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 811-4978 --------------------- Columbia Funds Trust XI ------------------------------------------------------------------------------ (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip code) Vincent Pietropaolo, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 - ------------------------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-772-3698 ------------------- Date of fiscal year end: 09/30/2004 ------------------ Date of reporting period: 09/30/2004 ----------------- 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 EQUITY FUNDS ANNUAL REPORT SEPTEMBER 30, 2004 [Photo of 2 ladies, one with a pen in hand] LOGO(R) COLUMBIAFUNDS A MEMBER OF COLUMBIA MANAGEMENT GROUP [Sidebar] TABLE OF CONTENTS ECONOMIC UPDATE ............................... 1 COLUMBIA ASSET ALLOCATION FUND ................ 2 COLUMBIA LARGE CAP GROWTH FUND ................ 6 COLUMBIA DISCIPLINED VALUE FUND ............... 10 COLUMBIA INTERNATIONAL EQUITY FUND ............ 14 COLUMBIA LARGE CAP CORE FUND .................. 18 COLUMBIA SMALL CAP FUND ....................... 22 COLUMBIA SMALL COMPANY EQUITY FUND ............ 26 FINANCIAL STATEMENTS .......................... 30 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ...................... 138 UNAUDITED INFORMATION ......................... 139 TRUSTEES ...................................... 140 OFFICERS ...................................... 142 IMPORTANT INFORMATION ABOUT THIS REPORT ............................. 143 COLUMBIA FUNDS ................................ 144 Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. Not FDIC May Lose Value Insured No Bank Guarantee PRESIDENT'S MESSAGE ____________________________________________________________ Columbia Equity Funds DEAR SHAREHOLDER: Your fund's legal and management team here at Columbia Funds have been working hard to strengthen our mutual fund services operation and to ensure that all operations and processes comply with legal and regulatory standards. In the coming months, we will continue to monitor the oversight enhancements recently put in place by your fund's Board of Trustees and make every effort to protect the interests of all our shareholders in everything we do. In our last report, we announced that your fund's advisor, Columbia Management Advisors, Inc., and your fund's distributor, Columbia Funds Distributor, Inc., had reached an agreement with the Securities and Exchange Commission and the New York Attorney General to settle charges involving market timing in some of our mutual funds. We want to reassure you that the settlement and all associated legal fees will be paid by Columbia Management, not by the affected funds or their shareholders. Recently the Securities and Exchange Commission has adopted new rules regarding mutual fund governance. We think it is important for you to know that Columbia Management complied with the majority of these rules well before they were adopted. Your fund's Board of Trustees has taken the following important steps to strengthen its capacity to oversee your fund and to comply with SEC rules. o THE BOARD OF TRUSTEES APPOINTED MARY JOAN HOENE AS CHIEF COMPLIANCE OFFICER OF COLUMBIA FUNDS. IN THIS ROLE, MS. HOENE WILL REPORT DIRECTLY TO THE BOARD OF TRUSTEES AND WILL WORK WITH THE BOARD OF TRUSTEES AS WELL AS THE SENIOR LEADERSHIP OF COLUMBIA MANAGEMENT, THE INVESTMENT MANAGEMENT ARM OF BANK OF AMERICA, AND WITH BANK OF AMERICA'S PRINCIPAL COMPLIANCE EXECUTIVES. SHE WILL FOCUS ON THE OVERALL COMPLIANCE PROGRAM OF THE FUNDS AND THE RESPONSIBILITY AND PERFORMANCE OF THE FUND'S SERVICE PROVIDERS. PRIOR TO HER APPOINTMENT, MS. HOENE WAS A PARTNER IN THE LAW FIRM OF CARTER, LEDYARD & MILBURN, LLP. PREVIOUSLY SHE ALSO SERVED AS ASSOCIATE DIRECTOR AND DEPUTY DIRECTOR FOR THE SECURITIES AND EXCHANGE COMMISSION DIVISION OF INVESTMENT MANAGEMENT. AS AN ACTIVE ADVISOR, MS. HOENE HAS HELPED SEVERAL FUND BOARDS DEVELOP INDEPENDENT BOARD PRACTICES. THE BOARD IS PLEASED TO HAVE MS. HOENE, WITH HER BROAD AND EXTENSIVE EXPERIENCE, IN THIS IMPORTANT NEW POSITION. o THE BOARD OF TRUSTEES HAS ESTABLISHED OPERATIONAL GUIDELINES THAT RESULT IN STRONGER, MORE VIGILANT TRUSTEESHIP ACROSS THE ENTIRE COLUMBIA MANAGEMENT ORGANIZATION. BOARD COMMITTEES HAVE BEEN ESTABLISHED TO OVERSEE PRODUCTS BY FUND CATEGORY, ALLOWING FOR GREATER SPECIALIZATION AMONG BOARD TRUSTEES. SHAREHOLDERS WILL ELECT BOARD MEMBERS EVERY FIVE YEARS, BEGINNING IN 2005. o IN ADDITION TO ENHANCEMENTS TO OVERSIGHT WITHIN COLUMBIA MANAGEMENT, OUR PARENT COMPANY--BANK OF AMERICA--HAS ALSO INCREASED THE ROLE THAT SUCH PROFESSIONALS PLAY WITHIN THE BROADER ORGANIZATION. A CHIEF COMPLIANCE OFFICER HAS BEEN NAMED TO REPORT DIRECTLY TO KEN LEWIS, BANK OF AMERICA'S CHIEF EXECUTIVE OFFICER. BANK OF AMERICA HAS ALSO ADOPTED A CORPORATE CODE OF ETHICS COMMITTEE, AN INTERNAL COMPLIANCE CONTROLS COMMITTEE AND A REGULATORY IMPLEMENTATION GROUP TO ENSURE FULL ALIGNMENT AND EXECUTION OF REMEDIAL ACTIONS AND BEST PRACTICES ACROSS THE COMPANY. In the pages that follow, you'll find a discussion of the economic environment during the period, followed by a detailed report from the fund's manager on key factors that influenced performance. This report is rich in information, and you should discuss it with your financial advisor if you have questions. We are committed to providing quality products and services to our shareholders, strengthening your confidence in us, and working hard to help you achieve financial success. It is a privilege to play a role in your financial future, and we value your business. Thank you for choosing Columbia Management. Sincerely, /s/ Christopher Wilson Christopher Wilson HEAD OF MUTUAL FUNDS, COLUMBIA MANAGEMENT Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible for the day-to-day delivery of mutual fund services to the firm's investors. With the exception of distribution, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. Chris serves as Columbia Management's chief liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. [Sidebar] SUMMARY FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004 o STOCK PRICES ROSE AROUND THE WORLD, AS MEASURED BY THE S&P 500 INDEX AND THE MSCI EAFE INDEX. HOWEVER, THE US MARKET RETREATED AS SHORT-TERM INTEREST RATES MOVED HIGHER IN THE SUMMER AND A HOST OF GLOBAL UNCERTAINTIES UNSETTLED INVESTORS. S&P 500 INDEX MSCI EAFE INDEX [UP ARROW] [UP ARROW] 13.87% 22.08% o DESPITE INTEREST RATE VOLATILITY, INVESTMENT GRADE BONDS CHALKED UP RESPECTABLE GAINS. THE LEHMAN BROTHERS AGGREGATE BOND INDEX RETURNED 3.68%. HIGH-YIELD BONDS, WHICH CAN BE LESS SENSITIVE TO CHANGING INTEREST RATES, LED THE FIXED INCOME MARKETS. THE MERRILL LYNCH US HIGH YIELD, CASH PAY INDEX RETURNED 12.23%. LEHMAN INDEX MERRILL LYNCH INDEX [UP ARROW] [UP ARROW] 3.68% 12.23% The S&P 500 Index is an unmanaged index that tracks the performance of 500 widely held, large capitalization US stocks. The MSCI EAFE Index is an unmanaged market-weighted index composed of companies representative of the market structure of 21 developed market countries in Europe, Australasia and the Far East. 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. ECONOMIC UPDATE ________________________________________________________________ Columbia Equity Funds Despite uncertainty about job growth and rising energy prices, the US economy grew at a pace of more than 4.5% during the 12-month period that began October 1, 2003 and ended September 30, 2004. Economic growth encountered a soft patch in the second quarter of 2004, but monthly data suggested that it picked up again in the third quarter. Job growth dominated the economic news during this reporting period: When more than one million jobs were created in the spring of 2004, consumer confidence soared to its highest level in two years. However, when job growth fell below expectations during the summer months, consumer confidence fell. According to the Labor Department's Payroll Survey, the job market has not fully recovered from the losses incurred during the economic downturn of 2000-2001, and that has left consumers somewhat cautious about the months ahead. Consumer spending held up for most of the period, as last year's tax rebates and tax cuts worked their way into household budgets. Even when consumer spending growth declined during the summer, housing activity remained strong. Also, the business sector stepped into the gap created by sagging consumer spending. Industrial production rose; factories utilized more of their capacity; and spending on technology, capital equipment and construction picked up. STOCKS OUTPERFORMED BONDS Buoyed by strong gains at the beginning of the period, the S&P 500 Index returned 13.87% during this 12-month reporting period. However, concerns about new terror threats, continued fighting in Iraq, higher oil prices and the presidential election helped sideline investors as the period wore on. Late in the period, leadership passed from small-cap stocks to mid- and large-cap stocks. Value stocks continued to lead growth stocks until the final month of the period, when small- and mid-cap growth stocks bested their value counterparts. Energy and real estate investment trusts were the best-performing sectors. Foreign stock markets did even better than U.S. markets. The MSCI EAFE Index, a broad measure of stock market performance in developed countries outside the United States, returned 22.08% for the 12-month period. Unlike the U.S. market, many foreign markets continued to generate positive returns in 2004. BONDS DELIVER RESPECTABLE GAINS Despite periods of interest-rate volatility, the U.S. bond market delivered respectable gains during the period. Bond prices sagged in the spring when job growth picked up and investors began to anticipate higher short-term interest rates. However, a shaky stock market, higher oil prices and some disappointing economic data gave the bond market a boost in the last three months of the period. The 10-year Treasury yield ended the period at 4.10%, very close to where it started. In this environment, the Lehman Brothers Aggregate Bond Index returned 3.68%. High-yield bonds gained 12.23%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. However, most of those gains were achieved during the first half of the reporting period. In the second half, slower economic growth and high valuations made high-yield bonds less attractive. After a year of the lowest short-term interest rates in recent history, The Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.00% to 1.75% in three equal steps during the period. The Fed indicated that it would continue to raise short-term interest rates at a "measured pace," in an attempt to balance economic growth against inflationary pressures. 1 [Sidebar] PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($) SALES CHARGE WITHOUT WITH - ---------------------------------------------- Class A 21,772 20,526 - ---------------------------------------------- Class B 20,886 20,886 - ---------------------------------------------- Class C 20,878 20,878 - ---------------------------------------------- Class G 20,408 20,408 - ---------------------------------------------- Class T 21,691 20,449 - ---------------------------------------------- Class Z 22,179 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION ________________________________________________________ Columbia Asset Allocation Fund VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 [MOUNTAIN CHART] LEHMAN CLASS A CLASS A BROTHERS SHARES WITHOUT SHARES WITH S&P 500 AGGREGATE SALES CHARGE SALES CHARGE INDEX BOND INDEX -------------- ------------ --------- ---------- 10/1994 10,000.00 9,425.00 10,000.00 10,000.00 10,123.00 9,541.00 10,225.00 9,991.00 9,914.00 9,344.00 9,853.00 9,969.00 10,042.00 9,465.00 9,999.00 10,038.00 10,243.00 9,654.00 10,258.00 10,237.00 10,540.00 9,934.00 10,658.00 10,480.00 10,777.00 10,158.00 10,972.00 10,544.00 11,095.00 10,457.00 11,295.00 10,692.00 11,577.00 10,911.00 11,746.00 11,106.00 11,791.00 11,113.00 12,019.00 11,187.00 11,995.00 11,305.00 12,418.00 11,162.00 12,033.00 11,342.00 12,449.00 11,297.00 12,445.00 11,729.00 12,974.00 11,407.00 12,494.00 11,775.00 12,928.00 11,555.00 12,922.00 12,179.00 13,495.00 11,728.00 13,084.00 12,331.00 13,756.00 11,892.00 13,361.00 12,593.00 14,223.00 11,971.00 13,352.00 12,584.00 14,356.00 11,763.00 13,449.00 12,676.00 14,493.00 11,680.00 13,549.00 12,770.00 14,706.00 11,615.00 13,768.00 12,976.00 15,086.00 11,592.00 13,921.00 13,120.00 15,143.00 11,747.00 13,551.00 12,771.00 14,474.00 11,779.00 13,740.00 12,950.00 14,779.00 11,759.00 14,297.00 13,475.00 15,611.00 11,963.00 14,608.00 13,768.00 16,042.00 12,229.00 15,191.00 14,318.00 17,255.00 12,438.00 15,061.00 14,195.00 16,913.00 12,322.00 15,553.00 14,659.00 17,970.00 12,360.00 15,500.00 14,609.00 18,111.00 12,391.00 15,150.00 14,279.00 17,366.00 12,254.00 15,729.00 14,824.00 18,403.00 12,438.00 16,245.00 15,311.00 19,524.00 12,556.00 16,688.00 15,729.00 20,398.00 12,705.00 17,599.00 16,587.00 22,022.00 13,048.00 17,027.00 16,048.00 20,789.00 12,937.00 17,507.00 16,501.00 21,928.00 13,128.00 17,560.00 16,550.00 21,196.00 13,318.00 17,774.00 16,752.00 22,177.00 13,379.00 18,034.00 16,997.00 22,559.00 13,514.00 18,288.00 17,236.00 22,809.00 13,687.00 18,879.00 17,793.00 24,453.00 13,676.00 19,413.00 18,297.00 25,706.00 13,723.00 19,623.00 18,494.00 25,965.00 13,794.00 19,389.00 18,274.00 25,519.00 13,925.00 19,750.00 18,614.00 26,555.00 14,044.00 19,574.00 18,448.00 26,273.00 14,073.00 18,284.00 17,233.00 22,474.00 14,302.00 18,999.00 17,907.00 23,915.00 14,637.00 19,989.00 18,839.00 25,859.00 14,560.00 20,542.00 19,361.00 27,426.00 14,643.00 21,239.00 20,018.00 29,006.00 14,686.00 21,653.00 20,408.00 30,218.00 14,791.00 21,166.00 19,949.00 29,278.00 14,532.00 21,830.00 20,575.00 30,449.00 14,612.00 22,001.00 20,736.00 31,628.00 14,659.00 21,462.00 20,228.00 30,881.00 14,530.00 21,953.00 20,691.00 32,595.00 14,483.00 21,707.00 20,459.00 31,578.00 14,421.00 21,462.00 20,228.00 31,424.00 14,414.00 21,262.00 20,040.00 30,563.00 14,581.00 21,930.00 20,669.00 32,497.00 14,635.00 22,189.00 20,913.00 33,157.00 14,633.00 22,815.00 21,503.00 35,110.00 14,563.00 22,180.00 20,905.00 33,347.00 14,515.00 22,256.00 20,976.00 32,717.00 14,691.00 23,716.00 22,352.00 35,917.00 14,885.00 23,626.00 22,267.00 34,836.00 14,841.00 23,092.00 21,764.00 34,122.00 14,834.00 24,006.00 22,626.00 34,964.00 15,142.00 24,109.00 22,723.00 34,419.00 15,280.00 25,146.00 23,700.00 36,556.00 15,502.00 24,389.00 22,987.00 34,626.00 15,600.00 24,157.00 22,768.00 34,481.00 15,702.00 23,090.00 21,762.00 31,764.00 15,960.00 23,261.00 21,923.00 31,919.00 16,257.00 23,896.00 22,522.00 33,052.00 16,523.00 22,502.00 21,209.00 30,038.00 16,667.00 21,539.00 20,301.00 28,134.00 16,751.00 22,369.00 21,082.00 30,320.00 16,680.00 22,395.00 21,108.00 30,523.00 16,780.00 21,851.00 20,595.00 29,781.00 16,844.00 21,797.00 20,543.00 29,489.00 17,221.00 21,101.00 19,888.00 27,643.00 17,419.00 20,061.00 18,907.00 25,410.00 17,623.00 20,514.00 19,335.00 25,895.00 17,992.00 21,310.00 20,085.00 27,881.00 17,743.00 21,344.00 20,117.00 28,126.00 17,630.00 20,766.00 19,572.00 27,716.00 17,772.00 20,257.00 19,092.00 27,181.00 17,945.00 20,691.00 19,501.00 28,203.00 17,647.00 19,875.00 18,733.00 26,494.00 17,989.00 19,778.00 18,641.00 26,298.00 18,142.00 18,775.00 17,696.00 24,425.00 18,298.00 18,124.00 17,082.00 22,523.00 18,520.00 18,263.00 17,213.00 22,669.00 18,833.00 16,981.00 16,005.00 20,205.00 19,138.00 17,944.00 16,912.00 21,983.00 19,050.00 18,567.00 17,499.00 23,278.00 19,044.00 18,017.00 16,981.00 21,911.00 19,438.00 17,653.00 16,638.00 21,337.00 19,456.00 17,443.00 16,440.00 21,017.00 19,724.00 17,518.00 16,511.00 21,221.00 19,708.00 18,392.00 17,335.00 22,970.00 19,872.00 19,294.00 18,184.00 24,180.00 20,242.00 19,542.00 18,419.00 24,490.00 20,201.00 19,585.00 18,459.00 24,921.00 19,522.00 19,924.00 18,779.00 25,407.00 19,651.00 19,884.00 18,741.00 25,137.00 20,172.00 20,523.00 19,343.00 26,560.00 19,984.00 20,736.00 19,544.00 26,794.00 20,032.00 21,450.00 20,216.00 28,198.00 20,237.00 21,778.00 20,525.00 28,717.00 20,399.00 22,050.00 20,782.00 29,116.00 20,619.00 22,079.00 20,809.00 28,676.00 20,774.00 21,489.00 20,253.00 28,226.00 20,233.00 21,560.00 20,320.00 28,613.00 20,152.00 21,929.00 20,668.00 29,168.00 20,267.00 21,339.00 20,112.00 28,202.00 20,468.00 21,439.00 20,206.00 28,315.00 20,859.00 09/2004 21,772.00 20,526.00 28,612.00 20,918.00 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Standard & Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization U.S. stocks. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the daily price, coupon, pay-downs, and total return performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues with at least $250 million par amount outstanding and with at least one year to final maturity. 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 09/30/04 (%) - ------------------------------------------------------------------------------------------------------------------------ SHARE CLASS A B C G T Z - ------------------------------------------------------------------------------------------------------------------------ INCEPTION 11/01/98 11/01/98 11/18/02 03/04/96 12/30/91 12/30/91 - ------------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------------ 1-YEAR 9.46 3.20 8.68 3.68 8.67 7.67 8.72 3.72 9.47 3.21 9.75 - ------------------------------------------------------------------------------------------------------------------------ 5-YEAR 0.47 -0.72 -0.23 -0.59 -0.24 -0.24 -0.25 -0.79 0.43 -0.76 0.68 - ------------------------------------------------------------------------------------------------------------------------ 10-YEAR 8.09 7.46 7.64 7.64 7.64 7.64 7.39 7.39 8.05 7.42 8.29 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. The returns for class A and class B shares include the returns of Prime A shares (for class A shares) and Prime B shares (for class B shares) of the Galaxy Asset Allocation Fund for periods prior to November 18, 2002. The returns shown for class A shares and class B shares also include the returns of Retail A shares of the Galaxy Asset Allocation Fund (adjusted, as necessary, to reflect the sales charges applicable to class A shares and class B shares, respectively), for periods prior to the inception of Prime A shares (November 1, 1998) and Prime B shares (November 1, 1998). Class A and class B shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although returns would have been lower to the extent that expenses for class A and class B shares exceed expenses paid by Retail A shares. The returns shown for class C shares include the returns of Prime B shares of the Galaxy Asset Allocation Fund (adjusted to reflect the sales charge applicable to class C shares) for periods prior to November 18, 2002, the date on which class C shares were initially offered by the Fund. The returns shown for class C shares also include the returns of Retail A shares of the Galaxy Asset Allocation Fund (adjusted to reflect the sales charges applicable to class C shares) for periods prior to the date of inception of Prime B shares (November 1, 1998). Class C shares generally would have had substantially similar returns because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class C shares exceed expenses paid by Retail A and Prime B Shares. Retail A shares of the Galaxy Asset Allocation Fund were initially offered on December 30, 1991. Class A, B and C shares were initially offered on November 18, 2002. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Asset Allocation Fund for periods prior to November 18, 2002, the date on which class T and class G shares were initially offered by the Fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect sales charges applicable to class G shares) for periods prior to the inception of Retail B shares of the Galaxy Asset Allocation Fund (March 4, 1996). Retail A shares of the Galaxy Asset Allocation Fund were initially offered on December 30, 1991. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy Asset Allocation Fund for periods prior to November 18, 2002, the date on which class Z shares were initially offered by the Fund. Trust shares of the Galaxy Asset Allocation Fund were initially offered on December 30, 1991. 2 [Sidebar] 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 THE 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 UNDERSTANDING YOUR EXPENSES ____________________________________________________ Columbia Asset Allocation 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 - ------------------------------------------------------------------------------------------------------------------------ ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------------ ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 985.95 1,017.70 7.25 7.36 1.46 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 982.50 1,013.95 10.95 11.13 2.21 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 982.40 1,013.95 10.95 11.13 2.21 - ------------------------------------------------------------------------------------------------------------------------ Class G 1,000.00 1,000.00 983.10 1,014.20 10.71 10.88 2.16 - ------------------------------------------------------------------------------------------------------------------------ Class T 1,000.00 1,000.00 986.10 1,017.45 7.50 7.62 1.51 - ------------------------------------------------------------------------------------------------------------------------ Class Z 1,000.00 1,000.00 987.45 1,018.95 6.01 6.11 1.21 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 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 [Sidebar] SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES RETURNED 9.46% WITHOUT SALES CHARGE. o THE FUND'S RETURN FELL BETWEEN THE RETURNS OF ITS TWO BENCHMARKS, THE S&P 500 INDEX AND THE LEHMAN BROTHERS AGGREGATE BOND INDEX. IT WAS SLIGHTLY LESS THAN THE MORNINGSTAR(R) MODERATE ASSET ALLOCATION CATEGORY AVERAGE OF 9.72%. o AN EMPHASIS ON LARGE-CAP STOCKS WITHIN THE EQUITY PORTION OF THE PORTFOLIO AIDED PERFORMANCE. HOWEVER, OUR DECISION TO LIGHTEN UP ON SMALL-CAP STOCKS AND HIGH-YIELD ISSUES TURNED OUT TO BE PREMATURE AS BOTH SECTORS CONTINUED TO PERFORM WELL. LEHMAN BROTHERS CLASS A S&P 500 AGGREGATE SHARES INDEX BOND INDEX [UP ARROW] [UP ARROW] [UP ARROW] 9.46% 13.87% 3.68% OBJECTIVE Seeks a high total return by providing both a current level of income greater than that provided by popular stock market averages, as well as long-term growth in the value of the Fund's assets. TOTAL NET ASSETS $423.2 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) Class A 15.06 - ---------------------------------------------- Class B 15.06 - ---------------------------------------------- Class C 15.06 - ---------------------------------------------- Class G 15.06 - ---------------------------------------------- Class T 15.07 - ---------------------------------------------- Class Z 15.06 DISTRIBUTIONS DECLARED PER SHARE 10/01/03 - 09/30/04 ($) Class A 0.27 - ---------------------------------------------- Class B 0.15 - ---------------------------------------------- Class C 0.15 - ---------------------------------------------- Class G 0.16 - ---------------------------------------------- Class T 0.26 - ---------------------------------------------- Class Z 0.31 PORTFOLIO MANAGER'S REPORT _____________________________________________________ Columbia Asset Allocation Fund For the 12-month period ended September 30, 2004, Columbia Asset Allocation Fund class A shares returned 9.46% without sales charge. That compares with a 13.87% return for the S&P 500 Index and a 3.68% return for the Lehman Brothers Aggregate Bond Index. We expect the fund, which is typically divided between 60% stocks and 40% bonds, to generate a return that is between these two benchmarks. The fund's return fell slightly behind the average return of its peer group, the Morningstar(R) Moderate Asset Allocation Category, which was 9.72%. 1 We believe this modest underperformance was the result of the fund's lackluster performance in growth stocks as well as international stocks. LARGE COMPANY FOCUS Early in the period, we trimmed exposure to small-cap stocks to emphasize large-cap stocks. This shift turned out to be premature, because small-cap stocks continued to perform well up to the final months of the period. The fund benefited from our strategy to diversify across value and growth stocks. Value stocks outperformed growth, but when the market began to shift near the end of the period, diversification helped dampen the fund's price volatility. In fact, we put more money to work in large-cap growth stocks as the sector became more attractively valued. FINANCIALS, ENERGY AND CONSUMER STOCKS AIDED PERFORMANCE The financial sector was the strongest contributor to the fund's performance. Industrials such as General Electric also boosted the fund's return. Strong profit margins and rising energy prices fuelled returns from ChevronTexaco and Exxon Mobil in the energy sector. The fund also benefited from owning eBay in the consumer discretionary sector. The online service company has successfully harnessed technological trends and global consumer demand to fuel rapid growth, and its stock was a stand-out performer for the period. SHIFT FROM HIGH-YIELD BONDS WAS PREMATURE Although the fund's bond holdings delivered respectable returns, we were premature in scaling back on the fund's substantial position in high-yield bonds. We became less enthusiastic about the sector as the yield advantage between high-yield and investment grade bonds narrowed. 1 (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 4 [Sidebar] TOP 5 EQUITY SECTORS AS OF 09/30/04 (%) Financials 13.7 - ---------------------------------------------- Health care 8.8 - ---------------------------------------------- Information technology 8.7 - ---------------------------------------------- Consumer discretionary 8.4 - ---------------------------------------------- Industrials 7.3 TOP 10 EQUITY HOLDINGS AS OF 09/30/04 (%) Microsoft Corp. 1.1 - ---------------------------------------------- Citigroup, Inc. 1.1 - ---------------------------------------------- General Electric Co. 1.0 - ---------------------------------------------- Pfizer, Inc. 0.9 - ---------------------------------------------- BP PLC 0.8 - ---------------------------------------------- Johnson & Johnson 0.8 - ---------------------------------------------- Exxon Mobil Corp. 0.8 - ---------------------------------------------- PepsiCo, Inc. 0.7 - ---------------------------------------------- Wells Fargo & Co. 0.7 - ---------------------------------------------- Procter & Gamble Co. 0.7 PORTFOLIO STRUCTURE AS OF 09/30/04 (%) Common stocks 64.9 - ---------------------------------------------- Corporate fixed-income bonds And notes 14.9 - ---------------------------------------------- Mortgage-backed securities 11.9 - ---------------------------------------------- Asset-backed securities 3.2 - ---------------------------------------------- Government and agency obligations 2.1 - ---------------------------------------------- Preferred stock 0.3 - ---------------------------------------------- Municipal security 0.2 - ---------------------------------------------- Cash equivalents, net other assets And liabilities 2.5 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) General Electric Co. 1.0 - ---------------------------------------------- ChevronTexaco Corp. 0.1 - ---------------------------------------------- Exxon Mobil PLC 0.8 - ---------------------------------------------- eBay Corp. 0.3 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ Columbia Asset Allocation Fund ECONOMIC BACKDROP CONTINUES TO FAVOR EQUITIES Uncertainties regarding Iraq, global terrorism and the US elections, as well as surging oil prices, have dampened stock performance in 2004. However, we believe that the fund's emphasis on stocks should prove beneficial even if the economy expands at 3.5% or more and corporate profits grow, albeit at a slower pace. We have positioned the fund to take advantage of this environment by 1) allocating 65% of its assets to stocks and 35% to bonds, 2) increasing exposure to large-cap growth stocks and international issues and 3) cutting back on exposure to high-yield and investment grade corporate bonds. [Photo of Harvey B Hirschhorn] Harvey Hirschhorn, CFA, is the lead manager for Columbia Asset Allocation Fund and has co-managed the fund since October 2002. He has been with the advisor or its predecessors or affiliate organizations since 1973. He is responsible for allocating the fund's assets among the various asset classes. The investment decisions for these asset classes are made by professionals with expertise in that class. /s/ Harvey B Hirschhorn An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. Investing in high-yield securities offers the potential for high current income and attractive total return, but involves certain risks. Lower-rated bond risks include default of the issuer, rising interest rates and risk associated with investing in securities of foreign and emerging markets, including currency exchange rate fluctuations and economic and political change. The fund may be subject to the same types of risks associated with direct ownership of real estate including the decline of property value due to general, local and regional economic conditions. 5 PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($) SALES CHARGE WITHOUT WITH - ---------------------------------------------- Class A 22,987 21,670 - ---------------------------------------------- Class B 21,988 21,988 - ---------------------------------------------- Class C 22,025 22,025 - ---------------------------------------------- Class G 21,303 21,303 - ---------------------------------------------- Class T 22,805 21,499 - ---------------------------------------------- Class Z 23,757 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION ________________________________________________________ Columbia Large Cap Growth Fund VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 [MOUNTAIN CHART] CLASS A CLASS A RUSSELL SHARES WITHOUT SHARES WITH S&P 500 1000 SALES CHARGE SALES CHARGE INDEX GROWTH INDEX -------------- ------------ --------- ------------ 10/1994 10,000.00 9,425.00 10,000.00 10,000.00 10,260.00 9,670.00 10,225.00 10,235.00 9,978.00 9,404.00 9,853.00 9,906.00 10,014.00 9,438.00 9,999.00 10,073.00 10,227.00 9,639.00 10,258.00 10,288.00 10,513.00 9,909.00 10,658.00 10,720.00 10,817.00 10,195.00 10,972.00 11,033.00 11,142.00 10,501.00 11,295.00 11,274.00 11,562.00 10,897.00 11,746.00 11,666.00 11,927.00 11,241.00 12,019.00 12,117.00 12,296.00 11,589.00 12,418.00 12,621.00 12,237.00 11,533.00 12,449.00 12,635.00 12,711.00 11,981.00 12,974.00 13,217.00 12,778.00 12,043.00 12,928.00 13,226.00 13,301.00 12,537.00 13,495.00 13,741.00 13,384.00 12,614.00 13,756.00 13,819.00 13,828.00 13,033.00 14,223.00 14,281.00 14,009.00 13,204.00 14,356.00 14,542.00 14,106.00 13,295.00 14,493.00 14,561.00 14,378.00 13,552.00 14,706.00 14,944.00 14,703.00 13,858.00 15,086.00 15,466.00 14,714.00 13,868.00 15,143.00 15,487.00 13,921.00 13,120.00 14,474.00 14,580.00 14,238.00 13,419.00 14,779.00 14,956.00 15,038.00 14,173.00 15,611.00 16,045.00 15,401.00 14,515.00 16,042.00 16,141.00 16,437.00 15,492.00 17,255.00 17,353.00 16,126.00 15,199.00 16,913.00 17,013.00 16,923.00 15,950.00 17,970.00 18,206.00 16,569.00 15,617.00 18,111.00 18,082.00 16,094.00 15,168.00 17,366.00 17,104.00 16,971.00 15,995.00 18,403.00 18,239.00 18,138.00 17,095.00 19,524.00 19,556.00 18,692.00 17,617.00 20,398.00 20,338.00 20,320.00 19,151.00 22,022.00 22,136.00 19,651.00 18,521.00 20,789.00 20,841.00 20,675.00 19,486.00 21,928.00 21,867.00 20,272.00 19,106.00 21,196.00 21,058.00 20,740.00 19,548.00 22,177.00 21,953.00 21,035.00 19,825.00 22,559.00 22,198.00 21,224.00 20,004.00 22,809.00 22,862.00 22,620.00 21,320.00 24,453.00 24,581.00 23,785.00 22,418.00 25,706.00 25,562.00 24,233.00 22,839.00 25,965.00 25,915.00 23,377.00 22,033.00 25,519.00 25,179.00 24,132.00 22,745.00 26,555.00 26,720.00 23,770.00 22,403.00 26,273.00 26,544.00 19,836.00 18,696.00 22,474.00 22,559.00 21,310.00 20,085.00 23,915.00 24,292.00 23,258.00 21,921.00 25,859.00 26,245.00 24,511.00 23,102.00 27,426.00 28,242.00 26,406.00 24,888.00 29,006.00 30,790.00 27,563.00 25,978.00 30,218.00 32,597.00 26,447.00 24,926.00 29,278.00 31,107.00 27,951.00 26,344.00 30,449.00 32,747.00 28,482.00 26,845.00 31,628.00 32,789.00 27,693.00 26,101.00 30,881.00 31,783.00 29,862.00 28,145.00 32,595.00 34,008.00 28,921.00 27,258.00 31,578.00 32,926.00 28,522.00 26,882.00 31,424.00 33,463.00 28,245.00 26,621.00 30,563.00 32,760.00 29,627.00 27,923.00 32,497.00 35,233.00 30,752.00 28,984.00 33,157.00 37,136.00 33,274.00 31,361.00 35,110.00 40,998.00 32,036.00 30,194.00 33,347.00 39,075.00 32,927.00 31,034.00 32,717.00 40,986.00 36,236.00 34,152.00 35,917.00 43,921.00 35,660.00 33,609.00 34,836.00 41,830.00 34,337.00 32,363.00 34,122.00 39,722.00 35,391.00 33,356.00 34,964.00 42,733.00 35,012.00 32,999.00 34,419.00 40,951.00 37,596.00 35,435.00 36,556.00 44,657.00 35,686.00 33,634.00 34,626.00 40,432.00 35,069.00 33,053.00 34,481.00 38,520.00 31,706.00 29,883.00 31,764.00 32,842.00 32,803.00 30,917.00 31,919.00 31,804.00 33,593.00 31,662.00 33,052.00 34,002.00 30,170.00 28,436.00 30,038.00 28,228.00 27,672.00 26,081.00 28,134.00 25,157.00 29,676.00 27,969.00 30,320.00 28,340.00 29,812.00 28,098.00 30,523.00 27,923.00 28,527.00 26,887.00 29,781.00 27,275.00 28,057.00 26,443.00 29,489.00 26,593.00 26,166.00 24,661.00 27,643.00 24,418.00 23,633.00 22,274.00 25,410.00 21,981.00 24,398.00 22,996.00 25,895.00 23,135.00 26,228.00 24,720.00 27,881.00 25,358.00 26,637.00 25,106.00 28,126.00 25,310.00 25,687.00 24,210.00 27,716.00 24,862.00 24,847.00 23,418.00 27,181.00 23,830.00 26,491.00 24,968.00 28,203.00 24,655.00 24,860.00 23,430.00 26,494.00 22,643.00 24,278.00 22,882.00 26,298.00 22,095.00 22,127.00 20,855.00 24,425.00 20,051.00 20,496.00 19,318.00 22,523.00 18,948.00 20,644.00 19,457.00 22,669.00 19,005.00 18,356.00 17,301.00 20,205.00 17,034.00 19,852.00 18,711.00 21,983.00 18,597.00 20,914.00 19,712.00 23,278.00 19,606.00 19,478.00 18,358.00 21,911.00 18,252.00 18,969.00 17,879.00 21,337.00 17,808.00 18,772.00 17,693.00 21,017.00 17,726.00 18,971.00 17,880.00 21,221.00 18,056.00 20,407.00 19,234.00 22,970.00 19,390.00 21,509.00 20,272.00 24,180.00 20,358.00 21,595.00 20,353.00 24,490.00 20,639.00 21,794.00 20,541.00 24,921.00 21,153.00 22,352.00 21,066.00 25,407.00 21,679.00 21,782.00 20,529.00 25,137.00 21,447.00 22,971.00 21,650.00 26,560.00 22,653.00 23,256.00 21,919.00 26,794.00 22,890.00 23,800.00 22,432.00 28,198.00 23,682.00 24,209.00 22,817.00 28,717.00 24,166.00 24,357.00 22,957.00 29,116.00 24,320.00 24,072.00 22,688.00 28,676.00 23,868.00 23,403.00 22,057.00 28,226.00 23,591.00 24,035.00 22,653.00 28,613.00 24,030.00 24,419.00 23,015.00 29,168.00 24,330.00 22,835.00 21,522.00 28,202.00 22,956.00 22,538.00 21,242.00 28,315.00 22,843.00 09/2004 22,987.00 21,670.00 28,612.00 23,060.00 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Standard and Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. The S&P 500 Index was the fund's previous benchmark. 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 09/30/04 (%) - ------------------------------------------------------------------------------------------------------------------------ SHARE CLASS A B C G T Z - ------------------------------------------------------------------------------------------------------------------------ INCEPTION 11/01/98 11/01/98 11/18/02 03/04/96 12/14/90 12/14/90 - ------------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------------ 1-Year 5.57 -0.48 4.72 -0.28 4.77 3.77 4.75 -0.25 5.49 -0.59 5.83 - ------------------------------------------------------------------------------------------------------------------------ 5-Year -4.04 -5.16 -4.82 -5.14 -4.79 -4.79 -4.96 -5.43 -4.21 -5.34 -3.84 - ------------------------------------------------------------------------------------------------------------------------ 10-Year 8.68 8.04 8.20 8.20 8.22 8.22 7.86 7.86 8.59 7.95 9.04 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE"RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. The returns for class A and class B shares include the returns of Prime A shares (for class A shares) and Prime B shares (for class B shares) of the Galaxy Equity Growth Fund for periods prior to November 18, 2002, the date on which class A and class B shares were initially offered by the Fund. The returns shown for class A shares and class B shares also include the returns of Retail A shares of the Galaxy Equity Growth Fund (adjusted, as necessary, to reflect the sales charges applicable to class A shares and class B shares, respectively) for periods prior to the date of inception of Prime A shares and Prime B shares (November 1, 1998). Class A and class B shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although returns would have been lower to the extent that expenses for class A and class B shares exceed expenses paid by Retail A shares. The returns shown for class C shares include the returns of Prime B shares of the Galaxy Equity Growth Fund (adjusted to reflect the sales charge applicable to class C shares) for periods prior to November 18, 2002, the date on which class C shares were initially offered by the Fund. The returns shown for class C shares also include the returns of Retail A shares of the Galaxy Equity Growth Fund (adjusted to reflect the sales charges applicable to class C shares) for periods prior to the date of inception of Prime B shares (November 1, 1998). Class C shares generally would have had substantially similar returns because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class C shares exceed expenses paid by Retail A and Prime B shares. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Equity Growth Fund for periods prior to November 18, 2002, the date on which class T and class G shares were initially offered by the Fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect sales charges applicable to class G shares) for periods prior to the inception of Retail B shares of the Galaxy Equity Growth Fund (March 4, 1996). Retail A shares were initially offered on December 14, 1990. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would be lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy Equity Growth Fund for periods prior to November 18, 2002, the date on which class Z shares were initially offered by the Fund. Trust shares of the Galaxy Equity Growth Fund were initially offered on December 14, 1990. 6 [Sidebar] 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 THE 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 UNDERSTANDING YOUR EXPENSES ____________________________________________________ Columbia Large Cap Growth 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 - ------------------------------------------------------------------------------------------------------------------------ ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------------ ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 955.90 1,018.55 6.31 6.51 1.29 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 952.10 1,014.80 9.96 10.28 2.04 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 952.05 1,014.80 9.96 10.28 2.04 - ------------------------------------------------------------------------------------------------------------------------ Class G 1,000.00 1,000.00 953.80 1,015.05 9.72 10.02 1.99 - ------------------------------------------------------------------------------------------------------------------------ Class T 1,000.00 1,000.00 955.60 1,018.30 6.55 6.76 1.34 - ------------------------------------------------------------------------------------------------------------------------ Class Z 1,000.00 1,000.00 956.35 1,019.80 5.09 5.25 1.04 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 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. 7 [Sidebar] SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES RETURNED 5.57% WITHOUT SALES CHARGE. o AS WORLDWIDE ECONOMIC GROWTH PICKED UP, THE FUND'S INDUSTRIAL STOCKS HELPED PERFORMANCE. CONSUMER STAPLES STOCKS ALSO PERFORMED WELL. o STOCK SELECTION AND OVERWEIGHT POSITIONS IN TECHNOLOGY AND CONSUMER CYCLICAL SECTORS HURT PERFORMANCE RELATIVE TO THE FUND'S BENCHMARKS. RUSSELL CLASS A S&P 500 1000 GROWTH SHARES INDEX INDEX [UP ARROW] [UP ARROW] [UP ARROW] 5.57% 13.87% 7.51% OBJECTIVE Seeks long-term capital appreciation. TOTAL NET ASSETS $908.0 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) Class A 18.57 - ---------------------------------------------- Class B 17.76 - ---------------------------------------------- Class C 17.79 - ---------------------------------------------- Class G 17.21 - ---------------------------------------------- Class T 18.46 - ---------------------------------------------- Class Z 18.87 DISTRIBUTIONS DECLARED PER SHARE 10/01/03 - 09/30/04 ($) Class A 0.00 - ---------------------------------------------- Class B 0.00 - ---------------------------------------------- Class C 0.00 - ---------------------------------------------- Class G 0.00 - ---------------------------------------------- Class T 0.00 - ---------------------------------------------- Class Z 0.01 PORTFOLIO MANAGERS' REPORT _____________________________________________________ Columbia Large Cap Growth Fund For the 12-month period ended September 30, 2004, class A shares of Columbia Large Cap Growth Fund returned 5.57% without sales charge. The fund underperformed the Russell 1000 Growth Index and the S&P 500 Index, which returned 7.51% and 13.87%, respectively, over the same period. The fund also trailed the average return of its peer group, the Morningstar(R) Large Growth Category, which was 7.61%. 1 The fund's focus on large, profitable companies with strong competitive positions, healthy balance sheets and above-average sales growth led us to invest in what turned out to be top-performing stocks in the industrial and consumer staples sectors. However, the fund's exposure to technology on average was higher than its weight in the Russell 1000 Growth Index. This hurt performance because technology was a weak performer during the period. Stock selection in technology and financials also detracted from the fund's return. STRONG GAINS FROM INDUSTRIALS, CONSUMER STAPLES SECTORS An above-average stake in industrials helped the fund as world economic growth, particularly in China, was strong. Phelps Dodge and Praxair contributed to portfolio performance. Tyco International, an industrial conglomerate under new management, performed particularly well. With US economic growth maturing, we added to our holdings of high quality growth companies, buying NIKE, Carnival and Hershey Foods. Costco Wholesale, a warehouse chain that sells consumer goods, was a standout performer as it reduced employee related costs and produced strong sales growth via its superior product offering. Consumer discretionary stocks also aided performance. Top performers included XM Satellite Radio Holdings and eBay. XM benefited from greater penetration of the consumer market with its terrific product which has no commercials and virtually unlimited range. By contrast, traditional media stocks such as Clear Channel and Viacom, which the fund does not hold, were disappointing performers as they sold less advertising than expected because advertisers are increasingly using the internet medium and consumers are choosing to subscribe to commercial free radio. Meanwhile, eBay rallied as its robust growth continued to exceed investor expectations. Niche retailers Chico's FAS and Coach also delivered strong results. MIXED HEALTH CARE AND TECHNOLOGY RETURNS The fund's health care returns were mixed. Medical product and device companies, such as Alcon and St. Jude Medical, rallied nicely amid new product introductions. However, the fund lost some ground by not owning more shares of Johnson & Johnson when its stock price took off in the spring of 2004. Biotechnology stocks further detracted from performance. In particular, Amgen was hurt by concerns about Medicare reimbursement. 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. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 8 [Sidebar] SECTORS AS OF 09/30/04 (%) Consumer discretionary 16.1 - ---------------------------------------------- Consumer staples 10.4 - ---------------------------------------------- Energy 1.5 - ---------------------------------------------- Financials 8.8 - ---------------------------------------------- Health care 23.6 - ---------------------------------------------- Industrials 10.1 - ---------------------------------------------- Information technology 24.7 - ---------------------------------------------- Materials 4.8 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/04 (%) Microsoft Corp. 4.9 - ---------------------------------------------- Pfizer, Inc. 3.2 - ---------------------------------------------- Johnson & Johnson 3.2 - ---------------------------------------------- Praxair, Inc. 2.5 - ---------------------------------------------- Tyco International Ltd. 2.4 - ---------------------------------------------- Cisco Systems, Inc. 2.4 - ---------------------------------------------- Teva Pharmaceutical Industries Ltd. ADR 2.2 - ---------------------------------------------- Zimmer Holdings, Inc. 2.1 - ---------------------------------------------- Lowe's Companies 1.9 - ---------------------------------------------- Procter & GAMBLE CO. 1.8 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) Phelps Dodge Corp. 0.9 - ---------------------------------------------- Praxair, Inc. 2.5 - ---------------------------------------------- Tyco International Ltd. 2.4 - ---------------------------------------------- NIKE, Inc. 0.8 - ---------------------------------------------- Carnival Corp. 0.9 - ---------------------------------------------- Hershey Foods Corp. 0.7 - ---------------------------------------------- Costco Wholesale Corp. 1.3 - ---------------------------------------------- XM Satellite Radio Holdings, Inc. 1.0 - ---------------------------------------------- eBay Corp. 1.2 - ---------------------------------------------- Chico's FAS, Inc. 1.3 - ---------------------------------------------- Coach, Inc. 1.0 - ---------------------------------------------- Alcon, Inc. 1.1 - ---------------------------------------------- St. Jude Medical, Inc. 1.5 - ---------------------------------------------- Johnson & Johnson 3.2 - ---------------------------------------------- Amgen, Inc. 0.8 - ---------------------------------------------- Cognizant Technology Solutions Corp. 1.2 - ---------------------------------------------- QUALCOMM, Inc. 1.4 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ Columbia Large Cap Growth Fund Within technology, the fund owned a range of companies we believed could benefit from an improving economy, increased corporate spending and the growing popularity of advanced communication devices. However, the technology sector had the largest negative impact on performance. The fund's exposure to technology was higher on average than its weight in the Russell 1000 Growth Index, and technology lagged the broader market. Stock selection also detracted from performance. The fund did well by overweighting Cognizant Technology Solutions and QUALCOMM and not owning Applied Materials. However, the gains realized from these stocks were not enough to overcome losses from Seagate Technology, down 50% in the fund, and Red Hat, which were sold before the end of the period. We overestimated demand for information technology equipment and underestimated the supply growth from China where manufacturers continue to access low cost labor. OPTIMISTIC OUTLOOK FOR LARGE-CAP STOCKS In a pattern reminiscent of the underperformance of value stocks during the technology bubble years of the late 1990s, large-cap growth stocks have underperformed nearly every domestic equity category. As a result, valuations of large-cap growth stocks, in our opinion, have become attractive compared to value stocks on a historical basis. We are optimistic about the prospects for large-cap growth stocks. We expect high quality companies with strong growth records and earnings prospects that are not dependent on economic performance to do better than the low quality companies that performed well coming out of the 2002 bear market bottom. We have maintained a diversified and balanced approach to sector exposure while picking what we believe are growth stocks with growth potential, attractive valuations and strong balance sheets. Alexander S. Macmillan has co-managed the Columbia Large Cap Growth Fund since July 2003 and has been with the advisor or its predecessors or affiliate organizations since 1989. /s/ Alexander S. Macmillan Paul J. Berlinguet has co-managed the fund since October 2003 and has been with the advisor or its predecessors or affiliate organizations since October 2003. /s/ Paul J. Berlinguet An investment in the fund may present certain risks, including stock market fluctuations that occur in response to economic and business developments. The fund may invest in foreign securities, which have special risks, including political or economic instability and higher transaction costs; different regulations, accounting standards, trading practices and levels of information; and currency exchange rate fluctuations. The fund's approach offers the potential for long-term growth, but also involves the possibility of losses due to the sensitivity of growth stock prices to changes in current or expected earnings. 9 [Sidebar] PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($) SALES CHARGE WITHOUT WITH - ---------------------------------------------- Class A 24,974 23,539 - ---------------------------------------------- Class B 23,485 23,485 - ---------------------------------------------- Class C 23,447 23,447 - ---------------------------------------------- Class G 23,514 23,514 - ---------------------------------------------- Class T 24,931 23,499 - ---------------------------------------------- Class Z 25,906 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION ________________________________________________________ Columbia Disciplined Value Fund VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 [MOUNTAIN CHART] CLASS A CLASS A RUSSELL SHARES WITHOUT SHARES WITH 1000 S&P 500 SALES CHARGE SALES CHARGE GROWTH INDEX INDEX -------------- ------------ ------------ ------------ 10/1994 10000.00 9425.00 10000.00 10000.00 10137.00 9554.00 10139.00 10225.00 9939.00 9368.00 9730.00 9853.00 10031.00 9454.00 9843.00 9999.00 10166.00 9582.00 10146.00 10258.00 10496.00 9892.00 10548.00 10658.00 10722.00 10106.00 10780.00 10972.00 10850.00 10226.00 11121.00 11295.00 11341.00 10689.00 11588.00 11746.00 11634.00 10965.00 11744.00 12019.00 11881.00 11197.00 12153.00 12418.00 11940.00 11253.00 12325.00 12449.00 12307.00 11599.00 12771.00 12974.00 12246.00 11542.00 12644.00 12928.00 12887.00 12146.00 13284.00 13495.00 12816.00 12079.00 13617.00 13756.00 13232.00 12472.00 14042.00 14223.00 13473.00 12699.00 14149.00 14356.00 13504.00 12728.00 14390.00 14493.00 13746.00 12956.00 14444.00 14706.00 14099.00 13289.00 14625.00 15086.00 14056.00 13247.00 14637.00 15143.00 13507.00 12731.00 14083.00 14474.00 13972.00 13169.00 14486.00 14779.00 14654.00 13811.00 15063.00 15611.00 14878.00 14023.00 15646.00 16042.00 16025.00 15104.00 16780.00 17255.00 15520.00 14628.00 16565.00 16913.00 16247.00 15312.00 17368.00 17970.00 16183.00 15253.00 17624.00 18111.00 15453.00 14565.00 16989.00 17366.00 16317.00 15379.00 17703.00 18403.00 17561.00 16551.00 18692.00 19524.00 17864.00 16837.00 19494.00 20398.00 19533.00 18410.00 20960.00 22022.00 18953.00 17863.00 20214.00 20789.00 19880.00 18737.00 21435.00 21928.00 19265.00 18158.00 20837.00 21196.00 19699.00 18566.00 21758.00 22177.00 19813.00 18674.00 22393.00 22559.00 20083.00 18928.00 22075.00 22809.00 21697.00 20450.00 23561.00 24453.00 22795.00 21484.00 25003.00 25706.00 23000.00 21678.00 25171.00 25965.00 22115.00 20843.00 24798.00 25519.00 22761.00 21452.00 25115.00 26555.00 22003.00 20737.00 24673.00 26273.00 18399.00 17341.00 21002.00 22474.00 19284.00 18175.00 22208.00 23915.00 21169.00 19952.00 23929.00 25859.00 22708.00 21403.00 25044.00 27426.00 24518.00 23109.00 25895.00 29006.00 25526.00 24058.00 26102.00 30218.00 24357.00 22956.00 25734.00 29278.00 25114.00 23670.00 26267.00 30449.00 25845.00 24359.00 28720.00 31628.00 25473.00 24008.00 28404.00 30881.00 26961.00 25410.00 29228.00 32595.00 25885.00 24397.00 28372.00 31578.00 24663.00 23245.00 27319.00 31424.00 23642.00 22283.00 26366.00 30563.00 24266.00 22871.00 27884.00 32497.00 24400.00 22997.00 27667.00 33157.00 26157.00 24653.00 27800.00 35110.00 24530.00 23119.00 26893.00 33347.00 24007.00 22627.00 24895.00 32717.00 26965.00 25414.00 27932.00 35917.00 26520.00 24995.00 27608.00 34836.00 26321.00 24808.00 27898.00 34122.00 24923.00 23490.00 26623.00 34964.00 24495.00 23086.00 26956.00 34419.00 26765.00 25226.00 28455.00 36556.00 25738.00 24258.00 28717.00 34626.00 26167.00 24663.00 29423.00 34481.00 23804.00 22436.00 28332.00 31764.00 25321.00 23865.00 29751.00 31919.00 27914.00 26309.00 29864.00 33052.00 25884.00 24396.00 29034.00 30038.00 25077.00 23635.00 28009.00 28134.00 27183.00 25620.00 29381.00 30320.00 27730.00 26135.00 30042.00 30523.00 26809.00 25267.00 29375.00 29781.00 27203.00 25639.00 29314.00 29489.00 25794.00 24311.00 28138.00 27643.00 22428.00 21138.00 26157.00 25410.00 23480.00 22130.00 25932.00 25895.00 25586.00 24115.00 27439.00 27881.00 26538.00 25012.00 28087.00 28126.00 26055.00 24556.00 27870.00 27716.00 24877.00 23447.00 27915.00 27181.00 26671.00 25137.00 29235.00 28203.00 25302.00 23847.00 28233.00 26494.00 25302.00 23847.00 28374.00 26298.00 22661.00 21358.00 26745.00 24425.00 20442.00 19267.00 24258.00 22523.00 20289.00 19122.00 24442.00 22669.00 17820.00 16795.00 21724.00 20205.00 18476.00 17413.00 23334.00 21983.00 19575.00 18449.00 24804.00 23278.00 18649.00 17577.00 23727.00 21911.00 18399.00 17341.00 23153.00 21337.00 17705.00 16687.00 22535.00 21017.00 17783.00 16761.00 22573.00 21221.00 19268.00 18160.00 24560.00 22970.00 20523.00 19343.00 26146.00 24180.00 20851.00 19652.00 26473.00 24490.00 21101.00 19888.00 26868.00 24921.00 21525.00 20288.00 27287.00 25407.00 21256.00 20034.00 27019.00 25137.00 22453.00 21162.00 28673.00 26560.00 22704.00 21399.00 29063.00 26794.00 23919.00 22544.00 30853.00 28198.00 24386.00 22983.00 31396.00 28717.00 24773.00 23349.00 32068.00 29116.00 24578.00 23164.00 31786.00 28676.00 24052.00 22669.00 31010.00 28226.00 24246.00 22852.00 31327.00 28613.00 24938.00 23504.00 32066.00 29168.00 24466.00 23059.00 31614.00 28202.00 24779.00 23355.00 32063.00 28315.00 09/2004 24974.00 23539.00 32560.00 28612.00 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The 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 U.S. stocks. The S&P 500 Index was the fund's previous benchmark. 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 09/30/04 (%) - ------------------------------------------------------------------------------------------------------------------------ SHARE CLASS A B C G T Z - ------------------------------------------------------------------------------------------------------------------------ INCEPTION 11/25/02 11/25/02 11/25/02 03/04/96 09/01/88 09/01/88 - ------------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------------ 1-Year 17.53 10.79 16.64 11.64 16.67 15.67 16.67 11.67 17.54 10.79 17.86 - ------------------------------------------------------------------------------------------------------------------------ 5-Year 1.10 -0.09 0.30 0.03 0.27 0.27 0.33 -0.09 1.07 -0.13 1.46 - ------------------------------------------------------------------------------------------------------------------------ 10-Year 9.58 8.94 8.91 8.91 8.90 8.90 8.93 8.93 9.57 8.92 9.99 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE"RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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 A, class B and class C are newer classes of shares. Their performance information includes returns of the Retail A shares (for class A shares) and Retail B shares (for class B and class C shares) of the Galaxy Equity Value Fund for periods prior to November 25, 2002, the date on which class A, B and C shares were initially offered by the Fund. The returns shown for class B and class C shares also include the performance of Retail A shares of the Galaxy Equity Value Fund for periods prior to the inception of Retail B shares (March 4, 1996). Class B and class C shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class B and class C shares exceed expenses paid by Retail A shares. The returns have not been restated to reflect any differences in expenses (such as 12b-1 fees) between any of the predecessor shares and the newer classes of shares. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Equity Value Fund for periods prior to November 25, 2002, the date on which class T and class G shares were initially offered by the Fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect the sales charge applicable to class G shares), for periods prior to the inception of Retail B shares of the Galaxy Equity Value Fund (March 4, 1996). Retail A shares were initially offered on September 1, 1988. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy Equity Value Fund for periods prior to November 25, 2002, the date on which class Z shares were initially offered by the Fund. 10 [Sidebar] 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 THE 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 UNDERSTANDING YOUR EXPENSES ____________________________________________________ Columbia Disciplined Value 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 - ------------------------------------------------------------------------------------------------------------------------ ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------------ ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 1,016.75 1,018.40 6.66 6.66 1.32 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 1,014.65 1,014.65 10.43 10.43 2.07 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 1,015.85 1,014.65 10.43 10.43 2.07 - ------------------------------------------------------------------------------------------------------------------------ Class G 1,000.00 1,000.00 1,015.40 1,014.90 10.18 10.18 2.02 - ------------------------------------------------------------------------------------------------------------------------ Class T 1,000.00 1,000.00 1,018.05 1,018.15 6.91 6.91 1.37 - ------------------------------------------------------------------------------------------------------------------------ Class Z 1,000.00 1,000.00 1,018.35 1,019.65 5.40 5.40 1.07 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. 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. 11 [Sidebar] SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES RETURNED 17.53% WITHOUT SALES CHARGE. o A FAVORABLE ENVIRONMENT FOR VALUE STOCKS HELPED THE FUND, ITS BENCHMARK AND PEER GROUP ACHIEVE DOUBLE-DIGIT RETURNS. o GOOD STOCK SELECTION, AS WELL AS THE FUND'S EMPHASIS ON RELATIVELY STABLE, HIGHER QUALITY COMPANIES MADE A STRONG CONTRIBUTION TO PERFORMANCE. HOWEVER, IN A MARKET THAT FAVORED STOCKS OF SMALLER, MORE SPECULATIVE COMPANIES, OUR FOCUS ON QUALITY CONTRIBUTED TO THE FUND'S UNDERPERFORMANCE RELATIVE TO THE RUSSELL 1000 VALUE INDEX. RUSSELL CLASS A S&P 500 1000 VALUE SHARES INDEX INDEX [UP ARROW] [UP ARROW] [UP ARROW] 17.53% 13.87% 20.52% OBJECTIVE Seeks long-term capital appreciation, with income as a secondary goal. TOTAL NET ASSETS $429.2 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) Class A 12.71 - ---------------------------------------------- Class B 12.16 - ---------------------------------------------- Class C 12.14 - ---------------------------------------------- Class G 12.17 - ---------------------------------------------- Class T 12.72 - ---------------------------------------------- Class Z 12.95 DISTRIBUTIONS DECLARED PER SHARE 10/01/03 - 09/30/04 ($) Class A 0.23 - ---------------------------------------------- Class B 0.07 - ---------------------------------------------- Class C 0.07 - ---------------------------------------------- Class G 0.08 - ---------------------------------------------- Class T 0.20 - ---------------------------------------------- Class Z 0.28 PORTFOLIO MANAGER'S REPORT _____________________________________________________ Columbia Disciplined Value Fund For the 12-month period ended September 30, 2004, Columbia Disciplined Value Fund class A shares returned 17.53% without sales charge. The fund trailed the Russell 1000 Value Index, which returned 20.52% for the same period, but beat the 13.87% return of the S&P 500 Index and the 16.86% return of the Morningstar(R) Large Value Category. 1 Good stock selection, as well as the fund's emphasis on relatively stable, higher quality companies made a strong contribution to performance. However, in a market that favored stocks of smaller, speculative companies, our focus on quality contributed to the fund's underperformance relative to the Russell 1000 Value Index. TOP PERFORMERS IN MANY INDUSTRIES The fund's top performers represented a spectrum of industry groups. TXU (formerly Texas Utilities) more than doubled as new leadership took steps to restructure the company. TXU sold some non-core businesses and reduced debt. Thanks to these moves, the perception of the company's growth potential increased dramatically and investors rewarded it with a higher stock price. In the chemical industry, Monsanto enjoyed higher revenues from global corn and seed sales and from pesticides and herbicides outside the United States. The fund took profits from the stock and sold its position. In the consumer sector, Gillette reported record net sales and profits, spurred by strong sales of new products, including a new razor for men. The company also benefited from ongoing cost savings and increased manufacturing productivity. In the energy sector, ChevronTexaco and Valero Energy benefited from rising oil prices. Valero Energy was sold before the end of the period. BIGGEST DISAPPOINTMENT FROM MERCK The biggest detractor from performance was pharmaceutical giant Merck. The company withdrew arthritis drug and painkiller Vioxx from all markets on September 30, the last day of the reporting period, because of reports that the drug increased the risk of heart attacks and strokes. As a result, the stock's price fell more than 25% in one day. Beyond the loss of Vioxx, Merck's patent for Zocor, its best selling cholesterol treatment, expires in 2006. The company is also experiencing increased competition for four of its five major drugs. 1 (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 12 [Sidebar] SECTORS AS OF 09/30/04 (%) Consumer discretionary 9.2 - ---------------------------------------------- Consumer staples 7.6 - ---------------------------------------------- Energy 12.7 - ---------------------------------------------- Financials 31.6 - ---------------------------------------------- Health care 4.8 - ---------------------------------------------- Industrials 8.4 - ---------------------------------------------- Information technology 8.0 - ---------------------------------------------- Materials 6.9 - ---------------------------------------------- Telecommunication services 5.5 - ---------------------------------------------- Utilities 5.3 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/04 (%) Exxon Mobil Corp. 5.2 - ---------------------------------------------- ChevronTexaco Corp. 4.7 - ---------------------------------------------- JPMorgan Chase & CO. 4.2 - ---------------------------------------------- SBC Communications, Inc. 4.0 - ---------------------------------------------- General Electric Co. 4.0 - ---------------------------------------------- Citigroup, Inc. 4.0 - ---------------------------------------------- Wachovia Corp. 3.6 - ---------------------------------------------- International Business Machines Corp. 3.2 - ---------------------------------------------- Freddie Mac 3.1 - ---------------------------------------------- Prudential Financial, Inc. 2.9 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) TXU Corp. 0.6 - ---------------------------------------------- Gillette Co. 2.6 - ---------------------------------------------- ChevronTexaco Corp. 4.7 - ---------------------------------------------- Merck & Co., Inc. 2.3 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ Columbia Disciplined Value Fund FAVORABLE CLIMATE FOR LARGE-CAP STOCKS We believe that the economy has the potential to strengthen in the months ahead and that large-cap stocks have the potential to outperform small-cap stocks because they are more reasonably priced relative to their earnings growth. Large-cap stocks have a long history of superior performance when the outlook for the economy is favorable. Yet, uncertainty over higher oil prices could put a damper on growth. If consumers are required to spend more to drive their cars and heat their homes, there will be less to spend on other consumer goods. Given this uncertainty, we will maintain our focus on stock selection, seeking attractively priced stocks of companies we view as having improving business prospects. [Photo of Michael A. Welhoelter] Michael A. Welhoelter has managed or co-managed the fund since January 2003 and has been with the advisor or its predecessors or affiliate organizations since November 2001. /s/ Michael A. Welhoelter An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. This fund may invest in small- and mid-cap companies, which may be subject to greater volatility and price fluctuations because they may be thinly traded and less liquid than investments in larger companies. 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. 13 [Sidebar] PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($) SALES CHARGE WITHOUT WITH - ---------------------------------------------- Class A 14,393 13,562 - ---------------------------------------------- Class B 13,901 13,901 - ---------------------------------------------- Class C 13,810 13,810 - ---------------------------------------------- Class G 13,672 13,672 - ---------------------------------------------- Class T 14,230 13,409 - ---------------------------------------------- Class Z 15,016 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION ________________________________________________________ Columbia International Equity Fund VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 [MOUNTAIN CHART] CLASS A CLASS A MSCI ALL SHARES WITHOUT SHARES WITH COUNTRY WORLD MSCI EAFE SALES CHARGE SALES CHARGE EX U.S. INDEX INDEX -------------- ------------ ------------- ----------- 10/1994 10000.00 9425.00 10000.00 10000.00 10233.00 9645.00 10269.00 10333.00 9698.00 9140.00 9774.00 9836.00 9647.00 9093.00 9752.00 9898.00 9206.00 8677.00 9309.00 9518.00 9167.00 8640.00 9259.00 9490.00 9600.00 9048.00 9782.00 10082.00 9914.00 9344.00 10163.00 10462.00 10001.00 9426.00 10117.00 10337.00 9907.00 9337.00 9978.00 10156.00 10465.00 9864.00 10544.00 10789.00 10150.00 9567.00 10178.00 10378.00 10261.00 9671.00 10352.00 10580.00 10167.00 9582.00 10075.00 10296.00 10394.00 9797.00 10312.00 10582.00 10712.00 10097.00 10720.00 11008.00 10939.00 10310.00 10867.00 11053.00 11027.00 10393.00 10867.00 11091.00 11238.00 10592.00 11071.00 11326.00 11577.00 10911.00 11406.00 11656.00 11439.00 10782.00 11235.00 11441.00 11471.00 10812.00 11292.00 11505.00 11076.00 10439.00 10917.00 11169.00 11011.00 10378.00 10982.00 11194.00 11326.00 10675.00 11254.00 11492.00 11270.00 10622.00 11142.00 11374.00 11746.00 11071.00 11572.00 11827.00 11786.00 11109.00 11437.00 11675.00 11829.00 11149.00 11227.00 11266.00 11941.00 11254.00 11432.00 11451.00 12035.00 11343.00 11408.00 11492.00 12216.00 11514.00 11505.00 11553.00 12965.00 12219.00 12215.00 12305.00 13911.00 13111.00 12889.00 12983.00 14633.00 13792.00 13150.00 13193.00 13351.00 12584.00 12115.00 12208.00 14521.00 13686.00 12770.00 12891.00 13059.00 12308.00 11682.00 11900.00 13016.00 12267.00 11536.00 11779.00 13387.00 12617.00 11669.00 11881.00 13670.00 12884.00 12018.00 12424.00 14742.00 13894.00 12819.00 13222.00 15531.00 14638.00 13263.00 13629.00 15815.00 14906.00 13359.00 13737.00 16142.00 15214.00 13115.00 13669.00 16249.00 15315.00 13067.00 13773.00 16595.00 15641.00 13191.00 13912.00 14575.00 13737.00 11331.00 12189.00 13876.00 13078.00 11092.00 11814.00 14842.00 13988.00 12254.00 13045.00 15852.00 14941.00 12912.00 13713.00 16369.00 15428.00 13357.00 14254.00 17107.00 16124.00 13342.00 14211.00 16526.00 15575.00 13043.00 13873.00 16803.00 15837.00 13673.00 14451.00 17440.00 16437.00 14357.00 15036.00 16831.00 15864.00 13682.00 14262.00 17523.00 16516.00 14311.00 14818.00 17865.00 16838.00 14646.00 15258.00 18337.00 17282.00 14698.00 15315.00 18623.00 17552.00 14796.00 15470.00 19371.00 18257.00 15346.00 16050.00 20479.00 19302.00 15960.00 16607.00 23172.00 21840.00 17483.00 18098.00 22095.00 20824.00 16534.00 16949.00 23787.00 22419.00 16980.00 17405.00 23728.00 22363.00 17618.00 18080.00 21566.00 20326.00 16635.00 17129.00 20803.00 19607.00 16209.00 16711.00 21487.00 20252.00 16900.00 17364.00 20793.00 19597.00 16232.00 16637.00 21076.00 19864.00 16434.00 16781.00 19843.00 18702.00 15522.00 15964.00 19109.00 18010.00 15028.00 15587.00 18102.00 17061.00 14355.00 15003.00 18509.00 17445.00 14844.00 15536.00 18646.00 17574.00 15067.00 15528.00 16996.00 16019.00 13874.00 14363.00 15733.00 14828.00 12893.00 13405.00 16688.00 15728.00 13769.00 14337.00 15949.00 15032.00 13389.00 13831.00 15244.00 14367.00 12877.00 13265.00 14846.00 13992.00 12589.00 13024.00 14095.00 13284.00 12277.00 12694.00 12434.00 11719.00 10975.00 11408.00 12730.00 11998.00 11282.00 11700.00 13390.00 12620.00 11798.00 12132.00 13449.00 12675.00 11950.00 12204.00 12790.00 12054.00 11438.00 11556.00 13067.00 12316.00 11521.00 11636.00 13702.00 12914.00 12132.00 12322.00 13656.00 12870.00 12226.00 12347.00 13609.00 12827.00 12359.00 12503.00 13043.00 12293.00 11825.00 12006.00 11588.00 10921.00 10672.00 10821.00 11334.00 10682.00 10673.00 10796.00 10306.00 9713.00 9542.00 9636.00 10722.00 10106.00 10053.00 10154.00 11080.00 10443.00 10537.00 10615.00 10771.00 10152.00 10198.00 10258.00 10295.00 9703.00 9840.00 9830.00 10167.00 9583.00 9640.00 9605.00 10133.00 9550.00 9453.00 9417.00 10841.00 10218.00 10364.00 10340.00 11433.00 10776.00 11024.00 10966.00 11677.00 11005.00 11330.00 11232.00 12001.00 11311.00 11631.00 11504.00 12314.00 11606.00 11978.00 11781.00 12569.00 11847.00 12313.00 12144.00 13359.00 12590.00 13111.00 12900.00 13510.00 12733.00 13397.00 13187.00 14416.00 13587.00 14419.00 14217.00 14696.00 13851.00 14651.00 14417.00 14882.00 14027.00 15023.00 14750.00 15022.00 14158.00 15116.00 14833.00 14603.00 13763.00 14646.00 14497.00 14463.00 13631.00 14693.00 14547.00 14742.00 13894.00 15012.00 14865.00 14172.00 13357.00 14575.00 14382.00 14160.00 13346.00 14692.00 14445.00 09/2004 14393.00 13562.00 15164.00 14825.00 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Morgan Stanley Capital International (MSCI) All Country (AC) World ex U.S. Index is an unmanaged index of global stock market performance that includes developed and emerging markets but excludes the U.S. The Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US and Canada. 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 09/30/04 (%) - ------------------------------------------------------------------------------------------------------------------------ SHARE CLASS A B C G T Z - ------------------------------------------------------------------------------------------------------------------------ INCEPTION 11/01/98 11/01/98 11/18/02 11/01/98 12/30/91 12/30/91 - ------------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------------ 1-Year 14.51 7.93 13.67 8.67 13.35 12.35 13.59 8.59 14.37 7.77 14.81 - ------------------------------------------------------------------------------------------------------------------------ 5-Year -5.02 -6.14 -5.55 -5.86 -5.67 -5.67 -5.80 -6.27 -5.03 -6.14 -4.56 - ------------------------------------------------------------------------------------------------------------------------ 10-Year 3.71 3.09 3.35 3.35 3.28 3.28 3.18 3.18 3.59 2.98 4.15 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE"RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. The returns for class A and class B shares include the returns of Prime A shares (for class A shares) and Prime B shares (for class B shares) of the Galaxy International Equity Fund for periods prior to November 18, 2002, the date on which class A and class B shares were initially offered by the Fund. The returns shown for class A shares and class B shares also include the returns of Retail A shares of the Galaxy International Equity Fund (adjusted, as necessary, to reflect the sales charge applicable to class A shares and class B shares, respectively) for periods prior to the date of inception of Prime A and Prime B shares (November 1, 1998). Class A and class B shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although returns would have been lower to the extent that expenses for class A and class B shares exceed expenses paid by Retail A shares. The returns shown for class C shares include the returns of Prime B Shares of the Galaxy International Equity Fund (adjusted to reflect the sales charge applicable to class C shares) for periods prior to November 18, 2002, the date on which class C shares were initially offered by the Fund. The returns shown for class C shares also include the returns of Retail A shares of the Galaxy International Equity Fund (adjusted to reflect the sales charges applicable to class C shares) for periods prior to the date of inception of Prime B Shares (November 1, 1998). Class C shares generally would have had substantially similar returns because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class C shares exceed expenses paid by Retail A and Prime B shares. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B Shares (for class G shares) of the Galaxy International Equity Fund for periods prior to November 18, 2002, the date on which class T and class G shares were initially offered by the Fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect the sales charges applicable to class T and class G shares) for periods prior to the inception of Retail B shares of the Galaxy International Equity Fund (November 1, 1998). Retail A shares of the Galaxy International Equity Fund were initially offered on December 30, 1991. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy International Equity Fund for periods prior to November 18, 2002, the date on which class Z shares were initially offered by the Fund. 14 [Sidebar] 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 THE 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 UNDERSTANDING YOUR EXPENSES ____________________________________________________ Columbia International Equity 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 - ------------------------------------------------------------------------------------------------------------------------ ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------------ ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------------ CLASS A 1,000.00 1,000.00 959.85 1,019.40 5.49 5.65 1.12 - ------------------------------------------------------------------------------------------------------------------------ CLASS B 1,000.00 1,000.00 957.40 1,015.65 9.15 9.42 1.87 - ------------------------------------------------------------------------------------------------------------------------ CLASS C 1,000.00 1,000.00 955.00 1,015.65 9.14 9.42 1.87 - ------------------------------------------------------------------------------------------------------------------------ CLASS G 1,000.00 1,000.00 957.45 1,015.90 8.91 9.17 1.82 - ------------------------------------------------------------------------------------------------------------------------ CLASS T 1,000.00 1,000.00 960.30 1,019.15 5.73 5.91 1.17 - ------------------------------------------------------------------------------------------------------------------------ CLASS Z 1,000.00 1,000.00 959.80 1,020.65 4.26 4.39 0.87 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 and the Transfer Agent not waived 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. 15 [Sidebar] SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES RETURNED 14.51% WITHOUT SALES CHARGE. o IN AN ENVIRONMENT THAT WAS FAVORABLE FOR NON-U.S. STOCKS, THE FUND, ITS BENCHMARK AND PEER GROUP ALL EARNED DOUBLE-DIGIT RETURNS. o AN EMPHASIS ON TECHNOLOGY AND CERTAIN TELECOMMUNICATIONS STOCKS HURT PERFORMANCE. SOME OF THE FUND'S JAPANESE HOLDINGS WERE ALSO DISAPPOINTMENTS DURING THE PERIOD. MSCI ALL COUNTRY CLASS A WORLD EX U.S. MSCI EAFE SHARES INDEX INDEX [UP ARROW] [UP ARROW] [UP ARROW] 14.51% 23.14% 22.08% OBJECTIVE Seeks long-term capital appreciation. TOTAL NET ASSETS $485.7 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) Class A 12.35 - ---------------------------------------------- Class B 12.22 - ---------------------------------------------- Class C 12.14 - ---------------------------------------------- Class G 12.12 - ---------------------------------------------- Class T 12.32 - ---------------------------------------------- Class Z 12.55 DISTRIBUTIONS DECLARED PER SHARE 10/01/03 - 09/30/04 ($) Class A 0.05 - ---------------------------------------------- Class B 0.00 - ---------------------------------------------- Class C 0.00 - ---------------------------------------------- Class G 0.00 - ---------------------------------------------- Class T 0.01 - ---------------------------------------------- Class Z 0.09 PORTFOLIO MANAGERS' REPORT _____________________________________________________ Columbia International Equity Fund For the 12-month period ended September 30, 2004, Columbia International Equity Fund class A shares returned 14.51% without sales charge. The fund's return fell short of its benchmarks. The MSCI All Country World ex U.S. Index returned 23.14% for the period and the MSCI EAFE Index returned 22.08%. The fund also trailed the average return of the Morningstar(R) Foreign Large Growth Category, which was 16.64%. 1 The portfolio underperformed its benchmarks mainly because of its overweight in the technology sector at the beginning of the period and its emphasis on certain telecommunications stocks. Also, some of the fund's Japanese holdings were disappointments during the period. A CHANGING INVESTMENT ENVIRONMENT There were two distinct market environments during the 12-month reporting period. During the first five months, low valuations, underestimated earnings growth and a global economic recovery provided a positive backdrop. During this period, the fund's sizable technology allocation helped performance. However, in February the market environment began to change. Valuations began to look less attractive, upgraded earnings estimates were reported by fewer companies and concerns arose about slowing global growth and rising interest rates. In this environment, the fund's relatively large technology weight detracted from its return. BOOSTING INVESTMENT IN JAPAN, THE UNITED KINGDOM AND AUSTRIA The fund benefited from our regional allocation decisions. We reduced exposure to emerging markets, which helped the fund because emerging markets significantly underperformed developed markets. We used the proceeds from the sale of emerging market stocks to invest in Japan and the United Kingdom, where the prospects for long-term economic growth appeared stronger. In Japan, the economy continued to recover from a 10-year deflationary cycle. Companies have become more competitive on a global basis and the Japanese government has demonstrated a willingness to be more accommodative toward business. Yet, some of our Japanese holdings were disappointments during the period. A long-term fund favorite, wireless communications company NTT DoCoMo reported lower earnings as it came up against heavy competition from companies that had better technology and offered customers more favorable pricing. The company also suffered from government polices aimed at controlling telephone rates. However, we recently increased the fund's position in the stock because we believed it was attractively priced relative to its future earnings prospects. The company appears to have stemmed its earnings decline, upgraded its technology and improved its pricing. 1 (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 16 [Sidebar] SECTORS AS OF 09/30/04 (%) Consumer discretionary 15.7 - ---------------------------------------------- Consumer staples 9.2 - ---------------------------------------------- Energy 11.6 - ---------------------------------------------- Financials 24.4 - ---------------------------------------------- Health care 11.5 - ---------------------------------------------- Industrials 9.6 - ---------------------------------------------- Information technology 3.0 - ---------------------------------------------- Materials 5.0 - ---------------------------------------------- Telecommunication services 6.7 - ---------------------------------------------- Utilities 3.3 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/04 (%) ENI S.p.A. 2.7 - ---------------------------------------------- BP PLC 2.4 - ---------------------------------------------- Barclays PLC 1.8 - ---------------------------------------------- Nestle SA Registered shares 1.7 - ---------------------------------------------- Glaxosmithkline PLC 1.7 - ---------------------------------------------- Vodafone Group PLC 1.7 - ---------------------------------------------- ING Groep NV 1.6 - ---------------------------------------------- Smith & Nephew PLC 1.6 - ---------------------------------------------- Takeda Chemical Industries Ltd. 1.6 - ---------------------------------------------- Toyota Motor Corp. 1.5 TOP 5 COUNTRIES AS OF 09/30/04 (%) United Kingdom 24.3 - ---------------------------------------------- Japan 18.9 - ---------------------------------------------- France 9.7 - ---------------------------------------------- Germany 8.0 - ---------------------------------------------- Switzerland 4.8 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) NTT DoCoMo 0.7 - ---------------------------------------------- BP PLC 2.4 - ---------------------------------------------- GlaxoSmithKline PLC 1.7 - ---------------------------------------------- Erste Bank der oesterrelchischen 0.5 - ---------------------------------------------- Wienerberger AG 0.5 Your fund is actively managed and the composition of its portfolio will change over time. Sectors and holdings are calculated as a percentage of net assets and countries are calculated as a percentage of total investments. ________________________________________________________________________________ Columbia International Equity Fund In the United Kingdom, we were drawn to the region's consistent GDP growth, relatively strong consumer spending and attractive housing sector. Investments in BP, a large integrated-energy company, and in GlaxoSmithKline, a global pharmaceutical company, were positive for performance. We also invested in Austria where we emphasized companies with exposure to East European countries that have entered the European Union. We added Erste Bank, which has had a significant pick-up in loan growth, and Wienerberger AG, the world's largest producer of bricks used in construction projects. Both companies benefited performance. REDUCED EXPOSURE TO THAILAND During the period, we reduced the fund's stake in Thailand from approximately 6.5% to approximately 0.8% of net assets. Investments in Thailand aided return for several years, as the country benefited from the global economic recovery, a pro-business government and brisk trading activity with China, Japan and the United States. However, in the last few months of the period, Thailand's business policies became less expansionary, and we became concerned that the country's export growth had the potential to decline in a cooling global economy. BECOMING MORE DEFENSIVE We believe that concerns about the pace of global economic growth and rising interest rates will continue to weigh on the market for several months. With this expectation, we have structured the portfolio more defensively. We cut back the fund's exposure to small companies and focused on large, established companies with dividend-paying potential in sectors such as pharmaceuticals, consumer staples and energy. We believe more cautious positioning may help the fund weather this period of potential uncertainty. [Photo of Penelope L. Burgess] Penelope L. Burgess has co-managed the Columbia International Equity Fund since July 2004 and has been with the advisor and its predecessors or affiliate organizations since 1993. /s/ Penelope L. Burgess [Photo of Deborah F. Snee] Deborah F. Snee has co-managed the fund since July 2004 and has been with the advisor and its predecessors or affiliate organizations since 1999. /s/ Deborah F. Snee On October 13, 2004, the Board of Trustees approved a proposal to reorganize the Columbia International Equity Fund into the Columbia International Stock Fund, subject to shareholder approval and the satisfaction of certain other conditions. The effective date of the reorganization is expected to be on or around February 25, 2005 or such a date parties may agree. There are specific risks involved when investing in foreign stocks, such as currency exchange rate fluctuations, economic change, instability of emerging countries and political developments. 17 [Sidebar] PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($) SALES CHARGE WITHOUT WITH - ---------------------------------------------- Class A 21,629 20,381 - ---------------------------------------------- Class B 20,694 20,694 - ---------------------------------------------- Class C 20,694 20,694 - ---------------------------------------------- Class G 20,148 20,148 - ---------------------------------------------- Class T 21,455 20,217 - ---------------------------------------------- Class Z 22,143 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION ________________________________________________________ Columbia Large Cap Core Fund VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 [MOUNTAIN CHART] CLASS A CLASS A SHARES WITHOUT SHARES WITH S&P 500 SALES CHARGE SALES CHARGE INDEX -------------- ------------ ------------- 10/1994 10,000.00 9,425.00 10,000.00 10,192.00 9,606.00 10,225.00 9,899.00 9,330.00 9,853.00 9,959.00 9,386.00 9,999.00 10,190.00 9,604.00 10,258.00 10,517.00 9,912.00 10,658.00 10,788.00 10,168.00 10,972.00 11,001.00 10,368.00 11,295.00 11,408.00 10,752.00 11,746.00 11,616.00 10,948.00 12,019.00 11,898.00 11,214.00 12,418.00 11,830.00 11,150.00 12,449.00 12,236.00 11,532.00 12,974.00 12,079.00 11,385.00 12,928.00 12,624.00 11,898.00 13,495.00 12,880.00 12,140.00 13,756.00 13,162.00 12,405.00 14,223.00 13,319.00 12,553.00 14,356.00 13,593.00 12,812.00 14,493.00 13,843.00 13,047.00 14,706.00 14,105.00 13,294.00 15,086.00 14,005.00 13,200.00 15,143.00 13,449.00 12,676.00 14,474.00 13,838.00 13,042.00 14,779.00 14,369.00 13,543.00 15,611.00 14,527.00 13,692.00 16,042.00 15,644.00 14,745.00 17,255.00 15,438.00 14,550.00 16,913.00 16,188.00 15,257.00 17,970.00 16,222.00 15,289.00 18,111.00 15,750.00 14,844.00 17,366.00 16,362.00 15,422.00 18,403.00 17,357.00 16,359.00 19,524.00 17,991.00 16,956.00 20,398.00 19,232.00 18,126.00 22,022.00 18,571.00 17,503.00 20,789.00 19,408.00 18,292.00 21,928.00 18,896.00 17,809.00 21,196.00 19,489.00 18,368.00 22,177.00 19,941.00 18,795.00 22,559.00 19,871.00 18,729.00 22,809.00 21,344.00 20,117.00 24,453.00 22,356.00 21,070.00 25,706.00 22,537.00 21,241.00 25,965.00 21,994.00 20,729.00 25,519.00 22,110.00 20,839.00 26,555.00 21,566.00 20,326.00 26,273.00 18,232.00 17,184.00 22,474.00 19,124.00 18,024.00 23,915.00 20,772.00 19,578.00 25,859.00 21,917.00 20,656.00 27,426.00 23,105.00 21,776.00 29,006.00 23,386.00 22,042.00 30,218.00 22,926.00 21,607.00 29,278.00 23,820.00 22,450.00 30,449.00 24,756.00 23,332.00 31,628.00 24,771.00 23,346.00 30,881.00 26,151.00 24,647.00 32,595.00 25,316.00 23,861.00 31,578.00 24,349.00 22,949.00 31,424.00 23,385.00 22,040.00 30,563.00 23,848.00 22,477.00 32,497.00 24,086.00 22,702.00 33,157.00 24,718.00 23,296.00 35,110.00 23,845.00 22,474.00 33,347.00 23,385.00 22,040.00 32,717.00 25,791.00 24,308.00 35,917.00 25,822.00 24,337.00 34,836.00 25,711.00 24,233.00 34,122.00 25,055.00 23,615.00 34,964.00 25,166.00 23,719.00 34,419.00 26,849.00 25,305.00 36,556.00 25,611.00 24,139.00 34,626.00 26,057.00 24,559.00 34,481.00 24,770.00 23,346.00 31,764.00 25,667.00 24,191.00 31,919.00 26,703.00 25,168.00 33,052.00 25,355.00 23,897.00 30,038.00 23,765.00 22,399.00 28,134.00 25,357.00 23,899.00 30,320.00 25,687.00 24,210.00 30,523.00 25,127.00 23,682.00 29,781.00 25,162.00 23,715.00 29,489.00 23,793.00 22,425.00 27,643.00 21,697.00 20,450.00 25,410.00 22,062.00 20,793.00 25,895.00 23,725.00 22,361.00 27,881.00 24,169.00 22,779.00 28,126.00 23,076.00 21,750.00 27,716.00 22,737.00 21,430.00 27,181.00 23,665.00 22,304.00 28,203.00 22,411.00 21,122.00 26,494.00 22,733.00 21,426.00 26,298.00 20,837.00 19,639.00 24,425.00 19,333.00 18,221.00 22,523.00 19,173.00 18,070.00 22,669.00 16,878.00 15,907.00 20,205.00 18,061.00 17,022.00 21,983.00 19,186.00 18,083.00 23,278.00 18,133.00 17,090.00 21,911.00 17,828.00 16,803.00 21,337.00 17,307.00 16,312.00 21,017.00 17,484.00 16,479.00 21,221.00 18,797.00 17,716.00 22,970.00 19,750.00 18,614.00 24,180.00 19,853.00 18,711.00 24,490.00 20,176.00 19,016.00 24,921.00 20,626.00 19,440.00 25,407.00 20,195.00 19,034.00 25,137.00 21,203.00 19,984.00 26,560.00 21,472.00 20,237.00 26,794.00 22,148.00 20,875.00 28,198.00 22,346.00 21,061.00 28,717.00 22,580.00 21,282.00 29,116.00 22,382.00 21,095.00 28,676.00 21,806.00 20,552.00 28,226.00 22,203.00 20,927.00 28,613.00 22,581.00 21,282.00 29,168.00 21,535.00 20,297.00 28,202.00 21,374.00 20,145.00 28,315.00 09/2004 21,629.00 20,381.00 28,612.00 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Standard and 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 09/30/04 (%) - ------------------------------------------------------------------------------------------------------------------------ SHARE CLASS A B C G T Z - ------------------------------------------------------------------------------------------------------------------------ INCEPTION 11/01/98 11/01/98 12/09/02 03/04/96 02/12/93 12/14/92 - ------------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------------ 1-YEAR 7.09 0.97 6.28 1.28 6.28 5.28 6.24 1.24 6.92 0.79 7.28 - ------------------------------------------------------------------------------------------------------------------------ 5-YEAR -1.55 -2.71 -2.29 -2.62 -2.29 -2.29 -2.38 -2.87 -1.68 -2.84 -1.32 - ------------------------------------------------------------------------------------------------------------------------ 10-YEAR 8.02 7.38 7.54 7.54 7.54 7.54 7.26 7.26 7.93 7.29 8.27 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE"RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. The returns for class A and class B shares include the returns of Prime A shares (for class A shares) and Prime B shares (for class B shares) of the Galaxy Growth & Income Fund for periods prior to December 9, 2002, the date on which class A and class B shares were initially offered by the Fund. The returns shown for class A shares and class B shares also include the returns of Retail A shares of the Galaxy Growth & Income Fund (adjusted to reflect the sales charge applicable to class A shares and class B shares, respectively) for periods prior to the inception of Prime A and Prime B shares (November 1, 1998). Class A and class B shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class A and class B shares exceed expenses paid by Retail A shares. The returns shown for class C shares include the returns of Prime B shares of the Galaxy Growth & Income Fund (adjusted to reflect the sales charge applicable to class C shares) for periods prior to December 9, 2002, the date on which class C shares were initially offered. The returns shown for class C shares also include the returns of Retail A shares of the Galaxy Growth & Income Fund (adjusted to reflect the sales charges applicable to class C shares) for periods prior to the inception of Prime B shares (November 1, 1998). Class C shares generally would have had substantially similar returns to Retail A and Prime B shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class C shares exceed expenses paid by Retail A and Prime B shares. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Growth & Income Fund for periods prior to December 9, 2002, the date on which class T and class G shares were initially offered by the Fund. The returns shown for class G shares also include the returns of Retail A shares for periods prior to the inception of Retail B shares of the Galaxy Growth & Income Fund (March 4, 1996). Retail A shares were initially offered on February 12, 1993. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy Growth & Income Fund for periods prior to December 9, 2002, the date on which class Z shares were initially offered by the Fund, and returns of Trust shares of the Shawmut Fund (whose shares were initially offered on December 14, 1992), for periods prior to December 14, 1995. 18 [Sidebar] 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 THE 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 UNDERSTANDING YOUR EXPENSES ____________________________________________________ Columbia Large Cap Core 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 - ------------------------------------------------------------------------------------------------------------------------ ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------------ ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 967.20 1,018.40 6.49 6.66 1.32 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 962.80 1,014.65 10.16 10.43 2.07 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 962.75 1,014.65 10.16 10.43 2.07 - ------------------------------------------------------------------------------------------------------------------------ Class G 1,000.00 1,000.00 962.70 1,014.90 9.91 10.18 2.02 - ------------------------------------------------------------------------------------------------------------------------ Class T 1,000.00 1,000.00 965.20 1,018.15 6.73 6.91 1.37 - ------------------------------------------------------------------------------------------------------------------------ Class Z 1,000.00 1,000.00 966.45 1,019.65 5.26 5.40 1.07 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 Transfer Agent not waived 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. 19 [Sidebar] SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES RETURNED 7.09% WITHOUT SALES CHARGE. o THE FUND'S EMPHASIS ON TECHNOLOGY, WHICH SUFFERED A SHARP DECLINE DURING THE PERIOD, HURT THE FUND'S PERFORMANCE AGAINST ITS BENCHMARK, THE S&P 500 INDEX. WE BELIEVE ITS TECHNOLOGY WEIGHT WAS ALSO A FACTOR IN ITS SHORTFALL COMPARED TO ITS PEER GROUP, THE MORNINGSTAR(R) LARGE BLEND CATEGORY. o BY BRINGING THE FUND'S SECTOR WEIGHTS IN LINE WITH ITS BENCHMARK, WE HOPE TO HELP THE FUND GET A GREATER BENEFIT FROM STOCK SELECTION GOING FORWARD AND TO REDUCE THE FUND'S VOLATILITY RELATIVE TO THE INDEX. CLASS A SHARES S&P 500 INDEX [UP ARROW] [UP ARROW] 7.09% 13.87% OBJECTIVE Seeks to provide a relatively high total return through long-term capital appreciation and current income. TOTAL NET ASSETS $383.9 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) Class A 12.01 - ---------------------------------------------- Class B 11.68 - ---------------------------------------------- Class C 11.68 - ---------------------------------------------- Class G 11.57 - ---------------------------------------------- Class T 11.95 - ---------------------------------------------- Class Z 12.05 DISTRIBUTIONS DECLARED PER SHARE 10/01/03 - 09/30/04 ($) Class A 0.01 - ---------------------------------------------- Class B 0.00 - ---------------------------------------------- Class C 0.00 - ---------------------------------------------- Class G 0.00 - ---------------------------------------------- Class T 0.00* - ---------------------------------------------- Class Z 0.02 * Rounds to less than $0.01 per share. PORTFOLIO MANAGERS' REPORT _____________________________________________________ Columbia Large Cap Core Fund For the 12-month period ended September 30, 2004, class A shares of Columbia Large Cap Core Fund returned 7.09% without sales charge. It underperformed the S&P 500 Index, which returned 13.87%. It also trailed the average return of the Morningstar(R) Large Blend Category, which was 12.22% during the same period. 1 Smaller and lower quality companies led the market higher in 2003 and early 2004. The fund did not have meaningful exposure to these companies. Also, the fund's overweight in economically sensitive sectors like technology, penalized results when economic growth slowed during the second quarter of 2004. A TALE OF TWO INVESTMENT ENVIRONMENTS There were two distinct investment environments during the fiscal year. In the first half, the economy expanded at a robust pace, and investors favored stocks of smaller, lower quality companies. As a result, the fund underperformed significantly during this period as it was positioned in larger, higher quality companies. In the second half, most companies became guarded in their earnings forecasts as economic growth slowed. Investors became more cautious at the prospect of slower profit growth, as well as a host of external uncertainties, such as rising oil prices. In seeking to reduce risk, investors gravitated toward large, higher quality companies, with solid balance sheets and consistent earnings growth. While the fund performed better in this environment, it was not enough to offset the first half's underperformance. MOVED TOWARD NEUTRAL SECTOR WEIGHTS During the period, we positioned the portfolio such that stock selection would be the primary source of excess return by eliminating large sector under/over weights versus the S&P 500. This move should help maximize the impact of stock selection, which we believe represents the largest and most sustainable opportunity for long-term outperformance. For example, we took the fund from a small weight in telecommunications services and electric utilities to a market weight. We sought out companies with good business prospects that had suffered from low investor expectations. In the industrials sector, we added PACCAR, a truck manufacturer, and Masco, a producer of home improvement products. Both companies outperformed when they reported better-than-expected earnings. 1 (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 20 [Sidebar] SECTORS AS OF 09/30/04 (%) Consumer discretionary 10.2 - ---------------------------------------------- Consumer staples 8.9 - ---------------------------------------------- Energy 7.1 - ---------------------------------------------- Financials 19.9 - ---------------------------------------------- Health care 14.1 - ---------------------------------------------- Industrials 12.1 - ---------------------------------------------- Information technology 15.0 - ---------------------------------------------- Materials 3.9 - ---------------------------------------------- Telecommunication services 3.4 - ---------------------------------------------- Utilities 2.8 - ---------------------------------------------- Investment companies 2.6 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/04 (%) Microsoft Corp. 3.9 - ---------------------------------------------- Pfizer, Inc. 3.6 - ---------------------------------------------- Procter & Gamble CO. 3.0 - ---------------------------------------------- Exxon Mobil PLC 2.9 - ---------------------------------------------- Pepsico, Inc. 2.7 - ---------------------------------------------- ConocoPhillips 2.6 - ---------------------------------------------- Lexmark International, Inc. 2.2 - ---------------------------------------------- Citigroup Corp. 1.9 - ---------------------------------------------- Wachovia Corp. 1.9 - ---------------------------------------------- United Technologies Corp. 1.9 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) PACCAR, Inc. 1.1 - ---------------------------------------------- Masco Corp. 1.0 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ Columbia Large Cap Core Fund DEFENSIVELY POSITIONED IN ENERGY During the period, we raised the fund's exposure to the energy sector so that it was in line with the index weight. Energy was the strongest performing sector for the year. However, the fund's energy holdings trailed the index because we focused on integrated oil companies, which did not benefit as much from the steep climb in the price of oil as exploration and production and oil service companies. We believe our energy holdings offer a cushion against future volatility in the sector because historically integrated oil companies have tended to lose less ground than other types of energy companies when oil prices decline. AN EMPHASIS ON QUALITY AND STOCK SELECTION We are optimistic that an expanding economy and relatively low interest rates are favorable factors for the stock market going forward. Because we do not expect any broad investment themes to emerge, we think stock selection will continue to be the most important factor in performance. We believe that the fund has invested in many attractive, high quality companies that have not reached peak earnings levels and that offer good relative value. We plan to continue to seek other such companies in the months ahead. Sean P. Wilson, CFA, has co-managed Columbia Large Cap Core Fund since October 2003 and has been with the advisor since June 2003. /s/ Sean P. Wilson Michael R. Pelosi, CFA, has co-managed the fund since October 2003 and has been with the advisor or its predecessors or affiliate organizations since 1986. /s/ Michael R. Pelosi An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. In addition, the fund's share price will likely be subject to more volatility than the overall stock market because it concentrates in technology stocks. 21 [Sidebar] PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($) SALES CHARGE WITHOUT WITH - ---------------------------------------------- Class A 41,214 38,849 - ---------------------------------------------- Class B 39,332 39,332 - ---------------------------------------------- Class C 39,377 39,377 - ---------------------------------------------- Class G 39,094 39,094 - ---------------------------------------------- Class T 40,737 38,401 - ---------------------------------------------- Class Z 42,328 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION ________________________________________________________ Columbia Small Cap Fund VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 [MOUNTAIN CHART] CLASS A CLASS A SHARES WITHOUT SHARES WITH S&P SMALL CAP RUSSELL 2000 SALES CHARGE SALES CHARGE 600 INDEX INDEX -------------- ------------ ------------- ------------ 10/1994 10,000.00 9,425.00 10,000.00 10,000.00 10,045.00 9,467.00 9,900.00 9,961.00 9,773.00 9,211.00 9,522.00 9,559.00 9,895.00 9,326.00 9,753.00 9,816.00 9,895.00 9,326.00 9,616.00 9,692.00 10,164.00 9,580.00 10,012.00 10,095.00 10,337.00 9,743.00 10,215.00 10,269.00 10,606.00 9,996.00 10,444.00 10,497.00 10,894.00 10,268.00 10,607.00 10,677.00 11,432.00 10,775.00 11,189.00 11,232.00 11,960.00 11,273.00 12,045.00 11,878.00 12,220.00 11,517.00 12,306.00 12,124.00 12,536.00 11,816.00 12,620.00 12,341.00 12,180.00 11,480.00 11,997.00 11,790.00 12,649.00 11,922.00 12,472.00 12,285.00 13,010.00 12,262.00 12,678.00 12,609.00 12,846.00 12,107.00 12,706.00 12,595.00 13,278.00 12,514.00 13,121.00 12,988.00 13,663.00 12,877.00 13,402.00 13,253.00 14,507.00 13,673.00 14,171.00 13,962.00 15,052.00 14,187.00 14,674.00 14,512.00 14,672.00 13,828.00 14,099.00 13,916.00 13,827.00 13,032.00 13,129.00 12,701.00 14,528.00 13,692.00 13,942.00 13,439.00 15,146.00 14,276.00 14,554.00 13,964.00 15,198.00 14,324.00 14,453.00 13,749.00 15,836.00 14,926.00 15,203.00 14,316.00 16,487.00 15,539.00 15,381.00 14,691.00 16,726.00 15,764.00 15,637.00 14,985.00 16,666.00 15,708.00 15,313.00 14,622.00 16,118.00 15,191.00 14,527.00 13,932.00 15,950.00 15,033.00 14,705.00 13,971.00 17,633.00 16,619.00 16,431.00 15,525.00 18,789.00 17,709.00 17,157.00 16,191.00 20,090.00 18,935.00 18,236.00 16,943.00 20,710.00 19,520.00 18,696.00 17,331.00 22,297.00 21,015.00 19,932.00 18,600.00 21,820.00 20,565.00 19,071.00 17,784.00 21,606.00 20,364.00 18,931.00 17,668.00 21,636.00 20,392.00 19,314.00 17,977.00 21,271.00 20,047.00 18,937.00 17,693.00 22,496.00 21,202.00 20,662.00 19,001.00 23,915.00 22,540.00 21,452.00 19,784.00 24,028.00 22,646.00 21,578.00 19,892.00 22,773.00 21,464.00 20,437.00 18,820.00 22,154.00 20,880.00 20,496.00 18,860.00 20,687.00 19,498.00 18,928.00 17,332.00 17,868.00 16,840.00 15,275.00 13,966.00 18,625.00 17,554.00 16,210.00 15,060.00 19,091.00 17,993.00 16,962.00 15,674.00 20,022.00 18,871.00 17,917.00 16,495.00 20,473.00 19,296.00 19,062.00 17,517.00 20,581.00 19,398.00 18,822.00 17,749.00 19,388.00 18,273.00 17,126.00 16,312.00 18,895.00 17,809.00 17,347.00 16,566.00 20,231.00 19,068.00 18,493.00 18,051.00 20,976.00 19,770.00 18,943.00 18,314.00 22,008.00 20,742.00 20,021.00 19,142.00 22,054.00 20,786.00 19,844.00 18,617.00 21,136.00 19,921.00 18,971.00 17,929.00 21,094.00 19,881.00 19,051.00 17,932.00 20,286.00 19,120.00 19,003.00 18,006.00 21,173.00 19,955.00 19,798.00 19,081.00 22,666.00 21,362.00 21,425.00 21,241.00 22,389.00 21,102.00 20,761.00 20,899.00 22,839.00 21,526.00 23,541.00 24,349.00 23,634.00 22,275.00 22,670.00 22,744.00 23,546.00 22,192.00 22,282.00 21,375.00 23,426.00 22,079.00 21,623.00 20,129.00 23,867.00 22,494.00 22,900.00 21,884.00 23,504.00 22,152.00 22,339.00 21,180.00 24,905.00 23,473.00 24,319.00 22,796.00 25,323.00 23,867.00 23,657.00 22,125.00 24,804.00 23,378.00 23,806.00 21,139.00 24,095.00 22,709.00 21,328.00 18,968.00 26,519.00 24,994.00 23,956.00 20,597.00 27,256.00 25,689.00 24,983.00 21,670.00 27,496.00 25,915.00 23,459.00 20,248.00 27,135.00 25,575.00 22,383.00 19,258.00 28,370.00 26,739.00 24,088.00 20,764.00 29,624.00 27,921.00 24,548.00 21,275.00 30,465.00 28,714.00 25,447.00 22,009.00 30,008.00 28,283.00 25,022.00 20,818.00 29,849.00 28,133.00 24,451.00 20,146.00 27,178.00 25,615.00 21,145.00 17,434.00 27,996.00 26,386.00 22,272.00 18,454.00 29,491.00 27,795.00 23,903.00 19,883.00 31,408.00 29,602.00 25,521.00 21,109.00 31,474.00 29,664.00 25,743.00 20,890.00 32,084.00 30,239.00 25,300.00 20,317.00 34,564.00 32,577.00 27,299.00 21,949.00 35,238.00 33,212.00 28,071.00 22,149.00 34,541.00 32,555.00 26,909.00 21,165.00 33,867.00 31,920.00 25,518.00 20,115.00 29,407.00 27,716.00 21,915.00 17,078.00 29,254.00 27,572.00 22,123.00 17,035.00 27,838.00 26,237.00 20,769.00 15,812.00 27,512.00 25,930.00 21,434.00 16,320.00 29,232.00 27,551.00 22,551.00 17,776.00 28,694.00 27,044.00 21,788.00 16,785.00 27,962.00 26,354.00 21,039.00 16,320.00 27,163.00 25,601.00 20,366.00 15,828.00 27,184.00 25,621.00 20,526.00 16,032.00 29,220.00 27,540.00 22,193.00 17,552.00 31,760.00 29,933.00 23,982.00 19,435.00 32,516.00 30,646.00 24,605.00 19,787.00 34,255.00 32,285.00 25,885.00 21,025.00 35,536.00 33,493.00 27,146.00 21,988.00 35,010.00 32,997.00 26,347.00 21,581.00 37,458.00 35,304.00 28,632.00 23,394.00 38,600.00 36,381.00 29,714.00 24,225.00 39,827.00 37,537.00 30,240.00 24,717.00 40,628.00 38,292.00 31,111.00 25,789.00 41,217.00 38,847.00 31,708.00 26,021.00 41,522.00 39,135.00 32,121.00 26,263.00 40,725.00 38,383.00 31,054.00 24,924.00 40,700.00 38,360.00 31,529.00 25,320.00 42,369.00 39,933.00 33,276.00 26,386.00 40,043.00 37,741.00 31,452.00 24,610.00 39,643.00 37,363.00 31,176.00 24,485.00 09/2004 41,214.00 38,849.00 32,815.00 25,633.00 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 2000 Index is an unmanaged index that tracks the performance of the 2,000 smallest of the 3,000 largest U.S. companies based on market capitalization. The Standard & Poor's (S&P) Small Cap 600 Index is an unmanaged index that tracks the performance of 600 domestic companies traded on the New York Stock Exchange, the American Stock Exchange and NASDAQ. The S&P Small Cap 600 Index is heavily weighted with the stocks of companies with small market capitalizations. Unlike mutual funds, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. AVERAGE ANNUAL TOTAL RETURN AS OF 09/30/04 (%) - ------------------------------------------------------------------------------------------------------------------------ SHARE CLASS A B C G T Z - ------------------------------------------------------------------------------------------------------------------------ INCEPTION 11/01/98 11/01/98 11/18/02 11/01/98 02/12/93 12/14/92 - ------------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------------ 1-Year 17.73 10.99 16.96 11.96 16.94 15.94 16.97 11.97 17.73 10.99 18.12 - ------------------------------------------------------------------------------------------------------------------------ 5-Year 14.33 12.98 13.43 13.18 13.45 13.45 13.32 12.95 14.19 12.85 14.69 - ------------------------------------------------------------------------------------------------------------------------ 10-Year 15.21 14.54 14.68 14.68 14.69 14.69 14.61 14.61 15.08 14.40 15.52 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE"RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. Prior to November 18, 2002, the fund was named Galaxy Small Cap Value Fund, and offered Retail A, Retail B, Trust, Prime A and Prime B share classes. On that day, the fund changed its name to Liberty Small Cap Fund and began offering class A, B, C, G, T and Z shares. The returns for class A and B shares include returns of Prime A shares and Retail A shares (for class A shares) and Prime B shares and Retail A shares (for class B shares) of the former Galaxy Small Cap Value fund for periods prior to the inception of class A and class B shares. Class C share performance information includes returns of Retail B shares and Retail A shares of the former Galaxy Small Cap Value fund for periods prior to the inception of class C shares. The returns for class G and T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Small Cap Value Fund for periods prior to the date of this prospectus. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect the sales charges applicable to class G shares) for periods prior to the inception of Retail B shares of the Galaxy Small Cap Value Fund (November 1, 1998). Retail A shares were initially offered on February 12, 1993. Class G shares generally would have had substantially similar returns because they would have been invested in the same portfolio of securities, although the returns would be lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include the returns of Trust shares of the Galaxy Small Cap Value Fund (the "Galaxy Fund"), for periods prior to the date of this prospectus, and returns of Trust shares of the Small Cap portfolio of The Shawmut Funds (the "Shawmut Fund"), the predecessor to the Galaxy Small Cap Value Fund, for periods prior to December 4, 1995. Total returns are not restated to reflect any expense differential (e.g. Rule 12b-1 fees) between any of the share classes. Had the expense differential been reflected, the returns for the periods prior to the inception of class A, B and C shares would have been lower. 22 [Sidebar] 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 THE 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 UNDERSTANDING YOUR EXPENSES ____________________________________________________ Columbia Small Cap 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 - ------------------------------------------------------------------------------------------------------------------------ ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------------ ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 992.80 1,019.10 5.88 5.96 1.18 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 989.65 1,015.35 9.60 9.72 1.93 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 989.90 1,015.35 9.60 9.72 1.93 - ------------------------------------------------------------------------------------------------------------------------ Class G 1,000.00 1,000.00 990.35 1,015.60 9.35 9.47 1.88 - ------------------------------------------------------------------------------------------------------------------------ Class T 1,000.00 1,000.00 993.10 1,018.85 6.13 6.21 1.23 - ------------------------------------------------------------------------------------------------------------------------ Class Z 1,000.00 1,000.00 994.30 1,020.35 4.64 4.70 0.93 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 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. 23 [Sidebar] SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES RETURNED 17.73% WITHOUT SALES CHARGE. o A STRONG MARKET ENVIRONMENT HELPED THE FUND, ITS BENCHMARKS AND PEER GROUP ACHIEVE DOUBLE DIGIT RETURNS FOR THE PERIOD. o AN EMPHASIS ON ENERGY DURING A PERIOD OF RISING COMMODITY PRICES AND FAVORABLE STOCK SELECTION IN HEALTH CARE BOOSTED THE FUND'S RETURN. HOWEVER, IT UNDERPERFORMED THE RUSSELL 2000 INDEX, THE S&P SMALL CAP 600 INDEX AND THE MORNINGSTAR(R) SMALL BLEND CATEGORY, PRIMARILY BECAUSE OF ITS SIZABLE CASH POSITION EARLY IN THE PERIOD. S&P CLASS A RUSSELL 2000 SMALL CAP SHARES INDEX 600 INDEX [UP ARROW] [UP ARROW] [UP ARROW] 17.73% 18.77% 24.56% OBJECTIVE Seeks long-term capital appreciation. TOTAL NET ASSETS $1,575.4 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) Class A 17.54 - ---------------------------------------------- Class B 16.89 - ---------------------------------------------- Class C 16.91 - ---------------------------------------------- Class G 16.75 - ---------------------------------------------- Class T 17.40 - ---------------------------------------------- Class Z 17.73 DISTRIBUTIONS DECLARED PER SHARE 10/01/03 - 09/30/04 ($) Class A 0.44 - ---------------------------------------------- Class B 0.34 - ---------------------------------------------- Class C 0.34 - ---------------------------------------------- Class G 0.34 - ---------------------------------------------- Class T 0.42 - ---------------------------------------------- Class Z 0.49 PORTFOLIO MANAGER'S REPORT _____________________________________________________ Columbia Small Cap Fund For the 12-month period ended September 30, 2004, Columbia Small Cap Fund class A shares returned 17.73% without sales charge. That was less than the fund's benchmarks, the Russell 2000 Index and the S&P Small Cap 600 Index, which returned 18.77% and 24.56%, respectively. The fund's return also fell short of the average return of its peer group, the Morningstar(R) Small Blend Category, which was 20.94%. 1 Energy and health care stocks were among the top contributors to the fund's return. However, we believe the fund lagged its benchmarks and peer group primarily because of its large cash position. After the fund was closed to new investors in March 2004, that performance gap began to close. Disappointing returns from consumer-related investments and low exposure to financial stocks also hampered the fund's competitive performance. ROBUST RETURNS FROM ENERGY, STEEL Limited global oil and natural gas supplies combined with increasing demand from China and India to raise oil prices to record levels during the period. Above-index exposure and good stock selection helped the fund make the most of its energy holdings. Four of the fund's top ten performers were in this sector, including Southwestern Energy, Whiting Petroleum and Atwood Oceanics, a company that leases oil-drilling rigs. The fund also benefited by holding Steel Dynamics, a steel mini-mill. A BOOST FROM HEALTH CARE Health care stocks also helped the fund's return. In health care, the fund's top performer was Immucor, a company that sells blood-testing equipment and chemicals to hospitals and labs. The fund held Res-Care, a company that runs group homes for developmentally disabled people. Its earnings and cash flow improved during the year and we believe Res-Care still continues to have strong growth potential. EXCESS CASH HAMPERED THE FUND'S RETURN The bulk of the fund's relative underperformance was the result of its large cash position in the first half of the period. Cash accumulated as new money poured into the fund and as we trimmed holdings that had appreciated. On March 1, the fund's trustees voted to limit inflows by closing the fund to new investors. This was an effective strategy, and competitive performance improved in the second half of the year. 1 (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 24 [Sidebar] SECTORS AS OF 09/30/04 (%) Consumer discretionary 22.1 - ---------------------------------------------- Consumer staples 2.5 - ---------------------------------------------- Energy 5.5 - ---------------------------------------------- Financials 9.7 - ---------------------------------------------- Health care 14.2 - ---------------------------------------------- Industrials 17.9 - ---------------------------------------------- Information technology 13.9 - ---------------------------------------------- Materials 7.9 - ---------------------------------------------- Telecommunication services 0.6 - ---------------------------------------------- Utilities 3.0 - ---------------------------------------------- Investment companies 2.7 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/04 (%) iShares Russell 2000 Index 2.2 - ---------------------------------------------- Benchmark Electronics, Inc. 1.6 - ---------------------------------------------- Invacare Corp. 1.4 - ---------------------------------------------- Albany International Corp. 1.1 - ---------------------------------------------- Greif, Inc. 1.0 - ---------------------------------------------- Chicago Bridge & Iron Co. NV NY 0.9 - ---------------------------------------------- MacDermid, Inc. 0.9 - ---------------------------------------------- Unifirst Corp. 0.9 - ---------------------------------------------- West Pharmaceutical Services, Inc. 0.8 - ---------------------------------------------- Armor Holdings, Inc. 0.8 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) Southwestern Energy Co. 0.8 - ---------------------------------------------- Whiting Petroleum Corp. 0.6 - ---------------------------------------------- Atwood Oceanics, Inc. 0.4 - ---------------------------------------------- Steel Dynamics, Inc. 0.2 - ---------------------------------------------- Immucor, Inc. 0.3 - ---------------------------------------------- Res-care, Inc. 0.7 - ---------------------------------------------- The Buckle, Inc. 0.6 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ Columbia Small Cap Fund MIXED RESULTS FROM FINANCIALS AND RETAIL The fund's relatively low exposure to financial stocks also detracted from its return. We avoided financial stocks, particularly small banks, that were expensively priced on a valuation basis. Although that hurt the fund's return when the financial sector rallied during the year, we believe that our strategy is appropriate and that it has the potential to benefit performance going forward. The fund's retail positions also hurt performance during the period. Investments in American Eagle Outfitters and The Buckle, both youth-oriented retailers, were strong performers. American Eagle's share price more than doubled during the period and The Buckle shares gained more than 40 percent. We sold American Eagle's shares for a profit. However, these gains were not enough to offset disappointments from positions that we added to the portfolio in an effort to broaden the fund's retail exposure. Looking back, our timing was less than ideal. The outlook for the sector weakened as rising energy prices took a bite out of consumer budgets. LOOKING AHEAD As value investors, we continue to seek attractively-priced stocks, which we tend to hold until we believe that they are fairly valued. However, with valuations generally high among small-cap stocks, we are also willing to tilt somewhat toward growth stocks that we believe are selling at reasonable prices. As a result, we plan to add selectively to our technology exposure, seeking overlooked small companies with strong cash positions, earnings growth prospects and reasonable valuations. We also believe that energy prices could continue to have a significant impact on certain segments of the market. We will monitor exposure to cyclical segments of the market with an eye to cutting back before they run out of steam. [Photo of Peter Larson] Peter Larson has managed Columbia Small Cap Fund since 1992 and has been with the advisor or its predecessors or affiliate organizations since 1963. /s/ Peter Larson An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. Investing in small-cap stocks may present special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. 25 [Sidebar] PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($) SALES CHARGE WITHOUT WITH - ---------------------------------------------- Class A 21,107 19,886 - ---------------------------------------------- Class B 19,880 19,880 - ---------------------------------------------- Class C 19,827 19,827 - ---------------------------------------------- Class G 19,840 19,840 - ---------------------------------------------- Class T 21,080 19,861 - ---------------------------------------------- Class Z 22,050 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION ________________________________________________________ Columbia Small Company Equity Fund VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 [MOUNTAIN CHART] CLASS A CLASS A SHARES WITHOUT SHARES WITH RUSSELL 2000 RUSSELL 2000 SALES CHARGE SALES CHARGE GROWTH INDEX INDEX -------------- ------------ ------------- ------------ 10/1994 10,000.00 9,425.00 10,000.00 10,000.00 10,249.00 9,660.00 10,108.00 9,961.00 9,917.00 9,347.00 9,699.00 9,559.00 10,259.00 9,669.00 9,928.00 9,816.00 9,947.00 9,375.00 9,727.00 9,692.00 10,352.00 9,757.00 10,175.00 10,095.00 10,883.00 10,257.00 10,473.00 10,269.00 11,212.00 10,567.00 10,632.00 10,497.00 11,313.00 10,662.00 10,771.00 10,677.00 12,283.00 11,577.00 11,513.00 11,232.00 13,389.00 12,619.00 12,410.00 11,878.00 13,499.00 12,722.00 12,563.00 12,124.00 14,114.00 13,303.00 12,821.00 12,341.00 13,734.00 12,945.00 12,191.00 11,790.00 14,232.00 13,413.00 12,728.00 12,285.00 14,239.00 13,420.00 13,011.00 12,609.00 13,931.00 13,130.00 12,903.00 12,595.00 14,860.00 14,006.00 13,491.00 12,988.00 15,577.00 14,681.00 13,758.00 13,253.00 17,366.00 16,368.00 14,815.00 13,962.00 18,049.00 17,011.00 15,575.00 14,512.00 16,838.00 15,870.00 14,562.00 13,916.00 15,482.00 14,592.00 12,784.00 12,701.00 16,428.00 15,484.00 13,730.00 13,439.00 17,495.00 16,489.00 14,438.00 13,964.00 17,026.00 16,047.00 13,815.00 13,749.00 17,077.00 16,095.00 14,199.00 14,316.00 17,205.00 16,216.00 14,476.00 14,691.00 17,864.00 16,837.00 14,838.00 14,985.00 16,111.00 15,185.00 13,942.00 14,622.00 15,104.00 14,236.00 12,958.00 13,932.00 14,630.00 13,789.00 12,807.00 13,971.00 17,177.00 16,190.00 14,732.00 15,525.00 18,117.00 17,075.00 15,232.00 16,191.00 19,095.00 17,997.00 16,012.00 16,943.00 19,666.00 18,535.00 16,492.00 17,331.00 21,253.00 20,031.00 17,808.00 18,600.00 20,276.00 19,110.00 16,738.00 17,784.00 19,442.00 18,324.00 16,339.00 17,668.00 19,644.00 18,515.00 16,349.00 17,977.00 19,173.00 18,070.00 16,132.00 17,693.00 20,774.00 19,579.00 17,556.00 19,001.00 21,663.00 20,417.00 18,292.00 19,784.00 21,388.00 20,158.00 18,403.00 19,892.00 19,884.00 18,741.00 17,065.00 18,820.00 19,632.00 18,503.00 17,239.00 18,860.00 17,877.00 16,849.00 15,800.00 17,332.00 13,458.00 12,684.00 12,153.00 13,966.00 14,916.00 14,059.00 13,386.00 15,060.00 14,949.00 14,090.00 14,084.00 15,674.00 15,948.00 15,031.00 15,177.00 16,495.00 17,495.00 16,489.00 16,551.00 17,517.00 17,682.00 16,665.00 17,296.00 17,749.00 15,159.00 14,287.00 15,713.00 16,312.00 14,840.00 13,987.00 16,272.00 16,566.00 15,202.00 14,328.00 17,709.00 18,051.00 15,707.00 14,804.00 17,738.00 18,314.00 16,990.00 16,014.00 18,672.00 19,142.00 16,727.00 15,765.00 18,095.00 18,617.00 16,431.00 15,486.00 17,419.00 17,929.00 16,870.00 15,900.00 17,755.00 17,932.00 17,177.00 16,189.00 18,209.00 18,006.00 19,996.00 18,846.00 20,134.00 19,081.00 24,307.00 22,909.00 23,684.00 21,241.00 24,088.00 22,703.00 23,464.00 20,899.00 29,835.00 28,120.00 28,924.00 24,349.00 29,749.00 28,038.00 25,884.00 22,744.00 25,899.00 24,410.00 23,269.00 21,375.00 24,387.00 22,984.00 21,231.00 20,129.00 27,196.00 25,632.00 23,974.00 21,884.00 24,498.00 23,090.00 21,919.00 21,180.00 26,813.00 25,271.00 24,225.00 22,796.00 25,781.00 24,299.00 23,021.00 22,125.00 23,860.00 22,488.00 21,152.00 21,139.00 21,009.00 19,801.00 17,311.00 18,968.00 22,977.00 21,656.00 18,370.00 20,597.00 24,342.00 22,943.00 19,856.00 21,670.00 22,595.00 21,295.00 17,134.00 20,248.00 21,216.00 19,996.00 15,577.00 19,258.00 22,540.00 21,244.00 17,483.00 20,764.00 23,176.00 21,843.00 17,889.00 21,275.00 24,024.00 22,643.00 18,377.00 22,009.00 23,282.00 21,943.00 16,810.00 20,818.00 22,288.00 21,006.00 15,759.00 20,146.00 18,514.00 17,450.00 13,215.00 17,434.00 19,799.00 18,661.00 14,487.00 18,454.00 21,322.00 20,096.00 15,696.00 19,883.00 22,951.00 21,631.00 16,674.00 21,109.00 21,957.00 20,694.00 16,081.00 20,890.00 20,315.00 19,146.00 15,040.00 20,317.00 21,930.00 20,669.00 16,347.00 21,949.00 21,083.00 19,871.00 15,994.00 22,149.00 19,561.00 18,436.00 15,059.00 21,165.00 18,037.00 17,000.00 13,782.00 20,115.00 15,030.00 14,166.00 11,663.00 17,078.00 15,057.00 14,192.00 11,658.00 17,035.00 14,342.00 13,517.00 10,816.00 15,812.00 14,871.00 14,016.00 11,363.00 16,320.00 16,248.00 15,314.00 12,489.00 17,776.00 15,202.00 14,328.00 11,627.00 16,785.00 14,460.00 13,629.00 11,311.00 16,320.00 14,050.00 13,242.00 11,009.00 15,828.00 14,447.00 13,616.00 11,175.00 16,032.00 15,440.00 14,552.00 12,233.00 17,552.00 17,187.00 16,199.00 13,611.00 19,435.00 17,598.00 16,586.00 13,874.00 19,787.00 18,485.00 17,422.00 14,923.00 21,025.00 19,360.00 18,246.00 15,724.00 21,988.00 18,670.00 17,597.00 15,326.00 21,581.00 20,618.00 19,432.00 16,651.00 23,394.00 21,094.00 19,881.00 17,193.00 24,225.00 21,623.00 20,380.00 17,271.00 24,717.00 22,538.00 21,242.00 18,177.00 25,789.00 22,750.00 21,442.00 18,150.00 26,021.00 23,121.00 21,791.00 18,235.00 26,263.00 22,140.00 20,867.00 17,320.00 24,924.00 22,220.00 20,942.00 17,665.00 25,320.00 22,722.00 21,416.00 18,253.00 26,386.00 20,525.00 19,345.00 16,614.00 24,610.00 19,969.00 18,821.00 16,257.00 24,485.00 09/2004 21,107.00 19,886.00 17,158.00 25,633.00 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 2000 Growth Index is an unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged index that tracks the performance of the 2,000 smallest of the 3,000 largest U.S. companies based on market capitalization. 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 09/30/04 (%) - ------------------------------------------------------------------------------------------------------------------------ SHARE CLASS A B C G T Z - ------------------------------------------------------------------------------------------------------------------------ INCEPTION 11/18/02 11/18/02 11/18/02 03/04/96 12/30/91 12/30/91 - ------------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------------ 1-Year 13.05 6.55 12.22 7.22 12.25 11.25 12.16 7.16 12.99 6.49 13.40 - ------------------------------------------------------------------------------------------------------------------------ 5-Year 4.58 3.35 3.75 3.41 3.69 3.69 3.71 3.19 4.56 3.32 4.98 - ------------------------------------------------------------------------------------------------------------------------ 10-Year 7.76 7.12 7.11 7.11 7.08 7.08 7.09 7.09 7.74 7.10 8.23 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE"RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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 A, class B, and class C are newer classes of shares. Their performance information includes returns of Retail A shares (for class A shares) and Retail B shares (for class B and class C shares) of the Galaxy Small Company Equity Fund for periods prior to November 18, 2002, the date on which class A, B, and C shares were initially offered by the Fund. The returns of class B and class C shares also include the returns of Retail A shares for periods prior to the inception of Retail B shares of the Galaxy Small Company Equity Small Company Equity Fund (March 4, 1996). Class B and class C shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would be lower to the extent that expenses for class B and class C shares exceed expenses paid by Retail A shares. The returns have not been restated to reflect any differences in expenses between the predecessor shares and the newer class of shares. If differences in expenses had been reflected, the returns shown for periods prior to the inception of the newer classes of shares would have been lower. The returns for class G and T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Small Company Equity Fund for periods prior to November 18, 2002, the date on which class T and class G shares were initially offered by the Fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect the sales charge applicable to class G shares) for periods prior to the inception of Retail B shares of the Galaxy Small Company Equity Fund (March 4, 1996). Retail A shares were initially offered on December 30, 1991. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include the returns of Trust shares of the Galaxy Small Company Equity Fund for periods prior to November 18, 2002, the date on which class Z shares were initially offered by the Fund. 26 [Sidebar] 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 THE 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 UNDERSTANDING YOUR EXPENSES ____________________________________________________ Columbia Small Company Equity 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 - ------------------------------------------------------------------------------------------------------------------------ ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------------ ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 917.05 1,018.30 6.42 6.76 1.34 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 913.75 1,014.55 10.00 10.53 2.09 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 915.10 1,014.55 10.01 10.53 2.09 - ------------------------------------------------------------------------------------------------------------------------ Class G 1,000.00 1,000.00 914.05 1,014.80 9.76 10.28 2.04 - ------------------------------------------------------------------------------------------------------------------------ Class T 1,000.00 1,000.00 915.90 1,018.05 6.66 7.01 1.39 - ------------------------------------------------------------------------------------------------------------------------ Class Z 1,000.00 1,000.00 916.90 1,019.55 5.22 5.50 1.09 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 Transfer Agent not waived 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. 27 [Sidebar] SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES RETURNED 13.05% WITHOUT SALES CHARGE. o THE FUND OUTPERFORMED THE RUSSELL 2000 GROWTH INDEX AND ITS PEER GROUP, THE MORNINGSTAR(R) SMALL COMPANY GROWTH CATEGORY. HOWEVER, IT TRAILED THE RUSSELL 2000 INDEX. o WE BELIEVE THAT SUPERIOR STOCK SELECTION HELPED THE FUND OUTPERFORM ITS GROWTH BENCHMARK AND PEER GROUP. THE FUND'S GROWTH BIAS ACCOUNTED FOR ITS SHORTFALL RELATIVE TO THE BROADER RUSSELL 2000 INDEX, WHICH INCLUDES BOTH GROWTH AND VALUE STOCKS. RUSSELL 2000 CLASS A GROWTH RUSSELL 2000 SHARES INDEX INDEX [UP ARROW] [UP ARROW] [UP ARROW] 13.05% 11.92% 18.77% OBJECTIVE Seeks capital appreciation. TOTAL NET ASSETS $380.4 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) Class A 15.94 - ---------------------------------------------- Class B 14.88 - ---------------------------------------------- Class C 14.84 - ---------------------------------------------- Class G 14.85 - ---------------------------------------------- Class T 15.92 - ---------------------------------------------- Class Z 16.84 PORTFOLIO MANAGERS' REPORT _____________________________________________________ Columbia Small Company Equity Fund For the 12-month period ended September 30, 2004, class A shares of Columbia Small Company Equity Fund returned 13.05% without sales charge. The fund outpaced the 11.92% return of its primary benchmark, the Russell 2000 Growth Index and beat the Morningstar(R) Small Growth Category average, which returned 11.36%. 1 Strong stock selection drove performance. However, the fund fell short of the 18.77% return of it secondary benchmark, the Russell 2000 Index, because the fund focuses on small-cap growth stocks, and value stocks led the market for the period. The Russell 2000 Index measures the performance of both small-cap growth and value stocks. STOCK PICKING FOCUSED ON QUALITY AND VALUATION Small-cap stocks held up well even as uncertainty over the economy, war in Iraq and the presidential election unsettled investors. In this environment, we emphasized small-cap companies that appeared to have healthy balance sheets, attractive business models and strong management teams. We also targeted companies that had track records of profitability operating in well-defined niches with strong growth prospects and attractive or reasonable stock valuations. Among the fund's best performers were Station Casinos and Jarden. Station benefited as business boomed, both at the casinos it operates for Las Vegas residents and through collaborations with Native American tribes on new projects. We sold our stake as the stock reached mid-cap size. Jarden, a diversified consumer products company, rallied as innovative marketing and smart acquisitions drove strong earnings growth. STRONG CONTRIBUTIONS FROM ENERGY, INDUSTRIALS, HEALTH CARE AND FINANCIALS Energy, industrials, health care and financials were the best performing sectors for the fund. Energy stocks posted sharp gains, driven by high commodity prices and concerns around supply. Maverick Tube, a company that makes metal tubing to transport gas and oil from offshore drilling sites, was one of the fund's top performers. Within industrials, we emphasized transportation stocks. Freight companies, such as EGL, did especially well amid favorable supply/demand dynamics. In health care, we favored biotechnology and specialty pharmaceutical companies, which helped performance. Salix Pharmaceuticals rallied sharply following FDA approval for its new gastro-intestinal drug. The fund's financial investments focused on banks that were well-positioned for rising interest rates. East West Bancorp, a West Coast bank with a niche serving the Chinese-American community, generated particularly strong returns. DISAPPOINTMENTS FROM TECHNOLOGY AND MEDIA Technology stocks declined as economic growth slowed during the summer months, traditionally a slow period for technology. Netopia, 1 (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 28 [Sidebar] SECTORS AS OF 09/30/04 (%) Consumer discretionary 16.5 - ---------------------------------------------- Consumer staples 0.4 - ---------------------------------------------- Energy 3.8 - ---------------------------------------------- Financials 10.9 - ---------------------------------------------- Health care 22.8 - ---------------------------------------------- Industrials 14.4 - ---------------------------------------------- Information technology 29.0 - ---------------------------------------------- Materials 2.2 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/04 (%) Jarden Corp. 1.5 - ---------------------------------------------- DRS Technologies, Inc. 1.3 - ---------------------------------------------- Silicon Image, Inc. 1.2 - ---------------------------------------------- Infinity Property & Casualty Corp. 1.2 - ---------------------------------------------- Cost Plus, Inc. 1.2 - ---------------------------------------------- Scientific Games Corp. 1.2 - ---------------------------------------------- Jefferies Group, Inc. 1.1 - ---------------------------------------------- Advisory Board Co. 1.1 - ---------------------------------------------- Gaylord Entertainment Co. 1.1 - ---------------------------------------------- EGL, Inc. 1.1 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) Jarden Corp. 1.5 - ---------------------------------------------- Maverick Tube Corp. 0.7 - ---------------------------------------------- EGL, Inc. 1.1 - ---------------------------------------------- Salix Pharmaceuticals Ltd. 0.9 - ---------------------------------------------- East West Bancorp, Inc. 1.0 - ---------------------------------------------- Netopia, Inc. 0.1 - ---------------------------------------------- Micromuse, Inc. 0.7 - ---------------------------------------------- Silicon Image, Inc. 1.2 - ---------------------------------------------- Artisan Components, Inc. 0.9 - ---------------------------------------------- Taro Pharmaceuticals Industries Ltd. 0.5 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ Columbia Small Company Equity Fund which makes smart modems for DSL, and Micromuse, which sells network management software, were among the biggest detractors as sales fell short of expectations. The fund's focus on semiconductor and semiconductor equipment stocks, however, yielded a few bright spots. Silicon Image climbed sharply after launching a new type of digital connectivity technology called HDMI, while Artisan Components, a semiconductor design company, rallied nicely following a generous buyout offer. Elsewhere, the fund lost ground from its emphasis on media stocks, which came under pressure because of weaker-than-expected advertising revenues. In addition, Taro Pharmaceuticals Industries and At Road tumbled after failing to meet investor expectations. Taro Pharmaceuticals Industries is a specialty pharmaceutical company, while At Road is a mobile resource management company that helps companies track the location of field workers. We sold At Road as prospects deteriorated, but held on to Taro, because we believe its earnings outlook is encouraging. CAUTIOUS OPTIMISM FOR COMING YEAR Although small-cap valuations have risen and investor risk tolerance has dropped, we remain optimistic about the prospects for small-cap growth stocks. We think their earnings outlooks remain better than those for large-cap stocks, especially if the economy continues to improve. In the midst of economic uncertainty and potential market volatility, we expect to maintain the fund's bias toward higher quality, small-cap growth stocks. Paul Berlinguet has managed Columbia Small Company Equity Fund since November 2003 and has been with the advisor since October 2003. /s/ Paul Berlinguet Steven Lilly has co-managed the fund since May 2004 and has been with the advisor or its predecessors or affiliate organizations since July 1995. /s/ Steven Lilly Thomas Lettenberger has co-managed the fund since May 2004 and has been with the advisor or its predecessors or affiliate organizations since August 2000. /s/ Thomas Lettenberger An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. Investing in small-cap stocks may present special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. 29 INVESTMENT PORTFOLIO ___________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - 64.9% CONSUMER DISCRETIONARY - 8.1% AUTO COMPONENTS - 0.3% Autoliv, Inc. 1,520 61,408 BorgWarner, Inc. 2,600 112,554 Continental AG 4,500 245,151 Denso Corp. 15,600 369,637 Gentex Corp. 2,100 73,773 Johnson Controls, Inc. 2,500 142,025 Lear Corp. 3,000 163,350 Modine Manufacturing Co. 1,200 36,132 Standard Motor Products, Inc. 2,600 39,286 Superior Industries International 1,800 53,910 Visteon Corp. 1 8 ------------- Auto Components Total 1,297,234 AUTOMOBILES - 0.4% Renault SA 9,232 757,245 Toyota Motor Corp. 20,300 779,198 ------------- Automobiles Total 1,536,443 DISTRIBUTORS - 0.0% Brightpoint, Inc. (a) 4,200 72,240 ------------- Distributors Total 72,240 HOTELS, RESTAURANTS & LEISURE - 1.4% Alliance Gaming Corp. (a) 4,300 64,758 Applebee's International, Inc. 2,450 61,936 Bally Total Fitness Holding Corp. (a) 4,600 16,744 Bob Evans Farms, Inc. 1,624 44,108 Brinker International, Inc. (a) 4,200 130,830 Buca, Inc. (a) 6,800 28,832 Carnival Corp. 24,300 1,149,147 Cheesecake Factory, Inc. (a) 1,450 62,930 Darden Restaurants, Inc. 2,300 53,636 Dave & Buster's, Inc. (a) 3,500 66,430 Four Seasons Hotels, Inc. 520 33,332 Gaylord Entertainment Co. (a) 4,000 124,000 Harrah's Entertainment, Inc. 8,782 465,270 Hilton Hotels Corp. 16,760 315,758 Intercontinental Hotels Group PLC 19,238 219,338 Landry's Restaurants, Inc. 2,500 68,225 Lone Star Steakhouse & Saloon 3,300 85,239 Marcus Corp. 3,500 68,145 Marriott International, Inc., Class A 26,230 1,362,911 McDonald's Corp. 16,450 461,094 OPAP SA 12,620 242,930 Pinnacle Entertainment, Inc. (a) 5,700 78,660 Scientific Games Corp., Class A (a) 10,900 208,190 Six Flags, Inc. (a) 12,800 69,632 Starwood Hotels & Resorts Worldwide, Inc. 2,970 137,867 Volume Services America Holdings, Inc. 3,200 47,040 Yum! Brands, Inc. 4,650 189,069 ------------- Hotels, Restaurants & Leisure Total 5,856,051 SHARES VALUE ($) ------- ------------- HOUSEHOLD DURABLES - 0.4% American Greetings Corp., Class A (a) 1,900 47,728 Centex Corp. 1,340 67,616 CSS Industries, Inc. 1,500 46,410 D.R. Horton, Inc. 2,340 77,477 Funai Electric Co., Ltd. 1,900 256,814 Harman International Industries, Inc. 400 43,100 Kimball International, Inc., Class B 3,300 45,804 Koninklijke (Royal) Philips Electronics NV (a) 16,590 381,263 Matsushita Electric Industrial Co., Ltd. 37,000 495,040 Newell Rubbermaid, Inc. 4,700 94,188 Pulte Homes, Inc. 500 30,685 Russ Berrie & Co., Inc. 1,100 22,165 ------------- Household Durables Total 1,608,290 INTERNET & CATALOG RETAIL - 0.3% eBay, Inc. (a) 12,000 1,103,280 ------------- Internet & Catalog Retail Total 1,103,280 LEISURE EQUIPMENT & PRODUCTS - 0.1% Action Performance Companies, Inc. 3,700 37,481 Fuji Photo Film Co., Ltd. 11,000 362,225 JAKKS Pacific, Inc. (a) 1,600 36,800 M&F Worldwide Corp. (a) 2,500 32,525 Marvel Enterprises, Inc. (a) 9,230 134,389 Mattel, Inc. 3,900 70,707 ------------- Leisure Equipment & Products Total 674,127 MEDIA - 1.7% 4Kids Entertainment, Inc. (a) 3,300 66,660 Arbitron, Inc. (a) 2,800 102,508 Clear Channel Communications, Inc. 17,254 537,807 Cumulus Media, Inc., Class A (a) 5,500 79,145 Dentsu, Inc. 78 209,298 Grupo Televisa SA, ADR 900 47,457 JC Decaux SA (a) 12,374 281,914 Journal Communications, Inc. 2,000 35,080 Knight-Ridder, Inc. 800 52,360 Lamar Advertising Co., Class A (a) 1,450 60,335 Liberty Corp. 1,400 55,636 Lin TV Corp., Class A (a) 5,800 112,984 McGraw-Hill Companies, Inc. 12,857 1,024,574 Media General, Inc., Class A 900 50,355 Mediacom Communications Corp., Class A (a) 5,800 37,874 New York Times Co., Class A 2,400 93,840 News Corp., Ltd. 29,600 243,458 Omnicom Group 8,600 628,316 Pearson PLC 35,520 380,433 Radio One, Inc., Class D (a) 5,900 83,957 Sinclair Broadcast Group, Inc., Class A 12,700 92,710 Time Warner, Inc. (a) 64,363 1,038,819 TiVo, Inc. (a) 9,000 59,580 Univision Communications, Inc., Class A (a) 3,570 112,848 Viacom, Inc., Class A 10,890 370,260 See Accompanying Notes to Financial Statements. 30 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) CONSUMER DISCRETIONARY - (CONTINUED) MEDIA - (CONTINUED) WPP Group PLC 25,000 233,425 XM Satellite Radio Holdings, Inc., Class A (a) 33,455 1,037,774 ------------- Media Total 7,129,407 MULTILINE RETAIL - 0.2% Federated Department Stores, Inc. 5,900 268,037 Fred's, Inc. 4,300 77,228 May Department Stores Co. 8,810 225,800 ShopKo Stores, Inc. (a) 2,200 38,302 Takashimaya Co., Ltd. 12,000 100,088 Wal-Mart de Mexico SA de CV, Series V 81,100 275,652 ------------- Multiline Retail Total 985,107 SPECIALTY RETAIL - 2.7% Aoyama Trading Co., Ltd. 3,900 88,878 Bed Bath & Beyond, Inc. (a) 29,065 1,078,602 Best Buy Co., Inc. 24,900 1,350,576 Boise Cascade Corp. 2,500 83,200 Bombay Co., Inc. (a) 12,100 88,693 Borders Group, Inc. 5,600 138,880 Building Material Holding Corp. 1,500 41,280 Chico's FAS, Inc. (a) 37,270 1,274,634 Compucom Systems, Inc. (a) 8,100 37,098 Cost Plus, Inc. (a) 3,700 130,906 GameStop Corp., Class A (a) 3,600 66,636 Goody's Family Clothing, Inc. 4,200 35,364 Home Depot, Inc. 27,915 1,094,268 Jarden Corp. (a) 4,800 175,152 Limited Brands 21,793 485,766 Lowe's Companies, Inc. 31,225 1,697,079 Monro Muffler, Inc. (a) 3,300 72,105 Movie Gallery, Inc. 1,100 19,283 Nitori Co., Ltd. 3,500 201,209 Office Depot, Inc. (a) 55,633 836,164 Pacific Sunwear of California, Inc. (a) 4,100 86,305 Party City Corp. (a) 3,700 54,649 PETCO Animal Supplies, Inc. (a) 4,900 160,034 PETsMART, Inc. 3,000 85,170 Pier 1 Imports, Inc. 2,400 43,392 Rent-Way, Inc. (a) 3,600 24,660 Ross Stores, Inc. 3,400 79,696 Sharper Image Corp. (a) 4,600 98,670 Staples, Inc. 53,940 1,608,491 TBC Corp. (a) 900 20,106 TJX Companies, Inc. 8,800 193,952 Urban Outfitters, Inc. (a) 1,700 58,480 ------------- Specialty Retail Total 11,509,378 TEXTILES, APPAREL & LUXURY GOODS - 0.6% Burberry Group PLC 56,100 379,216 Carter's, Inc. (a) 3,000 83,070 Coach, Inc. (a) 24,780 1,051,168 Culp, Inc. (a) 400 2,940 SHARES VALUE ($) ------- ------------- Delta Apparel, Inc. 1,000 23,800 Hampshire Group Ltd. (a) 1,700 53,652 Kellwood Co. 2,200 80,190 NIKE, Inc., Class B 9,300 732,840 Russell Corp. 2,500 42,100 Stride Rite Corp. 3,000 30,750 Tandy Brands Accessories, Inc. 1,600 22,800 Wolverine World Wide, Inc. 2,900 73,080 ------------- Textiles, Apparel & Luxury Goods Total 2,575,606 ------------- CONSUMER DISCRETIONARY TOTAL 34,347,163 CONSUMER STAPLES - 5.8% BEVERAGES - 1.0% Diageo PLC 39,400 493,057 Pepsi Bottling Group, Inc. 4,300 116,745 PepsiCo, Inc. 64,292 3,127,806 SABMiller PLC 19,840 262,486 ------------- Beverages Total 4,000,094 FOOD & STAPLES RETAILING - 0.9% Aeon Co., Ltd., 6,300 102,086 Aeon Co., Ltd., New Shares 6,300 100,635 BJ's Wholesale Club, Inc. (a) 1,300 35,542 Costco Wholesale Corp. 60,051 2,495,719 Metro AG 8,293 370,887 Performance Food Group Co. (a) 1,800 42,660 Sysco Corp. 24,130 721,970 Whole Foods Market, Inc. 1,000 85,790 Winn-Dixie Stores, Inc. 3,400 10,506 ------------- Food & Staples Retailing Total 3,965,795 FOOD PRODUCTS - 1.3% Ajinomoto Co., Inc. 21,000 240,683 Bunge Ltd. 9,500 379,810 Central Garden and Pet Co. (a) 600 18,372 ConAgra Foods, Inc. 34,037 875,091 Corn Products International, Inc. 2,500 115,250 Dean Foods Co. (a) 11,800 354,236 Hershey Foods Corp. 14,640 683,834 Hormel Foods Corp. 2,100 56,238 John B. Sanfilippo & Son, Inc. (a) 800 20,960 Kraft Foods, Inc., Class A 36,207 1,148,486 Nestle SA, Registered Shares 3,966 910,793 Omega Protein Corp. (a) 3,400 26,180 Unilever PLC 81,110 661,548 ------------- Food Products Total 5,491,481 HOUSEHOLD PRODUCTS - 1.5% Clorox Co. 21,075 1,123,297 Kao Corp. 20,000 442,978 Kimberly-Clark Corp. 19,090 1,233,023 Procter & Gamble Co. 53,572 2,899,317 Reckitt Benckiser PLC 25,583 627,919 ------------- Household Products Total 6,326,534 See Accompanying Notes to Financial Statements. 31 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) CONSUMER STAPLES - (CONTINUED) PERSONAL PRODUCTS - 0.6% Alberto-Culver Co., Class B 26,255 1,141,567 Avon Products, Inc. 27,600 1,205,568 ------------- Personal Products Total 2,347,135 TOBACCO - 0.5% Altria Group, Inc. 38,219 1,797,822 Imperial Tobacco Group PLC 22,997 502,314 ------------- Tobacco Total 2,300,136 ------------- CONSUMER STAPLES TOTAL 24,431,175 ENERGY - 5.3% ENERGY EQUIPMENT & SERVICES - 0.8% Baker Hughes, Inc. 2,970 129,849 BJ Services Co. 4,440 232,700 Cooper Cameron Corp. (a) 700 38,388 Halliburton Co. 29,831 1,005,006 Key Energy Services, Inc. (a) 7,100 78,455 Lufkin Industries, Inc. 1,900 70,718 Maverick Tube Corp. (a) 2,500 77,025 Nabors Industries Ltd. (a) 1,210 57,294 National-Oilwell, Inc. (a) 18,560 609,882 Noble Corp. (a) 2,300 103,385 Patterson-UTI Energy, Inc. 5,630 107,364 Saipem S.p.A. 11,700 131,701 Smith International, Inc. (a) 6,000 364,380 Transocean, Inc. (a) 2,800 100,184 Unit Corp. (a) 3,200 112,256 Universal Compression Holdings, Inc. (a) 1,800 61,326 Weatherford International Ltd. (a) 1,900 96,938 Willbros Group, Inc. (a) 5,200 77,532 ------------- Energy Equipment & Services Total 3,454,383 OIL & GAS - 4.5% Amerada Hess Corp. 2,500 222,500 Apache Corp. 1,194 59,831 BG Group PLC 38,152 256,674 BP PLC, ADR 62,501 3,595,683 Carrizo Oil & Gas, Inc. (a) 5,300 50,721 ChevronTexaco Corp. 9,568 513,228 Cimarex Energy Co. (a) 1,700 59,398 ConocoPhillips 32,607 2,701,490 Edge Petroleum Corp. (a) 2,300 36,731 EnCana Corp. 16,400 758,964 Energy Partners Ltd. (a) 4,200 68,376 ENI S.p.A. 58,813 1,319,225 EOG Resources, Inc. 8,560 563,676 Exxon Mobil Corp. 69,277 3,348,157 Fortum Oyj 17,400 243,397 Harvest Natural Resources, Inc. (a) 4,200 69,720 Magnum Hunter Resources, Inc (a) 4,900 56,546 Marathon Oil Corp. 33,398 1,378,669 Mission Resources Corp. (a) 8,200 51,578 SHARES VALUE ($) ------- ------------- Murphy Oil Corp. 400 34,708 Norsk Hydro ASA 3,800 277,218 PTT Public Co., Ltd. 113,300 462,281 Range Resources Corp. 3,100 54,219 Royal Dutch Petroleum Co., N.Y. Registered Shares 20,509 1,058,264 Shell Transport & Trading Co., PLC 51,400 378,069 Stone Energy Corp. (a) 1,700 74,392 Total SA 3,640 742,949 Ultra Petroleum Corp. (a) 300 14,715 Western Gas Resources, Inc. 4,600 131,514 Whiting Petroleum Corp. (a) 1,300 39,520 XTO Energy, Inc. 15,020 487,850 ------------- Oil & Gas Total 19,110,263 ------------- ENERGY TOTAL 22,564,646 FINANCIALS - 13.7% CAPITAL MARKETS - 1.4% Bank of New York Co., Inc. 38,797 1,131,708 Bear Stearns Companies, Inc. 1,400 134,638 Deutsche Bank AG, Registered Shares 3,583 258,108 E*TRADE Financial Corp. (a) 6,010 68,634 Goldman Sachs Group, Inc. 15,590 1,453,612 Janus Capital Group, Inc. 11,200 152,432 Jefferies Group, Inc. 3,600 124,092 LaBranche & Co., Inc. (a) 2,700 22,815 Lehman Brothers Holdings, Inc. 1,600 127,552 Merrill Lynch & Co., Inc. 18,000 894,960 Morgan Stanley 15,944 786,039 State Street Corp. 13,609 581,240 ------------- Capital Markets Total 5,735,830 COMMERCIAL BANKS - 4.2% Anglo Irish Bank Corp., PLC 15,700 288,070 Bancfirst Corp. 200 12,824 Banco Popolare di Verona E Novara 22,900 402,147 Banco Popular Espanol SA 5,470 304,433 Bancorpsouth, Inc. 2,300 52,877 BancTrust Financial Group, Inc. 2,300 43,240 Bank of Granite Corp. 2,200 42,702 Bank of Ireland 25,424 342,899 Banknorth Group, Inc. 4,200 147,000 Barclays PLC 102,120 981,997 BNP Paribas 10,019 648,794 Boston Private Financial Holdings, Inc. 3,500 87,360 Bryn Mawr Bank Corp. 2,700 54,216 Capitol Bancorp Ltd. 2,400 70,416 Chemical Financial Corp. 2,145 78,335 Chittenden Corp. 3,125 85,156 City National Corp. 2,100 136,395 Columbia Banking System, Inc. 1,800 42,822 Community Trust Bancorp, Inc. 1,270 39,472 Corus Bankshares, Inc. 2,000 86,260 Credit Agricole SA 10,640 290,926 Cullen/Frost Bankers, Inc. 1,400 65,058 Danske Bank A/S 11,000 289,446 DNB NOR ASA 32,000 253,681 See Accompanying Notes to Financial Statements. 32 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) COMMERCIAL BANKS - (CONTINUED) East-West Bancorp, Inc. 3,400 114,206 Erste Bank der oesterreichischen Sparkassen AG 6,534 272,371 First Citizens BancShares, Inc., Class A 300 35,400 First Financial Bankshares Inc. 1,150 46,184 Greater Bay Bancorp 1,800 51,750 Hancock Holding Co. 1,000 31,790 Hansabank Ltd. 31,965 289,650 HBOS PLC 19,860 268,786 ITLA Capital Corp. (a) 1,100 50,820 Kookmin Bank, ADR (a) 10,300 327,952 Lloyds TSB Group PLC 33,110 259,181 MASSBANK Corp. 700 25,998 Mercantile Bank Corp. 2,945 102,604 Merchants Bancshares, Inc. 1,800 51,750 Mid-State Bancshares 3,200 82,336 Mitsubishi Tokyo Financial Group, Inc. 44 367,527 Mizuho Financial Group, Inc. 68 256,051 National Bank of Greece SA 11,505 279,782 National City Corp. 23,970 925,721 North Fork Bancorporation, Inc. 13,360 593,852 Northrim BanCorp, Inc. 1,600 34,960 Prosperity Bancshares, Inc. 4,100 109,552 Riggs National Corp. 1,900 42,180 Royal Bank of Scotland Group PLC 27,887 807,398 S.Y. Bancorp, Inc. 400 9,028 Skandinaviska Enskilda Banken AB, Class A 38,200 590,612 Sterling Bancshares, Inc. 5,500 73,975 Sumitomo Mitsui Financial Group, Inc. 41 234,933 TCF Financial Corp. 3,120 94,505 Trico Bancshares 4,400 92,048 UCBH Holdings, Inc. 1,560 60,949 UMB Financial Corp. 1,600 76,272 UnionBanCal Corp. 500 29,605 US Bancorp 73,435 2,122,272 Wachovia Corp. 24,349 1,143,186 Wells Fargo & Co. 49,992 2,981,023 Whitney Holding Corp. 1,500 63,000 Wintrust Financial Corp. 1,000 57,280 Zions Bancorporation 1,000 61,040 ------------- Commercial Banks Total 17,964,055 CONSUMER FINANCE - 0.6% American Express Co. 23,000 1,183,580 Cash America International, Inc. 4,100 100,286 MBNA Corp. 42,688 1,075,738 ------------- Consumer Finance Total 2,359,604 DIVERSIFIED FINANCIAL SERVICES - 2.0% ACE Cash Express, Inc. (a) 3,200 83,328 Citigroup, Inc. 102,080 4,503,770 Commercial Capital Bancorp, Inc. 4,200 95,298 Credit Saison Co., Ltd. 4,100 126,423 SHARES VALUE ($) ------- ------------- Greenhill & Co., Inc. 3,600 84,960 ING Groep NV 32,420 818,995 JPMorgan Chase & Co. 63,873 2,537,674 Metris Companies, Inc. (a) 6,600 64,548 MFC Bancorp Ltd. (a) 5,400 99,036 MTC Technologies, Inc. (a) 4,000 110,520 National Financial Partners Corp. 1,900 67,982 QC Holdings, Inc. (a) 1,600 25,488 ------------- Diversified Financial Services Total 8,618,022 INSURANCE - 3.3% Aegon NV 11,591 125,377 Aflac, Inc. 13,798 541,020 Allianz AG, Registered Shares 3,854 388,979 Ambac Financial Group, Inc. 14,274 1,141,206 American International Group, Inc. 40,673 2,765,357 AmerUs Group Co. 900 36,900 Axa 12,400 251,660 Baldwin & Lyons, Inc., Class B 300 7,572 Chubb Corp. 13,455 945,617 Cincinnati Financial Corp. 1,365 56,265 CNA Surety Corp. (a) 3,500 37,100 Commerce Group, Inc. 1,100 53,240 Delphi Financial Group, Inc., Class A 1,950 78,332 Harleysville Group, Inc. 2,700 55,782 Hartford Financial Services Group, Inc. 11,841 733,313 Horace Mann Educators Corp. 2,700 47,466 Infinity Property & Casualty Corp. 4,400 129,932 Irish Life & Permanent PLC 19,200 310,273 Kansas City Life Insurance Co. 200 8,514 Lincoln National Corp. 24,476 1,150,372 Loews Corp. 1,300 76,050 Marsh & McLennan Companies, Inc. 10,523 481,532 Millea Holdings, Inc. 32 413,318 Mitsui Sumitomo Insurance Co., Ltd. 39,000 322,435 Nationwide Financial Services, Inc., Class A 2,100 73,731 Navigators Group, Inc. (a) 1,200 35,088 Old Republic International Corp. 1,050 26,282 Philadelphia Consolidated Holding Co. (a) 2,100 115,752 Phoenix Companies, Inc. 5,500 57,310 ProCentury Corp. 4,200 41,790 Progressive Corp. 3,300 279,675 Quanta Capital Holdings Ltd. (a) 4,600 37,490 RenaissanceRe Holdings Ltd. 17,600 907,808 Riunione Adriatica di Sicurta S.p.A 9,043 174,065 RLI Corp. 1,600 60,080 St. Paul Travelers Companies, Inc. 1,900 62,814 T&D Holdings, Inc. (a) 5,500 241,753 UICI 900 29,466 United National Group Ltd., Class A (a) 2,700 39,204 Universal American Financial Corp. (a) 2,300 29,739 Willis Group Holdings Ltd. 20,758 776,349 XL Capital Ltd., Class A 12,885 953,361 ------------- Insurance Total 14,099,369 See Accompanying Notes to Financial Statements. 33 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) REAL ESTATE - 1.6% Alexandria Real Estate Equities, Inc., REIT 3,960 260,251 American Financial Realty Trust, REIT 2,800 39,508 Archstone-Smith Trust, REIT 19,096 604,197 AvalonBay Communities, Inc. 7,150 430,573 BioMed Realty Trust, Inc. 4,000 70,360 Boston Properties, Inc., REIT 1,120 62,037 Boykin Lodging Co., REIT (a) 4,500 37,845 Brandywine Realty Trust 1,800 51,264 Brookfield Properties Co., REIT 1,930 62,262 CenterPoint Properties Trust, REIT 2,200 95,876 Corporate Office Properties Trust 1,800 46,116 Cousins Properties, Inc., REIT 5,800 198,998 Duke Realty Corp., REIT 3,250 107,900 Eastgroup Properties, Inc., REIT 2,100 69,720 Equity Office Properties Trust, REIT 4,220 114,995 Equity One, Inc., REIT 2,600 51,012 Equity Residential, REIT 5,970 185,070 Essex Property Trust, Inc., REIT 430 30,895 First Potomac Realty Trust, REIT 2,500 51,650 General Growth Properties, Inc., REIT 5,420 168,020 Getty Realty Corp., REIT 1,800 47,196 Gladstone Commercial Corp., REIT 2,100 34,041 Host Marriott Corp. (a) 17,800 249,734 iStar Financial, Inc., REIT 5,290 218,107 Kimco Realty Corp., REIT 13,123 673,210 La Quinta Corp., REIT (a) 8,810 68,718 Liberty Property Trust, REIT 2,140 85,258 Mid-America Apartment Communities, Inc., REIT 2,100 81,795 Mitsubishi Estate Co., Ltd. 19,000 198,733 Nationwide Health Properties, Inc., REIT 3,400 70,550 Newcastle Investment Corp., REIT 2,870 88,109 Pan Pacific Retail Properties, Inc., REIT 1,450 78,445 ProLogis, REIT 4,580 161,399 PS Business Parks, Inc., REIT 2,500 99,625 Public Storage, Inc., REIT 2,770 137,254 Regency Centers Corp., REIT 3,070 142,724 Simon Property Group, Inc., REIT 3,690 197,895 SL Green Realty Corp., REIT 1,200 62,172 St. Joe Co. 3,560 170,061 Sumitomo Realty & Development Co., Ltd. 10,000 106,697 Sun Hung Kai Properties Ltd. 61,000 574,535 Swire Pacific Ltd., Class A 17,000 118,143 Tanger Factory Outlet Centers, Inc., REIT 1,200 53,736 United Dominion Realty Trust, Inc., REIT 2,400 47,592 Universal Health Realty Income Trust, REIT 1,100 33,330 SHARES VALUE ($) ------- ------------- Urstadt Biddle Properties, Inc., Class A, REIT 2,600 39,624 Vornado Realty Trust, REIT 2,637 165,287 ------------- Real Estate Total 6,742,519 THRIFTS & MORTGAGE FINANCE - 0.6% Countrywide Financial Corp. 16,884 665,061 Freddie Mac 14,032 915,447 Golden West Financial Corp. 2,900 321,755 Greenpoint Financial Corp. 3,650 168,849 PMI Group, Inc. 4,100 166,378 Radian Group, Inc. 3,000 138,690 Sovereign Bancorp, Inc. 8,400 183,288 Webster Financial Corp. 2,700 133,353 ------------- Thrifts & Mortgage Finance Total 2,692,821 ------------- FINANCIALS TOTAL 58,212,220 HEALTH CARE - 8.8% BIOTECHNOLOGY - 0.8% Amgen, Inc. (a) 12,830 727,204 Amylin Pharmaceuticals, Inc. (a) 4,724 96,937 Biogen Idec, Inc. (a) 7,600 464,892 BioMarin Pharmaceuticals, Inc. (a) 9,500 49,305 Cell Therapeutics, Inc. (a) 10,100 69,286 Cytogen Corp. (a) 4,600 48,484 Exact Sciences Corp. (a) 6,800 22,440 Gen-Probe, Inc. (a) 2,330 92,897 Genentech, Inc. (a) 23,000 1,205,660 Genzyme Corp. (a) 2,330 126,775 ImClone Systems, Inc. (a) 500 26,425 Martek Biosciences Corp. (a) 1,450 70,528 Neopharm, Inc. (a) 9,410 80,550 Neurocrine Biosciences, Inc. (a) 2,100 99,036 Protein Design Labs, Inc. (a) 4,500 88,110 Telik, Inc. (a) 4,600 102,580 ------------- Biotechnology Total 3,371,109 HEALTH CARE EQUIPMENT & SUPPLIES - 2.6% Alcon, Inc. 11,860 951,172 Beckman Coulter, Inc. 1,150 64,538 Bio-Rad Laboratories, Inc., Class A (a) 2,200 112,420 Biomet, Inc. 5,160 241,901 Boston Scientific Corp. (a) 24,730 982,523 Cardiac Science, Inc. (a) 17,300 33,216 Conceptus, Inc. (a) 6,500 60,255 Cytyc Corp. (a) 2,600 62,790 Fisher Scientific International, Inc. (a) 2,850 166,240 Integra LifeSciences Holdings Corp. (a) 3,300 105,963 Kinetic Concepts, Inc. (a) 12,490 656,350 LCA-Vision, Inc. 3,700 95,423 Medical Action Industries, Inc. (a) 7,100 118,059 Millipore Corp. (a) 2,400 114,840 Nobel Biocare Holding AG 1,222 189,999 Palomar Medical Technologies, Inc. (a) 2,100 46,032 Smith & Nephew PLC 73,280 675,439 Sola International, Inc. (a) 1,600 30,480 See Accompanying Notes to Financial Statements. 34 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) HEALTH CARE EQUIPMENT & SUPPLIES - (CONTINUED) SonoSite, Inc. (a) 4,400 114,620 St. Jude Medical, Inc. (a) 17,560 1,321,741 SurModics, Inc. (a) 3,000 71,250 Synthes, Inc. (a) 1,200 131,024 Thermo Electron Corp. (a) 35,340 954,887 Varian Medical Systems, Inc. (a) 45,290 1,565,675 Varian, Inc. (a) 2,500 94,675 Zimmer Holdings, Inc. (a) 23,000 1,817,920 ------------- Health Care Equipment & Supplies Total 10,779,432 HEALTH CARE PROVIDERS & SERVICES - 1.4% Accredo Health, Inc. (a) 2,540 59,868 Advisory Board Co. (a) 3,700 124,320 Aetna, Inc. 21,093 2,107,823 America Service Group, Inc. (a) 2,159 88,605 Anthem, Inc. (a) 12,000 1,047,000 Capital Senior Living Corp. (a) 1,300 6,240 Caremark Rx, Inc. (a) 33,610 1,077,873 Chronimed, Inc. (a) 3,500 21,070 Community Health Systems, Inc. (a) 2,330 62,164 Cross Country Healthcare, Inc. (a) 2,500 38,750 DaVita, Inc. (a) 5,840 181,916 First Health Group Corp. (a) 6,600 106,194 Genesis HealthCare Corp. (a) 1,350 41,054 Gentiva Health Services, Inc. (a) 2,600 42,562 HCA, Inc. 2,600 99,190 Hooper Holmes, Inc. 9,000 40,320 Isolagen, Inc. (a) 6,800 64,260 Kindred Healthcare, Inc. (a) 3,000 73,200 LifePoint Hospitals, Inc. (a) 2,500 75,025 McKesson Corp. 4,680 120,042 OCA, Inc. (a) 5,200 24,648 Parexel International Corp. (a) 3,700 72,520 Pediatrix Medical Group, Inc. (a) 1,200 65,820 Province Healthcare Co. (a) 1,800 37,656 Stewart Enterprises, Inc., Class A (a) 8,300 57,685 U.S. Physical Therapy, Inc. (a) 2,800 38,052 UnitedHealth Group, Inc. 699 51,544 WellPoint Health Networks, Inc. (a) 1,300 136,617 ------------- Health Care Providers & Services Total 5,962,018 PHARMACEUTICALS - 4.0% Advancis Pharmaceutical Corp. (a) 9,000 73,350 AstraZeneca PLC 13,900 570,867 Atrix Labs, Inc. (a) 3,000 92,070 Barr Pharmaceuticals, Inc. (a) 1,675 69,395 Bone Care International, Inc. (a) 3,900 94,770 Bristol-Myers Squibb Co. 16,864 399,171 Caraco Pharmaceutical Laboratories Ltd. (a) 2,400 18,480 Chugai Pharmaceutical Co., Ltd. 23,600 341,106 DepoMed, Inc. (a) 16,000 83,520 DOV Pharmaceutical, Inc. (a) 6,600 113,124 Elan Corp., PLC, ADR (a) 4,610 107,874 Eli Lilly & Co. 13,700 822,685 SHARES VALUE ($) ------- ------------- Endo Pharmaceuticals Holdings, Inc. (a) 3,470 63,709 GlaxoSmithKline PLC 40,530 875,967 IVAX Corp. (a) 3,388 64,871 Johnson & Johnson 60,178 3,389,827 Medicis Pharmaceutical Corp., Class A 6,050 236,192 Merck & Co., Inc. 20,098 663,234 Nektar Therapeutics (a) 10,050 145,524 Novartis AG, Registered Shares 14,630 682,741 Noven Pharmaceuticals, Inc. (a) 5,400 112,536 Perrigo Co. 2,700 55,485 Pfizer, Inc. 129,112 3,950,827 Renovis, Inc. (a) 6,400 51,264 Salix Pharmaceuticals Ltd. (a) 4,600 98,992 Sanofi-Aventis 9,750 709,441 Takeda Chemical Industries Ltd. 17,400 791,357 Taro Pharmaceuticals Industries Ltd. (a) 2,300 53,774 Teva Pharmaceutical Industries Ltd., ADR 91,230 2,367,419 ------------- Pharmaceuticals Total 17,099,572 ------------- HEALTH CARE TOTAL 37,212,131 INDUSTRIALS - 7.3% AEROSPACE & DEFENSE - 1.0% AAR Corp. (a) 3,654 45,492 Alliant Techsystems, Inc. (a) 1,300 78,650 DRS Technologies, Inc. (a) 3,600 134,784 Esterline Technologies Corp. (a) 2,600 79,534 General Dynamics Corp. 11,532 1,177,417 Herley Industries, Inc. (a) 1,900 35,511 Honeywell International, Inc. 14,012 502,471 Kaman Corp., Class A 3,500 41,790 L-3 Communications Holdings, Inc. 820 54,940 Ladish Co., Inc. (a) 4,000 36,600 Northrop Grumman Corp. 1,000 53,330 Precision Castparts Corp. 1,500 90,075 Raytheon Co. 14,307 543,380 United Defense Industries, Inc. (a) 1,670 66,783 United Technologies Corp. 14,747 1,377,075 ------------- Aerospace & Defense Total 4,317,832 AIR FREIGHT & LOGISTICS - 0.1% C.H. Robinson Worldwide, Inc. 1,560 72,369 CNF, Inc. 2,000 81,980 EGL, Inc. (a) 4,200 127,092 Expeditors International of Washington, Inc. 1,230 63,591 HUB Group, Inc., Class A (a) 2,165 80,646 Ryder System, Inc. 1,200 56,448 UTI Worldwide, Inc. 1,800 105,858 ------------- Air Freight & Logistics Total 587,984 AIRLINES - 0.0% AMR Corp. (a) 6,800 49,844 FLYi, Inc. (a) 2,300 8,993 MAIR Holdings, Inc. (a) 2,100 17,220 Skywest, Inc. 2,700 40,635 ------------- Airlines Total 116,692 See Accompanying Notes to Financial Statements. 35 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) INDUSTRIALS - (CONTINUED) BUILDING PRODUCTS - 0.1% Masco Corp. 1,610 55,593 NCI Building Systems, Inc. (a) 1,900 60,610 Wienerberger AG 6,657 250,046 ------------- Building Products Total 366,249 COMMERCIAL SERVICES & SUPPLIES - 1.3% ABM Industries, Inc. 2,800 56,420 ActivCard Corp. (a) 4,300 26,402 Adesa, Inc. (a) 1,700 27,931 Angelica Corp. 2,100 52,248 Avery Dennison Corp. 1,110 73,016 Brink's Co. 6,700 202,139 Career Education Corp. (a) 1,030 29,283 Casella Waste Systems, Inc., Class A (a) 5,800 68,672 Cendant Corp. 69,275 1,496,340 Century Business Services, Inc. (a) 3,538 15,886 ChoicePoint, Inc. (a) 3,530 150,554 Cintas Corp. 1,340 56,334 Consolidated Graphics, Inc. (a) 2,600 108,940 Corporate Executive Board Co. 4,140 253,534 Danka Business Systems PLC, ADR (a) 3,800 14,440 Educate, Inc. (a) 6,500 76,635 Education Management Corp. (a) 2,710 72,194 Electro Rent Corp. (a) 1,200 13,248 First Consulting Group, Inc. (a) 431 2,043 Healthcare Services Group, Inc. 3,350 60,166 Imagistics International, Inc. (a) 2,800 94,080 Laureate Education, Inc. (a) 2,600 96,772 Lightbridge, Inc. (a) 4,100 19,762 Manpower, Inc. 6,260 278,507 MDC Partners, Inc., Class A (a) 7,500 95,100 Navigant Consulting, Inc. (a) 3,700 81,252 NCO Group, Inc. (a) 5,200 140,140 Randstad Holding NV 11,400 413,261 Republic Services, Inc. 3,100 92,256 Robert Half International, Inc. 2,270 58,498 SOURCECORP, Inc. (a) 1,800 39,852 TeleTech Holdings, Inc. (a) 4,900 46,256 Waste Management, Inc. 36,405 995,313 ------------- Commercial Services & Supplies Total 5,307,474 CONSTRUCTION & ENGINEERING - 0.4% Chicago Bridge & Iron Co., NV, N.Y. Registered Shares 3,700 110,963 Comfort Systems USA, Inc. (a) 5,900 38,940 Dycom Industries, Inc. (a) 2,600 73,814 EMCOR Group, Inc. (a) 900 33,858 Jacobs Engineering Group, Inc. (a) 2,190 83,855 JGC Corp. 36,000 369,499 Mastec, Inc. (a) 1,200 6,300 Quanta Services, Inc. (a) 1,800 10,890 Shimizu Corp. 63,000 251,609 SHARES VALUE ($) ------- ------------- Vinci SA 3,510 404,563 Washington Group International, Inc. (a) 1,700 58,854 ------------- Construction & Engineering Total 1,443,145 ELECTRICAL EQUIPMENT - 0.3% Ametek, Inc. 2,500 75,800 C&D Technologies, Inc. 2,600 49,452 Genlyte Group, Inc. (a) 1,000 64,390 Hubbell, Inc., Class B 1,200 53,796 Plug Power, Inc. (a) 8,000 51,280 Powell Industries, Inc. (a) 800 13,480 Rockwell Automation, Inc. 19,100 739,170 Woodward Governor Co. 1,000 67,490 ------------- Electrical Equipment Total 1,114,858 INDUSTRIAL CONGLOMERATES - 2.3% 3M Co. 13,700 1,095,589 BioSante Pharmaceuticals, Inc. (a) 2,100 18,921 Carlisle Companies, Inc. 2,700 172,611 General Electric Co. 122,895 4,126,814 Hutchison Whampoa Ltd. 31,000 242,207 NIWS Co., Ltd. 65 165,326 Siemens AG, Registered Shares 3,787 279,123 Smiths Group PLC 19,333 260,179 Textron, Inc. 18,318 1,177,298 Tyco International Ltd. 71,140 2,181,152 ------------- Industrial Conglomerates Total 9,719,220 MACHINERY - 1.5% AGCO Corp. (a) 3,000 67,860 Alamo Group, Inc. 1,200 22,452 Atlas Copco AB, Class B 16,900 596,538 Briggs & Stratton Corp. 900 73,080 Cuno, Inc. (a) 2,200 127,050 Deere & Co. 15,059 972,058 Dover Corp. 1,900 73,853 EnPro Industries, Inc. (a) 3,600 86,904 Harsco Corp. 1,900 85,310 Heidelberger Druckmaschinen AG (a) 8,428 251,566 Ingersoll-Rand Co., Ltd., Class A 26,660 1,812,080 ITT Industries, Inc. 19,400 1,551,806 Kadant Inc. (a) 2,600 47,736 Navistar International Corp. (a) 4,100 152,479 Parker Hannifin Corp. 1,400 82,404 RAE Systems, Inc. (a) 11,300 63,054 Robbins & Myers, Inc. 2,673 58,806 Stewart & Stevenson Services, Inc. 4,200 74,214 Tecumseh Products Co., Class A 1,100 46,057 UNOVA, Inc. (a) 400 5,620 Volvo AB, Class B 7,600 268,549 ------------- Machinery Total 6,519,476 ROAD & RAIL - 0.2% Canadian National Railway Co. 6,290 308,401 Covenant Transport, Inc., Class A (a) 1,900 36,708 Dollar Thrifty Automotive Group, Inc. (a) 1,800 43,794 Genesee & Wyoming, Inc., Class A (a) 4,401 111,433 Heartland Express, Inc. 5,250 96,863 See Accompanying Notes to Financial Statements. 36 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) INDUSTRIALS - (CONTINUED) ROAD & RAIL - (CONTINUED) Sirva, Inc. (a) 4,200 96,180 U.S. Xpress Enterprises, Inc., Class A (a) 1,100 20,394 Werner Enterprises, Inc. 3,400 65,654 ------------- Road & Rail Total 779,427 TRADING COMPANIES & DISTRIBUTORS - 0.1% Aceto Corp. 4,300 61,920 Hughes Supply, Inc. 2,604 78,302 Mitsubishi Corp. 22,000 238,167 Watsco, Inc. 3,100 93,093 ------------- Trading Companies & Distributors Total 471,482 ------------- INDUSTRIALS TOTAL 30,743,839 INFORMATION TECHNOLOGY - 8.7% COMMUNICATIONS EQUIPMENT - 1.5% Anaren, Inc. (a) 3,500 47,110 Andrew Corp. (a) 11,800 144,432 Avaya, Inc. (a) 32,800 457,232 Avocent Corp. (a) 1,450 37,743 Belden CDT, Inc. 1,700 37,060 Black Box Corp. 1,100 40,645 Cisco Systems, Inc. (a) 115,265 2,086,297 Comverse Technology, Inc. (a) 5,110 96,221 F5 Networks, Inc. (a) 3,600 109,656 Finisar Corp. (a) 19,800 25,740 Foundry Networks, Inc. (a) 7,900 74,971 Harris Corp. 1,200 65,928 Inter-Tel, Inc. 3,645 78,805 Juniper Networks, Inc. (a) 4,940 116,584 Motorola, Inc. 16,800 303,072 Netopia, Inc. (a) 5,700 12,198 NMS Communications Corp. (a) 9,000 43,920 Nokia Oyj, ADR 71,191 976,741 Polycom, Inc. (a) 3,560 70,559 QUALCOMM, Inc. 33,160 1,294,566 Tollgrade Communications, Inc. (a) 2,800 24,612 ------------- Communications Equipment Total 6,144,092 COMPUTERS & PERIPHERALS - 1.5% Advanced Digital Information Corp. (a) 800 6,960 Applied Films Corp. (a) 3,900 70,239 Cray, Inc. (a) 12,800 45,184 Dell, Inc. (a) 39,675 1,412,430 Electronics for Imaging, Inc. (a) 900 14,616 EMC Corp. (a) 34,600 399,284 Hutchinson Technology, Inc. (a) 1,600 42,768 Hypercom Corp. (a) 5,700 42,066 Imation Corp. 400 14,236 Innovex, Inc. (a) 3,400 13,838 Intergraph Corp. (a) 1,135 30,838 International Business Machines Corp. 24,685 2,116,492 Lexmark International, Inc., Class A (a) 22,154 1,861,158 SHARES VALUE ($) ------- ------------- PalmSource, Inc. (a) 6,000 124,440 Pinnacle Systems, Inc. (a) 9,300 38,781 ------------- Computers & Peripherals Total 6,233,330 ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.8% Agilysys, Inc. 2,100 36,309 Amphenol Corp., Class A (a) 5,600 191,856 Anixter International, Inc. 3,500 122,815 Arrow Electronics, Inc. (a) 4,200 94,836 AVX Corp. 6,100 72,285 Benchmark Electronics, Inc. (a) 1,450 43,210 CDW Corp. 1,000 58,030 Checkpoint Systems, Inc. (a) 2,700 42,039 Flextronics International Ltd. (a) 34,320 454,740 Flir Systems, Inc. (a) 1,000 58,500 Global Imaging Systems, Inc. (a) 3,700 114,996 Identix, Inc. (a) 5,200 34,632 Itron, Inc. (a) 4,900 85,505 Littelfuse, Inc. (a) 3,000 103,590 MTS Systems Corp. 1,900 40,375 NU Horizons Electronics Corp. (a) 4,400 27,940 OSI Systems, Inc. (a) 5,800 93,380 Planar Systems, Inc. (a) 2,000 22,420 Samsung Electronics Co., Ltd., GDR (b) 4,496 890,208 Samsung Electronics Co., Ltd., Registered Shares, GDR 2,076 412,614 Tandberg ASA 27,400 247,782 TDK Corp. 4,200 280,391 Vishay Intertechnology, Inc. (a) 4,100 52,890 ------------- Electronic Equipment & Instruments Total 3,581,343 INTERNET SOFTWARE & SERVICES - 0.4% Ask Jeeves, Inc. (a) 3,110 101,728 Corillian Corp. (a) 19,400 89,434 Digital River, Inc. (a) 3,100 92,318 Digitas, Inc. (a) 11,100 85,803 Equinix, Inc. (a) 2,000 61,540 Keynote Systems, Inc. (a) 3,400 48,144 Modem Media, Inc. (a) 3,200 17,216 PEC Solutions, Inc. (a) 800 9,376 Retek, Inc. (a) 19,100 87,096 Stellent, Inc. (a) 3,100 23,901 Telecommunication Systems, Inc., Class A (a) 13,000 41,730 Yahoo!, Inc. (a) 30,240 1,025,439 ------------- Internet Software & Services Total 1,683,725 IT SERVICES - 0.7% Accenture Ltd., Class A (a) 43,056 1,164,665 Acxiom Corp. 2,600 61,724 Affiliated Computer Services, Inc., Class A (a) 2,700 150,309 Cognizant Technology Solutions Corp., Class A (a) 38,380 1,170,974 Computer Horizons Corp. (a) 4,900 21,217 DST Systems, Inc. (a) 1,300 57,811 Inforte Corp. (a) 3,400 23,460 Iron Mountain, Inc. (a) 3,770 127,614 See Accompanying Notes to Financial Statements. 37 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - (CONTINUED) IT SERVICES - (CONTINUED) Maximus, Inc. (a) 3,400 97,954 MPS Group, Inc. (a) 9,600 80,736 SunGard Data Systems, Inc. (a) 2,010 47,778 ------------- IT Services Total 3,004,242 OFFICE ELECTRONICS - 0.4% Canon, Inc. 10,200 480,119 Xerox Corp. (a) 69,880 983,910 Zebra Technologies Corp., Class A (a) 1,995 121,715 ------------- Office Electronics Total 1,585,744 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.3% Advanced Micro Devices, Inc. (a) 9,660 125,580 Altera Corp. (a) 24,710 483,575 Artisan Components, Inc. (a) 4,200 122,262 August Technology Corp. (a) 5,300 36,411 Broadcom Corp., Class A (a) 18,000 491,220 Brooks Automation, Inc. (a) 7,700 108,955 DSP Group, Inc. (a) 2,300 48,415 Entegris, Inc. (a) 12,600 105,084 Exar Corp. (a) 2,700 38,232 FEI Co. (a) 4,300 84,968 Integrated Circuit Systems, Inc. (a) 2,400 51,600 Intel Corp. 79,260 1,589,955 IXYS Corp. (a) 10,700 76,826 Laedis Technology, Inc. 5,400 60,912 Linear Technology Corp. 9,090 329,422 Marvell Technology Group Ltd. (a) 33,640 879,013 Microchip Technology, Inc. 12,960 347,846 Mykrolis Corp. (a) 6,300 63,441 National Semiconductor Corp. 3,040 47,090 NVIDIA Corp. (a) 6,070 88,136 Pericom Semiconductor Corp. (a) 2,700 26,082 Silicon Image, Inc. (a) 12,800 161,792 Silicon Laboratories, Inc. (a) 4,140 136,993 Silicon Storage Technology, Inc. (a) 11,500 73,255 Ultratech, Inc. (a) 5,700 89,319 Zoran Corp. (a) 2,200 34,584 ------------- Semiconductors & Semiconductor Equipment Total 5,700,968 SOFTWARE - 2.1% Activision, Inc. (a) 6,400 88,768 Amdocs Ltd. (a) 32,530 710,130 Ascential Software Corp. (a) 3,400 45,798 BMC Software, Inc. (a) 5,370 84,900 Business Objects SA, ADR (a) 800 18,648 Captaris, Inc. (a) 7,200 30,672 Captiva Software Corp. (a) 7,900 88,480 Check Point Software Technologies Ltd. (a) 4,860 82,474 Citrix Systems, Inc. (a) 4,890 85,673 SHARES VALUE ($) ------- ------------- Epicor Software Corp. (a) 5,700 68,571 FileNet Corp. (a) 2,800 48,888 Hyperion Solutions Corp. (a) 2,830 96,192 Internet Security Systems, Inc. (a) 2,600 44,200 Intuit, Inc. (a) 1,400 63,560 Lawson Software, Inc. (a) 3,400 19,040 Magma Design Automation, Inc. (a) 5,800 87,464 Manhattan Associates, Inc. (a) 3,100 75,702 Mercury Interactive Corp. (a) 3,140 109,523 Micromuse, Inc. (a) 21,700 79,856 Microsoft Corp. 170,465 4,713,357 MSC.Software Corp. (a) 4,400 35,376 Novell, Inc. (a) 8,700 54,897 OpenTV Corp., Class A (a) 17,100 52,155 Oracle Corp. (a) 72,925 822,594 PLATO Learning, Inc. (a) 5,900 52,156 Reynolds & Reynolds Co., Class A 4,000 98,680 SAP AG, ADR 11,800 459,610 ScanSoft, Inc. (a) 12,300 50,184 SeaChange International, Inc. (a) 2,900 46,371 Sybase, Inc. (a) 2,000 27,580 Symantec Corp. (a) 6,300 345,744 Take-Two Interactive Software, Inc. (a) 2,100 68,985 Transaction Systems Architects, Inc., Class A (a) 3,300 61,330 VERITAS Software Corp. (a) 3,360 59,808 Verity, Inc. (a) 4,000 51,520 ------------- Software Total 8,928,886 ------------- INFORMATION TECHNOLOGY TOTAL 36,862,330 MATERIALS - 3.3% CHEMICALS - 1.6% Air Products & Chemicals, Inc. 24,167 1,314,201 BASF AG 5,600 330,650 Cytec Industries, Inc. 1,300 63,635 Eastman Chemical Co. 2,800 133,140 Engelhard Corp. 2,900 82,215 Fuller (H.B.) Co. 1,500 41,100 International Flavors & Fragrances, Inc. 5,200 198,640 L'Air Liquide SA 1,571 247,025 Landec Corp. (a) 7,700 57,750 Linde AG 7,400 427,343 Lubrizol Corp. 3,400 117,640 Minerals Technologies, Inc. 1,000 58,860 Novozymes A/S, Class B 2,850 128,607 Potash Corp. of Saskatchewan, Inc. 2,760 177,109 PPG Industries, Inc. 1,700 104,176 Praxair, Inc. 54,900 2,346,426 Schulman (A.), Inc. 1,900 41,876 Sensient Technologies Corp. 1,900 41,116 Stepan Co. 1,900 45,201 Syngenta AG (a) 7,656 731,951 ------------- Chemicals Total 6,688,661 See Accompanying Notes to Financial Statements. 38 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) MATERIALS - (CONTINUED) CONSTRUCTION MATERIALS - 0.1% Cemex SA de C.V., ADR 13,300 374,262 Eagle Materials, Inc. 1,200 85,560 Florida Rock Industries, Inc. 800 39,192 ------------- Construction Materials Total 499,014 CONTAINERS & PACKAGING - 0.1% Aptargroup, Inc. 1,200 52,764 Crown Holdings, Inc. (a) 8,000 82,480 Greif, Inc., Class A 1,900 80,085 Packaging Corp. of America 5,500 134,585 Pactiv Corp. (a) 3,500 81,375 Smurfit-Stone Container Corp. (a) 4,610 89,296 Temple-Inland, Inc. 650 43,647 ------------- Containers & Packaging Total 564,232 METALS & MINING - 0.8% Alcoa, Inc. 35,200 1,182,368 Allegheny Technologies, Inc. 2,100 38,325 AMCOL International Corp. 3,900 74,568 Carpenter Technology Corp. 2,700 128,898 Freeport-McMoRan Copper & Gold, Inc., Class B 1,670 67,635 Inco Ltd. (a) 2,970 115,979 Metal Management, Inc. (a) 3,900 70,902 Oregon Steel Mills, Inc. (a) 5,600 93,128 Peabody Energy Corp. 3,420 203,490 Phelps Dodge Corp. 9,940 914,778 RTI International Metals, Inc. (a) 3,500 67,795 Steel Technologies, Inc. 6,800 174,196 ------------- Metals & Mining Total 3,132,062 PAPER & FOREST PRODUCTS - 0.7% Bowater, Inc. 3,980 151,996 Georgia-Pacific Corp. 4,500 161,775 Glatfelter 4,200 52,038 International Paper Co. 3,320 134,161 MeadWestvaco Corp. 43,837 1,398,401 Mercer International, Inc. (a) 5,700 49,590 UPM-Kymmene Oyj 12,850 244,985 Weyerhaeuser Co. 12,711 845,027 ------------- Paper & Forest Products Total 3,037,973 ------------- MATERIALS TOTAL 13,921,942 TELECOMMUNICATION SERVICES - 2.0% DIVERSIFIED TELECOMMUNICATION SERVICES - 1.5% Belgacom SA (a) 7,700 276,184 BellSouth Corp. 26,930 730,342 Deutsche Telekom AG, Registered Shares (a) 16,248 302,077 France Telecom SA 15,900 397,252 Nippon Telegraph & Telephone Corp. 66 264,049 North Pittsburgh Systems, Inc. 2,000 41,420 SHARES VALUE ($) ------- ------------- Qwest Communications International, Inc. (a) 1 3 SBC Communications, Inc. 78,050 2,025,397 TDC A/S 7,700 272,386 Telecom Italia S.p.A. 84,240 260,452 Telefonaktiebolaget LM Ericsson, ADR (a) 10,400 324,896 Verizon Communications, Inc. 42,058 1,656,244 ------------- Diversified Telecommunication Services Total 6,550,702 WIRELESS TELECOMMUNICATION SERVICES - 0.5% American Tower Corp., Class A (a) 2,920 44,822 Crown Castle International Corp. (a) 6,670 99,250 Hutchison Telecom International Reserved Shares (a)(c) 413 --(d) Millicom International Cellular SA (a) 4,810 87,542 Nextel Partners, Inc., Class A (a) 5,850 96,993 NTT DoCoMo, Inc. 187 318,803 Price Communications Corp. (a) 2,730 41,632 Telephone and Data Systems, Inc. 2,800 235,676 VimpelCom, ADR (a) 300 32,640 Vodafone Group PLC 374,600 899,055 Western Wireless Corp., Class A (a) 2,690 69,160 ------------- Wireless Telecommunication Services Total 1,925,573 ------------- TELECOMMUNICATION SERVICES TOTAL 8,476,275 UTILITIES - 1.9% ELECTRIC UTILITIES - 1.6% Allete, Inc. 567 18,417 American Electric Power Co., Inc. 30,716 981,683 Central Vermont Public Service Corp. 2,900 58,319 CH Energy Group, Inc. 1,900 87,020 Consolidated Edison, Inc. 35,158 1,478,042 E. ON AG 6,879 508,146 El Paso Electric Co. (a) 3,300 53,031 Entergy Corp. 14,729 892,725 Exelon Corp. 4,400 161,436 Maine & Maritimes Corp. 600 17,400 MGE Energy, Inc. 1,100 35,002 Otter Tail Corp. 1,800 45,900 PG&E Corp. (a) 11,000 334,400 PPL Corp. 1,400 66,052 Progress Energy, Inc. 3,000 127,020 Puget Energy, Inc. 2,900 65,830 Reliant Energy, Inc. (a) 4,500 41,985 Scottish Power PLC 36,291 277,965 Southern Co. 4,007 120,130 TXU Corp. 33,966 1,627,651 ------------- Electric Utilities Total 6,998,154 GAS UTILITIES - 0.1% Cascade Natural Gas Corp. 1,200 25,476 Centrica PLC 55,400 252,291 Northwest Natural Gas Co. 1,000 31,730 WGL Holdings, Inc. 1,100 31,086 ------------- Gas Utilities Total 340,583 See Accompanying Notes to Financial Statements. 39 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) UTILITIES - (CONTINUED) MULTI-UTILITIES & UNREGULATED POWER - 0.2% Constellation Energy Group, Inc. 2,800 111,552 Energy East Corp. 3,600 90,648 National Grid Transco PLC 56,600 479,606 ------------- Multi-Utilities & Unregulated Power Total 681,806 ------------- UTILITIES TOTAL 8,020,543 TOTAL COMMON STOCKS (cost of $238,239,338) 274,792,264 PAR ($) ------- CORPORATE FIXED-INCOME BONDS & NOTES - 14.9% BASIC MATERIALS - 0.6% CHEMICALS - 0.2% Acetex Corp. 10.875% 08/01/09 100,000 110,000 Airgas, Inc. 9.125% 10/01/11 250,000 281,250 Equistar Chemicals LP 10.125% 09/01/08 25,000 28,062 10.625% 05/01/11 85,000 96,900 Ethyl Corp. 8.875% 05/01/10 155,000 167,400 MacDermid, Inc. 9.125% 07/15/11 130,000 145,113 Nalco Co. 7.750% 11/15/11 115,000 122,044 ------------- Chemicals Total 950,769 FOREST PRODUCTS & PAPER - 0.4% Westvaco Corp. 8.200% 01/15/30 1,290,000 1,534,571 ------------- Forest Products & Paper Total 1,534,571 IRON/STEEL - 0.0% Russel Metals, Inc. 6.375% 03/01/14 130,000 130,000 ------------- Iron/Steel Total 130,000 ------------- BASIC MATERIALS TOTAL 2,615,340 COMMUNICATIONS - 2.0% ADVERTISING - 0.2% Lamar Media Corp. 7.250% 01/01/13 450,000 484,875 R.H. Donnelley Finance Corp. 10.875% 12/15/12 (b) 400,000 485,000 ------------- Advertising Total 969,875 PAR ($) VALUE ($) ------- ------------- MEDIA - 1.1% Comcast Corp. 7.050% 03/15/33 950,000 1,040,877 Dex Media East LLC 12.125% 11/15/12 195,000 241,800 DirecTV Holdings LLC 8.375% 03/15/13 375,000 427,500 Echostar DBS Corp. 5.750% 10/01/08 410,000 412,050 6.625% 10/01/14 (b) 90,000 89,100 Emmis Operating Co. 6.875% 05/15/12 65,000 67,194 Gannett Co., Inc. 5.500% 04/01/07 1,000,000 1,055,290 Houghton Mifflin Co. 9.875% 02/01/13 120,000 126,000 LIN Television Corp. 6.500% 05/15/13 275,000 279,125 Rogers Cable, Inc. 6.250% 06/15/13 375,000 366,742 7.875% 05/01/12 55,000 59,925 Sinclair Broadcast Group, Inc. 8.750% 12/15/11 245,000 267,050 ------------- Media Total 4,432,653 TELECOMMUNICATIONS - 0.7% MCI, Inc. 5.908% 05/01/07 24,000 23,790 6.688% 05/01/09 24,000 23,100 7.735% 05/01/14 20,000 18,900 Nextel Communications, Inc. 5.950% 03/15/14 20,000 19,700 7.375% 08/01/15 375,000 402,187 Sprint Capital Corp. 6.125% 11/15/08 825,000 890,984 Verizon Global Funding Corp. 7.750% 12/01/30 1,300,000 1,556,945 ------------- Telecommunications Total 2,935,606 ------------- COMMUNICATIONS TOTAL 8,338,134 CONSUMER CYCLICAL - 1.7% AIRLINES - 0.4% Continental Airlines, Inc. 7.461% 04/01/15 814,095 748,967 United Air Lines, Inc. 7.032% 10/01/10 (e) 588,020 493,937 United Airlines, Inc. 9.200% 03/22/08 (f) 1,014,042 405,617 ------------- Airlines Total 1,648,521 AUTO MANUFACTURERS - 0.1% General Motors Corp. 7.125% 07/15/13 250,000 261,460 ------------- Auto Manufacturers Total 261,460 See Accompanying Notes to Financial Statements. 40 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund PAR ($) VALUE ($) ------- ------------- CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED) CONSUMER CYCLICAL - (CONTINUED) ENTERTAINMENT - 0.2% Cinemark USA, Inc. 9.000% 02/01/13 300,000 336,000 Speedway Motorsports, Inc. 6.750% 06/01/13 237,000 247,072 Warner Music Group 7.375% 04/15/14 (b) 125,000 129,063 ------------- Entertainment Total 712,135 HOME BUILDERS - 0.2% KB Home 8.625% 12/15/08 325,000 366,437 Toll Corp. 8.250% 12/01/11 365,000 403,325 ------------- Home Builders Total 769,762 LEISURE TIME - 0.1% K2, Inc. 7.375% 07/01/14 (b) 125,000 131,757 Royal Caribbean Cruises Ltd. 6.750% 03/15/08 80,000 85,200 6.875% 12/01/13 100,000 106,375 8.000% 05/15/10 40,000 45,100 8.750% 02/02/11 155,000 180,963 ------------- Leisure Time Total 549,395 LODGING - 0.5% Harrah's Operating Co., Inc. 7.875% 12/15/05 250,000 263,125 Kerzner International 8.875% 08/15/11 155,000 170,113 MGM Grand, Inc. 9.750% 06/01/07 450,000 500,625 Park Place Entertainment Corp. 9.375% 02/15/07 425,000 471,750 Starwood Hotels & Resorts Worldwide, Inc. 7.875% 05/01/12 225,000 255,656 Station Casinos, Inc. 6.500% 02/01/14 500,000 512,500 ------------- Lodging Total 2,173,769 RETAIL - 0.2% Autonation, Inc. 9.000% 08/01/08 215,000 246,712 Domino's, Inc. 8.250% 07/01/11 115,000 123,913 Finlay Fine Jewelry Corp. 8.375% 06/01/12 (b) 100,000 107,500 Group 1 Automotive, Inc. 8.250% 08/15/13 90,000 95,175 Suburban Propane Partners 6.875% 12/15/13 145,000 149,350 ------------- Retail Total 722,650 PAR ($) VALUE ($) ------- ------------- TOYS/GAMES/HOBBIES - 0.0% Hasbro, Inc. 6.150% 07/15/08 200,000 212,500 ------------- Toys/Games/Hobbies Total 212,500 ------------- CONSUMER CYCLICAL TOTAL 7,050,192 CONSUMER NON-CYCLICAL - 1.9% BEVERAGES - 0.2% Constellation Brands, Inc. 8.125% 01/15/12 450,000 496,125 Cott Beverages USA, Inc. 8.000% 12/15/11 450,000 490,500 ------------- Beverages Total 986,625 COMMERCIAL SERVICES - 0.2% Corrections Corporation of America 7.500% 05/01/11 325,000 343,281 Iron Mountain, Inc. 7.750% 01/15/15 10,000 10,725 8.625% 04/01/13 450,000 489,375 United Rentals North America, Inc. 7.000% 02/15/14 150,000 133,500 7.750% 11/15/13 105,000 98,175 ------------- Commercial Services Total 1,075,056 COSMETICS/PERSONAL CARE - 0.3% Procter & Gamble Co. 4.750% 06/15/07 1,100,000 1,146,684 ------------- Cosmetics/Personal Care Total 1,146,684 HEALTHCARE SERVICES - 0.9% Extendicare Health Services, Inc. 6.875% 05/01/14 65,000 65,650 9.500% 07/01/10 15,000 16,762 HCA, Inc. 6.950% 05/01/12 225,000 242,786 7.125% 06/01/06 1,450,000 1,529,300 Province Healthcare Co. 7.500% 06/01/13 225,000 253,125 Select Medical Corp. 9.500% 06/15/09 325,000 354,250 Tenet Healthcare Corp. 5.375% 11/15/06 785,000 786,963 Triad Hospitals, Inc. 7.000% 05/15/12 350,000 367,938 7.000% 11/15/13 30,000 30,375 ------------- Healthcare Services Total 3,647,149 HOUSEHOLD PRODUCTS/WARES - 0.0% Scotts Co. 6.625% 11/15/13 150,000 157,500 ------------- Household Products/Wares Total 157,500 See Accompanying Notes to Financial Statements. 41 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund PAR ($) VALUE ($) ------- ------------- CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED) CONSUMER NON-CYCLICAL - (CONTINUED) PHARMACEUTICALS - 0.3% AmerisourceBergen Corp. 8.125% 09/01/08 300,000 331,500 Omnicare, Inc., Series B 8.125% 03/15/11 375,000 407,813 Wyeth 6.500% 02/01/34 425,000 433,908 ------------- Pharmaceuticals Total 1,173,221 ------------- CONSUMER NON-CYCLICAL TOTAL 8,186,235 ENERGY - 1.4% COAL - 0.1% Peabody Energy Corp., Series B 5.875% 04/15/16 75,000 73,781 Peabody Energy Corp., Series B 6.875% 03/15/13 405,000 438,413 ------------- Coal Total 512,194 OIL & GAS - 1.0% Chesapeake Energy Corp. 7.500% 09/15/13 300,000 327,750 8.125% 04/01/11 150,000 164,250 Devon Financing Corp. 6.875% 09/30/11 1,150,000 1,299,580 Newfield Exploration Co. 6.625% 09/01/14 (b) 270,000 280,800 Nexen, Inc. 7.875% 03/15/32 750,000 927,315 Pemex Project Funding Master Trust 7.875% 02/01/09 550,000 613,800 Plains Exploration & Production Co. 7.125% 06/15/14 (b) 205,000 220,375 Pride International, Inc. 7.375% 07/15/14 (b) 220,000 240,900 Vintage Petroleum, Inc. 7.875% 05/15/11 250,000 267,500 ------------- Oil & Gas Total 4,342,270 OIL & GAS SERVICES - 0.2% Grant Prideco, Inc., Series B 9.625% 12/01/07 410,000 460,225 Key Energy Services, Inc. 8.375% 03/01/08 50,000 52,750 Universal Compression, Inc. 7.250% 05/15/10 230,000 244,375 ------------- Oil & Gas Services Total 757,350 PIPELINES - 0.1% Williams Companies, Inc. 7.125% 09/01/11 25,000 27,375 8.125% 03/15/12 185,000 212,750 ------------- Pipelines Total 240,125 ------------- ENERGY TOTAL 5,851,939 PAR ($) VALUE ($) ------- ------------- FINANCIALS - 4.8% BANKS - 0.8% Bank One Corp. 6.500% 02/01/06 700,000 734,615 HSBC Capital Funding LP 9.547% 12/31/49 (b) 800,000 995,520 Rabobank Capital Funding II 5.260% 12/31/49 (b) 1,425,000 1,436,485 ------------- Banks Total 3,166,620 DIVERSIFIED FINANCIAL SERVICES - 2.7% Caterpillar Financial Services Corp. 1.830% 02/26/07 (g) 375,000 375,124 Citicorp 8.040% 12/15/19(b) 1,900,000 2,295,257 Couche Tard US Finance 7.500% 12/15/13 255,000 271,575 Ford Motor Credit Co. 7.375% 02/01/11 1,525,000 1,659,566 General Motors Acceptance Corp. 6.875% 08/28/12 850,000 885,258 Goldman Sachs Group, Inc. 6.600% 01/15/12 2,000,000 2,216,000 Household Finance Corp. 5.875% 02/01/09 1,100,000 1,183,545 International Lease Finance Corp. 6.375% 03/15/09 1,175,000 1,283,335 Morgan Stanley 6.750% 04/15/11 570,000 641,107 UFJ Finance Aruba AEC 6.750% 07/15/13 575,000 640,061 ------------- Diversified Financial Services Total 11,450,828 INSURANCE - 0.9% Florida Windstorm Underwriting Association 7.125% 02/25/19 (b) 1,400,000 1,643,782 Prudential Insurance Co. of America 7.650% 07/01/07 (b) 2,000,000 2,219,680 ------------- Insurance Total 3,863,462 INVESTMENT MANAGEMENT COMPANIES - 0.2% Credit Suisse First Boston USA, Inc. 5.875% 08/01/06 900,000 945,594 ------------- Investment Management Companies Total 945,594 REAL ESTATE INVESTMENT TRUSTS - 0.1% iStar Financial, Inc. 5.125% 04/01/11 25,000 24,566 7.000% 03/15/08 75,000 79,984 8.750% 08/15/08 200,000 227,858 ------------- Real Estate Investment Trusts Total 332,408 VENTURE CAPITAL - 0.1% Arch Western Finance LLC 7.500% 07/01/13 (b) 435,000 468,713 ------------- Venture Capital Total 468,713 ------------- FINANCIALS TOTAL 20,227,625 See Accompanying Notes to Financial Statements. 42 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund PAR ($) VALUE ($) ------- ------------- CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED) INDUSTRIALS - 1.4% AEROSPACE & DEFENSE - 0.6% K&F Industries, Inc., Series B 9.625% 12/15/10 215,000 239,725 L-3 Communications Corp. 6.125% 07/15/13 5,000 5,062 7.625% 06/15/12 450,000 496,125 Raytheon Co. 8.300% 03/01/10 1,200,000 1,430,400 Transdigm, Inc. 8.375% 07/15/11 250,000 267,500 ------------- Aerospace & Defense Total 2,438,812 ELECTRONICS - 0.0% Fisher Scientific International 6.750% 08/15/14 (b) 120,000 126,000 ------------- Electronics Total 126,000 ENVIRONMENTAL CONTROL - 0.1% Allied Waste North America, Inc. 9.250% 09/01/12 375,000 417,188 Synagro Technologies, Inc. 9.500% 04/01/09 125,000 133,125 ------------- Environmental Control Total 550,313 HAND/MACHINE TOOLS - 0.1% Kennametal, Inc. 7.200% 06/15/12 400,000 436,356 ------------- Hand/Machine Tools Total 436,356 MACHINERY DIVERSIFIED - 0.0% Westinghouse Air Brake Technologies Corp. 6.875% 07/31/13 145,000 148,625 ------------- Machinery Diversified Total 148,625 PACKAGING & CONTAINERS - 0.3% Ball Corp. 6.875% 12/15/12 475,000 508,250 Jefferson Smurfit Corp. 8.250% 10/01/12 200,000 220,000 Owens-Illinois, Inc. 7.350% 05/15/08 130,000 133,900 Silgan Holdings, Inc. 6.750% 11/15/13 350,000 357,000 Stone Container Corp. 8.375% 07/01/12 125,000 137,500 ------------- Packaging & Containers Total 1,356,650 TRANSPORTATION - 0.3% FedEx Corp. 7.530% 09/23/06 368,974 393,850 Offshore Logistics, Inc. 6.125% 06/15/13 155,000 156,550 PAR ($) VALUE ($) ------- ------------- Teekay Shipping Corp. 8.875% 07/15/11 415,000 468,950 ------------- Transportation Total 1,019,350 ------------- INDUSTRIALS TOTAL 6,076,106 TECHNOLOGY - 0.1% SEMICONDUCTORS - 0.1% Freescale Semiconductor, Inc. 6.875% 07/15/11 (b) 275,000 284,625 ------------- Semiconductors Total 284,625 ------------- TECHNOLOGY TOTAL 284,625 UTILITIES - 1.0% ELECTRIC - 1.0% Dominion Resources, Inc. 6.300% 03/15/33 625,000 631,531 FirstEnergy Corp. 5.500% 11/15/06 1,850,000 1,925,554 Public Service Electric & Gas 4.000% 11/01/08 1,125,000 1,132,763 Southern Power Co. 6.250% 07/15/12 635,000 691,058 ------------- Electric Total 4,380,906 ------------- UTILITIES TOTAL 4,380,906 TOTAL CORPORATE FIXED-INCOME BONDS & NOTES (cost of $61,797,529) 63,011,102 MORTGAGE-BACKED SECURITIES - 11.9% Federal Home Loan Mortgage Corp. 5.000% 09/01/34 2,000,000 1,982,716 6.500% 02/01/11-08/01/32 2,702,584 2,844,571 7.000% 07/01/28-08/01/31 645,444 685,463 7.500% 07/01/15-01/01/30 195,869 209,729 8.000% 09/01/15 92,876 99,009 Federal National Mortgage Association 4.500% 05/01/34 994,147 958,527 5.000% 12/25/15-08/01/33 12,183,461 12,313,335 5.500% 05/01/16-10/01/33 11,374,650 11,589,521 6.000% 01/01/09-06/01/14 446,306 468,799 6.120% 10/01/08 2,322,520 2,275,263 6.500% 03/01/11-10/01/32 2,596,076 2,725,409 7.000% 03/01/15-07/01/32 869,011 922,172 7.500% 06/01/15-08/01/31 478,860 511,151 8.000% 12/01/29-07/01/31 229,554 249,830 First Union Chase Commercial Mortgage 6.645% 06/15/31 450,000 495,045 See Accompanying Notes to Financial Statements. 43 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund PAR ($) VALUE ($) ------- ------------- MORTGAGE-BACKED SECURITIES - (CONTINUED) Government National Mortgage Association 6.000% 04/15/13-01/15/29 718,997 748,167 6.500% 05/15/13-07/15/31 1,724,464 1,826,320 7.000% 11/15/13-06/15/31 863,041 921,127 7.500% 06/15/23-09/15/29 275,924 297,540 8.000% 07/15/25 44,297 48,658 8.500% 12/15/30 11,684 12,837 9.000% 12/15/17 70,356 78,975 GS Mortgage Securities Corp. II 6.620% 10/18/30 2,000,000 2,173,180 JPMorgan Commercial Mortgage Finance Corp. 6.507% 10/15/35 1,600,000 1,741,216 LB-UBS Commercial Mortgage Trust 6.510% 12/15/26 1,000,000 1,114,670 Wachovia Bank Commercial Mortgage Trust 3.999% 06/15/35 3,000,000 2,874,390 ------------- TOTAL MORTGAGE-BACKED SECURITIES (cost of $49,018,146) 50,167,620 ASSET-BACKED SECURITIES - 3.2% AUTOMOBILE - 0.3% Chase Manhattan Auto Owner Trust 3.800% 05/15/08 947,448 955,919 Honda Auto Receivables Owner Trust 3.000% 05/18/06 388,726 389,783 ------------- Automobile Total 1,345,702 CREDIT CARD - 2.0% Capital One Multi-Asset Execution Trust 3.650% 07/15/11 1,360,000 1,364,216 Chemical Bank Master Credit Card Trust I 5.980% 09/15/08 1,550,000 1,614,867 Citibank Credit Card Issuance Trust 4.950% 02/09/09 225,000 234,662 MBNA Master Credit Card Trust USA 6.600% 04/16/07 1,200,000 1,206,396 Providian Gateway Master Trust 1.000% 09/15/11 (b) 1,200,000 1,197,375 Standard Credit Card Master Trust 6.550% 10/07/07 2,595,000 2,697,087 ------------- Credit Card Total 8,314,603 MANUFACTURED HOUSING - 0.2% Origen Manufactured Housing 3.380% 08/15/17 870,000 858,725 ------------- Manufactured Housing Total 858,725 PAR ($) VALUE ($) ------- ------------- OTHER ASSET-BACKED - 0.7% California Infrastructure 6.420% 12/26/09 2,000,000 2,167,200 Consumer Funding LLC 5.430% 04/20/15 820,000 876,949 ------------- Other Asset-Backed Total 3,044,149 TOTAL ASSET-BACKED SECURITIES (cost of $13,760,211) 13,563,179 GOVERNMENT AGENCIES & OBLIGATIONS - 2.1% U.S. GOVERNMENT AGENCY - 2.1% Federal National Mortgage Association 6.625% 09/15/09 3,900,000 4,393,779 U.S. Treasury Bond 5.375% 02/15/31 3,090,000 3,310,163 6.125% 08/15/29 425,000 495,308 6.250% 08/15/23 600,000 700,640 ------------- U.S. GOVERNMENT AGENCY TOTAL 8,899,890 TOTAL U.S.GOVERNMENT AGENCIES & OBLIGATIONS (cost of $7,784,761) 8,899,890 SHARES ------- PREFERRED STOCKS - 0.3% CONSUMER DISCRETIONARY - 0.3% AUTOMOBILES - 0.1% Porsche AG 800 520,880 ------------- Automobiles Total 520,880 MEDIA - 0.2% News Corp., Ltd., ADR 27,400 858,442 ------------- Media Total 858,442 ------------- CONSUMER DISCRETIONARY TOTAL 1,379,322 TOTAL PREFERRED STOCKS (cost of $1,415,582) 1,379,322 PAR ($) ------- MUNICIPAL SECURITIES - 0.2% Illinois Sate Taxable Pension 5.100% 06/01/33 650,000 615,719 ------------- TOTAL MUNICPAL SECURITIES (cost of $577,909) 615,719 See Accompanying Notes to Financial Statements. 44 ________________________________________________________________________________ September 30, 2004 Columbia Asset Allocation Fund PAR ($) VALUE ($) ------- ------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 0.0% American Mortgage Trust 8.445% 09/27/22 27,275 24,547 Rural Housing Trust 6.330% 04/01/26 123,343 124,027 ------------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (cost of $146,798) 148,574 SHORT-TERM OBLIGATION - 2.0% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by a U.S. Treasury Bond maturing 02/15/29, market value $8,650,113 (repurchase proceeds $8,457,371) 8,457,000 8,457,000 ------------- TOTAL SHORT-TERM OBLIGATION (cost of $8,457,000) 8,457,000 TOTAL INVESTMENTS - 99.5% (COST OF $381,197,274) (h) 421,034,670 OTHER ASSETS & LIABILITIES, NET - 0.5% 2,192,752 NET ASSETS - 100.0% 423,227,422 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2004, the value of these securities amounted to $13,242,140, which represents 3.1% of net assets. (c) Represents fair value as determined in good faith under the direction of the Board of Trustees. (d) Security has no value. (e) The issuer has filed for bankruptcy protection under Chapter 11, and is in default of certain debt covenants. Income is being accrued. As of September 30, 2004, the value of this security represents 0.1% of net assets. (f) The issuer has filed for bankruptcy protection under Chapter 11, and is in default of certain debt covenants. Income is not being accrued. As of September 30, 2004, the value of this security represents 0.1% of net assets. (g) Variable rate security. The interest rate shown reflects the rate as of September 30, 2004. (h) Cost for federal income tax purposes is $385,677,811. ACRONYM NAME ------- ---- ADR American Depositary Receipt GDR Global Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. 45 INVESTMENT PORTFOLIO ___________________________________________________________ September 30, 2004 Columbia Large Cap Growth Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - 98.3% CONSUMER DISCRETIONARY - 15.1% HOTELS, RESTAURANTS & LEISURE - 2.2% Carnival Corp. 169,500 8,015,655 Marriott International, Inc., Class A 228,800 11,888,448 ------------- Hotels, Restaurants & Leisure Total 19,904,103 INTERNET & CATALOG RETAIL - 1.2% eBay, Inc. (a) 120,200 11,051,188 ------------- Internet & Catalog Retail Total 11,051,188 MEDIA - 1.8% Omnicom Group 87,100 6,363,526 XM Satellite Radio Holdings, Inc., Class A (a) 302,300 9,377,346 ------------- Media Total 15,740,872 SPECIALTY RETAIL - 8.1% Bed Bath & Beyond, Inc. (a) 278,500 10,335,135 Best Buy Co., Inc. 251,930 13,664,683 Chico's FAS, Inc. (a) 337,300 11,535,660 Home Depot, Inc. 159,200 6,240,640 Lowe's Companies, Inc. 311,500 16,930,025 Staples, Inc. 504,200 15,035,244 ------------- Specialty Retail Total 73,741,387 TEXTILES, APPAREL & LUXURY GOODS - 1.8% Coach, Inc. (a) 216,900 9,200,898 NIKE, Inc., Class B 93,300 7,352,040 ------------- Textiles, Apparel & Luxury Goods Total 16,552,938 ------------- CONSUMER DISCRETIONARY TOTAL 136,990,488 CONSUMER STAPLES - 10.3% BEVERAGES - 1.7% PepsiCo, Inc. 319,300 15,533,945 ------------- Beverages Total 15,533,945 FOOD & STAPLES RETAILING - 2.2% Costco Wholesale Corp. 290,600 12,077,336 Sysco Corp. 257,500 7,704,400 ------------- Food & Staples Retailing Total 19,781,736 FOOD PRODUCTS - 1.0% Bunge Ltd. 64,700 2,586,706 Hershey Foods Corp. 138,000 6,445,980 ------------- Food Products Total 9,032,686 HOUSEHOLD PRODUCTS - 1.8% Procter & Gamble Co. 305,200 16,517,424 ------------- Household Products Total 16,517,424 PERSONAL PRODUCTS - 2.5% Alberto-Culver Co., Inc. 250,800 10,904,784 Avon Products, Inc. 261,800 11,435,424 ------------- Personal Products Total 22,340,208 SHARES VALUE ($) ------- ------------- TOBACCO - 1.1% Altria Group, Inc. 213,700 10,052,448 ------------- Tobacco Total 10,052,448 ------------- CONSUMER STAPLES TOTAL 93,258,447 ENERGY - 1.5% ENERGY EQUIPMENT & SERVICES - 0.9% National-Oilwell, Inc. (a) 142,400 4,679,264 Smith International, Inc. (a) 60,800 3,692,384 ------------- Energy Equipment & Services Total 8,371,648 OIL & GAS - 0.6% EOG Resources, Inc. 82,300 5,419,455 ------------- Oil & Gas Total 5,419,455 ------------- ENERGY TOTAL 13,791,103 FINANCIALS - 8.7% CAPITAL MARKETS - 1.7% Goldman Sachs Group, Inc. 73,100 6,815,844 Merrill Lynch & Co., Inc. 179,900 8,944,628 ------------- Capital Markets Total 15,760,472 COMMERCIAL BANKS - 1.4% North Fork Bancorporation, Inc. 81,300 3,613,785 Wells Fargo & Co. 153,900 9,177,057 ------------- Commercial Banks Total 12,790,842 CONSUMER FINANCE - 1.8% American Express Co. 239,600 12,329,816 MBNA Corp. 149,100 3,757,320 ------------- Consumer Finance Total 16,087,136 DIVERSIFIED FINANCIAL SERVICES - 1.0% Citigroup, Inc. 196,300 8,660,756 ------------- Diversified Financial Services Total 8,660,756 INSURANCE - 2.8% American International Group, Inc. 133,400 9,069,866 Chubb Corp. 70,700 4,968,796 Progressive Corp. 32,800 2,779,800 RenaissanceRe Holdings Ltd. 176,100 9,083,238 ------------- Insurance Total 25,901,700 ------------- FINANCIALS TOTAL 79,200,906 HEALTH CARE - 23.4% BIOTECHNOLOGY - 2.7% Amgen, Inc. (a) 134,100 7,600,788 Biogen Idec, Inc. (a) 79,100 4,838,547 Genentech, Inc. (a) 234,700 12,302,974 ------------- Biotechnology Total 24,742,309 See Accompanying Notes to Financial Statements. 46 ________________________________________________________________________________ September 30, 2004 Columbia Large Cap Growth Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) HEALTH CARE EQUIPMENT & SUPPLIES - 8.9% Alcon, Inc. 119,900 9,615,980 Boston Scientific Corp. (a) 256,100 10,174,853 Kinetic Concepts, Inc. (a) 96,500 5,071,075 St. Jude Medical, Inc. (a) 176,200 13,262,574 Thermo Electron Corp. (a) 323,700 8,746,374 Varian Medical Systems, Inc. (a) 441,400 15,259,198 Zimmer Holdings, Inc. (a) 235,900 18,645,536 ------------- Health Care Equipment & Supplies Total 80,775,590 HEALTH CARE PROVIDERS & SERVICES - 2.3% Anthem, Inc. (a) 109,100 9,518,975 Caremark Rx, Inc. (a) 343,100 11,003,217 ------------- Health Care Providers & Services Total 20,522,192 PHARMACEUTICALS - 9.5% Eli Lilly & Co. 139,300 8,364,965 Johnson & Johnson 512,200 28,852,226 Pfizer, Inc. 962,400 29,449,440 Teva Pharmaceutical Industries Ltd., ADR 755,100 19,594,845 ------------- Pharmaceuticals Total 86,261,476 ------------- HEALTH CARE TOTAL 212,301,567 INDUSTRIALS - 10.0% COMMERCIAL SERVICES & SUPPLIES - 0.9% Cendant Corp. 394,000 8,510,400 ------------- Commercial Services & Supplies Total 8,510,400 ELECTRICAL EQUIPMENT - 0.8% Rockwell Automation, Inc. 195,200 7,554,240 ------------- Electrical Equipment Total 7,554,240 INDUSTRIAL CONGLOMERATES - 5.4% 3M Co. 137,000 10,955,890 General Electric Co. 483,400 16,232,572 Tyco International Ltd. 712,240 21,837,279 ------------- Industrial Conglomerates Total 49,025,741 MACHINERY - 2.9% Ingersoll-Rand Co., Class A 148,200 10,073,153 ITT Industries, Inc. 202,300 16,181,977 ------------- Machinery Total 26,255,130 ------------- INDUSTRIALS TOTAL 91,345,511 INFORMATION TECHNOLOGY - 24.5% COMMUNICATIONS EQUIPMENT - 4.7% Avaya, Inc. (a) 336,300 4,688,022 Cisco Systems, Inc. (a) 1,204,500 21,801,450 Motorola, Inc. 174,900 3,155,196 QUALCOMM, Inc. 332,100 12,965,184 ------------- Communications Equipment Total 42,609,852 SHARES VALUE ($) ------- ------------- COMPUTERS & PERIPHERALS - 4.5% Dell, Inc. (a) 415,700 14,798,920 EMC Corp. (a) 361,200 4,168,248 International Business Machines Corp. 150,500 12,903,870 Lexmark International, Inc., Class A (a) 107,600 9,039,476 ------------- Computers & Peripherals Total 40,910,514 ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.5% Flextronics International Ltd. (a) 346,000 4,584,500 Samsung Electronics Co., Ltd., GDR (b) 44,700 8,850,600 ------------- Electronic Equipment & Instruments Total 13,435,100 INTERNET SOFTWARE & SERVICES - 1.2% Yahoo!, Inc. (a) 315,700 10,705,387 ------------- Internet Software & Services Total 10,705,387 IT SERVICES - 1.2% Cognizant Technology Solutions Corp., Class A (a) 358,000 10,922,580 ------------- IT Services Total 10,922,580 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.9% Altera Corp. (a) 224,300 4,389,551 Broadcom Corp., Class A (a) 125,300 3,419,437 Intel Corp. 798,000 16,007,880 Linear Technology Corp. 59,200 2,145,408 Marvell Technology Group Ltd. (a) 274,100 7,162,233 Microchip Technology, Inc. 101,000 2,710,840 ------------- Semiconductors & Semiconductor Equipment Total 35,835,349 SOFTWARE - 7.5% Amdocs Ltd. (a) 297,700 6,498,791 Microsoft Corp. 1,620,000 44,793,000 Oracle Corp. (a) 733,800 8,277,264 SAP AG, ADR 118,500 4,615,575 Symantec Corp. (a) 67,400 3,698,912 ------------- Software Total 67,883,542 ------------- INFORMATION TECHNOLOGY TOTAL 222,302,324 MATERIALS - 4.8% CHEMICALS - 2.5% Praxair, Inc. 532,300 22,750,502 ------------- Chemicals Total 22,750,502 METALS & MINING - 2.3% Alcoa, Inc. 366,800 12,320,812 Phelps Dodge Corp. 89,260 8,214,598 ------------- Metals & Mining Total 20,535,411 ------------- MATERIALS TOTAL 43,285,913 TOTAL COMMON STOCKS (cost of $768,598,021) 892,476,259 See Accompanying Notes to Financial Statements. 47 ________________________________________________________________________________ September 30, 2004 Columbia Large Cap Growth Fund SHARES VALUE ($) ------- ------------- PREFERRED STOCK - 0.9% CONSUMER DISCRETIONARY - 0.9% MEDIA - 0.9% News Corp., Ltd., ADR 260,400 8,158,332 ------------- Media Total 8,158,332 ------------- CONSUMER DISCRETIONARY TOTAL 8,158,332 TOTAL PREFERRED STOCK (cost of $8,689,361) 8,158,332 PAR ($) ------- SHORT-TERM OBLIGATION - 1.0% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by a U.S. Treasury Bond maturing 02/15/31, market value $9,707,958 (repurchase proceeds $9,513,418) 9,513,000 9,513,000 ------------- TOTAL SHORT-TERM OBLIGATION (cost of $9,513,000) 9,513,000 TOTAL INVESTMENTS - 100.2% (COST OF $786,800,382) (c) 910,147,591 OTHER ASSETS & LIABILITIES, NET - (0.2)% (2,138,709) NET ASSETS - 100.0% 908,008,882 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2004, the value of this security represents 1.0% of net assets. (c) Cost for federal income tax purposes is $798,246,142. ACRONYM NAME ------- ---- ADR American Depositary Receipt GDR Global Depositary Receipt See Accompanying Notes to Financial Statements. 48 INVESTMENT PORTFOLIO ___________________________________________________________ September 30, 2004 Columbia Disciplined Value Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - 99.6% CONSUMER DISCRETIONARY - 9.2% AUTOMOBILES - 1.3% Ford Motor Co. 407,400 5,723,970 ------------- Automobiles Total 5,723,970 HOTELS, RESTAURANTS & LEISURE - 1.1% McDonald's Corp. 168,800 4,731,464 ------------- Hotels, Restaurants & Leisure Total 4,731,464 MEDIA - 3.4% Comcast Corp., Class A (a) 141,600 3,998,784 Fox Entertainment Group, Inc., Class A (a) 132,300 3,670,002 Time Warner, Inc. (a) 428,700 6,919,218 ------------- Media Total 14,588,004 MULTILINE RETAIL - 1.4% Saks, Inc. (a) 186,400 2,246,120 Sears Roebuck and Co. 89,500 3,566,575 ------------- Multiline Retail Total 5,812,695 SPECIALTY RETAIL - 2.0% Barnes & Noble, Inc. (a) 144,800 5,357,600 Toys `R' US, Inc. (a) 172,700 3,063,698 ------------- Specialty Retail Total 8,421,298 ------------- CONSUMER DISCRETIONARY TOTAL 39,277,431 CONSUMER STAPLES - 7.6% BEVERAGES - 2.1% Coca-Cola Co. 229,200 9,179,460 ------------- Beverages Total 9,179,460 FOOD & STAPLES RETAILING - 1.6% Costco Wholesale Corp. 160,600 6,674,536 ------------- Food & Staples Retailing Total 6,674,536 HOUSEHOLD PRODUCTS - 1.3% Procter & Gamble Co. 106,100 5,742,132 ------------- Household Products Total 5,742,132 PERSONAL PRODUCTS - 2.6% Gillette Co. 262,500 10,956,750 ------------- Personal Products Total 10,956,750 ------------- CONSUMER STAPLES TOTAL 32,552,878 ENERGY - 12.6% OIL & GAS - 12.6% Amerada Hess Corp. 32,700 2,910,300 ChevronTexaco Corp. 373,300 20,023,812 SHARES VALUE ($) ------- ------------- Devon Energy Corp. 128,100 9,096,381 Exxon Mobil Corp. 458,300 22,149,639 ------------- Oil & Gas Total 54,180,132 ------------- ENERGY TOTAL 54,180,132 FINANCIALS - 31.5% CAPITAL MARKETS - 0.5% State Street Corp. 48,500 2,071,435 ------------- Capital Markets Total 2,071,435 COMMERCIAL BANKS - 7.8% City National Corp. 70,200 4,559,490 National City Corp. 207,500 8,013,650 U.S. Bancorp 82,900 2,395,810 UnionBanCal Corp. 52,400 3,102,604 Wachovia Corp. 327,900 15,394,905 ------------- Commercial Banks Total 33,466,459 DIVERSIFIED FINANCIAL SERVICES - 8.2% Citigroup, Inc. 386,100 17,034,732 JPMorgan Chase & Co. 452,700 17,985,771 ------------- Diversified Financial Services Total 35,020,503 INSURANCE - 10.2% American International Group, Inc. 30,400 2,066,896 Chubb Corp. 156,000 10,963,680 First American Corp. 125,400 3,866,082 Hartford Financial Services Group, Inc. 192,600 11,927,718 MetLife, Inc. 68,600 2,651,390 Prudential Financial, Inc. 261,600 12,305,664 ------------- Insurance Total 43,781,430 REAL ESTATE - 1.7% Rayonier, Inc. 159,997 7,238,264 ------------- Real Estate Total 7,238,264 THRIFTS & MORTGAGE FINANCE - 3.1% Freddie Mac 206,600 13,478,584 ------------- Thrifts & Mortgage Finance Total 13,478,584 ------------- FINANCIALS TOTAL 135,056,675 HEALTH CARE - 4.8% HEALTH CARE PROVIDERS & SERVICES - 2.5% CIGNA Corp. 57,200 3,982,836 Medco Health Solutions, Inc. (a) 224,200 6,927,780 ------------- Health Care Providers & Services Total 10,910,616 PHARMACEUTICALS - 2.3% Merck & Co., Inc. 296,500 9,784,500 ------------- Pharmaceuticals Total 9,784,500 ------------- HEALTH CARE TOTAL 20,695,116 See Accompanying Notes to Financial Statements. 49 ________________________________________________________________________________ September 30, 2004 Columbia Disciplined Value Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) INDUSTRIALS - 8.3% AEROSPACE & DEFENSE - 0.6% Northrop Grumman Corp. 52,400 2,794,492 ------------- Aerospace & Defense Total 2,794,492 COMMERCIAL SERVICES & SUPPLIES - 1.9% Cendant Corp. 369,600 7,983,360 ------------- Commercial Services & Supplies Total 7,983,360 INDUSTRIAL CONGLOMERATES - 5.3% General Electric Co. 508,000 17,058,640 Textron, Inc. 88,100 5,662,187 ------------- Industrial Conglomerates Total 22,720,827 TRADING COMPANIES & DISTRIBUTORS - 0.5% W.W. Grainger, Inc. 38,400 2,213,760 ------------- Trading Companies & Distributors Total 2,213,760 ------------- INDUSTRIALS TOTAL 35,712,439 INFORMATION TECHNOLOGY - 8.0% COMPUTERS & PERIPHERALS - 3.7% Hewlett-Packard Co. 118,200 2,216,250 International Business Machines Corp. 159,500 13,675,530 ------------- Computers & Peripherals Total 15,891,780 ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.2% Avnet Inc. (a) 199,100 3,408,592 Vishay Intertechnology, Inc. (a) 128,600 1,658,940 ------------- Electronic Equipment & Instruments Total 5,067,532 IT SERVICES - 1.0% Computer Sciences Corp. (a) 47,600 2,241,960 Convergys Corp. (a) 152,900 2,053,447 ------------- IT Services Total 4,295,407 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT-0.5% Intersil Corp. 135,400 2,156,922 ------------- Semiconductors & Semiconductor Equipment Total 2,156,922 SOFTWARE - 1.6% Microsoft Corp. 245,800 6,796,370 ------------- Software Total 6,796,370 ------------- INFORMATION TECHNOLOGY TOTAL 34,208,011 MATERIALS - 6.8% CHEMICALS - 0.5% Sigma-Aldrich Corp. 35,900 2,082,200 ------------- Chemicals Total 2,082,200 SHARES VALUE ($) ------- ------------- CONTAINERS & PACKAGING - 2.0% Temple-Inland, Inc. 128,300 8,615,345 ------------- Containers & Packaging Total 8,615,345 METALS & MINING - 2.9% Phelps Dodge Corp. (a) 57,700 5,310,131 Southern Peru Copper Corp. 142,700 7,371,882 ------------- Metals & Mining Total 12,682,013 PAPER & FOREST PRODUCTS - 1.4% Georgia-Pacific Corp. 165,000 5,931,750 ------------- Paper & Forest Products Total 5,931,750 ------------- MATERIALS TOTAL 29,311,308 TELECOMMUNICATION SERVICES - 5.5% DIVERSIFIED TELECOMMUNICATION SERVICES - 5.5% BellSouth Corp. 79,300 2,150,616 SBC Communications, Inc. 657,700 17,067,315 Verizon Communications, Inc. 108,300 4,264,854 ------------- Diversified Telecommunication Services Total 23,482,785 ------------- TELECOMMUNICATION SERVICES TOTAL 23,482,785 UTILITIES - 5.3% ELECTRIC UTILITIES - 4.5% American Electric Power Co., Inc. 69,100 2,208,436 PG&E Corp. (a) 216,700 6,587,680 TECO Energy, Inc. 594,000 8,036,820 TXU Corp. 49,800 2,386,416 ------------- Electric Utilities Total 19,219,352 MULTI-UTILITIES & UNREGULATED POWER - 0.8% Duke Energy Corp. 160,400 3,671,557 ------------- Multi-Utilities & Unregulated Power Total 3,671,557 ------------- UTILITIES TOTAL 22,890,909 TOTAL COMMON STOCKS (cost of $402,009,428) 427,367,684 PAR ($) ------- SHORT-TERM OBLIGATION - 0.5% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by a U.S. Treasury Bond maturing 08/15/19, market value $2,178,375 (repurchase proceeds $2,129,093) 2,129,000 2,129,000 ------------- TOTAL SHORT-TERM OBLIGATION (cost of $2,129,000) 2,129,000 See Accompanying Notes to Financial Statements. 50 ________________________________________________________________________________ September 30, 2004 Columbia Disciplined Value Fund VALUE ($) ------------- TOTAL INVESTMENTS - 100.1% (COST OF $404,138,428) (b) 429,496,684 OTHER ASSETS & LIABILITIES, NET - (0.1)% (259,146) NET ASSETS - 100.0% 429,237,538 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $404,794,609. See Accompanying Notes to Financial Statements. 51 INVESTMENT PORTFOLIO ___________________________________________________________ September 30, 2004 Columbia International Equity Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - 94.3% CONSUMER DISCRETIONARY - 14.0% AUTO COMPONENTS - 1.2% Continental AG 44,000 2,397,035 Denso Corp. 148,100 3,509,177 ------------- Auto Components Total 5,906,212 AUTOMOBILES - 2.9% Renault SA 86,041 7,057,423 Toyota Motor Corp. 188,600 7,239,251 ------------- Automobiles Total 14,296,674 HOTELS, RESTAURANTS & LEISURE - 1.6% Carnival Corp. 68,400 3,234,636 InterContinental Hotels Group PLC 178,859 2,039,223 OPAP SA 120,620 2,321,888 ------------- Hotels, Restaurants & Leisure Total 7,595,747 HOUSEHOLD DURABLES - 2.2% Funai Electric Co., Ltd. 17,000 2,297,805 Koninklijke (Royal) Philips Electronics NV 158,121 3,633,859 Matsushita Electric Industrial Co., Ltd. 347,000 4,642,669 ------------- Household Durables Total 10,574,333 LEISURE EQUIPMENT & PRODUCTS - 0.7% Fuji Photo Film Co., Ltd. 106,000 3,490,529 ------------- Leisure Equipment & Products Total 3,490,529 MEDIA - 2.7% Dentsu, Inc. 692 1,856,849 JC Decaux SA (a) 164,500 3,747,767 News Corp., Ltd. 262,200 2,156,573 Pearson PLC 314,500 3,368,417 WPP Group PLC 219,000 2,044,802 ------------- Media Total 13,174,408 MULTILINE RETAIL - 1.4% Metro AG 77,265 3,455,512 Takashimaya Co., Ltd. 117,000 975,859 Wal-Mart de Mexico SA de CV, Series V 753,600 2,561,419 ------------- Multiline Retail Total 6,992,790 SPECIALTY RETAIL - 0.6% Aoyama Trading Co., Ltd. 38,100 868,274 Nitori Co., Ltd. 31,750 1,825,254 ------------- Specialty Retail Total 2,693,528 TEXTILES, APPAREL & LUXURY GOODS - 0.7% Burberry Group PLC 468,900 3,169,596 ------------- Textiles, Apparel & Luxury Goods Total 3,169,596 ------------- CONSUMER DISCRETIONARY TOTAL 67,893,817 SHARES VALUE ($) ------- ------------- CONSUMER STAPLES - 8.8% BEVERAGES - 1.4% Diageo PLC 354,330 4,434,135 SABMiller PLC 193,460 2,559,502 ------------- Beverages Total 6,993,637 FOOD & STAPLES RETAILING - 0.8% Aeon Co., Ltd. 58,900 954,423 Aeon Co., Ltd., New Shares 58,900 940,857 William Morrison Supermarkets PLC 526,742 1,838,986 ------------- Food & Staples Retailing Total 3,734,266 FOOD PRODUCTS - 3.5% Ajinomoto Co., Inc. 199,000 2,280,760 Nestle SA, Registered Shares 36,944 8,484,197 Unilever PLC 751,620 6,130,347 ------------- Food Products Total 16,895,304 HOUSEHOLD PRODUCTS - 2.1% Kao Corp. 190,000 4,208,289 Reckitt Benckiser PLC 248,723 6,104,755 ------------- Household Products Total 10,313,044 TOBACCO - 1.0% Imperial Tobacco Group PLC 218,092 4,763,695 ------------- Tobacco Total 4,763,695 ------------- CONSUMER STAPLES TOTAL 42,699,946 ENERGY - 11.0% ENERGY EQUIPMENT & SERVICES - 0.2% Saipem S.p.A. 114,000 1,283,243 ------------- Energy Equipment & Services Total 1,283,243 OIL & GAS - 10.8% BG Group PLC 370,918 2,495,409 BP PLC 1,200,740 11,497,231 EnCana Corp. 137,600 6,367,895 ENI S.p.A. 584,681 13,114,883 Fortum Oyj 166,600 2,330,458 Norsk Hydro ASA 34,100 2,487,663 PTT Public Co., Ltd. 949,400 3,873,699 Shell Transport & Trading Co., PLC 476,500 3,504,864 Total SA 32,680 6,670,213 ------------- Oil & Gas Total 52,342,315 ------------- ENERGY TOTAL 53,625,558 FINANCIALS - 23.3% CAPITAL MARKETS - 0.5% Deutsche Bank AG, Registered Shares 34,961 2,518,476 ------------- Capital Markets Total 2,518,476 See Accompanying Notes to Financial Statements. 52 ________________________________________________________________________________ September 30, 2004 Columbia International Equity Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) COMMERCIAL BANKS - 14.6% Anglo Irish Bank Corp., PLC 149,600 2,767,239 Banco Popolare di Verona E Novara 164,400 2,887,030 Banco Popular Espanol SA 50,800 2,827,279 Bank of Ireland 247,767 3,341,685 Barclays PLC 905,300 8,705,458 BNP Paribas SA 98,057 6,349,815 Credit Agricole SA 103,770 2,837,351 Danske Bank A/S 101,600 2,673,426 DNB NOR ASA 311,200 2,467,052 Erste Bank der oesterreichischen Sparkassen AG 62,520 2,606,158 Hansabank Ltd. 249,147 2,257,639 HBOS PLC 184,020 2,490,536 Kookmin Bank, ADR (a) 89,900 2,862,416 Lloyds TSB Group PLC 306,810 2,401,670 Mitsubishi Tokyo Financial Group, Inc. 405 3,382,915 Mizuho Financial Group, Inc. 629 2,368,470 National Bank of Greece SA 107,081 2,604,027 Royal Bank of Scotland Group PLC 243,545 7,051,234 Skandinaviska Enskilda Banken AB, Class A 372,000 5,751,512 Sumitomo Mitsui Financial Group, Inc. 383 2,194,617 ------------- Commercial Banks Total 70,827,529 DIVERSIFIED FINANCIAL SERVICES - 1.9% Credit Saison Co., Ltd. 39,500 1,217,980 ING Groep NV 309,300 7,813,548 ------------- Diversified Financial Services Total 9,031,528 INSURANCE - 4.4% Aegon NV 110,900 1,199,582 Allianz AG, Registered Shares 36,871 3,721,337 Axa 115,300 2,340,035 Irish Life & Permanent PLC 204,800 3,309,576 Millea Holdings, Inc. 349 4,507,745 Mitsui Sumitomo Insurance Co., Ltd. 235,000 1,942,876 Riunione Adriatica di Sicurta S.p.A 87,913 1,692,197 T&D Holdings, Inc. (a) 60,500 2,659,285 ------------- Insurance Total 21,372,633 REAL ESTATE - 1.9% Mitsubishi Estate Co., Ltd. 185,000 1,935,034 Sumitomo Realty & Development Co., Ltd. 93,000 992,285 Sun Hung Kai Properties Ltd. 549,000 5,170,811 Swire Pacific Ltd., Class A 168,000 1,167,535 ------------- Real Estate Total 9,265,665 ------------- FINANCIALS TOTAL 113,015,831 HEALTH CARE - 10.9% HEALTH CARE EQUIPMENT & SUPPLIES - 2.5% Nobel Biocare Holding AG 11,158 1,734,869 Smith & Nephew PLC 847,092 7,807,850 SHARES VALUE ($) ------- ------------- Synthes, Inc. 22,700 2,478,537 ------------- Health Care Equipment & Supplies Total 12,021,256 PHARMACEUTICALS - 8.4% AstraZeneca PLC 126,600 5,199,410 Chugai Pharmaceutical Co., Ltd. 225,500 3,259,296 GlaxoSmithKline PLC 390,284 8,435,128 Novartis AG, Registered Shares 135,840 6,339,271 Sanofi-Aventis 90,360 6,574,882 Takeda Chemical Industries Ltd. 165,200 7,513,346 Teva Pharmaceutical Industries Ltd., ADR 146,400 3,799,080 ------------- Pharmaceuticals Total 41,120,413 ------------- HEALTH CARE TOTAL 53,141,669 INDUSTRIALS - 9.1% BUILDING PRODUCTS - 0.5% Wienerberger AG 63,689 2,392,245 ------------- Building Products Total 2,392,245 COMMERCIAL SERVICES & SUPPLIES - 1.0% Randstad Holding NV 134,400 4,872,135 ------------- Commercial Services & Supplies Total 4,872,135 CONSTRUCTION & ENGINEERING - 2.0% JGC Corp. 341,000 3,499,974 Shimizu Corp. 551,000 2,200,586 Vinci SA 32,710 3,770,156 ------------- Construction & Engineering Total 9,470,716 ELECTRICAL EQUIPMENT - 0.5% Siemens AG, Registered Shares 35,279 2,600,256 ------------- Electrical Equipment Total 2,600,256 INDUSTRIAL CONGLOMERATES - 1.2% Hutchison Whampoa Ltd. 307,000 2,398,630 NIWS Co., Ltd. 420 1,068,263 Smiths Group PLC 183,351 2,467,496 ------------- Industrial Conglomerates Total 5,934,389 MACHINERY - 2.5% Atlas Copco AB, Class B 129,400 4,567,573 Heidelberger Druckmaschinen AG (a) 78,700 2,349,103 Linde AG 48,500 2,800,826 Volvo AB, Class B 71,100 2,512,342 ------------- Machinery Total 12,229,844 ROAD & RAIL - 0.6% Canadian National Railway Co. 58,417 2,864,210 ------------- Road & Rail Total 2,864,210 TRADING COMPANIES & DISTRIBUTORS - 0.8% Mitsubishi Corp. 351,000 3,799,846 ------------- Trading Companies & Distributors Total 3,799,846 ------------- INDUSTRIALS TOTAL 44,163,641 See Accompanying Notes to Financial Statements. 53 ________________________________________________________________________________ September 30, 2004 Columbia International Equity Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - 2.9% ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.2% Tandberg ASA 253,500 2,292,441 TDK Corp. 49,400 3,297,928 ------------- Electronic Equipment & Instruments Total 5,590,369 OFFICE ELECTRONICS - 0.9% Canon, Inc. 96,700 4,551,715 ------------- Office Electronics Total 4,551,715 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.8% Samsung Electronics Co., Ltd. 9,831 3,904,454 ------------- Semiconductors & Semiconductor Equipment Total 3,904,454 ------------- INFORMATION TECHNOLOGY TOTAL 14,046,538 MATERIALS - 4.8% CHEMICALS - 3.5% BASF AG 98,100 5,792,287 L'Air Liquide SA 22,586 3,551,439 Novozymes A/S, Class B 27,150 1,225,150 Syngenta AG (a) 68,702 6,568,243 ------------- Chemicals Total 17,137,119 CONSTRUCTION MATERIALS - 0.7% Cemex SA de CV, ADR 123,700 3,480,918 ------------- Construction Materials Total 3,480,918 PAPER & FOREST PRODUCTS - 0.6% UPM-Kymmene Oyj 139,800 2,665,285 ------------- Paper & Forest Products Total 2,665,285 ------------- MATERIALS TOTAL 23,283,322 TELECOMMUNICATION SERVICES - 6.4% DIVERSIFIED TELECOMMUNICATION SERVICES - 4.1% Belgacom SA (a) 73,300 2,629,124 Deutsche Telekom AG, Registered Shares (a) 157,964 2,936,812 France Telecom SA 142,800 3,567,777 Nippon Telegraph & Telephone Corp. 633 2,532,467 TDC A/S 73,000 2,582,361 Telecom Italia S.p.A. (a) 801,154 2,476,997 Telefonaktiebolaget LM Ericsson, ADR (a) 99,000 3,092,760 ------------- Diversified Telecommunication Services Total 19,818,298 WIRELESS TELECOMMUNICATION SERVICES - 2.3% Hutchison Telecom International Reserved Shares (a)(b) 4,093 --(c) NTT DoCoMo, Inc. 1,872 3,191,438 Vodafone Group PLC 3,383,400 8,120,294 ------------- Wireless Telecommunication Services Total 11,311,732 ------------- TELECOMMUNICATION SERVICES TOTAL 31,130,030 SHARES VALUE ($) ------- ------------- UTILITIES - 3.1% ELECTRIC UTILITIES - 2.6% E. ON AG 67,146 4,960,022 National Grid Transco PLC 609,600 5,165,511 Scottish Power PLC 337,026 2,581,391 ------------- Electric Utilities Total 12,706,924 GAS UTILITIES - 0.5% Centrica PLC 528,700 2,407,695 ------------- Gas Utilities Total 2,407,695 ------------- UTILITIES TOTAL 15,114,619 TOTAL COMMON STOCKS (cost of $416,864,333) 458,114,971 PREFERRED STOCK - 1.0% CONSUMER DISCRETIONARY - 1.0% AUTOMOBILES - 1.0% Porsche AG 7,300 4,753,033 ------------- Automobiles Total 4,753,033 ------------- CONSUMER DISCRETIONARY TOTAL 4,753,033 TOTAL PREFERRED STOCK (cost of $4,666,378) 4,753,033 PAR ($) ------- SHORT-TERM OBLIGATION - 3.9% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by a U.S. Treasury Bond maturing 11/15/15, market value $19,287,355 (repurchase proceeds $18,904,830) 18,904,000 18,904,000 ------------- TOTAL SHORT-TERM OBLIGATION (cost of $18,904,000) 18,904,000 TOTAL INVESTMENTS - 99.2% (COST OF $440,434,711) (d) 481,772,004 OTHER ASSETS & LIABILITIES, NET - 0.8% 3,961,710 NET ASSETS - 100.0% 485,733,714 See Accompanying Notes to Financial Statements. 54 ________________________________________________________________________________ September 30, 2004 Columbia International Equity Fund NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Represents fair value as determined in good faith under the direction of the Board of Trustees. (c) Security has no value. (d) Cost for federal income tax purposes is $440,556,800. SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY VALUE INVESTMENTS ----------------------------------------------------------------------- United Kingdom $116,784,634 24.3% Japan 91,206,065 18.9 France 46,466,857 9.7 Germany 38,284,697 8.0 Switzerland 23,126,581 4.8 Italy 21,454,351 4.5 United States* 21,382,537 4.4 Netherlands 17,519,123 3.6 Sweden 15,924,187 3.3 Ireland 9,418,500 2.0 Canada 9,232,104 1.9 Hong Kong 8,736,976 1.8 Norway 7,247,156 1.5 Korea, Republic of 6,766,870 1.4 Denmark 6,480,937 1.3 Mexico 6,042,337 1.3 Austria 4,998,404 1.0 Finland 4,995,743 1.0 Greece 4,925,915 1.0 Thailand 3,873,699 0.8 Israel 3,799,080 0.8 Panama 3,234,636 0.7 Spain 2,827,279 0.6 Belgium 2,629,124 0.5 Estonia 2,257,639 0.5 Australia 2,156,573 0.4 ------------ ----------- Total $481,772,004 100.0% ============ =========== * Includes Short-Term Obligation. Certain securities are listed by country of underlying exposure but may trade predominately on other exchanges. ACRONYM NAME ------- ---- ADR American Depositary Receipt See Accompanying Notes to Financial Statements. 55 INVESTMENT PORTFOLIO ___________________________________________________________ September 30, 2004 Columbia Large Cap Core Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - 96.5% CONSUMER DISCRETIONARY - 9.2% AUTO COMPONENTS - 0.5% Magna International, Inc., Class A 25,800 1,911,264 ------------- Auto Components Total 1,911,264 HOTELS, RESTAURANTS & LEISURE - 1.1% Yum! Brands, Inc. 98,400 4,000,944 ------------- Hotels, Restaurants & Leisure Total 4,000,944 HOUSEHOLD DURABLES - 0.5% Lennar Corp., Class A 41,300 1,965,880 ------------- Household Durables Total 1,965,880 MEDIA - 3.3% Fox Entertainment Group, Inc., Class A (a) 69,500 1,927,930 Liberty Media Corp., Class A (a) 217,800 1,899,216 McGraw-Hill Companies, Inc. 41,000 3,267,290 Viacom, Inc., Class B 169,900 5,701,844 ------------- Media Total 12,796,280 MULTILINE RETAIL - 0.7% J.C. Penney Co., Inc. 78,200 2,758,896 ------------- Multiline Retail Total 2,758,896 SPECIALTY RETAIL - 3.1% Abercrombie & Fitch Co., Class A 99,400 3,131,100 Best Buy Co., Inc. 85,600 4,642,944 Staples, Inc. 131,900 3,933,258 ------------- Specialty Retail Total 11,707,302 ------------- CONSUMER DISCRETIONARY TOTAL 35,140,566 CONSUMER STAPLES - 9.0% BEVERAGES - 4.2% Diageo PLC, ADR 114,500 5,774,235 PepsiCo, Inc. 210,000 10,216,500 ------------- Beverages Total 15,990,735 FOOD & STAPLES RETAILING - 1.3% Costco Wholesale Corp. 116,700 4,850,052 ------------- Food & Staples Retailing Total 4,850,052 HOUSEHOLD PRODUCTS - 3.0% Procter & Gamble Co. 213,600 11,560,032 ------------- Household Products Total 11,560,032 TOBACCO - 0.5% Altria Group, Inc. 42,900 2,018,016 ------------- Tobacco Total 2,018,016 ------------- CONSUMER STAPLES TOTAL 34,418,835 SHARES VALUE ($) ------- ------------- ENERGY - 7.1% OIL & GAS - 7.1% Apache Corp. 41,900 2,099,609 ConocoPhillips 119,000 9,859,150 EOG Resources, Inc. 63,200 4,161,720 Exxon Mobil Corp. 230,300 11,130,399 ------------- Oil & Gas Total 27,250,878 ------------- ENERGY TOTAL 27,250,878 FINANCIALS - 19.9% CAPITAL MARKETS - 3.5% Bank of New York Co., Inc. 101,900 2,972,423 E*TRADE Financial Corp. (a) 255,200 2,914,384 Goldman Sachs Group, Inc. 41,100 3,832,164 Merrill Lynch & Co., Inc. 76,200 3,788,664 ------------- Capital Markets Total 13,507,635 COMMERCIAL BANKS - 8.0% M&T Bank Corp. 19,700 1,885,290 National City Corp. 76,400 2,950,568 SouthTrust Corp. 68,760 2,864,542 SunTrust Banks, Inc. 28,400 1,999,644 U.S. Bancorp 162,500 4,696,250 Wachovia Corp. 157,100 7,375,845 Wells Fargo & Co. 116,300 6,934,969 Zions Bancorp. 31,700 1,934,968 ------------- Commercial Banks Total 30,642,076 DIVERSIFIED FINANCIAL SERVICES - 3.0% Citigroup, Inc. 169,600 7,482,752 JPMorgan Chase & Co. 97,200 3,861,756 ------------- Diversified Financial Services Total 11,344,508 INSURANCE - 4.1% Aflac, Inc. 101,900 3,995,499 American International Group, Inc. 26,700 1,815,333 Hartford Financial Services Group, Inc. 64,400 3,988,292 MetLife, Inc. 51,100 1,975,015 XL Capital Ltd., Class A 53,900 3,988,061 ------------- Insurance Total 15,762,200 THRIFTS & MORTGAGE FINANCE - 1.3% Fannie Mae 81,400 5,160,760 ------------- Thrifts & Mortgage Finance Total 5,160,760 ------------- FINANCIALS TOTAL 76,417,179 HEALTH CARE - 14.1% BIOTECHNOLOGY - 0.9% Genentech, Inc. (a) 39,800 2,086,316 Invitrogen Corp. (a) 23,100 1,270,269 ------------- Biotechnology Total 3,356,585 See Accompanying Notes to Financial Statements. 56 ________________________________________________________________________________ September 30, 2004 Columbia Large Cap Core Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) HEALTH CARE EQUIPMENT & SUPPLIES - 2.4% Alcon, Inc. 25,000 2,005,000 Boston Scientific Corp. (a) 57,700 2,292,421 Medtronic, Inc. 57,800 2,999,820 Varian Medical Systems, Inc. (a) 59,600 2,060,372 ------------- Health Care Equipment & Supplies Total 9,357,613 HEALTH CARE PROVIDERS & SERVICES - 1.9% Anthem, Inc. (a) 47,400 4,135,650 Caremark Rx, Inc. (a) 100,500 3,223,035 ------------- Health Care Providers & Services Total 7,358,685 PHARMACEUTICALS - 8.9% Abbott Laboratories 98,800 4,185,168 Allergan, Inc. 49,600 3,598,480 GlaxoSmithKline PLC, ADR 68,160 2,980,637 Johnson & Johnson 59,500 3,351,635 Merck & Co., Inc. 85,800 2,831,400 Pfizer, Inc. 456,700 13,975,020 Teva Pharmaceutical Industries Ltd., ADR 117,000 3,036,150 ------------- Pharmaceuticals Total 33,958,490 ------------- HEALTH CARE TOTAL 54,031,373 INDUSTRIALS - 12.1% AEROSPACE & DEFENSE - 2.7% Northrop Grumman Corp. 56,600 3,018,478 United Technologies Corp. 77,000 7,190,260 ------------- Aerospace & Defense Total 10,208,738 AIR FREIGHT & LOGISTICS - 1.6% United Parcel Service, Inc., Class B 79,200 6,012,864 ------------- Air Freight & Logistics Total 6,012,864 BUILDING PRODUCTS - 1.0% Masco Corp. 115,900 4,002,027 ------------- Building Products Total 4,002,027 COMMERCIAL SERVICES & SUPPLIES - 1.9% Cendant Corp. 142,500 3,078,000 Manpower, Inc. 45,300 2,015,397 Republic Services, Inc. 75,600 2,249,856 ------------- Commercial Services & Supplies Total 7,343,253 INDUSTRIAL CONGLOMERATES - 1.8% General Electric Co. 211,404 7,098,946 ------------- Industrial Conglomerates Total 7,098,946 SHARES VALUE ($) ------- ------------- MACHINERY - 3.1% Eaton Corp. 36,000 2,282,760 Flowserve Corp. (a) 88,000 2,127,840 Ingersoll-Rand Co., Class A 45,800 3,113,026 PACCAR, Inc. 61,300 4,237,056 ------------- Machinery Total 11,760,682 ------------- INDUSTRIALS TOTAL 46,426,510 INFORMATION TECHNOLOGY - 15.0% COMMUNICATIONS EQUIPMENT - 1.3% Avaya, Inc. (a) 139,900 1,950,206 Cisco Systems, Inc. (a) 177,300 3,209,130 ------------- Communications Equipment Total 5,159,336 COMPUTERS & PERIPHERALS - 2.2% Lexmark International, Inc., Class A (a) 99,781 8,382,602 ------------- Computers & Peripherals Total 8,382,602 ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.7% Tektronix, Inc. 82,900 2,756,425 ------------- Electronic Equipment & Instruments Total 2,756,425 IT SERVICES - 1.6% Accenture Ltd., Class A (a) 219,600 5,940,180 ------------- IT Services Total 5,940,180 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.2% Altera Corp. (a) 104,800 2,050,936 Analog Devices, Inc. 78,900 3,059,742 ASML Holding N.V., N.Y. Registered Shares (a) 211,500 2,722,005 Marvell Technology Group Ltd. (a) 94,800 2,477,124 Maxim Integrated Products, Inc. 58,800 2,486,652 Taiwan Semiconductor Manufacturing Co., Ltd., ADR 485,300 3,465,042 ------------- Semiconductors & Semiconductor Equipment Total 16,261,501 SOFTWARE - 5.0% Microsoft Corp. 544,700 15,060,955 Symantec Corp. (a) 76,700 4,209,296 ------------- Software Total 19,270,251 ------------- INFORMATION TECHNOLOGY TOTAL 57,770,295 MATERIALS - 3.9% CONTAINERS & PACKAGING - 0.6% Smurfit-Stone Container Corp. (a) 124,400 2,409,628 ------------- Containers & Packaging Total 2,409,628 METALS & MINING - 2.7% Arch Coal, Inc. 77,600 2,754,024 Companhia Vale do Rio Doce, ADR 138,900 2,673,825 Peabody Energy Corp. 45,700 2,719,150 Phelps Dodge Corp. 23,400 2,153,502 ------------- Metals & Mining Total 10,300,501 See Accompanying Notes to Financial Statements. 57 ________________________________________________________________________________ September 30, 2004 Columbia Large Cap Core Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) MATERIALS - (CONTINUED) PAPER & FOREST PRODUCTS - 0.6% MeadWestvaco Corp. 75,500 2,408,450 ------------- Paper & Forest Products Total 2,408,450 ------------- MATERIALS TOTAL 15,118,579 TELECOMMUNICATION SERVICES - 3.4% DIVERSIFIED TELECOMMUNICATION SERVICES - 3.4% ALLTEL Corp. 71,100 3,904,101 BellSouth Corp. 108,300 2,937,096 Citizens Communications Co. 153,100 2,050,009 SBC Communications, Inc. 74,900 1,943,655 Verizon Communications, Inc. 53,100 2,091,078 ------------- Diversified Telecommunication Services Total 12,925,939 ------------- TELECOMMUNICATION SERVICES TOTAL 12,925,939 UTILITIES - 2.8% ELECTRIC UTILITIES - 1.8% American Electric Power Co., Inc. 66,500 2,125,340 Entergy Corp. 78,400 4,751,824 ------------- Electric Utilities Total 6,877,164 MULTI-UTILITIES & UNREGULATED POWER - 1.0% Sempra Energy 110,700 4,006,233 ------------- Multi-Utilities & Unregulated Power Total 4,006,233 ------------- UTILITIES TOTAL 10,883,397 TOTAL COMMON STOCKS (cost of $345,905,412) 370,383,551 PREFERRED STOCK - 1.0% CONSUMER DISCRETIONARY - 1.0% MEDIA - 1.0% News Corp., Ltd., ADR 126,100 3,950,713 ------------- Media Total 3,950,713 ------------- CONSUMER DISCRETIONARY TOTAL 3,950,713 TOTAL PREFERRED STOCK (cost of $4,525,173) 3,950,713 INVESTMENT COMPANIES - 2.6% Nasdaq-100 Index Tracking Stock 77,500 2,724,125 Consumer Staples Select SPDR Fund 310,900 6,734,094 SPDR Trust Series 1 3,400 379,984 ------------- TOTAL INVESTMENT COMPANIES (cost of $9,782,938) 9,838,203 PAR ($) VALUE ($) ------- ------------- SHORT-TERM OBLIGATION - 0.2% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by a U.S. Treasury Note maturing 05/15/14, market value $1,022,400 (repurchase proceeds $1,001,044) TOTAL SHORT-TERM OBLIGATION (cost of $1,001,000) 1,001,000 1,001,000 TOTAL INVESTMENTS - 100.3% (COST OF $361,214,523) (b) 385,173,467 OTHER ASSETS & LIABILITIES, NET - (0.3)% (1,246,349) NET ASSETS - 100.0% 383,927,118 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $362,485,330. ACRONYM NAME ------- ---- ADR American Depositary Receipt See Accompanying Notes to Financial Statements. 58 INVESTMENT PORTFOLIO ___________________________________________________________ September 30, 2004 Columbia Small Cap Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - 90.8% CONSUMER DISCRETIONARY - 20.7% AUTO COMPONENTS - 1.2% Cooper Tire & Rubber Co. 239,870 4,838,178 Keystone Automotive Industries, Inc. (a) 300,000 6,600,000 R&B, Inc. (a) 203,883 4,456,883 Sauer-Danfoss, Inc. 152,900 2,611,532 ------------- Auto Components Total 18,506,593 HOTELS, RESTAURANTS & LEISURE - 4.8% Buca, Inc. (a) 484,450 2,054,068 CEC Entertainment, Inc. (a) 227,230 8,350,702 Checkers Drive-In Restaurant, Inc. (a)(b) 607,900 7,142,825 Famous Dave's of America, Inc. (a) 500,000 3,750,000 Friendly Ice Cream Corp. (a) 230,000 2,219,500 Gaylord Entertainment Co. (a) 267,300 8,286,300 Jack in the Box, Inc. (a) 293,900 9,325,447 Navigant International, Inc. (a) 325,000 5,307,250 O'Charleys, Inc. (a) 627,005 10,220,182 Ruby Tuesday, Inc. 210,500 5,866,635 Ryan's Restaurant Group, Inc. (a) 418,650 6,212,766 Steak n Shake Co. (a) 182,000 3,108,560 Total Entertainment Restaurant Corp. (a)(b) 501,000 4,363,710 ------------- Hotels, Restaurants & Leisure Total 76,207,945 HOUSEHOLD DURABLES - 0.8% Bassett Furniture Industries, Inc. 138,850 2,621,488 Kimball International, Inc., Class B 127,400 1,768,312 Yankee Candle Co., Inc. (a) 304,000 8,803,840 ------------- Household Durables Total 13,193,640 INTERNET & CATALOG RETAIL - 0.7% Alloy, Inc. (a) 1,230,200 4,662,458 Valuevision Media, Inc., Class A (a) 409,000 5,476,510 ------------- Internet & Catalog Retail Total 10,138,968 LEISURE EQUIPMENT & PRODUCTS - 1.0% Callaway Golf Co. 252,400 2,667,868 RC2 Corp. (a) 290,900 9,570,610 Topps Co., Inc. 268,900 2,629,842 ------------- Leisure Equipment & Products Total 14,868,320 MEDIA - 3.4% ADVO, Inc. 360,699 11,160,027 Catalina Marketing Corp. 370,400 8,548,832 Journal Communications, Inc., Class A 179,400 3,146,676 Journal Register Co. (a) 367,500 6,945,750 Paxson Communications Corp. (a) 1,275,400 1,721,790 Pulitzer, Inc. 144,200 7,123,480 Regent Communications, Inc. (a) 451,600 2,556,056 Scholastic Corp. (a) 249,600 7,710,144 Sinclair Broadcast Group, Inc., Class A 263,100 1,920,630 Young Broadcasting, Inc., Class A (a) 229,400 2,493,578 ------------- Media Total 53,326,963 SHARES VALUE ($) ------- ------------- MULTILINE RETAIL - 0.4% Fred's, Inc. 376,800 6,767,328 ------------- Multiline Retail Total 6,767,328 SPECIALTY RETAIL - 6.1% AC Moore Arts & Crafts, Inc. (a) 180,000 4,451,400 Buckle, Inc. 349,900 9,611,753 Dress Barn, Inc. (a) 260,700 4,549,215 Gaiam, Inc. (a) 240,000 1,432,800 Gymboree Corp. (a) 499,500 7,192,800 Hancock Fabrics, Inc. 424,300 5,083,114 Haverty Furniture Companies, Inc. 186,200 3,265,948 Hot Topic, Inc. (a) 350,000 5,964,000 Kirkland's, Inc. (a) 368,500 3,463,900 Lithia Motors, Inc., Class A 343,300 7,298,558 Men's Wearhouse, Inc. (a) 157,500 4,575,375 Monro Muffler, Inc. (a) 220,000 4,807,000 Pacific Sunwear of California, Inc. (a) 150,000 3,157,500 Party City Corp. (a) 492,700 7,277,179 Regis Corp. 100,000 4,022,000 Rent-A-Center, Inc. (a) 197,750 5,113,815 Rush Enterprises, Inc., Class A (a) 150,000 1,642,500 Rush Enterprises, Inc., Class B (a) 200,000 2,338,000 Sports Authority, Inc. (a) 249,600 5,790,720 Stage Stores, Inc. (a) 168,800 5,776,336 ------------- Specialty Retail Total 96,813,913 TEXTILES, APPAREL & LUXURY GOODS - 2.3% Ashworth, Inc. (a) 300,000 2,460,000 Phillips-Van Heusen Corp. 311,900 6,949,132 Quiksilver, Inc. (a) 231,600 5,887,272 Rocky Shoes & Boots, Inc. (a) 167,100 2,924,250 Tommy Hilfiger Corp. (a) 400,900 3,956,883 Unifirst Corp. (b) 472,800 13,522,080 ------------- Textiles, Apparel & Luxury Goods Total 35,699,617 ------------- CONSUMER DISCRETIONARY TOTAL 325,523,287 CONSUMER STAPLES - 2.4% FOOD & STAPLES RETAILING - 0.5% Casey's General Stores, Inc. 316,570 5,885,036 Wild Oats Markets, Inc. (a) 193,300 1,670,112 ------------- Food & Staples Retailing Total 7,555,148 FOOD PRODUCTS - 1.4% Central Garden & Pet Co. (a) 188,600 5,774,932 Corn Products International, Inc. 145,800 6,721,380 Delta & Pine Land Co. 318,200 8,511,850 ------------- Food Products Total 21,008,162 HOUSEHOLD PRODUCTS - 0.5% Rayovac Corp. (a) 316,100 8,329,235 ------------- Household Products Total 8,329,235 ------------- CONSUMER STAPLES TOTAL 36,892,545 See Accompanying Notes to Financial Statements. 59 ________________________________________________________________________________ September 30, 2004 Columbia Small Cap Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) ENERGY - 5.1% ENERGY EQUIPMENT & SERVICES - 2.4% Atwood Oceanics, Inc. (a) 145,600 6,921,824 Core Laboratories NV (a) 130,300 3,204,077 Gulfmark Offshore, Inc. (a) 541,200 8,837,796 Newpark Resources, Inc. (a) 831,000 4,986,000 Oceaneering International, Inc. (a) 201,100 7,408,524 Offshore Logistics, Inc. (a) 100,000 3,442,000 Oil States International, Inc. (a) 145,000 2,711,500 ------------- Energy Equipment & Services Total 37,511,721 OIL & GAS - 2.7% Cimarex Energy Co. (a) 153,700 5,370,278 Houston Exploration Co. (a) 168,200 9,982,670 Plains Exploration & Production Co. (a) 84,245 2,010,086 Southwestern Energy Co. (a) 282,400 11,857,976 Vintage Petroleum, Inc. 222,500 4,465,575 Whiting Petroleum Corp. (a) 320,200 9,734,080 ------------- Oil & Gas Total 43,420,665 ------------- ENERGY TOTAL 80,932,386 FINANCIALS - 9.1% COMMERCIAL BANKS - 2.5% First Niagara Financial Group, Inc. 465,500 6,228,390 Matrix Bancorp, Inc. (a) 227,400 2,887,980 NewAlliance Bancshares, Inc. 498,500 7,153,475 Oriental Financial Group 360,537 9,756,131 Republic Bancorp, Inc. 215,737 3,322,350 SNB Bancshares, Inc. (a) 233,700 2,799,726 Taylor Capital Group, Inc. 129,628 3,111,072 Willow Grove Bancorp, Inc. 272,000 4,500,240 ------------- Commercial Banks Total 39,759,364 CONSUMER FINANCE - 0.3% Rewards Network, Inc. (a) 600,100 4,002,667 ------------- Consumer Finance Total 4,002,667 DIVERSIFIED FINANCIAL SERVICES - 0.8% Eurobancshares, Inc. (a) 184,400 3,427,996 Jefferson Bancshares, Inc. 266,400 3,505,824 Prospect Energy Corp. (a) 157,700 2,357,615 QC Holdings, Inc. (a) 225,100 3,585,843 ------------- Diversified Financial Services Total 12,877,278 INSURANCE - 2.6% AmerUs Group Co. 173,320 7,106,120 Bristol West Holdings, Inc. 256,100 4,389,554 Direct General Corp. 198,200 5,731,944 Horace Mann Educators Corp. 271,200 4,767,696 Hub International Ltd. 83,300 1,506,064 Navigators Group, Inc. (a) 152,800 4,467,872 NYMAGIC, Inc. 105,000 2,298,450 Ohio Casualty Corp. (a) 295,600 6,186,908 SHARES VALUE ($) ------- ------------- Phoenix Companies, Inc. 199,900 2,082,958 Presidential Life Corp. 140,100 2,406,918 ------------- Insurance Total 40,944,484 REAL ESTATE - 1.8% Acadia Realty Trust, REIT 231,100 3,408,725 Corporate Office Properties Trust, Inc., REIT 47,600 1,219,512 First Potomac Realty Trust, REIT 400,000 8,264,000 Gramercy Capital Corp., REIT (a) 229,200 3,575,520 Innkeepers USA Trust, Inc., REIT 466,100 5,798,284 Jones Lang LaSalle, Inc. (a) 172,900 5,707,429 Kilroy Realty Corp., REIT 7,700 292,831 Medical Office Properties, Inc., REIT (a)(c) 277,825 2,778 ------------- Real Estate Total 28,269,079 THRIFTS & MORTGAGE FINANCE - 1.1% Anchor BanCorp Wisconsin, Inc. 169,800 4,397,820 Dime Community Bancshares 283,200 4,757,760 Webster Financial Corp. 145,900 7,206,001 ------------- Thrifts & Mortgage Finance Total 16,361,581 ------------- FINANCIALS TOTAL 142,214,453 HEALTH CARE - 13.2% BIOTECHNOLOGY - 1.5% BioMarin Pharmaceuticals, Inc. (a) 399,850 2,075,221 CV Therapeutics, Inc. (a) 184,200 2,302,500 Lifecell Corp. (a) 580,000 5,800,000 PRAECIS Pharmaceuticals, Inc. (a) 507,100 1,115,620 Serologicals Corp. (a) 437,100 10,197,543 Strategic Diagnostics, Inc. (a) 800,000 1,712,000 ------------- Biotechnology Total 23,202,884 HEALTH CARE EQUIPMENT & SUPPLIES - 5.4% Analogic Corp. 158,700 6,616,203 Cytyc Corp. (a) 287,900 6,952,785 Datascope Corp. 229,150 8,547,295 Haemonetics Corp. (a) 197,000 6,469,480 Immucor, Inc. (a) 179,425 4,440,769 Invacare Corp. 463,300 21,311,800 Lifecore Biomedical, Inc. (a) 325,300 2,277,100 STAAR Surgical Co. (a) 530,600 1,750,980 SurModics, Inc. (a) 170,000 4,037,500 Thoratec Corp. (a) 749,200 7,207,304 Viasys Healthcare, Inc. (a) 174,000 2,911,020 West Pharmaceutical Services, Inc. 642,000 13,385,700 ------------- Health Care Equipment & Supplies Total 85,907,936 HEALTH CARE PROVIDERS & SERVICES - 5.4% Beverly Enterprises, Inc. (a) 628,500 4,757,745 LabOne, Inc. (a) 182,300 5,328,629 LifePoint Hospitals, Inc. (a) 164,600 4,939,646 Magellan Health Services, Inc. (a) 176,200 6,441,872 Pediatrix Medical Group, Inc. (a) 212,200 11,639,170 Priority Healthcare Corp., Class B (a) 316,975 6,387,047 Province Healthcare Co. (a) 172,100 3,600,332 See Accompanying Notes to Financial Statements. 60 ________________________________________________________________________________ September 30, 2004 Columbia Small Cap Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) HEALTH CARE PROVIDERS & SERVICES - (CONTINUED) Proxymed, Inc. (a) 73,400 731,798 PSS World Medical, Inc. (a) 640,700 6,432,628 Psychiatric Solutions, Inc. (a) 175,700 4,453,995 Res-Care, Inc. (a) 945,925 11,209,211 Select Medical Corp. 650,600 8,737,558 Triad Hospitals, Inc. (a) 180,900 6,230,196 U.S. Physical Therapy, Inc. (a) 314,200 4,269,978 ------------- Health Care Providers & Services Total 85,159,805 PHARMACEUTICALS - 0.9% Acusphere, Inc. (a) 369,500 2,313,070 Critical Therapeutics, Inc. (a) 229,200 1,340,820 Valeant Pharmaceuticals International 431,526 10,408,407 ------------- Pharmaceuticals Total 14,062,297 ------------- HEALTH CARE TOTAL 208,332,922 INDUSTRIALS - 16.7% AEROSPACE & DEFENSE - 1.4% Armor Holdings, Inc. (a) 315,365 13,122,338 Ladish Co., Inc. (a) 276,300 2,528,145 Moog, Inc., Class A (a) 156,000 5,662,800 ------------- Aerospace & Defense Total 21,313,283 AIR FREIGHT & LOGISTICS - 0.4% AirNet Systems, Inc. (a) 17,400 74,820 Ryder System, Inc. 143,200 6,736,128 ------------- Air Freight & Logistics Total 6,810,948 BUILDING PRODUCTS - 0.9% Jacuzzi Brands, Inc. (a) 807,500 7,509,750 NCI Building Systems, Inc. (a) 222,900 7,110,510 ------------- Building Products Total 14,620,260 COMMERCIAL SERVICES & SUPPLIES - 5.2% Bennett Environmental, Inc. (a) 400,000 1,980,000 Cornell Companies, Inc. (a)(b) 765,600 9,493,440 Danka Business Systems PLC, ADR (a) 1,600,000 6,080,000 FTI Consulting, Inc. (a) 620,000 11,718,000 G&K Services, Inc., Class A 155,500 6,179,570 HMS Holdings Corp. (a) 194,400 1,263,600 infoUSA, Inc. (a) 358,100 3,190,671 Kforce, Inc. (a) 1,148,004 9,620,274 Mobile Mini, Inc. (a) 66,000 1,636,800 MPW Industrial Services Group, Inc. (a) 188,100 426,987 Nashua Corp. (a) 169,600 1,874,080 NCO Group, Inc. (a) 368,330 9,926,493 Nobel Learning Communities, Inc. (a) 14,600 102,200 RemedyTemp, Inc., Class A (a) 125,210 1,307,192 School Specialty, Inc. (a) 162,600 6,408,066 Spherion Corp. (a) 499,200 3,903,744 SHARES VALUE ($) ------- ------------- Tetra Tech, Inc. (a) 463,500 5,872,545 Westaff, Inc. (a) 113,700 354,744 Willis Lease Finance Corp. (a) 87,100 670,235 ------------- Commercial Services & Supplies Total 82,008,641 CONSTRUCTION & ENGINEERING - 1.9% Chicago Bridge & Iron Co., NV, N.Y. Registered Shares. 460,300 13,804,397 EMCOR Group, Inc. (a) 261,500 9,837,630 Shaw Group, Inc. (a) 548,200 6,578,400 ------------- Construction & Engineering Total 30,220,427 ELECTRICAL EQUIPMENT - 0.2% Powell Industries, Inc. (a) 172,700 2,909,995 Wood's (T.B.) Corp. 108,207 616,780 ------------- Electrical Equipment Total 3,526,775 MACHINERY - 4.6% AGCO Corp. (a) 226,300 5,118,906 Albany International Corp., Class A 600,005 17,886,149 CIRCOR International, Inc. 271,900 5,302,050 Key Technology, Inc. (a)(b) 259,265 2,916,731 Lydall, Inc. (a) 188,600 1,753,980 Oshkosh Truck Corp. 64,500 3,680,370 Pentair, Inc. 115,900 4,046,069 Reliance Steel & Aluminum Co. 219,500 8,714,150 Terex Corp. (a) 170,644 7,405,950 Thomas Industries, Inc. 241,585 7,585,769 Watts Water Technologies, Inc., Class A 283,400 7,609,290 ------------- Machinery Total 72,019,414 ROAD & RAIL - 2.1% Arkansas Best Corp. 322,000 11,791,640 Kansas City Southern (a) 403,845 6,126,328 P.A.M. Transportation Services, Inc. (a) 176,400 3,379,824 RailAmerica, Inc. (a) 376,800 4,163,640 USF Corp. 106,600 3,825,874 Werner Enterprises, Inc. 185,125 3,574,764 ------------- Road & Rail Total 32,862,070 ------------- INDUSTRIALS TOTAL 263,381,818 INFORMATION TECHNOLOGY - 13.0% COMMUNICATIONS EQUIPMENT - 0.6% Paradyne Networks Corp. (a) 1,050,000 4,830,000 Performance Technologies, Inc. (a) 609,400 3,851,408 ------------- Communications Equipment Total 8,681,408 COMPUTERS & PERIPHERALS - 1.7% Cray, Inc. (a) 814,500 2,875,185 Hypercom Corp. (a) 545,800 4,028,004 Imation Corp. 309,500 11,015,105 Maxtor Corp. (a) 334,600 1,739,920 Presstek, Inc. (a) 311,100 3,008,337 Rimage Corp. (a) 162,900 2,280,600 Storage Technology Corp. (a) 100,000 2,526,000 ------------- Computers & Peripherals Total 27,473,151 See Accompanying Notes to Financial Statements. 61 ________________________________________________________________________________ September 30, 2004 Columbia Small Cap Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - (CONTINUED) ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.4% Agilysys, Inc. 289,600 5,007,184 Benchmark Electronics, Inc. (a) 848,950 25,298,710 Gerber Scientific, Inc. (a) 287,400 1,893,966 Itron, Inc. (a) 300,300 5,240,235 K-Tron International, Inc. (a) 41,710 922,625 Keithley Instruments, Inc. 343,640 5,996,518 LeCroy Corp. (a) 139,500 2,331,045 LSI Industries, Inc. 900,965 9,406,075 Merix Corp. (a) 403,600 4,181,296 Rogers Corp. (a) 82,200 3,492,678 Technitrol, Inc. (a) 313,010 6,103,695 ------------- Electronic Equipment & Instruments Total 69,874,027 INTERNET SOFTWARE & SERVICES - 0.4% Allscripts Healthcare Solutions, Inc. (a)200,000 1,800,000 Selectica, Inc. (a) 682,300 2,585,917 Tumbleweed Communications Corp. (a) 900,000 2,277,000 ------------- Internet Software & Services Total 6,662,917 IT SERVICES - 2.1% Analysts International Corp. (a) 530,700 2,324,466 Carreker Corp. (a) 286,500 2,180,265 Computer Task Group, Inc. (a) 792,500 2,464,675 Inforte Corp. (a) 500,000 3,450,000 Integral Systems, Inc. 168,100 3,279,631 ProQuest Co. (a) 394,230 10,131,711 SI International, Inc. (a) 42,400 928,984 Startek, Inc. 265,200 8,316,672 ------------- IT Services Total 33,076,404 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.9% Anadigics, Inc. (a) 364,300 1,227,691 Asyst Technologies, Inc. (a) 155,700 795,627 Fairchild Semiconductor International, Inc., Class A (a) 472,100 6,689,657 Pericom Semiconductor Corp. (a) 400,460 3,868,444 STATS ChipPAC Ltd., ADR (a) 281,184 1,681,480 ------------- Semiconductors & Semiconductor Equipment Total 14,262,899 SOFTWARE - 2.9% BindView Development Corp. (a) 1,510,500 5,014,860 MAPICS, Inc. (a) 179,400 1,623,570 MapInfo Corp. (a) 249,000 2,689,200 Mediware Information Systems, Inc. (a) 314,600 3,696,550 Mentor Graphics Corp. (a) 289,200 3,171,078 MSC.Software Corp. (a) 460,515 3,702,540 PLATO Learning, Inc. (a) 519,200 4,589,728 Progress Software Corp. (a) 296,500 5,900,350 Sybase, Inc. (a) 640,600 8,833,874 THQ, Inc. (a) 288,000 5,604,480 ------------- Software Total 44,826,230 ------------- INFORMATION TECHNOLOGY TOTAL 204,857,036 SHARES VALUE ($) ------- ------------- MATERIALS - 7.3% CHEMICALS - 4.1% Airgas, Inc. 251,900 6,063,233 Albemarle Corp. 246,360 8,644,772 Cambrex Corp. 296,700 6,512,565 H.B. Fuller Co. 330,860 9,065,564 MacDermid, Inc. 475,200 13,761,792 Olin Corp. 176,900 3,538,000 Sensient Technologies Corp. 307,800 6,660,792 Spartech Corp. 412,800 10,361,280 ------------- Chemicals Total 64,607,998 CONTAINERS & PACKAGING - 1.5% Greif, Inc., Class A 359,600 15,157,140 Jarden Corp. (a) 124,050 4,526,584 Longview Fibre Co. 204,800 3,123,200 Peak International Ltd. (a) 244,650 1,272,180 ------------- Containers & Packaging Total 24,079,104 METALS & MINING - 1.3% Brush Engineered Materials, Inc. (a) 258,800 5,359,748 GrafTech International Ltd. (a) 369,500 5,154,525 Hecla Mining Co. (a) 298,300 2,219,352 Northwest Pipe Co. (a) 303,150 5,259,653 Steel Dynamics, Inc. 81,800 3,159,116 ------------- Metals & Mining Total 21,152,394 PAPER & FOREST PRODUCTS - 0.4% Buckeye Technologies, Inc. (a) 144,900 1,615,635 Glatfelter 331,440 4,106,542 ------------- Paper & Forest Products Total 5,722,177 ------------- MATERIALS TOTAL 115,561,673 TELECOMMUNICATION SERVICES - 0.5% DIVERSIFIED TELECOMMUNICATION SERVICES - 0.4% CT Communications, Inc. 208,400 2,873,836 General Communication, Inc., Class A (a) 417,300 3,776,565 ------------- Diversified Telecommunication Services Total 6,650,401 WIRELESS TELECOMMUNICATION SERVICES - 0.1% LCC International, Inc., Class A (a) 560,700 1,783,026 ------------- Wireless Telecommunication Services Total 1,783,026 ------------- TELECOMMUNICATION SERVICES TOTAL 8,433,427 UTILITIES - 2.8% ELECTRIC UTILITIES - 0.2% Idacorp, Inc. 102,800 2,987,368 ------------- Electric Utilities Total 2,987,368 GAS UTILITIES - 2.0% Cascade Natural Gas Corp. 92,550 1,964,837 New Jersey Resources Corp. 158,750 6,572,250 Northwest Natural Gas Co. 154,700 4,908,631 NUI Corp. 468,100 6,244,454 See Accompanying Notes to Financial Statements. 62 ________________________________________________________________________________ September 30, 2004 Columbia Small Cap Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) UTILITIES - (CONTINUED) GAS UTILITIES - (CONTINUED) South Jersey Industries, Inc. 105,500 5,037,625 Southwest Gas Corp. 301,500 7,220,925 ------------- Gas Utilities Total 31,948,722 WATER UTILITIES - 0.6% American States Water Co. 135,150 3,365,235 Aqua America, Inc. 124,468 2,751,987 California Water Service Group 104,200 3,060,354 ------------- Water Utilities Total 9,177,576 ------------- UTILITIES TOTAL 44,113,666 TOTAL COMMON STOCKS (cost of $1,258,768,324) 1,430,243,213 INVESTMENT COMPANIES - 2.5% iShares Russell 2000 Index Fund 310,000 35,293,500 iShares Russell 2000 Value Index Fund 30,000 5,150,700 ------------- TOTAL INVESTMENT COMPANIES (cost of $39,264,683) 40,444,200 PAR ($) ------- SHORT-TERM OBLIGATION - 7.2% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by U.S. Treasury Bonds with various maturities to 08/15/29, market value $115,288,413 (repurchase proceeds $113,019,960) 113,015,000 113,015,000 TOTAL SHORT-TERM OBLIGATION (cost of $113,015,000) 113,015,000 TOTAL INVESTMENTS - 100.5% (COST OF $1,411,048,007) (D) 1,583,702,413 OTHER ASSETS & LIABILITIES, NET - (0.5)% (8,328,706) NET ASSETS - 100.0% 1,575,373,707 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Investments in affiliated companies at September 30, 2004: An affiliated company is a company in which the Fund has ownership of at least 5% of the voting shares outstanding. Security name: Checkers Drive-In Restaurant, Inc. Shares as of 09/30/03: 319,000 Shares purchased: 288,900 Shares as of 09/30/04: 607,900 Net realized gain (loss): $ -- Dividend income earned: $ -- Value at end of period: $ 7,142,825 Security name: Total Entertainment Restaurant Corp. Shares as of 09/30/03: 0 Shares purchased: 501,000 Shares as of 09/30/04: 501,000 Net realized gain (loss): $ -- Dividend income earned: $ -- Value at end of period: $ 4,363,710 Security name: Unifirst Corp. Shares as of 09/30/03: 422,800 Shares purchased: 50,000 Shares as of 09/30/04: 472,800 Net realized gain (loss): $ -- Dividend income earned: $ 69,420 Value at end of period: $ 13,522,080 Security name: Cornell Companies, Inc. Shares as of 09/30/03: 343,100 Shares purchased: 422,500 Shares as of 09/30/04: 765,600 Net realized loss: $ -- Dividend income earned: $ -- Value at end of period: $ 9,493,440 Security name: Key Technology, Inc. Shares as of 09/30/03: 203,665 Shares purchased: 70,000 Shares sold: 14,400 Shares as of 09/30/04: 259,265 Net realized gain or loss: $ (54,023) Dividend income earned: $ -- Value at end of period: $ 2,916,731 (c) Represents fair value as determined in good faith under the direction of the Board of Trustees. (d) Cost for federal income tax purposes is $1,411,878,088. ACRONYM NAME ------- ---- ADR American Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. 63 INVESTMENT PORTFOLIO ___________________________________________________________ September 30, 2004 Columbia Small Company Equity Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - 99.9% CONSUMER DISCRETIONARY - 16.5% HOTELS, RESTAURANTS & LEISURE - 3.6% Alliance Gaming Corp. (a) 151,600 2,283,096 Gaylord Entertainment Co. (a) 131,400 4,073,400 Pinnacle Entertainment, Inc. (a) 191,600 2,644,080 Scientific Games Corp., Class A (a) 234,600 4,480,860 ------------- Hotels, Restaurants & Leisure Total 13,481,436 LEISURE EQUIPMENT & PRODUCTS - 0.7% Marvel Enterprises, Inc. (a) 192,800 2,807,168 ------------- Leisure Equipment & Products Total 2,807,168 MEDIA - 4.6% Arbitron, Inc. (a) 98,200 3,595,102 Cumulus Media, Inc., Class A (a) 173,700 2,499,543 Journal Communications, Inc., Class A 4,700 82,438 Lin TV Corp., Class A (a) 171,000 3,331,080 Radio One, Inc., Class D (a) 209,300 2,978,339 Sinclair Broadcast Group, Inc., Class A 397,800 2,903,940 TiVo, Inc. (a) 316,600 2,095,892 ------------- Media Total 17,486,334 MULTILINE RETAIL - 0.6% Fred's, Inc. 122,600 2,201,896 ------------- Multiline Retail Total 2,201,896 SPECIALTY RETAIL - 6.3% Bombay Co., Inc. (a) 416,000 3,049,280 Cost Plus, Inc. (a) 128,700 4,553,406 Jarden Corp. (a) 152,000 5,546,480 Pacific Sunwear of California, Inc. (a) 131,900 2,776,495 Party City Corp. (a) 99,900 1,475,523 PETCO Animal Supplies, Inc. (a) 98,900 3,230,074 Sharper Image Corp. (a) 161,900 3,472,755 ------------- Specialty Retail Total 24,104,013 TEXTILES, APPAREL & LUXURY GOODS - 0.7% Carter's, Inc. (a) 96,900 2,683,161 ------------- Textiles, Apparel & Luxury Goods Total 2,683,161 ------------- CONSUMER DISCRETIONARY TOTAL 62,764,008 CONSUMER STAPLES - 0.4% FOOD & STAPLES RETAILING - 0.4% Performance Food Group Co. (a) 58,700 1,391,190 ------------- Food & Staples Retailing Total 1,391,190 ------------- CONSUMER STAPLES TOTAL 1,391,190 ENERGY - 3.7% ENERGY EQUIPMENT & SERVICES - 2.3% Key Energy Services, Inc. (a) 235,000 2,596,750 Maverick Tube Corp. (a) 83,900 2,584,959 Unit Corp. (a) 105,000 3,683,400 ------------- Energy Equipment & Services Total 8,865,109 SHARES VALUE ($) ------- ------------- OIL & GAS - 1.4% Edge Petroleum Corp. (a) 75,800 1,210,526 Energy Partners Ltd. (a) 29,000 472,120 Mission Resources Corp. (a) 265,400 1,669,366 Western Gas Resources, Inc. 70,400 2,012,736 ------------- Oil & Gas Total 5,364,748 ------------- ENERGY TOTAL 14,229,857 FINANCIALS - 10.9% CAPITAL MARKETS - 1.1% Jefferies Group, Inc. 128,300 4,422,501 ------------- Capital Markets Total 4,422,501 COMMERCIAL BANKS - 3.8% Boston Private Financial Holdings, Inc. 125,800 3,139,968 East West Bancorp, Inc. 109,400 3,674,746 Mercantile Bank Corp. 102,165 3,559,428 Prosperity Bancshares, Inc. 148,000 3,954,560 ------------- Commercial Banks Total 14,328,702 DIVERSIFIED FINANCIAL SERVICES - 3.8% ACE Cash Express, Inc. (a) 91,300 2,377,452 Commercial Capital Bancorp, Inc. 148,100 3,360,389 Greenhill & Co., Inc. 121,800 2,874,480 MTC Technologies, Inc. (a) 135,700 3,749,391 National Financial Partners Corp. 59,900 2,143,222 ------------- Diversified Financial Services Total 14,504,934 INSURANCE - 2.2% Infinity Property & Casualty Corp. 154,200 4,553,526 Philadelphia Consolidated Holding Co. (a) 66,900 3,687,528 ------------- Insurance Total 8,241,054 ------------- FINANCIALS TOTAL 41,497,191 HEALTH CARE - 22.8% BIOTECHNOLOGY - 4.8% BioMarin Pharmaceuticals, Inc. (a) 374,100 1,941,579 Cell Therapeutics, Inc. (a) 321,400 2,204,804 Cytogen Corp. (a) 161,300 1,700,102 Exact Sciences Corp. (a) 228,800 755,040 NeoPharm, Inc. (a) 303,700 2,599,672 Neurocrine Biosciences, Inc. (a) 50,100 2,362,716 Protein Design Labs, Inc. (a) 157,900 3,091,682 Telik, Inc. (a) 164,300 3,663,890 ------------- Biotechnology Total 18,319,485 HEALTH CARE EQUIPMENT & SUPPLIES - 7.0% Bio-Rad Laboratories, Inc., Class A (a) 50,050 2,557,555 Cardiac Science, Inc. (a) 542,700 1,041,984 Conceptus, Inc. (a) 227,400 2,107,998 Cytyc Corp. (a) 86,800 2,096,220 Integra LifeSciences Holdings Corp. (a) 118,400 3,801,824 LCA-Vision, Inc. 120,000 3,094,800 Medical Action Industries, Inc. (a) 231,900 3,856,033 See Accompanying Notes to Financial Statements. 64 ________________________________________________________________________________ September 30, 2004 Columbia Small Company Equity Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) HEALTH CARE EQUIPMENT & SUPPLIES - (CONTINUED) Palomar Medical Technologies, Inc. (a) 67,900 1,488,368 SonoSite, Inc. (a) 155,600 4,053,380 SurModics, Inc. (a) 103,900 2,467,625 ------------- Health Care Equipment & Supplies Total 26,565,787 HEALTH CARE PROVIDERS & SERVICES - 3.4% Advisory Board Co. (a) 127,300 4,277,280 America Service Group, Inc. (a) 63,700 2,614,248 Isolagen, Inc. (a) 230,000 2,173,500 LifePoint Hospitals, Inc. (a) 90,800 2,724,908 U.S. Physical Therapy, Inc. (a) 86,500 1,175,535 ------------- Health Care Providers & Services Total 12,965,471 PHARMACEUTICALS - 7.6% Advancis Pharmaceutical Corp. (a) 253,863 2,068,984 Atrix Labs, Inc. (a) 99,800 3,062,862 Bone Care International, Inc. (a) 125,400 3,047,220 Caraco Pharmaceutical Laboratories Ltd. (a) 88,800 683,760 DepoMed, Inc. (a) 462,500 2,414,250 DOV Pharmaceutical, Inc. (a) 208,100 3,566,834 Nektar Therapeutics (a) 207,200 3,000,256 Noven Pharmaceuticals, Inc. (a) 187,700 3,911,668 Renovis, Inc. (a) 214,400 1,717,344 Salix Pharmaceuticals Ltd. (a) 164,100 3,531,432 Taro Pharmaceuticals Industries Ltd. (a) 78,600 1,837,668 ------------- Pharmaceuticals Total 28,842,278 ------------- HEALTH CARE TOTAL 86,693,021 INDUSTRIALS - 14.4% AEROSPACE & DEFENSE - 1.3% DRS Technologies, Inc. (a) 129,700 4,855,968 ------------- Aerospace & Defense Total 4,855,968 AIR FREIGHT & LOGISTICS - 2.1% EGL, Inc. (a) 134,000 4,054,840 UTI Worldwide, Inc. 64,300 3,781,483 ------------- Air Freight & Logistics Total 7,836,323 COMMERCIAL SERVICES & SUPPLIES - 4.8% Corporate Executive Board Co. 55,100 3,374,324 Educate, Inc. (a) 215,100 2,536,029 Laureate Education, Inc. (a) 76,500 2,847,330 MDC Partners, Inc., Class A (a) 248,300 3,148,444 Navigant Consulting, Inc. (a) 130,100 2,856,996 NCO Group, Inc. (a) 124,100 3,344,495 ------------- Commercial Services & Supplies Total 18,107,618 SHARES VALUE ($) ------- ------------- CONSTRUCTION & ENGINEERING - 0.9% Chicago Bridge & Iron Co., NV, N.Y. Registered Shares 119,000 3,568,810 ------------- Construction & Engineering Total 3,568,810 ELECTRICAL EQUIPMENT - 0.5% Plug Power, Inc. (a) 320,000 2,051,200 ------------- Electrical Equipment Total 2,051,200 INDUSTRIAL CONGLOMERATES - 0.2% BioSante Pharmaceuticals, Inc. (a) 67,900 611,779 ------------- Industrial Conglomerates Total 611,779 MACHINERY - 1.5% Cuno, Inc. (a) 63,875 3,688,781 RAE Systems, Inc. (a) 360,500 2,011,590 ------------- Machinery Total 5,700,371 ROAD & RAIL - 2.6% Genesee & Wyoming, Inc., Class A (a) 149,550 3,786,606 Heartland Express, Inc. 190,050 3,506,423 Sirva, Inc. (a) 122,000 2,793,800 ------------- Road & Rail Total 10,086,829 TRADING COMPANIES & DISTRIBUTORS - 0.5% Aceto Corp. 143,000 2,059,200 ------------- Trading Companies & Distributors Total 2,059,200 ------------- INDUSTRIALS TOTAL 54,878,098 INFORMATION TECHNOLOGY - 29.0% COMMUNICATIONS EQUIPMENT - 3.0% F5 Networks, Inc. (a) 113,800 3,466,348 Finisar Corp. (a) 773,000 1,004,900 Foundry Networks, Inc. (a) 282,000 2,676,180 Inter-Tel, Inc. 99,200 2,144,704 Netopia, Inc. (a) 195,100 417,514 NMS Communications Corp. (a) 306,100 1,493,768 ------------- Communications Equipment Total 11,203,414 COMPUTERS & PERIPHERALS - 2.3% Applied Films Corp. (a) 120,300 2,166,603 Cray, Inc. (a) 441,600 1,558,848 PalmSource, Inc. (a) 166,900 3,461,506 Pinnacle Systems, Inc. (a) 361,200 1,506,204 ------------- Computers & Peripherals Total 8,693,161 ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.1% Anixter International, Inc. 89,400 3,137,046 Global Imaging Systems, Inc. (a) 124,200 3,860,136 Itron, Inc. (a) 170,000 2,966,500 OSI Systems, Inc. (a) 124,000 1,996,400 ------------- Electronic Equipment & Instruments Total 11,960,082 See Accompanying Notes to Financial Statements. 65 ________________________________________________________________________________ September 30, 2004 Columbia Small Company Equity Fund SHARES VALUE ($) ------- ------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - (CONTINUED) INTERNET SOFTWARE & SERVICES - 4.1% Corillian Corp. (a) 640,300 2,951,783 Digital River, Inc. (a) 102,300 3,046,494 Digitas, Inc. (a) 395,000 3,053,350 Equinix, Inc. (a) 68,700 2,113,899 PEC Solutions, Inc. (a) 27,300 319,956 Retek, Inc. (a) 622,800 2,839,968 Telecommunication Systems, Inc., Class A (a) 366,700 1,177,107 ------------- Internet Software & Services Total 15,502,557 IT SERVICES - 0.6% MAXIMUS, Inc. (a) 81,500 2,348,015 ------------- IT Services Total 2,348,015 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.4% Artisan Components, Inc. (a) 111,200 3,237,032 August Technology Corp. (a) 172,200 1,183,014 Brooks Automation, Inc. (a) 246,300 3,485,145 DSP Group, Inc. (a) 87,100 1,833,455 Entegris, Inc. (a) 443,800 3,701,292 FEI Co. (a) 138,000 2,726,880 Integrated Circuit Systems, Inc. (a) 78,900 1,696,350 IXYS Corp. (a) 425,300 3,053,654 Laedis Technology, Inc., (a) 151,800 1,712,304 Mykrolis Corp. (a) 221,700 2,232,519 Silicon Image, Inc. (a) 363,000 4,588,320 Silicon Storage Technology, Inc. (a) 347,300 2,212,301 Ultratech, Inc. (a) 189,200 2,964,764 Zoran Corp. (a) 80,000 1,257,600 ------------- Semiconductors & Semiconductor Equipment Total 35,884,630 SOFTWARE - 6.5% Activision, Inc. (a) 197,850 2,744,179 Captiva Software Corp. (a) 264,200 2,959,040 Epicor Software Corp. (a) 165,700 1,993,371 FileNET Corp. (a) 90,800 1,585,368 Magma Design Automation, Inc. (a) 197,600 2,979,808 Manhattan Associates, Inc. (a) 99,800 2,437,116 Micromuse, Inc. (a) 680,500 2,504,240 OpenTV Corp., Class A (a) 669,100 2,040,755 ScanSoft, Inc. (a) 409,600 1,671,168 Take-Two Interactive Software, Inc. (a) 58,200 1,911,870 Verity, Inc. (a) 143,600 1,849,568 ------------- Software Total 24,676,483 ------------- INFORMATION TECHNOLOGY TOTAL 110,268,342 SHARES VALUE ($) ------- ------------- MATERIALS - 2.2% CHEMICALS - 0.5% Landec Corp. (a) 254,500 1,908,750 ------------- Chemicals Total 1,908,750 METALS & MINING - 1.7% AMCOL International Corp. 69,100 1,321,192 Oregon Steel Mills, Inc. (a) 176,600 2,936,858 Steel Technologies, Inc. 92,100 2,359,326 ------------- Metals & Mining Total 6,617,376 ------------- MATERIALS TOTAL 8,526,126 TOTAL COMMON STOCKS (cost of $342,225,932) 380,247,833 PAR ($) ------- SHORT-TERM OBLIGATION - 0.9% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by a U.S. Treasury Bond maturing 05/15/14, market value $3,370,725 (repurchase proceeds $3,301,145) 3,301,000 3,301,000 TOTAL SHORT-TERM OBLIGATION (cost of $3,301,000) 3,301,000 TOTAL INVESTMENTS - 100.8% (COST OF $345,526,932) (b) 383,548,833 OTHER ASSETS & LIABILITIES, NET - (0.8)% (3,122,097) NET ASSETS - 100.0% 380,426,736 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $346,364,563. See Accompanying Notes to Financial Statements. 66 This page intentionally left blank. STATEMENTS OF ASSETS AND LIABILITIES ___________________________________________ September 30, 2004 Columbia Equity Funds COLUMBIA COLUMBIA COLUMBIA COLUMBIA ASSET LARGE CAP DISCIPLINED INTERNATIONAL ALLOCATION GROWTH VALUE EQUITY FUND ($) FUND ($) FUND ($) FUND ($) - ----------------------------------------------------------------------------------------------------------------------------- ASSETS Unaffiliated investments, at identified cost 381,197,274 786,800,382 404,138,428 440,434,711 Affiliated investments, at identified cost -- -- -- -- -------------- -------------- -------------- -------------- Total investments, at identified cost 381,197,274 786,800,382 404,138,428 440,434,711 -------------- -------------- -------------- -------------- Unaffiliated investments, at value 421,034,670 910,147,591 429,496,684 481,772,004 Affiliated investments, at value -- -- -- -- -------------- -------------- -------------- -------------- Total investments, at value 421,034,670 910,147,591 429,496,684 481,772,004 Cash 197,969 593 282 626 Foreign currency (cost of $209,664 and $1,816,469, respectively) 210,105 -- -- 1,818,067 Receivable for: Investments sold 6,227,032 17,058,429 -- 6,588,721 Fund shares sold 20,325 851,997 109,918 1,203,954 Interest 1,396,544 418 93 830 Dividends 284,129 510,275 526,880 798,031 Foreign tax reclaim 22,792 24,721 -- 376,693 Deferred compensation plan 25,715 49,291 20,765 22,130 -------------- -------------- -------------- -------------- Total assets 429,419,281 928,643,315 430,154,622 492,581,056 - ----------------------------------------------------------------------------------------------------------------------------- LIABILITIES Payable for: Investments purchased 4,329,988 14,867,948 -- 5,529,161 Fund shares repurchased 1,163,562 4,681,197 420,707 646,077 Investment advisory fee 263,790 545,839 262,720 249,307 Administration fee 23,692 50,415 23,469 24,541 Transfer agent fee 180,541 252,485 96,573 39,597 Pricing and bookkeeping fees 12,001 7,525 4,584 6,725 Trustees' fees 1,549 2,639 1,289 1,439 Distribution and service fees 82,448 95,062 41,879 15,062 Custody fee 15,528 2,884 1,436 24,853 Deferred compensation plan 25,715 49,291 20,765 22,130 Deferred foreign capital gains tax payable 28,954 -- -- 242,619 Other liabilities 64,091 79,148 43,662 45,831 -------------- -------------- -------------- -------------- Total liabilities 6,191,859 20,634,433 917,084 6,847,342 NET ASSETS 423,227,422 908,008,882 429,237,538 485,733,714 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital 394,916,016 925,969,281 415,268,926 747,333,619 Undistributed (overdistributed) net investment income (577,690) -- (13,047) 2,288,505 Accumulated net investment loss -- (31,890) -- -- Accumulated net realized gain (loss) (10,918,763) (141,275,718) (11,376,597) (305,003,997) Unrealized appreciation (depreciation) on: Investments 39,837,396 123,347,209 25,358,256 41,337,293 Foreign currency translations (583) -- -- 20,913 Foreign capital gains tax (28,954) -- -- (242,619) -------------- -------------- -------------- -------------- NET ASSETS 423,227,422 908,008,882 429,237,538 485,733,714 COLUMBIA COLUMBIA COLUMBIA SMALL LARGE CAP SMALL COMPANY CORE CAP EQUITY FUND ($) FUND ($) FUND ($) - ----------------------------------------------------------------------------------------------------------- ASSETS Unaffiliated investments, at identified cost 361,214,523 1,379,039,197 345,526,932 Affiliated investments, at identified cost -- 32,008,810 -- -------------- -------------- -------------- Total investments, at identified cost 361,214,523 1,411,048,007 345,526,932 -------------- -------------- -------------- Unaffiliated investments, at value 385,173,467 1,546,263,627 383,548,833 Affiliated investments, at value -- 37,438,786 -- -------------- -------------- -------------- Total investments, at value 385,173,467 1,583,702,413 383,548,833 Cash 534 282,053 149 Foreign currency (cost of $209,664 and $1,816,469, respectively) -- -- -- Receivable for: Investments sold 28,675,351 3,937,511 1,770,137 Fund shares sold 329,944 932,879 684,604 Interest 44 4,960 145 Dividends 291,766 1,239,253 41,300 Foreign tax reclaim 3,899 1,841 476 Deferred compensation plan 24,329 21,991 18,483 -------------- -------------- -------------- Total assets 414,499,334 1,590,122,901 386,064,127 - ----------------------------------------------------------------------------------------------------------- LIABILITIES Payable for: Investments purchased 29,374,346 6,383,829 4,535,828 Fund shares repurchased 687,760 6,894,392 630,406 Investment advisory fee 239,536 891,848 230,241 Administration fee 22,352 83,577 20,568 Transfer agent fee 96,714 190,321 130,392 Pricing and bookkeeping fees 4,696 11,041 4,634 Trustees' fees 1,389 2,639 1,289 Distribution and service fees 63,220 171,773 23,250 Custody fee 3,682 3,493 1,797 Deferred compensation plan 24,329 21,991 18,483 Deferred foreign capital gains tax payable -- -- -- Other liabilities 54,192 94,290 40,503 -------------- -------------- -------------- Total liabilities 30,572,216 14,749,194 5,637,391 NET ASSETS 383,927,118 1,575,373,707 380,426,736 - ----------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital 350,412,564 1,312,328,884 380,167,611 Undistributed (overdistributed) net investment income (16,638) -- -- Accumulated net investment loss -- (12,009) (11,506) Accumulated net realized gain (loss) 9,572,248 90,402,426 (37,751,270) Unrealized appreciation (depreciation) on: Investments 23,958,944 172,654,406 38,021,901 Foreign currency translations -- -- -- Foreign capital gains tax -- -- -- -------------- -------------- -------------- NET ASSETS 383,927,118 1,575,373,707 380,426,736 See Accompanying Notes to Financial Statements. 68 STATEMENTS OF ASSETS AND LIABILITIES ___________________________________________ Columbia Equity Funds COLUMBIA COLUMBIA COLUMBIA COLUMBIA ASSET LARGE CAP DISCIPLINED INTERNATIONAL ALLOCATION GROWTH VALUE EQUITY FUND ($) FUND ($) FUND ($) FUND ($) ---------------------------------------------------------------------------------------------------------------------------- CLASS A Net assets 2,900,661 3,866,530 2,511,215 871,554 Shares outstanding 192,552 208,236 197,522 70,564 Net asset value per share (a) 15.06 18.57 12.71 12.35 Maximum sales charge 5.75% 5.75% 5.75% 5.75% Maximum offering price per share (b) 15.98 19.70 13.49 13.10 ---------------------------------------------------------------------------------------------------------------------------- CLASS B Net assets 4,926,481 3,195,171 2,370,284 931,487 Shares outstanding 327,151 179,878 194,854 76,246 Net asset value and offering price per share (a)(b) 15.06 17.76 12.16 12.22 - ---------------------------------------------------------------------------------------------------------------------------- CLASS C Net assets 513,816 780,155 290,936 104,189 Shares outstanding 34,113 43,857 23,960 8,581 Net asset value and offering price per share (a)(b) 15.06 17.79 12.14 12.14 - ---------------------------------------------------------------------------------------------------------------------------- CLASS G Net assets 39,892,086 46,327,886 7,501,669 4,872,891 Shares outstanding 2,649,365 2,692,113 616,456 402,074 Net asset value and offering price per share (a)(b) 15.06 17.21 12.17 12.12 - ---------------------------------------------------------------------------------------------------------------------------- CLASS T Net assets 183,437,976 219,128,845 133,094,180 41,359,071 Shares outstanding 12,173,067 11,870,378 10,466,559 3,357,923 Net asset value per share (a) 15.07 18.46 12.72 12.32 Maximum sales charge 5.75% 5.75% 5.75% 5.75% Maximum offering price per share (b) 15.99 19.59 13.50 13.07 ---------------------------------------------------------------------------------------------------------------------------- CLASS Z Net assets 191,556,402 634,710,295 283,469,254 437,594,522 Shares outstanding 12,720,870 33,634,867 21,890,242 34,873,505 Net asset value and offering price per share (c) 15.06 18.87 12.95 12.55 COLUMBIA COLUMBIA COLUMBIA SMALL LARGE CAP SMALL COMPANY CORE CAP EQUITY FUND ($) FUND ($) FUND ($) - ----------------------------------------------------------------------------------------------------------- CLASS A Net assets 9,304,104 211,501,578 4,585,904 Shares outstanding 774,729 12,058,127 287,611 Net asset value per share (a) 12.01 17.54 15.94 Maximum sales charge 5.75% 5.75% 5.75% Maximum offering price per share (b) 12.74 18.61 16.91 ----------------------------------------------------------------------------------------------------------- CLASS B Net assets 3,424,661 40,169,917 1,825,934 Shares outstanding 293,289 2,377,952 122,671 Net asset value and offering price per share (a)(b) 11.68 16.89 14.88 - ----------------------------------------------------------------------------------------------------------- CLASS C Net assets 344,713 64,686,315 982,391 Shares outstanding 29,516 3,826,115 66,181 Net asset value and offering price per share (a)(b) 11.68 16.91 14.84 - ----------------------------------------------------------------------------------------------------------- CLASS G Net assets 16,418,967 10,952,320 4,564,655 Shares outstanding 1,419,394 653,847 307,317 Net asset value and offering price per share (a)(b) 11.57 16.75 14.85 - ----------------------------------------------------------------------------------------------------------- CLASS T Net assets 179,310,453 146,752,072 68,358,682 Shares outstanding 15,001,630 8,435,145 4,293,137 Net asset value per share (a) 11.95 17.40 15.92 Maximum sales charge 5.75% 5.75% 5.75% Maximum offering price per share (b) 12.68 18.46 16.89 - ----------------------------------------------------------------------------------------------------------- CLASS Z Net assets 175,124,220 1,101,311,505 300,109,170 Shares outstanding 14,532,215 62,130,303 17,819,129 Net asset value and offering price per share (c) 12.05 17.73 16.84 (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. (c) Redemption price per share is equal to net asset value less any applicable redemption fees. See Accompanying Notes to Financial Statements. 69 STATEMENTS OF OPERATIONS _______________________________________________________ For the Year Ended September 30, 2004 Columbia Equity Funds COLUMBIA COLUMBIA COLUMBIA COLUMBIA ASSET LARGE CAP DISCIPLINED INTERNATIONAL ALLOCATION GROWTH VALUE EQUITY FUND ($) FUND ($) FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME INCOME Dividends 4,896,276 8,595,842 11,116,023 9,727,198 Dividends from affiliates -- -- -- -- Interest 8,407,262 73,121 35,115 143,594 Foreign withholding tax (139,631) (98,072) -- (990,348) -------------- -------------- -------------- -------------- Total income 13,163,907 8,570,891 11,151,138 8,880,444 - ------------------------------------------------------------------------------------------------------------------------------ EXPENSES Investment advisory fee 3,448,055 7,131,628 3,108,611 4,214,630 Administration fee 308,026 657,017 277,702 316,447 Distribution fee: Class B 29,398 17,951 10,653 5,064 Class C 3,016 5,054 1,587 683 Class G 324,721 346,467 62,491 34,284 Service fee: Class A 5,251 8,125 4,475 1,544 Class B 9,789 5,973 3,545 1,684 Class C 1,004 1,685 528 229 Class G 149,871 159,908 28,842 15,823 Shareholder service fee-Class T 576,354 718,452 409,010 133,528 Transfer agent fee: Class A 4,975 6,178 3,104 725 Class B 9,324 4,643 2,473 645 Class C 973 1,285 384 128 Class G 127,179 120,377 20,941 12,020 Class T 469,440 489,583 252,295 71,362 Class Z 509,596 1,301,556 463,593 301,005 Pricing and bookkeeping fees 148,514 112,216 57,257 83,461 Trustees' fees 14,973 28,288 16,796 14,278 Custody fee 234,419 42,175 16,571 261,438 Non-recurring costs (See Note 10) 21,519 46,518 20,002 23,162 Other expenses 214,394 292,721 216,963 142,055 -------------- -------------- -------------- -------------- Total expenses 6,610,791 11,497,800 4,977,823 5,634,195 Expenses waived or reimbursed by Investment Advisor (12,117) (21,381) -- (1,180,929) Fees waived by Transfer Agent: Class A -- -- -- (70) Class B -- -- -- (76) Class C -- -- -- (10) Class G -- -- -- (3,839) Class T -- -- -- (16,670) Class Z -- -- -- (42,292) Custody earnings credit (1,348) (711) (28) (461) -------------- -------------- -------------- -------------- Non-recurring costs assumed by Investment Advisor (See Note 10) (21,519) (46,518) (20,002) (23,162) -------------- -------------- -------------- -------------- Net expenses 6,575,807 11,429,190 4,957,793 4,366,686 -------------- -------------- -------------- -------------- Net Investment Income (Loss) 6,588,100 (2,858,299) 6,193,345 4,513,758 COLUMBIA COLUMBIA COLUMBIA SMALL LARGE CAP SMALL COMPANY CORE CAP EQUITY FUND ($) FUND ($) FUND ($) - ----------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME INCOME Dividends 5,600,615 9,690,463 676,989 Dividends from affiliates -- 69,420 -- Interest 17,851 1,233,433 52,968 Foreign withholding tax (48,130) (30,015) -- -------------- -------------- -------------- Total income 5,570,336 10,963,301 729,957 - ----------------------------------------------------------------------------------------------------------- EXPENSES Investment advisory fee 3,150,172 10,191,194 3,023,227 Administration fee 281,415 969,722 270,075 Distribution fee: Class B 24,301 247,007 8,081 Class C 2,875 390,034 3,496 Class G 155,589 72,803 38,641 Service fee: Class A 23,439 426,677 4,283 Class B 8,090 82,244 2,689 Class C 958 129,876 1,162 Class G 71,810 33,601 17,835 Shareholder service fee-Class T 575,263 453,076 221,342 Transfer agent fee: Class A 20,258 162,894 3,500 Class B 6,577 32,075 2,164 Class C 795 50,043 905 Class G 65,869 11,888 19,177 Class T 423,519 148,245 174,342 Class Z 353,912 937,141 616,396 Pricing and bookkeeping fees 57,406 139,317 58,589 Trustees' fees 15,110 30,570 16,289 Custody fee 27,542 53,200 22,152 Non-recurring costs (See Note 10) 19,890 74,770 19,440 Other expenses 185,544 420,571 221,101 -------------- -------------- -------------- Total expenses 5,470,334 15,056,948 4,744,886 Expenses waived or reimbursed by Investment Advisor -- (28,816) -- Fees waived by Transfer Agent: Class A (317) -- (147) Class B (115) -- (92) Class C (13) -- (41) Class G (5,058) -- (379) Class T (6,203) -- (14,211) Class Z (6,157) -- (21,654) Custody earnings credit -- (7,503) (1,323) -------------- -------------- -------------- Non-recurring costs assumed by Investment Advisor (See Note 10) (19,890) (74,770) (19,440) -------------- -------------- -------------- Net expenses 5,432,581 14,945,859 4,687,599 -------------- -------------- -------------- Net Investment Income (Loss) 137,755 (3,982,558) (3,957,642) See Accompanying Notes to Financial Statements. 70 STATEMENTS OF OPERATIONS _______________________________________________________ Columbia Equity Funds COLUMBIA COLUMBIA COLUMBIA COLUMBIA ASSET LARGE CAP DISCIPLINED INTERNATIONAL ALLOCATION GROWTH VALUE EQUITY FUND ($) FUND ($) FUND ($) FUND ($) - ----------------------------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FOREIGN CAPITAL GAINS TAX Net realized gain (loss) on: Unaffiliated investments 29,863,149 35,926,964 56,049,664 61,026,111 Affiliated investments -- -- -- -- Foreign currency transactions (96,615) -- -- (730,052) Foreign capital gains tax -- -- -- (1,497,512) Net realized loss on the disposal of investments purchased/sold in error (See Note 9) -- -- -- -- -------------- -------------- -------------- -------------- Net realized gain 29,766,534 35,926,964 56,049,664 58,798,547 -------------- -------------- -------------- -------------- Net change in unrealized appreciation/depreciation on: Investments 6,961,384 24,493,437 2,235,576 (5,323,392) Foreign currency translations (583) -- -- (43,018) Foreign capital gains tax (28,954) -- -- 952,516 -------------- -------------- -------------- -------------- Net change in unrealized appreciation/depreciation 6,931,847 24,493,437 2,235,576 (4,413,894) -------------- -------------- -------------- -------------- Net Gain 36,698,381 60,420,401 58,285,240 54,384,653 -------------- -------------- -------------- -------------- Net Increase Resulting from Operations 43,286,481 57,562,102 64,478,585 58,898,411 COLUMBIA COLUMBIA COLUMBIA SMALL LARGE CAP SMALL COMPANY CORE CAP EQUITY FUND ($) FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FOREIGN CAPITAL GAINS TAX Net realized gain (loss) on: Unaffiliated investments 31,566,846 101,709,890 63,906,432 Affiliated investments -- -- -- Foreign currency transactions -- -- -- Foreign capital gains tax -- -- -- Net realized loss on the disposal of investments purchased/sold in error (See Note 9) -- -- -- -------------- -------------- -------------- Net realized gain 31,566,846 101,709,890 63,906,432 -------------- -------------- -------------- Net change in unrealized appreciation/depreciation on: Investments (1,396,341) 100,021,971 (10,180,101) Foreign currency translations -- -- -- Foreign capital gains tax -- -- -- -------------- -------------- -------------- Net change in unrealized appreciation/depreciation (1,396,341) 100,021,971 (10,180,101) -------------- -------------- -------------- Net Gain 30,170,505 201,731,861 53,726,331 -------------- -------------- -------------- Net Increase Resulting from Operations 30,308,260 197,749,303 49,768,689 See Accompanying Notes to Financial Statements. 71 STATEMENTS OF CHANGES IN NET ASSETS ____________________________________________ Columbia Equity Funds COLUMBIA ASSET ALLOCATION FUND -------------------------------------------------- YEAR PERIOD YEAR ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 (a)($) 2002 ($) - ---------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 6,588,100 8,020,538 9,550,438 Net realized gain (loss) on investments, futures contracts, foreign currency transactions and foreign capital gains tax 29,766,534 (10,461,088) (26,364,880) Net change in unrealized appreciation/depreciation of investments, futures contracts, foreign currency translations and foreign capital gains tax 6,931,847 46,417,019 (54,121,169) -------------- -------------- -------------- Net increase (decrease) resulting from operations 43,286,481 43,976,469 (70,935,611) - ---------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A (38,123) (4,595) (817) Class B (39,489) (9,663) (3,249) Class C (3,850) (640) -- Class G (532,662) (666,378) (903,651) Class T (3,361,232) (3,230,558) (4,182,650) Class Z (4,367,911) (4,391,025) (3,849,053) From net realized gains: Class G -- -- -- Class T -- -- -- Class Z -- -- -- -------------- -------------- -------------- Total distributions to shareholders (8,343,267) (8,302,859) (8,939,420) - ---------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS (79,551,611) (3,427,997) (111,502,479) Redemption fees -- -- -- -------------- -------------- -------------- Net increase (decrease) in net assets (44,608,397) 32,245,613 (191,377,510) - ---------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 467,835,819 435,590,206 626,967,716 End of period 423,227,422 467,835,819 435,590,206 -------------- -------------- -------------- Undistributed (overdistributed) net investment income at end of period (577,690) 821,590 1,115,554 Accumulated net investment loss at end of period -- -- -- COLUMBIA LARGE CAP GROWTH FUND -------------------------------------------------- YEAR PERIOD YEAR ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 (a)($) 2002 ($) - ---------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) (2,858,299) 831,687 1,842,652 Net realized gain (loss) on investments, futures contracts, foreign currency transactions and foreign capital gains tax 35,926,964 (33,599,244) (95,984,198) Net change in unrealized appreciation/depreciation of investments, futures contracts, foreign currency translations and foreign capital gains tax 24,493,437 118,125,297 (145,463,165) -------------- -------------- -------------- Net increase (decrease) resulting from operations 57,562,102 85,357,740 (239,604,711) - ---------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A -- (123) -- Class B -- -- -- Class C -- -- -- Class G -- -- -- Class T -- (2,326,221) -- Class Z (344,225) -- -- From net realized gains: Class G -- -- -- Class T -- -- -- Class Z -- -- -- -------------- -------------- -------------- Total distributions to shareholders (344,225) (2,326,344) -- - ---------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS (113,980,519) (121,172,860) (42,855,520) Redemption fees -- -- -- -------------- -------------- -------------- Net increase (decrease) in net assets (56,762,642) (38,141,464) (282,460,231) - ---------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 964,771,524 1,002,912,988 1,285,373,219 End of period 908,008,882 964,771,524 1,002,912,988 -------------- -------------- -------------- Undistributed (overdistributed) net investment income at end of period -- 312,712 1,807,369 Accumulated net investment loss at end of period (31,890) -- -- COLUMBIA DISCIPLINED VALUE FUND -------------------------------------------------- YEAR PERIOD YEAR ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 (a)($) 2002 ($) - ---------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 6,193,345 1,773,200 (831,035) Net realized gain (loss) on investments, futures contracts, foreign currency transactions and foreign capital gains tax 56,049,664 3,691,251 (68,065,195) Net change in unrealized appreciation/depreciation of investments, futures contracts, foreign currency translations and foreign capital gains tax 2,235,576 41,060,980 (16,740,050) -------------- -------------- -------------- Net increase (decrease) resulting from operations 64,478,585 46,525,431 (85,636,280) - ---------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A (34,019) -- -- Class B (10,336) -- -- Class C (1,620) -- -- Class G (60,722) -- -- Class T (2,222,608) -- -- Class Z (5,958,609) -- -- From net realized gains: Class G -- -- (732,810) Class T -- -- (4,986,255) Class Z -- -- (4,800,214) -------------- -------------- -------------- Total distributions to shareholders (8,287,914) -- (10,519,279) - ---------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS 8,578,064 10,199,956 45,686,823 Redemption fees -- -- -- -------------- -------------- -------------- Net increase (decrease) in net assets 64,768,735 56,725,387 (50,468,736) - ---------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 364,468,803 307,743,416 358,212,152 End of period 429,237,538 364,468,803 307,743,416 -------------- -------------- -------------- Undistributed (overdistributed) net investment income at end of period (13,047) 1,766,812 -- Accumulated net investment loss at end of period -- -- (8,463) COLUMBIA INTERNATIONAL EQUITY FUND -------------------------------------------------- YEAR PERIOD YEAR ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 (a)($) 2002 ($) - ---------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 4,513,758 3,710,010 2,732,183 Net realized gain (loss) on investments, futures contracts, foreign currency transactions and foreign capital gains tax 58,798,547 (36,657,573) (215,475,392) Net change in unrealized appreciation/depreciation of investments, futures contracts, foreign currency translations and foreign capital gains tax (4,413,894) 95,365,607 143,822,027 -------------- -------------- -------------- Net increase (decrease) resulting from operations 58,898,411 62,418,044 (68,921,182) ---------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A (1,624) (309) (158) Class B -- (51) (3,271) Class C -- (1) -- Class G -- -- (46,997) Class T (33,041) (276,228) (1,161,415) Class Z (2,868,268) (4,085,135) (10,992,572) From net realized gains: Class G -- -- -- Class T -- -- -- Class Z -- -- -- -------------- -------------- -------------- Total distributions to shareholders (2,902,933) (4,361,724) (12,204,413) - ---------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS 35,100,538 (85,661,095) (94,416,667) Redemption fees 53,214 -- -- -------------- -------------- -------------- Net increase (decrease) in net assets 91,149,230 (27,604,775) (175,542,262) - ---------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 394,584,484 422,189,259 597,731,521 End of period 485,733,714 394,584,484 422,189,259 -------------- -------------- -------------- Undistributed (overdistributed) net investment income at end of period 2,288,505 2,905,261 4,356,476 Accumulated net investment loss at end of period -- -- -- (a) The Fund changed its fiscal year end from October 31 to September 30. See Accompanying Notes to Financial Statements. Spread 72-73 STATEMENTS OF CHANGES IN NET ASSETS ____________________________________________ Columbia Equity Funds COLUMBIA LARGE CAP CORE FUND -------------------------------------------------- YEAR PERIOD YEAR ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 (a)($) 2002 ($) - ---------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 137,755 2,795,356 2,673,116 Net realized gain (loss) on investments, futures contracts and foreign currency transactions 31,566,846 (16,524,653) (2,843,956) Net change in unrealized appreciation/depreciation of investments, futures contracts and foreign currency translations (1,396,341) 50,850,870 (132,810,615) -------------- -------------- -------------- Net increase (decrease) resulting from operations 30,308,260 37,121,573 (132,981,455) ---------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A (3,718) (17,426) (64) Class B -- (86) -- Class C -- (41) -- Class G -- (34,472) -- Class T (53,896) (811,898) (264,222) Class Z (307,876) (2,057,027) (2,074,328) From net realized gains: Class A -- -- (2,049) Class B -- -- (3,781) Class C -- -- -- Class G -- -- (1,681,983) Class T -- -- (8,851,728) Class Z -- -- (15,146,836) -------------- -------------- -------------- Total distributions to shareholders (365,490) (2,920,950) (28,024,991) - ---------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS (60,613,547) (171,845,720) (55,616,582) Net increase (decrease) in net assets (30,670,777) (137,645,097) (216,623,028) - ---------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 414,597,895 552,242,992 768,866,020 End of period 383,927,118 414,597,895 552,242,992 -------------- -------------- -------------- Undistributed (overdistributed) net investment income at end of period (16,638) 193,079 319,232 Accumulated net investment loss at end of period -- -- -- COLUMBIA SMALL CAP FUND -------------------------------------------------- YEAR PERIOD YEAR ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 (a)($) 2002 ($) - ---------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) (3,982,558) 279,754 648,758 Net realized gain (loss) on investments, futures contracts and foreign currency transactions 101,709,890 36,226,379 37,781,019 Net change in unrealized appreciation/depreciation of investments, futures contracts and foreign currency translations 100,021,971 154,698,131 (69,887,913) -------------- -------------- -------------- Net increase (decrease) resulting from operations 197,749,303 191,204,264 (31,458,136) - ---------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A -- -- -- Class B -- -- -- Class C -- -- -- Class G -- -- -- Class T -- -- -- Class Z -- (450,747) (445,097) From net realized gains: Class A (2,842,592) (23,427) (12,287) Class B (388,822) (27,700) (17,051) Class C (673,375) (2,462) -- Class G (236,658) (479,909) (532,460) Class T (3,762,956) (5,982,965) (9,651,542) Class Z (26,575,680) (25,553,703) (37,414,810) -------------- -------------- -------------- Total distributions to shareholders (34,480,083) (32,520,913) (48,073,247) - ---------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS 396,376,350 246,841,891 158,244,656 Net increase (decrease) in net assets 559,645,570 405,525,242 78,713,273 - ---------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 1,015,728,137 610,202,895 531,489,622 End of period 1,575,373,707 1,015,728,137 610,202,895 -------------- -------------- -------------- Undistributed (overdistributed) net investment income at end of period -- 214,302 80,108 Accumulated net investment loss at end of period (12,009) -- -- COLUMBIA SMALL COMPANY EQUITY FUND -------------------------------------------------- YEAR PERIOD YEAR ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 (a)($) 2002 ($) - ---------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) (3,957,642) (3,035,547) (3,342,769) Net realized gain (loss) on investments, futures contracts and foreign currency transactions 63,906,432 (200,156) (93,471,017) Net change in unrealized appreciation/depreciation of investments, futures contracts and foreign currency translations (10,180,101) 77,738,196 (2,618,304) -------------- -------------- -------------- Net increase (decrease) resulting from operations 49,768,689 74,502,493 (99,432,090) - ---------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A -- -- -- Class B -- -- -- Class C -- -- -- Class G -- -- -- Class T -- -- -- Class Z -- -- -- From net realized gains: Class A -- -- -- Class B -- -- -- Class C -- -- -- Class G -- -- -- Class T -- -- -- Class Z -- -- -- -------------- -------------- -------------- Total distributions to shareholders -- -- -- - ---------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS (37,019,466) 9,112,934 (34,442,508) Net increase (decrease) in net assets 12,749,223 83,615,427 (133,874,598) - ---------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 367,677,513 284,062,086 417,936,684 End of period 380,426,736 367,677,513 284,062,086 -------------- -------------- -------------- Undistributed (overdistributed) net investment income at end of period -- -- -- Accumulated net investment loss at end of period (11,506) (8,888) (7,647) (a) The Fund changed its fiscal year end from October 31 to September 30. See Accompanying Notes to Financial Statements. Spread 74-75 STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY ___________________ Columbia Equity Funds COLUMBIA ASSET ALLOCATION FUND -------------------------------------------------------------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 (a)(b) OCTOBER 31, 2002 ---------------------------- ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) SHARES DOLLARS ($) - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 156,246 2,338,730 90,623 1,246,966 153 1,942 Distributions reinvested 2,480 37,011 313 4,381 46 643 Redemptions (52,637) (794,225) (7,781) (105,877) (877) (12,593) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 106,089 1,581,516 83,155 1,145,470 (678) (10,008) CLASS B Subscriptions 187,791 2,806,475 175,332 2,371,280 132 2,002 Distributions reinvested 2,375 35,373 641 8,683 226 3,147 Redemptions (44,405) (665,807) (16,090) (219,790) (4,930) (69,201) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 145,761 2,176,041 159,883 2,160,173 (4,572) (64,052) CLASS C Subscriptions 26,605 398,392 15,733 208,308 -- -- Distributions reinvested 225 3,354 38 520 -- -- Redemptions (6,084) (90,769) (2,404) (32,872) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase 20,746 310,977 13,367 175,956 -- -- CLASS G Subscriptions 46,210 691,443 60,925 796,644 280,333 4,078,242 Distributions reinvested 35,018 520,503 49,383 643,841 63,424 882,934 Redemptions (1,460,481) (21,741,477) (1,779,909) (23,798,027) (1,754,424) (24,005,581) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (1,379,253) (20,529,531) (1,669,601) (22,357,542) (1,410,667) (19,044,405) CLASS T Subscriptions 1,030,515 15,369,640 948,459 12,980,478 1,681,657 23,448,832 Distributions reinvested 218,543 3,254,741 238,021 3,138,892 287,807 4,060,095 Redemptions (2,605,902) (39,012,056) (3,052,027) (39,894,205) (5,963,835) (82,540,616) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (1,356,844) (20,387,675) (1,865,547) (23,774,835) (3,994,371) (55,031,689) CLASS Z Subscriptions 885,247 13,242,156 1,650,315 21,698,761 2,688,275 38,817,973 Proceeds received in connection with merger -- -- 9,749,490 127,523,327 -- -- Distributions reinvested 240,806 3,584,314 279,463 3,688,536 246,822 3,482,666 Redemptions (3,966,326) (59,529,409) (8,860,695) (113,687,843) (5,622,405) (79,652,964) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (2,840,273) (42,702,939) 2,818,573 39,222,781 (2,687,308) (37,352,325) COLUMBIA LARGE CAP GROWTH FUND -------------------------------------------------------------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 (a)(c) OCTOBER 31, 2002 ---------------------------- ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) SHARES DOLLARS ($) --------------------------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 185,141 3,529,297 127,594 2,227,933 675 14,224 Distributions reinvested -- -- 8 122 -- -- Redemptions (84,167) (1,611,464) (23,849) (418,221) (31,158) (561,125) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 100,974 1,917,833 103,753 1,809,834 (30,483) (546,901) CLASS B Subscriptions 173,093 3,184,607 73,152 1,201,742 76 1,377 Distributions reinvested -- -- -- -- -- -- Redemptions (52,933) (968,494) (26,733) (445,675) (2,768) (52,491) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 120,160 2,216,113 46,419 756,067 (2,692) (51,114) CLASS C Subscriptions 33,259 603,292 53,880 875,203 -- -- Distributions reinvested -- -- -- -- -- -- Redemptions (20,280) (369,823) (23,002) (386,398) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase 12,979 233,469 30,878 488,805 -- -- CLASS G Subscriptions 100,874 1,790,776 137,178 2,112,439 402,662 7,699,620 Distributions reinvested -- -- -- -- -- -- Redemptions (748,063) (13,235,279) (1,043,026) (16,470,137) (1,070,412) (18,399,523) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (647,189) (11,444,503) (905,848) (14,357,698) (667,750) (10,699,903) CLASS T Subscriptions 593,336 11,219,286 1,601,558 26,623,304 3,309,526 62,313,532 Distributions reinvested -- -- 12 186 -- -- Redemptions (2,197,901) (41,619,482) (3,101,612) (50,338,825) (5,906,627) (109,994,675) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (1,604,565) (30,400,196) (1,500,042) (23,715,335) (2,597,101) (47,681,143) CLASS Z Subscriptions 5,402,218 104,135,991 8,605,204 145,302,438 10,670,158 208,441,606 Proceeds received in connection with merger -- -- -- -- -- -- Distributions reinvested 9,645 181,333 83,287 1,331,752 -- -- Redemptions (9,359,449) (180,820,559) (14,044,860) (232,788,723) (10,051,097) (192,318,065) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (3,947,586) (76,503,235) (5,356,369) (86,154,533) 619,061 16,123,541 (a) The Fund changed its fiscal year end from October 31 to September 30. (b) Effective November 18, 2002, the Galaxy Asset Allocation Fund Prime A, Prime B, Retail B, Retail A and Trust shares were reorganized as Liberty Asset Allocation Fund Class A, Class B, Class G, Class T and Class Z shares, respectively. Subsequently, the Fund began offering Class C shares. Effective October 13, 2003, the Liberty Asset Allocation Fund was renamed Columbia Asset Allocation Fund. (c) Effective November 18, 2002, the Galaxy Equity Growth Fund Prime A, Prime B,Retail B, Retail A and Trust shares were reorganized as Liberty Equity Growth Fund Class A, Class B, Class G, Class T and Class Z shares, respectively. Subsequently, the Fund began offering Class C shares. Effective October 13, 2003, the Liberty Equity Growth Fund was renamed Columbia Large Cap Growth Fund. See Accompanying Notes to Financial Statements. Spread 76-77 STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY ___________________ Columbia Equity Funds COLUMBIA DISCIPLINED VALUE FUND -------------------------------------------------------------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 (a)(b) OCTOBER 31, 2002 ---------------------------- ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) SHARES DOLLARS ($) - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 136,953 1,686,613 245,472 2,488,497 -- -- Distributions reinvested 2,599 32,080 -- -- -- -- Redemptions (23,995) (300,932) (163,507) (1,646,171) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 115,557 1,417,761 81,965 842,326 -- -- CLASS B Subscriptions 179,802 2,124,921 48,835 490,115 -- -- Distributions reinvested 761 9,119 -- -- -- -- Redemptions (17,928) (213,057) (16,616) (170,281) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 162,635 1,920,983 32,219 319,834 -- -- CLASS C Subscriptions 40,005 458,582 34,288 342,474 -- -- Distributions reinvested 72 858 -- -- -- -- Redemptions (18,365) (206,697) (32,040) (326,333) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 21,712 252,743 2,248 16,141 -- -- CLASS G Subscriptions 17,943 210,409 23,830 227,695 122,965 1,530,736 Distributions reinvested 5,027 60,020 -- -- 56,061 730,490 Redemptions (461,561) (5,407,849) (791,814) (7,910,003) (485,678) (5,357,577) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (438,591) (5,137,420) (767,984) (7,682,308) (306,652) (3,096,351) CLASS T Subscriptions 474,406 5,826,432 712,384 7,479,651 1,461,025 18,997,313 Distributions reinvested 176,846 2,178,280 -- -- 365,484 4,923,064 Redemptions (1,818,952) (22,446,540) (1,921,056) (19,161,516) (3,436,236) (42,048,389) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (1,167,700) (14,441,828) (1,208,672) (11,681,865) (1,609,727) (18,128,012) CLASS Z Subscriptions 5,864,057 73,282,626 8,245,789 85,258,557 8,229,129 103,359,201 Distributions reinvested 165,325 2,065,049 -- -- 281,992 3,849,192 Redemptions (4,080,140) (50,781,850) (5,518,932) (56,872,729) (3,316,907) (40,297,207) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 1,949,242 24,565,825 2,726,857 28,385,828 5,194,214 66,911,186 COLUMBIA INTERNATIONAL EQUITY FUND -------------------------------------------------------------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 (a)(c) OCTOBER 31, 2002 ---------------------------- ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) SHARES DOLLARS ($) - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 63,180 779,414 365,782 3,760,494 43 500 Distributions reinvested 136 1,624 9 80 14 158 Redemptions (17,453) (209,500) (341,913) (3,639,588) (79) (773) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 45,863 571,538 23,878 120,986 (22) (115) CLASS B Subscriptions 84,442 1,019,313 63,174 632,499 -- -- Distributions reinvested -- -- 5 47 79 904 Redemptions (31,410) (369,623) (45,848) (459,615) (19,410) (169,123) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 53,032 649,690 17,331 172,931 (19,331) (168,219) CLASS C Subscriptions 77,806 915,767 136,603 1,296,905 -- -- Distributions reinvested -- -- -- -- -- -- Redemptions (69,828) (830,279) (136,000) (1,299,758) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 7,978 85,488 603 (2,853) -- -- CLASS G Subscriptions 8,197 98,874 7,418 69,394 29,664 335,436 Distributions reinvested -- -- -- -- 4,075 46,346 Redemptions (72,469) (880,823) (77,285) (731,060) (130,389) (1,400,567) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (64,272) (781,949) (69,867) (661,666) (96,650) (1,018,785) CLASS T Subscriptions 269,439 3,253,726 6,604,035 60,584,311 36,599,906 393,268,992 Distributions reinvested 2,717 32,174 29,476 267,640 93,635 1,067,845 Redemptions (828,956) (10,131,193) (7,380,277) (68,028,146) (37,921,896) (410,600,585) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (556,800) (6,845,293) (746,766) (7,176,195) (1,228,355) (16,263,748) CLASS Z Subscriptions 11,934,272 147,871,142 16,739,214 159,741,174 51,501,696 559,110,349 Distributions reinvested 34,063 410,115 125,382 1,158,531 339,109 3,916,708 Redemptions (8,594,161) (106,860,193) (25,020,075) (239,061,805) (58,357,513) (639,992,857) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 3,374,174 41,421,064 (8,155,479) (78,162,100) (6,516,708) (76,965,800) (a) The Fund changed its fiscal year end from October 31 to September 30. (b) Effective November 25, 2002, the Galaxy Equity Value Fund Retail B, Retail A and Trust shares were reorganized as Liberty Equity Value Fund Class G, Class T and Class Z shares, respectively. Subsequently, the Fund began offering Class A, Class B and Class C shares. Effective October 13, 2003, the Liberty Equity Value Fund was renamed Columbia Disciplined Value Fund. (c) Effective November 18, 2002, the Galaxy International Equity Fund Prime A, Prime B, Retail B, Retail A and Trust shares were reorganized as Liberty International Equity Fund Class A, Class B, Class G, Class T and Class Z shares, respectively. Subsequently, the Fund began offering Class C shares. Effective October 13, 2003, the Liberty International Equity Fund was renamed Columbia International Equity Fund. See Accompanying Notes to Financial Statements. Spread 78-79 STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY ___________________ Columbia Equity Funds COLUMBIA LARGE CAP CORE FUND -------------------------------------------------------------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 (a)(b) OCTOBER 31, 2002 ---------------------------- ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) SHARES DOLLARS ($) - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 223,985 2,723,272 126,227 1,379,676 10 128 Proceeds received in connection with merger -- -- 621,521 6,454,752 -- -- Distributions reinvested 298 3,571 1,676 16,670 35 466 Redemptions (124,083) (1,510,141) (76,403) (794,588) (3,221) (40,839) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 100,200 1,216,702 673,021 7,056,510 (3,176) (40,245) CLASS B Subscriptions 191,409 2,257,015 162,123 1,730,382 -- -- Distributions reinvested -- -- 9 86 237 3,106 Redemptions (57,832) (683,878) (8,016) (85,754) (3,283) (31,132) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 133,577 1,573,137 154,116 1,644,714 (3,046) (28,026) CLASS C Subscriptions 44,391 521,233 32,690 332,435 -- -- Distributions reinvested -- -- 4 41 -- -- Redemptions (35,218) (416,189) (12,351) (121,881) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase 9,173 105,044 20,343 210,595 -- -- CLASS G Subscriptions 30,324 358,212 44,266 449,389 162,505 1,998,005 Proceeds received in connection with merger -- -- 1,226,272 12,420,359 -- -- Distributions reinvested -- -- 3,352 30,905 126,869 1,654,365 Redemptions (1,265,623) (14,874,554) (1,816,170) (18,640,817) (973,850) (10,728,602) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (1,235,299) (14,516,342) (542,280) (5,740,164) (684,476) (7,076,232) CLASS T Subscriptions 1,137,554 13,775,855 1,495,379 15,776,849 2,708,325 33,029,033 Distributions reinvested 4,431 52,863 82,213 836,757 675,947 8,936,751 Redemptions (2,774,051) (33,648,875) (2,878,020) (29,879,271) (5,908,323) (70,008,875) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (1,632,066) (19,820,157) (1,300,428) (13,265,665) (2,524,051) (28,043,091) CLASS Z Subscriptions 2,978,947 36,327,362 3,300,574 34,099,883 7,884,391 100,632,122 Proceeds received in connection with merger -- -- 6,658,543 69,340,646 -- -- Distributions reinvested 7,263 87,150 86,880 913,137 1,177,076 15,587,396 Redemptions (5,362,164) (65,586,443) (26,833,257) (266,105,376) (11,419,815) (136,648,506) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (2,375,954) (29,171,931) (16,787,260) (161,751,710) (2,358,348) (20,428,988) COLUMBIA SMALL CAP FUND -------------------------------------------------------------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 (a)(c) OCTOBER 31, 2002 ---------------------------- ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) SHARES DOLLARS ($) --------------------------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 9,975,214 170,177,084 4,098,552 58,433,179 11,215 157,443 Proceeds received in connection with merger -- -- -- -- -- -- Distributions reinvested 166,652 2,743,101 1,737 21,912 683 9,710 Redemptions (1,839,971) (31,780,743) (360,646) (5,358,656) (7,291) (105,884) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 8,301,895 141,139,442 3,739,643 53,096,435 4,607 61,269 CLASS B Subscriptions 1,835,057 30,371,535 756,403 10,430,015 9,728 132,259 Distributions reinvested 22,302 355,492 2,142 26,282 1,222 17,051 Redemptions (233,273) (3,860,617) (27,618) (373,156) (2,347) (33,156) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 1,624,086 26,866,410 730,927 10,083,141 8,603 116,154 CLASS C Subscriptions 3,168,245 52,152,651 869,296 12,200,290 -- -- Distributions reinvested 37,782 603,008 192 2,361 -- -- Redemptions (237,693) (3,942,134) (11,707) (147,824) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase 2,968,334 48,813,525 857,781 12,054,827 -- -- CLASS G Subscriptions 15,992 262,179 28,276 350,209 429,423 6,235,998 Proceeds received in connection with merger -- -- -- -- -- -- Distributions reinvested 14,620 230,995 38,236 465,333 38,027 526,290 Redemptions (84,274) (1,387,033) (99,176) (1,269,029) (111,919) (1,509,331) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (53,662) (893,859) (32,664) (453,487) 355,531 5,252,957 CLASS T Subscriptions 1,032,837 17,432,562 2,163,625 28,267,215 6,479,808 92,202,077 Distributions reinvested 221,143 3,611,276 453,371 5,680,741 665,372 9,395,064 Redemptions (1,687,801) (28,719,170) (2,947,006) (38,209,114) (5,121,259) (70,792,166) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (433,821) (7,675,332) (330,010) (4,261,158) 2,023,921 30,804,975 CLASS Z Subscriptions 23,044,663 396,797,303 23,437,396 320,832,302 19,254,421 283,345,487 Proceeds received in connection with merger -- -- -- -- -- -- Distributions reinvested 1,091,817 18,124,145 1,461,938 18,622,287 2,024,954 28,972,951 Redemptions (13,111,013) (226,795,284) (11,858,363) (163,132,456) (13,389,656) (190,309,137) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 11,025,467 188,126,164 13,040,971 176,322,133 7,889,719 122,009,301 (a) The Fund changed its fiscal year end from October 31 to September 30. (b) Effective December 9, 2002, the Galaxy Large Cap Value Fund Prime A, Prime B, Retail B, Retail A and Trust shares were reorganized as Liberty Large Cap Core Fund (formerly known as Galaxy Growth & Income Fund) Class A, Class B, Class G, Class T and Class Z shares, respectively. Subsequently, the Fund began offering Class C shares. Effective October 13, 2003, the Liberty Large Cap Core Fund was renamed Columbia Large Cap Core Fund. (c) Effective November 18, 2002, the Galaxy Small Cap Value Fund Prime A, Prime B, Retail B, Retail A and Trust shares were reorganized as Liberty Small Cap Fund Class A, Class B, Class G, Class T and Class Z shares, respectively. Subsequently, the Fund began offering Class C shares. Effective October 13, 2003, the Liberty Small Cap Fund was renamed Columbia Small Cap Fund. See Accompanying Notes to Financial Statements. Spread 80-81 STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY ___________________ Columbia Equity Funds COLUMBIA SMALL COMPANY EQUITY FUND -------------------------------------------------------------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 (a)(b) OCTOBER 31, 2002 ---------------------------- ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) SHARES DOLLARS ($) --------------------------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 296,504 4,933,872 47,106 619,478 -- -- Redemptions (36,147) (662,030) (19,853) (248,570) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase 260,357 4,271,842 27,253 370,908 -- -- CLASS B Subscriptions 131,387 2,053,177 15,904 207,848 -- -- Redemptions (24,027) (359,925) (593) (5,872) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase 107,360 1,693,252 15,311 201,976 -- -- CLASS C Subscriptions 69,159 1,059,859 14,632 187,755 -- -- Redemptions (7,231) (109,723) (10,379) (127,847) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase 61,928 950,136 4,253 59,908 -- -- CLASS G Subscriptions 7,992 121,923 15,704 176,262 358,543 5,343,587 Redemptions (203,048) (3,089,126) (372,314) (4,494,902) (561,965) (7,654,692) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (195,056) (2,967,203) (356,610) (4,318,640) (203,422) (2,311,105) CLASS T Subscriptions 219,277 3,570,127 1,610,555 19,278,621 7,332,857 103,731,584 Redemptions (666,822) (10,915,948) (1,992,911) (23,497,418) (7,849,704) (111,618,506) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease (447,545) (7,345,821) (382,356) (4,218,797) (516,847) (7,886,922) CLASS Z Subscriptions 4,555,081 78,677,281 8,255,053 107,075,672 5,263,829 81,621,271 Redemptions (6,507,999) (112,298,953) (6,917,009) (90,058,093) (7,195,424) (105,865,752) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (1,952,918) (33,621,672) 1,338,044 17,017,579 (1,931,595) (24,244,481) (a) The Fund changed its fiscal year end from October 31 to September 30. (b) Effective November 18, 2002, the Galaxy Small Company Equity Fund Retail B, Retail A and Trust shares were reorganized as Liberty Small Company Equity Fund Class G, Class T and Class Z shares, respectively. Subsequently, the Fund began offering Class A, Class B and Class C shares. Effective October 13, 2003, the Liberty Small Company Equity Fund was renamed Columbia Small Company Equity Fund. See Accompanying Notes to Financial Statements. 82 NOTES TO FINANCIAL STATEMENTS __________________________________________________ September 30, 2004 Columbia Equity Funds NOTE 1. ORGANIZATION The Columbia Fund Trust XI (the "Trust") is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Information presented in these financial statements pertains to the following diversified portfolios (individually referred to as a "Fund", collectively referred to as the "Funds"): Columbia Asset Allocation Fund Columbia Large Cap Growth Fund Columbia Disciplined Value Fund Columbia International Equity Fund Columbia Large Cap Core Fund Columbia Small Cap Fund Columbia Small Company Equity Fund INVESTMENT GOALS The Columbia Asset Allocation Fund seeks a high total return by providing both a current level of income greater than that provided by popular stock market averages, as well as long-term growth in the value of the Fund's assets. Columbia Large Cap Growth Fund, Columbia International Equity Fund and Columbia Small Cap Fund seek long term capital appreciation. Columbia Disciplined Value Fund seeks long term capital appreciation, with income as a secondary goal. Columbia Large Cap Core Fund seeks to provide a relatively high total return through long-term capital appreciation and current income. Columbia Small Company Equity Fund seeks capital appreciation. FUND SHARES The Funds may issue an unlimited number of shares. Each Fund offers six classes of shares: Class A, Class B, Class C, Class G, Class T and Class Z. Each share class has its own sales charge and expense structure. Effective March 1, 2004, the Columbia Small Cap Fund was closed to new investors. Class A and Class T shares are subject to a front-end sales charge based on the amount of initial investment. Class A and Class T shares purchased without an initial sales charge in accounts aggregating $1 million to $25 million at the time of purchase are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months of the time of purchase. Class B and Class G 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 G shares will convert to Class T shares in eight years after purchase. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in each Fund's prospectus. Effective October 13, 2003, the Liberty Asset Allocation Fund, Liberty Equity Growth Fund, Liberty Equity Value Fund, Liberty International Equity Fund, Liberty Large Cap Core Fund, Liberty Small Cap Fund, and Liberty Small Company Equity Fund were renamed Columbia Asset Allocation Fund, Columbia Large Cap Growth Fund, Columbia Disciplined Value Fund, Columbia International Equity Fund, Columbia Large Cap Core Fund, Columbia Small Cap Fund and Columbia Small Company Equity Fund, respectively. Also on this date, the Liberty-Stein Roe Investment Trust was renamed Columbia Funds Trust XI. 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 Funds in the preparation of their 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. 83 ________________________________________________________________________________ September30, 2004 Columbia Equity Funds Debt securities generally are valued by a pricing service approved by the Funds' Board of Trustees, based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. Debt securities for which quotations are readily available are valued at an over-the-counter or exchange bid quotation. Certain debt securities, which tend to be more thinly traded and of lesser quality, are priced based on fundamental analysis of the financial condition of the issuer and the estimated value of any collateral. Valuations developed through pricing techniques may vary from the actual amounts realized upon sale of the securities, and the potential variation may be greater for those securities valued using fundamental analysis. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments in other investment companies are valued at net asset value. Foreign securities are generally valued at the last sale price on the foreign exchange or market on which they trade. If any foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sale price of the local shares in the principal market in which such securities are normally traded. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Funds' shares are determined as of such times. Foreign currency exchange rates are generally determined at 2:00 p.m. Eastern (U.S.) time. Occasionally, events affecting the values of such foreign securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE, which would not be reflected in the computation of the Funds' net asset value. If events materially affecting the values of such foreign securities occur and it is determined that market quotations are not reliable, then these foreign securities will be valued at their fair value using procedures approved by the Board of Trustees. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. The Funds may use a systematic fair valuation model provided by an independent third party to value securities, principally traded in foreign markets, in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for fair valuation. If a security is valued at a "fair value," such value is likely to be different from the last quoted market price for the security. 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 Each Fund may engage in repurchase agreement transactions with institutions that the Funds' investment advisor has determined are creditworthy. Each Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the each 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 Funds seek to assert their rights. INCOME RECOGNITION Interest income is recorded on the accrual basis. Premium and discount are amortized and accreted, respectively, on all debt securities. Corporate actions and dividend income are recorded on the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Funds become aware of such, net of non-reclaimable tax withholdings. Awards from class action litigation are recorded as a reduction of cost if the Funds still own the applicable securities on the payment date. If the Funds no longer own the applicable securities, the proceeds are recorded as realized gains. 84 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds The Funds estimate 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. If the Funds no longer own the applicable securities, any distributions received in excess of income are recorded as realized gains. Effective April 1, 2004, the Columbia Asset Allocation Fund and Columbia Small Cap Fund adopted the policy to reduce cost of investments for financial statement purposes by the distributions received in excess of income from REITs. The cumulative effect of this accounting change did not impact the net assets of the Funds, but resulted in reclassifications as follows: COLUMBIA ASSET ALLOCATION FUND: INCREASE IN DECREASE OVERDISTRIBUTED NET IN COST INVESTMENT INCOME -------- ------------------- $ 30,134 $ 30,134 The effect of the change for the year ended September 30, 2004 is as follows: DECREASE DECREASE IN INCREASE IN IN COST DIVIDEND INCOME NET REALIZED GAIN -------- ---------------- ----------------- $ 8,514 $ 15,447 $ 6,933 COLUMBIA SMALL CAP FUND: INCREASE IN DECREASE ACCUMULATED NET IN COST INVESTMENT LOSS -------- --------------- $311,495 $ 311,495 The effect of the change for the year ended September 30, 2004 is as follows: INCREASE DECREASE IN INCREASE IN IN COST DIVIDEND INCOME NET REALIZED GAIN -------- --------------- ----------------- $108,883 $ 58,723 $ 167,606 FOREIGN CURRENCY TRANSACTIONS The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. For financial statement purposes, the Funds do not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. DETERMINATION OF CLASS NET ASSET VALUES All income, expenses (other than class-specific expenses, as shown on the Statement of Operations) and realized and unrealized gains (losses), are allocated to each class of a 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 Each 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, each 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 each Fund should not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. FOREIGN CAPITAL GAINS TAXES Realized gains in certain countries may be subject to foreign taxes at the fund level, at rates ranging from approximately 10% to 30%. The Funds accrue for such foreign taxes on net realized and unrealized gains at the appropriate rate for each jurisdiction. DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income are declared and paid quarterly for each Fund, with the exception of the Columbia International Equity Fund. The Columbia International Equity Fund declares and pays dividends annually. Effective October 13, 2004, the Board of Trustees approved a change in the distribution policy for the Columbia Large Cap Growth Fund, Columbia Large Cap Core Fund, Columbia Small Cap Fund and Columbia Small Company Equity Fund, so that these Funds will distribute any dividends annually. Net realized capital gains, if any, are distributed at least annually for all Funds. 85 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds 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 Funds' 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 September 30, 2004, permanent differences resulting primarily from differing treatments for amortization/accretion adjustments, redemption based payments treated as dividend paid deduction, distribution reclassifications, non-deductible excise tax expense, foreign capital gains tax, passive foreign investment company adjustments, paydown reclassifications, net operating loss reclassifications, REIT adjustments, market discount reclassification adjustments and foreign currency transactions were identified and reclassified among the components of the Funds' net assets as follows: UNDISTRIBUTED (OVERDISTRIBUTED) OR (ACCUMULATED) ACCUMULATED NET INVESTMENT NET REALIZED PAID-IN INCOME (LOSS) GAIN(LOSS) CAPITAL -------------------------------------------------- Columbia Asset Allocation Fund ........................ $ 386,021 $ (385,858) $ (163) Columbia Large Cap Growth Fund ........................ 2,857,922 -- (2,857,922) Columbia Disciplined Value Fund ....................... 314,710 37,184 (351,894) Columbia International Equity Fund .................... (2,227,581) 2,227,564 17 Columbia Large Cap Core Fund .......................... 18,018 (2,405,129) 2,387,111 Columbia Small Cap Fund ............................... 4,067,742 (9,365,270) 5,297,528 Columbia Small Company Equity Fund .................... 3,955,024 -- (3,955,024) Net investment income and net realized gains (losses), as disclosed on the Statements of Operations, and net assets were not affected by these reclassifications. The tax character of distributions paid during the year ended September 30, 2004, the period ended September 30, 2003 and the year ended October 31, 2002 was as follows: SEPTEMBER 30, 2004 ---------------------------- ORDINARY LONG-TERM INCOME* CAPITAL GAINS ----------------------------- Columbia Asset Allocation Fund ............................................. $ 8,343,267 $ -- Columbia Large Cap Growth Fund ............................................. 344,225 -- Columbia Disciplined Value Fund ............................................ 8,287,914 -- Columbia International Equity Fund ......................................... 2,902,933 -- Columbia Large Cap Core Fund ............................................... 347,473 18,017 Columbia Small Cap Fund .................................................... 9,268,588 25,211,495 SEPTEMBER 30, 2003 ---------------------------- ORDINARY LONG-TERM INCOME* CAPITAL GAINS ----------------------------- Columbia Asset Allocation Fund ............................................. $ 8,302,859 $ -- Columbia Large Cap Growth Fund ............................................. 2,326,344 -- Columbia International Equity Fund ......................................... 4,361,724 -- Columbia Large Cap Core Fund ............................................... 2,920,950 -- Columbia Small Cap Fund .................................................... 8,797,912 23,723,001 86 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds OCTOBER 31, 2002 ---------------------------- ORDINARY LONG-TERM INCOME* CAPITAL GAINS ----------------------------- Columbia Asset Allocation Fund ...............................................$ 8,939,420 $ -- Columbia Disciplined Value Fund .............................................. -- 10,519,279 Columbia International Equity Fund ........................................... 12,204,413 -- Columbia Large Cap Core Fund ................................................. 2,339,161 25,685,830 Columbia Small Cap Fund ...................................................... 8,625,684 39,447,563 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of September 30, 2004, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ---------------------------------------------------- Columbia Asset Allocation Fund ........................ $ 98,156 $ -- $ 35,356,276 Columbia Large Cap Growth Fund ........................ -- -- 111,901,449 Columbia Disciplined Value Fund ....................... -- -- 24,702,075 Columbia International Equity Fund .................... 2,296,054 -- 41,244,251 Columbia Large Cap Core Fund .......................... -- 10,843,055 22,688,137 Columbia Small Cap Fund ............................... 23,973,257 67,259,250 171,824,325 Columbia Small Company Equity Fund .................... -- -- 37,184,270 *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 September 30, 2004, based on cost of investments for federal income tax purposes and excluding any unrealized appreciation and depreciation from changes in the value of assets and liabilities resulting from changes in exchange rates, was: UNREALIZED UNREALIZED NET UNREALIZED APPRECIATION DEPRECIATION APPRECIATION ----------------------------------------------------- Columbia Asset Allocation Fund ........................ $ 45,964,390 $ (10,607,531) $ 35,356,859 Columbia Large Cap Growth Fund ........................ 133,241,933 (21,340,484) 111,901,449 Columbia Disciplined Value Fund ....................... 42,018,308 (17,316,233) 24,702,075 Columbia International Equity Fund .................... 54,321,998 (13,106,794) 41,215,204 Columbia Large Cap Core Fund .......................... 33,613,810 (10,925,673) 22,688,137 Columbia Small Cap Fund ............................... 290,919,269 (119,094,944) 171,824,325 Columbia Small Company Equity Fund .................... 77,329,582 (40,145,312) 37,184,270 The following capital loss carryforwards, determined as of September 30, 2004, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: COLUMBIA COLUMBIA COLUMBIA ASSET LARGE CAP DISCIPLINED ALLOCATION GROWTH VALUE YEAR OF EXPIRATION FUND* FUND FUND ---------------------------------------------------------------------------------------------------------- 2009 .................................................. $ -- $ 8,273,159 $ -- 2010 .................................................. 1,108,836 99,339,708 10,720,416 2011 .................................................. 5,941,365 22,217,091 -- ----------------- ------------- ----------- Total ................................................. $ 7,050,201 $ 129,829,958 $10,720,416 ----------------- ------------- ----------- 87 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds COLUMBIA COLUMBIA COLUMBIA INTERNATIONAL LARGE CAP COLUMBIA SMALL COMPANY EQUITY CORE SMALL CAP EQUITY YEAR OF EXPIRATION FUND** FUND FUND FUND ------------------------------------------------------------------------------------------------------------------------------- 2008 .................................................. $ 698,550 $ -- $ -- $ -- 2009 .................................................. 48,210,646 -- -- -- 2010 ................................................. 219,682,429 -- -- 36,913,639 2011 .................................................. 36,290,283 -- -- -- ------------- ---------- --------- ------------ Total ................................................. $ 304,881,908 -- $ -- $ 36,913,639 ------------- ---------- --------- ------------ * Of the capital loss carryforwards attributable to Columbia Asset Allocation Fund, $1,108,836 expiring 9/30/2010 remains from the Columbia Asset Allocation Fund's merger with Stein Roe Balanced Fund (See Note 11). ** The availability of $698,550 of the capital loss carryforwards which were acquired on August 20, 2001 in connection with The Pillar Funds reorganization, may be limited in a given year. The following capital loss carryforwards, determined as of September 30, 2004, have been utilized as follows: Columbia Asset Allocation Fund .................................................................................. $ 28,030,902 Columbia Large Cap Growth Fund .................................................................................. 33,254,599 Columbia Disciplined Value Fund ................................................................................. 55,001,322 Columbia International Equity Fund .............................................................................. 60,822,899 Columbia Large Cap Core Fund .................................................................................... 19,498,866 Columbia Small Company Equity Fund .............................................................................. 63,905,081 NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the Funds. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004, FleetBoston, including the Funds' investment advisor, transfer agent and distributor, was acquired by Bank of America Corporation ("BOA"). The acquisition did not change the way the Funds are managed, the investment personnel assigned to manage the Funds or the fees paid by the Funds. INVESTMENT ADVISORY FEE Columbia receives a monthly investment advisory fee based on average daily net assets from each of the Funds (excluding Columbia International Equity Fund and Columbia Small Company Equity Fund), at the following annual rates: ANNUAL FEE AVERAGE DAILY NET ASSETS RATE ------------------------ ------ First $500 million 0.75% Next $500 million 0.70% Next $500 million 0.65% Next $500 million 0.60% Over $2 billion 0.55% For the period July 1, 2003 through October 31, 2003, Columbia voluntarily waived its investment advisory fee of the Columbia Asset Allocation Fund by 0.03% annually of the Fund's average daily net assets. Columbia receives a monthly investment advisory fee based on average daily net assets of the Columbia International Equity Fund at the following annual rates: ANNUAL FEE AVERAGE DAILY NET ASSETS RATE ------------------------ ------ First $50 million 1.15% Next $50 million 0.95% Over $100 million 0.85% Columbia has voluntarily agreed to waive a portion of its investment advisory fee for the Columbia International Equity Fund at an annual rate of 0.25% of the Fund's average daily net assets. Columbia, at its discretion, may revise or discontinue this arrangement any time. Columbia receives a monthly investment advisory fee based on average daily net assets of the Columbia Small Company Equity Fund at the following annual rates: ANNUAL FEE AVERAGE DAILY NET ASSETS RATE ------------------------ ------ First $500 million 0.75% Next $500 million 0.70% Over $1 billion 0.65% 88 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds Prior to November 1, 2003, Columbia was entitled to receive a monthly investment advisory fee from each Fund (excluding Columbia International Equity Fund) at the annual rate of 0.75% of each Fund's average daily net assets. In addition, Columbia also waived a portion of its investment advisory fee so that such fees payable by the Funds were as follows: ANNUAL FEE AVERAGE DAILY NET ASSETS RATE ------------------------ ------ First $500 million 0.75% Next $500 million 0.70% Next $500 million 0.65% Next $500 million 0.60% Over $2 billion 0.55% For the year ended September 30, 2004, the effective investment advisory fee rates for the Funds were as follows: Columbia Asset Allocation Fund 0.75% Columbia Large Cap Growth Fund 0.73% Columbia Disciplined Value Fund 0.75% Columbia International Equity Fund 0.64% Columbia Large Cap Core Fund 0.75% Columbia Small Cap Fund 0.70% Columbia Small Company Equity Fund 0.75% ADMINISTRATION FEE Columbia provides administrative and other services to the Funds for a monthly administration fee at the annual rate of 0.067% of each Fund's average daily net assets. PRICING AND BOOKKEEPING FEES Columbia is responsible for providing pricing and bookkeeping services to the Funds 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 collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Funds, Columbia receives an annual fee based on the average daily net assets of each Fund at the following annual rates: ANNUAL FEE AVERAGE DAILY NET ASSETS RATE ------------------------ --------- Under $50 million $ 25,000 Over $50 million but less than $200 million $ 35,000 Over $200 million but less than $500 million $ 50,000 Over $500 million but less than $1 billion $ 85,000 Over $1 billion $ 125,000 The annual fees for a Fund with more than 25% in non-domestic assets, as measured on a monthly basis, will be 150% of the fees disclosed above. An additional flat rate fee of $10,000 is charged to each Fund due to its multiple class structure. The Funds also pay additional fees for pricing services based on the number of securities held by each Fund. For the year ended September 30, 2004, the effective pricing and bookkeeping fee rates for the Funds, inclusive of out-of-pocket expenses, were as follows: Columbia Asset Allocation Fund 0.032% Columbia Large Cap Growth Fund 0.011% Columbia Disciplined Value Fund 0.014% Columbia International Equity Fund 0.018% Columbia Large Cap Core Fund 0.014% Columbia Small Cap Fund 0.010% Columbia Small Company Equity Fund 0.015% TRANSFER AGENT FEE Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services to the Funds. 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. 89 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly transfer agent fee, in addition to reimbursement for certain out-of-pocket expenses, based on a per-account charge or a minimum of $5,000 annually. The Transfer Agent has voluntarily agreed to waive a portion of its transfer agent fee for the Columbia International Equity Fund, Columbia Large Cap Core Fund and Columbia Small Company Equity Fund. These arrangements may be revised discontinued by the Transfer Agent at any time. For the period January 1, 2004 through September 30, 2004, the Transfer Agent waived fees for the Funds as follows: FEES WAIVED -------- Columbia International Equity Fund $ 47,295 Columbia Large Cap Core Fund 13,522 Columbia Small Company Equity Fund 27,315 For the period October 1, 2003 through December 31, 2003, the Transfer Agent waived transfer agent fees as follows: FEES WAIVED ------------------- CLASS G CLASS T ------- ------- Columbia International Equity Fund $ 3,326 $12,336 Columbia Large Cap Core Fund 4,341 -- Columbia Small Company Equity Fund -- 9,209 Effective October 13, 2003, Liberty Funds Services, Inc. was renamed Columbia Funds Services, Inc. UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Funds. For the year ended September 30, 2004, the Distributor has retained net underwriting discounts and CDSC fees as follows: FRONT-END SALES CHARGE CDSC ---------------------- ----------------------------------------------------- CLASS A CLASS T CLASS A CLASS B CLASS C CLASS G CLASS T -------- ------- ------- ------- ------- --------- ------- Columbia Asset Allocation Fund ................. $ 7,818 $ 6,103 $ -- $ 9,957 $ 43 $ 123,227 $ -- Columbia Large Cap Growth Fund ................. 9,078 16,547 -- 4,622 397 126,393 -- Columbia Disciplined Value Fund ................ 4,141 5,789 -- 1,113 -- 60 21,262 Columbia International Equity Fund ............. 2,303 1,857 -- 3,106 -- 10,139 -- Columbia Large Cap Core Fund ................... 8,168 7,174 -- 6,185 201 47,212 -- Columbia Small Cap Fund ........................ 192,749 8,824 714 57,363 20,259 19,348 2 Columbia Small Company Equity Fund ............. 12,014 2,961 -- 1,995 249 13,973 -- The Funds have adopted a 12b-1 plan (the "Plan") which requires the payment of a monthly service and distribution fee to the Distributor based on the average daily net assets of each Fund at the following annual rates: DISTRIBUTION FEE ---------------------------------------- CLASS A CLASS B CLASS C CLASS G ------- ------- ------- ------- Columbia Asset Allocation Fund ................................................. 0.10% 0.75% 0.75% 0.65% Columbia Large Cap Growth Fund ................................................. 0.10% 0.75% 0.75% 0.65% Columbia Disciplined Value Fund ................................................ 0.10% 0.75% 0.75% 0.65% Columbia International Equity Fund ............................................. 0.10% 0.75% 0.75% 0.65% Columbia Large Cap Core Fund ................................................... 0.10% 0.75% 0.75% 0.65% Columbia Small Cap Fund ........................................................ 0.10% 0.75% 0.75% 0.65% Columbia Small Company Equity Fund ............................................. 0.10% 0.75% 0.75% 0.65% SERVICE FEE ---------------------------------------- CLASS A CLASS B CLASS C CLASS G ------- ------- ------- ------- Columbia Asset Allocation Fund ................................................. 0.25% 0.25% 0.25% 0.50% Columbia Large Cap Growth Fund ................................................. 0.25% 0.25% 0.25% 0.50% Columbia Disciplined Value Fund ................................................ 0.25% 0.25% 0.25% 0.50% Columbia International Equity Fund ............................................. 0.25% 0.25% 0.25% 0.50% Columbia Large Cap Core Fund ................................................... 0.25% 0.25% 0.25% 0.50% Columbia Small Cap Fund ........................................................ 0.25% 0.25% 0.25% 0.50% Columbia Small Company Equity Fund ............................................. 0.25% 0.25% 0.25% 0.50% 90 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds The Funds do not intend to pay total distribution and service fees in excess of 0.25% and 0.95% annually for Class A and Class G shares of the Funds, respectively. Of the 0.50% service fee for Class G shares, 0.25% relates to shareholder liaison fees and 0.25% relates to administration support fees. 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. SHAREHOLDER SERVICES FEES The Funds have adopted shareholder services plans that permit them to pay for certain services provided to Class T and Class Z shareholders by their financial advisors. Currently, the service plan has not been implemented with respect to the Funds' Class Z shares. The annual service fee may equal up to 0.50% for Class T shares. The Funds do not intend to pay more than 0.30% annually for Class T shareholder service fees. CUSTODY CREDITS Each Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. The Funds could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if they had not entered into such an agreement. FEES PAID TO OFFICERS AND DIRECTORS The Funds pay no compensation to their officers, all of whom are employees of Columbia or its affiliates. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Funds in accordance with federal securities regulations. Each Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Chief Compliance Officer role. Each Fund's fee will not exceed $15,000 per year. The Funds' 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 Funds' assets. OTHER Columbia provides certain services to the Funds related to Sarbanes-Oxley compliance. This amount is included in "Other expenses" on the Statements of Operations. For the year ended September 30, 2004, the Funds paid fees to Columbia for such services as follows: Columbia Asset Allocation Fund ................ $ 2,042 Columbia Large Cap Growth Fund ................ 2,858 Columbia Disciplined Value Fund ............... 1,864 Columbia International Equity Fund ............ 1,947 Columbia Large Cap Core Fund .................. 1,972 Columbia Small Cap Fund ....................... 2,957 Columbia Small Company Equity Fund ............ 1,898 NOTE 5. PORTFOLIO INFORMATION For the year ended September 30, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were as follows: OTHER INVESTMENT SECURITIES -------------------------------- PURCHASES SALES -------------------------------- Columbia Asset Allocation Fund ............................................. $ 313,560,119 $ 386,440,074 Columbia Large Cap Growth Fund ............................................. 1,222,680,371 1,338,348,790 Columbia Disciplined Value Fund ............................................ 419,775,701 412,382,267 Columbia International Equity Fund ......................................... 470,597,439 453,336,059 Columbia Large Cap Core Fund ............................................... 478,967,318 543,498,628 Columbia Small Cap Fund .................................................... 705,827,594 338,282,499 Columbia Small Company Equity Fund ......................................... 215,814,604 247,896,201 U.S. GOVERNMENT SECURITIES -------------------------------- PURCHASES SALES -------------------------------- Columbia Asset Allocation Fund ............................................. $ 20,155,084 $ 27,961,389 91 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds NOTE 6. REDEMPTION FEES Effective February 15, 2003, the Columbia International Equity Fund began imposing a 2.00% redemption fee to shareholders of Class Z shares who redeem shares held for 60 days or less. Redemption fees, which are retained by the Fund, are accounted for as an addition to paid-in capital and are allocated to each class proportionately for purposes of determining the net asset value of each class. Prior to October 9, 2003, redemption fees were recorded as a component of paid in capital on Class Z shares. For the year ended September 30, 2004, the redemption fees for the Class Z shares of the Columbia International Equity Fund amounted to $53,214. NOTE 7. OTHER RELATED PARTY TRANSACTIONS During the year ended September 30, 2004, the Columbia Small Cap Fund used Bank of America Securities, a wholly owned subsidiary of BOA, as a broker. Total commissions paid to Bank of America Securities during the year were $12,945. NOTE 8. LINE OF CREDIT The Funds 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 Funds based on their borrowings. In addition, each 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 September 30, 2004, the Funds did not borrow under this arrangement. NOTE 9. OTHER During the year ended September 30, 2004, the Columbia Asset Allocation Fund purchased shares of Compass Group PLC in error. This position was subsequently sold at a loss of $13,429 and the Fund was reimbursed by Columbia. During the year ended September 30, 2004, the Columbia International Equity Fund purchased shares of Compass Group PLC and foreign currency in error. These positions were subsequently sold at a loss of $687,106 and the Fund was reimbursed by Columbia. NOTE 10. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES FOREIGN SECURITIES There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. In addition, the liquidity of foreign securities may be more limited than that of domestic securities. Investments in emerging market countries are subject to additional risk. The risk of foreign investments is typically increased in less developed countries. These countries are also more likely to experience high levels of inflation, deflation or currency devaluation which could hurt their economies and securities markets. HIGH-YIELD SECURITIES Investing in high-yield securities may involve greater credit risk and considerations not typically associated with investing in U.S. Government bonds and other higher quality fixed income securities. These securities are non-investment grade securities, often referred to as "junk bonds." Economic downturns may disrupt the high yield market and impair the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high-yield securities may be less liquid due to the extent that there is no established retail secondary market and because of a decline in the value of such securities. INDUSTRY FOCUS The Funds may focus their investments in certain industries, subjecting them 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 92 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds 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 of its 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 September 30, 2004, Columbia has assumed legal, consulting services and Trustees' fees incurred by the Funds in connection with these matters as follows: Columbia Asset Allocation Fund $ 21,519 Columbia Large Cap Growth Fund 46,518 Columbia Disciplined Value Fund 20,002 Columbia International Equity Fund 23,162 Columbia Large Cap Core Fund 19,890 Columbia Small Cap Fund 74,770 Columbia Small Company Equity Fund 19,440 93 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds NOTE 11. BUSINESS COMBINATIONS AND MERGERS As of the end of business on November 15, 2002, the Stein Roe Balanced Fund, a separate series of the Trust, merged into the Trust shares of Galaxy Asset Allocation Fund. The Galaxy Asset Allocation Fund received a tax-free transfer of assets from the Stein Roe Balanced Fund as follows: SHARES NET ASSETS UNREALIZED ISSUED RECEIVED APPRECIATION 1 --------------- ------------- --------------- 9,749,490 $ 127,523,327 $ 8,523,537 NET ASSETS NET ASSETS NET ASSETS OF STEIN ROE OF ASSET OF ASSET BALANCED FUND ALLOCATION FUND ALLOCATION FUND IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION --------------- ------------- --------------- $ 441,389,479 $ 127,523,327 $ 568,912,806 1 Unrealized appreciation is included in the Net Assets Received amount shown above. Also as of the end of business on November 15, 2002, subsequent to the merger described above, the Galaxy Asset Allocation Fund, previously a fund of Galaxy, was reorganized as the Asset Allocation Fund. Class A, Class B, Class G, Class T and Class Z shares were issued in exchange for Prime A, Prime B, Retail B, Retail A and Trust shares, respectively. Class C shares commenced operations on November 18, 2002. Differing amortization policies between the Liberty Asset Allocation Fund and the Stein Roe Balanced Fund resulted in reclassifications as follows: UNREALIZED APPRECIATION PAID-IN CAPITAL ------------ --------------- $ 64,867 $ (64,867) Also as of the end of business on November 15, 2002, the Galaxy Equity Growth Fund, previously a fund of Galaxy, was reorganized as the Equity Growth Fund with Class A, Class B, Class G, Class T and Class Z shares issued in exchange for Prime A, Prime B, Retail B, Retail A and Trust shares, respectively. Class C shares commenced operations on November 18, 2002. As of the end of business on November 22, 2002, the Galaxy Equity Value Fund, previously a fund of Galaxy, was reorganized as the Equity Value Fund with Class G, Class T and Class Z shares issued in exchange for Retail B, Retail A and Trust shares, respectively. Class A, Class B and Class C shares commenced operations on November 25, 2002. As of the end of business on November 15, 2002, the Galaxy International Equity Fund, previously a fund of Galaxy, was reorganized as the International Equity Fund with Class A, Class B, Class G, Class T and Class Z shares issued in exchange for Prime A, Prime B, Retail B, Retail A and Trust shares, respectively. Class C shares commenced operations on November 18, 2002. As of the end of business on December 6, 2002, the Galaxy Large Cap Value Fund, Retail A, Retail B and Trust shares merged into the Galaxy Growth & Income Fund, Prime A, Retail B and Trust shares, respectively. The Galaxy Large Cap Value Fund and Galaxy Growth & Income Fund were both previously funds of Galaxy. The Galaxy Growth & Income Fund received a tax-free transfer of assets from Galaxy Large Cap Value Fund as follows: SHARES NET ASSETS UNREALIZED ISSUED RECEIVED APPRECIATION 1 --------------- ------------- -------------- 8,506,336 $ 88,215,757 $ 3,841,144 NET ASSETS OF NET ASSETS OF NET ASSETS OF GROWTH & LARGE CAP LARGE CAP INCOME FUND CORE FUND CORE FUND IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION --------------- ------------- --------------- $ 560,578,780 $ 88,215,757 $ 648,794,537 1 Unrealized appreciation is included in the Net Assets Received amount shown above. Also as of the end of business on December 6, 2002, subsequent to the merger described above, the Galaxy Growth & Income Fund was reorganized as the Liberty Large Cap Core Fund. Class A, Class B, Class G, Class T and Class Z shares were issued in exchange for Prime A, Prime B, Retail B, Retail A and Trust shares, respectively. Class C shares commenced operations on December 9, 2002. As of the end of business on November 15, 2002, the Galaxy Small Cap Value Fund, previously a fund of Galaxy, was reorganized as the Small Cap Fund with Class A, Class B, Class G, Class T and Class Z shares issued in exchange for Prime A, Prime B, Retail B, Retail A and Trust shares, respectively. Class C shares commenced operations on November 18, 2002. As of the end of business on November 15, 2002, the Galaxy Small Company Equity Fund, previously a fund of Galaxy, was reorganized as the Small Company Equity Fund with Class G, Class T and Class Z shares issued in exchange for Retail B, Retail A and 94 ________________________________________________________________________________ September 30, 2004 Columbia Equity Funds Trust shares, respectively. Class A, Class B and Class C shares commenced operations on November 18, 2002. The accompanying statements of operations, statements of changes in net assets and financial highlights for these funds represent the historical operations of the Galaxy Asset Allocation Fund, Galaxy Equity Growth Fund, Galaxy International Equity Fund, Galaxy Small Cap Value Fund and Galaxy Small Company Equity Fund for periods prior to November 15, 2002, and the Galaxy Equity Value Fund for periods prior to November 22, 2002 and the Galaxy Growth & Income Fund for periods prior to December 6, 2002. NOTE 12. COMPARABILITY OF FINANCIAL STATEMENTS The fiscal year end of the Funds was changed from October 31 to September 30. NOTE 13. PROPOSED REORGANIZATION On October 13, 2004, the Board of Trustees approved a proposal to reorganize the Columbia International Equity Fund into the Columbia International Stock Fund, subject to shareholder approval and the satisfaction of certain other conditions. The effective date of the reorganization is expected to be on or around February 25, 2005 or such a date parties may agree. 95 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Asset Allocation Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.01 $ 12.86 - ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.21(e) 0.20(e) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.11 1.17 ------------- ------------- Total from investment operations 1.32 1.37 - ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.27) (0.22) From net realized gains -- -- ------------- ------------- Total distributions declared to shareholders (0.27) (0.22) - ---------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.06 $ 14.01 Total return (g)(h) 9.46% 10.80%(i) - ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.43% 1.49%(k) Net investment income (j) 1.43% 1.55%(k) Waiver/reimbursement --%(l) 0.01%(k) Portfolio turnover rate 75% 122%(i) Net assets, end of period (000's) $ 2,901 $ 1,211 - ---------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS A SHARES 2002 2001 2000 1999 (d) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.95 $ 18.77 $ 17.73 $ 16.95 ------------ ------------ ------------ ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.26(f) 0.34(e) 0.39(e) 0.44 Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (2.12)(f) (3.06) 1.36 1.17 ------------ ------------ ------------ ------------ Total from investment operations (1.86) (2.72) 1.75 1.61 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.23) (0.36) (0.40) (0.40) From net realized gains -- (0.74) (0.31) (0.43) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.23) (1.10) (0.71) (0.83) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.86 $ 14.95 $ 18.77 $ 17.73 Total return (g)(h) (12.53)% (15.08)% 10.15% 9.72% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.40% 1.26% 1.15% 1.16% Net investment income (j) 1.73%(f) 2.07% 2.15% 2.27% Waiver/reimbursement 0.13% 0.12% 0.15% 0.13% Portfolio turnover rate 40% 65% 59% 135% Net assets, end of period (000's) $ 43 $ 60 $ 186 $ 238 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Prime A shares were redesignated Liberty Asset Allocation Fund, Class A shares. (d) The Fund began offering Prime A shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (g) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 96 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Asset Allocation Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 (a) 2003 (b)(c) - --------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.00 $ 12.85 - --------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.10(e) 0.12(e) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.11 1.17 ------------- ------------- Total from investment operations 1.21 1.29 - --------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.15) (0.14) From net realized gains -- -- ------------- ------------- Total distributions declared to shareholders (0.15) (0.14) - --------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.06 $ 14.00 Total return (g) 8.68%(h) 10.13%(h)(i) - --------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 2.18% 2.17%(k) Net investment income (j) 0.68% 0.95%(k) Waiver/reimbursement --%(l) 0.01%(k) Portfolio turnover rate 75% 122%(i) Net assets, end of period (000's) $ 4,926 $ 2,539 - --------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS B SHARES 2002 2001 2000 1999 (d) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.93 $ 18.75 $ 17.71 $ 16.95 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.14(f) 0.22(e) 0.26(e) 0.29 Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (2.08)(f) (3.06) 1.35 1.19 ------------ ------------ ------------ ------------ Total from investment operations (1.94) (2.84) 1.61 1.48 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.14) (0.24) (0.26) (0.29) From net realized gains -- (0.74) (0.31) (0.43) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.14) (0.98) (0.57) (0.72) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.85 $ 14.93 $ 18.75 $ 17.71 Total return (g) (13.06)% (15.68)%(h) 9.29%(h) 8.91%(h) - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 2.06% 1.99% 1.89% 1.90% Net investment income (j) 1.07%(f) 1.34% 1.41% 1.53% Waiver/reimbursement -- 0.04% 0.17% 0.18% Portfolio turnover rate 40% 65% 59% 135% Net assets, end of period (000's) $ 276 $ 389 $ 526 $ 519 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Prime B shares were redesignated Liberty Asset Allocation Fund, Class B shares. (d) The Fund began offering Prime B shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (g) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 97 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Asset Allocation Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 (a) 2003 (b)(c) - --------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.00 $ 13.08 - --------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (d) 0.10 0.10(e) Net realized and unrealized gain on investments, foreign currency and foreign capital gains tax 1.11 0.93 ------------- ------------- Total from investment operations 1.21 1.03 - --------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.15) (0.11) - --------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.06 $ 14.00 Total return (f)(g) 8.67% 7.93%(h) - --------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.19% 2.28%(j) Net investment income (i) 0.69% 0.85%(j) Waiver/reimbursement --%(k) 0.01%(j) Portfolio turnover rate 75% 122%(h) Net assets, end of period (000's) $ 514 $ 187 - --------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 18, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares during the period. (e) Net investment income per share before reimbursement of certain expenses for the period ended September 30, 2003 was $0.10. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 98 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Asset Allocation Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS G SHARES 2004 (a) 2003 (b)(c) - --------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.00 $ 12.84 - --------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.11(d) 0.12(d) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.11 1.17 ------------- ------------- Total from investment operations 1.22 1.29 - --------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.16) (0.13) From net realized gains -- -- ------------- ------------- Total distributions declared to shareholders (0.16) (0.13) - --------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.06 $ 14.00 Total return (f) 8.72%(g) 10.12%(g)(h) - --------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.15% 2.19%(j) Net investment income (i) 0.71% 1.02%(j) Waiver/reimbursement --%(k) 0.01%(j) Portfolio turnover rate 75% 122%(h) Net assets, end of period (000's) $ 39,892 $ 56,383 - --------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS G SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.92 $ 18.74 $ 17.70 $ 16.92 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.14(e) 0.22(d) 0.24(d) 0.25 Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (2.08)(e) (3.06) 1.36 1.21 ------------ ------------ ------------ ------------ Total from investment operations (1.94) (2.84) 1.60 1.46 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.14) (0.24) (0.25) (0.25) From net realized gains -- (0.74) (0.31) (0.43) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.14) (0.98) (0.56) (0.68) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.84 $ 14.92 $ 18.74 $ 17.70 Total return (f) (13.08)%(g) (15.72)%(g) 9.20% 8.76% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.09% 2.01% 1.99% 2.00% Net investment income (i) 1.04%(e) 1.33% 1.31% 1.43% Waiver/reimbursement 0.03% 0.01% -- -- Portfolio turnover rate 40% 65% 59% 135% Net assets, end of period (000's) $ 73,183 $ 106,074 $ 105,980 $ 91,199 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Retail B shares were redesignated Liberty Asset Allocation Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 99 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Asset Allocation Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS T SHARES 2004 (a) 2003 (b)(c) - --------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.01 $ 12.87 - --------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.21(d) 0.21(d) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.11 1.16 ------------- ------------- Total from investment operations 1.32 1.37 - --------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.26) (0.23) From net realized gains -- -- ------------- ------------- Total distributions declared to shareholders (0.26) (0.23) - --------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.07 $ 14.01 Total return (f) 9.47%(g) 10.75%(g)(h) - --------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.49% 1.49%(j) Net investment income (i) 1.37% 1.73%(j) Waiver/reimbursement --%(k) 0.01%(j) Portfolio turnover rate 75% 122%(h) Net assets, end of period (000's) $ 183,438 $ 189,580 - --------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS T SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.95 $ 18.79 $ 17.74 $ 16.95 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.25(e) 0.33(d) 0.37(d) 0.37 Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (2.09)(e) (3.08) 1.36 1.21 ------------ ------------ ------------ ------------ Total from investment operations (1.84) (2.75) 1.73 1.58 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.24) (0.35) (0.37) (0.36) From net realized gains -- (0.74) (0.31) (0.43) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.24) (1.09) (0.68) (0.79) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.87 $ 14.95 $ 18.79 $ 17.74 Total return (f) (12.45)%(g) (15.18)%(g) 9.98% 9.53% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.37% 1.33% 1.29% 1.32% Net investment income (i) 1.76%(e) 2.01% 2.01% 2.11% Waiver/reimbursement 0.01% 0.01% -- -- Portfolio turnover rate 40% 65% 59% 135% Net assets, end of period (000's) $ 198,154 $ 289,882 $ 371,590 $ 389,077 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Retail A shares were redesignated Liberty Asset Allocation Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 100 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Asset Allocation Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS Z SHARES 2004 (a) 2003 (b)(c) - ----------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.01 $ 12.87 - ----------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.25(d) 0.25(d) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.11 1.16 ------------- ------------- Total from investment operations 1.36 1.41 - ----------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.31) (0.27) From net realized gains -- -- ------------- ------------- Total distributions declared to shareholders (0.31) (0.27) - ----------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.06 $ 14.01 Total return (f) 9.75%(g) 11.07%(g)(h) - ----------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.19% 1.16%(j) Net investment income (i) 1.67% 2.04%(j) Waiver/reimbursement --%(k) 0.01%(j) Portfolio turnover rate 75% 122%(h) Net assets, end of period (000's) $ 191,556 $ 217,935 - ----------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS Z SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.94 $ 18.78 $ 17.73 $ 16.96 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.29(e) 0.37(d) 0.41(d) 0.40 Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (2.09)(e) (3.08) 1.36 1.20 ------------ ------------ ------------ ------------ Total from investment operations (1.80) (2.71) 1.77 1.60 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.27) (0.39) (0.41) (0.40) From net realized gains -- (0.74) (0.31) (0.43) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.27) (1.13) (0.72) (0.83) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.87 $ 14.94 $ 18.78 $ 17.73 Total return (f) (12.23)%(g) (14.94)% 10.21% 9.63% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.12% 1.11% 1.09% 1.12% Net investment income (i) 2.01%(e) 2.23% 2.21% 2.31% Waiver/reimbursement 0.03% -- -- -- Portfolio turnover rate 40% 65% 59% 135% Net assets, end of period (000's) $ 163,934 $ 230,562 $ 290,970 $ 269,851 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Trust shares were redesignated Liberty Asset Allocation Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 101 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Growth Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 17.59 $ 16.06 - ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.08)(e) (0.05)(e) Net realized and unrealized gain (loss) on investments 1.06 1.61 ------------- ------------- Total from investment operations 0.98 1.56 - ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.03) From net realized gains -- -- ------------- ------------- Total distributions declared to shareholders -- (0.03) - ---------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 18.57 $ 17.59 Total return (f)(g) 5.57% 9.72%(h) - ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.28% 1.30%(j) Net investment income (loss) (i) (0.40)% (0.30)%(j) Waiver/reimbursement --%(k) 0.02%(j) Portfolio turnover rate 126% 91%(h) Net assets, end of period (000's) $ 3,867 $ 1,887 - ---------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS A SHARES 2002 2001 2000 1999 (d) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 19.74 $ 32.31 $ 28.95 $ 24.49 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.03(e) (0.02) (0.05)(e) (0.01) Net realized and unrealized gain (loss) on investments (3.71) (8.92) 5.13 6.37 ------------ ------------ ------------ ------------ Total from investment operations (3.68) (8.94) 5.08 6.36 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- -- From net realized gains -- (3.63) (1.72) (1.90) ------------ ------------ ------------ ------------ Total distributions declared to shareholders -- (3.63) (1.72) (1.90) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.06 $ 19.74 $ 32.31 $ 28.95 Total return (f)(g) (18.64)% (30.43)% 18.36% 27.30% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.12% 1.13% 1.12% 1.14% Net investment income (loss) (i) 0.14% (0.10)% (0.17)% (0.05)% Waiver/reimbursement 0.05% 0.03% 0.11% 0.14% Portfolio turnover rate 43% 48% 54% 53% Net assets, end of period (000's) $ 56 $ 671 $ 142 $ 107 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Prime A shares were redesignated Liberty Equity Growth Fund, Class A shares. (d) The Fund began issuing Prime A shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 102 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Growth Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 16.96 $ 15.57 - ------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.21)(e) (0.14)(e) Net realized and unrealized gain (loss) on investments 1.01 1.53 ------------- ------------- Total from investment operations 0.80 1.39 - ------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- - ------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 17.76 $ 16.96 Total return (f)(g) 4.72% 8.93%(h) - ------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.03% 2.13%(j) Net investment loss (i) (1.15)% (0.97)%(j) Waiver/reimbursement --%(k) 0.02%(j) Portfolio turnover rate 126% 91%(h) Net assets, end of period (000's) $ 3,195 $ 1,013 - ------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS B SHARES 2002 2001 2000 1999 (d) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 19.32 $ 31.94 $ 28.84 $ 24.49 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.14)(e) (0.19) (0.29)(e) (0.10) Net realized and unrealized gain (loss) on investments (3.61) (8.80) 5.11 6.35 ------------ ------------ ------------ ------------ Total from investment operations (3.75) (8.99) 4.82 6.25 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- (3.63) (1.72) (1.90) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.57 $ 19.32 $ 31.94 $ 28.84 Total return (f)(g) (19.41)% (31.00)% 17.48% 26.79% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.99% 1.95% 1.87% 1.87% Net investment loss (i) (0.73)% (0.92)% (0.92)% (0.78)% Waiver/reimbursement 0.05% 0.03% 0.15% 0.32% Portfolio turnover rate 43% 48% 54% 53% Net assets, end of period (000's) $ 207 $ 309 $ 450 $ 246 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Prime B shares were redesignated Liberty Equity Growth Fund, Class B shares. (d) The Fund began issuing Prime B shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 103 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Growth Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 16.98 $ 16.04 - ------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.21) (0.13) Net realized and unrealized gain on investments 1.02 1.07 ------------- ------------- Total from investment operations 0.81 0.94 - ------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 17.79 $ 16.98 Total return (e)(f) 4.77% 5.86%(g) - ------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.03% 2.00%(i) Net investment loss (h) (1.15)% (0.92)%(i) Waiver/reimbursement --%(j) 0.02%(i) Portfolio turnover rate 126% 91%(g) Net assets, end of period (000's) $ 780 $ 524 - ------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 18, 2002. 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 no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates 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. (j) Rounds to less than 0.01%. 104 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Growth Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS G SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 16.43 $ 15.11 - ------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.20)(d) (0.15)(d) Net realized and unrealized gain (loss) on investments 0.98 1.47 ------------- ------------- Total from investment operations 0.78 1.32 - ------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- - ------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 17.21 $ 16.43 Total return (e)(f) 4.75% 8.66%(g) - ------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.02% 2.31%(i) Net investment loss (h) (1.14)% (1.02)%(i) Waiver/reimbursement --%(j) 0.02%(i) Portfolio turnover rate 126% 91%(g) Net assets, end of period (000's) $ 46,328 $ 54,850 - ------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS G SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 18.79 $ 31.22 $ 28.27 $ 24.07 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.17)(d) (0.21) (0.35)(d) (0.20) Net realized and unrealized gain (loss) on investments (3.51) (8.59) 5.02 6.30 ------------ ------------ ------------ ------------ Total from investment operations (3.68) (8.80) 4.67 6.10 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- (3.63) (1.72) (1.90) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.11 $ 18.79 $ 31.22 $ 28.27 Total return (e)(f) (19.49)% (31.16)% 17.29% 26.63% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.18% 2.11% 2.07% 2.05% Net investment loss (h) (0.92)% (1.08)% (1.11)% (0.96)% Waiver/reimbursement 0.07% 0.02% 0.02% 0.03% Portfolio turnover rate 43% 48% 54% 53% Net assets, end of period (000's) $ 64,156 $ 92,292 $ 130,347 $ 71,525 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Retail B shares were redesignated Liberty Equity Growth Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates 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. (j) Rounds to less than 0.01%. 105 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Growth Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS T SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 17.50 $ 15.98 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.09)(d) (0.02)(d) Net realized and unrealized gain (loss) on investments 1.05 1.54 ------------ ------------ Total from investment operations 0.96 1.52 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 18.46 $ 17.50 Total return (e) 5.49%(f) 9.51%(f)(g) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.35% 1.45%(i) Net investment loss (h) (0.47)% (0.16)%(i) Waiver/reimbursement --%(j) 0.02%(i) Portfolio turnover rate 126% 91%(g) Net assets, end of period (000's) $ 219,129 $ 235,849 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS T SHARES 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 19.70 $ 32.31 $ 28.99 $ 24.47 - ----------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.02)(d) (0.07) (0.10)(d) (0.06) Net realized and unrealized gain (loss) on investments (3.70) (8.91) 5.14 6.48 ------------ ------------ ------------ ------------ Total from investment operations (3.72) (8.98) 5.04 6.42 - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- (3.63) (1.72) (1.90) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.98 $ 19.70 $ 32.31 $ 28.99 Total return (e) (18.88)%(f) (30.57)%(f) 18.18% 27.55% - ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.34% 1.31% 1.28% 1.34% Net investment loss (h) (0.08)% (0.28)% (0.33)% (0.25)% Waiver/reimbursement 0.07% 0.02% -- -- Portfolio turnover rate 43% 48% 54% 53% Net assets, end of period (000's) $ 239,279 $ 346,214 $ 580,417 $ 443,639 - ----------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Retail A shares were redesignated Liberty Equity Growth Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates 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. (j) Rounds to less than 0.01%. 106 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Growth Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS Z SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 17.84 $ 16.28 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.03)(d) 0.05(d) Net realized and unrealized gain (loss) on investments 1.07 1.57 ------------ ------------ Total from investment operations 1.04 1.62 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.01) (0.06) From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.01) (0.06) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 18.87 $ 17.84 Total return (e) 5.83%(f) 9.93%(f)(g) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.03% 0.99%(i) Net investment income (loss) (h) (0.15)% 0.30%(i) Waiver/reimbursement --%(j) 0.02%(i) Portfolio turnover rate 126% 91%(g) Net assets, end of period (000's) $ 634,710 $ 670,649 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS Z SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 19.99 $ 32.61 $ 29.15 $ 24.52 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.07(d) 0.02 0.01(d) 0.03 Net realized and unrealized gain (loss) on investments (3.78) (9.01) 5.18 6.50 ------------ ------------ ------------ ------------ Total from investment operations (3.71) (8.99) 5.19 6.53 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- (0.01) -- From net realized gains -- (3.63) (1.72) (1.90) ------------ ------------ ------------ ------------ Total distributions declared to shareholders -- (3.63) (1.73) (1.90) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.28 $ 19.99 $ 32.61 $ 29.15 Total return (e) (18.51)%(f) (30.29)%(f) 18.63% 28.07% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 0.91% 0.93% 0.91% 0.94% Net investment income (loss) (h) 0.35% 0.10% 0.04% 0.15% Waiver/reimbursement 0.05% 0.01% -- -- Portfolio turnover rate 43% 48% 54% 53% Net assets, end of period (000's) $ 699,215 $ 845,887 $ 1,258,399 $ 1,041,378 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Trust shares were redesignated Liberty Equity Growth Fund, Class Z shares. (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 and/or any of its affiliates 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. (j) Rounds to less than 0.01%. 107 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Disciplined Value Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 11.02 $ 10.06 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (d) 0.17 0.04 Net realized and unrealized gain on investments 1.75 0.92 ------------ ------------ Total from investment operations 1.92 0.96 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.23) -- - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 12.71 $ 11.02 Total return (e) 17.53% 9.54%(f) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 1.31% 1.31%(h) Net investment income (g) 1.34% 0.49%(h) Portfolio turnover rate 101% 50%(f) Net assets, end of period (000's) $ 2,511 $ 903 - ------------------------------------------------------------------------------------ (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class A shares were initially offered on November 25, 2002. 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 and no initial sales charge or contingent deferred sales charge. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 108 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Disciplined Value Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.49 $ 9.67 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (d) 0.07 (0.02) Net realized and unrealized gain on investments 1.67 0.84 ------------ ------------ Total from investment operations 1.74 0.82 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.07) -- - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 12.16 $ 10.49 Total return (e) 16.64% 8.48%(f) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 2.06% 2.26%(h) Net investment income (loss) (g) 0.60% (0.27)%(h) Portfolio turnover rate 101% 50%(f) Net assets, end of period (000's) $ 2,370 $ 338 - ------------------------------------------------------------------------------------ (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class B shares were initially offered on November 25, 2002. 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 and no contingent deferred sales charge. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 109 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Disciplined Value Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.47 $ 9.67 - -------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (d) 0.07 (0.05) Net realized and unrealized gain on investments 1.67 0.85 ------------ ------------ Total from investment operations 1.74 0.80 - -------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.07) -- - -------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.14 $ 10.47 Total return (e) 16.67% 8.27%(f)(g) - -------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.07% 2.49%(i) Net investment income (loss) (h) 0.63% (0.60)%(i) Waiver/reimbursement -- 0.49%(i) Portfolio turnover rate 101% 50%(f) Net assets, end of period (000's) $ 291 $ 24 - -------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 25, 2002. 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 and no contingent deferred sales charge. (f) Not annualized. (g) Had the Investment Advisor or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 110 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Disciplined Value Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS G SHARES 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.50 $ 9.21 - -------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.08(d) (0.04)(d) Net realized and unrealized gain (loss) on investments 1.67 1.33 ------------ ------------ Total from investment operations 1.75 1.29 - -------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.08) -- From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.08) -- - -------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.17 $ 10.50 Total return (e) 16.67% 14.01%(f) - -------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.06% 2.31%(i) Net investment income (loss) (h) 0.64% (0.47)%(i) Waiver/reimbursement -- -- Portfolio turnover rate 101% 50%(f) Net assets, end of period (000's) $ 7,502 $ 11,074 - -------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS G SHARES 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.10 $ 16.73 $ 18.08 $ 16.44 - ----------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.19) (0.10) (0.15) (0.15) Net realized and unrealized gain (loss) on investments (2.35) (1.64) 1.25 2.40 ------------ ------------ ------------ ------------ Total from investment operations (2.54) (1.74) 1.10 2.25 - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- -- From net realized gains (0.35) (2.89) (2.45) (0.61) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.35) (2.89) (2.45) (0.61) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.21 $ 12.10 $ 16.73 $ 18.08 Total return (e) (21.85)% (11.00)%(g) 7.12%(g) 13.81% - ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.18% 2.13% 2.09% 2.08% Net investment income (loss) (h) (1.15)% (0.91)% (0.83)% (0.87)% Waiver/reimbursement -- 0.02% 0.03% -- Portfolio turnover rate 99% 127% 72% 75% Net assets, end of period (000's) $ 16,791 $ 25,776 $ 30,555 $ 30,988 - ----------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, the Galaxy Equity Value Fund, Retail B shares were redesignated Liberty Equity Value Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (f) Not annualized. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 111 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Disciplined Value Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS T SHARES 2004 (a) 2003 (b)(c) - ----------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.00 $ 9.58 ------------ ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.16(d) 0.03(d) Net realized and unrealized gain (loss) on investments 1.76 1.39 ------------ ------------ Total from investment operations 1.92 1.42 - ----------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.20) -- In excess of net investment income -- -- From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.20) -- - ----------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.72 $ 11.00 Total return (f) 17.54% 14.82%(g) - ----------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.38% 1.50%(j) Net investment income (loss) (i) 1.31% 0.35%(j) Waiver/reimbursement -- -- Portfolio turnover rate 101% 50%(g) Net assets, end of period (000's) $ 133,094 $ 127,993 - ----------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS T SHARES 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.48 $ 17.05 $ 18.28 $ 16.50 - ----------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.05) (0.02) (0.02) (0.03) Net realized and unrealized gain (loss) on investments (2.50) (1.66) 1.25 2.42 ------------ ------------ ------------ ------------ Total from investment operations (2.55) (1.68) 1.23 2.39 - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- (0.01) -- In excess of net investment income -- -- --(e) -- From net realized gains (0.35) (2.89) (2.45) (0.61) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.35) (2.89) (2.46) (0.61) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.58 $ 12.48 $ 17.05 $ 18.28 Total return (f) (21.31)% (10.27)%(h) 7.83% 14.63% - ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.41% 1.39% 1.36% 1.37% Net investment income (loss) (i) (0.38)% (0.17)% (0.10)% (0.16)% Waiver/reimbursement -- 0.01% -- -- Portfolio turnover rate 99% 127% 72% 75% Net assets, end of period (000's) $ 123,085 $ 180,435 $ 226,836 $ 258,332 - ----------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, the Galaxy Equity Value Fund, Retail A shares were redesignated Liberty Equity Value Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Not annualized. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 112 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Disciplined Value Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS Z SHARES 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.24 $ 9.75 - ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.20(d) 0.08(d) Net realized and unrealized gain (loss) on investments 1.79 1.41 ------------ ------------ Total from investment operations 1.99 1.49 - ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.28) -- In excess of net investment income -- -- From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.28) -- - ---------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.95 $ 11.24 Total return (f) 17.86% 15.28%(g) - ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.06% 1.04%(j) Net investment income (i) 1.62% 0.82%(j) Waiver/reimbursement -- -- Portfolio turnover rate 101% 50%(g) Net assets, end of period (000's) $ 283,469 $ 224,137 - ---------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS Z SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.65 $ 17.17 $ 18.35 $ 16.51 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.02) 0.02 0.04 0.03 Net realized and unrealized gain (loss) on investments (2.53) (1.65) 1.25 2.42 ------------ ------------ ------------ ------------ Total from investment operations (2.55) (1.63) 1.29 2.45 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- (0.02) -- In excess of net investment income -- -- --(e) -- From net realized gains (0.35) (2.89) (2.45) (0.61) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.35) (2.89) (2.47) (0.61) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.75 $ 12.65 $ 17.17 $ 18.35 Total return (f) (20.96)% (9.91)% 8.22% 15.04%(h) - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 0.98% 1.00% 1.00% 1.02% Net investment income (i) 0.05% 0.22% 0.26% 0.19% Waiver/reimbursement -- -- -- 0.01% Portfolio turnover rate 99% 127% 72% 75% Net assets, end of period (000's) $ 167,867 $ 152,002 $ 164,864 $ 281,064 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, the Galaxy Equity Value Fund, Trust shares were redesignated Liberty Equity Value Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested. (g) Not annualized. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 113 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia International Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 (a) 2003 (b)(c) - ----------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.83 $ 9.28 - ----------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.11(e) 0.06(e) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.46 1.53 ------------ ------------ Total from investment operations 1.57 1.59 - ----------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.05) (0.04) From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.05) (0.04) - ----------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital --(e)(f) -- - ----------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.35 $ 10.83 Total return (g)(h) 14.51% 17.23%(i) - ----------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.17% 1.38%(k) Net investment income (loss) (j) 0.87% 0.69%(k) Waiver/reimbursement 0.26% 0.25%(k) Portfolio turnover rate 100% 66%(i) Net assets, end of period (000's) $ 872 $ 268 - ----------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS A SHARES 2002 2001 2000 1999 (d) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.19 $ 19.53 $ 20.98 $ 16.85 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.01)(e) (0.02) 0.46(e) 0.06(e) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (1.72) (5.73) (0.60) 4.79 ------------ ------------ ------------ ------------ Total from investment operations (1.73) (5.75) (0.14) 4.85 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.18) (0.31) (0.12) (0.15) From net realized gains -- (2.28) (1.19) (0.57) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.18) (2.59) (1.31) (0.72) - ---------------------------------------------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.28 $ 11.19 $ 19.53 $ 20.98 Total return (g)(h) (15.78)% (33.38)% (1.34)% 29.73% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.63% 1.44% 1.10% 1.17% Net investment income (loss) (j) (0.11)% 0.01% 2.06% 0.34% Waiver/reimbursement 0.56% 0.33% 0.89% 0.86% Portfolio turnover rate 110% 60% 50% 45% Net assets, end of period (000's) $ 8 $ 9 $ 14 $ 12 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty International Equity Fund was renamed the Columbia International Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy International Equity Fund, Prime A shares were redesignated Liberty International Equity Fund, Class A shares. (d) The Fund began offering Prime A shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Rounds to less than $0.01 per share. (g) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. 114 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia International Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.75 $ 9.22 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.02(e) (0.03)(e) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.45 1.57 ------------ ------------ Total from investment operations 1.47 1.54 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.01) From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders -- (0.01) - ------------------------------------------------------------------------------------ REDEMPTION FEES: Redemption fees added to paid-in capital --(e)(f) -- - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 12.22 $ 10.75 Total return (g)(h) 13.67% 16.71%(i) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.90% 2.37%(k) Net investment income (loss) (j) 0.14% (0.37)%(k) Waiver/reimbursement 0.26% 0.25%(k) Portfolio turnover rate 100% 66%(i) Net assets, end of period (000's) $ 931 $ 250 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS B SHARES 2002 2001 2000 1999 (d) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.11 $ 19.37 $ 20.85 $ 16.85 - ----------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.05)(e) (0.08) 0.29(e) (0.08)(e) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (1.71) (5.71) (0.58) 4.78 ------------ ------------ ------------ ------------ Total from investment operations (1.76) (5.79) (0.29) 4.70 - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.13) (0.19) -- (0.13) From net realized gains -- (2.28) (1.19) (0.57) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.13) (2.47) (1.19) (0.70) - ----------------------------------------------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.22 $ 11.11 $ 19.37 $ 20.85 Total return (g)(h) (16.06)% (33.72)% (2.02)% 28.74% - ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.97% 1.91% 1.83% 1.89% Net investment income (loss) (j) (0.45)% (0.46)% 1.33% (0.38)% Waiver/reimbursement 0.25% 0.28% 0.34% 0.38% Portfolio turnover rate 110% 60% 50% 45% Net assets, end of period (000's) $ 54 $ 280 $ 483 $ 458 - ----------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty International Equity Fund was renamed the Columbia International Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy International Equity Fund, Prime B shares were redesignated Liberty International Equity Fund, Class B shares. (d) The Fund began offering Prime B shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Rounds to less than $0.01 per share. (g) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. 115 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia International Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.71 $ 9.33 - ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (d) (0.01) 0.04 Net realized and unrealized gain on investments, foreign currency and foreign capital gains tax 1.44 1.35 ------------ ------------ Total from Investment Operations 1.43 1.39 - ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: Total distributions declared to shareholders -- (0.01) - ---------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital --(d)(e) -- - ----------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.14 $ 10.71 Total return (f)(g) 13.35% 14.90%(h) - ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.95% 2.07%(j) Net investment income (loss) (i) (0.08)% 0.44%(j) Waiver/reimbursement 0.26% 1.68%(h) Portfolio turnover rate 100% 66% Net assets, end of period (000's) $ 104 $ 6 - ---------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty International Equity Fund was renamed the Columbia International Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 18, 2002. 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) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 116 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia International Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS G SHARES 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.67 $ 9.16 - ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.01)(e) (0.03)(e) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.46 1.54 ------------ ------------ Total from investment operations 1.45 1.51 - ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders -- -- - ---------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital --(e)(f) -- - ---------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.12 $ 10.67 Total return (g)(h) 13.59% 16.48%(i) - ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.92% 2.41%(k) Net investment income (loss) (j) (0.07)% (0.31)%(k) Waiver/reimbursement 0.32% 0.49%(k) Portfolio turnover rate 100% 66%(i) Net assets, end of period (000's) $ 4,873 $ 4,976 - ---------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS G SHARES 2002 2001 2000 1999 (d) - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.04 $ 19.28 $ 20.80 $ 16.85 - ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.10)(e) (0.10) 0.22(e) (0.09)(e) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (1.70) (5.72) (0.55) 4.74 ------------ ------------ ------------ ------------ Total from investment operations (1.80) (5.82) (0.33) 4.65 - ------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.08) (0.14) -- (0.13) From net realized gains -- (2.28) (1.19) (0.57) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.08) (2.42) (1.19) (0.70) - ------------------------------------------------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.16 $ 11.04 $ 19.28 $ 20.80 Total return (g)(h) (16.55)% (33.95)% (2.22)% 28.41% - ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 2.46% 2.34% 2.14% 1.96% Net investment income (loss) (j) (0.94)% (0.89)% 1.02% (0.45)% Waiver/reimbursement 0.51% 0.32% 0.50% 0.74% Portfolio turnover rate 110% 60% 50% 45% Net assets, end of period (000's) $ 4,913 $ 6,988 $ 8,297 $ 2,189 - ------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty International Equity Fund was renamed the Columbia International Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy International Equity Fund, Retail B shares were redesignated Liberty International Equity Fund, Class G shares. (d) The Fund began issuing Class G shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Rounds to less than $0.01 per share. (g) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. 117 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia International Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS T SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.78 $ 9.24 - ------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.07(d) 0.05(d) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.48 1.55 ------------ ------------ Total from investment operations 1.55 1.60 - ------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.01) (0.06) From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.01) (0.06) - ------------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital --(d)(e) -- - ------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.32 $ 10.78 Total return (f)(g) 14.37% 17.45%(h) - ------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.24% 1.55%(j) Net investment income (i) 0.61% 0.54%(j) Waiver/reimbursement 0.29% 0.36%(j) Portfolio turnover rate 100% 66%(h) Net assets, end of period (000's) $ 41,359 $ 42,195 - ------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS T SHARES 2002 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.16 $ 19.44 $ 20.86 $ 16.75 - ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.01(d) 0.03 0.41(d) 0.01(d) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (1.73) (5.75) (0.59) 4.72 ------------ ------------ ------------ ------------ Total from investment operations (1.72) (5.72) (0.18) 4.73 - ------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.20) (0.28) (0.05) (0.05) From net realized gains -- (2.28) (1.19) (0.57) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.20) (2.56) (1.24) (0.62) - ------------------------------------------------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.24 $ 11.16 $ 19.44 $ 20.86 Total return (f)(g) (15.75)% (33.35)% (1.49)% 29.04% - ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.42% 1.34% 1.32% 1.48% Net investment income (i) 0.10% 0.11% 1.83% 0.03% Waiver/reimbursement 0.37% 0.30% 0.25% 0.25% Portfolio turnover rate 110% 60% 50% 45% Net assets, end of period (000's) $ 43,095 $ 65,749 $ 120,351 $ 89,327 - ------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty International Equity Fund was renamed the Columbia International Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy International Equity Fund, Retail A shares were redesignated Liberty International Equity Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 118 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia International Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS Z SHARES 2004 (a) 2003 (b)(c) - ----------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.01 $ 9.43 - ----------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.13(d) 0.10(d) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax 1.50 1.59 ------------ ------------ Total from investment operations 1.63 1.69 - ----------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.09) (0.11) From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.09) (0.11) - ----------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital --(d)(e) -- - ----------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.55 $ 11.01 Total return (f)(g) 14.81% 18.08%(h) - ----------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 0.88% 0.97%(j) Net investment income (i) 1.01% 1.11%(j) Waiver/reimbursement 0.26% 0.25%(j) Portfolio turnover rate 100% 66%(h) Net assets, end of period (000's) $ 437,595 $ 346,889 - ----------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS Z SHARES 2002 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.36 $ 19.74 $ 21.18 $ 17.00 - ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.06(d) 0.07 0.51(d) 0.10(d) Net realized and unrealized gain (loss) on investments, foreign currency and foreign capital gains tax (1.74) (5.82) (0.60) 4.80 ------------ ------------ ------------ ------------ Total from investment operations (1.68) (5.75) (0.09) 4.90 - ------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.25) (0.35) (0.16) (0.15) From net realized gains -- (2.28) (1.19) (0.57) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.25) (2.63) (1.35) (0.72) - ------------------------------------------------------------------------------------------------------------------------- REDEMPTION FEES: Redemption fees added to paid-in capital -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.43 $ 11.36 $ 19.74 $ 21.18 Total return (f)(g) (15.26)% (33.00)% (1.08)% 29.71% - ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 0.94% 0.90% 0.87% 0.97% Net investment income (i) 0.58% 0.55% 2.28% 0.54% Waiver/reimbursement 0.27% 0.26% 0.25% 0.25% Portfolio turnover rate 110% 60% 50% 45% Net assets, end of period (000's) $ 374,119 $ 524,704 $ 912,555 $ 501,776 - ------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty International Equity Fund was renamed the Columbia International Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy International Equity Fund, Trust shares were redesignated Liberty International Equity Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 119 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Core Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 11.22 $ 10.08 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) --(e)(f) 0.03(e) Net realized and unrealized gain (loss) on investments 0.80 1.16 ------------ ------------ Total from investment operations 0.80 1.19 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.01) (0.05) In excess of net investment income -- -- From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.01) (0.05) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 12.01 $ 11.22 Total return (g) 7.09%(h) 11.82%(i) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.35% 1.48%(k) Net investment income (loss) (j) (0.02)% 0.37%(k) Waiver/reimbursement --%(l) -- Portfolio turnover rate 115% 55%(i) Net assets, end of period (000's) $ 9,304 $ 7,570 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS A SHARES 2002 2001 2000 1999 (d) - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 12.74 $ 16.41 $ 16.00 $ 14.88 - ------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.03(e) 0.02 0.04 0.11(e) Net realized and unrealized gain (loss) on investments (2.23) (2.38) 1.34 2.03 ------------ ------------ ------------ ------------ Total from investment operations (2.20) (2.36) 1.38 2.14 - ------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.02) (0.03) (0.06) (0.11) In excess of net investment income -- --(f) -- -- From net realized gains (0.44) (1.28) (0.91) (0.91) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.46) (1.31) (0.97) (1.02) - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 10.08 $ 12.74 $ 16.41 $ 16.00 Total return (g) (18.14)%(h) (15.34)%(h) 9.27%(h) 14.81%(h) - ------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.28% 1.19% 1.14% 1.15% Net investment income (loss) (j) 0.25% 0.22% 0.30% 0.66% Waiver/reimbursement 0.24% 0.03% 0.10% 0.15% Portfolio turnover rate 13% 19% 42% 20% Net assets, end of period (000's) $ 15 $ 60 $ 156 $ 150 - ------------------------------------------------------------------------------------------------------------------------ (a) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On December 9, 2002, the Galaxy Growth & Income Fund, Prime A shares were redesignated Liberty Large Cap Core Fund, Class A shares. (d) The Fund began offering Prime A shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Rounds to less than $0.01 per share. (g) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 120 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Core Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.99 $ 9.90 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.09)(e) (0.04)(e) Net realized and unrealized gain (loss) on investments 0.78 1.14 ------------ ------------ Total from investment operations 0.69 1.10 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.01) From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders -- (0.01) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.68 $ 10.99 Total return (f) 6.28%(g) 11.12%(h) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.09% 2.19%(j) Net investment loss (i) (0.76)% (0.38)%(j) Waiver/reimbursement --%(k) -- Portfolio turnover rate 115% 55%(h) Net assets, end of period (000's) $ 3,425 $ 1,755 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS B SHARES 2002 2001 2000 1999 (d) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.59 $ 16.32 $ 15.97 $ 14.88 - ----------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.06)(e) (0.07) (0.07) (0.01)(e) Net realized and unrealized gain (loss) on investments (2.19) (2.38) 1.33 2.03 ------------ ------------ ------------ ------------ Total from investment operations (2.25) (2.45) 1.26 2.02 - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- (0.02) From net realized gains (0.44) (1.28) (0.91) (0.91) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.44) (1.28) (0.91) (0.93) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.90 $ 12.59 $ 16.32 $ 15.97 Total return (f) (18.75)%(g) (15.95)%(g) 8.38%(g) 13.98%(g) - ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.02% 1.96% 1.89% 1.90% Net investment loss (i) (0.49)% (0.55)% (0.45)% (0.09)% Waiver/reimbursement 0.02% 0.04% 0.18% 0.27% Portfolio turnover rate 13% 19% 42% 20% Net assets, end of period (000's) $ 55 $ 109 $ 129 $ 129 - ----------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On December 9, 2002, the Galaxy Growth & Income Fund, Prime B shares were redesignated Liberty Large Cap Core Fund, Class B shares. (d) The Fund began offering Prime B shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 121 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Core Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.99 $ 10.21 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.09) (0.04) Net realized and unrealized gain on investments 0.78 0.83 ------------ ------------ Total from investment operations 0.69 0.79 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.01) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.68 $ 10.99 Total return (e) 6.28%(f) 7.74%(g) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.09% 2.18%(i) Net investment loss (h) (0.74)% (0.42)%(i) Waiver/reimbursement --%(j) -- Portfolio turnover rate 115% 55%(g) Net assets, end of period (000's) $ 345 $ 223 - ------------------------------------------------------------------------------------ (a) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on December 9, 2002. 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 and no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates 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. (j) Rounds to less than 0.01%. 122 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Core Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS G SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.89 $ 9.82 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.09)(d) (0.02)(d) Net realized and unrealized gain (loss) on investments 0.77 1.10 ------------ ------------ Total from investment operations 0.68 1.08 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: In excess of net investment income -- (0.01) From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders -- (0.01) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.57 $ 10.89 Total return (e) 6.24%(f) 11.00%(f)(g) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.09% 2.19%(i) Net investment loss (h) (0.77)% (0.28)%(i) Waiver/reimbursement 0.02% 0.05%(i) Portfolio turnover rate 115% 55%(g) Net assets, end of period (000's) $ 16,419 $ 28,917 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS G SHARES 2002 2001 2000 1999 - -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.50 $ 16.23 $ 15.90 $ 14.83 - -------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.06)(d) (0.09) (0.10) (0.04)(d) Net realized and unrealized gain (loss) on investments (2.18) (2.36) 1.34 2.02 ------------ ------------ ------------ ------------ Total from investment operations (2.24) (2.45) 1.24 1.98 -------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: In excess of net investment income -- -- -- -- From net realized gains (0.44) (1.28) (0.91) (0.91) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.44) (1.28) (0.91) (0.91) - -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 9.82 $ 12.50 $ 16.23 $ 15.90 Total return (e) (18.80)%(f) (16.11)% 8.35% 13.72%(f) - -------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.08% 2.05% 2.04% 2.03% Net investment loss (h) (0.55)% (0.64)% (0.60)% (0.22)% Waiver/reimbursement 0.02% -- -- 0.01% Portfolio turnover rate 13% 19% 42% 20% Net assets, end of period (000's) $ 31,407 $ 48,512 $ 61,857 $ 62,366 - -------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On December 9, 2002, the Galaxy Growth & Income Fund, Retail B shares were redesignated Liberty Large Cap Core Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates 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. 123 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Core Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS T SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 11.18 $ 10.05 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.01)(d) 0.04(d) Net realized and unrealized gain (loss) on investments 0.78 1.14 ------------ ------------ Total from investment operations 0.77 1.18 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income --(e) (0.05) In excess of net investment income -- -- From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders -- (0.05) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.95 $ 11.18 Total return (f) 6.92%(g) 11.76%(h) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.40% 1.46%(j) Net investment income (loss) (i) (0.07)% 0.45%(j) Waiver/reimbursement --%(k) -- Portfolio turnover rate 115% 55%(h) Net assets, end of period (000's) $ 179,310 $ 185,938 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS T SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.70 $ 16.37 $ 15.98 $ 14.87 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.02(d) 0.02 0.02 0.08(d) Net realized and unrealized gain (loss) on investments (2.22) (2.39) 1.33 2.02 ------------ ------------ ------------ ------------ Total from investment operations (2.20) (2.37) 1.35 2.10 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.01) (0.02) (0.05) (0.08) In excess of net investment income -- --(e) --(e) -- From net realized gains (0.44) (1.28) (0.91) (0.91) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.45) (1.30) (0.96) (0.99) - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 10.05 $ 12.70 $ 16.37 $ 15.98 Total return (f) (18.16)%(g) (15.46)%(g) 9.06%(g) 14.56%(g) - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.35% 1.34% 1.28% 1.28% Net investment income (loss) (i) 0.18% 0.07% 0.16% 0.53% Waiver/reimbursement 0.01% 0.02% 0.09% 0.10% Portfolio turnover rate 13% 19% 42% 20% Net assets, end of period (000's) $ 180,269 $ 259,884 $ 217,423 $ 232,110 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On December 9, 2002, the Galaxy Growth & Income Fund, Retail A shares were redesignated Liberty Large Cap Core Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 124 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Large Cap Core Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS Z SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 11.25 $ 10.11 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.03(d) 0.08(d) Net realized and unrealized gain (loss) on investments 0.79 1.15 ------------ ------------ Total from investment operations 0.82 1.23 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.02) (0.09) In excess of net investment income -- -- From net realized gains -- -- ------------ ------------ Total distributions declared to shareholders (0.02) (0.09) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 12.05 $ 11.25 Total return (f) 7.28%(g) 12.20%(h) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.07% 1.03%(j) Net investment income (i) 0.26% 0.89%(j) Waiver/reimbursement --%(k) -- Portfolio turnover rate 115% 55%(h) Net assets, end of period (000's) $ 175,124 $ 190,195 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS Z SHARES 2002 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.77 $ 16.43 $ 16.02 $ 14.90 - ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.07(d) 0.06 0.08 0.13(d) Net realized and unrealized gain (loss) on investments (2.23) (2.39) 1.32 2.02 ------------ ------------ ------------ ------------ Total from investment operations (2.16) (2.33) 1.40 2.15 - ------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.06) (0.05) (0.08) (0.12) In excess of net investment income -- --(e) --(e) -- From net realized gains (0.44) (1.28) (0.91) (0.91) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (0.50) (1.33) (0.99) (1.03) - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 10.11 $ 12.77 $ 16.43 $ 16.02 Total return (f) (17.85)%(g) (15.12)% 9.38% 14.85% - ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 0.97% 0.97% 1.00% 1.05% Net investment income (i) 0.56% 0.44% 0.44% 0.76% Waiver/reimbursement 0.03% -- -- -- Portfolio turnover rate 13% 19% 42% 20% Net assets, end of period (000's) $ 340,496 $ 460,302 $ 678,398 $ 309,106 - ------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On December 9, 2002, the Galaxy Growth & Income Fund, Trust shares were redesignated Liberty Large Cap Core Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 125 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Cap Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 (a) 2003 (b)(c) - ----------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.30 $ 12.64 - ----------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.07)(e) (0.04)(e) Net realized and unrealized gain (loss) on investments 2.75 3.35 ------------ ------------ Total from investment operations 2.68 3.31 - ----------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- From net realized gains (0.44) (0.65) ------------ ------------ Total distributions declared to shareholders (0.44) (0.65) - ----------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 17.54 $ 15.30 Total return (f)(g) 17.73% 27.25%(h) ----------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.15% 1.24%(j) Net investment income (loss) (i) (0.40)% (0.28)%(j) Waiver/reimbursement --%(k) 0.02%(j) Portfolio turnover rate 26% 19%(h) Net assets, end of period (000's) $ 211,502 $ 57,462 - ----------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS A SHARES 2002 2001 2000 1999 (d) - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 14.05 $ 14.33 $ 13.04 $ 13.59 - ------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.03)(e) 0.02(e) 0.05(e) 0.03 Net realized and unrealized gain (loss) on investments (0.07) 1.61 2.64 0.73 ------------ ------------ ------------ ------------ Total from investment operations (0.10) 1.63 2.69 0.76 - ------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.04) (0.04) (0.04) From net realized gains (1.31) (1.87) (1.36) (1.27) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (1.31) (1.91) (1.40) (1.31) - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 12.64 $ 14.05 $ 14.33 $ 13.04 Total return (f)(g) (1.73)% 12.87% 22.26% 5.80% - ------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.29% 1.23% 1.16% 1.18% Net investment income (loss) (i) (0.19)% 0.17% 0.36% 0.26% Waiver/reimbursement 0.01% 0.04% 0.16% 0.22% Portfolio turnover rate 23% 46% 43% 42% Net assets, end of period (000's) $ 210 $ 168 $ 189 $ 175 - ------------------------------------------------------------------------------------------------------------------------ (a) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Cap Value Fund, Prime A shares were redesignated Liberty Small Cap Fund, Class A shares. (d) The Fund began offering Prime B shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 126 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Cap Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 14.75 $ 12.31 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.19)(e) (0.15)(e) Net realized and unrealized gain (loss) on investments 2.67 3.24 ------------ ------------ Total from investment operations 2.48 3.09 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (0.34) (0.65) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 16.89 $ 14.75 Total Return (f)(g) 16.96% 26.14%(h) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.90% 2.10%(j) Net investment loss (i) (1.15)% (1.14)%(j) Waiver/reimbursement --%(k) 0.02%(j) Portfolio turnover rate 26% 19%(h) Net assets, end of period (000's) $ 40,170 $ 11,122 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS B SHARES 2002 2001 2000 1999 (d) - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 13.82 $ 14.19 $ 12.98 $ 13.59 - ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.14)(e) (0.10)(e) (0.05)(e) (0.05) Net realized and unrealized gain (loss) on investments (0.06) 1.60 2.62 0.71 ------------ ------------ ------------ ------------ Total from investment operations (0.20) 1.50 2.57 0.66 - ------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (1.31) (1.87) (1.36) (1.27) - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.31 $ 13.82 $ 14.19 $ 12.98 Total Return (f)(g) (2.55)% 11.91% 21.46% 4.96% - ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.12% 2.08% 1.93% 1.93% Net investment loss (i) (1.02)% (0.68)% (0.41)% (0.49)% Waiver/reimbursement 0.01% 0.07% 0.53% 0.56% Portfolio turnover rate 23% 46% 43% 42% Net assets, end of period (000's) $ 282 $ 198 $ 170 $ 190 - ------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Cap Value Fund, Prime B shares were redesignated Liberty Small Cap Fund, Class B shares. (d) The Fund began offering Prime B shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 127 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Cap Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 (a) 2003 (a)(c) - --------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.77 $ 12.55 - --------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.19) (0.14) Net realized and unrealized gain on investments 2.67 3.01 ------------ ------------ Total from investment operations 2.48 2.87 - --------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (0.34) (0.65) - --------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.91 $ 14.77 Total return (e)(f) 16.94% 23.90%(g) - --------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.90% 2.03%(i) Net investment loss (h) (1.15)% (1.10)%(i) Waiver/reimbursement --%(j) 0.02%(i) Portfolio turnover rate 26% 19%(g) Net assets, end of period (000's) $ 64,686 $ 12,670 - --------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 18, 2002. 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 and no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates 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. (j) Rounds to less than 0.01%. 128 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Cap Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS G SHARES 2004 (a) 2003 (a)(c) - --------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.63 $ 12.22 - --------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.18)(e) (0.12)(e) Net realized and unrealized gain (loss) on investments 2.64 3.18 ------------ ------------ Total from investment operations 2.46 3.06 - --------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (0.34) (0.65) - --------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.75 $ 14.63 Total return (f) 16.97%(g) 26.09%(g)(h) - --------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.87% 2.10%(j) Net investment loss (i) (1.11)% (1.03)%(j) Waiver/reimbursement --%(k) 0.02%(j) Portfolio turnover rate 26% 19%(h) Net assets, end of period (000's) $ 10,952 $ 10,353 - --------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS G SHARES 2002 2001 2000 1999(d) - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 13.72 $ 14.13 $ 12.96 $ 13.59 - ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.14)(e) (0.11)(e) (0.10)(e) (0.04) Net realized and unrealized gain (loss) on investments (0.05) 1.57 2.63 0.68 ------------ ------------ ------------ ------------ Total from investment operations (0.19) 1.46 2.53 0.64 - ------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (1.31) (1.87) (1.36) (1.27) - ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.22 $ 13.72 $ 14.13 $ 12.96 Total return (f) (2.49)%(g) 11.73% 21.06%(g) 4.80%(g) - ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.12% 2.21% 2.23% 2.10% Net investment loss (i) (1.02)% (0.80)% (0.71)% (0.66)% Waiver/reimbursement 0.01% -- 0.18% 0.78% Portfolio turnover rate 23% 46% 43% 42% Net assets, end of period (000's) $ 9,046 $ 5,278 $ 2,838 $ 1,637 - ------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Cap Value Fund, Retail B shares were redesignated Liberty Small Cap Fund, Class G shares. (d) The Fund began offering Retail B shares on November 1, 1998. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 129 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Cap Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS T SHARES 2004 (a) 2003 (a)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 15.16 $ 12.55 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.08)(d) (0.03)(d) Net realized and unrealized gain (loss) on investments 2.74 3.29 ------------ ------------ Total from investment operations 2.66 3.26 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- From net realized gains (0.42) (0.65) ------------ ------------ Total distributions declared to shareholders (0.42) (0.65) - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 17.40 $ 15.16 Total return (f) 17.73%(g) 27.03%(g)(h) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.21% 1.34%(j) Net investment income (loss) (i) (0.45)% (0.26)%(j) Waiver/reimbursement --%(k) 0.02%(j) Portfolio turnover rate 26% 19%(h) Net assets, end of period (000's) $ 146,752 $ 134,455 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS T SHARES 2002 2001 2000 1999 - -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 13.96 $ 14.25 $ 12.98 $ 13.53 - -------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.03)(d) --(d)(e) 0.01(d) 0.02 Net realized and unrealized gain (loss) on investments (0.07) 1.59 2.63 0.73 ------------ ------------ ------------ ------------ Total from investment operations (0.10) 1.59 2.64 0.75 - -------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.01) (0.01) (0.03) From net realized gains (1.31) (1.87) (1.36) (1.27) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (1.31) (1.88) (1.37) (1.30) - -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.55 $ 13.96 $ 14.25 $ 12.98 Total return (f) (1.75)%(g) 12.66% 21.96%(g) 5.68%(g) - -------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.33% 1.42% 1.44% 1.31% Net investment income (loss) (i) (0.23)% (0.02)% 0.08% 0.13% Waiver/reimbursement 0.01% -- 0.11% 0.28% Portfolio turnover rate 23% 46% 43% 42% Net assets, end of period (000's) $ 115,468 $ 100,159 $ 87,457 $ 80,870 - -------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Cap Value Fund, Retail A shares were redesignated Liberty Small Cap Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 130 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Cap Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS Z SHARES 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.45 $ 12.75 - ---------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.03)(d) 0.02(d) Net realized and unrealized gain (loss) on investments 2.80 3.34 ------------ ------------ Total from investment operations 2.77 3.36 - ---------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.01) From net realized gains (0.49) (0.65) ------------ ------------ Total distributions declared to shareholders (0.49) (0.66) - ---------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 17.73 $ 15.45 Total return (e) 18.12%(f) 27.44%(f)(g) - ---------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 0.90% 0.92%(i) Net investment income (loss) (h) (0.15)% 0.14%(i) Waiver/reimbursement --%(j) 0.02%(i) Portfolio turnover rate 26% 19%(g) Net assets, end of period (000's) $ 1,101,312 $ 789,666 - ---------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS Z SHARES 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------- CLASS Z SHARES NET ASSET VALUE, BEGINNING OF PERIOD $ 14.11 $ 14.38 $ 13.07 $ 13.61 - ----------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.03(d) 0.07(d) 0.08(d) 0.05 Net realized and unrealized gain (loss) on investments (0.07) 1.60 2.65 0.74 ------------ ------------ ------------ ------------ Total from investment operations (0.04) 1.67 2.73 0.79 - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.01) (0.07) (0.06) (0.06) From net realized gains (1.31) (1.87) (1.36) (1.27) ------------ ------------ ------------ ------------ Total distributions declared to shareholders (1.32) (1.94) (1.42) (1.33) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.75 $ 14.11 $ 14.38 $ 13.07 Total return (e) (1.26)%(f) 13.20% 22.62% 6.02% - ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 0.90% 0.92% 0.94% 0.97% Net investment income (loss) (h) 0.20% 0.48% 0.58% 0.47% Waiver/reimbursement 0.01% -- -- -- Portfolio turnover rate 23% 46% 43% 42% Net assets, end of period (000's) $ 485,197 $ 425,687 $ 332,703 $ 255,268 - ----------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Cap Value Fund, Trust shares were redesignated Liberty Small Cap Fund, Class Z shares. (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 and/or any of its affiliates 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. (j) Rounds to less than 0.01%. 131 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Company Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.10 $ 11.74 - -------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.19) (0.17) Net realized and unrealized gain on investments 2.03 2.53 ------------ ------------ Total from investment operations 1.84 2.36 - -------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 15.94 $ 14.10 Total return (e) 13.05%(f) 20.10%(g) - -------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.35% 1.62%(i) Net investment loss (h) (1.16)% (1.42)%(i) Waiver/reimbursement 0.01% -- Portfolio turnover rate 54% 123%(g) Net assets, end of period (000's) $ 4,586 $ 384 - -------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class A shares were initially offered on November 18, 2002. 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 no initial sales charge or contingent deferred sales charge. (f) Had the Investment Advisor or any of its affiliates 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. 132 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Company Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 13.26 $ 11.13 - -------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.29) (0.25) Net realized and unrealized gain on investments 1.91 2.38 ------------ ------------ Total from investment operations 1.62 2.13 - -------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 14.88 $ 13.26 Total return (e) 12.22%(f) 19.14%(g) - -------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.09% 2.47%(i) Net investment loss (h) (1.90)% (2.24)%(i) Waiver/reimbursement 0.01% -- Portfolio turnover rate 54% 123%(g) Net assets, end of period (000's) $ 1,826 $ 203 - -------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class B shares were initially offered on November 18, 2002. 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 no contingent deferred sales charge. (f) Had the Investment Advisor or any of its affiliates 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. 133 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Company Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 13.22 $ 11.13 - -------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.29) (0.29) Net realized and unrealized gain on investments 1.91 2.38 ------------ ------------ Total from investment operations 1.62 2.09 - -------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 14.84 $ 13.22 Total return (e) 12.25%(f) 18.78%(g) - -------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.09% 2.84%(i) Net investment loss (h) (1.90)% (2.59)%(i) Waiver/reimbursement 0.01% -- Portfolio turnover rate 54% 123%(g) Net assets, end of period (000's) $ 982 $ 56 - -------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 18, 2002. 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 no contingent deferred sales charge. (f) Had the Investment Advisor or any of its affiliates 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. 134 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Company Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS G SHARES 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 13.24 $ 10.65 - -------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.30)(d) (0.25)(d) Net realized and unrealized gain (loss) on investments 1.91 2.84 ------------ ------------ Total from investment operations 1.61 2.59 - -------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- In excess of net realized gains -- -- ------------ ------------ Total distributions declared to shareholders -- -- - -------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 14.85 $ 13.24 Total return (f) 12.16%(g) 24.32%(h) - -------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.16% 2.53%(j) Net investment loss (i) (1.98)% (2.34)%(j) Waiver/reimbursement 0.01% -- Portfolio turnover rate 54% 123%(h) Net assets, end of period (000's) $ 4,565 $ 6,651 - -------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS G SHARES 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.30 $ 21.10 $ 15.31 $ 13.39 - ----------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.27)(d) (0.25) (0.37) (0.34) Net realized and unrealized gain (loss) on investments (3.38) (3.15) 6.16 2.26 ------------ ------------ ------------ ------------ Total from investment operations (3.65) (3.40) 5.79 1.92 - ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- (3.40) -- -- In excess of net realized gains -- --(e) -- -- ------------ ------------ ------------ ------------ Total distributions declared to shareholders -- (3.40) -- -- - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 10.65 $ 14.30 $ 21.10 $ 15.31 Total return (f) (25.52)%(g) (17.66)% 37.82%(g) 14.34%(g) - ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.29% 2.25% 2.24% 2.16% Net investment loss (i) (1.97)% (1.74)% (1.79)% (2.04)% Waiver/reimbursement 0.03% -- 0.01% 0.16% Portfolio turnover rate 96% 75% 91% 105% Net assets, end of period (000's) $ 9,148 $ 15,190 $ 18,936 $ 12,212 - ----------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Company Equity Fund, Retail B shares were redesignated Liberty Small Company Equity Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 135 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Company Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS T SHARES 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 14.09 $ 11.23 - ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.20)(d) (0.15)(d) Net realized and unrealized gain (loss) on investments 2.03 3.01 ------------ ------------ Total from investment operations 1.83 2.86 - ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- In excess of net realized gains -- -- ------------ ------------ Total distributions declared to shareholders -- -- - ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 15.92 $ 14.09 Total return (f) 12.99%(g) 25.47%(g)(h) - ------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.41% 1.54%(j) Net investment loss (i) (1.23)% (1.35)%(j) Waiver/reimbursement 0.02% 0.05%(j) Portfolio turnover rate 54% 123%(h) Net assets, end of period (000's) $ 68,359 $ 66,780 - ------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS T SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.95 $ 21.75 $ 15.66 $ 13.63 - ---------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.16)(d) (0.17) (0.22) (0.23) Net realized and unrealized gain (loss) on investments (3.56) (3.23) 6.31 2.26 ------------ ------------ ------------ ------------ Total from investment operations (3.72) (3.40) 6.09 2.03 - ---------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- (3.40) -- -- In excess of net realized gains -- --(e) -- -- ------------ ------------ ------------ ------------ Total distributions declared to shareholders -- (3.40) -- -- - ---------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 11.23 $ 14.95 $ 21.75 $ 15.66 Total return (f) (24.88)%(g) (17.03)% 38.89% 14.89%(g) - ---------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.46% 1.42% 1.44% 1.53% Net investment loss (i) (1.14)% (0.91)% (0.99)% (1.41)% Waiver/reimbursement 0.03% -- -- 0.01% Portfolio turnover rate 96% 75% 91% 105% Net assets, end of period (000's) $ 57,537 $ 84,332 $ 125,427 $ 87,921 - ---------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Company Equity Fund, Retail A shares were redesignated Liberty Small Company Equity Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 136 FINANCIAL HIGHLIGHTS ___________________________________________________________ Columbia Small Company Equity Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR PERIOD ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, CLASS Z SHARES 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.85 $ 11.79 - ---------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.15)(d) (0.11)(d) Net realized and unrealized gain (loss) on investments 2.14 3.17 ------------ ------------ Total from investment operations 1.99 3.06 - ---------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- In excess of net realized gains -- -- ------------ ------------ Total distributions declared to shareholders -- -- - ---------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.84 $ 14.85 Total return (f) 13.40%(g) 25.95%(h) - ---------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.08% 1.12%(j) Net investment loss (i) (0.90)% (0.93)%(j) Waiver/reimbursement 0.01% -- Portfolio turnover rate 54% 123%(h) Net assets, end of period (000's) $ 300,109 $ 293,603 - ---------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------------------------- CLASS Z SHARES 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.63 $ 22.48 $ 16.13 $ 13.96 - ---------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.11)(d) (0.10) (0.12) (0.16) Net realized and unrealized gain (loss) on investments (3.73) (3.35) 6.47 2.33 ------------ ------------ ------------ ------------ Total from investment operations (3.84) (3.45) 6.35 2.17 - ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- (3.40) -- -- In excess of net realized gains -- --(e) -- -- ------------ ------------ ------------ ------------ Total distributions declared to shareholders -- (3.40) -- -- - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 11.79 $ 15.63 $ 22.48 $ 16.13 Total return (f) (24.62)%(g) (16.63)% 39.43% 15.54% - ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.04% 1.03% 1.03% 1.12% Net investment loss (i) (0.72)% (0.52)% (0.58)% (1.00)% Waiver/reimbursement 0.01% -- -- -- Portfolio turnover rate 96% 75% 91% 105% Net assets, end of period (000's) $ 217,377 $ 318,414 $ 422,579 $ 233,326 - ---------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Company Equity Fund, Trust shares were redesignated Liberty Small Company Equity Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 137 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ________________________ Columbia Equity Funds TO THE TRUSTEES OF COLUMBIA FUNDS TRUST XI AND THE SHAREHOLDERS OF: COLUMBIA ASSET ALLOCATION FUND COLUMBIA LARGE CAP GROWTH FUND COLUMBIA DISCIPLINED VALUE FUND COLUMBIA INTERNATIONAL EQUITY FUND COLUMBIA LARGE CAP CORE FUND COLUMBIA SMALL CAP FUND COLUMBIA SMALL COMPANY EQUITY FUND In our opinion, the accompanying statements of assets and liabilities, including the investment portfolios, 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 the above Funds (the "Funds") at September 30, 2004, and the results of their operations, the changes in their net assets, and their financial highlights for the year then ended, 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 Funds' 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 audits 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 September 30, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial statements and financial highlights of the Funds as of September 30, 2003 and for fiscal periods ending on or prior to September 30, 2003 were audited by other independent accountants, whose report dated November 14, 2003 expressed an unqualified opinion on those statements and highlights. PricewaterhouseCoopers LLP Boston, Massachusetts November 15, 2004 138 UNAUDITED INFORMATION __________________________________________________________ Columbia Equity Funds FEDERAL INCOME TAX INFORMATION COLUMBIA ASSET ALLOCATION FUND For non-corporate shareholders 60.02%, of the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 43.43% of the ordinary income distributed by the Fund for the year ended September 30, 2004, qualifies for the corporate dividends received deduction. COLUMBIA LARGE CAP GROWTH FUND For non-corporate shareholders 100.00%, of the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 100.00% of the ordinary income distributed by the Fund for the year ended September 30, 2004, qualifies for the corporate dividends received deduction. COLUMBIA DISCIPLINED VALUE FUND For non-corporate shareholders 100.00%, of the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 100.00% of the ordinary income distributed by the Fund for the year ended September 30, 2004, qualifies for the corporate dividends received deduction. COLUMBIA INTERNATIONAL EQUITY FUND Foreign taxes paid during the fiscal year ended September 30,2004, amounting to $2,487,860 ($0.06 per share) are expected to be passed through to shareholders as 100.00% allowable foreign tax credits on Form 1099-DIV for the year ending December 31, 2004. Gross income derived from sources within foreign countries amounted to $9,510,340 ($0.25) for the fiscal year ended September 30, 2004. For non-corporate shareholders 100.00%, of the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. COLUMBIA LARGE CAP CORE FUND For the fiscal year ended September 30, 2004, the Fund designates long-term capital gains of $13,248,184. For non-corporate shareholders 100.00%, 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 October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099 Div Form. 100.00% of the ordinary income distributed by the Fund for the year ended September 30, 2004, qualifies for the corporate dividends received deduction. COLUMBIA SMALL CAP FUND For the fiscal year ended September 30, 2004, the Fund designates long-term capital gains of $71,905,830. For non-corporate shareholders 49.86%, 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 October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 60.73% of the ordinary income distributed by the Fund for the year ended September 30, 2004, qualifies for the corporate dividends received deduction. 139 TRUSTEES _______________________________________________________________________ Columbia Equity Funds Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were appointed to the Board of the Trustees of the Fund. Messrs. Simpson and Woolworth had been directors of 15 Columbia Funds and 20 funds in the CMG Fund Trust. Also effective October 8, 2003, the incumbent trustees of the Fund were elected as directors of the 15 Columbia Funds and as trustees of the 20 funds in the CMG Fund Trust. The new combined Board of Trustees/Directors of the Fund now oversees 118 funds in the Columbia Funds Complex (including the former Liberty Funds, former Stein Roe Funds, Columbia Funds and CMG Funds). Several of these trustees/directors also serve on the Boards of other funds in the Columbia Funds Complex. The Trustees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA YEAR FIRST ELECTED OR APPOINTED TO OFFICE (1) FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES DOUGLAS A. HACKER (AGE 49) 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) March 1999 to September 2001; Senior Vice President - Finance from March 1993 to July 1999). Oversees 118, Orbitz, Inc. (on-line travel company) ------------------------------------------------------------------------------------- JANET LANGFORD KELLY (AGE 46) Adjunct Professor of Law, Northwestern University, since September 2004; Private 9534 W. Gull Lake Drive Investor since March 2004 (formerly Chief Administrative Officer and Senior Vice Richland, MI 49083-8530 President, Kmart Holding Corporation (consumer goods), from September 2003 to March Trustee (since 1996) 2004; Executive Vice President-Corporate Development and Administration, 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 1213, 4, Saucony, Inc. (athletic footwear) Trustee (since 1985) ------------------------------------------------------------------------------------- PATRICK J. SIMPSON (AGE 60) 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) ------------------------------------------------------------------------------------- 140 ________________________________________________________________________________ Columbia Equity Funds NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA YEAR FIRST ELECTED OR APPOINTED TO OFFICE (1) FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES 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) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) since 303 W. Madison September 2004 (formerly Managing Director, William Blair Capital Partners Suite 2500 (private equity investing) from September 1994 to September 2004). Oversees 118, Chicago, IL 60606 Anixter International (network support equipment distributor); Ventas, Inc. (real Trustee and Chairman of the Board 5 estate investment trust); Jones Lang LaSalle (real estate management services) and (since 1996) Ambac Financial Group (financial guaranty insurance) ------------------------------------------------------------------------------------- ANNE-LEE VERVILLE (AGE 59) Retired since 1997 (formerly General Manager, Global Education Industry, IBM 359 Stickney Hill Road Corporation (computer and technology) from 1994 to 1997). Oversees 1194, Chairman Hopkinton, NH 03229 of 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, Arthur Young & Company). Trustee (since 1991) Oversees 118, Northwest Natural Gas Co. (natural gas service provider) ------------------------------------------------------------------------------------- INTERESTED TRUSTEE 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); 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 also serve as directors/trustees of the Liberty 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. 141 OFFICERS _______________________________________________________________________ Columbia Equity Funds NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA FUNDS, YEAR FIRST ELECTED OR APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS CHRISTOPHER L. WILSON (AGE 47) President of the Columbia Funds since October 2004 (formerly President and Chief One Financial Center Executive Officer, CDC IXIS Asset Management Services, Inc. from September 1998 to Boston, MA 02111 August 2004). President (since 2004) ------------------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (AGE 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December One Financial Center 2000; Vice President of the Advisor since April 2003 (formerly President of the Boston, MA 02111 Columbia Funds from February 2004 to October 2004; Chief Accounting Officer and Treasurer (since 2000) Controller of the Liberty Funds and of the 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 Management Associates, Inc. from February 1998 to October 2000). ------------------------------------------------------------------------------------- MARY JOAN HOENE (AGE 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds since August 40 West 57th Street 2004; Chief Compliance Officer of the Liberty All-Star Funds since August 2004 New York, NY 10019 (formerly Partner, Carter, Ledyard & Milburn LLP from January 2001 to August 2004; Senior Vice President and Counsel, Carter, Ledyard & Milburn LLP from November 1999 to December 2000; Vice Chief Compliance Officer President and Counsel, Equitable Life Assurance Society of the United States from (since 2004) April 1998 to November 1999). ------------------------------------------------------------------------------------- MICHAEL G. CLARKE (AGE 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star Funds One Financial Center since October 2004 (formerly Controller of the Columbia Funds and of the Liberty Boston, MA 02111 All-Star Funds from May 2004 to October 2004; Assistant Treasurer from June, 2002 to Chief Accounting Officer May 2004; Vice President, Product Strategy & Development of the Liberty Funds Group (since 2004) 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, Deloitte & Touche LLP from May 1997 to August 1999). ------------------------------------------------------------------------------------- JEFFREY R. COLEMAN (AGE 34) Controller of the Columbia Funds and of the Liberty All-Star Funds since October 2004 One Financial Center (formerly Vice President of CDC IXIS Asset Management Services, Inc. and Deputy Boston, MA 02111 Treasurer of the CDC Nvest Funds and Loomis Sayles Funds from February 2003 to Controller (since 2004) September 2004; Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to February 2003; Tax Manager of PFPC, Inc. from November 1996 to August 2000). ------------------------------------------------------------------------------------- DAVID A. ROZENSON (AGE 50) Secretary of the Columbia Funds and of the Liberty All-Star Funds since December One Financial Center 2003; Senior Counsel, Bank of America Corporation (formerly FleetBoston Financial Boston, MA 02111 Corporation) since January 1996; Associate General Counsel, Columbia Management Secretary (since 2003) Group since November 2002. ------------------------------------------------------------------------------------- 142 IMPORTANT INFORMATION ABOUT THIS REPORT ________________________________________ Columbia Equity Funds 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 Equity Funds. 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 800-368-0346. Please note that on March 1, 2004, Ernst & Young LLP ("E&Y") resigned as the funds' independent registered public accounting firm. During the two most recent fiscal years, E&Y's audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. Further, in connection with its audits for the two most recent fiscal years and through March 1, 2004, there were no disagreements between the funds and E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of E&Y would have caused it to make reference to the disagreement in its report on the financial statements for such years. Effective March 1, 2004, PricewaterhouseCoopers LLP was appointed by the audit committee of the Board of Trustees as the independent registered public accounting firm of the funds for the fiscal year ended September 30, 2004. 143 Columbia Funds _________________________________________________________________ Columbia Equity Funds 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 ---------------------------------------- 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 144 ________________________________________________________________________________ Columbia Equity Funds ---------------------------------------- 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 * The fund will be closed to new investments after the close of business on November 10, 2004. The fund's trustees have approved the merger, which will take effect on or about February 26, 2005, pending shareholder approval. ** The fund will be closed to new investments after the close of business on November 10, 2004. The fund's trustees have approved the liquidation, which will take effect on December 10, 2004. 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 and distributor subsidiaries of Columbia Management Group, including Columbia Management Advisors, Inc., the registered investment advisor, and Columbia Funds Distributor, Inc. 145 Photo of eDelivery Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia Equity Funds Annual Report, September 30, 2004 PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 [LOGO] COLUMBIAFUNDS A MEMBER OF COLUMBIA MANAGEMENT GROUP (C)2004 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 800.426.3750 WWW.COLUMBIAFUNDS.COM G-02/980S-0904 (11/04) 04/3396 COLUMBIA DIVIDEND INCOME FUND Annual Report September 30, 2004 [photo of woman reading] [LOGO]: COLUMBIA FUNDS A MEMBER OF COLUMBIA MANAGEMENT GROUP Table of Contents Fund Profile.......................... 1 Performance Information............... 2 Understanding Your Expenses........... 3 Economic Update........................ 4 Portfolio Managers' Report............ 5 Investment Portfolio.................. 7 Statement of Assets and Liabilities... 11 Statement of Operations............... 12 Statement of Changes in Net Assets.... 13 Notes to Financial Statements......... 16 Financial Highlights.................. 22 Report of Independent Registered Public Accounting Firm..... 28 Unaudited Information................. 29 Trustees.............................. 30 Officers.............................. 32 Important Information About This Report..................... 33 President's Message - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Dear Shareholder: Your fund's legal and management team here at Columbia Funds have been working hard to strengthen our mutual fund services operation and to ensure that all operations and processes comply with legal and regulatory standards. In the coming months, we will continue to monitor the oversight enhancements recently put in place by your fund's Board of Trustees and make every effort to protect the interests of all our shareholders in everything we do. In our last report, we announced that your fund's advisor, Columbia Management Advisors, Inc., and your fund's distributor, Columbia Funds Distributor, Inc., had reached an agreement with the Securities and Exchange Commission and the New York Attorney General to settle charges involving market timing in some of our mutual funds. We want to reassure you that the settlement and all associated legal fees will be paid by Columbia Management, not by the affected funds or their shareholders. Recently the Securities and Exchange Commission has adopted new rules regarding mutual fund governance. We think it is important for you to know that Columbia Management complied with the majority of these rules well before they were adopted. Your fund's Board of Trustees has taken the following important steps to strengthen its capacity to oversee your fund and to comply with SEC rules. o The Board of Trustees appointed Mary Joan Hoene as Chief Compliance Officer of Columbia Funds. In this role, Ms. Hoene will report directly to the Board of Trustees and will work with the Board of Trustees as well as the senior leadership of Columbia Management, the investment management arm of Bank of America, and with Bank of America's principal compliance executives. She will focus on the overall compliance program of the funds and the responsibility and performance of the fund's service providers. Prior to her appointment, Ms. Hoene was a partner in the law firm of Carter, Ledyard & Milburn, LLP. Previously she also served as associate director and deputy director for the Securities and Exchange Commission Division of Investment Management. As an active advisor, Ms. Hoene has helped several fund boards develop independent board practices. The Board is pleased to have Ms. Hoene, with her broad and extensive experience, in this important new position. o The Board of Trustees has established operational guidelines that result in stronger, more vigilant trusteeship across the entire Columbia Management organization. Board committees have been established to oversee products by fund category, allowing for greater specialization among board trustees. Shareholders will elect board members every five years, beginning in 2005. o In addition to enhancements to oversight within Columbia Management, our parent company--Bank of America--has also increased the role that such professionals play within the broader organization. A chief compliance officer has been named to report directly to Ken Lewis, Bank of America's chief executive officer. Bank of America has also adopted a corporate Code of Ethics Committee, an Internal Compliance Controls Committee and a Regulatory Implementation Group to ensure full alignment and execution of remedial actions and best practices across the company. In the pages that follow, you'll find a discussion of the economic environment during the period, followed by a detailed report from the fund's manager on key factors that influenced performance. This report is rich in information, and you should discuss it with your financial advisor if you have questions. We are committed to providing quality products and services to our shareholders, strengthening your confidence in us, and working hard to help you achieve financial success. It is a privilege to play a role in your financial future, and we value your business. Thank you for choosing Columbia Management. Sincerely, /s/ Christopher Wilson Christopher Wilson Head of Mutual Funds, Columbia Management Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible for the day-to-day delivery of mutual fund services to the firm's investors. With the exception of distribution, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. Chris serves as Columbia Management's chief liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. 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 GURANTEE Fund Profile - -------------------------------------------------------------------------------- Columbia Dividend 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 10 holdings as of 09/30/04 (%) - ----------------------------------- Citigroup, Inc. 3.7 - ----------------------------------- Exxon Mobil Corp. 3.7 - ----------------------------------- ConocoPhillips 3.5 - ----------------------------------- BP PLC, ADR 3.3 - ----------------------------------- U.S. Bancorp 3.0 - ----------------------------------- Verizon Communications, Inc. 2.7 - ----------------------------------- National City Corp. 2.4 - ----------------------------------- SBC Communications, Inc. 2.3 - ----------------------------------- JPMorgan Chase & Co. 2.2 - ----------------------------------- Textron, Inc. 2.1 - ----------------------------------- Sectors as of 09/30/04 (%) - ----------------------------------- Financials 28.9 - ----------------------------------- Energy 16.2 - ----------------------------------- Industrials 13.2 - ----------------------------------- Consumer staples 8.9 - ----------------------------------- Telecommunication services 7.1 - ----------------------------------- Utilities 6.1 - ----------------------------------- Materials 5.7 - ----------------------------------- Health care 5.2 - ----------------------------------- Consumer discretionary 4.9 - ----------------------------------- Information technology 3.8 - ----------------------------------- [SIDEBAR DATA]: Summary o For the 12-month period that ended September 30, 2004, the fund's class A shares returned 18.60% without sales charge, in an environment that was generally favorable for stocks, and for value stocks in particular. o A shift in the fund's strategy toward dividend-paying stocks was rewarded by strong performance. The fund's modest underperformance relative to its benchmark, the Russell 1000 Value Index, occurred early in the period when the fund's strategy was in transition. o We believe that favorable sector allocation helped the fund outperform its peer group, the Lipper Equity Income Funds Category. Class A shares 18.60% Russell 1000 Value Index 20.52% Objective Seeks current income and capital appreciation Total net assets $215.2 million Morningstar style box STYLE--VALUE / SIZE--LARGE Portfolio holdings are calculated as a percentage of net assets. Sector breakdown is calculated as a percentage of total investments excluding short-term investments. (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 is gathered from reliable sources, Morningstar cannot guarantee completeness and accuracy. As of 09/30/2004. 1 Performance Information - -------------------------------------------------------------------------------- Columbia Dividend Income Fund [mountain chart data]: Value of a $10,000 investment 03/04/98 - 09/30/04 Class A shares Class A shares without with Russell 1000 S&P 500 sales charge sales charge Value Index Index 03/1998 $10,000 $ 9,425 $10,000 $10,000 10,230 9,642 10,565 10,530 10,170 9,585 10,636 10,636 9,760 9,199 10,478 10,453 9,635 9,081 10,612 10,878 9,425 8,883 10,426 10,763 7,864 7,412 8,874 9,206 8,555 8,063 9,384 9,796 9,625 9,071 10,111 10,593 9,835 9,269 10,582 11,235 10,262 9,672 10,942 11,882 10,302 9,710 11,030 12,379 10,072 9,492 10,874 11,994 10,489 9,885 11,099 12,473 11,351 10,698 12,136 12,956 11,431 10,774 12,002 12,650 11,693 11,021 12,350 13,352 11,251 10,604 11,988 12,936 10,759 10,141 11,544 12,872 10,097 9,516 11,141 12,520 9,936 9,365 11,783 13,312 9,885 9,317 11,691 13,582 10,266 9,676 11,747 14,382 9,876 9,308 11,364 13,660 9,704 9,146 10,519 13,402 11,088 10,450 11,803 14,713 11,191 10,548 11,666 14,270 11,409 10,753 11,788 13,978 10,965 10,335 11,250 14,323 10,839 10,216 11,390 14,099 11,460 10,801 12,024 14,975 11,481 10,821 12,134 14,184 12,033 11,341 12,433 14,125 11,665 10,994 11,971 13,012 12,549 11,828 12,571 13,075 13,644 12,859 12,619 13,540 13,227 12,467 12,268 12,305 12,856 12,117 11,835 11,525 13,677 12,891 12,415 12,420 13,856 13,060 12,694 12,503 13,565 12,785 12,413 12,200 13,530 12,752 12,386 12,080 12,804 12,067 11,890 11,324 11,590 10,923 11,053 10,409 11,935 11,249 10,958 10,608 12,971 12,225 11,594 11,421 13,555 12,775 11,868 11,522 13,135 12,379 11,777 11,353 13,160 12,403 11,795 11,134 13,737 12,947 12,353 11,553 13,502 12,726 11,930 10,853 13,317 12,552 11,989 10,773 12,168 11,468 11,301 10,006 11,081 10,444 10,250 9,226 11,218 10,573 10,328 9,286 9,759 9,198 9,180 8,277 10,564 9,956 9,860 9,005 11,237 10,590 10,481 9,535 10,759 10,140 10,026 8,976 10,449 9,848 9,783 8,741 9,879 9,311 9,522 8,609 9,882 9,313 9,538 8,693 10,616 10,005 10,378 9,409 11,449 10,791 11,048 9,905 11,700 11,027 11,186 10,032 11,612 10,944 11,353 10,208 11,775 11,098 11,530 10,408 11,611 10,943 11,417 10,297 12,037 11,345 12,116 10,880 12,125 11,428 12,281 10,976 13,028 12,279 13,037 11,551 13,179 12,422 13,266 11,763 13,469 12,695 13,550 11,927 13,383 12,614 13,431 11,747 13,130 12,375 13,103 11,562 13,155 12,399 13,237 11,721 13,453 12,679 13,549 11,948 13,338 12,571 13,358 11,553 13,554 12,775 13,548 11,599 09/2004 13,767 12,975 13,756 11,721 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The 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 and Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. The S&P 500 Index was the fund's previous benchmark. 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. Index performance is from March 4, 1998. Performance of a $10,000 investment 03/04/98 - 09/30/04 ($) - ------------------------------------ sales charge: without with - ------------------------------------ Class A 13,767 12,975 - ------------------------------------ Class B 13,193 13,093 - ------------------------------------ Class C 13,181 13,181 - ------------------------------------ Class G 13,179 13,079 - ------------------------------------ Class T 13,749 12,958 - ------------------------------------ Class Z 14,169 n/a - ------------------------------------ Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. Average annual total return as of 09/30/04 (%) - ------------------------------------------------------------------------------------------------------------------- Share class A B C G T Z - ------------------------------------------------------------------------------------------------------------------- Inception 11/25/02 11/25/02 11/25/02 03/04/98 03/04/98 03/04/98 - ------------------------------------------------------------------------------------------------------------------- Sales charge without with without with without with without with without with without - ------------------------------------------------------------------------------------------------------------------- 1-year 18.60 11.83 17.69 12.69 17.70 16.70 17.71 12.71 18.50 11.74 18.93 - ------------------------------------------------------------------------------------------------------------------- 5-year 6.39 5.15 5.61 5.29 5.59 5.59 5.59 5.10 6.37 5.12 6.83 - ------------------------------------------------------------------------------------------------------------------- Life 4.98 4.04 4.30 4.18 4.29 4.29 4.29 4.17 4.96 4.02 5.44 - ------------------------------------------------------------------------------------------------------------------- THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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 A, class B and class C are newer classes of shares. Their performance information includes returns of the fund's class T shares (for class A) and class G shares (for class B and class C) for periods prior to their inception. The returns shown for class T and G shares include the returns of Retail A shares (for class T) and Retail B shares (for class G) of the Galaxy fund for periods prior to November 25, 2002, the date on which class A, B and C shares were initially offered by the Fund and the date the Galaxy fund merged into the existing fund. The returns have not been restated to reflect any differences in expenses between the predecessor shares and the newer classes of shares. If differences in expenses had been reflected, the returns shown for periods prior to the inception of the newer classes of shares would have been lower. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy fund for periods prior to November 25, 2002, the date on which class T and class G shares were initially offered by the fund. Retail A shares and Retail B shares of the Galaxy fund were initially offered on March 4, 1998. The returns for class Z shares include returns of Trust shares of the Galaxy fund for periods prior to November 25, 2002, the date on which class Z shares were initially offered by the fund. Trust shares were initially offered by the Galaxy fund on March 4, 1998. 2 Understanding Your Expenses - -------------------------------------------------------------------------------- Columbia Dividend 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. April 1, 2004 - September 30, 2004 - ------------------------------------------------------------------------------------------------------------------------ Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) - ------------------------------------------------------------------------------------------------------------------------ Actual Hypothetical Actual Hypothetical Actual Hypothetical - ------------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 1,029.95 1,018.15 6.95 6.91 1.37 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 1,027.70 1,014.40 10.75 10.68 2.12 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 1,026.85 1,014.40 10.74 10.68 2.12 - ------------------------------------------------------------------------------------------------------------------------ Class G 1,000.00 1,000.00 1,027.55 1,014.65 10.49 10.43 2.07 - ------------------------------------------------------------------------------------------------------------------------ Class T 1,000.00 1,000.00 1,029.80 1,017.90 7.21 7.16 1.42 - ------------------------------------------------------------------------------------------------------------------------ Class Z 1,000.00 1,000.00 1,030.40 1,019.40 5.69 5.65 1.12 - ------------------------------------------------------------------------------------------------------------------------ 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 and the transfer agent not waived 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. 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 the 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 3 Economic Update - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Despite uncertainty about job growth, rising energy prices and a slowdown in consumer spending, the US economy grew at a pace of more than 4.5% during the 12-month period that began October 1, 2003 and ended September 30, 2004. Growth encountered a soft patch in the second quarter of 2004, but monthly data suggested that it picked up again in the third quarter. Job growth dominated the economic news during this reporting period. When more than 1.2 million jobs were created in the spring of 2004, consumer confidence soared to its highest level in two years. However, when job growth fell below expectations during the summer months, consumer confidence fell. According to the Labor Department's Payroll Survey, the job market has not fully recovered from the losses incurred during the economic downturn of 2000-2001, and that has left consumers more cautious about the months ahead. Consumer spending held up for most of the period, as last year's tax rebates and tax cuts worked their way into household budgets. Even when consumer spending declined during the summer, housing activity remained strong. Also, the business sector stepped into the gap created by sagging consumer spending. Industrial production rose; factories utilized more of their capacity; and spending on technology, capital equipment and construction picked up. STOCKS OUTPERFORMED BONDS Buoyed by strong gains at the beginning of the period, the S&P 500 Index returned 13.87% during this 12-month reporting period. However, concerns about new terror threats and higher interest rates and energy prices helped sideline investors as the period wore on. Late in the period, leadership passed from small-cap stocks to mid- and large-cap stocks. Value stocks continued to lead growth stocks until the final month of the period, when small- and mid-cap growth bested their value counterparts. Energy stocks and real estate investment trusts were the best-performing sectors. BONDS DELIVER RESPECTABLE GAINS Despite periods of interest-rate volatility, the US bond market delivered respectable gains during the period. Bond prices sagged in the spring when job growth picked up and investors began to anticipate higher short-term interest rates. However, a shaky stock market, higher energy prices and some weak economic data gave the bond market a boost in the last thee months of the period. The 10-year Treasury yield ended the period at 4.1%, very close to where it started. In this environment, the Lehman Brothers Aggregate Bond Index returned 3.68%. High-yield bonds gained 12.23%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. However, most of those gains were achieved during the first half of the reporting period. In the second half, slower economic growth and high valuations made high-yield bonds less attractive. After a year of the lowest short-term interest rates in recent history, The Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.0% to 1.75% in three equal steps during the period. The Fed indicated that it would continue to raise short-term interest rates at a "measured pace," in an attempt to balance economic growth against inflationary pressures. [SIDEBAR DATA]: Summary For the 12-month period ended September 30, 2004 o Stock prices rose, as measured by the S&P 500 Index and the broader Russell 3000 Index. Many sectors retreated as short-term interest rates moved higher in the summer and a host of uncertainties unsettled investors. S&P 500 Index 13.87% Russell Index 14.26% o Despite interest rate volatility, investment grade bonds chalked up respectable gains. The Lehman Brothers Aggregate Bond Index returned 3.68%. High-yield bonds, which can be less sensitive to changing interest rates, led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 12.23%. Merrill Lynch Index 12.23% Lehman Index 3.68% 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 the performance of fixed-rate, publicly placed, dollar-denominated, 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 Dividend Income Fund For the 12-month period ended September 30, 2004, class A shares of Columbia Dividend Income Fund returned 18.60% without sales charge. The fund's performance was lower than its benchmark, the Russell 1000 Value Index, which returned 20.52% for the same period. This slight underperformance can be attributed primarily to the first two months of the period, as we shifted the fund's assets toward dividend-paying stocks. However, in the months that followed the fund's strategy shift was rewarded. Favorable sector allocation decisions allowed the fund to outperform the 16.67% return of the Lipper Equity Income Funds Category.1 The margin of outperformance widened after the portfolio was restructured to reflect the change in investment objective that was approved by shareholders on October 21, 2003. SECTOR WEIGHTINGS AID PERFORMANCE The fund's strong showing during the period was primarily the result of favorable allocation decisions. The most important such decision was to overweight energy stocks, such as integrated oil companies ChevronTexaco, Exxon Mobil and BP. These companies experienced significant increases in their free cash flow because of rising oil prices. A significant percentage of this inflow of cash was transferred to shareholders in the form of higher dividend payments and/or stock buybacks. Cash flow is the amount of net cash a company generates, including earnings, depreciation and balance sheet changes, but after subtracting taxes. The fund also held less in the consumer discretionary sector than its benchmark because we believed that consumers were unlikely to continue spending at the same high level as in 2003, when a combination of tax cuts and mortgage refinancing enhanced discretionary income. In fact, many retailers and entertainment companies have produced disappointing earnings thus far in 2004, and the fund benefited by deemphasizing these areas. The fund was hurt slightly by its financial holdings, primarily because it did not participate in a brief wave of major banking mergers. Neither Bank One, which was acquired during the period by JPMorgan Chase, nor FleetBoston Financial were in the portfolio. FleetBoston Financial, as the parent company of the fund's advisor, was not eligible for purchase. It was bought out by Bank of America earlier this year. Stockholders of both Bank One and FleetBoston benefited from the acquisitions. A NEWLY FOCUSED FUND Overall, the fund benefited from the shareholder vote last fall, which approved a change in the fund's focus to current income as a component of total return. Because of this change, we shifted the fund toward companies that we believe have the potential to sustain their own growth and eventually share their increasing wealth with investors in the form of higher dividend payments. 1 Lipper Inc., a widely respected data provider in the industry, calculates an average total return for mutual funds with similar investment objectives as those of the fund. [SIDEBAR DATA]: Net asset value per share as of 09/30/04 ($) - ------------------------------------ Class A 10.80 - ------------------------------------ Class B 10.59 - ------------------------------------ Class C 10.58 - ------------------------------------ Class G 10.58 - ------------------------------------ Class T 10.80 - ------------------------------------ Class Z 10.80 - ------------------------------------ Distributions declared per share as of 10/01/03 - 09/30/04 ($) - ------------------------------------ Class A 0.17 - ------------------------------------ Class B 0.09 - ------------------------------------ Class C 0.09 - ------------------------------------ Class G 0.09 - ------------------------------------ Class T 0.17 - ------------------------------------ Class Z 0.20 - ------------------------------------ Holdings discussed in this report as of 09/30/04 (%) - ------------------------------------ ChevronTexaco Corp. 1.8 - ------------------------------------ Exxon Mobil Corp. 3.7 - ------------------------------------ BP PLC, ADR 3.3 - ------------------------------------ JPMorgan Chase & Co. 2.2 - ------------------------------------ Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. 5 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund In particular, we sold non-dividend paying companies such as Celestica and Accenture at the beginning of the period. Because technology stocks tend not to pay generous dividends, the fund had a below-average stake in that sector throughout the year. This helped fund performance during the second half of the period, when economic growth flattened out somewhat and technology stocks retreated. BULLISH ON DIVIDENDS We are optimistic that dividends will continue to play an important role within our universe of leading companies. Among our important energy holdings, for example, we believe earnings and dividend increases are quite likely barring a sharp reversal in oil prices. More generally, the percentage of corporate earnings that get paid out as dividends continues to languish at about 30%, a relatively low level. Even though many companies initiated or increased their dividends following last year's corporate tax legislation, subsequent dividend increases have not kept pace with earnings growth. With the economy showing positive but not explosive growth, we will continue to steer the portfolio toward what we judge to be higher-quality, dividend-paying companies. Finally, the fund moved to lower its fees as of September 1, which will effectively increase its dividend payout. [photo of Scott Davis] Scott Davis has co-managed Columbia Dividend Income Fund since November 2001 and has been with the advisor and its predecessors or affiliate organizations since 1985. /s/ Scott Davis [photo of Richard Dahlberg] Richard Dahlberg, CFA, has co-managed the fund since October 2003 and has been with the advisor and its predecessors or affiliate organizations since September 2003. /s/ Richard Dahlberg An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. 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. [PULL QUOTE:] Going forward, we will continue to steer the portfolio toward what we judge to be higher-quality, dividend-paying companies. 6 Investment Portfolio - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund Common Stocks - 95.1% CONSUMER DISCRETIONARY - 4.7% Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- Automobiles - 1.0% General Motors Corp. 50,000 2,124,000 Automobiles Total 2,124,000 ----------------------------------------------------------------------------- Hotels, Restaurants & Leisure - 1.1% Harrah's Entertainment, Inc. 20,000 1,059,600 McDonald's Corp. 46,000 1,289,380 Hotels, Restaurants & Leisure Total 2,348,980 ----------------------------------------------------------------------------- Media - 1.0% McGraw-Hill Companies, Inc. 26,000 2,071,940 Media Total 2,071,940 ----------------------------------------------------------------------------- Multiline Retail - 1.1% J.C. Penney Co., Inc. 70,000 2,469,600 Multiline Retail Total 2,469,600 ----------------------------------------------------------------------------- Specialty Retail - 0.5% Limited Brands 48,000 1,069,920 Specialty Retail Total 1,069,920 ----------- CONSUMER DISCRETIONARY TOTAL 10,084,440 CONSUMER STAPLES - 8.5% - ------------------------------------------ ----------------------------------------------------------------------------- Beverages - 0.8% PepsiCo, Inc. 36,000 1,751,400 Beverages Total 1,751,400 ----------------------------------------------------------------------------- Food Products - 1.8% ConAgra Foods, Inc. 148,000 3,805,080 Food Products Total 3,805,080 ----------------------------------------------------------------------------- Household Products - 3.0% Clorox Co. 60,000 3,198,000 Kimberly-Clark Corp. 52,000 3,358,680 Household Products Total 6,556,680 ----------------------------------------------------------------------------- Tobacco - 2.9% Altria Group, Inc. 82,000 3,857,280 Reynolds American, Inc. 27,000 1,837,080 UST, Inc. 14,000 563,640 Tobacco Total 6,258,000 ------------ CONSUMER STAPLES TOTAL 18,371,160 ENERGY - 15.6% - ------------------------------------------ ----------------------------------------------------------------------------- Energy Equipment & Services - 1.3% Halliburton Co. 80,000 2,695,200 Energy Equipment & Services Total 2,695,200 ----------------------------------------------------------------------------- Oil & Gas - 14.3% BP PLC, ADR 122,000 7,018,660 ChevronTexaco Corp. 72,000 3,862,080 ConocoPhillips 90,000 7,456,500 Exxon Mobil Corp. 164,000 7,926,120 Kinder Morgan, Inc. 40,000 2,512,800 Royal Dutch Petroleum Co., N.Y. Shares 40,000 2,064,000 Oil & Gas Total 30,840,160 ------------ ENERGY TOTAL 33,535,360 See Accompanying Notes to Financial Statements. 7 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund Common Stocks - (continued) FINANCIALS - 27.9% Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- Capital Markets - 2.0% Bank of New York Co., Inc. 78,000 2,275,260 Eaton Vance Corp. 26,000 1,050,140 Federated Investors, Inc., Class B 32,000 910,080 Capital Markets Total 4,235,480 ----------------------------------------------------------------------------- Commercial Banks - 8.3% National City Corp. 132,000 5,097,840 U.S. Bancorp 225,000 6,502,500 Wachovia Corp. 52,000 2,441,400 Wells Fargo & Co. 64,000 3,816,320 Commercial Banks Total 17,858,060 ----------------------------------------------------------------------------- Consumer Finance - 0.8% MBNA Corp. 68,000 1,713,600 Consumer Finance Total 1,713,600 ----------------------------------------------------------------------------- Diversified Financial Services - 5.9% Citigroup, Inc. 180,000 7,941,600 JPMorgan Chase & Co. 120,000 4,767,600 Diversified Financial Services Total 12,709,200 ----------------------------------------------------------------------------- Insurance - 7.3% Allstate Corp. 24,000 1,151,760 Chubb Corp. 40,000 2,811,200 Lincoln National Corp. 94,000 4,418,000 Marsh & McLennan Companies, Inc. 45,000 2,059,200 St. Paul Travelers Companies, Inc. 65,010 2,149,231 Willis Group Holdings Ltd. 30,000 1,122,000 XL Capital Ltd., Class A 26,000 1,923,740 Insurance Total 15,635,131 ----------------------------------------------------------------------------- Real Estate - 3.6% Archstone-Smith Trust, REIT 40,000 1,265,600 AvalonBay Communities, Inc., REIT 20,000 1,204,400 Equity Office Properties Trust, REIT 110,000 2,997,500 Kimco Realty Corp., REIT 22,000 1,128,600 Vornado Realty Trust, REIT 20,000 1,253,600 Real Estate Total 7,849,700 ------------ FINANCIALS TOTAL 60,001,171 HEALTH CARE - 5.0% - ------------------------------------------ ----------------------------------------------------------------------------- Health Care Providers & Services - 1.4% Aetna, Inc. 30,000 2,997,900 Health Care Providers & Services Total 2,997,900 ----------------------------------------------------------------------------- Pharmaceuticals - 3.6% Abbott Laboratories 50,000 2,118,000 Bristol-Myers Squibb Co. 84,000 1,988,280 Merck & Co., Inc. 44,000 1,452,000 Pfizer, Inc. 74,000 2,264,400 Pharmaceuticals Total 7,822,680 ------------ HEALTH CARE TOTAL 10,820,580 INDUSTRIALS - 12.7% - ------------------------------------------ ----------------------------------------------------------------------------- Aerospace & Defense - 4.5% Boeing Co. 24,000 1,238,880 Goodrich Corp. 78,000 2,446,080 Honeywell International, Inc. 88,000 3,155,680 United Technologies Corp. 30,000 2,801,400 Aerospace & Defense Total 9,642,040 See Accompanying Notes to Financial Statements. 8 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund Common Stocks - (continued) INDUSTRIALS - (continued) Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- Building Products - 1.1% Masco Corp. 70,000 2,417,100 Building Products Total 2,417,100 ----------------------------------------------------------------------------- Commercial Services & Supplies - 2.2% Cendant Corp. 44,000 950,400 Waste Management, Inc. 140,000 3,827,600 Commercial Services & Supplies Total 4,778,000 ----------------------------------------------------------------------------- Industrial Conglomerates - 4.0% General Electric Co. 120,000 4,029,600 Textron, Inc. 70,000 4,498,900 Industrial Conglomerates Total 8,528,500 ----------------------------------------------------------------------------- Machinery - 0.9% Deere & Co. 32,000 2,065,600 Machinery Total 2,065,600 ------------ INDUSTRIALS TOTAL 27,431,240 INFORMATION TECHNOLOGY - 3.7% - ------------------------------------------ ----------------------------------------------------------------------------- Communications Equipment - 1.0% Nokia Oyj, ADR 150,000 2,058,000 Communications Equipment Total 2,058,000 ----------------------------------------------------------------------------- Computers & Peripherals - 1.0% Diebold, Inc. 45,000 2,101,500 Computers & Peripherals Total 2,101,500 ----------------------------------------------------------------------------- IT Services - 1.7% Automatic Data Processing, Inc. 90,000 3,718,800 IT Services Total 3,718,800 ------------ INFORMATION TECHNOLOGY TOTAL 7,878,300 MATERIALS - 4.4% - ------------------------------------------ ----------------------------------------------------------------------------- Chemicals - 3.0% Dow Chemical Co. 65,000 2,936,700 E.I. du Pont de Nemours & Co. 56,000 2,396,800 Lyondell Chemical Co. 50,000 1,123,000 Chemicals Total 6,456,500 ----------------------------------------------------------------------------- Paper & Forest Products - 1.4% Weyerhaeuser Co. 44,000 2,925,120 Paper & Forest Products Total 2,925,120 ------------ MATERIALS TOTAL 9,381,620 TELECOMMUNICATION SERVICES - 6.8% - ------------------------------------------ ----------------------------------------------------------------------------- Diversified Telecommunication Services - 6.8% BellSouth Corp. 140,000 3,796,800 SBC Communications, Inc. 190,000 4,930,500 Verizon Communications, Inc. 150,000 5,907,000 Diversified Telecommunication Services Total 14,634,300 ------------ TELECOMMUNICATION SERVICES TOTAL 14,634,300 UTILITIES - 5.8% - ------------------------------------------ ----------------------------------------------------------------------------- Electric Utilities - 3.0% Consolidated Edison, Inc. 75,000 3,153,000 TXU Corp. 70,000 3,354,400 Electric Utilities Total 6,507,400 See Accompanying Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund Common Stocks - (continued) UTILITIES - (continued) Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- Multi-Utilities & Unregulated Power - 2.8% Dominion Resources, Inc. 20,000 1,305,000 Public Service Enterprise Group, Inc. 80,000 3,408,000 Sempra Energy 38,000 1,375,220 Multi-Utilities & Unregulated Power Total 6,088,220 ------------ UTILITIES TOTAL 12,595,620 ------------ TOTAL COMMON STOCKS (cost of $182,124,555) 204,733,791 Preferred Stock - 1.1% MATERIALS - 1.1% - ------------------------------------------ ----------------------------------------------------------------------------- Metals & Mining - 1.1% Freeport-McMoRan Copper & Gold, Inc., 5.500% (a) 2,425 2,467,437 Metals & Mining Total 2,467,437 ------------ MATERIALS TOTAL 2,467,437 ------------ TOTAL PREFERRED STOCK (cost of $2,376,525) 2,467,437 Short-Term Obligation - 3.7% Par ($) - ------------------------------------------ ----------------------------------------------------------------------------- Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by a U.S. Treasury Note maturing 05/15/14, market value $8,056,725 (repurchase proceeds $7,895,347) 7,895,000 7,895,000 ------------ TOTAL SHORT-TERM OBLIGATION (cost of $7,895,000) 7,895,000 Total Investments - 99.9% (cost of $192,396,080) (b) 215,096,228 Other Assets & Liabilities, Net - 0.1% 124,268 Net Assets - 100.0% 215,220,496 NOTES TO INVESTMENT PORTFOLIO: (a) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2004, the value of this security represents 1.1% of net assets. (b) Cost for federal income tax purposes is $193,057,051. ACRONYM NAME ------- ---- ADR American Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. 10 STATEMENT OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund ($) - ------------------------------------------ ----------------------------------------------------------------------------- Assets Investments, at cost 192,396,080 ------------ Investments, at value 215,096,228 Cash 373 Receivable for: Fund shares sold 509,330 Interest 346 Dividends 429,590 Expense reimbursement due from Investment Advisor 59,264 Deferred Trustees' compensation plan 14,530 ------------ Total Assets 216,109,661 ----------------------------------------------------------------------------- Liabilities Payable for: Investments purchased 249,808 Fund shares repurchased 356,613 Investment advisory fee 131,660 Administration fee 11,345 Transfer agent fee 44,989 Pricing and bookkeeping fees 4,587 Trustees' fees 897 Distribution and service fees 39,644 Deferred Trustees' fees 14,530 Other liabilities 35,092 ------------ Total Liabilities 889,165 Net Assets 215,220,496 ----------------------------------------------------------------------------- Composition of Net Assets Paid-in capital 227,012,370 Overdistributed net investment income (9,785) Accumulated net realized loss (34,482,237) Net unrealized appreciation on investments 22,700,148 Net Assets 215,220,496 ----------------------------------------------------------------------------- Class A Net assets 7,318,545 Shares outstanding 677,767 Net asset value per share 10.80(a) Maximum offering price per share ($10.80/0.9425) 11.46(b) ----------------------------------------------------------------------------- Class B Net assets 8,807,558 Shares outstanding 832,053 Net asset value and offering price per share 10.59(a) ----------------------------------------------------------------------------- Class C Net assets 2,026,757 Shares outstanding 191,636 Net asset value and offering price per share 10.58(a) ----------------------------------------------------------------------------- Class G Net assets 5,995,246 Shares outstanding 566,804 Net asset value and offering price per share 10.58(a) ----------------------------------------------------------------------------- Class T Net assets 100,803,091 Shares outstanding 9,335,726 Net asset value per share 10.80(a) Maximum offering price per share ($10.80/0.9425) 11.46(b) ----------------------------------------------------------------------------- Class Z Net assets 90,269,299 Shares outstanding 8,360,976 Net asset value, offering and redemption price per share 10.80 (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 11 STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------- For the Year Ended September 30, 2004 Columbia Dividend Income Fund ($) - ------------------------------------------ ----------------------------------------------------------------------------- Investment Income Dividends 6,107,977 Interest 24,140 ------------ Total Investment Income (net of foreign taxes withheld of $41,038) 6,132,117 ----------------------------------------------------------------------------- Expenses Investment advisory fee 1,488,735 Administration fee 132,994 Distribution fee: Class B 35,938 Class C 8,347 Class G 51,512 Service fee: Class A 10,101 Class B 11,959 Class C 2,777 Class G 23,775 Shareholder service fee - Class T 306,384 Transfer agent fee: Class A 8,283 Class B 9,833 Class C 2,288 Class G 20,974 Class T 236,790 Class Z 151,562 Pricing and bookkeeping fees 48,484 Trustees' fees 10,625 Custody fee 8,231 Non-recurring costs (See Note 8) 9,466 Other expenses 209,569 ------------ Total Expenses 2,788,627 Fees and expenses waived or reimbursed by Investment Advisor (59,264) Fees waived by Transfer Agent: Class A (476) Class B (557) Class C (133) Class G (704) Class T (12,291) Class Z (11,393) Non-recurring costs assumed by Investment Advisor (See Note 8) (9,466) Custody earnings credit (233) ------------ Net Expenses 2,694,110 ------------ Net Investment Income 3,438,007 ----------------------------------------------------------------------------- Net Realized and Unrealized Net realized loss on investments (2,366,483) Gain (Loss) on Investments Net change in unrealized appreciation/depreciation on investments 32,219,303 ------------ Net Gain 29,852,820 ------------ Net Increase in Net Assets from Operations 33,290,827 See Accompanying Notes to Financial Statements. 12 Statement of Changes in Net Assets - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Year Ended Period Ended Year Ended September 30, September 30, October 31, Increase (Decrease) in Net Assets 2004 ($) 2003 (a)(b)($) 2002 ($) - ------------------------------------------ ----------------------------------------------------------------------------- Operations Net investment income 3,438,007 2,589,395 237,883 Net realized gain (loss) on investments (2,366,483) (9,261,189) 12,886,804 Net change in unrealized appreciation/ depreciation on investments 32,219,303 14,197,391 (7,411,274) ---------------------------------------- Net Increase from Operations 33,290,827 7,525,597 5,713,413 ----------------------------------------------------------------------------- Distributions Declared to Shareholders From net investment income: Class A (74,299) (3,464) -- Class B (40,442) (2,610) -- Class C (9,211) (235) -- Class G (73,058) (58,829) -- Class T (1,626,505) (1,134,919) (14,787) Class Z (1,531,132) (1,326,619) (270,326) From net realized gains: Class G -- -- (92,957) Class T -- -- (321,990) Class Z -- -- (4,065,865) ---------------------------------------- Total Distributions Declared to Shareholders (3,354,647) (2,526,676) (4,765,925) ----------------------------------------------------------------------------- Share Transactions Class A: Subscriptions 9,356,105 648,541 -- Distributions reinvested 66,013 3,237 -- Redemptions (2,933,744) (99,798) -- ---------------------------------------- Net Increase 6,488,374 551,980 -- Class B: Subscriptions 8,241,367 1,466,777 -- Distributions reinvested 34,605 2,480 -- Redemptions (1,056,587) (350,847) -- ---------------------------------------- Net Increase 7,219,385 1,118,410 -- Class C: Subscriptions 2,110,907 743,182 -- Distributions reinvested 6,757 111 -- Redemptions (333,548) (624,830) -- ---------------------------------------- Net Increase 1,784,116 118,463 -- Class G: Subscriptions 107,766 143,452 607,331 Proceeds received in connection with merger -- 10,032,885 -- Distributions reinvested 71,095 56,662 92,335 Redemptions (5,168,967) (3,057,348) (449,690) ---------------------------------------- Net Increase (Decrease) (4,990,106) 7,175,651 249,976 Class T: Subscriptions 5,028,502 2,162,435 1,956,588 Proceeds received in connection with merger -- 101,580,964 -- Distributions reinvested 1,571,011 1,097,380 334,609 Redemptions (17,969,184) (17,083,667) (2,756,097) ---------------------------------------- Net Increase (Decrease) (11,369,671) 87,757,112 (464,900) See Accompanying Notes to Financial Statements. 13 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Year Ended Period Ended Year Ended September 30, September 30, October 31, 2004 ($) 2003 (a)(b)($) 2002 ($) - ------------------------------------------ ----------------------------------------------------------------------------- Share Transactions Class Z: Subscriptions 32,779,209 14,764,524 9,952,015 Proceeds received in connection with merger -- 76,942,534 -- Distributions reinvested 346,486 306,107 3,813,095 Redemption-in-kind (c) -- -- (93,827,039) Redemptions (28,389,060) (40,885,365) (5,698,090) ---------------------------------------- Net Increase (Decrease) 4,736,635 51,127,800 (85,760,019) Net Increase (Decrease) from Share Transactions 3,868,733 147,849,416 (85,974,943) Total Increase (Decrease) in Net Assets 33,804,913 152,848,337 (85,027,455) ----------------------------------------------------------------------------- Net Assets Beginning of period 181,415,583 28,567,246 113,594,701 End of period 215,220,496 181,415,583 28,567,246 Undistributed (overdistributed) net investment income, at end of period (9,785) 145,092 32,838 ----------------------------------------------------------------------------- Changes in Shares Class A: Subscriptions 891,438 72,731 -- Issued for distributions reinvested 6,319 345 -- Redemptions (280,897) (12,169) -- ---------------------------------------- Net Increase 616,860 60,907 -- Class B: Subscriptions 807,527 164,196 -- Issued for distributions reinvested 3,385 268 -- Redemptions (103,938) (39,385) -- ---------------------------------------- Net Increase 706,974 125,079 -- Class C: Subscriptions 207,466 86,238 -- Issued for distributions reinvested 660 12 -- Redemptions (33,197) (69,543) -- ---------------------------------------- Net Increase 174,929 16,707 -- Class G: Subscriptions 10,547 16,877 58,075 Issued in connection with merger -- 1,137,552 -- Issued for distributions reinvested 7,037 6,525 8,802 Redemptions (514,799) (347,287) (48,228) ---------------------------------------- Net Increase (Decrease) (497,215) 813,667 18,649 Class T: Subscriptions 487,272 238,068 184,929 Issued in connection with merger -- 11,278,336 -- Issued for distributions reinvested 151,877 122,918 31,497 Redemptions (1,739,989) (1,972,609) (285,078) ---------------------------------------- Net Increase (Decrease) (1,100,840) 9,666,713 (68,652) See Accompanying Notes to Financial Statements. 14 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Year Ended Period Ended Year Ended September 30, September 30, October 31, 2004 2003 (a)(b) 2002 - ------------------------------------------ ----------------------------------------------------------------------------- Changes in Shares Class Z: Subscriptions 3,178,656 1,688,522 985,895 Issued in connection with merger -- 8,539,200 -- Issued for distributions reinvested 33,472 34,595 356,985 Redemption-in-kind (c) -- -- (8,728,097) Redemptions (2,764,193) (4,674,712) (552,015) ---------------------------------------- Net Increase (Decrease) 447,935 5,587,605 (7,937,232) (a) The Fund changed its year end from October 31 to September 30. (b) Effective November 25, 2002, the Galaxy Strategic Equity Fund, Retail B, Retail A and Trust shares were reorganized as Liberty Strategic Equity Fund Class G, Class T and Class Z shares, respectively. Subsequently, the Fund began offering Class A, Class B and Class C shares. Effective October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. Effective October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (c) The Fund had a redemption-in-kind on January 11, 2002, which resulted in a redemption out of the Fund of $93,827,039. The redemption is compromised of securities and cash in the amounts of $83,530,666 and $10,296,373, respectively. See Accompanying Notes to Financial Statements. 15 Notes to Financial Statements - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund Note 1. Organization Columbia Dividend Income Fund (the "Fund"), a series of Columbia Funds Trust XI (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 Goals The Fund seeks current income and capital appreciation. Prior to October 27, 2003, the Fund's investment goal was to seek long-term growth of capital. Fund Shares The Fund may issue an unlimited number of shares and offers six classes of shares: Class A, Class B, Class C, Class G, Class T and Class Z. Each share class has its own sales charge and expense structure. Class A and Class T shares are subject to a front-end sales charge based on the amount of initial investment. Class A and Class T shares purchased without an initial sales charge in accounts aggregating $1 million to $25 million at the time of purchase are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months of the time of purchase. Class B and Class G 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 G shares will convert to Class T shares in eight years after purchase. 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 Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. Also on this date, the Liberty-Stein Roe Investment Trust was renamed Columbia Funds Trust XI. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. Note 2. Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. Security Valuation Equity securities are valued at the last sale price on the principal exchange on which they trade, except for securities traded on the NASDAQ, which are valued at the NASDAQ official close price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Security Transactions Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. Repurchase Agreements The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to 16 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. Income Recognition Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. 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. If the Fund no longer owns the applicable securities, any distributions received in excess of income are recorded as realized gains. Effective April 1, 2004, the Fund adopted the policy to reduce cost of investments for financial statement purposes by the distributions received in excess of income from REITs. The cumulative effect of this accounting change did not impact the net assets of the Fund, but resulted in reclassifications as follows: Decrease in Increase in Overdistributed Cost Net Investment Income - ---------------------------------------------------------------- $45,764 $45,764 The effect of the change for the year ended September 30, 2004 is as follows: Decrease in Increase in Decrease in Net Net Realized Cost Investment Income Loss - ------------------------------------------------------------------ $4,458 $806 $5,264 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 September 30, 2004, permanent differences resulting primarily from differing treatments for distribution in excess of net investment income and REIT adjustments were identified and reclassified among the components of the Fund's net assets as follows: Overdistributed Accumulated Paid-In Net Investment Income Net Realized Loss Capital - ------------------------------------------------------------------- $(192,473) $215,254 $(22,781) 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 September 30, 2004, the period ended 17 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund September 30, 2003 and the year ended October 31, 2002 was as follows: September 30, September 30, October 31, 2004 2003 2002 - ----------------------------------------------------------------------- Distributions paid from: - ----------------------------------------------------------------------- Ordinary income* $3,354,647 $2,526,676 $1,124,772 - ----------------------------------------------------------------------- Long-term capital gains -- -- 3,641,153 - ----------------------------------------------------------------------- * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of September 30, 2004, the components of distributable earnings on a tax basis were as follows: Undistributed Undistributed Long-Term Net Unrealized Ordinary Income Capital Gains Appreciation* - ----------------------------------------------------------------------- $-- $-- $22,039,177 - ----------------------------------------------------------------------- * 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 September 30, 2004, based on cost of investments for federal income tax purposes, was: Unrealized appreciation $ 31,870,395 Unrealized depreciation (9,831,218) - ----------------------------------------------------------------------- Net unrealized appreciation $ 22,039,177 - ----------------------------------------------------------------------- The following capital loss carryforwards, determined as of September 30, 2004, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: Year of Capital Loss Expiration Carryforward - -------------------------------------------------- 2009 $19,781,995 2010 2,470,255 2011 9,095,627 - -------------------------------------------------- $31,347,877 - -------------------------------------------------- Of the capital loss carryforwards attributable to the Fund, $20,102,723 ($19,781,995 expiring 9/30/09 and $320,728 expiring 9/30/10) remain from the Fund's merger with Galaxy Equity Income Fund (See Note 10). Capital loss carryforwards of $322,161 were utilized during the year ended September 30, 2004 for the Fund. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions under Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. Under current tax rules, certain currency and capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of September 30, 2004, post-October capital losses of $2,473,389 attributed to security transactions were deferred to October 1, 2004. 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 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 $500 million 0.75% - -------------------------------------------------------- Next $500 million 0.70% - -------------------------------------------------------- Next $500 million 0.65% - -------------------------------------------------------- Next $500 million 0.60% - -------------------------------------------------------- Over $2 billion 0.55% - -------------------------------------------------------- Prior to November 1, 2003, Columbia was entitled to receive a monthly investment advisory fee at the annual rate of 0.75% of the Fund's average daily net assets. For the year ended September 30, 2004, the Fund's effective investment advisory fee rate was 0.75%. Administration Fee Columbia provides administrative and other services to the Fund for a monthly administration fee at the annual rate of 0.067% of the Fund's average daily net assets. Pricing and Bookkeeping Fees Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia 18 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund has delegated those functions to State Street Corporation ("State Street"). As a result, Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives an annual fee based on the average daily net assets of the Fund at the following annual rates: Average Daily Net Assets Annual Fee Rate - ------------------------------------------------------------------ Under $50 million $ 25,000 - ------------------------------------------------------------------ Over $50 million but less than $200 million $ 35,000 - ------------------------------------------------------------------ Over $200 million but less than $500 million $ 50,000 - ------------------------------------------------------------------ Over $500 million but less than $1 billion $ 85,000 - ------------------------------------------------------------------ Over $1 billion $125,000 - ------------------------------------------------------------------ An additional flat rate fee of $10,000 is charged to the Fund due to its multiple class structure. The Fund also pays additional fees for pricing services based on the number of securities held by the Fund. For the year ended September 30, 2004, the effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, 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, in addition to reimbursement for certain out-of-pocket expenses, based on a per-account charge or a minimum of $5,000 annually. The Transfer Agent has voluntarily agreed to waive a portion of its transfer agent fee for the Fund. This arrangement may be revised or discontinued by the Transfer Agent at any time. For the period January 1, 2004 through September 30, 2004, the Transfer Agent waived fees of $19,156 for the Fund. For the period October 1, 2003 through December 31, 2003, the Transfer Agent waived transfer agent fees of $2,518 and $3,880 for Class T and Class Z shares of the Fund, respectively. Effective October 13, 2003, Liberty Funds Services, Inc. was renamed Columbia Funds Services, Inc. Underwriting Discounts, Service and Distribution Fees Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. For the year ended September 30, 2004, the Distributor has retained net underwriting discounts of $17,508 and $3,146 on sales of the Fund's Class A and Class T shares, respectively. For the same period, the Distributor received CDSC fees of $7,698, $428 and $18,721 on Class B, Class C and Class G share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan"), which requires the payment of a monthly distribution and service fee to the Distributor at an annual fee rate as follows: Distribution Fee - --------------------------------------------------------- Class A Class B Class C Class G 0.10% 0.75% 0.75% 0.65% - --------------------------------------------------------- Service Fee - --------------------------------------------------------- Class A Class B Class C Class G 0.25% 0.25% 0.25% 0.50% - --------------------------------------------------------- The Fund does not intend to pay total distribution and service fees in excess of 0.25% and 0.95% annually for Class A and Class G shares of the Fund, respectively. Of the 0.50% service fee for Class G shares, 0.25% relates to shareholder liaison fees and 0.25% relates to administration support fees. 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. Shareholder Services Fees The Fund has adopted a shareholder services plan that permits it to pay for certain services provided to Class T and Class Z shareholders by their financial advisor. Currently, the service plan has not been implemented with respect to the Fund's Class Z shares. The annual service fee may equal up to 0.50% for Class T shares. The Fund does not intend to pay more than 0.30% annually for Class T shareholder service fees. Expense Limits and Fee Reimbursements Effective September 1, 2004, Columbia has voluntarily agreed to waive fees and reimburse certain expenses to the extent that total expenses (exclusive of distribution and service fees, brokerage commissions, interest, taxes 19 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund and extraordinary expenses, if any) exceed 0.80% annually of the Fund's average daily net assets. Effective October 1, 2004, Columbia has contractually agreed to maintain this arrangement until December 31, 2006. 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. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Chief Compliance Officer role. The Fund's fee will not exceed $15,000 per year. 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 September 30, 2004, the Fund paid $1,585 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. Note 5. Portfolio Information For the year ended September 30, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $85,968,145 and $89,555,071, respectively. Note 6. Line of Credit The Fund and other affiliated funds participate in a $350,000,000 credit facility, which is used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to the Fund based on its borrowings. In addition, the Fund has agreed to pay commitment fees on its pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the year ended September 30, 2004, the Fund did not borrow under this arrangement. Note 7. Shares of Beneficial Interest As of September 30, 2004, 38.0% of the outstanding shares of the Fund were held by one shareholder. Subscription and redemption activity of this shareholder may have a material effect on the Fund. Note 8. Disclosure of Significant Risks and Contingencies Legal Proceedings Columbia, the Distributor, and certain of their affiliates (collectively, "The Columbia Group") have received information requests and subpoenas from various regulatory and law enforcement authorities in connection with their investigations of late trading and market timing in mutual funds as well as other industry wide issues. The Columbia Group has not uncovered any instances where Columbia or the Distributor were knowingly involved in late trading of mutual fund shares. On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a civil complaint in the United States District Court for the District of Massachusetts against Columbia and the Distributor, alleging that they had violated certain provisions of the federal securities laws in connection with trading activity in mutual fund shares. Also on February 24, 2004, the New York Attorney General ("NYAG") filed a civil complaint in New York Supreme Court, County of New York against Columbia and the Distributor alleging that Columbia and the Distributor had violated certain New York anti-fraud statutes. If either Columbia or the Distributor is unsuccessful in its defense of these proceedings, it could be barred from serving as an investment advisor or distributor for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could prevent Columbia, the Distributor or any company that is an affiliated person of Columbia and the Distributor from serving as an investment advisor or distributor for any registered investment company, including your fund. Your fund has been informed by Columbia and the Distributor that, if these results occur, they will seek exemptive relief 20 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Dividend Income Fund 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 of its 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 September 30, 2004, Columbia has assumed $9,466 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. Note 9. Comparability of Financial Statements The fiscal year end of the Fund was changed from October 31 to September 30. Note 10. Business Combinations and Mergers As of the end of business on November 22, 2002, the Galaxy Equity Income Fund, previously a fund of the Galaxy Fund, a separate Massachusetts business trust, merged into Liberty Strategic Equity Fund (currently known as Columbia Dividend Income Fund). The Liberty Strategic Equity Fund received a tax-free transfer of assets from Galaxy Equity Income Fund as follows: SHARES NET ASSETS UNREALIZED ISSUED RECEIVED DEPRECIATION1 ----------- ----------- ----------- 20,955,088 $188,556,383 $(19,625,587) NET ASSETS OF NET ASSETS OF NET ASSETS OF GALAXY EQUITY LIBERTY STRATEGIC LIBERTY STRATEGIC INCOME FUND EQUITY FUND EQUITY FUND IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION ----------- ----------- ----------- $30,204,471 $188,556,383 $218,760,854 1 Unrealized depreciation is included in the Net Assets Received amount shown above. Class G, Class T and Class Z shares of the Liberty Strategic Equity Fund were issued in exchange for Retail B, Retail A and Trust shares of Galaxy Equity Income Fund, respectively. Class A, Class B and Class C shares commenced operations on November 25, 2002. The accompanying statement of operations, statement of changes in net assets and financial highlights represent the historical operations of the Galaxy Strategic Equity Fund for periods prior to November 22, 2002. 21 Financial Highlights - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Year Ended Period Ended September 30, September 30, Class A Shares 2004 (a) 2003 (b)(c) =================================================================================================== Net Asset Value, Beginning of Period $ 9.26 $ 9.01 - --------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (d) 0.18 0.11 Net realized and unrealized gain on investments 1.53 0.25 -------- -------- Total from Investment Operations 1.71 0.36 - --------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.17) (0.11) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 10.80 $ 9.26 Total return (e)(f) 18.60% 4.02%(g) - --------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (h) 1.36% 1.42%(i) Net investment income (h) 1.71% 1.38%(i) Waiver/reimbursement 0.06% --%(i)(j) Portfolio turnover rate 44% 33%(g) Net assets, end of period (000's) $ 7,319 $ 564 - --------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class A shares were initially offered on November 25, 2002. 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 and no initial sales charge or contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates not waived 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. (j) Rounds to less than 0.01%. 22 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Year Ended Period Ended September 30, September 30, Class B Shares 2004 (a) 2003 (b)(c) =================================================================================================== Net Asset Value, Beginning of Period $ 9.08 $ 8.82 - --------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (d) 0.10 0.05 Net realized and unrealized gain on investments 1.50 0.26 -------- -------- Total from Investment Operations 1.60 0.31 - --------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.09) (0.05) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 10.59 $ 9.08 Total return (e)(f) 17.69% 3.51%(g) - --------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (h) 2.11% 2.34%(i) Net investment income (h) 0.94% 0.47%(i) Waiver/reimbursement 0.06% --%(i)(j) Portfolio turnover rate 44% 33%(g) Net assets, end of period (000's) $ 8,808 $ 1,136 - --------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class B shares were initially offered on November 25, 2002. 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 and no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates not waived 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. (j) Rounds to less than 0.01%. 23 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Year Ended Period Ended September 30, September 30, Class C Shares 2004 (a) 2003 (b)(c) =================================================================================================== Net Asset Value, Beginning of Period $ 9.07 $ 8.82 - --------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (d) 0.10 0.07 Net realized and unrealized gain on investments 1.50 0.23 -------- -------- Total from Investment Operations 1.60 0.30 - --------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.09) (0.05) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 10.58 $ 9.07 Total return (e)(f) 17.70% 3.41%(g) - --------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (h) 2.11% 2.18%(i) Net investment income (h) 0.94% 0.95%(i) Waiver/reimbursement 0.06% --%(i)(j) Portfolio turnover rate 44% 33%(g) Net assets, end of period (000's) $ 2,027 $ 152 - --------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 25, 2002. 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 and no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates not waived 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. (j) Rounds to less than 0.01%. 24 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Year Period Ended Ended September 30, September 30, Year Ended October 31, Class G Shares 2004 (a) 2003 (b)(c) 2002 2001 2000 1999 ==================================================================================================================================== Net Asset Value, Beginning of Period $ 9.07 $ 8.36 $ 9.87 $ 10.37 $ 9.84 $ 9.61 - ------------------------------------------------------------------------------------------------------------------------------------ Income from Investment Operations: Net investment income (loss) 0.10(d) 0.05(d) (0.07)(d) (0.06)(d) (0.04) (0.02)(d) Net realized and unrealized gain (loss) on investments 1.50 0.71 (1.05)(e) (0.11) 1.75 0.26 ------------ ------------ ------------ ------------ ------------ ------------ Total from Investment Operations 1.60 0.76 (1.12) (0.17) 1.71 0.24 - ------------------------------------------------------------------------------------------------------------------------------------ Less Distributions Declared to Shareholders: From net investment income (0.09) (0.05) -- -- --(f) -- From net realized gains -- -- (0.39) (0.33) (1.18) (0.01) ------------ ------------ ------------ ------------ ------------ ------------ Total Distributions Declared to Shareholders (0.09) (0.05) (0.39) (0.33) (1.18) (0.01) - ------------------------------------------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $ 10.58 $ 9.07 $ 8.36 $ 9.87 $ 10.37 $ 9.84 Total return (g)(h) 17.71% 9.08%(i) (12.16)% (1.71)% 20.33% 2.50% - ------------------------------------------------------------------------------------------------------------------------------------ Ratios to Average Net Assets/Supplemental Data: Expenses (j) 2.14% 2.21%(k) 2.17% 2.02% 1.95% 1.84% Net investment income (loss) (j) 0.97% 0.71%(k) (0.72)% (0.53)% (0.35)% (0.24)% Waiver/reimbursement 0.03% --%(k)(l) 0.25% 0.24% 0.40% 0.56% Portfolio turnover rate 44% 33%(i) 65%(m) 81% 81% 79% Net assets, end of period (000's) $ 5,995 $ 9,650 $ 2,093 $ 2,286 $ 1,555 $ 1,348 - ------------------------------------------------------------------------------------------------------------------------------------ (a) On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, Galaxy Strategic Equity Fund, Retail B shares were redesignated Liberty Strategic Equity Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund. (f) Rounds to less than $0.01 per share. (g) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. (m) Portfolio turnover rate excludes securities delivered from processing a redemption-in-kind. 25 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Year Period Ended Ended September 30, September 30, Year Ended October 31, Class T Shares 2004 (a) 2003 (b)(c) 2002 2001 2000 1999 =================================================================================================================================== Net Asset Value, Beginning of Period $ 9.26 $ 8.54 $ 10.02 $ 10.46 $ 9.89 $ 9.62 - ----------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income 0.17(d) 0.11(d) 0.01(d) 0.03(d) 0.04 0.04(d) Net realized and unrealized gain (loss) on investments 1.54 0.73 (1.08)(e) (0.11) 1.75 0.27 ------------ ------------ ------------ ------------ ------------ ------------ Total from Investment Operations 1.71 0.84 (1.07) (0.08) 1.79 0.31 - ----------------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.17) (0.12) (0.02) (0.03) (0.04) (0.03) From net realized gains -- -- (0.39) (0.33) (1.18) (0.01) ------------ ------------ ------------ ------------ ------------ ------------ Total Distributions Declared to Shareholders (0.17) (0.12) (0.41) (0.36) (1.22) (0.04) - ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 10.80 $ 9.26 $ 8.54 $ 10.02 $ 10.46 $ 9.89 Total return (f)(g) 18.50% 9.86%(h) (11.50)% (0.83)% 21.09% 3.25% - ----------------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (i) 1.45% 1.49%(j) 1.40% 1.24% 1.20% 1.19% Net investment income (i) 1.64% 1.42%(j) 0.05% 0.25% 0.40% 0.41% Waiver/reimbursement 0.04% 0.01%(j) 0.29% 0.26% 0.40% 0.44% Portfolio turnover rate 44% 33%(h) 65%(k) 81% 81% 79% Net assets, end of period (000's) $100,803 $96,638 $ 6,578 $ 8,400 $ 8,505 $ 8,229 - ----------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, Galaxy Strategic Equity Fund, Retail A shares were redesignated Liberty Strategic Equity Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Portfolio turnover rate excludes securities delivered from processing a redemption-in-kind. 26 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Year Period Ended Ended September 30, September 30, Year Ended October 31, Class Z Shares 2004 (a) 2003 (b)(c) 2002 2001 2000 1999 =================================================================================================================================== Net Asset Value, Beginning of Period $ 9.26 $ 8.56 $ 10.03 $ 10.48 $ 9.90 $ 9.63 - ----------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income 0.21(d) 0.15(d) 0.06(d) 0.08(d) 0.08 0.09(d) Net realized and unrealized gain (loss) on investments 1.53 0.72 (1.07)(e) (0.12) 1.76 0.27 ------------ ------------ ------------ ------------ ------------ ------------ Total from Investment Operations 1.74 0.87 (1.01) (0.04) 1.84 0.36 - ----------------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.20) (0.17) (0.07) (0.08) (0.08) (0.08) From net realized gains -- -- (0.39) (0.33) (1.18) (0.01) ------------ ------------ ------------ ------------ ------------ ------------ Total Distributions Declared to Shareholders (0.20) (0.17) (0.46) (0.41) (1.26) (0.09) - ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 10.80 $ 9.26 $ 8.56 $ 10.03 $ 10.48 $ 9.90 Total return (f)(g) 18.93% 10.22%(h) (11.07)% (0.43)% 21.69% 3.64% - ----------------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (i) 1.10% 1.02%(j) 0.82% 0.75% 0.78% 0.80% Net investment income (i) 1.98% 1.89%(j) 0.63% 0.74% 0.83% 0.80% Waiver/reimbursement 0.05% 0.02%(j) 0.24% 0.21% 0.20% 0.20% Portfolio turnover rate 44% 33%(h) 65%(k) 81% 81% 79% Net assets, end of period (000's) $90,269 $73,276 $19,896 $102,909 $93,558 $71,063 - ----------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, Galaxy Strategic Equity Fund, Trust shares were redesignated Liberty Strategic Equity Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Portfolio turnover rate excludes securities delivered from processing a redemption-in-kind. 27 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- Columbia Dividend Income Fund To the Trustees of Columbia Funds Trust XI and the Shareholders of Columbia Dividend 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 Dividend Income Fund (the "Fund") (a series of Columbia Funds Trust XI) at September 30, 2004, and the results of its operations, the changes in its net assets and the financial highlights for the year then ended, 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 audit. We conducted our audit 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 audit, which included confirmation of securities at September 30, 2004 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The financial statements of the Fund as of September 30, 2003 and for the five fiscal periods ending September 30, 2003 were audited by other independent accountants whose report dated November 14, 2003 expressed an unqualified opinion on those statements. PricewaterhouseCoopers LLP Boston, Massachusetts November 15, 2004 28 UNAUDITED INFORMATION - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Federal Income Tax Information For non-corporate shareholders, 100.00%, 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 October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 100.00% of the ordinary income distributed by the Fund for the year ended September 30, 2004, qualifies for the corporate dividends received deduction. 29 TRUSTEES - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were appointed to the Board of the 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 Trustrees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. Name, address and age, Position with funds, Year first elected or Principal occupation(s) during past five years, Number of portfolios in Columbia Funds appointed to office(1) Complex overseen by trustee/director, Other directorships held DISINTERESTED TRUSTEES DOUGLAS A. HACKER (Age 49) Executive Vice President - Strategy of United Airlines (airline) since December 2002 (formerly P.O. Box 66100 President of UAL Loyalty Services (airline) from September 2001 to December 2002; Executive Vice Chicago, IL 60666 President and Chief Financial Officer of United Airlines from March 1999 to September 2001; Senior Trustee (since 1996) Vice President - Finance from March 1993 to July 1999). Oversees 118, Orbitz, Inc. (on-line travel company) ------------------------------------------------------------------------------------------------------ JANET LANGFORD KELLY Professor of Law, Northwestern University, since September 2004; Private Investor since March (Age 46) Adjunct 2004 (formerly Chief Administrative Officer and Senior Vice President, Kmart Holding Corporation 9534 W. Gull Lake Drive (consumer goods), from September 2003 to March 2004; Executive Vice President-Corporate Richland, MI 49083-8530 Development and Administration, General Counsel and Secretary, Kellogg Company (food Trustee (since 1996) 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, U.S. Plywood 10701 Charleston Drive Corporation (building products manufacturer)). Oversees 1203, None Vero Beach, FL 32963 Trustee (since 1995) ------------------------------------------------------------------------------------------------------ CHARLES R. NELSON (Age 62) Professor of Economics, University of Washington, since January 1976; Ford and Louisa Van Voorhis Department of Economics Professor of Political Economy, University of Washington, since September 1993 (formerly Director, University of Washington Institute for Economic Research, University of Washington from September 2001 to June 2003) Adjunct Seattle, WA 98195 Professor of Statistics, University of Washington, since September 1980; Associate Editor, Journal of Trustee (since 1981) 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 (formerly Dean, 84 College Road Boston College School of Management from September 1977 to September 1999). Oversees 121(3, 4), Chestnut Hill, MA 02467-3838 Saucony, Inc. (athletic footwear) Trustee (since 1985) ------------------------------------------------------------------------------------------------------ PATRICK J. SIMPSON (Age 60) 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) 30 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Name, address and age, Position with funds, Year first elected or Principal occupation(s) during past five years, Number of portfolios in Columbia Funds appointed to office(1) Complex overseen by trustee/director, Other directorships held DISINTERESTED TRUSTEES THOMAS E. STITZEL (Age 68) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, College of Business, 2208 Tawny Woods Place Boise State University); Chartered Financial Analyst. Oversees 118, None. Boise, ID 83706 Trustee (since 1998) ------------------------------------------------------------------------------------------------------ THOMAS C. THEOBALD (Age 67) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) since September 2004 303 W. Madison (formerly Managing Director, William Blair Capital Partners (private equity investing) from September Suite 2500 1994 to September 2004). Oversees 118, Anixter International (network support equipment distributor); Chicago, IL 60606 Ventas, Inc. (real estate investment trust); Jones Lang LaSalle (real estate management services) and Trustee and Chairman Ambac Financial Group (financial guaranty insurance) of the Board5 (since 1996) ------------------------------------------------------------------------------------------------------ ANNE-LEE VERVILLE (Age 59) Retired since 1997 (formerly General Manager, Global Education Industry, IBM Corporation (computer 359 Stickney Hill Road and technology) from 1994 to 1997). Oversees 1194, Chairman of the Board of Directors, Enesco Group, Hopkinton, NH 03229 Inc. (designer, importer and distributor of giftware and collectibles) Trustee (since 1998) ------------------------------------------------------------------------------------------------------ RICHARD L. WOOLWORTH (Age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, The Regence Group 100 S.W. Market Street #1500 (regional health insurer); Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon; Portland, OR 97207 Certified Public Accountant, Arthur Young & Company). Oversees 118, Northwest Natural Gas Co. Trustee (since 1991) (natural gas service provider) ------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEE WILLIAM E. MAYER2 (Age 64) Managing Partner, Park Avenue Equity Partners (private equity) since February 1999 (formerly Founding 399 Park Avenue Partner, Development Capital LLC from November 1996 to February 1999). Oversees 1203, Lee Suite 3204 Enterprises (print media), WR Hambrecht + Co. (financial service provider); First Health (healthcare); New York, NY 10022 Reader's Digest (publishing); OPENFIELD Solutions (retail industry technology provider) Trustee (since 1994) ------------------------------------------------------------------------------------------------------ 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 also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. 4 Mr. Neuhauser and Ms. Verville also serve as disinterested directors of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. 5 Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. 31 OFFICERS - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Name, address and age, Position with Columbia Funds, Year first elected or appointed to office Principal occupation(s) during past five years CHRISTOPHER L. WILSON (Age 47) President of the Columbia Funds since October 2004 (formerly President and Chief Executive Officer, One Financial Center CDC IXIS Asset Management Services, Inc. from September 1998 to August 2004). Boston, MA 02111 President (since 2004) ----------------------------------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (Age 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December 2000; Vice President One Financial Center of the Advisor since April 2003 (formerly President of the Columbia Funds from February 2004 to Boston, MA 02111 October 2004; Chief Accounting Officer and Controller of the Liberty Funds and of the Liberty Treasurer (since 2000) 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 Management Associates, Inc. from February 1998 to October 2000). ----------------------------------------------------------------------------------------------------- MARY JOAN HOENE (Age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds since August 2004; Chief 40 West 57th Street Compliance Officer of the Liberty All-Star Funds since August 2004 (formerly Partner, Carter, Ledyard New York, NY 10019 & Milburn LLP from January 2001 to August 2004; Counsel, Carter, Ledyard & Milburn LLP from Senior Vice President and November 1999 to December 2000; Vice President and Counsel, Equitable Life Assurance Society of the Chief Compliance Officer United States from April 1998 to November 1999,). (since 2004) ----------------------------------------------------------------------------------------------------- MICHAEL G. CLARKE (Age 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star Funds since October 2004 One Financial Center (formerly Controller of the Columbia Funds and of the Liberty All-Star Funds from May 2004 to Boston, MA 02111 October 2004; Assistant Treasurer from June, 2002 to May 2004; Vice President, Product Strategy & Chief Accounting Officer Development of the Liberty Funds Group from February 2001 to June 2002; Assistant Treasurer of the (since 2004) Liberty Funds and of the Liberty All-Star Funds from August 1999 to February 2001; Audit Manager, Deloitte & Touche LLP from May 1997 to August 1999). ----------------------------------------------------------------------------------------------------- JEFFREY R. COLEMAN (Age 34) Controller of the Columbia Funds and of the Liberty All-Star Funds since October 2004 (formerly Vice One Financial Center President of CDC IXIS Asset Management Services, Inc. and Deputy Treasurer of the CDC Nvest Funds Boston, MA 02111 and Loomis Sayles Funds from February 2003 to September 2004; Assistant Vice President of CDC IXIS Controller (since 2004) Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to February 2003; Tax Manager of PFPC, Inc. from November 1996 to August 2000). ----------------------------------------------------------------------------------------------------- DAVID A. ROZENSON (Age 50) Secretary of the Columbia Funds and of the Liberty All-Star Funds since December 2003; Senior One Financial Center Counsel, Bank of America Corporation (formerly FleetBoston Financial Corporation) since January 1996; Boston, MA 02111 Associate General Counsel, Columbia Management Group since November 2002. Secretary (since 2003) ----------------------------------------------------------------------------------------------------- 32 Important Information About This Report - -------------------------------------------------------------------------------- Columbia Dividend 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 fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia Dividend 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 fund and with the most recent copy of the Columbia Dividend Income Fund 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 800-368-0346. Please note that on March 1, 2004, Ernst & Young LLP ("E&Y") resigned as the fund's independent registered public accounting firm. During the two most recent fiscal years, E&Y's audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. Further, in connection with its audits for the two most recent fiscal years and through March 1, 2004, there were no disagreements between the fund and E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of E&Y would have caused it to make reference to the disagreement in its report on the financial statements for such years. Effective March 1, 2004, PricewaterhouseCoopers LLP was appointed by the audit committee of the Board of Trustees as the independent registered public accounting firm of the fund for the fiscal year ended September 30, 2004. 33 [eDelivery LOGO] Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia Dividend Income Fund ANNUAL REPORT, SEPTEMBER 30, 2004 PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [LOGO]: COLUMBIA FUNDS A MEMBER OF COLUMBIA MANAGEMENT GROUP (C) 2004 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 800.345.6611 727-02/970S-0904 (11/04) 04/3397 [GRAPHIC] COLUMBIA THEMATIC EQUITY FUNDS ANNUAL REPORT SEPTEMBER 30, 2004 [COLUMBIAFUNDS(R) LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP <Page> TABLE OF CONTENTS <Table> Economic Update 1 Columbia Global Thematic Equity Fund Performance Information 2 Understanding Your Expenses 3 Portfolio Managers' Report 4 Columbia European Thematic Equity Fund Performance Information 6 Understanding Your Expenses 7 Portfolio Managers' Report 8 Financial Statements 10 Investment Portfolios 11 Statements of Assets and Liabilities 18 Statements of Operations 19 Statements of Changes in Net Assets 20 Notes to Financial Statements 21 Financial Highlights 28 Report of Independent Registered Public Accounting Firm 30 Unaudited Information 31 Trustees 32 Officers 34 Important Information About This Report 35 Columbia Funds 36 </Table> Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. NOT FDIC MAY LOSE VALUE INSURED ------------------- NO BANK GUARANTEE PRESIDENT'S MESSAGE COLUMBIA THEMATIC EQUITY FUNDS DEAR SHAREHOLDER: Your fund's legal and management team here at Columbia Funds have been working hard to strengthen our mutual fund services operation and to ensure that all operations and processes comply with legal and regulatory standards. In the coming months, we will continue to monitor the oversight enhancements recently put in place by your fund's Board of Trustees and make every effort to protect the interests of all our shareholders in everything we do. In our last report, we announced that your fund's advisor, Columbia Management Advisors, Inc., and your fund's distributor, Columbia Funds Distributor, Inc., had reached an agreement with the Securities and Exchange Commission and the New York Attorney General to settle charges involving market timing in some of our mutual funds. We want to reassure you that the settlement and all associated legal fees will be paid by Columbia Management, not by the affected funds or their shareholders. Recently the Securities and Exchange Commission has adopted new rules regarding mutual fund governance. We think it is important for you to know that Columbia Management complied with the majority of these rules well before they were adopted. Your fund's Board of Trustees has taken the following important steps to strengthen its capacity to oversee your fund and to comply with SEC rules. - - THE BOARD OF TRUSTEES APPOINTED MARY JOAN HOENE AS CHIEF COMPLIANCE OFFICER OF COLUMBIA FUNDS. IN THIS ROLE, MS. HOENE WILL REPORT DIRECTLY TO THE BOARD OF TRUSTEES AND WILL WORK WITH THE BOARD OF TRUSTEES AS WELL AS THE SENIOR LEADERSHIP OF COLUMBIA MANAGEMENT, THE INVESTMENT MANAGEMENT ARM OF BANK OF AMERICA, AND WITH BANK OF AMERICA'S PRINCIPAL COMPLIANCE EXECUTIVES. SHE WILL FOCUS ON THE OVERALL COMPLIANCE PROGRAM OF THE FUNDS AND THE RESPONSIBILITY AND PERFORMANCE OF THE FUND'S SERVICE PROVIDERS. PRIOR TO HER APPOINTMENT, MS. HOENE WAS A PARTNER IN THE LAW FIRM OF CARTER, LEDYARD & MILBURN, LLP. PREVIOUSLY SHE ALSO SERVED AS ASSOCIATE DIRECTOR AND DEPUTY DIRECTOR FOR THE SECURITIES AND EXCHANGE COMMISSION DIVISION OF INVESTMENT MANAGEMENT. AS AN ACTIVE ADVISOR, MS. HOENE HAS HELPED SEVERAL FUND BOARDS DEVELOP INDEPENDENT BOARD PRACTICES. THE BOARD IS PLEASED TO HAVE MS. HOENE, WITH HER BROAD AND EXTENSIVE EXPERIENCE, IN THIS IMPORTANT NEW POSITION. - - THE BOARD OF TRUSTEES HAS ESTABLISHED OPERATIONAL GUIDELINES THAT RESULT IN STRONGER, MORE VIGILANT TRUSTEESHIP ACROSS THE ENTIRE COLUMBIA MANAGEMENT ORGANIZATION. BOARD COMMITTEES HAVE BEEN ESTABLISHED TO OVERSEE PRODUCTS BY FUND CATEGORY, ALLOWING FOR GREATER SPECIALIZATION AMONG BOARD TRUSTEES. SHAREHOLDERS WILL ELECT BOARD MEMBERS EVERY FIVE YEARS, BEGINNING IN 2005. - - IN ADDITION TO ENHANCEMENTS TO OVERSIGHT WITHIN COLUMBIA MANAGEMENT, OUR PARENT COMPANY -- BANK OF AMERICA -- HAS ALSO INCREASED THE ROLE THAT SUCH PROFESSIONALS PLAY WITHIN THE BROADER ORGANIZATION. A CHIEF COMPLIANCE OFFICER HAS BEEN NAMED TO REPORT DIRECTLY TO KEN LEWIS, BANK OF AMERICA'S CHIEF EXECUTIVE OFFICER. BANK OF AMERICA HAS ALSO ADOPTED A CORPORATE CODE OF ETHICS COMMITTEE, AN INTERNAL COMPLIANCE CONTROLS COMMITTEE AND A REGULATORY IMPLEMENTATION GROUP TO ENSURE FULL ALIGNMENT AND EXECUTION OF REMEDIAL ACTIONS AND BEST PRACTICES ACROSS THE COMPANY. In the pages that follow, you'll find a discussion of the economic environment during the period, followed by a detailed report from the fund's manager on key factors that influenced performance. This report is rich in information, and you should discuss it with your financial advisor if you have questions. We are committed to providing quality products and services to our shareholders, strengthening your confidence in us, and working hard to help you achieve financial success. It is a privilege to play a role in your financial future, and we value your business. Thank you for choosing Columbia Management. Sincerely, /s/ Christopher Wilson Christopher Wilson HEAD OF MUTUAL FUNDS, COLUMBIA MANAGEMENT Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible for the day-to-day delivery of mutual fund services to the firm's investors. With the exception of distribution, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. Chris serves as Columbia Management's chief liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. <Page> ECONOMIC UPDATE COLUMBIA THEMATIC EQUITY FUNDS The United States led a worldwide economic recovery that picked up steam in 2003. But it also led a slowdown in economic growth within developed markets as the 12-month period that began October 1, 2003, and ended September 30, 2004, wore on. The US economy hit a soft patch mid year, as GDP growth slowed to 3.3%. Europe's economies grew at less than 2.0%, making it the weakest economic region in the industrialized world. Growth in the United Kingdom was in line with US growth. JAPAN'S RECOVERY REMAINS ON TRACK In Japan, a robust economic recovery lost some steam midway through the year. Growth slowed from 6.5% in the first half to just under 4.0% in the second half. However, the country's economic recovery appears to be broadening beyond the export-driven big companies. Smaller companies that cater to domestic demand have gained ground and helped spur a rise in employment. EMERGING MARKETS WERE GROWTH LEADERS In emerging markets, double-digit economic growth in the first half of the period reflected both high demand for exports and rising domestic economic activity. Some of these world growth leaders experienced slower growth in the second half. And while restrictive monetary policy, especially in China, could restrain growth in 2005, there's no evidence of a sharp fall-off in emerging market economic growth. In fact, in Southeast Asian economies, exports have continued to trend higher. As the manufacturing center of the global economy, Southeast Asia is often considered a relatively reliable indicator of global economic growth. STOCK MARKETS RESTRAINED BY EXTERNAL EVENTS In an environment of growth and relative stability, most of the world's stock markets reported positive returns during this reporting period. The S&P 500 Index, a broad measure of US stock market activity, gained 13.87% for the year. The MSCI EAFE Index did even better, returning 22.08%. However, most of those gains were generated during the first three months of the reporting period. As a cloud of uncertainty descended over the US stock markets, the result of a range of external factors, markets outside the United States were also dragged down. Soaring oil prices, hurricane activity and a disappointing job market put a crimp on consumer spending in the United States, Europe and Japan. Higher commodity prices are beginning to affect corporate profitability and the number of global companies issuing profit warnings has increased. In the United States, uncertainty about the outcome of the forthcoming presidential election and ongoing concerns about the war in Iraq and terrorist threats helped sideline investors. By the end of the reporting period, stock markets in the United States and Japan were flat to down in 2004. In Europe, most markets have eked out modest gains. The markets of Sweden, Denmark and Norway were standouts, with double-digit performance. Selected emerging stock markets, such as the Czech Republic, Egypt and Hungary, continued to rise strongly through the end of the period. LOOKING AHEAD Strong global trading patterns suggest that the world's economies are still on track. Even if energy prices remain high, the pace of economic expansion is more likely to drift lower rather than descend sharply. However, until the uncertainties plaguing the US markets begin to dissipate, investor fears--rather than the outlook for economic prosperity--are likely to hold sway over global stock markets. [SIDENOTE] SUMMARY: FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004 - - ECONOMIC DEMAND WAS SOLID, BUT IT SLOWED BETWEEN THE FIRST AND SECOND HALF OF THE REPORTING PERIOD. - - BOTH THE S&P 500 INDEX AND THE MSCI EAFE INDEX DELIVERED DOUBLE-DIGIT RETURNS, BUT MOST WERE ACCUMULATED IN THE FIRST HALF OF THE PERIOD. [CHART] <Table> S&P INDEX 13.87% MSCI INDEX 22.08% </Table> The S&P 500 Index is an unmanaged index that tracks the performance of the 500 widely held, large-capitalization US stocks. The Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index is free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US and Canada. 1 <Page> PERFORMANCE INFORMATION COLUMBIA GLOBAL THEMATIC EQUITY FUND [CHART] VALUE OF A $10,000 INVESTMENT 01/02/01 - 09/30/04 <Table> <Caption> CLASS Z SHARES MSCI WORLD INDEX 1/1/2001 $ 10,000 $ 10,000 1/31/2001 $ 10,424 $ 10,193 2/28/2001 $ 9,556 $ 9,331 3/31/2001 $ 8,737 $ 8,716 4/30/2001 $ 9,467 $ 9,358 5/31/2001 $ 9,338 $ 9,236 6/30/2001 $ 9,042 $ 8,946 7/31/2001 $ 8,766 $ 8,826 8/31/2001 $ 8,302 $ 8,401 9/30/2001 $ 7,493 $ 7,660 10/31/2001 $ 7,680 $ 7,806 11/30/2001 $ 8,174 $ 8,267 12/31/2001 $ 8,351 $ 8,318 1/31/2002 $ 7,887 $ 8,065 2/28/2002 $ 7,738 $ 7,994 3/31/2002 $ 8,064 $ 8,363 4/30/2002 $ 7,634 $ 8,064 5/31/2002 $ 7,564 $ 8,077 6/30/2002 $ 7,169 $ 7,586 7/31/2002 $ 6,547 $ 6,946 8/31/2002 $ 6,478 $ 6,958 9/30/2002 $ 5,757 $ 6,192 10/31/2002 $ 6,290 $ 6,648 11/30/2002 $ 6,566 $ 7,006 12/31/2002 $ 6,211 $ 6,665 1/31/2003 $ 5,955 $ 6,462 2/28/2003 $ 5,787 $ 6,349 3/31/2003 $ 5,728 $ 6,328 4/30/2003 $ 6,162 $ 6,889 5/31/2003 $ 6,439 $ 7,280 6/30/2003 $ 6,617 $ 7,406 7/31/2003 $ 6,844 $ 7,555 8/31/2003 $ 6,973 $ 7,718 9/30/2003 $ 6,894 $ 7,764 10/31/2003 $ 7,387 $ 8,224 11/30/2003 $ 7,397 $ 8,348 12/31/2003 $ 7,793 $ 8,871 1/31/2004 $ 7,963 $ 9,013 2/29/2004 $ 8,103 $ 9,164 3/31/2004 $ 8,033 $ 9,103 4/30/2004 $ 7,783 $ 8,917 5/31/2004 $ 7,783 $ 8,998 6/30/2004 $ 7,873 $ 9,182 7/31/2004 $ 7,503 $ 8,883 8/31/2004 $ 7,554 $ 8,922 9/30/2004 $ 7,713 $ 9,090 </Table> The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Morgan Stanley Capital International (MSCI) World Index is an unmanaged index that tracks the performance of global stocks. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Index performance is from January 2, 2001. AVERAGE ANNUAL TOTAL RETURN AS OF 09/30/04 (%) <Table> <Caption> SHARE CLASS Z - -------------------------------- INCEPTION 01/02/01 - -------------------------------- 1-year 11.89 Life (01/02/01) -6.69 </Table> All results shown assume reinvestment of distributions. Performance results reflect any voluntary waivers or reimbursements of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class Z shares are sold only at net asset value with no Rule 12b-1 fees. Class Z shares may be purchased by, among others: any shareholder (and family members) of a fund distributed by Columbia Funds Distributor, Inc. (CFDI) who (i) hold class Z shares, (ii) who holds class A shares that were obtained by exchanging with class Z shares, or (iii) who purchased no-load shares of funds merged with funds distributed by CFDI; clients of fee-based broker-dealers or registered investment advisors that recommend the purchase of fund shares; any trustee or director (and family members of a shareholder or any person listed on an account registration for the account of any shareholder) of any fund distributed by CFDI; insurance companies, trust companies, banks, endowments, investment companies, and foundations; and retirement plans with assets of at least $5 million. Investment minimums vary. For further information, please consult the fund prospectus. [SIDENOTE] PERFORMANCE OF A $10,000 INVESTMENT 01/02/01 - 09/30/04 ($) <Table> Class Z 7,713 </Table> Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. 2 <Page> UNDERSTANDING YOUR EXPENSES COLUMBIA GLOBAL THEMATIC EQUITY 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 continuing costs, which generally include investment advisory 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 this cost with the continuing 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 <Table> <Caption> ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - --------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - --------------------------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 960.50 1,017.00 7.84 8.07 1.60 </Table> 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 continuing 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 will 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 fund companies, 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. [SIDENOTE] 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: - - 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 - - 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 THE 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 3 <Page> PORTFOLIO MANAGERS' REPORT COLUMBIA GLOBAL THEMATIC EQUITY FUND For the 12-month period ended September 30, 2004, class Z shares of Columbia Global Thematic Equity Fund returned 11.89%. Fund performance was below that of its benchmark, the MSCI World Index, which returned 17.10%. The fund benefited from surging prices in energy and materials stocks. However, those gains were partially offset by mixed returns from large positions in financials and information technology, and poor performance in the consumer staples area. ECONOMIC GROWTH MAY HAVE PEAKED The first half of the year was characterized by broad-based global economic growth, as demand for raw materials in China and India powered equity markets. While the markets remained in positive territory for the rest of the period, stocks gave back some of their earlier gains over the summer as interest rates increased and economic data came in weaker than expected. Tight supplies of oil and natural gas and surging demand combined to raise oil prices to record levels. Higher prices helped energy producers, but they raised costs for consumer-oriented companies and dampened their returns. DIVERSIFICATION AND GLOBAL DATA TRAFFIC PAID OFF Early in the year, we made a strategic decision to increase energy exposure as part of the DIVERSIFICATION theme. This worked out well for the fund as US oil driller National-Oilwell gained more than 80% and Canadian Oil company Suncor Energy rose 72%. Suncor's profits rose as a result of higher commodity prices. The company also made improvements in its production processes that lowered its cost per barrel. Another Canadian company, Potash, did well for the DIVERSIFICATION theme. Increased land cultivation in developing countries helped the fertilizer manufacturer gain 80% during the year. In the GLOBAL DATA TRAFFIC theme, US stock Qualcomm appreciated dramatically. We sold it when it reached our price target. We believe the risk/reward relationship is better in other telecom-related technology companies such as Ericsson, which gained 112% during the period. DISAPPOINTING RESULTS FROM BANKS, SOFTWARE AND STAPLES Financial stocks accounted for 20% of the fund's assets, but very little in total return. Kookmin Bank (DEREGULATION/CROSS SELLING) declined on worries that the delayed recovery of Korea's domestic economy would result in raised delinquency rates on loans to small and mid-size businesses. Nomura Holdings (SAVING FOR RETIREMENT) also lost ground as investors fear that deregulation of the Japanese securities industry would hurt their business. In the United States, software company BEA Systems (STRATEGIC INFORMATION) lost ground when it experienced difficulty meeting sales forecasts. [SIDENOTE] SUMMARY - - FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS Z SHARES RETURNED 11.89%. - - A STRONG GLOBAL STOCK MARKET AND RECORD-HIGH COMMODITY PRICES HELPED THE FUND AND ITS BENCHMARK ACHIEVE DOUBLE-DIGIT RETURNS. - - ROBUST RETURNS FROM THE ENERGY AND MATERIALS SECTORS HELPED PERFORMANCE. HOWEVER PERFORMANCE WAS RESTRAINED BY POOR RESULTS FROM CONSUMER STAPLES HOLDINGS. [CHART] <Table> CLASS Z SHARES 11.89% MSCI WORLD INDEX 17.10% </Table> OBJECTIVE Seeks long-term growth of capital TOTAL NET ASSETS $0.4 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) <Table> Class Z 7.72 </Table> DISTRIBUTIONS DECLARED PER SHARE 10/01/03 - 09/30/04 ($) <Table> Class Z 0.09 </Table> The MSCI World Index is an unmanaged index that tracks the performance of global stocks. 4 <Page> INCREASED GLOBAL EXPOSURE During the period, we reshaped the fund's holdings, particularly the European holdings, to gain greater global exposure. We eliminated our positions in Kingfisher and Signet Group because of their exposure to a weakening European consumer market. We added Siemens (CONVERGENCE OF COMMUNICATION AND MEDIA), one of the largest German industrial companies, which we expect to benefit from an improvement in the technology cycle in the United States and Asia. The stock was trading at the lower end of its historical range, and we believe it offers attractive return potential. STILL ROOM FOR GROWTH Although business spending in the United States picked up, consumer spending slowed. Leading indicators point to lower US economic growth in 2005, particularly if oil prices remain at record highs. We believe that the fate of the US economy is likely to be a swing factor for the rest of the world in the coming year because a large portion of Japanese and European economic growth depends on exports to the United States. As a result, we plan to continue to focus our stock selection on high quality companies with a global profile, which we believe have the potential to do well in this environment. /s/ [ILLEGIBLE] Leon Pedersen is the lead manager of Columbia Global Thematic Equity Fund. The fund is managed by a 24-member portfolio team at Nordea Investment Management North America, Inc. No single individual at Nordea is responsible for making investment decisions for the fund. Nordea is the subadvisor to the fund. The fund's advisor is Columbia Management Advisors, Inc. An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. There are specific risks involved when investing in foreign stocks, such as currency exchange rate fluctuations, economic change, instability of emerging countries and political developments. PLEASE NOTE: On October 13, 2004, the fund's Board of Trustees voted to liquidate the fund. The fund was closed to new investors as of the close of business on November 10, 2004. The fund is scheduled for liquidation on or about December 10, 2004. The fund will continue to accept some automatic purchases and certain retirement contributions until the fund is liquidated. [SIDENOTE] SECTORS AS OF 09/30/04 (%) <Table> Financials 20.4 Information technology 19.0 Consumer discretionary 13.6 Industrials 13.3 Health care 10.5 Energy 8.3 Materials 5.8 Telecommunication services 5.6 Consumer staples 3.5 </Table> TOP 5 COUNTRIES AS OF 09/30/04 (%) <Table> United States 41.8 Japan 14.8 United Kingdom 7.6 Canada 6.9 Switzerland 4.9 </Table> TOP 10 HOLDINGS AS OF 09/30/04 (%) <Table> Samsung Electronics Co., Ltd., GDR 3.8 Alltel Corp. 3.6 Applied Materials, Inc. 3.2 Microsoft Corp. 3.1 Nomura Holdings, Inc. 3.0 Pfizer, Inc. 3.0 General Electric Co. 2.9 Mitsubishi Corp. 2.6 GlaxoSmithKline PLC 2.5 Hoya Corp. 2.5 </Table> HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) <Table> National-Oilwell, Inc. 0.4 Suncor Energy, Inc. 2.3 Potash Corp. of Saskatchewan, Inc. 1.5 Telefonaktiebolaget LM Ericsson, Class B 1.1 Kookmin Bank, ADR 0.8 Nomura Holdings, Inc. 3.0 BEA Systems, Inc. 1.0 Siemens AG, Registered Shares 0.7 </Table> Your fund is actively managed and the composition of its portfolio will change over time. Sector breakdown and countries are calculated as a percentage of total investments. Portfolio holdings are calculated as a percentage of net assets. 5 <Page> PERFORMANCE INFORMATION COLUMBIA EUROPEAN THEMATIC EQUITY FUND [CHART] VALUE OF A $10,000 INVESTMENT 01/02/01 - 09/30/04 <Table> <Caption> CLASS Z SHARES MSCI EUROPE INDEX 1/1/2001 $ 10,000 $ 10,000 1/31/2001 $ 10,157 $ 10,005 2/28/2001 $ 9,234 $ 9,127 3/31/2001 $ 8,429 $ 8,446 4/30/2001 $ 8,969 $ 9,046 5/31/2001 $ 8,477 $ 8,605 6/30/2001 $ 8,133 $ 8,279 7/31/2001 $ 8,054 $ 8,300 8/31/2001 $ 7,907 $ 8,084 9/30/2001 $ 7,150 $ 7,278 10/31/2001 $ 7,327 $ 7,509 11/30/2001 $ 7,563 $ 7,810 12/31/2001 $ 7,838 $ 8,010 1/31/2002 $ 7,347 $ 8,221 2/28/2002 $ 7,347 $ 7,590 3/31/2002 $ 7,651 $ 8,002 4/30/2002 $ 7,561 $ 7,941 5/31/2002 $ 7,471 $ 7,916 6/30/2002 $ 7,281 $ 7,641 7/31/2002 $ 6,373 $ 6,791 8/31/2002 $ 6,343 $ 6,790 9/30/2002 $ 5,364 $ 5,896 10/31/2002 $ 5,893 $ 6,466 11/30/2002 $ 6,173 $ 6,784 12/31/2002 $ 5,934 $ 6,537 1/31/2003 $ 5,564 $ 6,228 2/28/2003 $ 5,334 $ 6,025 3/31/2003 $ 5,544 $ 5,935 4/30/2003 $ 6,263 $ 6,736 5/31/2003 $ 6,733 $ 7,173 6/30/2003 $ 6,783 $ 7,242 7/31/2003 $ 6,863 $ 7,389 8/31/2003 $ 6,823 $ 7,375 9/30/2003 $ 6,923 $ 7,525 10/31/2003 $ 7,362 $ 8,028 11/30/2003 $ 7,712 $ 8,370 12/31/2003 $ 8,238 $ 9,057 1/31/2004 $ 8,329 $ 9,163 2/29/2004 $ 8,472 $ 9,432 3/31/2004 $ 8,145 $ 9,138 4/30/2004 $ 7,962 $ 9,062 5/31/2004 $ 8,043 $ 9,209 6/30/2004 $ 8,247 $ 9,332 7/31/2004 $ 7,920 $ 9,075 8/31/2004 $ 7,859 $ 9,081 9/30/2004 $ 8,125 $ 9,446 </Table> The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Morgan Stanley Capital International (MSCI) Europe Index is a broad-based, unmanaged index that tracks the performance of European stocks. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Index performance is from January 2, 2001. PERFORMANCE OF A $10,000 INVESTMENT 01/02/01 - 09/30/04 ($) <Table> Class Z 8,125 </Table> Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. AVERAGE ANNUAL TOTAL RETURN AS OF 09/30/04 (%) <Table> <Caption> SHARE CLASS Z - ----------------------------- INCEPTION 01/02/01 - ----------------------------- 1-year 17.37 Life (01/02/01) -5.39 </Table> All results shown assume reinvestment of distributions. Performance results reflect any voluntary waivers or reimbursements of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class Z shares are sold only at net asset value with no Rule 12b-1 fees. Class Z shares may be purchased by, among others: any shareholder (and family members) of a fund distributed by Columbia Funds Distributor, Inc. (CFDI) who (i) hold class Z shares, (ii) who holds class A shares that were obtained by exchanging with class Z shares, or (iii) who purchased no-load shares of funds merged with funds distributed by CFDI; clients of fee-based broker-dealers or registered investment advisors that recommend the purchase of fund shares; any trustee or director (and family members of a shareholder or any person listed on an account registration for the account of any shareholder) of any fund distributed by CFDI; insurance companies, trust companies, banks, endowments, investment companies, and foundations; and retirement plans with assets of at least $5 million. Investment minimums vary. For further information, please consult the fund prospectus. 6 <Page> UNDERSTANDING YOUR EXPENSES COLUMBIA EUROPEAN THEMATIC EQUITY 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 continuing costs, which generally include investment advisory 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 this cost with the continuing 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 <Table> <Caption> ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 997.50 1,017.00 7.99 8.07 1.60 </Table> 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 continuing 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 will 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 fund companies, 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. [SIDENOTE] 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: - - 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 - - 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 THE 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 7 <Page> PORTFOLIO MANAGERS' REPORT COLUMBIA EUROPEAN THEMATIC EQUITY FUND For the 12-month period ended September 30, 2004, class Z shares of Columbia European Thematic Equity Fund returned 17.37%. Surging prices in energy stocks and strong results in the health care sector helped the fund's overall performance. The fund did not gain as much as its benchmark, the MSCI Europe Index, which returned 25.52%. Disappointing performance from industrial and consumer holdings detracted from the fund's return relative to the index. ECONOMIC GROWTH MAY BE STABILIZING The year was characterized by broad-based global growth driven by strong demand for raw materials in China and India. Tight oil and gas supplies and surging demand combined to send oil prices to record levels during the period. Higher prices favored energy producers but dampened returns in sectors that were faced with higher costs. While European equity market performance was more volatile by the end of the period, Europe achieved a reasonable annual GDP growth level of 2% during the period. Forecasts call for growth of approximately the same level for the year ahead. BETTER LIFE AND RETIREMENT THEMES KEPT PACE The LONGER LIFE, BETTER LIFE theme provided healthy returns, led by two pharmaceutical companies. Aventis gained more than 60% before being acquired by its French rival Sanofi-Synthelabo to become Sanofi-Aventis. Danish drug manufacturer Novo-Nordisk, one of the world's leading producers of insulin and diabetes education training materials, rose 48%. The SAVING FOR RETIREMENT theme had four financial holdings gaining 25% or more during the period. Bank Austria Creditanstalt topped the list, rising 96%. One of the fund's largest holdings, UBS AG, did well on surprisingly strong 2003 results. The financial services company's fee income rose as a result of increased merger and acquisition activity handled by its corporate finance division. It also announced high earnings expectations for 2004, additional share buybacks and a 30% dividend increase. STRATEGY CHANGE IN CONSUMER COMPANIES Lackluster returns and a strategy shift in the consumer discretionary sector made a small contribution to performance during the period. British Sky Broadcasting (CONVERGENCE OF COMMUNICATION AND MEDIA) lost ground when it announced lower-than-anticipated growth in new subscribers, but we believe the company still has good prospects. Ryanair (FULFILL YOUR DREAMS) also dropped sharply during the year in response to keener competition from new low-fare carriers. We sold the position as part of our strategy to reduce the fund's exposure to weakening European consumer markets in favor of companies with a broader global reach. [SIDENOTE] SUMMARY - - FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS Z SHARES RETURNED 17.37%. - - RISING MARKET CONDITIONS HELPED THE FUND AND ITS BENCHMARK ACHIEVE DOUBLE-DIGIT RETURNS. - - STRONG RETURNS IN THE ENERGY AND HEALTH CARE SECTORS BOOSTED PERFORMANCE. DISAPPOINTING RESULTS FROM INDUSTRIAL AND CONSUMER-RELATED STOCKS HAMPERED THE FUND'S RETURN RELATIVE TO ITS BENCHMARK, THE MSCI EUROPE INDEX. [CHART] <Table> CLASS Z SHARES 17.37% MSCI EUROPE INDEX 25.52% </Table> OBJECTIVE Seeks long-term growth of capital TOTAL NET ASSETS $0.2 million NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) <Table> Class Z 7.97 </Table> DISTRIBUTIONS DECLARED PER SHARE 10/01/03 - 09/30/04 ($) <Table> Class Z 0.16 </Table> The MSCI Europe Index is a broad-based, unmanaged index that tracks the performance of European stocks. 8 <Page> NEW HOLDINGS IN COMMUNICATION AND MEDIA In keeping with our efforts to extend the fund's global exposure, we initiated a position in EMI Group, a leading global music recording and publishing company in the CONVERGENCE OF COMMUNICATION AND MEDIA theme. As the market for legal online music finally takes hold, we expect it to drive growth for companies such as EMI, which owns the rights to over one million songs worldwide. We also added Siemens AG, one of the largest German industrial companies, which we expect to benefit from an improvement in the technology cycle in the United States and Asia. The stock was trading at the lower end of its historical range and offers attractive return potential. SLOWER GROWTH AHEAD Although business spending in the United States has picked up, consumer spending growth has slowed. Leading indicators point to lower US economic growth in 2005, particularly if oil prices remain at record highs. We believe that the fate of the US economy is likely to be a swing factor for the rest of the world in the coming year because a large portion of European economic growth depends on exports to the United States. The European economy continues to lag other regions, and higher raw material costs are starting to affect company margins. In this environment, we plan to focus our stock selection on what we believe are high quality companies with a global profile, which have the potential to do well in an environment of slower growth. /S/ Leon Pedersen Leon Pedersen is the lead manager of Columbia European Thematic Equity Fund. The fund is managed by a 24-member portfolio team at Nordea Investment Management North America, Inc. No single individual at Nordea is responsible for making investment decisions for the fund. Nordea is the subadvisor to the fund. The fund's advisor is Columbia Management Advisors, Inc. An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. There are specific risks involved when investing in foreign stocks, such as currency exchange rate fluctuations, economic change, instability of emerging countries and political developments. A portfolio of stocks from a limited geographic region, such as Europe, may be subject to additional risks and volatility. PLEASE NOTE: On October 13, 2004, the fund's Board of Trustees voted to liquidate the fund. The fund was closed to new investors as of the close of business on November 10, 2004. The fund is scheduled for liquidation on or about December 10, 2004. The fund will continue to accept some automatic purchases and certain retirement contributions until the fund is liquidated. [SIDENOTE] SECTORS AS OF 09/30/04 (%) <Table> Financials 24.6 Consumer discretionary 15.0 Health care 11.8 Energy 11.5 Industrials 9.5 Telecommunication services 7.1 Materials 6.9 Consumer staples 6.9 Information technology 6.7 </Table> TOP 5 COUNTRIES AS OF 09/30/04 (%) <Table> United Kingdom 28.6 Switzerland 16.0 France 13.2 Germany 11.1 Sweden 6.9 </Table> TOP 10 HOLDINGS AS OF 09/30/04 (%) <Table> BP PLC 4.9 Total SA 4.8 Novartis AG, Registered Shares 4.1 UBS AG, Registered Shares 3.9 GlaxoSmithKline PLC 3.8 Prudential PLC 3.5 Diageo PLC 3.3 Dexia 3.0 Lafarge SA 3.0 Adecco SA 2.9 </Table> HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) <Table> Sanofi-Aventis 1.1 Novo-Nordisk A/S, Class B 1.7 Bank Austria Creditanstalt 2.0 UBS AG, Registered Shares 3.9 British Sky Broadcasting PLC 2.5 EMI Group PLC 2.4 Siemens AG, Registered Shares 2.2 </Table> Your fund is actively managed and the composition of its portfolio will change over time. Sector breakdown and countries are calculated as a percentage of total investments. Portfolio holdings are calculated as a percentage of net assets. 9 <Page> FINANCIAL STATEMENTS SEPTEMBER 30, 2004 COLUMBIA THEMATIC EQUITY FUNDS 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). 10 <Page> INVESTMENT PORTFOLIO SEPTEMBER 30, 2004 COLUMBIA GLOBAL THEMATIC EQUITY FUND <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 100.1% CONSUMER DISCRETIONARY - 13.7% AUTOMOBILES - 1.8% Bayerische Motoren Werke (BMW) AG 70 2,883 Honda Motor Co., Ltd. 100 4,876 Automobiles Total 7,759 HOTELS, RESTAURANTS & LEISURE - 2.1% Carnival Corp. 145 6,857 Compass Group PLC 440 1,763 Hotels, Restaurants & Leisure Total 8,620 HOUSEHOLD DURABLES - 1.3% Furniture Brands International, Inc. 150 3,762 Koninklijke (Royal) Philips Electronics NV 80 1,838 Household Durables Total 5,600 MEDIA - 4.8% British Sky Broadcasting PLC 480 4,173 Lamar Advertising Co., Class A (a) 100 4,161 Omnicom Group, Inc. 100 7,306 WPP Group PLC 500 4,669 Media Total 20,309 SPECIALTY RETAIL - 3.0% Home Depot, Inc. 205 8,036 Tiffany & Co. 80 2,459 Tractor Supply Co. (a) 75 2,358 Specialty Retail Total 12,853 TEXTILES, APPAREL & LUXURY GOODS - 0.7% Adidas-Salomon AG 20 2,797 Textiles, Apparel & Luxury Goods Total 2,797 ----------- CONSUMER DISCRETIONARY TOTAL 57,938 CONSUMER STAPLES - 3.5% BEVERAGES - 2.0% Diageo PLC 300 3,754 PepsiCo, Inc. 95 4,622 Beverages Total 8,376 FOOD & STAPLES RETAILING - 1.0% CVS Corp. 100 4,213 Food & Staples Retailing Total 4,213 FOOD PRODUCTS - 0.5% Nestle SA, Registered Shares 10 2,297 Food Products Total 2,297 ----------- CONSUMER STAPLES TOTAL 14,886 ENERGY - 8.3% ENERGY EQUIPMENT & SERVICES - 4.8% Nabors Industries Ltd. (a) 150 7,102 National-Oilwell, Inc. (a) 50 1,643 Schlumberger Ltd. 150 10,097 Varco International, Inc. (a) 60 1,609 Energy Equipment & Services Total 20,451 OIL & GAS - 3.5% Suncor Energy, Inc. 300 9,613 Total SA 25 5,103 Oil & Gas Total 14,716 ----------- ENERGY TOTAL 35,167 </Table> See Accompanying Notes to Financial Statements. 11 <Page> <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (CONTINUED) FINANCIALS - 20.4% CAPITAL MARKETS - 3.7% Merrill Lynch & Co., Inc. 170 8,453 UBS AG, Registered Shares 100 7,061 Capital Markets Total 15,514 COMMERCIAL BANKS - 8.1% Allied Irish Banks PLC 110 1,834 Banco Santander Central Hispano SA 550 5,377 Dexia 300 5,586 Kookmin Bank, ADR (a) 100 3,184 Mitsubishi Tokyo Financial Group 1 8,353 Wells Fargo & Co. 170 10,137 Commercial Banks Total 34,471 DIVERSIFIED FINANCIAL SERVICES - 5.3% Citigroup, Inc. 220 9,706 Nomura Holdings, Inc. 1,000 12,870 Diversified Financial Services Total 22,576 INSURANCE - 3.3% Alleanza Assicurazioni S.p.A. 300 3,475 Axa 170 3,450 Prudential PLC 535 4,373 Swiss Re, Registered Shares 50 2,887 Insurance Total 14,185 ----------- FINANCIALS TOTAL 86,746 HEALTH CARE - 10.5% HEALTH CARE EQUIPMENT & SUPPLIES - 0.7% Hospira, Inc. (a) 17 520 Medtronic, Inc. 45 2,336 Health Care Equipment & Supplies Total 2,856 PHARMACEUTICALS - 9.8% Abbott Laboratories 175 7,413 Eli Lilly & Co. 90 5,405 GlaxoSmithKline PLC 500 10,806 Novartis AG, Registered Shares 110 5,133 Pfizer, Inc. 420 12,852 Pharmaceuticals Total 41,609 ----------- HEALTH CARE TOTAL 44,465 INDUSTRIALS - 13.3% AEROSPACE & DEFENSE - 2.2% Bombardier, Inc., Class B 1,000 2,308 Honeywell International, Inc. 200 7,172 Aerospace & Defense Total 9,480 COMMERCIAL SERVICES & SUPPLIES - 0.4% Securitas AB, Class B 120 1,599 Commercial Services & Supplies Total 1,599 INDUSTRIAL CONGLOMERATES - 3.6% General Electric Co. 370 12,425 Siemens AG, Registered Shares 40 2,948 Industrial Conglomerates Total 15,373 MACHINERY - 2.1% Atlas Copco AB, Class A 70 2,697 Tomra Systems ASA 500 1,892 Volvo AB, Class B 120 4,240 Machinery Total 8,829 </Table> See Accompanying Notes to Financial Statements. 12 <Page> <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS -(CONTINUED) INDUSTRIALS - (CONTINUED) ROAD & RAIL - 2.4% East Japan Railway Co. 2 10,366 Road & Rail Total 10,366 TRADING COMPANIES & DISTRIBUTORS - 2.6% Mitsubishi Corp. 1,000 10,826 Trading Companies & Distributors Total 10,826 ----------- INDUSTRIALS TOTAL 56,473 INFORMATION TECHNOLOGY - 19.0% COMMUNICATIONS EQUIPMENT - 2.4% Nokia Oyj 400 5,493 Telefonaktiebolaget LM Ericsson, Class B (a) 1,500 4,677 Communications Equipment Total 10,170 COMPUTERS & PERIPHERALS - 1.5% International Business Machines Corp. 75 6,430 Computers & Peripherals Total 6,430 ELECTRONIC EQUIPMENT & INSTRUMENTS - 6.2% Hoya Corp. 100 10,506 Samsung Electronics Co., Ltd., GDR (b) 80 15,900 Electronic Equipment & Instruments Total 26,406 INTERNET SOFTWARE & SERVICES - 0.5% T-Online International AG (a) 200 2,177 Internet Software & Services Total 2,177 SEMICONDUCTORS & Applied Materials, Inc. (a) 809 13,340 SEMICONDUCTOR EQUIPMENT - 3.2% Semiconductors & Semiconductor Equipment Total 13,340 SOFTWARE - 5.2% BEA Systems, Inc. (a) 600 4,146 Dassault Systemes SA 100 4,684 Microsoft Corp. 475 13,134 Software Total 21,964 ----------- INFORMATION TECHNOLOGY TOTAL 80,487 MATERIALS - 5.8% CHEMICALS - 4.2% BOC Group PLC 60 963 Johnson Matthey PLC 100 1,732 Potash Corp. of Saskatchewan, Inc. 100 6,424 Praxair, Inc. 200 8,548 Chemicals Total 17,667 CONSTRUCTION MATERIALS - 0.7% Holcim Ltd., Registered Shares 60 3,172 Construction Materials Total 3,172 METALS & MINING - 0.9% Inco Ltd. (a) 100 3,918 Metals & Mining Total 3,918 ----------- MATERIALS TOTAL 24,757 TELECOMMUNICATION SERVICES - 5.6% DIVERSIFIED TELECOMMUNICATION SERVICES - 4.4% ALLTEL Corp. 275 15,100 Telefonica SA 21 314 Telenor ASA 400 3,052 Diversified Telecommunication Services Total 18,466 </Table> See Accompanying Notes to Financial Statements. 13 <Page> <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (CONTINUED) TELECOMMUNICATION SERVICES - (CONTINUED) WIRELESS TELECOMMUNICATION SERVICES - 1.2% NTT DoCoMo, Inc. 3 5,115 Wireless Telecommunication Services Total 5,115 ----------- TELECOMMUNICATION SERVICES TOTAL 23,581 TOTAL COMMON STOCKS - 100.1% (COST OF $407,607) (c) 424,500 OTHER ASSETS & LIABILITIES, NET - (0.1)% (518) NET ASSETS - 100.0% 423,982 </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2004, the value of this security represents 3.8% of net assets. (c) Cost for federal income tax purposes is $417,298. <Table> <Caption> ACRONYM NAME - -------------------------------------------------------- ADR American Depositary Receipt GDR Global Depositary Receipt </Table> <Table> <Caption> SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY (UNAUDITED) VALUE INVESTMENTS - ----------------------------------------------------- United States $ 177,286 41.8% Japan 62,911 14.8 United Kingdom 32,233 7.6 Canada 29,365 6.9 Switzerland 20,550 4.9 South Korea 19,084 4.5 France 13,237 3.1 Sweden 13,214 3.1 Netherlands 11,935 2.8 Germany 10,806 2.6 Panama 6,857 1.6 Spain 5,691 1.3 Belgium 5,586 1.3 Finland 5,493 1.3 Norway 4,943 1.2 Italy 3,475 0.8 Ireland 1,834 0.4 ---------- ----- $ 424,500 100.0% ========== ===== </Table> Certain securities are listed by country of underlying exposure but may trade predominately on other exchanges. See Accompanying Notes to Financial Statements. 14 <Page> INVESTMENT PORTFOLIO SEPTEMBER 30, 2004 COLUMBIA EUROPEAN THEMATIC EQUITY FUND <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 106.9% CONSUMER DISCRETIONARY - 16.3% AUTOMOBILES - 2.9% Bayerische Motoren Werke (BMW) AG 114 4,696 Automobiles Total 4,696 HOTELS, RESTAURANTS & LEISURE - 3.2% Carnival PLC 46 2,272 Compass Group PLC 765 3,065 Hotels, Restaurants & Leisure Total 5,337 HOUSEHOLD DURABLES - 2.7% Koninklijke (Royal) Philips Electronics NV 190 4,366 Household Durables Total 4,366 MEDIA - 4.9% British Sky Broadcasting PLC 475 4,130 EMI Group PLC 1,000 4,007 Media Total 8,137 TEXTILES, APPAREL & LUXURY GOODS - 2.6% Adidas-Salomon AG 31 4,336 Textiles, Apparel & Luxury Goods Total 4,336 ----------- CONSUMER DISCRETIONARY TOTAL 26,872 CONSUMER STAPLES - 7.6% BEVERAGES - 3.4% Diageo PLC 440 5,506 Beverages Total 5,506 Food Products - 4.2% Nestle SA, Registered Shares 20 4,593 Royal Numico NV (a) 74 2,361 Food Products Total 6,954 ----------- CONSUMER STAPLES TOTAL 12,460 ENERGY - 12.5% OIL & GAS - 12.5% BP PLC 850 8,139 Shell Transport & Trading Co., PLC 605 4,450 Total SA 39 7,960 Oil & Gas Total 20,549 ----------- ENERGY TOTAL 20,549 FINANCIALS - 26.9% CAPITAL MARKETS - 3.9% UBS AG, Registered Shares 90 6,355 Capital Markets Total 6,355 COMMERCIAL BANKS - 12.3% Allied Irish Banks PLC 150 2,501 Banco Santander Central Hispano SA 435 4,252 Bank Austria Creditanstalt 46 3,268 Dexia 265 4,934 ForeningsSparbanken AB 100 2,081 Sanpaolo IMI S.p.A. 285 3,221 Commercial Banks Total 20,257 INSURANCE - 10.7% Alleanza Assicurazioni S.p.A. 400 4,633 Axa 225 4,567 Prudential PLC 700 5,722 Swiss Re, Registered Shares 47 2,714 Insurance Total 17,636 ----------- FINANCIALS TOTAL 44,248 </Table> See Accompanying Notes to Financial Statements. 15 <Page> <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (CONTINUED) HEALTH CARE - 10.6% PHARMACEUTICALS - 10.6% GlaxoSmithKline PLC 288 6,225 Novartis AG, Registered Shares 146 6,813 Novo-Nordisk A/S, Class B 50 2,739 Sanofi-Aventis 24 1,746 Pharmaceuticals Total 17,523 ----------- HEALTH CARE TOTAL 17,523 INDUSTRIALS - 10.4% AIR FREIGHT & LOGISTICS - 1.0% Exel PLC 130 1,612 Air Freight & Logistics Total 1,612 COMMERCIAL SERVICES & SUPPLIES - 2.9% Adecco SA 96 4,783 Commercial Services & Supplies Total 4,783 INDUSTRIAL CONGLOMERATES - 2.3% Siemens AG, Registered Shares 50 3,685 Industrial Conglomerates Total 3,685 MACHINERY - 4.2% Atlas Copco AB, Class A 80 3,082 Tomra Systems ASA 185 700 Volvo AB, Class B 90 3,180 Machinery Total 6,962 ----------- INDUSTRIALS TOTAL 17,042 INFORMATION TECHNOLOGY - 7.3% COMMUNICATIONS EQUIPMENT - 2.5% Telefonaktiebolaget LM Ericsson, Class B (a) 1,300 4,054 Communications Equipment Total 4,054 INTERNET SOFTWARE & SERVICES - 2.1% T-Online International AG (a) 326 3,548 Internet Software & Services Total 3,548 SOFTWARE - 2.7% Dassault Systemes SA 95 4,450 Software Total 4,450 ----------- INFORMATION TECHNOLOGY TOTAL 12,052 MATERIALS - 7.6% CHEMICALS - 2.5% BOC Group PLC 170 2,726 Johnson Matthey PLC 80 1,386 Chemicals Total 4,112 CONSTRUCTION MATERIALS - 5.1% Holcim Ltd., Registered Shares 65 3,437 Lafarge SA 56 4,917 Construction Materials Total 8,354 ----------- MATERIALS TOTAL 12,466 TELECOMMUNICATION SERVICES - 7.7% DIVERSIFIED TELECOMMUNICATION SERVICES - 6.4% Telecom Italia S.p.A. 545 1,685 Telefonica SA 305 4,566 Telenor ASA 570 4,349 Diversified Telecommunication Services Total 10,600 </Table> See Accompanying Notes to Financial Statements. 16 <Page> <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (CONTINUED) TELECOMMUNICATION SERVICES - (CONTINUED) WIRELESS TELECOMMUNICATION SERVICES - 1.3% Vodafone Group PLC 875 2,100 Wireless Telecommunication Services Total 2,100 ----------- TELECOMMUNICATION SERVICES TOTAL 12,700 TOTAL COMMON STOCKS (COST OF $165,464) 175,912 PREFERRED STOCK - 2.2% HEALTH CARE - 2.2% HEALTH CARE PROVIDERS & SERVICES - 2.2% Fresenius AG 45 3,685 Health Care Providers & Services Total 3,685 ----------- HEALTH CARE TOTAL 3,685 TOTAL PREFERRED STOCK (COST OF $1,071) 3,685 TOTAL INVESTMENTS - 109.1% (COST OF $166,535) (B) 179,597 OTHER ASSETS & LIABILITIES, NET - (9.1)% (15,030) NET ASSETS - 100.0% 164,567 </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $168,131. <Table> <Caption> SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY (UNAUDITED) VALUE INVESTMENTS - ---------------------------------------------------- United Kingdom $ 51,340 28.6% Switzerland 28,695 16.0 France 23,640 13.2 Germany 19,950 11.1 Sweden 12,397 6.9 Italy 9,539 5.3 Spain 8,818 4.9 Netherlands 6,727 3.8 Norway 5,049 2.8 Belgium 4,934 2.7 Austria 3,268 1.8 Denmark 2,739 1.5 Ireland 2,501 1.4 --------- ----- $ 179,597 100.0% ========= ===== </Table> Certain securities are listed by country of underlying exposure but may trade predominately on other exchanges. See Accompanying Notes to Financial Statements. 17 <Page> STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2004 COLUMBIA THEMATIC EQUITY FUNDS <Table> <Caption> COLUMBIA COLUMBIA GLOBAL EUROPEAN THEMATIC THEMATIC EQUITY EQUITY FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at cost 407,607 166,535 Investments, at value 424,500 179,597 Cash 9,819 7,432 Foreign currency (cost of $9,410 and $6,481, respectively) 9,559 6,669 Receivable for: Investments sold 2,507 -- Dividends 673 373 Foreign tax reclaims 227 132 Expense reimbursement due from Investment Advisor 5,879 -- Deferred Trustees' compensation plan 2,046 1,814 ----------------------- Total Assets 455,210 196,017 LIABILITIES Expense reimbursement due to Investment Advisor -- 1,981 Payable for: Investment advisory fee 324 1,407 Administration fee 21 236 Transfer agent fee 195 314 Pricing and bookkeeping fees 4,428 4,398 Trustees' fees 240 240 Audit fee 13,850 13,850 Custody fee 1,940 2,201 Reports to shareholders 7,005 3,801 Deferred Trustees' fees 2,046 1,814 Other liabilities 1,179 1,208 ----------------------- Total Liabilities 31,228 31,450 NET ASSETS 423,982 164,567 COMPOSITION OF NET ASSETS Paid-in capital 1,039,734 823,309 Undistributed (overdistributed) net investment income (loss) (877) 2,755 Accumulated net realized loss (631,935) (674,784) Net unrealized appreciation on: Investments 16,893 13,062 Foreign currency translations 167 225 NET ASSETS 423,982 164,567 Class Z Net assets 423,982 164,567 Shares outstanding 54,930 20,637 Net asset value and offering price per share (a) 7.72 7.97 </Table> (a) Redemption price per share is equal to net asset value less any applicable redemption fee. See Accompanying Notes to Financial Statements. 18 <Page> STATEMENTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2004 COLUMBIA THEMATIC EQUITY FUNDS <Table> <Caption> COLUMBIA COLUMBIA GLOBAL EUROPEAN THEMATIC THEMATIC EQUITY EQUITY FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME Dividends 7,766 5,644 Interest 3 176 ----------------------- Total Investment Income (net of foreign taxes withheld of $549 and $811, respectively) 7,769 5,820 EXPENSES Investment advisory fee 4,400 2,139 Administration fee 307 149 Pricing and bookkeeping fees 14,842 14,550 Transfer agent fee 707 353 Trustees' fees 6,054 8,974 Custody fee 16,064 23,284 Audit fee 18,531 18,531 Registration fee 22,605 22,106 Reports to shareholders 16,805 7,260 Non-recurring costs (See Note 8) 23 10 Other expenses 5,176 5,240 ----------------------- Total Expenses 105,514 102,596 Fees and expenses waived or reimbursed by Investment Advisor (97,146) (98,522) Non-recurring costs assumed by Investment Advisor (See Note 8) (23) (10) Custody earnings credit (64) (40) ----------------------- Net Expenses 8,281 4,024 ----------------------- Net Investment Income (Loss) (512) 1,796 NET REALIZED AND UNREALIZED GAIN (LOSS) ON Net realized gain on: INVESTMENTS AND FOREIGN CURRENCY Investments 55,989 47,230 Foreign currency transactions 581 1,759 ----------------------- Net realized gain 56,570 48,989 Net change in unrealized appreciation/depreciation on: Investments 10,898 (7,338) Foreign currency translations (16) (128) ----------------------- Net change in unrealized appreciation/depreciation 10,882 (7,466) ----------------------- Net Gain 67,452 41,523 ----------------------- Net Increase in Net Assets from Operations 66,940 43,319 </Table> See Accompanying Notes to Financial Statements. 19 <Page> STATEMENTS OF CHANGES IN NET ASSETS COLUMBIA THEMATIC EQUITY FUNDS <Table> <Caption> COLUMBIA GLOBAL THEMATIC EQUITY FUND ------------------------------------------ YEAR ENDED PERIOD ENDED YEAR ENDED INCREASE (DECREASE) SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, IN NET ASSETS: 2004 ($) 2003(a)(b)($) 2002 (c)($) - --------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) (512) (41) (3,888) Net realized gain (loss) on investments and foreign currency transactions 56,570 (365,620) (235,843) Net change in unrealized appreciation/depreciation on investments and foreign currency translations 10,882 370,489 (51,477) ------------------------------------------ Net Increase (Decrease) from Operations 66,940 4,828 (291,208) DISTRIBUTIONS DECLARED TO Class Z: SHAREHOLDERS From net investment income (6,651) -- (839) SHARE TRANSACTIONS Class Z: Subscriptions 28,323 12,603 499,082 Distributions reinvested 6,623 -- 839 Redemptions (219,862) (717,389) (553,111) ------------------------------------------ Net Increase (Decrease) from Share Transactions (184,916) (704,786) (53,190) ------------------------------------------ Redemption fees 13 3 -- ------------------------------------------ Total Decrease in Net Assets (124,614) (699,955) (345,237) NET ASSETS Beginning of period 548,596 1,248,551 1,593,788 End of period 423,982 548,596 1,248,551 Undistributed (overdistributed) net investment income (loss) (877) 5,707 (540) CHANGES IN SHARES Class Z: Subscriptions 3,599 1,965 67,200 Issued for distributions reinvested 879 -- 104 Redemptions (28,120) (119,485) (76,155) ------------------------------------------ Net Increase (Decrease) (23,642) (117,520) (8,851) <Caption> COLUMBIA EUROPEAN THEMATIC EQUITY FUND ------------------------------------------ YEAR ENDED PERIOD ENDED YEAR ENDED INCREASE (DECREASE) SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, IN NET ASSETS: 2004 ($) 2003(a)(b)($) 2002 (c)($) - --------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 1,796 2,538 857 Net realized gain (loss) on investments and foreign currency transactions 48,989 (134,814) (451,975) Net change in unrealized appreciation/depreciation on investments and foreign currency translations (7,466) 110,855 198,885 ------------------------------------------ Net Increase (Decrease) from Operations 43,319 (21,421) (252,233) DISTRIBUTIONS DECLARED TO Class Z: SHAREHOLDERS From net investment income (6,287) -- (20,508) SHARE TRANSACTIONS Class Z: Subscriptions 26,098 179,094 990,208 Distributions reinvested 6,287 -- 20,508 Redemptions (168,032) (828,486) (979,194) ------------------------------------------ Net Increase (Decrease) from Share Transactions (135,647) (649,392) 31,522 ------------------------------------------ Redemption fees 52 241 -- ------------------------------------------ Total Decrease in Net Assets (98,563) (670,572) (241,219) NET ASSETS Beginning of period 263,130 933,702 1,174,921 End of period 164,567 263,130 933,702 Undistributed (overdistributed) net investment income (loss) 2,755 5,488 (538) CHANGES IN SHARES Class Z: Subscriptions 3,187 29,213 155,828 Issued for distributions reinvested 807 -- 2,658 Redemptions (21,322) (149,415) (157,802) ------------------------------------------ Net Increase (Decrease) (17,328) (120,202) 684 </Table> (a) The Fund changed its fiscal year end from October 31 to September 30. (b) Approximately $670,000 and $655,000 of redemptions in Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund, respectively, were by an affiliate of the Funds' investment advisor and were due to certain regulatory requirements. (c) On July 29, 2002, the Fund's outstanding shares were redesignated as Class Z shares. See Accompanying Notes to Financial Statements. 20 <Page> NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2004 COLUMBIA THEMATIC EQUITY FUNDS NOTE 1. ORGANIZATION Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund (collectively, the "Funds") are diversified portfolios of Columbia Funds Trust XI (the "Trust"). 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 GOALS Each Fund seeks long-term growth of capital. FUND SHARES The Funds may issue an unlimited number of shares. Effective July 29, 2002, the outstanding shares of the Funds were redesignated Class Z shares. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in each Fund's prospectus. Effective October 13, 2003, the Liberty Global Thematic Equity Fund and Liberty European Thematic Equity Fund were renamed Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund, respectively. Also on this date, the Liberty-Stein Roe Funds Investment Trust was renamed Columbia Funds Trust XI. 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 Funds in the preparation of their financial statements. SECURITY VALUATION Equity securities are valued at the last sale price on the principal exchange on which they trade, except for securities traded on the NASDAQ, which are valued at the NASDAQ official close price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value. Foreign securities are generally valued at the last sale price on the foreign exchange or market on which they trade. If any foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sale price of the local shares in the principal market in which such securities are normally traded. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Funds' shares are determined as of such times. Foreign currency exchange rates are generally determined at 2:00 p.m. Eastern (U.S.) time. Occasionally, events affecting the values of such foreign securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE, which would not be reflected in the computation of the Funds' net asset value. If events materially affecting the values of such foreign securities occur and it is determined that market quotations are not reliable, then these foreign securities will be valued at their fair value using procedures approved by the Board of Trustees. The Funds may use a systematic fair valuation model provided by an independent third party to value securities principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. If a security is valued at a "fair value," such value is likely to be different from the last quoted market price for the security. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. SECURITY TRANSACTIONS Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. 21 <Page> REPURCHASE AGREEMENTS The Funds may engage in repurchase agreement transactions with institutions that the Funds' investment advisor has determined are creditworthy. The Funds, through their custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Funds' ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Funds seek to assert their rights. INCOME RECOGNITION Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Funds becomes aware of such, net of non-reclaimable tax withholdings. FOREIGN CURRENCY TRANSACTIONS The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. For financial statement purposes, the Funds do not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. FEDERAL INCOME TAX STATUS Each 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, each 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 each 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 Funds' 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 September 30, 2004, permanent differences resulting primarily from differing treatments for foreign currency transactions were identified and reclassified among the components of the Funds' net assets as follows: <Table> <Caption> UNDISTRIBUTED (OVERDISTRIBUTED) ACCUMULATED NET INVESTMENT NET REALIZED PAID-IN INCOME (LOSS) LOSS CAPITAL - ----------------------------------------------------------------------- Columbia Global Thematic Equity Fund $ 579 $ (581) $ 2 Columbia European Thematic Equity Fund 1,758 (1,758) -- </Table> Net investment income and net realized gains (losses), as disclosed on the Statements of Operations, and net assets were not affected by these reclassifications. 22 <Page> The tax character of distributions paid during the year ended September 30, 2004, the period ended September 30, 2003 and year ended October 31, 2002 was as follows: <Table> <Caption> YEAR ENDED SEPTEMBER 30, 2004 - ------------------------------------------------------------------- LONG TERM ORDINARY INCOME* CAPITAL GAINS - ------------------------------------------------------------------- Columbia Global Thematic Equity Fund $ 6,651 $ -- Columbia European Thematic Equity Fund 6,287 -- </Table> <Table> <Caption> PERIOD ENDED SEPTEMBER 30, 2003 - ------------------------------------------------------------------- LONG TERM ORDINARY INCOME* CAPITAL GAINS - ------------------------------------------------------------------- Columbia Global Thematic Equity Fund $ -- $ -- Columbia European Thematic Equity Fund -- -- </Table> <Table> <Caption> YEAR ENDED OCTOBER 31, 2002 - ------------------------------------------------------------------- LONG TERM ORDINARY INCOME* CAPITAL GAINS - ------------------------------------------------------------------- Columbia Global Thematic Equity Fund $ 839 $ -- Columbia European Thematic Equity Fund 20,508 -- </Table> As of September 30, 2004, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED NET ORDINARY LONG-TERM UNREALIZED INCOME CAPITAL GAINS APPRECIATION* - --------------------------------------------------------------------------------------- Columbia Global Thematic Equity Fund $ 999 $ -- $ 7,369 Columbia European Thematic Equity Fund 4,448 -- 11,691 </Table> * 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 September 30, 2004, based on cost of investments for federal income tax purposes, excluding any unrealized appreciation and depreciation from changes in the value of other assets and liabilities resulting from changes in exchange rates, was: <Table> <Caption> NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION DEPRECIATION APPRECIATION - ------------------------------------------------------------------------------------ Columbia Global Thematic Equity Fund $ 41,660 $ (34,458) $ 7,202 Columbia European Thematic Equity Fund 18,503 (7,037) 11,466 </Table> The following capital loss carryforwards, determined as of September 30, 2004, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> COLUMBIA COLUMBIA GLOBAL EUROPEAN YEAR OF THEMATIC THEMATIC EXPIRATION EQUITY FUND EQUITY FUND - --------------------------------------------------- 2009 $ 43,995 $ 59,878 2010 235,325 205,264 2011 342,924 408,046 $ 622,244 $ 673,188 </Table> Expired capital loss carryforwards, if any, are recorded as a reduction of paid-in capital. The following capital loss carryforwards, determined as of September 30, 2004, have been utilized, as follows: <Table> Columbia Global Thematic Equity Fund $ 35,392 Columbia European Thematic Equity Fund 32,829 </Table> NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the Funds. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004, FleetBoston, including the Funds' investment advisor and transfer agent, was acquired by Bank of America Corporation ("BOA"). The acquisition did not change the way the Funds are managed, the investment personnel assigned to manage the Funds or the fees paid by the Funds. 23 <Page> INVESTMENT ADVISORY FEE Columbia receives a monthly investment advisory fee based on average daily net assets of each Fund at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS ANNUAL FEE RATE ----------------------------------------------- First $1 billion 0.85% Next $500 million 0.80% Over $1.5 billion 0.75% </Table> Prior to November 1, 2003, Columbia was entitled to receive a monthly investment advisory fee at the annual rate of 0.85% of each Fund's average daily net assets. SUB-ADVISORY FEE Nordea Investment Management North America, Inc. ("Nordea") has been retained by Columbia as sub-advisor to manage the day-to-day investment operations of the Funds. Columbia, out of the advisory fee it receives, pays Nordea a monthly sub-advisory fee equal to 0.60% annually of the average daily net assets of each Fund. ADMINISTRATION FEE Columbia provides administrative and other services to the Funds for a monthly administration fee at the annual rate of 0.05% of each Fund's average daily net assets. Prior to November 1, 2003, Columbia was entitled to receive a monthly administration fee at the annual rate of 0.15% of each Fund's average daily net assets. For the year ended September 30, 2004, the effective administration fee rates for the Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund were 0.06% and 0.06%, respectively. PRICING AND BOOKKEEPING FEES Columbia is responsible for providing pricing and bookkeeping services to the Funds 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 collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Funds, Columbia receives from each Fund an annual flat fee of $10,000 paid monthly, and in any month that a 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 Funds also pay additional fees for pricing services based on the number of securities held by each Fund. For the year ended September 30, 2004, the effective pricing and bookkeeping fee rates for the Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund, inclusive of out-of-pocket expenses, were 2.869% and 5.786%, respectively. 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, in addition to reimbursement for certain out-of-pocket expenses, at the annual rate of 0.06% of the Fund's average daily net assets plus flat-rate charges based on the number of shareholder accounts and transactions. For the year ended September 30, 2004, the effective transfer agent fee rate, inclusive of out-of-pocket expenses, for the Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund were 0.14% and 0.14%, respectively. Effective October 13, 2003, Liberty Funds Services, Inc. was renamed Columbia Funds Services, Inc. EXPENSE LIMITS AND FEE REIMBURSEMENTS Columbia has voluntarily agreed to waive fees and reimburse certain expenses to the extent that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, if any) exceed 1.60% annually of each Fund's average daily net assets. Columbia, at its discretion, may revise or discontinue this arrangement any time. CUSTODY CREDITS Each Fund has an agreement with its custodian bank under which custody fees may be reduced by balance 24 <Page> credits. The Funds could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if they had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES The Funds pay no compensation to their officers, all of whom are employees of Columbia or its affiliates. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Funds in accordance with federal securities regulations. Each Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Chief Compliance Officer role. Each Fund's fee will not exceed $15,000 per year. The Funds' 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 Funds' assets. OTHER Columbia provides certain services to the Funds related to Sarbanes-Oxley compliance. For the year ended September 30, 2004, Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund each paid $1,287 to Columbia for such services. This amount is included in "Other expenses" on the Statements of Operations. NOTE 5. PORTFOLIO INFORMATION For the year ended September 30, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were as follows: <Table> <Caption> PURCHASES SALES - ------------------------------------------------------------------- Columbia Global Thematic Equity Fund $ 234,855 $ 430,651 Columbia European Thematic Equity Fund 175,636 294,632 </Table> NOTE 6. REDEMPTION FEES Effective February 10, 2003, the Funds began imposing a 2.00% redemption fee to shareholders of Class Z shares who redeem shares held for 60 days or less. Redemption fees, which are retained by the Fund, are accounted for as an addition to paid-in capital. For the year ended September 30, 2004, the redemption fees for the Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund amounted to $13 and $52, respectively. NOTE 7. SHARES OF BENEFICIAL INTEREST As of September 30, 2004, the Funds had shareholders that held greater than 5% of the shares outstanding. Subscription and redemption activity of these shareholders may have a material effect on the Funds. The numbers of shareholders greater than 5% and the aggregate percentage of shares outstanding held were as follows: <Table> <Caption> NUMBER OF % OF SHAREHOLDER SHARES HELD - --------------------------------------------------------------- Columbia Global Thematic Equity Fund 3 60.3 Columbia European Thematic Equity Fund 2 90.6 </Table> NOTE 8. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES FOREIGN SECURITIES There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. In addition, the liquidity of foreign securities may be more limited than that of domestic securities. INDUSTRY FOCUS The Funds may focus their 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 25 <Page> 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 of its 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 September 30, 2004, Columbia has assumed $23 and $10 of legal, consulting services and Trustees' fees incurred by the Columbia Global Thematic Equity Fund and the Columbia European Thematic Equity Fund, respectively, in connection with these matters. NOTE 9. COMPARABILITY OF FINANCIAL STATEMENTS The fiscal year end of the Funds was changed from October 31 to September 30. 26 <Page> NOTE 10. SUBSEQUENT EVENT On October 13, 2004, the Board of Trustees of the Funds voted to liquidate the Funds. The effective date of the liquidations is expected to be on or about December 10, 2004. 27 <Page> FINANCIAL HIGHLIGHTS COLUMBIA GLOBAL THEMATIC EQUITY FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: <Table> <Caption> YEAR PERIOD YEAR PERIOD ENDED ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, OCTOBER 31, CLASS Z SHARES 2004(a) 2003(b) 2002(c) 2001(d) - ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 6.98 $ 6.37 $ 7.78 $ 10.13 INCOME FROM INVESTMENT OPERATIONS: Net investment loss (e) (0.01) --(f) (0.02) (0.03) Net realized and unrealized gain (loss) on investments and foreign currency 0.84 0.61 (1.39) (2.32) ------------- ------------- ------------ ------------ Total from Investment Operations 0.83 0.61 (1.41) (2.35) LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.09) -- --(f) -- REDEMPTION FEES: Redemption fees added to paid-in capital --(e)(f) --(e)(f) N/A N/A NET ASSET VALUE, END OF PERIOD $ 7.72 $ 6.98 $ 6.37 $ 7.78 Total return (g) (h) 11.89% 9.58%(i) (18.08)% (23.20)%(i) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.60% 1.60%(k) 1.60% 1.60%(k) Net investment loss (j) (0.10)% (0.01)%(k) (0.25)% (0.40)%(k) Waiver/reimbursement 18.78% 10.25%(k) 5.07% 5.54%(k) Portfolio turnover rate 47% 41%(i) 41% 15%(i) Net assets, end of period (000's) $ 424 $ 549 $ 1,249 $ 1,594 </Table> (a) On October 13, 2003, the Liberty Global Thematic Equity Fund was renamed Columbia Global Thematic Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On July 29, 2002, the Stein Roe Global Thematic Equity Fund was redesignated Liberty Global Thematic Equity Fund, Class Z shares. (d) The Fund commenced investment operations on January 2, 2001. Per share data, total return and portfolio turnover rate reflect activity from that date. (e) Per share data was calculated using average shares outstanding during the period. (f) Rounds to less than $0.01 per share. (g) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Total return at net asset value assuming all distributions reinvested. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%, except for the year ended September 30, 2004 and the period ended September 30, 2003 which had an impact of 0.01%. (k) Annualized. 28 <Page> COLUMBIA GLOBAL THEMATIC EQUITY FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: <Table> <Caption> YEAR PERIOD YEAR PERIOD ENDED ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, OCTOBER 31, CLASS Z SHARES 2004(a) 2003(b) 2002(c) 2001(d) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 6.93 $ 5.90 $ 7.46 $ 10.18 INCOME FROM INVESTMENT OPERATIONS: Net investment income (e) 0.06 0.03 0.01 0.05 Net realized and unrealized gain (loss) on investments and foreign currency 1.14 1.00 (1.44) (2.77) ------------- ------------- ------------ -------------- Total from Investment Operations 1.20 1.03 (1.43) (2.72) LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.16) -- (0.13) -- REDEMPTION FEES: Redemption fees added to paid-in capital --(e)(f) --(e)(f) N/A N/A NET ASSET VALUE, END OF PERIOD $ 7.97 $ 6.93 $ 5.90 $ 7.46 Total return (g) (h) 17.37% 17.46%(i) (19.58)% (26.72)%(i) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATE: Expenses (j) 1.60% 1.60%(k) 1.60% 1.60%(k) Net investment income (j) 0.71% 0.52%(k) 0.07% 0.71%(k) Waiver/reimbursement 39.18% 19.60%(k) 6.08% 5.57%(k) Portfolio turnover rate 71% 67%(i) 71% 33%(i) Net assets, end of period (000's) $ 165 $ 263 $ 934 $ 1,175 </Table> (a) On October 13, 2003, the Liberty European Thematic Equity Fund was renamed Columbia European Thematic Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On July 29, 2002, the Stein Roe European Thematic Equity Fund was redesignated Liberty European Thematic Equity Fund, Class Z shares. (d) The Fund commenced investment operations on January 2, 2001. Per share data, total return and portfolio turnover rate reflect activity from that date. (e) Per share data was calculated using average shares outstanding during the period. (f) Rounds to less than $0.01 per share. (g) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Total return at net asset value assuming all distributions reinvested. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%, except for the year ended September 30, 2004 which had an impact of 0.02% and the period ended September 30, 2003 which had an impact of 0.01%. (k) Annualized. 29 <Page> REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM COLUMBIA THEMATIC EQUITY FUNDS To the Trustees of Columbia Funds Trust XI and the Shareholders of Columbia Global Thematic Equity Fund and Columbia European Thematic Equity Fund In our opinion, the accompanying statements of assets and liabilities, including the investment portfolios, and the related statements of operations and changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the above funds (the "Funds") (each a series of Columbia Funds Trust XI) at September 30, 2004, and the results of their operations, the changes in their net assets, and their financial highlights for the year then ended, 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 Funds' 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 auditing standards of the Public Company Accounting Oversight Board (United States), which require that we plan and perform the audits 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 September 30, 2004 by correspondence with the custodian, provide a reasonable basis for our opinion. The financial statements of the Funds as of September 30, 2003 and for the three fiscal periods ending September 30, 2003 were audited by other independent accountants whose report dated November 14, 2003 expressed an unqualified opinion on those statements. The Trustees of the Funds approved a plan of liquidation for the Funds as described in Note 10. PricewaterhouseCoopers LLP Boston, Massachusetts November 15, 2004 30 <Page> UNAUDITED INFORMATION COLUMBIA THEMATIC EQUITY FUNDS FEDERAL INCOME TAX INFORMATION Columbia Global Thematic Equity Fund For non-corporate shareholders 100.00%, 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 October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. Columbia European Thematic Equity Fund For non-corporate shareholders 100.00%, 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 October 1, 2003 to September 30, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 31 <Page> TRUSTEES COLUMBIA THEMATIC EQUITY FUNDS Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were appointed to the Board of the 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 Trustrees/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. <Table> <Caption> NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA YEAR FIRST ELECTED OR APPOINTED TO OFFICE(1) FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES DOUGLAS A. HACKER (age 49) Executive Vice President-Strategy of United Airlines (airline) since P.O. Box 66100 December 2002 (formerly President of UAL Loyalty Services (airline) from Chicago, IL 60666 September 2001 to December 2002; Executive Vice President and Chief Financial Trustee (since 1996) Officer of United Airlines from March 1999 to September 2001; Senior Vice President-Finance from March 1993 to July 1999).Oversees 118, Orbitz, Inc. (on-line travel company) JANET LANGFORD KELLY (age 46) Adjunct Professor of Law, Northwestern University, since 9534 W. Gull Lake Drive September 2004; Private Investor since March 2004 (formerly Chief Richland, MI 49083-8530 Administrative Officer and Senior Vice President, Kmart Holding Trustee (since 1996) Corporation (consumer goods), from September 2003 to March 2004; Executive Vice President-Corporate Development and Administration, 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 10701 Charleston Drive Officer, U.S. Plywood Corporation (building products Vero Beach, FL 32963 manufacturer)). Oversees 120(3), None Trustee (since 1995) CHARLES R. NELSON (age 62) Professor of Economics, University of Washington, since January 1976; Ford Department of Economics and Louisa Van Voorhis Professor of Political Economy, University of University of Washington Washington, since September 1993 (formerly Director, Institute for Economic Seattle, WA 98195 Research, University of Washington from September 2001 to June 2003) Adjunct Trustee (since 1981) Professor of Statistics, University of Washington, since September 1980; Associate Editor, Journal of Money Credit and Banking, since September 1993; consultant on econometric and statistical matters. Oversees 118, None </Table> (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. 32 <Page> <Table> <Caption> NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA YEAR FIRST ELECTED OR APPOINTED TO OFFICE(1) FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES JOHN J. NEUHAUSER (age 61) Academic Vice President and Dean of Faculties since August 1999, Boston 84 College Road College (formerly Dean, Boston College School of Management from Chestnut Hill, MA 02467-3838 September 1977 to September1999).Oversees 121(3),(4), Saucony, Inc.(athletic Trustee (since 1985) footwear) PATRICK J. SIMPSON (age 60) 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 2208 Tawny Woods Place 1999, College of Business, Boise State University); Chartered Financial Boise, ID 83706 Analyst. Oversees 118, None. Trustee (since 1998) THOMAS C. THEOBALD (age 67) Partner and Senior Advisor, Chicago Growth Partners (private equity 303 W. Madison investing) since September 2004 (formerly Managing Director, William Blair Suite 2500 Capital Partners (private equity investing) from September 1994 to Chicago, IL 60606 September 2004). Oversees 118, Anixter International (network support Trustee equipment distributor); Ventas, Inc.(real estate investment trust); Jones and Chairman of the Board(5) Lang LaSalle (real estate management services) and Ambac Financial Group (since 1996) (financial guaranty insurance) ANNE-LEE VERVILLE (age 59) Retired since 1997 (formerly General Manager, Global Education Industry, 359 Stickney Hill Road IBM Corporation (computer and technology) from 1994 to 1997). Oversees Hopkinton, NH 03229 119(4), Chairman of the Board of Directors, Enesco Group, Inc. (designer, Trustee (since 1998) importer and distributor of giftware and collectibles) RICHARD L. WOOLWORTH (age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, 100 S.W. Market Street The Regence Group (regional health insurer); Chairman and Chief Executive #1500 Officer, BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Portland, OR 97207 Young & Company). Oversees 118, Northwest Natural Gas Co.(natural gas Trustee (since 1991) service provider) INTERESTED TRUSTEE WILLIAM E. MAYER(2) (age 64) Managing Partner, Park Avenue Equity Partners (private equity) since 399 Park Avenue February 1999 (formerly Founding Partner, Development Capital LLC from Suite 3204 November 1996 to February 1999). Oversees 120(3), Lee Enterprises (print New York, NY 10022 media), WR Hambrecht + Co. (financial service provider); First Health Trustee (since 1994) (healthcare); Reader's Digest (publishing); OPENFIELD Solutions (retail industry technology provider) </Table> (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 also serve as directors/trustees of the Liberty 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. 33 <Page> OFFICERS COLUMBIA THEMATIC EQUITY FUNDS <Table> <Caption> NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA FUNDS, YEAR FIRST ELECTED OR APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, CHRISTOPHER L. WILSON (age 47) President of the Columbia Funds since October 2004 (formerly President and One Financial Center Chief Executive Officer, CDC IXIS Asset Management Services, Inc. from Boston, MA 02111 September 1998 to August 2004). President (since 2004) J. KEVIN CONNAUGHTON (age 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since One Financial Center December 2000; Vice President of the Advisor since April 2003 (formerly Boston, MA 02111 President of the Columbia Funds from February 2004 to October 2004; Chief Treasurer (since 2000) Accounting Officer and Controller of the Liberty Funds and of the 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 Management Associates, Inc. from February 1998 to October 2000). MARY JOAN HOENE (age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds 40 West 57th Street since August 2004; Chief Compliance Officer of the Liberty All-Star Funds New York, NY 10019 since August 2004 (formerly Partner, Carter, Ledyard & Milburn LLP from Senior Vice President and Chief Compliance January 2001 to August 2004; Counsel, Carter, Ledyard & Milburn LLP from Officer (since 2004) November 1999 to December 2000; Vice President and Counsel, Equitable Life Assurance Society of the United States from April 1998 to November 1999,). MICHAEL G. CLARKE (age 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star One Financial Center Funds since October 2004 (formerly Controller of the Columbia Funds and of Boston, MA 02111 the Liberty All-Star Funds from May 2004 to October 2004; Assistant Chief Accounting Officer (since 2004) Treasurer from June, 2002 to May 2004; Vice President, Product Strategy & Development of the 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, Deloitte & Touche LLP from May 1997 to August 1999). JEFFREY R. COLEMAN (age 34) Controller of the Columbia Funds and of the Liberty All-Star Funds since One Financial Center October 2004 (formerly Vice President of CDC IXIS Asset Management Boston, MA 02111 Services, Inc. and Deputy Treasurer of the CDC Nvest Funds and Loomis Sayles Controller (since 2004) Funds from February 2003 to September 2004; Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to February 2003; Tax Manager of PFPC, Inc. from November 1996 to August 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 General Secretary (since 2003) Counsel, Columbia Management Group since November 2002. </Table> 34 <Page> IMPORTANT INFORMATION ABOUT THIS REPORT COLUMBIA THEMATIC EQUITY FUNDS 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 Thematic Equity Funds. 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 Thematic Equity Funds Performance Update. A description of the policies and procedures that the funds use to determine how to vote proxies relating to their portfolio securities and a copy of the funds' voting record are available (i) at www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov and (iii) without charge, upon request, by calling 800-368-0346. Please note that on March 1, 2004, Ernst & Young LLP ("E&Y") resigned as the funds' independent registered public accounting firm. During the three most recent fiscal years, E&Y's audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. Further, in connection with its audits for the three most recent fiscal years and through March 1, 2004, there were no disagreements between the funds and E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of E&Y would have caused it to make reference to the disagreement in its report on the financial statements for such years. Effective March 1, 2004, PricewaterhouseCoopers LLP was appointed by the audit committee of the Board of Trustees as the independent registered public accounting firm of the funds for the fiscal year ended September 30, 2004. 35 <Page> COLUMBIA FUNDS COLUMBIA THEMATIC EQUITY FUNDS <Table> 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 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 </Table> 36 <Page> <Table> 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 </Table> * The fund will be closed to new investments after the close of business on November 10, 2004. The fund's trustees have approved the merger, which will take effect on or about February 26, 2005, pending shareholder approval. ** The fund will be will be closed to new investments after the close of business on November 10, 2004. The fund's trustees have approved the liquidation, which will take effect on December 10, 2004. 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 and distributor subsidiaries of Columbia Management Group, including Columbia Management Advisors, Inc., the registered investment advisor, and Columbia Funds Distributor, Inc. 37 <Page> [GRAPHIC] Help your fund reduce printing and postage costs! Elect to get your shareholder reports by eletronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. COLUMBIA THEMATIC EQUITY FUNDS ANNUAL REPORT, SEPTEMBER 30, 2004 PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [COLUMBIAFUNDS(R) LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP (C)2004 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 800.345.6611 www.columbiafunds.com LTF-02/982S-0904 (11/04) 04/3401 [GRAPHIC] COLUMBIA GROWTH STOCK FUND ANNUAL REPORT SEPTEMBER 30, 2004 [COLUMBIAFUNDS(R) LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP <Page> TABLE OF CONTENTS <Table> Fund Profile 1 Performance Information 2 Understanding Your Expenses 3 Economic Update 4 Portfolio Manager's Report 5 Financial Statements 7 Investment Portfolio 8 Statement of Assets and Liabilities 11 Statement of Operations 12 Statement of Changes in Net Assets 13 Notes to Financial Statements 14 Financial Highlights 19 Report of Independent Registered Public Accounting Firm 23 Trustees 24 Officers 26 Important Information About This Report 27 Columbia Funds 28 </Table> Economic and market conditions change frequently. There is no assurance that trends described in this report will continue or commence. NOT FDIC MAY LOSE VALUE INSURED ------------------- NO BANK GUARANTEE PRESIDENT'S MESSAGE COLUMBIA GROWTH STOCK FUND DEAR SHAREHOLDER: Your fund's legal and management team here at Columbia Funds have been working hard to strengthen our mutual fund services operation and to ensure that all operations and processes comply with legal and regulatory standards. In the coming months, we will continue to monitor the oversight enhancements recently put in place by your fund's Board of Trustees and make every effort to protect the interests of all our shareholders in everything we do. In our last report, we announced that your fund's advisor, Columbia Management Advisors, Inc., and your fund's distributor, Columbia Funds Distributor, Inc., had reached an agreement with the Securities and Exchange Commission and the New York Attorney General to settle charges involving market timing in some of our mutual funds. We want to reassure you that the settlement and all associated legal fees will be paid by Columbia Management, not by the affected funds or their shareholders. Recently the Securities and Exchange Commission has adopted new rules regarding mutual fund governance. We think it is important for you to know that Columbia Management complied with the majority of these rules well before they were adopted. Your fund's Board of Trustees has taken the following important steps to strengthen its capacity to oversee your fund and to comply with SEC rules. - - THE BOARD OF TRUSTEES APPOINTED MARY JOAN HOENE AS CHIEF COMPLIANCE OFFICER OF COLUMBIA FUNDS. IN THIS ROLE, MS. HOENE WILL REPORT DIRECTLY TO THE BOARD OF TRUSTEES AND WILL WORK WITH THE BOARD OF TRUSTEES AS WELL AS THE SENIOR LEADERSHIP OF COLUMBIA MANAGEMENT, THE INVESTMENT MANAGEMENT ARM OF BANK OF AMERICA, AND WITH BANK OF AMERICA'S PRINCIPAL COMPLIANCE EXECUTIVES. SHE WILL FOCUS ON THE OVERALL COMPLIANCE PROGRAM OF THE FUNDS AND THE RESPONSIBILITY AND PERFORMANCE OF THE FUND'S SERVICE PROVIDERS. PRIOR TO HER APPOINTMENT, MS. HOENE WAS A PARTNER IN THE LAW FIRM OF CARTER, LEDYARD & MILBURN, LLP. PREVIOUSLY SHE ALSO SERVED AS ASSOCIATE DIRECTOR AND DEPUTY DIRECTOR FOR THE SECURITIES AND EXCHANGE COMMISSION DIVISION OF INVESTMENT MANAGEMENT. AS AN ACTIVE ADVISOR, MS. HOENE HAS HELPED SEVERAL FUND BOARDS DEVELOP INDEPENDENT BOARD PRACTICES. THE BOARD IS PLEASED TO HAVE MS. HOENE, WITH HER BROAD AND EXTENSIVE EXPERIENCE, IN THIS IMPORTANT NEW POSITION. - - THE BOARD OF TRUSTEES HAS ESTABLISHED OPERATIONAL GUIDELINES THAT RESULT IN STRONGER, MORE VIGILANT TRUSTEESHIP ACROSS THE ENTIRE COLUMBIA MANAGEMENT ORGANIZATION. BOARD COMMITTEES HAVE BEEN ESTABLISHED TO OVERSEE PRODUCTS BY FUND CATEGORY, ALLOWING FOR GREATER SPECIALIZATION AMONG BOARD TRUSTEES. SHAREHOLDERS WILL ELECT BOARD MEMBERS EVERY FIVE YEARS, BEGINNING IN 2005. - - IN ADDITION TO ENHANCEMENTS TO OVERSIGHT WITHIN COLUMBIA MANAGEMENT, OUR PARENT COMPANY -- BANK OF AMERICA -- HAS ALSO INCREASED THE ROLE THAT SUCH PROFESSIONALS PLAY WITHIN THE BROADER ORGANIZATION. A CHIEF COMPLIANCE OFFICER HAS BEEN NAMED TO REPORT DIRECTLY TO KEN LEWIS, BANK OF AMERICA'S CHIEF EXECUTIVE OFFICER. BANK OF AMERICA HAS ALSO ADOPTED A CORPORATE CODE OF ETHICS COMMITTEE, AN INTERNAL COMPLIANCE CONTROLS COMMITTEE AND A REGULATORY IMPLEMENTATION GROUP TO ENSURE FULL ALIGNMENT AND EXECUTION OF REMEDIAL ACTIONS AND BEST PRACTICES ACROSS THE COMPANY. In the pages that follow, you'll find a discussion of the economic environment during the period, followed by a detailed report from the fund's manager on key factors that influenced performance. This report is rich in information, and you should discuss it with your financial advisor if you have questions. We are committed to providing quality products and services to our shareholders, strengthening your confidence in us, and working hard to help you achieve financial success. It is a privilege to play a role in your financial future, and we value your business. Thank you for choosing Columbia Management. Sincerely, /s/ Christopher Wilson Christopher Wilson HEAD OF MUTUAL FUNDS, COLUMBIA MANAGEMENT Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible for the day-to-day delivery of mutual fund services to the firm's investors. With the exception of distribution, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. Chris serves as Columbia Management's chief liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. <Page> FUND PROFILE COLUMBIA GROWTH STOCK 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. SECTORS AS OF 09/30/04 (%) <Table> Information technology 35.7 Health care 21.5 Consumer staples 13.5 Consumer discretionary 12.5 Financials 8.4 Industrials 4.5 Energy 3.9 </Table> TOP 10 HOLDINGS AS OF 09/30/04 (%) <Table> Microsoft Corp. 5.6 Medtronic, Inc. 4.8 General Electric Co. 4.5 Novartis AG ADR 3.9 Schlumberger Ltd. 3.9 Wal-Mart Stores, Inc. 3.8 Costco Wholesale Corp. 3.8 Pfizer, Inc. 3.7 Johnson & Johnson Co. 3.6 American International Group, Inc. 3.6 </Table> Portfolio holdings are calculated as a percentage of net assets. Sector breakdown is calculated as a percentage of total investments excluding short-term investments. (C)2004 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Morningstar Style Box(TM) reveals a fund's investment strategy. For equity funds the vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend or growth). For fixed-income funds the vertical axis shows the average credit quality of the bonds owned, and the horizontal axis shows interest rate sensitivity as measured by a bond's duration (short, intermediate or long). All of these numbers are drawn from the data most recently provided by the fund and entered into Morningstar's database as of month-end. Although the data are gathered from reliable sources, Morningstar cannot guarantee completeness and accuracy. As of 09/30/2004. [SIDENOTE] SUMMARY - - FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES RETURNED NEGATIVE 0.39% WITHOUT SALES CHARGE. - - SIZABLE ALLOCATIONS IN TECHNOLOGY AND MEDIA STOCKS HURT THE FUND'S PERFORMANCE RELATIVE TO ITS BENCHMARK, THE RUSSELL 1000 GROWTH INDEX, AND ITS PEER GROUP, THE MORNINGSTAR(R) LARGE GROWTH CATEGORY. - - ENERGY STOCKS HELPED PERFORMANCE AS RISING COMMODITY PRICES MADE ENERGY THE PERIOD'S BEST PERFORMER. [CHART] <Table> CLASS A SHARES -0.39% RUSSELL 1000 GROWTH INDEX 7.51% </Table> OBJECTIVE Seeks long-term growth of capital TOTAL NET ASSETS $691.3 million MORNINGSTAR STYLE BOX [GRAPHIC] 1 <Page> PERFORMANCE INFORMATION COLUMBIA GROWTH STOCK FUND [CHART] VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 <Table> <Caption> CLASS A SHARES CLASS A SHARES RUSSELL 1000 WITHOUT SALES CHARGE WITH SALES CHARGE GROWTH INDEX S&P 500 INDEX 10/1/1994 $ 10,000 $ 9,425 $ 10,000 $ 10,000 10/31/1994 $ 10,119 $ 9,537 $ 10,235 $ 10,225 11/30/1994 $ 9,852 $ 9,285 $ 9,906 $ 9,853 12/31/1994 $ 9,953 $ 9,381 $ 10,073 $ 9,999 1/31/1995 $ 10,061 $ 9,482 $ 10,288 $ 10,258 2/28/1995 $ 10,395 $ 9,797 $ 10,720 $ 10,658 3/31/1995 $ 10,674 $ 10,061 $ 11,033 $ 10,972 4/30/1995 $ 10,964 $ 10,333 $ 11,274 $ 11,295 5/31/1995 $ 11,190 $ 10,546 $ 11,666 $ 11,746 6/30/1995 $ 11,641 $ 10,971 $ 12,117 $ 12,019 7/31/1995 $ 12,068 $ 11,374 $ 12,621 $ 12,418 8/31/1995 $ 12,196 $ 11,494 $ 12,635 $ 12,449 9/30/1995 $ 12,819 $ 12,082 $ 13,217 $ 12,974 10/31/1995 $ 12,746 $ 12,013 $ 13,226 $ 12,928 11/30/1995 $ 13,359 $ 12,591 $ 13,741 $ 13,495 12/31/1995 $ 13,500 $ 12,724 $ 13,819 $ 13,756 1/31/1996 $ 13,787 $ 12,994 $ 14,281 $ 14,223 2/29/1996 $ 13,970 $ 13,167 $ 14,542 $ 14,356 3/31/1996 $ 14,138 $ 13,325 $ 14,561 $ 14,493 4/30/1996 $ 14,305 $ 13,482 $ 14,944 $ 14,706 5/31/1996 $ 14,920 $ 14,062 $ 15,466 $ 15,086 6/30/1996 $ 15,081 $ 14,214 $ 15,487 $ 15,143 7/31/1996 $ 14,159 $ 13,345 $ 14,580 $ 14,474 8/31/1996 $ 14,515 $ 13,680 $ 14,956 $ 14,779 9/30/1996 $ 15,518 $ 14,625 $ 16,045 $ 15,611 10/31/1996 $ 15,840 $ 14,930 $ 16,141 $ 16,042 11/30/1996 $ 16,713 $ 15,752 $ 17,353 $ 17,255 12/31/1996 $ 16,329 $ 15,390 $ 17,013 $ 16,913 1/31/1997 $ 17,758 $ 16,737 $ 18,206 $ 17,970 2/28/1997 $ 17,401 $ 16,400 $ 18,082 $ 18,111 3/31/1997 $ 16,289 $ 15,352 $ 17,104 $ 17,366 4/30/1997 $ 17,571 $ 16,560 $ 18,239 $ 18,403 5/31/1997 $ 18,706 $ 17,630 $ 19,556 $ 19,524 6/30/1997 $ 19,566 $ 18,441 $ 20,338 $ 20,398 7/31/1997 $ 21,077 $ 19,865 $ 22,136 $ 22,022 8/31/1997 $ 19,673 $ 18,542 $ 20,841 $ 20,789 9/30/1997 $ 20,657 $ 19,469 $ 21,867 $ 21,928 10/31/1997 $ 20,206 $ 19,045 $ 21,058 $ 21,196 11/30/1997 $ 20,675 $ 19,486 $ 21,953 $ 22,177 12/31/1997 $ 21,496 $ 20,260 $ 22,198 $ 22,559 1/31/1998 $ 21,421 $ 20,189 $ 22,862 $ 22,809 2/28/1998 $ 22,959 $ 21,639 $ 24,581 $ 24,453 3/31/1998 $ 23,962 $ 22,584 $ 25,562 $ 25,706 4/30/1998 $ 24,286 $ 22,889 $ 25,915 $ 25,965 5/31/1998 $ 24,018 $ 22,637 $ 25,179 $ 25,519 6/30/1998 $ 25,464 $ 24,000 $ 26,720 $ 26,555 7/31/1998 $ 25,115 $ 23,671 $ 26,544 $ 26,273 8/31/1998 $ 20,773 $ 19,579 $ 22,559 $ 22,474 9/30/1998 $ 21,627 $ 20,383 $ 24,292 $ 23,915 10/31/1998 $ 23,322 $ 21,981 $ 26,245 $ 25,859 11/30/1998 $ 25,048 $ 23,608 $ 28,242 $ 27,426 12/31/1998 $ 26,987 $ 25,435 $ 30,790 $ 29,006 1/31/1999 $ 29,267 $ 27,584 $ 32,597 $ 30,218 2/28/1999 $ 28,439 $ 26,804 $ 31,107 $ 29,278 3/31/1999 $ 30,239 $ 28,500 $ 32,747 $ 30,449 4/30/1999 $ 29,734 $ 28,024 $ 32,789 $ 31,628 5/31/1999 $ 28,937 $ 27,273 $ 31,783 $ 30,881 6/30/1999 $ 31,082 $ 29,294 $ 34,008 $ 32,595 7/31/1999 $ 30,090 $ 28,360 $ 32,926 $ 31,578 8/31/1999 $ 29,705 $ 27,997 $ 33,463 $ 31,424 9/30/1999 $ 29,411 $ 27,720 $ 32,760 $ 30,563 10/31/1999 $ 31,225 $ 29,430 $ 35,233 $ 32,497 11/30/1999 $ 32,652 $ 30,775 $ 37,136 $ 33,157 12/31/1999 $ 36,868 $ 34,748 $ 40,998 $ 35,110 1/31/2000 $ 36,934 $ 34,811 $ 39,075 $ 33,347 2/29/2000 $ 40,602 $ 38,267 $ 40,986 $ 32,717 3/31/2000 $ 42,685 $ 40,230 $ 43,921 $ 35,917 4/30/2000 $ 40,563 $ 38,231 $ 41,830 $ 34,836 5/31/2000 $ 37,440 $ 35,287 $ 39,722 $ 34,122 6/30/2000 $ 40,776 $ 38,431 $ 42,733 $ 34,964 7/31/2000 $ 39,398 $ 37,132 $ 40,951 $ 34,419 8/31/2000 $ 43,211 $ 40,727 $ 44,657 $ 36,556 9/30/2000 $ 39,715 $ 37,432 $ 40,432 $ 34,626 10/31/2000 $ 36,622 $ 34,516 $ 38,520 $ 34,481 11/30/2000 $ 31,608 $ 29,791 $ 32,842 $ 31,764 12/31/2000 $ 32,686 $ 30,807 $ 31,804 $ 31,919 1/31/2001 $ 33,771 $ 31,829 $ 34,002 $ 33,052 2/28/2001 $ 29,651 $ 27,946 $ 28,228 $ 30,038 3/31/2001 $ 27,442 $ 25,864 $ 25,157 $ 28,134 4/30/2001 $ 30,063 $ 28,334 $ 28,340 $ 30,320 5/31/2001 $ 29,254 $ 27,572 $ 27,923 $ 30,523 6/30/2001 $ 28,075 $ 26,461 $ 27,275 $ 29,781 7/31/2001 $ 26,705 $ 25,170 $ 26,593 $ 29,489 8/31/2001 $ 24,630 $ 23,214 $ 24,418 $ 27,643 9/30/2001 $ 22,445 $ 21,155 $ 21,981 $ 25,410 10/31/2001 $ 23,119 $ 21,789 $ 23,135 $ 25,895 11/30/2001 $ 25,003 $ 23,565 $ 25,358 $ 27,881 12/31/2001 $ 24,860 $ 23,431 $ 25,310 $ 28,126 1/31/2002 $ 24,117 $ 22,730 $ 24,862 $ 27,716 2/28/2002 $ 22,938 $ 21,619 $ 23,830 $ 27,181 3/31/2002 $ 23,975 $ 22,596 $ 24,655 $ 28,203 4/30/2002 $ 22,613 $ 21,313 $ 22,643 $ 26,494 5/31/2002 $ 22,185 $ 20,910 $ 22,095 $ 26,298 6/30/2002 $ 20,404 $ 19,231 $ 20,051 $ 24,425 7/31/2002 $ 18,627 $ 17,556 $ 18,948 $ 22,523 8/31/2002 $ 18,550 $ 17,484 $ 19,005 $ 22,669 9/30/2002 $ 16,714 $ 15,753 $ 17,034 $ 20,205 10/31/2002 $ 17,585 $ 16,574 $ 18,597 $ 21,983 11/30/2002 $ 18,606 $ 17,537 $ 19,606 $ 23,278 12/31/2002 $ 17,432 $ 16,430 $ 18,252 $ 21,911 1/31/2003 $ 17,129 $ 16,144 $ 17,808 $ 21,337 2/28/2003 $ 16,656 $ 15,698 $ 17,726 $ 21,017 3/31/2003 $ 17,016 $ 16,038 $ 18,056 $ 21,221 4/30/2003 $ 18,323 $ 17,269 $ 19,390 $ 22,970 5/31/2003 $ 19,193 $ 18,090 $ 20,358 $ 24,180 6/30/2003 $ 19,268 $ 18,160 $ 20,639 $ 24,490 7/31/2003 $ 19,912 $ 18,767 $ 21,153 $ 24,921 8/31/2003 $ 20,272 $ 19,106 $ 21,679 $ 25,407 9/30/2003 $ 19,609 $ 18,482 $ 21,447 $ 25,137 10/31/2003 $ 20,650 $ 19,463 $ 22,653 $ 26,560 11/30/2003 $ 21,105 $ 19,891 $ 22,890 $ 26,794 12/31/2003 $ 21,729 $ 20,480 $ 23,682 $ 28,198 1/31/2004 $ 21,786 $ 20,533 $ 24,166 $ 28,717 2/29/2004 $ 21,540 $ 20,301 $ 24,320 $ 29,116 3/31/2004 $ 21,010 $ 19,802 $ 23,868 $ 28,676 4/30/2004 $ 20,632 $ 19,445 $ 23,591 $ 28,226 5/31/2004 $ 21,180 $ 19,963 $ 24,030 $ 28,613 6/30/2004 $ 21,161 $ 19,945 $ 24,330 $ 29,168 7/31/2004 $ 19,951 $ 18,804 $ 22,956 $ 28,202 8/31/2004 $ 19,572 $ 18,446 $ 22,843 $ 28,315 9/30/2004 $ 19,525 $ 18,402 $ 23,060 $ 28,612 </Table> The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher 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 U.S. stocks. The S&P 500 Index was the fund's previous benchmark. 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 09/30/04 (%) <Table> <Caption> SHARE CLASS A B C Z - --------------------------------------------------------------------------------------------------- INCEPTION 07/15/02 07/15/02 07/15/02 07/01/58 - --------------------------------------------------------------------------------------------------- SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - --------------------------------------------------------------------------------------------------- 1-year -0.39 -6.10 -1.11 -6.05 -1.01 -2.00 0.36 5-year -7.86 -8.94 -8.15 -8.44 -8.13 -8.13 -7.57 10-year 6.92 6.29 6.75 6.75 6.76 6.76 7.09 </Table> THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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 reimbursements of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The performance information for class A, B, and C shares (newer class shares) includes returns for the fund's class Z shares (the oldest existing fund class) for periods prior to the inception date of the newer class shares. The newer class shares returns are not restated to reflect any expense differential (e.g. Rule 12b-1 fees and transfer agent fees) between class Z shares and the newer class shares. Had the expense differential been reflected, the returns for the periods prior to the inception of the newer class shares would have been different. Class A, B, and C shares were initially offered July 15, 2002 and Class Z shares were initially offered July 1, 1958. [SIDENOTE] PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($) <Table> <Caption> SALES CHARGE: WITHOUT WITH - ---------------------------------------- Class A 19,525 18,402 Class B 19,214 19,214 Class C 19,234 19,234 Class Z 19,831 n/a </Table> Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. 2 <Page> UNDERSTANDING YOUR EXPENSES COLUMBIA GROWTH STOCK 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 continuing costs, which generally include investment advisory 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 this cost with the continuing 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. APRIL 1, 2004 - SEPTEMBER 30, 2004 <Table> <Caption> ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) -------------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL -------------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 931.45 1,017.35 7.39 7.72 1.53 Class B 1,000.00 1,000.00 927.75 1,013.70 10.89 11.38 2.26 Class C 1,000.00 1,000.00 928.75 1,013.90 10.70 11.18 2.22 Class Z 1,000.00 1,000.00 936.50 1,020.75 4.12 4.29 0.85 </Table> 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 Transfer Agent not waived or reimbursed a portion of Class Z shares' expenses, Class Z shares' total return would have been reduced. Had the Distributor not waived a portion of Class A shares' expenses, Class A shares' total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only continuing 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 will 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 fund companies, 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. [SIDENOTE] 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: - - 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 - - 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 THE 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 3 <Page> ECONOMIC UPDATE COLUMBIA GROWTH STOCK FUND Despite uncertainty about job growth, rising energy prices and a slowdown in consumer spending, the US economy grew at a pace of more than 4.5% during the 12-month period that began October 1, 2003, and ended September 30, 2004. Growth encountered a soft patch in the second quarter of 2004, but monthly data suggested that it picked up again in the third quarter. Job growth dominated the economic news during this reporting period: When more than one million jobs were created in the spring of 2004, consumer confidence soared to its highest level in two years. However, when job growth fell below expectations during the summer months, consumer confidence fell. According to the Labor Department's payroll survey, the job market has not fully recovered from the losses incurred during the economic downturn of 2000-2001, and that has left consumers more cautious about the months ahead. Consumer spending held up for most of the period, as last year's tax rebates and tax cuts worked their way into household budgets. Even when consumer spending declined during the summer, housing activity remained strong. Also, the business sector stepped into the gap created by sagging consumer spending. Industrial production rose; factories utilized more of their capacity; and spending on technology, capital equipment and construction picked up. STOCKS OUTPERFORMED BONDS Buoyed by strong gains at the beginning of the period, the S&P 500 Index returned 13.87% during this 12-month reporting period. However, concerns about new terror threats and higher interest rates and energy prices helped sideline investors as the period wore on. Late in the period, leadership passed from small-cap stocks to mid- and large-cap stocks. Value stocks continued to lead growth stocks until the final month of the period, when small- and mid-cap growth stocks bested their value counterparts. Energy and real estate investment trusts were the best-performing sectors. BONDS DELIVER RESPECTABLE GAINS Despite periods of interest-rate volatility, the US bond market delivered respectable gains during the period. Bond prices sagged in the spring when job growth picked up and investors began to anticipate higher short term interest rates. However, a shaky stock market, higher energy prices and some mixed economic data gave the bond market a boost in the last three months of the period. The 10-year Treasury yield ended the period at 4.1%, very close to where it started. In this environment, the Lehman Brothers Aggregate Bond Index returned 3.68%. High-yield bonds gained 12.23%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. However, most of those gains were achieved during the first half of the reporting period. In the second half, slower economic growth and high valuations made high-yield bonds less attractive. After a year of the lowest short-term interest rates in recent history, the Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.0% to 1.75% in three equal steps during the period. The Fed indicated that it would continue to raise short-term interest rates at a "measured pace," in an attempt to balance economic growth against inflationary pressures. [SIDENOTE] SUMMARY: FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2004 - - STOCK PRICES ROSE, AS MEASURED BY THE S&P 500 INDEX AND THE BROADER RUSSELL 3000 INDEX. MANY SECTORS RETREATED AS SHORT-TERM INTEREST RATES MOVED HIGHER IN THE SUMMER AND A HOST OF UNCERTAINTIES UNSETTLED INVESTORS. [CHART] <Table> S&P 500 INDEX 13.87% RUSSELL 3000 INDEX 14.26% </Table> - - DESPITE INTEREST RATE VOLATILITY, INVESTMENT-GRADE BONDS CHALKED UP RESPECTABLE GAINS. THE LEHMAN BROTHERS AGGREGATE BOND INDEX RETURNED 3.68%. HIGH-YIELD BONDS, WHICH CAN BE LESS SENSITIVE TO CHANGING INTEREST RATES, LED THE FIXED-INCOME MARKETS. THE MERRILL LYNCH US HIGH YIELD, CASH PAY INDEX RETURNED 12.23% [CHART] <Table> MERRILL LYNCH INDEX 12.23% LEHMAN INDEX 3.68% </Table> 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 the performance of fixed-rate, publicly placed, dollar-denominated, 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 <Page> PORTFOLIO MANAGER'S REPORT COLUMBIA GROWTH STOCK FUND For the 12-month period ended September 30, 2004, Columbia Growth Stock Fund class A shares returned negative 0.39% without sales charge. Performance fell short of the Russell 1000 Growth Index, which returned 7.51% during the same period. The fund also came out behind the Morningstar(R) Large Growth Category average, which returned 7.61%.(1) The fund's strategy is to buy and hold concentrated positions in stocks that we believe will be superior performers over the long term. This approach hampered the fund's return during the period because the areas in which assets were concentrated--technology and media--both experienced declines. Many of the companies owned by the fund continued to experience revenue and earnings growth, but these gains were not reflected in their stock prices during the period as investors focused on external market factors. DECLINE IN TECHNOLOGY AMID GROWING ECONOMIC CONCERNS About one-third of the fund's assets were in the technology sector where we found attractive, long-term investment opportunities among businesses with proprietary products, strong pricing, high gross margins and high profits. We expected technology stocks to benefit from positive economic growth domestically and internationally. Instead, technology stocks fell in 2004, as investors worried about the sustainability of the sector's strong performance and buildups in inventory. Our focus was on semiconductor ("chip") and semiconductor capital equipment companies, which were especially weak performers. Detractors included semiconductor capital equipment companies Novellus Systems and ASML Holding, and Xilinx, which makes programmable logic chips. FURTHER DISAPPOINTMENTS FROM MEDIA We also had an above-average stake in media companies, where we believe that proprietary entertainment products have the potential to create their own demand. We expected the sector to benefit from a boost in advertising revenues, given strong corporate profit growth. Profits were strong, but advertising spending fell short of our expectations. This hurt Viacom, which owns Infinity Broadcasting (a chain of radio stations), CBS, Paramount Pictures, MTV and Nickelodeon. In addition, the fund owned Comcast, which lost ground after making an unaccepted bid to acquire Walt Disney Company. (1) (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. [SIDENOTE] NET ASSET VALUE PER SHARE AS OF 09/30/04 ($) <Table> Class A 10.32 Class B 9.82 Class C 9.82 Class Z 8.35 </Table> HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%) <Table> Novellus Systems, Inc. 2.1 ASML Holding N.V., N.Y. Registered shares 2.4 Xilinx, Inc. 2.7 Viacom, Inc., Class B 2.7 Comcast Corp., Class A 2.7 Novartis AG, ADR 3.9 Medtronic, Inc. 4.8 Cardinal Health, Inc. 2.4 Schlumberger Ltd. 3.9 General Electric Co. 4.5 American International Group, Inc. 3.6 Costco Wholesale Corp. 3.8 </Table> Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. 5 <Page> MIXED RESULTS FROM HEALTH CARE STOCKS Health care stocks came under pressure as investors worried about upcoming patent expirations and a lack of new blockbuster drugs on the horizon. Despite this negative environment, Novartis and Medtronic generated strong returns. Novartis is a Swiss pharmaceuticals company, while Medtronic is a medical device company. Both companies benefited from new product pipelines that we did not think had been fully appreciated by investors. By contrast, the fund lost ground on Cardinal Health, a leading wholesale distributor of drugs, medical supplies and equipment that was hard hit by news of accounting irregularities. BRIGHT SPOTS INCLUDED ENERGY, INDUSTRIALS, FINANCIALS AND CONSUMER STOCKS Some of the fund's biggest stock price gains came from energy, as record high commodity prices sent energy stock prices skyrocketing. Schlumberger, an exploration and production company that uses technology to find new fields and get more out of existing deposits, provided one of the biggest price gains in the fund. Industrials and financials also bolstered performance. General Electric posted above-average gains, while American International Group rallied as insurance pricing improved and the company expanded operations in Asia. Winners elsewhere included Costco Wholesale, a warehouse club that operates a low cost business model and passes the savings to its customers. OUTLOOK FAVORS LARGE-CAP GROWTH DISCIPLINE We remain optimistic about the prospects for large-cap growth stocks, which are the focus of the fund. Valuations appear to us to be attractive, and the economic outlook remains favorable. Our expectation is that the economy will continue to grow, but growth rates for corporate profits will slow. Typically, large-cap stocks with a history of consistent earnings growth do well in the later stages of an economic expansion as growth becomes harder to generate. We also believe that investments that have been volatile on the downside may have some of the strongest potential for gains on the upside. [PHOTO OF PAUL BLAUSTEIN] Paul Blaustein, CFA, has managed Columbia Growth Stock Fund since November 2003 and has been with the advisor since 2003. /s/ Paul Blaustein An investment in the fund offers the potential for long-term growth, but also involves certain risks, including stock market fluctuations due to economic and business developments. In addition, the fund's share price will likely be subject to more volatility than the overall stock market because it concentrates in technology stocks. [SIDENOTE] WE REMAIN OPTIMISTIC ABOUT THE PROSPECTS FOR LARGE-CAP GROWTH STOCKS. VALUATIONS APPEAR TO US TO BE ATTRACTIVE, AND THE ECONOMIC OUTLOOK REMAINS FAVORABLE. 6 <Page> FINANCIAL STATEMENTS SEPTEMBER 30, 2004 COLUMBIA GROWTH STOCK 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 <Page> INVESTMENT PORTFOLIO SEPTEMBER 30, 2004 COLUMBIA GROWTH STOCK FUND <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS - 99.3% CONSUMER DISCRETIONARY - 12.4% MEDIA - 10.7% Comcast Corp., Class A (a) 660,000 18,638,400 Liberty Media Corp., Class A (a) 1,054,500 9,195,240 Liberty Media International, Inc., Class A (a) 65,110 2,172,200 News Corp. Ltd., ADR 308,700 10,146,969 Time Warner, Inc. (a) 953,500 15,389,490 Viacom, Inc., Class B 555,800 18,652,648 Media Total 74,194,947 SPECIALTY RETAIL - 1.7% Home Depot, Inc. 297,200 11,650,240 Specialty Retail Total 11,650,240 -------------- CONSUMER DISCRETIONARY TOTAL 85,845,187 CONSUMER STAPLES - 13.4% FOOD & STAPLES RETAILING - 7.7% Costco Wholesale Corp. 631,000 26,224,360 Wal-Mart Stores, Inc. 499,600 26,578,720 Food & Staples Retailing Total 52,803,080 HOUSEHOLD PRODUCTS - 5.7% Colgate-Palmolive Co. 427,100 19,296,378 Procter & Gamble Co. 375,000 20,295,000 Household Products Total 39,591,378 -------------- CONSUMER STAPLES TOTAL 92,394,458 ENERGY - 3.9% ENERGY EQUIPMENT & SERVICES - 3.9% Schlumberger Ltd. 397,000 26,722,070 Energy Equipment & Services Total 26,722,070 -------------- ENERGY TOTAL 26,722,070 FINANCIALS - 8.3% CAPITAL MARKETS - 1.3% Merrill Lynch & Co., Inc. 187,300 9,312,556 Capital Markets Total 9,312,556 COMMERCIAL BANKS - 3.4% Wells Fargo & Co. 397,900 23,726,777 Commercial Banks Total 23,726,777 INSURANCE - 3.6% American International Group, Inc. 363,700 24,727,963 Insurance Total 24,727,963 -------------- FINANCIALS TOTAL 57,767,296 HEALTH CARE - 21.4% BIOTECHNOLOGY - 3.0% Amgen, Inc. (a) 361,800 20,506,824 Biotechnology Total 20,506,824 HEALTH CARE EQUIPMENT & SUPPLIES - 4.8% Medtronic, Inc. 644,300 33,439,170 Health Care Equipment & Supplies Total 33,439,170 HEALTH CARE PROVIDERS & SERVICES - 2.4% Cardinal Health, Inc. 372,000 16,282,440 Health Care Providers & Services Total 16,282,440 </Table> See Accompanying Notes to Financial Statements. 8 <Page> <Table> <Caption> SHARES VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) PHARMACEUTICALS - 11.2% Johnson & Johnson Co. 445,400 25,089,382 Novartis AG, ADR 579,100 27,026,597 Pfizer, Inc. 832,600 25,477,560 Pharmaceuticals Total 77,593,539 -------------- HEALTH CARE TOTAL 147,821,973 INDUSTRIALS - 4.5% Industrial Conglomerates - 4.5% General Electric Co. 929,700 31,219,326 Industrial Conglomerates Total 31,219,326 -------------- INDUSTRIALS TOTAL 31,219,326 INFORMATION TECHNOLOGY - 35.4% COMMUNICATIONS EQUIPMENT - 3.2% Cisco Systems, Inc. (a) 1,232,600 22,310,060 Communications Equipment Total 22,310,060 COMPUTERS & PERIPHERALS - 3.1% Dell, Inc. (a) 609,100 21,683,960 Computers & Peripherals Total 21,683,960 IT SERVICES - 1.7% Paychex, Inc. 384,000 11,577,600 IT Services Total 11,577,600 SEMICONDUCTORS & Altera Corp. (a) 1,094,200 21,413,494 SEMICONDUCTOR EQUIPMENT - 120.0% Analog Devices, Inc. 328,200 12,727,596 Applied Materials, Inc. (a) 946,300 15,604,487 ASML Holding N.V., N.Y. Registered Shares (a) 1,274,500 16,402,815 Intel Corp. 70,200 1,408,212 Marvell Technology Group Ltd. (a) 270,700 7,073,391 Maxim Integrated Products, Inc. 482,900 20,421,841 Microchip Technology, Inc. 372,600 10,000,584 Novellus Systems, Inc. (a) 543,000 14,438,370 Xilinx, Inc. 702,600 18,970,200 Semiconductors & Semiconductor Equipment Total 138,460,990 SOFTWARE - 7.4% Microsoft Corp. 1,406,900 38,900,785 SAP AG, ADR 303,800 11,833,010 Software Total 50,733,795 -------------- INFORMATION TECHNOLOGY TOTAL 244,766,405 -------------- TOTAL COMMON STOCKS (cost of $598,068,855) 686,536,715 </Table> See Accompanying Notes to Financial Statements. 9 <Page> <Table> <Caption> PAR ($) VALUE ($) - ------------------------------------------------------------------------------------------------------------------------------- SHORT-TERM OBLIGATION - 0.1% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04, due 10/01/04 at 1.580%, collateralized by U.S. Treasury Bonds with various maturities to 08/15/22, market value $672,579 (repurchase proceeds $654,029) 654,000 654,000 TOTAL SHORT-TERM OBLIGATION (cost of $654,000) 654,000 TOTAL INVESTMENTS - 99.4% (COST OF $598,722,855) (b) 687,190,715 OTHER ASSETS & LIABILITIES, NET - 0.6% 4,079,231 NET ASSETS - 100.0% 691,269,946 </Table> NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $602,390,416. <Table> <Caption> ACRONYM NAME ------------------------------------------------------------ ADR American Depositary Receipt </Table> See Accompanying Notes to Financial Statements. 10 <Page> STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2004 COLUMBIA GROWTH STOCK FUND <Table> <Caption> ($) - ------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at cost 598,722,855 -------------- Investments, at value 687,190,715 Cash 731 Receivable for: Investments sold 5,291,775 Fund shares sold 446,166 Interest 29 Dividends 373,823 Expense reimbursement due from Investment Advisor 16,571 Deferred Trustees' compensation plan 20,133 -------------- Total Assets 693,339,943 LIABILITIES Payable for: Fund shares repurchased 1,029,653 Investment advisory fee 346,743 Administration fee 77,833 Transfer agent fee 263,099 Pricing and bookkeeping fees 16,910 Trustees' fees 1,740 Distribution and service fees 229,034 Deferred Trustees' fees 20,133 Other liabilities 84,852 -------------- Total Liabilities 2,069,997 NET ASSETS 691,269,946 COMPOSITION OF NET ASSETS Paid-in capital 1,091,154,970 Accumulated net investment loss (18,665) Accumulated net realized loss (488,334,219) Net unrealized appreciation on investments 88,467,860 NET ASSETS 691,269,946 CLASS A Net assets 66,142,318 Shares outstanding 6,407,639 Net asset value per share 10.32(a) Maximum offering price per share ($10.32/0.9425) 10.95(b) CLASS B Net assets 245,136,689 Shares outstanding 24,963,569 Net asset value and offering price per share 9.82(a) CLASS C Net assets 20,100,005 Shares outstanding 2,047,793 Net asset value and offering price per share 9.82(a) CLASS Z Net assets 359,890,934 Shares outstanding 43,122,286 Net asset value, offering and redemption price per share 8.35 </Table> (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 11 <Page> STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2004 COLUMBIA GROWTH STOCK FUND <Table> <Caption> ($) - ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends 6,871,435 Interest 68,659 -------------- Total Investment Income (net of foreign taxes withheld of $90,475) 6,940,094 EXPENSES Investment advisory fee 4,647,331 Administration fee 1,124,393 Distribution fee: Class A 80,000 Class B 2,224,912 Class C 193,643 Service fee: Class A 200,002 Class B 741,637 Class C 64,548 Transfer agent fee: Class A 360,774 Class B 1,487,460 Class C 117,419 Class Z 529,193 Pricing and bookkeeping fees 174,740 Trustees' fees 24,775 Custody fee 22,915 Non-recurring costs (See Note 7) 37,665 Other expenses 397,643 -------------- Total Expenses 12,429,050 Fees and expenses waived or reimbursed by Transfer Agent - Class Z (193,198) Fees waived by Distributor - Class A (40,000) Non-recurring costs assumed by Investment Advisor (See Note 7) (37,665) Custody earnings credit (500) -------------- Net Expenses 12,157,687 -------------- Net Investment Loss (5,217,593) NET REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain on investments 62,741,007 ON INVESTMENTS Net change in unrealized appreciation/depreciation on investments (53,726,795) -------------- Net Gain 9,014,212 -------------- Net Increase in Net Assets from Operations 3,796,619 </Table> See Accompanying Notes to Financial Statements. 12 <Page> STATEMENT OF CHANGES IN NET ASSETS COLUMBIA GROWTH STOCK FUND <Table> <Caption> YEAR ENDED SEPTEMBER 30, -------------------------------- INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 ($) - --------------------------------------- ------------------------------------------------------------------------------------- OPERATIONS Net investment loss (5,217,593) (4,504,325) Net realized gain (loss) on investments 62,741,007 (82,513,256) Net change in unrealized appreciation/depreciation on investments (53,726,795) 213,477,987 -------------------------------- Net Increase from Operations 3,796,619 126,460,406 SHARE TRANSACTIONS Class A: Subscriptions 14,653,162 52,887,088 Redemptions (31,034,051) (67,933,556) -------------------------------- Net Decrease (16,380,889) (15,046,468) Class B: Subscriptions 15,919,825 23,561,376 Redemptions (74,892,692) (72,246,627) -------------------------------- Net Decrease (58,972,867) (48,685,251) Class C: Subscriptions 2,549,820 5,839,044 Redemptions (10,634,792) (10,240,886) -------------------------------- Net Decrease (8,084,972) (4,401,842) Class Z: Subscriptions 70,908,194 36,268,004 Redemptions (98,706,026) (72,221,109) -------------------------------- Net Decrease (27,797,832) (35,953,105) Net Decrease from Share Transactions (111,236,560) (104,086,666) -------------------------------- Total Increase (Decrease) in Net Assets (107,439,941) 22,373,740 NET ASSETS Beginning of period 798,709,887 776,336,147 End of period (including accumulated net investment loss of $(18,665) and $(14,274), respectively) 691,269,946 798,709,887 CHANGES IN SHARES Class A: Subscriptions 1,324,748 5,514,819 Redemptions (2,828,087) (6,824,132) -------------------------------- Net Decrease (1,503,339) (1,309,313) Class B: Subscriptions 1,497,689 2,524,637 Redemptions (7,140,520) (7,881,240) -------------------------------- Net Decrease (5,642,831) (5,356,603) Class C: Subscriptions 240,936 629,913 Redemptions (1,008,828) (1,111,906) -------------------------------- Net Decrease (767,892) (481,993) Class Z: Subscriptions 7,969,960 4,591,242(a) Redemptions (11,099,886) (9,410,280)(a) -------------------------------- Net Decrease (3,129,926) (4,819,038) </Table> (a) Capital share activity prior to July 25, 2003 has been restated to reflect a 3-for-1 share split. See Accompanying Notes to Financial Statements. 13 <Page> NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2004 COLUMBIA GROWTH STOCK FUND NOTE 1. ORGANIZATION Columbia Growth Stock Fund (the "Fund"), a series of Columbia Funds Trust XI (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 GOALS The Fund seeks long-term growth of capital. FUND SHARES The Fund may issue an unlimited number of shares and offers four classes of shares: Class A, Class B, Class C and Class Z. Each share class has its own sales charge and expense structure. Class A shares are subject to a maximum front-end sales charge of 5.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. Effective October 13, 2003, the Liberty Growth Stock Fund was renamed Columbia Growth Stock Fund. Also on this date, the Liberty-Stein Roe Funds Investment Trust was renamed Columbia Funds Trust XI. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION Equity securities are valued at the last sale price on the principal exchange on which they trade, except for securities traded on the NASDAQ, which are valued at the NASDAQ official close price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the 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 14 <Page> the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. 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 September 30, 2004, permanent differences resulting primarily from differing treatments for net operating losses were identified and reclassified among the components of the Fund's net assets as follows: <Table> <Caption> ACCUMULATED ACCUMULATED NET INVESTMENT NET REALIZED PAID-IN LOSS LOSS CAPITAL - -------------------------------------------------------------- $ 5,213,202 $ -- $ (5,213,202) </Table> Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. As of September 30, 2004, the components of distributable earnings on a tax basis were as follows: <Table> <Caption> UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* - -------------------------------------------------------------- $ -- $ -- $ 84,800,299 </Table> *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 September 30, 2004, based on cost of investments for federal income tax purposes was: <Table> Unrealized appreciation $ 133,341,227 Unrealized depreciation (48,540,928) -------------- Net unrealized appreciation $ 84,800,299 </Table> The following capital loss carryforwards, determined as of September 30, 2004, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: <Table> <Caption> YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD ------------------------------------------------- 2008 $ 22,583,899 2009 201,991,560 2011 253,937,044 2012 5,529,590 -------------- $ 484,042,093 </Table> Of these capital loss carryforwards, $219,806,550 ($22,583,899 expiring 09/30/08 and $197,222,651 expiring 09/30/09) and $4,768,909 (expiring 09/30/09) were obtained upon the Fund's mergers with Liberty Growth Stock Fund and Stein Roe Focus Fund, respectively. Utilization of Liberty Growth Stock Fund's and Stein Roe Focus Fund's losses could be subject to limitations imposed by the Internal Revenue Code. Under current tax rules, certain currency and capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of September 30, 2004, post-October capital losses of $624,565 attributed to security transactions were deferred to October 1, 2004. 15 <Page> 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: <Table> <Caption> AVERAGE DAILY NET ASSETS ANNUAL FEE RATE ----------------------------------------------- First $500 million 0.60% Next $500 million 0.55% Next $1 billion 0.50% Over $2 billion 0.45% </Table> For the year ended September 30, 2004, the Fund's effective investment advisory fee rate was 0.58%. ADMINISTRATION FEE Columbia provides administrative and other services to the Fund for a monthly administration fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS ANNUAL FEE RATE ----------------------------------------------- First $500 million 0.150% Next $500 million 0.125% Next $500 million 0.100% Next $500 million 0.075% Over $2 billion 0.050% </Table> Prior to November 1, 2003, Columbia was entitled to receive a monthly administration fee based on the Fund's average daily net assets at the following annual rates: <Table> <Caption> AVERAGE DAILY NET ASSETS ANNUAL FEE RATE ----------------------------------------------- First $500 million 0.150% Next $500 million 0.125% Next $1 billion 0.100% Over $2 billion 0.075% </Table> For the year ended September 30, 2004, the Fund's effective administration fee rate was 0.14%. 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 collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services based on the number of securities held by the Fund. For the year ended September 30, 2004, the effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.022%. 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 per class. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. The Transfer Agent has voluntarily agreed to waive a portion of the Class Z transfer agent fee so that such fee (exclusive of out-of-pocket expenses) will not exceed 0.05% annually of the Class Z average daily net assets. The Transfer Agent, at its discretion, may revise or discontinue this arrangement any time. Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly transfer agent fee, in addition to reimbursement for certain out-of-pocket expenses, at the annual rate of 0.06% of the Fund's average daily net assets plus flat-rate charges based on the number of shareholder accounts and transactions. 16 <Page> Effective October 13, 2003, Liberty Funds Services, Inc. was renamed Columbia Funds Services, Inc. UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. For the year ended September 30, 2004, the Distributor has retained net underwriting discounts of $18,870 on sales of the Fund's Class A shares and received CDSC fees of $4,536, $915,732 and $4,459 on Class A, Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a monthly service fee to the Distributor at the annual rate of 0.25% of the average daily net assets attributable to Class A, Class B and Class C shares of the Fund. The Plan also requires the payment of a monthly distribution fee to the Distributor at the annual rates of 0.10%, 0.75% and 0.75% of the average daily net assets attributable to Class A, Class B and Class C shares of the Fund, respectively. The Distributor has voluntarily agreed to waive a portion of the Class A share distribution fee so that it will not exceed 0.05% annually of Class A average daily net assets. 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. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Chief Compliance Officer role. The Fund's fee will not exceed $15,000 per year. 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 September 30, 2004, the Fund paid $2,623 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. NOTE 5. PORTFOLIO INFORMATION For the year ended September 30, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $404,570,451 and $512,301,644, respectively. NOTE 6. LINE OF CREDIT The Fund and other affiliated funds participate in a $350,000,000 credit facility, which is used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to the Fund based on its borrowings. In addition, the Fund has agreed to pay commitment fees on its pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the year ended September 30, 2004, the Fund did not borrow under this arrangement. NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES LEGAL PROCEEDINGS Columbia, the Distributor, and certain of their affiliates (collectively, "The Columbia Group") have received information requests and subpoenas from various regulatory and law enforcement authorities in connection with their investigations of late trading and market timing in mutual funds as well as other industry wide issues. The Columbia Group has not uncovered any instances where Columbia or the 17 <Page> 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 of its 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 September 30, 2004, Columbia has assumed $37,665 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. NOTE 8. COMPARABILITY OF FINANCIAL STATEMENTS CAPITAL ACTIVITY Effective July 25, 2003, there was a 3-for-1 split on Class Z shares. The accompanying prior period financial highlights for Class Z have been adjusted to reflect the 3-for-1 split. 18 <Page> FINANCIAL HIGHLIGHTS COLUMBIA GROWTH STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: <Table> <Caption> YEAR ENDED SEPTEMBER 30, PERIOD ENDED --------------------------------- SEPTEMBER 30, CLASS A SHARES 2004 2003 2002(a) - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.36 $ 8.83 $ 9.98 INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.08) (0.05) (0.01) Net realized and unrealized gain (loss) on investments 0.04 1.58 (1.14) -------------- -------------- -------------- Total from Investment Operations (0.04) 1.53 (1.15) NET ASSET VALUE, END OF PERIOD $ 10.32 $ 10.36 $ 8.83 Total return (c)(d) (0.39)% 17.33% (11.52)%(e) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (f) 1.55% 1.54% 1.63%(h) Interest expense -- --%(g) -- Net expenses (f) 1.55% 1.54% 1.63%(h) Net investment loss (f) (0.68)% (0.53)% (0.41)%(h) Waiver/reimbursement 0.05% 0.05% 0.05%(h) NPortfolio turnover rate 51% 108% 71% Net assets, end of period (000's) $ 66,142 $ 81,967 $ 81,442 </Table> (a) Class A shares were initially offered on July 15, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming no initial sales charge or contingent deferred sales charge. (d) Had the Distributor not waived a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Rounds to less than 0.01%. (h) Annualized. 19 <Page> <Table> <Caption> YEAR ENDED SEPTEMBER 30, PERIOD ENDED --------------------------------- SEPTEMBER 30, CLASS B SHARES 2004 2003 2002(a) - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 9.93 $ 8.52 $ 9.65 INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.15) (0.11) (0.02) Net realized and unrealized gain (loss) on investments 0.04 1.52 (1.11) -------------- -------------- -------------- Total from Investment Operations (0.11) 1.41 (1.13) NET ASSET VALUE, END OF PERIOD $ 9.82 $ 9.93 $ 8.52 Total return (c) (1.11)% 16.55% (11.71)%(d) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (e) 2.30% 2.24% 2.33%(g) Interest expense -- --%(f) -- Net expenses (e) 2.30% 2.24% 2.33%(g) Net investment loss (e) (1.43)% (1.23)% (1.11)%(g) Portfolio turnover rate 51% 108% 71% Net assets, end of period (000's) $ 245,137 $ 303,943 $ 306,561 </Table> (a) Class B shares were initially offered on July 15, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming no contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Rounds to less than 0.01%. (g) Annualized. 20 <Page> <Table> <Caption> YEAR ENDED SEPTEMBER 30, PERIOD ENDED --------------------------------- SEPTEMBER 30, CLASS C SHARES 2004 2003 2002(a) - ------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 9.92 $ 8.52 $ 9.64 INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.15) (0.11) (0.02) Net realized and unrealized gain (loss) on investments 0.05 1.51 (1.10) -------------- -------------- -------------- Total from Investment Operations (0.10) 1.40 (1.12) NET ASSET VALUE, END OF PERIOD $ 9.82 $ 9.92 $ 8.52 Total return (c) (1.01)% 16.43% (11.62)%(d) RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (e) 2.25% 2.24% 2.33%(g) Interest expense -- --%(f) -- Net expenses (e) 2.25% 2.24% 2.33%(g) Net investment loss (e) (1.39)% (1.23)% (1.11)%(g) Portfolio turnover rate 51% 108% 71% Net assets, end of period (000's) $ 20,100 $ 27,938 $ 28,093 </Table> (a) Class C shares were initially offered on July 15, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming no contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Rounds to less than 0.01%. (g) Annualized. 21 <Page> <Table> <Caption> YEAR ENDED SEPTEMBER 30, ----------------------------------------------------------------------------- CLASS Z SHARES 2004 2003(a) 2002(a)(b) 2001(a) 2000(a) - ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 8.32 $ 7.05 $ 9.45 $ 19.89 $ 15.73 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (c) --(d) --(d) 0.01(e) (0.01)(e) (0.08)(e) Net realized and unrealized gain (loss) on investments 0.03 1.27 (2.41) (7.77) 5.39 ---------- ---------- ---------- ---------- ----------- Total from Investment Operations 0.03 1.27 (2.40) (7.78) 5.31 LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- -- (2.66) (1.15) NET ASSET VALUE, END OF PERIOD $ 8.35 $ 8.32 $ 7.05 $ 9.45 $ 19.89 Total return (f) 0.36%(g) 17.96%(g) (25.34)%(g) (43.48)% 35.04% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (h) 0.89% 1.00% 0.88%(e) 0.95%(e) 0.95%(e) Interest expense -- --%(i) -- -- -- Net expenses (h) 0.89% 1.00% 0.88%(e) 0.95%(e) 0.95%(e) Net investment income (loss) (h) (0.02)% 0.01% 0.08%(e) (0.05)%(e) (0.44)%(e) Waiver/reimbursement 0.05% 0.06% 0.01% -- -- Portfolio turnover rate 51% 108% 71% 73%(j) 74%(j) Net assets, end of period (000's) $ 359,891 $ 384,861 $ 360,240 $ 551,474 $ 1,083,271 </Table> (a) Per share data has been restated to reflect a 3-for-1 share split effective July 25, 2003. (b) On July 15, 2002, the Stein Roe Growth Stock Fund was redesignated Liberty Growth Stock Fund, Class Z shares. (c) Per share data was calculated using average shares outstanding during the period. (d) Rounds to less than $0.01 per share. (e) Per share amounts and ratios reflect income and expenses inclusive of the Fund's proportionate share of the income and expenses of the SR&F Growth Stock Portfolio prior to the termination of their master/feeder fund structure on July 12, 2002. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor/Transfer Agent not waived a portion of expenses, total return would have been reduced. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Round to less than 0.01%. (j) Portfolio turnover rate disclosed is for the SR&F Growth Stock Portfolio. 22 <Page> REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM COLUMBIA GROWTH STOCK FUND TO THE TRUSTEES OF COLUMBIA FUNDS TRUST XI AND THE SHAREHOLDERS OF COLUMBIA GROWTH STOCK 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 Stock Fund (the "Fund") (a series of Columbia Funds Trust XI), at September 30, 2004 and the results of its operations, the changes in its net assets, and its financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit 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 portfolio positions at September 30, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts November 15, 2004 23 <Page> TRUSTEES COLUMBIA GROWTH STOCK FUND Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were appointed to the Board of the 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 Trustrees/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. <Table> <Caption> NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA YEAR FIRST ELECTED OR APPOINTED TO OFFICE(1) FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES DOUGLAS A. HACKER (age 49) Executive Vice President-Strategy of United Airlines (airline) since December P.O. Box 66100 2002 (formerly President of UAL Loyalty Services (airline) from September 2001 Chicago, IL 60666 to December 2002; Executive Vice President and Chief Financial Officer of United Trustee (since 1996) Airlines from March 1999 to September 2001; Senior Vice President-Finance from March 1993 to July 1999). Oversees 118, Orbitz, Inc. (on-line travel company) JANET LANGFORD KELLY (age 46) Adjunct Professor of Law, Northwestern University, since September 2004; Private 9534 W. Gull Lake Drive Investor since March 2004 (formerly Chief Administrative Officer and Senior Vice Richland, MI 49083-8530 President, Kmart Holding Corporation (consumer goods), from September 2003 to Trustee (since 1996) March 2004; Executive Vice President-Corporate Development and Administration, 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 10701 Charleston Drive Officer, U.S. Plywood Corporation (building products manufacturer)). Oversees Vero Beach, FL 32963 120(3), None Trustee (since 1995) CHARLES R. NELSON (age 62) Professor of Economics, University of Washington, since January 1976; Ford and Department of Economics Louisa Van Voorhis Professor of Political Economy, University of Washington, University of Washington since September 1993 (formerly Director, Institute for Economic Research, Seattle, WA 98195 University of Washington from September 2001 to June 2003) Adjunct Professor of Trustee (since 1981) Statistics, University of Washington, since September 1980; Associate Editor, Journal of Money Credit and Banking, since September 1993; consultant on econometric and statistical matters. Oversees 118, None </Table> (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. 24 <Page> <Table> <Caption> NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA YEAR FIRST ELECTED OR APPOINTED TO OFFICE(1) FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES 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 Chestnut Hill, MA 02467-3838 September 1999). Oversees 121(3),(4), Saucony, Inc. (athletic footwear) Trustee (since 1985) PATRICK J. SIMPSON (age 60) 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) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) 303 W. Madison since September 2004 (formerly Managing Director, William Blair Capital Partners Suite 2500 (private equity investing) from September 1994 to September 2004). Oversees 118, Chicago, IL 60606 Anixter International (network support equipment distributor); Ventas, Inc. Trustee and Chairman of the Board(5) (real estate investment trust); Jones Lang LaSalle (real estate management (since 1996) services) and Ambac Financial Group (financial guaranty insurance) 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), Hopkinton, NH 03229 Chairman of the Board of Directors, Enesco Group, Inc. (designer, importer and Trustee (since 1998) distributor of giftware and collectibles) RICHARD L. WOOLWORTH (age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, The 100 S.W. Market Street Regence Group (regional health insurer); Chairman and Chief Executive Officer, #1500 BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Young & Portland, OR 97207 Company). Oversees 118, Northwest Natural Gas Co. (natural gas service provider) Trustee (since 1991) INTERESTED TRUSTEE WILLIAM E. MAYER(2) (age 64) Managing Partner, Park Avenue Equity Partners (private equity) since February 399 Park Avenue 1999 (formerly Founding Partner, Development Capital LLC from November 1996 to Suite 3204 February 1999). Oversees 120(3), Lee Enterprises (print media), WR Hambrecht + Co. New York, NY 10022 (financial service provider); First Health (healthcare); Reader's Digest Trustee (since 1994) (publishing); OPENFIELD Solutions (retail industry technology provider) </Table> (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 also serve as directors/trustees of the Liberty 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. 25 <Page> OFFICERS COLUMBIA GROWTH STOCK FUND <Table> <Caption> NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA FUNDS, YEAR FIRST ELECTED OR APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS CHRISTOPHER L. WILSON (age 47) President of the Columbia Funds since October 2004 (formerly President and One Financial Center Chief Executive Officer, CDC IXIS Asset Management Services, Inc. from Boston, MA 02111 September 1998 to August 2004). President (since 2004) J. KEVIN CONNAUGHTON (age 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since One Financial Center December 2000; Vice President of the Advisor since April 2003 (formerly Boston, MA 02111 President of the Columbia Funds from February 2004 to October 2004; Chief Treasurer (since 2000) Accounting Officer and Controller of the Liberty Funds and of the 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 Management Associates, Inc. from February 1998 to October 2000). MARY JOAN HOENE (age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds 40 West 57th Street since August 2004; Chief Compliance Officer of the Liberty All-Star Funds New York, NY 10019 since August 2004 (formerly Partner, Carter, Ledyard & Milburn LLP from Senior Vice President and Chief Compliance January 2001 to August 2004; Counsel, Carter, Ledyard & Milburn LLP from Officer (since 2004) November 1999 to December 2000; Vice President and Counsel, Equitable Life Assurance Society of the United States from April 1998 to November 1999,). MICHAEL G. CLARKE (age 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star One Financial Center Funds since October 2004 (formerly Controller of the Columbia Funds and of Boston, MA 02111 the Liberty All-Star Funds from May 2004 to October 2004; Assistant Chief Accounting Officer (since 2004) Treasurer from June, 2002 to May 2004; Vice President, Product Strategy & Development of the 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, Deloitte & Touche LLP from May 1997 to August 1999). JEFFREY R. COLEMAN (age 34) Controller of the Columbia Funds and of the Liberty All-Star Funds since One Financial Center October 2004 (formerly Vice President of CDC IXIS Asset Management Boston, MA 02111 Services, Inc. and Deputy Treasurer of the CDC Nvest Funds and Loomis Controller (since 2004) Sayles Funds from February 2003 to September 2004; Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to February 2003; Tax Manager of PFPC, Inc. from November 1996 to August 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 General Secretary (since 2003) Counsel, Columbia Management Group since November 2002. </Table> 26 <Page> IMPORTANT INFORMATION ABOUT THIS REPORT COLUMBIA GROWTH STOCK 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 fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia Growth Stock Fund. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the fund and with the most recent copy of the Columbia Funds Performance Update. A description of the policies and procedures that the fund uses to determine how to vote proxies relating to their portfolio securities and a copy of the fund's voting record are available (i) at www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov and (iii) without charge, upon request, by calling 800-368-0346. 27 <Page> COLUMBIA FUNDS COLUMBIA GROWTH STOCK FUND <Table> 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 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 </Table> 28 <Page> <Table> 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 </Table> * The fund will be closed to new investments after the close of business on November 10, 2004. The fund's trustees have approved the merger, which will take effect on or about February 26, 2005, pending shareholder approval. ** The fund will be closed to new investments after the close of business on November 10, 2004. The fund's trustees have approved the liquidation, which will take effect on December 10, 2004. 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 and distributor subsidiaries of Columbia Management Group, including Columbia Management Advisors, Inc., the registered investment advisor, and Columbia Funds Distributor, Inc. 29 <Page> [GRAPHIC] Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. COLUMBIA GROWTH STOCK FUND ANNUAL REPORT, SEPTEMBER 30, 2004 PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [COLUMBIAFUNDS(R) LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP (C) 2004 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 800.345.6611 www.columbiafunds.com 755-02/974S-0904 (11/04) 04/3398 COLUMBIA YOUNG INVESTOR FUND Annual Report September 30, 2004 [photo of children playing] [LOGO]: COLUMBIA FUNDS A MEMBER OF COLUMBIA MANAGEMENT GROUP [Sidebar] 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.... 13 Statement of Operations................ 14 Statements of Changes in Net Assets.... 15 Notes to Financial Statements.......... 16 Financial Highlights................... 22 Report of Independent Registered Public Accounting Firm.................... 26 Trustees.................................. 27 Officers.................................. 29 Important Information About This Report......................... 30 Activity Pages............................ I 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 PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Columbia Young Investor Fund DEAR SHAREHOLDER: Your fund's legal and management team here at Columbia Funds have been working hard to strengthen our mutual fund services operation and to ensure that all operations and processes comply with legal and regulatory standards. In the coming months, we will continue to monitor the oversight enhancements recently put in place by your fund's Board of Trustees and make every effort to protect the interests of all our shareholders in everything we do. In our last report, we announced that your fund's advisor, Columbia Management Advisors, Inc., and your fund's distributor, Columbia Funds Distributor, Inc., had reached an agreement with the Securities and Exchange Commission and the New York Attorney General to settle charges involving market timing in some of our mutual funds. We want to reassure you that the settlement and all associated legal fees will be paid by Columbia Management, not by the affected funds or their shareholders. Recently the Securities and Exchange Commission has adopted new rules regarding mutual fund governance. We think it is important for you to know that Columbia Management complied with the majority of these rules well before they were adopted. Your fund's Board of Trustees has taken the following important steps to strengthen its capacity to oversee your fund and to comply with SEC rules. O THE BOARD OF TRUSTEES APPOINTED MARY JOAN HOENE AS CHIEF COMPLIANCE OFFICER OF COLUMBIA FUNDS. IN THIS ROLE, MS. HOENE WILL REPORT DIRECTLY TO THE BOARD OF TRUSTEES AND WILL WORK WITH THE BOARD OF TRUSTEES AS WELL AS THE SENIOR LEADERSHIP OF COLUMBIA MANAGEMENT, THE INVESTMENT MANAGEMENT ARM OF BANK OF AMERICA, AND WITH BANK OF AMERICA'S PRINCIPAL COMPLIANCE EXECUTIVES. SHE WILL FOCUS ON THE OVERALL COMPLIANCE PROGRAM OF THE FUNDS AND THE RESPONSIBILITY AND PERFORMANCE OF THE FUND'S SERVICE PROVIDERS. PRIOR TO HER APPOINTMENT, MS. HOENE WAS A PARTNER IN THE LAW FIRM OF CARTER,LEDYARD & MILBURN, LLP. PREVIOUSLY SHE ALSO SERVED AS ASSOCIATE DIRECTOR AND DEPUTY DIRECTOR FOR THE SECURITIES AND EXCHANGE COMMISSION DIVISION OF INVESTMENT MANAGEMENT. AS AN ACTIVE ADVISOR, MS. HOENE HAS HELPED SEVERAL FUND BOARDS DEVELOP INDEPENDENT BOARD PRACTICES. THE BOARD IS PLEASED TO HAVE MS. HOENE, WITH HER BROAD AND EXTENSIVE EXPERIENCE, IN THIS IMPORTANT NEW POSITION. o THE BOARD OF TRUSTEES HAS ESTABLISHED OPERATIONAL GUIDELINES THAT RESULT IN STRONGER, MORE VIGILANT TRUSTEESHIP ACROSS THE ENTIRE COLUMBIA MANAGEMENT ORGANIZATION. BOARD COMMITTEES HAVE BEEN ESTABLISHED TO OVERSEE PRODUCTS BY FUND CATEGORY, ALLOWING FOR GREATER SPECIALIZATION AMONG BOARD TRUSTEES. SHAREHOLDERS WILL ELECT BOARD MEMBERS EVERY FIVE YEARS, BEGINNING IN 2005. o IN ADDITION TOENHANCEMENTS TO OVERSIGHT WITHIN COLUMBIA MANAGEMENT, OUR PARENT COMPANY--BANK OF AMERICA--HAS ALSO INCREASED THE ROLE THAT SUCH PROFESSIONALS PLAY WITHIN THE BROADER ORGANIZATION. A CHIEF COMPLIANCE OFFICER HAS BEEN NAMED TO REPORT DIRECTLY TO KEN LEWIS, BANK OF AMERICA'S CHIEF EXECUTIVE OFFICER. BANK OF AMERICA HAS ALSO ADOPTED A CORPORATE CODE OF ETHICS COMMITTEE, AN INTERNAL COMPLIANCE CONTROLS COMMITTEE AND A REGULATORY IMPLEMENTATION GROUP TO ENSURE FULL ALIGNMENT AND EXECUTION OF REMEDIAL ACTIONS AND BEST PRACTICES ACROSS THE COMPANY. In the pages that follow, you'll find a discussion of the economic environment during the period, followed by a detailed report from the fund's manager on key factors that influenced performance. This report is rich in information, and you should discuss it with your financial advisor if you have questions. We are committed to providing quality products and services to our shareholders, strengthening your confidence in us, and working hard to help you achieve financial success. It is a privilege to play a role in your financial future, and we value your business. Thank you for choosing Columbia Management. Sincerely, /s/ Christopher Wilson Christopher Wilson Head of Mutual Funds, Columbia Management Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible for the day-to-day delivery of mutual fund services to the firm's investors. With the exception of distribution, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. Chris serves as Columbia Management's chief liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. FUND PROFILE - -------------------------------------------------------------------------------- Columbia Young Investor 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. Sectors as of 09/30/04 (%) - ------------------------------------- Financials 19.5 - ------------------------------------- Information technology 19.3 - ------------------------------------- Consumer discretionary 13.9 - ------------------------------------- Health care 13.0 - ------------------------------------- Energy 9.6 - ------------------------------------- Consumer staples 6.7 - ------------------------------------- Industrials 6.5 - ------------------------------------- Materials 5.8 - ------------------------------------- Telecommunication services 3.4 - ------------------------------------- Utilities 1.8 - ------------------------------------- Investment management company 0.5 - ------------------------------------- Top 10 holdings as of 09/30/04 (%) - ------------------------------------------- Exxon Mobil Corp. 2.8 - ------------------------------------------- General Electric Co. 2.7 - ------------------------------------------- Microsoft Corp. 2.2 - ------------------------------------------- Wells Fargo & Co. 2.2 - ------------------------------------------- Citigroup, Inc. 1.9 - ------------------------------------------- American International Group, Inc. 1.9 - ------------------------------------------- Costco Wholesale Corp. 1.8 - ------------------------------------------- Medtronic, Inc. 1.6 - ------------------------------------------- Pfizer, Inc. 1.5 - ------------------------------------------- Procter & Gamble Co. 1.5 - ------------------------------------------- Sector breakdown is calculated as a percentage of total investments excluding short-term investments. 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 09/30/2004. [Sidebar] Summary o For the 12-month period ended September 30, 2004, the fund's class A shares returned 11.56% without sales charge. o A favorable environment for stocks early in the reporting period helped the fund, its benchmark and its peer group achieve double-digit returns. The fund's return, however, was behind both the Russell 3000 Index and the Morningstar Large Blend Category. o Strong gains from large-company value stocks as well as small- and mid-size stocks helped performance. Investments in large-cap technology stocks hurt performance. [Illustration of two arrows pointing up] Class A shares Russell 3000 Index 11.56% 14.26% OBJECTIVE Seeks long-term growth of capital TOTAL NET ASSETS $779.4 million Morningstar style box Style-Growth // Size-Large 1 PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- Columbia Young Investor Fund [mountain chart data]: Value of a $10,000 investment 10/01/94 - 09/30/04 Class A Class A S&P 500 Russell 3000 shares without shares with Index Index sales charge sales charge 10/1994 $10,000 $10,000 $10,000 $ 9,425 10,225 10,165 10,410 9,811 9,853 9,794 10,205 9,618 9,999 9,947 10,487 9,884 10,258 10,165 10,526 9,921 10,658 10,579 10,773 10,153 10,972 10,843 11,147 10,506 11,295 11,126 11,275 10,626 11,746 11,530 11,462 10,803 12,019 11,863 12,426 11,711 12,418 12,340 13,174 12,416 12,449 12,450 13,341 12,574 12,974 12,931 14,059 13,251 12,928 12,820 13,774 12,982 13,495 13,389 14,560 13,723 13,756 13,608 14,659 13,816 14,223 14,002 15,232 14,356 14,356 14,209 15,436 14,549 14,493 14,353 16,080 15,155 14,706 14,626 17,164 16,177 15,086 15,000 17,991 16,957 15,143 14,952 18,338 17,284 14,474 14,170 17,122 16,138 14,779 14,599 17,890 16,861 15,611 15,394 19,054 17,959 16,042 15,675 19,319 18,208 17,255 16,780 20,076 18,922 16,913 16,579 19,803 18,665 17,970 17,496 20,724 19,533 18,111 17,515 20,185 19,025 17,366 16,723 18,841 17,758 18,403 17,548 19,687 18,555 19,524 18,746 21,211 19,991 20,398 19,526 22,227 20,949 22,022 21,057 23,771 22,405 20,789 20,202 22,956 21,636 21,928 21,348 24,079 22,694 21,196 20,630 23,380 22,036 22,177 21,421 23,963 22,585 22,559 21,849 25,007 23,569 22,809 21,963 25,157 23,711 24,453 23,533 27,175 25,612 25,706 24,700 28,227 26,604 25,965 24,942 28,548 26,907 25,519 24,326 27,572 25,987 26,555 25,148 29,149 27,473 26,273 24,691 28,193 26,572 22,474 20,908 22,963 21,643 23,915 22,334 24,348 22,948 25,859 24,029 26,023 24,527 27,426 25,500 27,558 25,974 29,006 27,121 29,419 27,727 30,218 28,044 30,784 29,014 29,278 27,051 29,694 27,987 30,449 28,044 32,016 30,175 31,628 29,308 32,829 30,942 30,881 28,752 31,697 29,874 32,595 30,203 33,247 31,335 31,578 29,288 31,488 29,677 31,424 28,954 30,849 29,075 30,563 28,213 30,167 28,432 32,497 29,982 32,653 30,775 33,157 30,822 34,720 32,723 35,110 32,788 38,737 36,509 33,347 31,503 37,838 35,662 32,717 31,796 41,304 38,929 35,917 34,285 42,526 40,081 34,836 33,079 39,018 36,775 34,122 32,149 35,417 33,380 34,964 33,101 38,693 36,468 34,419 32,515 38,058 35,870 36,556 34,927 41,868 39,460 34,626 33,345 39,913 37,618 34,481 32,872 38,591 36,372 31,764 29,841 33,748 31,808 31,919 30,342 34,845 32,841 33,052 31,380 36,566 34,464 30,038 28,512 32,804 30,917 28,134 26,653 30,268 28,528 30,320 28,790 33,137 31,232 30,523 29,021 32,932 31,038 29,781 28,487 31,720 29,896 29,489 28,017 29,642 27,938 27,643 26,364 27,642 26,052 25,410 24,038 23,918 22,543 25,895 24,599 24,734 23,312 27,881 26,493 26,940 25,391 28,126 26,866 27,183 25,620 27,716 26,530 26,443 24,923 27,181 25,989 25,742 24,262 28,203 27,127 27,272 25,703 26,494 25,703 25,613 24,141 26,298 25,405 25,104 23,660 24,425 23,576 23,306 21,966 22,523 21,702 21,265 20,042 22,669 21,804 21,154 19,938 20,205 19,512 18,933 17,844 21,983 21,065 20,466 19,290 23,278 22,340 21,999 20,734 21,911 21,077 20,510 19,331 21,337 20,561 20,088 18,933 21,017 20,222 19,776 18,639 21,221 20,434 19,954 18,807 22,970 22,104 21,487 20,251 24,180 23,439 22,619 21,318 24,490 23,755 22,685 21,380 24,921 24,299 23,172 21,840 25,407 24,839 23,884 22,510 25,137 24,568 23,263 21,925 26,560 26,054 24,707 23,287 26,794 26,414 25,063 23,622 28,198 27,621 26,108 24,607 28,717 28,198 26,398 24,880 29,116 28,579 26,575 25,047 28,676 28,239 26,264 24,754 28,226 27,654 25,707 24,229 28,613 28,055 26,196 24,689 29,168 28,613 26,662 25,129 28,202 27,532 25,707 24,229 28,315 27,645 25,574 24,103 09/2004 28,612 28,073 25,960 24,478 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 3000 Index is an unmanaged index that tracks the performance of 3,000 of the largest US companies, based on market capitalization. The Standard & Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. The S&P 500 Index was the fund's previous benchmark. 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. [Sidebar] Performance of a $10,000 investment 10/01/94 - 09/30/04 ($) - --------------------------------------- sales charge: without with - --------------------------------------- Class A 25,960 24,478 - --------------------------------------- Class B 25,560 25,560 - --------------------------------------- Class C 25,582 25,582 - --------------------------------------- Class Z 25,915 n/a - --------------------------------------- Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. WHAT DOES AVERAGE ANNUAL TOTAL RETURN MEAN? The average annual total return is given for periods greater than one year. Calculated as a percentage, this figure represents the average yearly return for the time period specified. The chart below includes average annual returns for the following periods: one year, five years and ten years. Returns for periods less than one year are known as cumulative returns. A cumulative return is the percentage that the fund has grown or shrunk in the number of months indicated. Average annual total return as of 09/30/04 (%) - ------------------------------------------------------------------------------------------ Share class A B C Z - ------------------------------------------------------------------------------------------ Inception 07/29/02 07/29/02 07/29/02 04/29/94 - ------------------------------------------------------------------------------------------ Sales charge without with without with without with without - ------------------------------------------------------------------------------------------ 1-year 11.56 5.13 10.68 5.68 10.78 9.78 11.28 - ------------------------------------------------------------------------------------------ 5-year -2.96 -4.10 -3.26 -3.60 -3.25 -3.25 -3.00 - ------------------------------------------------------------------------------------------ 10-year 10.01 9.36 9.84 9.84 9.85 9.85 9.99 - ------------------------------------------------------------------------------------------ THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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 A, B, and C shares (newer class shares) performance information includes returns for the fund's class Z shares (the oldest existing fund class) for periods prior to the inception of the newer class shares. The newer class shares returns are not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between class Z shares and the newer class shares. Had the expense differential been reflected, the returns for the periods prior to the inception of the newer class shares would have been lower. Classes A, B, and C shares were initially offered July 29, 2002 and class Z shares were initially offered April 29, 1994. 2 UNDERSTANDING YOUR EXPENSES - -------------------------------------------------------------------------------- Columbia Young Investor 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. [Sidebar] 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 $8,600 at the end of the period, the result would be 8.6 2. In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period April 1, 2004 - September 30, 2004 - ---------------------------------------------------------------------------------------------------------------------------- Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) - ---------------------------------------------------------------------------------------------------------------------------- Actual Hypothetical Actual Hypothetical Actual Hypothetical - ---------------------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 989.75 1,018.95 6.02 6.11 1.21 - ---------------------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 986.15 1,015.45 9.48 9.62 1.91 - ---------------------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 986.15 1,015.45 9.48 9.62 1.91 - ---------------------------------------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 988.30 1,018.55 6.41 6.51 1.29 - ---------------------------------------------------------------------------------------------------------------------------- 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 Class A, B, and C shares transfer agent expenses, total return would have been reduced for Class A, B, and C shares. Had the Distributor not waived a portion of Class A share distribution fee, total return would have been reduced for Class A shares. 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 - -------------------------------------------------------------------------------- Columbia Young Investor Fund Despite uncertainty about job growth, rising energy prices and a slowdown in consumer spending, the US economy grew at a pace of more than 4.5% during the 12-month period that began October 1, 2003, and ended September 30, 2004. Growth encountered a soft patch in the second quarter of 2004, but monthly data suggested that it picked up again in the third quarter. Job growth dominated the economic news during this reporting period. When more than one million jobs were created in the spring of 2004, consumer confidence soared to its highest level in two years. However, when job growth fell below expectations during the summer months, consumer confidence also fell. According to the Labor Department's payroll survey, the job market has not fully recovered from the losses incurred during the economic downturn of 2000-2001, and that has left consumers more cautious about the months ahead. Consumer spending held up for most of the period, as last year's tax rebates and tax cuts worked their way into household budgets. Even when spending declined during the summer, housing activity remained strong. Also, the business sector stepped into the gap created by sagging consumer spending. Industrial production rose; factories utilized more of their capacity; and spending on technology, capital equipment and construction picked up. STOCKS OUTPERFORMED BONDS Buoyed by strong gains at the beginning of the period, the S&P 500 Index returned 13.87% during this 12-month reporting period. However, concerns about new terror threats and higher interest rates and energy prices helped sideline investors as the period wore on. Late in the period, leadership passed from small-cap stocks to mid- and large-cap stocks. Value stocks continued to lead growth stocks until the final month of the period, when small- and mid-cap growth stocks bested their value counterparts. Energy and real estate investment trusts were the best-performing sectors. BONDS DELIVER RESPECTABLE GAINS Despite periods of interest-rate volatility, the US bond market delivered respectable gains during the period. Bond prices sagged in the spring when job growth picked up and investors began to anticipate higher short-term interest rates. However, a shaky stock market, higher energy prices and some mixed economic data gave the bond market a boost in the last three months of the period. The 10-year Treasury yield ended the period at 4.1%, very close to where it started. In this environment, the Lehman Brothers Aggregate Bond Index returned 3.68%. High-yield bonds gained 12.23%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. However, most of those gains were achieved during the first half of the reporting period. In the second half, slower economic growth and high valuations made high-yield bonds less attractive. After a year of the lowest short-term interest rates in recent history, the Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.0% to 1.75% in three equal steps during the period. The Fed indicated that it would continue to raise short-term interest rates at a "measured pace," in an attempt to balance economic growth against inflationary pressures. [SIDEBAR DATA]: Summary For the 12-month period ended September 30, 2004 o Stock prices rose, as measured by the S&P 500 Index and the broader Russell 3000 Index. Many sectors retreated as short-term interest rates moved higher in the summer and a host of uncertainties unsettled investors. [Illustration of two arrows pointing up] S&P 500 Index Russell 3000 Index 13.87% 14.26% o Despite interest rate volatility, investment grade bonds chalked up respectable gains. The Lehman Brothers Aggregate Bond Index returned 3.68%. High-yield bonds, which can be less sensitive to changing interest rates, led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 12.23%. [Illustration of two arrows pointing up] Merrill Lynch Index Lehman Index 12.23% 3.68% 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 the performance of fixed-rate, publicly placed, dollar-denominated, 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 Young Investor Fund [SIDE BAR DATA]: Net asset value per share as of 09/30/04 ($) - ------------------------------------ Class A 11.68 - ------------------------------------ Class B 11.50 - ------------------------------------ Class C 11.51 - ------------------------------------ Class Z 10.16 - ------------------------------------ Holdings discussed in this report as of 09/30/04 (%) - --------------------------------------------------- Novellus Systems, Inc. 0.7 - --------------------------------------------------- ASML Holding N.V., N.Y. Registered Shares 0.8 - --------------------------------------------------- Intel Corp. 0.1 - --------------------------------------------------- Exxon Mobil Corp. 2.8 - --------------------------------------------------- ConocoPhillips 1.3 - --------------------------------------------------- Schlumberger Ltd. 1.3 - --------------------------------------------------- Amerada Hess Corp. 0.9 - --------------------------------------------------- Carpenter Technology Corp. 0.7 - --------------------------------------------------- Monsanto Co. 0.4 - --------------------------------------------------- General Electric Co. 2.7 - --------------------------------------------------- American International Group, Inc. 1.9 - --------------------------------------------------- Aetna, Inc. 0.7 - --------------------------------------------------- Cigna Corp. 0.7 - --------------------------------------------------- Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. DID YOU KNOW? Three different managers run your fund, and each one follows a different investment discipline. The idea is that over time a blend of these three approaches may result in superior investment performance. Of course, there are no guarantees about performance, but that is our goal. About one-third of the fund's assets are invested in large-company growth stocks, one-third in large-company value stocks and one-third in the stocks of small- and medium-sized companies. Paul Blaustein manages the large-company growth portfolio. He invests in companies with superior earnings growth and profit potential and plans to hold onto them for the long term. Greg Miller manages the large-cap value portfolio. Mr. Miller is a bargain hunter. He targets stocks that are priced below what he thinks theyreally worth. Finally, Mike Welhoelter manages the small and medium-sized stock portfolio. He uses computer models to target companies with high quality financial characteristics, reasonable stock prices and improving business trends. - -------------------------------------------------------------------------------- HOW DID THE FUND PERFORM? During the 12-month period ended September 30, 2004, the fund's class A shares returned 11.56%. This return was calculated before the sales charge was deducted. The fund's return was lower than the 14.26% return of the Russell 3000 Index. The index measures the performance of small-, medium- and large-company stocks. The fund also fell short of the 12.22% average return of its peer group, the Morningstar(R) Large Blend Category.1 The fund's investments in large-cap value stocks, as well as in small- and mid-size stocks, helped performance. Returns from the growth portion of the fund, however, were disappointing. The biggest losers were technology stocks. WHAT KIND OF STOCKS DID THE BEST DURING THE PERIOD? Large-company value stocks and small- and mid-size company stocks posted big gains in the last few months of 2003. Many of these stocks had fallen sharply between 2000 and 2002, but their prospects improved when the economy got stronger. In the early stages of an economic recovery, value stocks tend to do better than growth stocks. And small-cap stocks often beat large-cap stocks. In the later stages of an economic recovery, when many companies find it harder to maintain a high level of profit growth, growth stocks tend to have the advantage. WHICH SECTORS DID YOU FAVOR? The fund's largest investment positions were in the financial, technology, consumer discretionary and health care sectors. We found attractive, long-term growth opportunities in tech companies with unique products that could command the prices they wanted. We liked these stocks because of their overall qualities, but also because we expected technology stocks to benefit from a growing economy at home as well as in other parts of the world. Unfortunately, we were disappointed. Investors got nervous about sales and profits and tech stocks fell in 2004. Some of the weakest performers were companies such as Novellus Systems, ASML Holding and Intel that make the "chips" (or brains) for personal computers, cellular phones and many other products. WHERE DID THE BIGGEST GAINS COME FROM? Energy stocks soared as prices for crude oil and natural gas skyrocketed. Among the fund's strongest performers were Exxon Mobil, ConocoPhillips, Schlumberger, and Amerada Hess. An improving economy also helped industrial and materials stocks, such as Carpenter Technology. This small materials company produces metal products for planes, cars, medical devices and golf clubs. Its stock price climbed sharply because the company cut costs and improved productivity and manufacturing efficiency. These steps led to higher sales and profits. An investment in Monsanto, a mid-sized chemical products company, also did quite well. Monsanto is known for its agricultural chemicals, including the weed killer Round-Up. Demand for Monsanto's products was strong. It 1 (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar categories compare the performance of funds with similar investment objectives and strategies. 5 - -------------------------------------------------------------------------------- Columbia Young Investor Fund also has attractive prospects for a promising new business: The company is working on engineering genetically altered seeds that can help growers get a higher yield from their plantings. In the industrial sector, General Electric (GE) was a top holding. The company was helped by strength in its military aircraft engines business and an expected recovery in the power generation business. In addition, GE refocused its business portfolio onto markets that are experiencing faster growth. The company also benefited from a pickup in the global economy. HOW DID A STRONGER ECONOMY AFFECT THE FUND? It helped the fund's investment in financial stocks, which represented a large percentage of the portfolio. An improving economy helped households and businesses pay their bills on time, and that translated into higher profits for lenders. Some people were worried that bank stocks wouldn't do well if interest rates rose. Rates did rise during the period, but not as fast, as early or as high as many people expected, and that was a plus for bank stocks. Insurance stocks also fared well within the financial sector. American International Group, a global insurer, was one of the fund's strongest performers. However, companies that trade securities or handle mergers and acquisitions didn't do nearly as well as banks, lenders and insurance companies. A stronger economy also made it possible for large health insurers to attract new subscribers, because more than one million new jobs were added to the economy over the past year. Large health insurers, such as Aetna and CIGNA, benefited from this trend. By contrast, large drug companies remained under pressure. Many of them are facing patent expirations and a shortage of new blockbuster drugs. WHAT IS YOUR OUTLOOK FOR STOCKS GOING FORWARD? We're optimistic that stocks will benefit from continued economic growth. Yet we recognize that higher interest rates, high energy prices, the war in Iraq and terrorist threats could unsettle the markets. Regardless of what happens, our plan is to own the best stocks in each of our three investment disciplines. We are encouraged by prospects in each area. Large-cap growth stocks appear reasonably priced with strong potential for gains in the later stages of the economic recovery. Large-cap value stocks also stand to benefit from an extended economic recovery. Many value stocks also pay dividends, which offer a measure of protection in the event of a market downturn. Finally, we continue to find opportunities among small- and mid-sized stocks. [photo of Greg Miller] /s/ Greg Miller [photo of Michael A. Welhoelter] /s/ Michael A. Welhoelter [photo of Paul A. Blaustein] /s/ Paul A. Blaustein Greg Miller, Michael A. Welhoelter, CFA, and Paul A. Blaustein, CFA lead the team of portfolio managers who manage the portfolio of Columbia Young Investor Fund. Mr. Miller and Mr. Welhoelter have been co-managing the fund since June 2003. Mr. Blaustein has been co-managing the fund since November 2003. [sidebar] DID YOU KNOW? Growth investors look toward the future and try to estimate how fast a company's earnings and revenues will grow. They expect a company with rapid earnings and revenue growth to produce a better stock return than a company with slower growth. For us, the best growth stocks also have strong competitive positions (often because they have unique or cutting edge products), a high level of profits and the ability to sustain their growth rates over the long term. We often find companies meeting these criteria in the technology sector. Although many technology stocks have not performed well recently, we still believe they offer good long-term prospects for growth. We expect reduced prices for bandwidth, which measures how fast electronic data can travel, and innovative products to continue to fuel strong gains for the sector. Many of the fund's growth stocks from other sectors rely heavily on technology to run and improve their business. An investment in the fund offers the potential for long-term growth but also involves certain risks. The fund may be affected by stock market fluctuations that occur in response to economic and business developments. Since the fund is actively managed, there can be no guarantee that the fund will continue to maintain the holdings described in this report. The prices of small- and medium-sized companies may be more volatile than those of larger, more established firms. 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. A concentration of investments in a specific sector, such as technology, may cause a fund to experience increased volatility. 6 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor 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 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund COMMON STOCKS - 98.4% CONSUMER DISCRETIONARY - 13.7% Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- AUTO COMPONENTS - 0.3% Autoliv, Inc. 59,300 2,395,720 Auto Components Total 2,395,720 ----------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE - 0.8% Choice Hotels International, Inc. 46,600 2,683,694 McDonald's Corp. 45,883 1,286,100 Wendy's International, Inc. 75,270 2,529,072 Hotels, Restaurants & Leisure Total 6,498,866 ----------------------------------------------------------------------------- HOUSEHOLD DURABLES - 0.7% Applica, Inc. 166,900 674,276 Stanley Works 104,300 4,435,879 Household Durables Total 5,110,155 ----------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS - 0.4% Marvel Enterprises, Inc. (a) 206,700 3,009,552 Leisure Equipment & Products Total 3,009,552 ----------------------------------------------------------------------------- MEDIA - 7.5% Clear Channel Communications, Inc. 71,982 2,243,679 Comcast Corp., Class A (a) 248,200 7,009,168 Getty Images, Inc. (a) 126,600 7,000,980 Lee Enterprises, Inc. 64,200 2,975,028 Liberty Media Corp., Class A (a) 396,400 3,456,608 Liberty Media International, Inc., Class A (a) 24,810 827,711 McClatchy Co., Class A 113,600 8,046,288 McGraw-Hill Companies, Inc. 34,282 2,731,933 News Corp. Ltd., ADR 115,900 3,809,633 R.H. Donnelley Corp. (a) 66,600 3,287,376 Time Warner Inc. (a) 358,200 5,781,348 Viacom Inc. 332,600 11,162,056 Media Total 58,331,808 ----------------------------------------------------------------------------- MULTILINE RETAIL - 0.7% Sears, Roebuck and Co. 141,600 5,642,760 Multiline Retail Total 5,642,760 ----------------------------------------------------------------------------- SPECIALTY RETAIL - 2.8% Abercrombie & Fitch Co., Class A 161,100 5,074,650 Barnes & Noble, Inc. (a) 148,600 5,498,200 Home Depot, Inc. 143,677 5,632,138 Limited Brands 90,200 2,010,558 Lowe's Companies, Inc. 65,500 3,559,925 Specialty Retail Total 21,775,471 ----------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS - 0.5% Kellwood Co. 112,100 4,086,045 Textiles, Apparel & Luxury Goods Total 4,086,045 ------------ CONSUMER DISCRETIONARY TOTAL 106,850,377 CONSUMER STAPLES - 6.6% - ------------------------------------------ ----------------------------------------------------------------------------- BEVERAGES - 0.4% PepsiCo, Inc. 72,196 3,512,335 Beverages Total 3,512,335 ----------------------------------------------------------------------------- FOOD & STAPLES RETAILING - 3.0% Costco Wholesale Corp. 331,103 13,760,641 Wal-Mart Stores, Inc. 187,700 9,985,640 Food & Staples Retailing Total 23,746,281 ----------------------------------------------------------------------------- FOOD PRODUCTS - 0.4% Chiquita Brands International, Inc. (a) 158,900 2,766,449 Food Products Total 2,766,449 ----------------------------------------------------------------------------- See Accompanying Notes to Financial Statements. 8 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund COMMON STOCKS - (CONTINUED) CONSUMER STAPLES - (continued) Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- HOUSEHOLD PRODUCTS - 2.8% Clorox Co. 50,772 2,706,148 Colgate-Palmolive Co. 160,400 7,246,872 Procter & Gamble Co. 213,786 11,570,098 Household Products Total 21,523,118 ------------ CONSUMER STAPLES TOTAL 51,548,183 ENERGY - 9.4% - ------------------------------------------ ----------------------------------------------------------------------------- ENERGY EQUIPMENT & Services - 1.7% Halliburton Co. 90,208 3,039,108 Schlumberger Ltd. 149,300 10,049,383 Energy Equipment & Services Total 13,088,491 ----------------------------------------------------------------------------- OIL & GAS - 7.7% Amerada Hess Corp. 77,600 6,906,400 BP PLC, ADR 110,896 6,379,847 ChevronTexaco Corp. 25,966 1,392,816 ConocoPhillips 120,800 10,008,280 Exxon Mobil Corp. 458,534 22,160,948 Newfield Exploration Co. (a) 130,600 7,997,944 Stone Energy Corp. (a) 82,900 3,627,704 Todco, Class A (a) 117,100 2,031,685 Oil & Gas Total 60,505,624 ------------ ENERGY TOTAL 73,594,115 FINANCIALS - 19.3% - ------------------------------------------ ----------------------------------------------------------------------------- CAPITAL MARKETS - 1.5% Bank of New York Co. Inc. 108,435 3,163,049 Merrill Lynch & Co., Inc. 70,300 3,495,316 Morgan Stanley 96,800 4,772,240 Capital Markets Total 11,430,605 ----------------------------------------------------------------------------- COMMERCIAL BANKS - 4.9% City National Corp. 66,000 4,286,700 Texas Regional Bancshares, Inc., Class A 91,050 2,830,744 UnionBanCal Corp. 88,200 5,222,322 US Bancorp 203,700 5,886,930 Wachovia Corp. 58,270 2,735,777 Wells Fargo & Co. 286,200 17,066,106 Commercial Banks Total 38,028,579 ----------------------------------------------------------------------------- CONSUMER FINANCE - 0.3% MBNA Corp. 108,927 2,744,960 Consumer Finance Total 2,744,960 ----------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 3.2% Citigroup, Inc. 339,010 14,957,121 JPMorgan Chase & Co. 190,970 7,587,238 NTL, Inc. (a) 35,100 2,178,657 Diversified Financial Services Total 24,723,016 ----------------------------------------------------------------------------- INSURANCE - 6.8% AFLAC, Inc. 82,034 3,216,553 American International Group, Inc. 218,475 14,854,115 CNA Financial Corp. (a) 75,900 1,822,359 Hartford Financial Services Group, Inc. 32,556 2,016,193 Lincoln National Corp. 145,300 6,829,100 Marsh & McLennan Companies, Inc. 29,733 1,360,582 SAFECO Corp. 165,300 7,545,945 UICI 222,800 7,294,472 Willis Group Holdings Ltd. 138,450 5,178,030 XL Capital Ltd., Class A 36,653 2,711,956 Insurance Total 52,829,305 ----------------------------------------------------------------------------- REAL ESTATE - 2.2% AvalonBay Communities, Inc., REIT 112,400 6,768,728 Kimco Realty Corp., REIT 73,600 3,775,680 Rayonier, Inc., REIT 155,981 7,056,581 Real Estate Total 17,600,989 ----------------------------------------------------------------------------- See Accompanying Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund COMMON STOCKS - (CONTINUED) FINANCIALS - (continued) Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE - 0.4% Federal Home Loan Mortgage Corp. 48,891 3,189,649 Thrifts & Mortgage Finance Total 3,189,649 ------------ FINANCIALS TOTAL 150,547,103 HEALTH CARE - 12.9% - ------------------------------------------ ----------------------------------------------------------------------------- BIOTECHNOLOGY - 1.0% Amgen, Inc. (a) 136,100 7,714,148 Biotechnology Total 7,714,148 ----------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES - 1.6% Medtronic, Inc. 242,200 12,570,180 Health Care Equipment & Supplies Total 12,570,180 ----------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 5.5% Aetna, Inc. 56,223 5,618,364 Cardinal Health, Inc. 139,800 6,119,046 CIGNA Corp. 82,000 5,709,660 Coventry Health Care, Inc. (a) 154,350 8,237,660 IMS Health, Inc. 303,400 7,257,328 Lincare Holdings, Inc. (a) 61,500 1,827,165 Medco Health Solutions, Inc. (a) 252,300 7,796,070 Health Care Providers & Services Total 42,565,293 ----------------------------------------------------------------------------- PHARMACEUTICALS - 4.8% Bristol-Myers Squibb Co. 50,295 1,190,483 Eon Labs, Inc. (a) 44,900 974,330 Johnson & Johnson 167,400 9,429,642 Merck & Co., Inc. 54,983 1,814,439 Novartis AG, ADR 217,800 10,164,726 Pfizer, Inc. 385,313 11,790,578 Pharmion Corp. (a) 36,400 1,881,734 Pharmaceuticals Total 37,245,932 ------------ HEALTH CARE TOTAL 100,095,553 INDUSTRIALS - 6.4% - ------------------------------------------ ----------------------------------------------------------------------------- AEROSPACE & DEFENSE - 1.5% Honeywell International, Inc. 109,570 3,929,180 United Technologies Corp. 79,972 7,467,786 Aerospace & Defense Total 11,396,966 ----------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES - 1.2% Cendant Corp. 58,010 1,253,016 Pitney Bowes, Inc. 116,200 5,124,420 Waste Management, Inc. 100,919 2,759,125 Commercial Services & Supplies Total 9,136,561 ----------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES - 3.2% 3M Co. 54,100 4,326,377 General Electric Co. 622,455 20,902,039 Industrial Conglomerates Total 25,228,416 ----------------------------------------------------------------------------- MACHINERY - 0.5% Ingersoll-Rand Co., Ltd., Class A 58,387 3,968,564 Machinery Total 3,968,564 ------------ INDUSTRIALS TOTAL 49,730,507 INFORMATION TECHNOLOGY - 19.1% - ------------------------------------------ ----------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 1.7% Cisco Systems, Inc. (a) 463,200 8,383,920 Scientific-Atlanta, Inc. 197,000 5,106,240 Communications Equipment Total 13,490,160 ----------------------------------------------------------------------------- COMPUTERS & Peripherals - 1.9% Dell, Inc. (a) 228,800 8,145,280 International Business Machines Corp. 44,784 3,839,780 Lexmark International, Inc., Class A (a) 35,181 2,955,556 Computers & Peripherals Total 14,940,616 See Accompanying Notes to Financial Statements. 10 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - (continued) Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & Instruments - 0.7% Avnet, Inc. (a) 332,300 5,688,976 Electronic Equipment & Instruments Total 5,688,976 ----------------------------------------------------------------------------- INTERNET SOFTWARE & Services - 0.7% InfoSpace, Inc. (a) 85,400 4,047,106 United Online, Inc. (a) 182,400 1,754,688 Internet Software & Services Total 5,801,794 ----------------------------------------------------------------------------- IT SERVICES - 2.4% Accenture Ltd., Class A (a) 135,987 3,678,449 Computer Sciences Corp. (a) 164,400 7,743,240 Convergys Corp. (a) 96,000 1,289,280 Electronic Data Systems Corp. 77,000 1,493,030 Paychex, Inc. 144,600 4,359,690 IT Services Total 18,563,689 ----------------------------------------------------------------------------- OFFICE ELECTRONICS - 0.3% Xerox Corp. (a) 142,900 2,012,032 Office Electronics Total 2,012,032 ----------------------------------------------------------------------------- SEMICONDUCTORS & Semiconductor Equipment - 6.7% Altera Corp. (a) 411,300 8,049,141 Analog Devices, Inc. 121,300 4,704,014 Applied Materials, Inc. (a) 355,900 5,868,791 ASML Holding N.V., N.Y. Registered Shares (a) 479,300 6,168,591 Intel Corp. 26,500 531,590 Marvell Technology Group Ltd. (a) 101,600 2,654,808 Maxim Integrated Products, Inc. 181,200 7,662,948 Microchip Technology, Inc. 139,700 3,749,548 Novellus Systems, Inc. (a) 204,000 5,424,360 Xilinx, Inc. 264,200 7,133,400 Semiconductors & Semiconductor Equipment Total 51,947,191 ----------------------------------------------------------------------------- SOFTWARE - 4.7% Adobe Systems, Inc. 158,500 7,840,995 Autodesk, Inc. 90,200 4,386,426 Electronic Arts, Inc. (a) 51,967 2,389,962 Microsoft Corp. 629,049 17,393,205 SAP AG 114,100 4,444,195 Software Total 36,454,783 ------------ INFORMATION TECHNOLOGY TOTAL 148,899,241 MATERIALS - 5.8% - ------------------------------------------ ----------------------------------------------------------------------------- CHEMICALS - 2.7% Air Products & Chemicals, Inc. 82,882 4,507,123 Monsanto Co. 95,400 3,474,468 OM Group, Inc. (a) 209,700 7,666,632 PPG Industries, Inc. 60,600 3,713,568 Sigma-Aldrich Corp. 34,500 2,001,000 Chemicals Total 21,362,791 ----------------------------------------------------------------------------- CONSTRUCTION MATERIALS - 0.7% Vulcan Materials Co., Inc. 98,800 5,033,860 Construction Materials Total 5,033,860 ----------------------------------------------------------------------------- CONTAINERS & Packaging - 1.0% Temple-Inland, Inc. 114,000 7,655,100 Containers & Packaging Total 7,655,100 ----------------------------------------------------------------------------- METALS & Mining - 0.7% Carpenter Technology Corp. 117,600 5,614,224 Metals & Mining Total 5,614,224 ----------------------------------------------------------------------------- PAPER & Forest Products - 0.7% Georgia-Pacific Corp. 86,100 3,095,295 Potlatch Corp. 45,800 2,143,898 Paper & Forest Products Total 5,239,193 ------------ MATERIALS TOTAL 44,905,168 See Accompanying Notes to Financial Statements. 11 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund Common Stocks - (continued) TELECOMMUNICATION SERVICES - 3.4% Shares Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES - 3.1% BellSouth Corp. 146,800 3,981,216 CenturyTel, Inc. 207,200 7,094,528 SBC Communications, Inc. 236,022 6,124,771 Verizon Communications, Inc. 178,817 7,041,813 Diversified Telecommunication Services Total 24,242,328 WIRELESS TELECOMMUNICATION SERVICES - 0.3% Telephone and Data Systems, Inc. 24,400 2,053,748 Wireless Telecommunication Services Total 2,053,748 ------------ TELECOMMUNICATION SERVICES TOTAL 26,296,076 UTILITIES - 1.8% - ------------------------------------------ ----------------------------------------------------------------------------- ELECTRIC UTILITIES - 1.5% Consolidated Edison, Inc. 126,100 5,301,244 Entergy Corp. 50,207 3,043,046 PG&E Corp. (a) 30,500 927,200 Southern Co. 18,712 560,986 TXU Corp. 42,600 2,041,392 Electric Utilities Total 11,873,868 ----------------------------------------------------------------------------- MULTI-UTILITIES & Unregulated Power - 0.3% Questar Corp. 46,500 2,130,631 Multi-Utilities & Unregulated Power Total 2,130,631 ------------ UTILITIES TOTAL 14,004,499 ------------ TOTAL COMMON STOCKS (cost of $674,097,873) 766,470,822 INVESTMENT MANAGEMENT COMPANY - 0.5% - ------------------------------------------ ----------------------------------------------------------------------------- iShares Russell 1000 Value Index Fund 63,877 3,868,391 ------------ TOTAL INVESTMENT MANAGEMENT COMPANY (cost of $3,654,218) 3,868,391 SHORT-TERM OBLIGATION - 0.5% Par ($) - ------------------------------------------ ----------------------------------------------------------------------------- Repurchase agreement with State Street Bank & Trust Co., dated 09/30/04 due 10/01/04 at 1.580% collateralized by U.S. Treasury Bonds and Notes with various maturities to 02/15/31, market value $4,151,882 (repurchase proceeds $4,065,178) 4,065,000 4,065,000 ------------ TOTAL SHORT-TERM OBLIGATION (cost of $4,065,000) 4,065,000 TOTAL INVESTMENTS - 99.4% (COST OF $681,817,091) (B) 774,404,213 OTHER ASSETS & Liabilities, Net - 0.6% 5,008,582 NET ASSETS - 100.0% 779,412,795 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $682,157,398. ACRONYM NAME - ------------- ------------------------ ADR American Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. 12 STATEMENT OF ASSETS AND LIABILITIES - ------------------------------------------------------------------------------------------------------------------------------------ September 30, 2004 Columbia Young Investor Fund ($) - ------------------------------------------ ------------------------------------------------------------------------------ ASSETS Investments, at cost 681,817,091 Investments, at value 774,404,213 Cash 2,151 Receivable for: Investments sold 10,387,505 Fund shares sold 54,596 Interest 178 Dividends 572,718 Expense reimbursement due from Investment Advisor 95,058 Deferred Trustees' compensation plan 15,855 ------------ Total Assets 785,532,274 ------------------------------------------------------------------------------ LIABILITIES Payable for: Investments purchased 4,395,729 Fund shares repurchased 374,289 Investment advisory fee 374,127 Administration fee 116,287 Transfer agent fee 586,923 Pricing and bookkeeping fees 16,993 Trustees' fees 2,001 Custody fee 3,933 Reports to shareholders 165,734 Distribution and service fees 31,624 Deferred Trustees' fees 15,855 Other liabilities 35,984 ------------ Total Liabilities 6,119,479 NET ASSETS 779,412,795 ------------------------------------------------------------------------------ COMPOSITION OF NET ASSETS Paid-in capital 869,713,326 Undistributed net investment income 1,488,435 Accumulated net realized loss (184,376,088) Net unrealized appreciation on investments 92,587,122 ------------ NET ASSETS 779,412,795 ------------------------------------------------------------------------------ CLASS A Net assets 94,386,103 Shares outstanding 8,081,956 Net asset value per share 11.68(a) Maximum offering price per share ($11.68/0.9425) 12.39(b) ------------------------------------------------------------------------------ CLASS B Net assets 6,081,903 Shares outstanding 528,697 Net asset value and offering price per share 11.50(a) ------------------------------------------------------------------------------ CLASS C Net assets 798,400 Shares outstanding 69,375 Net asset value and offering price per share 11.51(a) ------------------------------------------------------------------------------ CLASS Z Net assets 678,146,389 Shares outstanding 66,715,367 Net asset value, offering and redemption price per share 10.16 (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 13 STATEMENT OF OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------------ For the Year Ended September 30, 2004 Columbia Young Investor Fund ($) - ------------------------------------------ ------------------------------------------------------------------------------ INVESTMENT INCOME Dividends 12,913,604 Interest 50,626 ------------ Total Investment Income (net of foreign taxes withheld of $50,018) 12,964,230 ---------------------------------------------------------------------------- EXPENSES Investment advisory fee 4,756,239 Administration fee 1,478,974 Distribution fee: Class A 99,933 Class B 50,972 Class C 5,680 Service fee: Class A 249,887 Class B 16,991 Class C 1,893 Transfer agent fee: Class A 1,207,638 Class B 42,191 Class C 6,508 Class Z 4,167,188 Pricing and bookkeeping fees 221,918 Trustees' fees 20,808 Custody fee 45,071 Non-recurring costs (See Note 7) 38,858 Other expenses 587,773 ------------ Total Expenses 12,998,522 Fees and expenses waived or reimbursed by Investment Advisor: Class A (1,049,650) Class B (30,950) Class C (5,381) Fees waived by Distributor - Class A (49,956) Non-recurring costs assumed by Investment Advisor (See Note 7) (38,858) Custody earnings credit (2,282) ------------ Net Expenses 11,821,445 ------------ Net Investment Income 1,142,785 ---------------------------------------------------------------------------- NET REALIZED AND UNREALIZED Net realized gain on investments 79,300,117 GAIN (LOSS) ON INVESTMENTS Net change in unrealized appreciation/depreciation on investments 7,949,049 ------------ Net Gain 87,249,166 ------------ Net Increase in Net Assets from Operations 88,391,951 See Accompanying Notes to Financial Statements. 14 STATEMENT OF CHANGES IN NET ASSETS - ------------------------------------------------------------------------------------------------------------------------------------ Columbia Young Investor Fund YEAR ENDED SEPTEMBER 30, ------------------------- INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 ($) - ------------------------------------------ ------------------------------------------------------------------------------ OPERATIONS Net investment income (loss) 1,142,785 (2,300,743) Net realized gain (loss) on investments 79,300,117 (56,715,298) Net change in unrealized appreciation/depreciation on investments 7,949,049 208,670,172 ------------------------- Net Increase from Operations 88,391,951 149,654,131 ---------------------------------------------------------------------------- SHARE TRANSACTIONS Class A Subscriptions 5,875,316 7,644,323 Redemptions (16,955,769) (14,032,114) ------------------------- Net Decrease (11,080,453) (6,387,791) Class B Subscriptions 628,365 771,614 Redemptions (2,147,700) (1,742,729) ------------------------- Net Decrease (1,519,335) (971,115) Class C Subscriptions 182,250 173,069 Redemptions (113,350) (116,948) ------------------------- Net Increase 68,900 56,121 Class Z Subscriptions 42,087,456 49,798,986 Redemptions (115,275,588) (78,078,650) ------------------------- Net Decrease (73,188,132) (28,279,664) Net Decrease from Share Transactions (85,719,020) (35,582,449) Total Increase in Net Assets 2,672,931 114,071,682 ---------------------------------------------------------------------------- NET ASSETS Beginning of period 776,739,864 662,668,182 End of period (including undistributed net investment income of $1,488,435 and $250,843, respectively) $779,412,795 $776,739,864 ---------------------------------------------------------------------------- CHANGES IN SHARES Class A Subscriptions 506,593 800,725 Redemptions (1,458,671) (1,457,386) ------------------------- Net Decrease (952,078) (656,661) Class B Subscriptions 54,732 79,511 Redemptions (187,544) (182,289) ------------------------- Net Decrease (132,812) (102,778) Class C Subscriptions 15,881 18,211 Redemptions (10,012) (12,056) ------------------------- Net Increase 5,869 6,155 Class Z Subscriptions (a) 4,164,659 5,931,393 Redemptions (a) (11,357,922) (9,268,147) ------------------------- Net Decrease (7,193,263) (3,336,754) (a) Shares purchased prior to July 25, 2003 have been adjusted to reflect a 2-for-1 share split. See Accompanying Notes to Financial Statements. 15 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund NOTE 1. ORGANIZATION Columbia Young Investor Fund (the "Fund"), a series of Columbia Funds Trust XI (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 GOALS The Fund seeks long-term growth of capital. The Fund also has an educational objective to teach investors, especially young people, about basic economic principles and personal finance through a variety of educational materials prepared and paid for by the Fund. FUND SHARES The Fund may issue an unlimited number of shares and offers four classes of shares: Class A, Class B, Class C and Class Z. Each share class has its own sales charge and expense structure. Class A shares are subject to a maximum front-end sales charge of 5.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. Effective October 13, 2003, the Liberty Young Investor Fund was renamed Columbia Young Investor Fund. Also on this date, the Liberty-Stein Roe Funds Investment Trust was renamed Columbia Funds Trust XI. 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 restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the 16 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. Awards from class action litigation are recorded as a reduction of cost if the fund still owns the applicable securities on 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. If the Fund no longer owns the applicable securities, any distributions received in excess of income are recorded as realized gains. Effective April 1, 2004, the Fund adopted the policy to reduce cost of investments for financial statement purposes by the distributions received in excess of income from REITs. The cumulative effect of this accounting change did not impact the net assets of the Fund, but resulted in reclassifications as follows: Decrease in Undistributed Decrease in Cost Net Investment Income - ---------------------------------------------------------------- $35,486 $35,486 - ---------------------------------------------------------------- The effect of the change for the year ended September 30, 2004 is as follows: Decrease in Increase to Decrease in Cost Dividend Income Realized Gain - ---------------------------------------------------------------- $10,701 $20,313 $9,612 - ---------------------------------------------------------------- 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 September 30, 2004, permanent differences resulting primarily from differing treatments for REIT adjustments, non-deductible excise tax paid, partnership adjustments and permanently lost capital loss carryforwards due to limitations were identified and reclassified among the components of the Fund's net assets as follows: Undistributed Accumulated Paid-In Net Investment Income Net Realized Loss Capital - ---------------------------------------------------------------- $130,293 $9,284,457 $(9,414,750) - ---------------------------------------------------------------- Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. 17 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund As of September 30, 2004, the components of distributable earnings on a tax basis were as follows: Undistributed Undistributed Long-Term Net Unrealized Ordinary Income Capital Gains Appreciation* - ---------------------------------------------------------------- $1,503,343 $-- $92,246,815 * 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 September 30, 2004, based on cost of investments for federal income tax purposes was: Unrealized appreciation $125,994,296 Unrealized depreciation (33,747,481) - ---------------------------------------------------------------- Net unrealized appreciation $ 92,246,815 - ---------------------------------------------------------------- The following capital loss carryforwards, determined as of September 30, 2004, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: Year of Capital Loss Expiration Carryforwards - ---------------------------------------------------------------- 2007 $ 1,167,536 - ---------------------------------------------------------------- 2008 273,885 - ---------------------------------------------------------------- 2009 25,009,742 - ---------------------------------------------------------------- 2010 38,352,415 - ---------------------------------------------------------------- 2011 119,232,204 - ---------------------------------------------------------------- Total $184,035,782 - ---------------------------------------------------------------- Of these carryforwards, $21,710,750 (expiring 09/30/09) and $4,740,410 ($1,167,533 expiring 09/30/07, $273,885 expiring 09/30/08 and $3,298,992 expiring 09/30/09) remain from the Fund's merger with Liberty Young Investor Fund and Liberty Growth Investor Fund, respectively. Utilization of Liberty Young Investor Fund's and Liberty Growth Investor Fund's losses could be subject to limitations imposed by the Internal Revenue Code. Expired capital loss carryforwards, if any, 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 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 $500 million 0.60% - ---------------------------------------------------------------- Next $500 million 0.55% - ---------------------------------------------------------------- Over $1 billion 0.50% - ---------------------------------------------------------------- For the year ended September 30, 2004, the Fund's effective investment advisory fee rate was 0.58%. ADMINISTRATION FEE Columbia provides administrative and other services to the Fund for a monthly administration fee based on the Fund's average daily net assets at the following annual rates: Average Daily Net Assets Annual Fee Rate - ---------------------------------------------------------------- First $500 million 0.200% - ---------------------------------------------------------------- Next $500 million 0.150% - ---------------------------------------------------------------- Over $1 billion 0.125% - ---------------------------------------------------------------- For the year ended September 30, 2004, the Fund's effective administration fee rate was 0.18%. 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 collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, 18 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund 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 September 30, 2004, the effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.027%. 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 per class. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. Columbia has voluntarily agreed to reimburse the Fund for a portion of transfer agency fees so that Class A, Class B and Class C transfer agent expenses (exclusive of out-of-pocket expenses) will not exceed 0.10% annually. Columbia, at its discretion, may revise or discontinue this arrangement any time. Effective November 1, 2004, Columbia will voluntarily reimburse the Fund so that the transfer agent expenses for Class Z shares (exclusive of out-of-pocket expenses) will not exceed 0.10% annually. Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly transfer agent fee, in addition to reimbursement for certain out-of-pocket expenses, at the annual rate of 0.06% of the Fund's average daily net assets plus flat-rate charges based on the number of shareholder accounts and transactions. Effective October 13, 2003, Liberty Funds Services, Inc. was renamed Columbia Funds Services, Inc. UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. For the year ended September 30, 2004, the Distributor has retained net underwriting discounts of $9,013 on sales of the Fund's Class A shares and received CDSC fees of $21,893, $21,402 and $29 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 equal to 0.25% annually of the average daily net assets attributable to Class A, Class B and Class C shares. The Plan also requires the payment of a monthly distribution fee to the Distributor equal to 0.10% annually of the average daily net assets attributable to Class A shares and 0.75% annually of the average daily net assets attributable to Class B and Class C shares. The Distributor has voluntarily agreed to waive a portion of the Class A share distribution fee so that it will not exceed 0.05% annually. The CDSC and the fees received from the Plan are used principally as repayment to the Distributor for amounts paid by the Distributor to dealers who sold such shares. 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. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Chief Compliance Officer role. The Fund's fee will not exceed $15,000 per year. 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 September 30, 2004, the Fund paid $2,570 to 19 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. NOTE 5. PURCHASES INFORMATION For the year ended September 30, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $468,213,067 and $554,035,766, respectively. NOTE 6. LINE OF CREDIT The Fund and other affiliated funds participate in a $350,000,000 credit facility, which is used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to the Fund based on its borrowings. In addition, the Fund has agreed to pay commitment fees on its pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the year ended September 30, 2004, the Fund did not borrow under this arrangement. NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS Columbia, the Distributor, and certain of their affiliates (collectively, "The Columbia Group") have received information requests and subpoenas from various regulatory and law enforcement authorities in connection with their investigations of late trading and market timing in mutual funds as well as other industry wide issues. The Columbia Group has not uncovered any instances where Columbia or the Distributor were knowingly involved in late trading of mutual fund shares. On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a civil complaint in the United States District Court for the District of Massachusetts against Columbia and the Distributor, alleging that they had violated certain provisions of the federal securities laws in connection with trading activity in mutual fund shares. Also on February 24, 2004, the New York Attorney General ("NYAG") filed a civil complaint in New York Supreme Court, County of New York against Columbia and the Distributor alleging that Columbia and the Distributor had violated certain New York anti-fraud statutes. If either Columbia or the Distributor is unsuccessful in its defense of these proceedings, it could be barred from serving as an investment advisor or distributor for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could prevent Columbia, the Distributor or any company that is an affiliated person of Columbia and the Distributor from serving as an investment advisor or distributor for any registered investment company, including your fund. Your fund has been informed by Columbia and the Distributor that, if these results occur, they will seek exemptive relief from the SEC to permit them to 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. 20 - -------------------------------------------------------------------------------- September 30, 2004 Columbia Young Investor Fund 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 of its 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 September 30, 2004, Columbia has assumed $38,858 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. NOTE 8. CAPITAL ACTIVITY Effective July 25, 2003, there was a 2-for-1 split on Class Z shares. The accompanying prior period financial highlights for Class Z have been adjusted to reflect the 2-for-1 split. 21 Financial Highlights - -------------------------------------------------------------------------------- Columbia Young Investor Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED YEAR ENDED PERIOD ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 2003 2002 (a) =================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $ 10.47 $ 8.52 $ 8.94 - ------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (b) 0.03 (0.03) (0.01) Net realized and unrealized gain (loss) on investments 1.18 1.98 (0.41) -------- -------- -------- Total from Investment Operations 1.21 1.95 (0.42) - ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 11.68 $ 10.47 $ 8.52 Total return (c)(d) 11.56% 22.89% (4.70)%(e) - ------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 1.33% 1.54% 1.67%(g) Net investment income (loss) (f) 0.26% (0.35)% (0.49)%(g) Waiver/reimbursement 1.10% 0.56% 0.80%(g) Portfolio turnover rate 58% 128% 32% Net assets, end of period (000's) $94,386 $94,617 $82,564 - ------------------------------------------------------------------------------------------------------------------- (a) Class A shares were initially offered on July 29, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming no initial sales charge or contingent deferred sales charge. (d) Had the Investment Advisor and/or Distributor 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 Young Investor Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED YEAR ENDED PERIOD ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 2003 2002 (a) ================================================================================================================= NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 8.51 $ 8.94 - ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.05) (0.10) (0.02) Net realized and unrealized gain (loss) on investments 1.16 1.98 (0.41) -------- -------- -------- Total from Investment Operations 1.11 1.88 (0.43) - ----------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 11.50 $ 10.39 $ 8.51 Total return (c)(d) 10.68% 22.09% (4.81)%(e) - ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 2.03% 2.24% 2.37%(g) Net investment loss (f) (0.45)% (1.05)% (1.19)%(g) Waiver/reimbursement 0.46% 0.51% 0.75%(g) Portfolio turnover rate 58% 128% 32% Net assets, end of period (000's) $ 6,082 $ 6,872 $ 6,505 - ----------------------------------------------------------------------------------------------------------------- (a) Class B shares were initially offered on July 29, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming 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 Young Investor Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED YEAR ENDED PERIOD ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 2003 2002 (a) ================================================================================================================= NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 8.51 $ 8.94 - ----------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.05) (0.10) (0.02) Net realized and unrealized gain (loss) on investments 1.17 1.98 (0.41) -------- -------- -------- Total from Investment Operations 1.12 1.88 (0.43) - ----------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 11.51 $ 10.39 $ 8.51 Total return (c)(d) 10.78% 22.09% (4.81)%(e) - ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 2.03% 2.24% 2.37%(g) Net investment loss (f) (0.43)% (1.05)% (1.19)%(g) Waiver/reimbursement 0.71% 0.50% 0.75%(g) Portfolio turnover rate 58% 128% 32% Net assets, end of period (000's) $ 798 $ 660 $ 488 - ----------------------------------------------------------------------------------------------------------------- (a) Class C shares were initially offered on July 29, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming 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. 24 - -------------------------------------------------------------------------------- Columbia Young Investor Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------------------- CLASS Z SHARES 2004 2003 (a) 2002 (a)(b) 2001 (a) 2000 (a) ================================================================================================================================= NET ASSET VALUE, BEGINNING OF PERIOD $ 9.13 $ 7.42 $ 9.38 $ 17.97 $ 13.71 - --------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (c) 0.01 (0.03) (0.07)(d) (0.06)(d) (0.07)(d) Net realized and unrealized gain (loss) on investments 1.02 1.74 (1.89) (6.52) 4.49 ------------ ------------ ------------ ------------ ------------ Total from Investment Operations 1.03 1.71 (1.96) (6.58) 4.42 - --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- -- (1.56) (0.16) In excess of net realized gains -- -- -- (0.45) -- ------------ ------------ ------------ ------------ ------------ Total Distributions Declared to Shareholders -- -- -- (2.01) (0.16) - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 10.16 $ 9.13 $ 7.42 $ 9.38 $ 17.97 Total return (e) 11.28% 23.05% (20.90)% (40.08)% 32.32% - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 1.46% 1.49% 1.58%(d) 1.26%(d) 1.08%(d) Net investment income (loss) (f) 0.13% (0.30)% (0.71)%(d) (0.41)%(d) (0.45)%(d) Portfolio turnover rate 58% 128% 32% 23%(g) 72%(g) Net assets, end of period (000's) $678,146 $674,590 $573,111 $746,698 $1,215,809 - --------------------------------------------------------------------------------------------------------------------------------- (a) Per share data has been restated to reflect a 2-for-1 share split effective July 25, 2003. (b) Class S shares were redesignated Class Z shares on July 29, 2002. (c) Per share data was calculated using average shares outstanding during the period. (d) Per share data and ratios reflect income and expenses inclusive of the Fund's proportionate share of the income and expenses of the SR&F Growth Investor Portfolio prior to the termination of the master feeder/fund structure on July 26, 2002. (e) Total return at net asset value assuming all distributions reinvested. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Portfolio turnover disclosed is for the SR&F Growth Investor Portfolio. 25 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- Columbia Young Investor Fund TO THE TRUSTEES OF COLUMBIA FUNDS TRUST XI AND THE SHAREHOLDERS OF COLUMBIA YOUNG INVESTOR 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 Young Investor Fund (the "Fund") (a series of Columbia Funds Trust XI) at September 30, 2004 and the results of its operations, the changes in its net assets, and its financial highlights for the periods indicated, in conformity with accounting principles generally accepted 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 portfolio positions at September 30, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts November 15, 2004 26 TRUSTEES - -------------------------------------------------------------------------------- Columbia Young Investor Fund Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were appointed to the Board of the 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 Trustrees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. NAME, ADDRESS AND AGE, POSITION WITH FUNDS, YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES DOUGLAS A. HACKER (Age 49) Executive Vice President - Strategy of United Airlines (airline) since December 2002 (formerly President P.O. Box 66100 of UAL Loyalty Services (airline) from September 2001 to December 2002; Executive Vice President and Chicago, IL 60666 Chief Financial Officer of United Airlines from March 1999 to September 2001; Senior Vice President - Trustee (since 1996) Finance from March 1993 to July 1999). Oversees 118, Orbitz, Inc. (on-line travel company) -------------------------------------------------------------------------------------------------------- JANET LANGFORD KELLY (Age 46) Adjunct Professor of Law, Northwestern University, since September 2004; Private Investor since March 9534 W. Gull Lake Drive 2004 (formerly Chief Administrative Officer and Senior Vice President, Kmart Holding Corporation Richland, MI 49083-8530 (consumer goods), from September 2003 to March 2004; Executive Vice President-Corporate Trustee (since 1996) Development and Administration, 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, U.S. Plywood 10701 Charleston Drive 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 Van Voorhis Department of Economics Professor of Political Economy, University of Washington, since September 1993 (formerly Director, University of Washington Institute for Economic Research, University of Washington from September 2001 to June 2003) Adjunct Seattle, WA 98195 Professor of Statistics, University of Washington, since September 1980; Associate Editor, Journal of Trustee (since 1981) 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 (formerly Dean, 84 College Road Boston College School of Management from September 1977 to September 1999). Oversees 121(3),(4), Chestnut Hill, MA 02467-3838Saucony, Inc. (athletic footwear) Trustee (since 1985) -------------------------------------------------------------------------------------------------------- PATRICK J. SIMPSON (Age 60) 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) -------------------------------------------------------------------------------------------------------- 27 - -------------------------------------------------------------------------------- Columbia Young Investor Fund NAME, ADDRESS AND AGE, POSITION WITH FUNDS, YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES THOMAS E. STITZEL (Age 68) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, College of Business, 2208 Tawny Woods Place Boise State University); Chartered Financial Analyst. Oversees 118, None. Boise, ID 83706 Trustee (since 1998) -------------------------------------------------------------------------------------------------------- THOMAS C. THEOBALD (Age 67) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) since September 2004 303 W. Madison (formerly Managing Director, William Blair Capital Partners (private equity investing) from September Suite 2500 1994 to September 2004). Oversees 118, Anixter International (network support equipment distributor); Chicago, IL 60606 Ventas, Inc. (real estate investment trust); Jones Lang LaSalle (real estate management services) and Trustee and Chairman Ambac Financial Group (financial guaranty insurance) of the Board5 (since 1996) -------------------------------------------------------------------------------------------------------- ANNE-LEE VERVILLE (Age 59) Retired since 1997 (formerly General Manager, Global Education Industry, IBM Corporation (computer 359 Stickney Hill Road and technology) from 1994 to 1997). Oversees 119(4), Chairman of the Board of Directors, Enesco Group, Hopkinton, NH 03229 Inc. (designer, importer and distributor of giftware and collectibles) Trustee (since 1998) ------------------------------------------------------------------------------------------------------ RICHARD L. WOOLWORTH (Age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, The Regence Group 100 S.W. Market Street #1500 (regional health insurer); Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon; Portland, OR 97207 Certified Public Accountant, Arthur Young & Company). Oversees 118, Northwest Natural Gas Co. Trustee (since 1991) (natural gas service provider) ------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEE WILLIAM E. MAYER2 (Age 64) Managing Partner, Park Avenue Equity Partners (private equity) since February 1999 (formerly Founding 399 Park Avenue Partner, Development Capital LLC from November 1996 to February 1999). Oversees 120(3), Lee Suite 3204 Enterprises (print media), WR Hambrecht + Co. (financial service provider); First Health (healthcare); New York, NY 10022 Reader's Digest (publishing); OPENFIELD Solutions (retail industry technology provider) Trustee (since 1994) -------------------------------------------------------------------------------------------------------- 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 also serve as directors/trustees of the Liberty 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 Young Investor Fund NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA FUNDS, YEAR FIRST ELECTED OR APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS CHRISTOPHER L. WILSON (Age 47) President of the Columbia Funds since October 2004 (formerly President and Chief Executive Officer, One Financial Center CDC IXIS Asset Management Services, Inc. from September 1998 to August 2004). Boston, MA 02111 President (since 2004) ----------------------------------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (Age 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December 2000; Vice President One Financial Center of the Advisor since April 2003 (formerly President of the Columbia Funds from February 2004 to Boston, MA 02111 October 2004; Chief Accounting Officer and Controller of the Liberty Funds and of the Liberty Treasurer (since 2000) 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 Management Associates, Inc. from February 1998 to October 2000). ----------------------------------------------------------------------------------------------------- MARY JOAN HOENE (Age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds since August 2004; Chief 40 West 57th Street Compliance Officer of the Liberty All-Star Funds since August 2004 (formerly Partner, Carter, Ledyard New York, NY 10019 & Milburn LLP from January 2001 to August 2004; Counsel, Carter, Ledyard & Milburn LLP from Senior Vice President and November 1999 to December 2000; Vice President and Counsel, Equitable Life Assurance Society of the Chief Compliance Officer United States from April 1998 to November 1999). (since 2004) ----------------------------------------------------------------------------------------------------- MICHAEL G. CLARKE (Age 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star Funds since October 2004 One Financial Center (formerly Controller of the Columbia Funds and of the Liberty All-Star Funds from May 2004 to Boston, MA 02111 October 2004; Assistant Treasurer from June, 2002 to May 2004; Vice President, Product Strategy & Chief Accounting Officer Development of the Liberty Funds Group from February 2001 to June 2002; Assistant Treasurer of the (since 2004) Liberty Funds and of the Liberty All-Star Funds from August 1999 to February 2001; Audit Manager, Deloitte & Touche LLP from May 1997 to August 1999). ----------------------------------------------------------------------------------------------------- JEFFREY R. COLEMAN (Age 34) Controller of the Columbia Funds and of the Liberty All-Star Funds since October 2004 (formerly Vice One Financial Center President of CDC IXIS Asset Management Services, Inc. and Deputy Treasurer of the CDC Nvest Funds Boston, MA 02111 and Loomis Sayles Funds from February 2003 to September 2004; Assistant Vice President of CDC IXIS Controller (since 2004) Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to February 2003; Tax Manager of PFPC, Inc. from November 1996 to August 2000). ----------------------------------------------------------------------------------------------------- DAVID A. ROZENSON (Age 50) Secretary of the Columbia Funds and of the Liberty All-Star Funds since December 2003; Senior One Financial Center Counsel, Bank of America Corporation (formerly FleetBoston Financial Corporation) since January 1996; Boston, MA 02111 Associate General Counsel, Columbia Management Group since November 2002. Secretary (since 2003) ----------------------------------------------------------------------------------------------------- 29 Important Information About This Report - -------------------------------------------------------------------------------- Columbia Young Investor 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 Young Investor 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 800-368-0346. 30 ACTIVITY PAGES TRICKY TAXES Taxes are a way for the government to collect money to pay for the public goods and services you and your family benefit from - like roads and highways and law enforcement. You might know about sales tax, which you sometimes pay when you buy things. But did you also know that one day you will have to pay an income tax on money that you earn from a job or your investments? If you have a job, the money you earn from working is called wages. You will eventually earn enough wages to owe taxes on that income. And if you are invested in a fund, like the Young Investor Fund, and that fund pays you dividends or capital gains during the year, you may have to pay taxes on that income too. Earnings from your investments are called unearned income because you didn't actually earn that money. Whether you owe taxes on your income from your job or on your unearned income from your investments depends mostly on your age and your total taxable income for any given year. [WORD FIND PUZZLE] INCOME CAPITAL WAGES JOB UNEARNED DIVIDENDS TAXABLE MONEY FEDERAL INVESTMENTS GOVERNMENT GAINS I BUDGETING FOR THE HOLIDAYS Are you gearing up for holiday shopping and wondering how you'll be able to buy great gifts for all the people on your list? Especially during the holiday season, retailers do everything they can to promote items and get you to spend more. Stores know that you have a deadline and that your first priority is that each gift you buy is PERFECT for each recipient. It's no wonder that it's easy to go over budget when buying gifts for your family and friends. There are ways, though, to guard against overspending - and still come home with great gifts. 1. Make a list and check it twice. Carefully choose the recipients. Do you usually exchange gifts with that person? Would a card, small present or gift of time mean just as much? Many people go overboard during the holidays, buying for casual friends who really don't expect anything. [Illustration of a gift box] 2. Create a budget. The total budget divided by the number of people on your list is logically the amount you have to spend per person, but you may want to spend more on your parents than on your friends. 3. Get creative. Brainstorm gifts without going over your budget. Ideas can come from all over, including: o hints they've dropped o gifts of time and effort o things you can make o food o window-shopping o research on the Internet You've got the list of whom you'll buy for, what you'll purchase and how much you'll spend. Now you'll need to get in and out of the store without buying extras. Just having this goal helps, but for reinforcement: 1. Estimate prices online. Browse stores' websites to estimate the cost of each item before you hit the mall. 2. Make your first trip to the mall without money in your pocket. Even with solid ideas in your head, it always helps to go to the stores, armed with a notebook and a calculator, for one last brainstorm. Leave your spending money at home on this trip so you won't feel pressured to buy anything too soon. 3. Carry cash. Once you're ready to shop, bring only the money you've budgeted and don't use credit. 4. Enter, buy and leave. Move fast and you won't see other potential purchases - and what you don't see, you won't want. 5. Shop with a like-minded buddy. Two sets of willpower are stronger than one. 6. Go away and think it over. If you still want an unplanned item, you can go back and buy it - but things often lose their appeal once you leave the store. 7. Remember the secret retailers won't tell you: In most holiday traditions, it's the love that counts. Plan the presents! Below make a list of the people you are shopping for this holiday season. Next to each person's name, write the amount you can afford to spend on him or her. (Remember to stick to an overall budget so you don't spend too much on your friends and have nothing left for your sister or brother!) Your last step is to brainstorm gift ideas that fit into your budget for each recipient. Take this page with you when you go shopping! RECIPIENTS BUDGET IDEAS __________________ ______________________ __________________ __________________ ______________________ __________________ __________________ ______________________ __________________ __________________ ______________________ __________________ II WHAT YOU SHOULD KNOW ABOUT THE EURO Just as the dollar and cent represent the national currency of the United States, the euro is the single currency of twelve European Union countries - Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. And just as the dollar comes in various denominations ($1, $5, $10, $20, $50 and so on) and different American coins hold specific cent values (1(cent), 5(cent), 10(cent), 25(cent), etc.), each with its own unique design, the euro comes in seven banknote (paper) denominations and eight coin denominations. Each banknote has a unique design, ranging from well-known gates to famous bridges. The front of each euro coin shows one of three European designs, while the reverse side of each coin shows an individual design relating to the specific country where the coin was minted. Euro banknotes and coins were first introduced on January 1, 2002. They replaced the participating countries' national currencies and made buying, selling and investing much easier throughout Europe. Having a single currency made it easier for people to travel throughout Europe, eliminated the problem of exchange rate fluctuations, simplified the banking and investing process in Europe, made trading with other countries less tricky, and made Europe a strong trade partner world-wide. Because of all the benefits of the euro, many other European countries besides the twelve original euro countries have adopted the euro as their national currency. SKETCH IT! EURO VS. DOLLAR The different images featured on three denominations of the euro appear below. On a separate piece of paper, draw the images featured on the front and back of each corresponding American dollar. (For example, next to the euro 5 banknote, draw the five dollar bill.) If you really want to test yourself, try it from memory! Then think about how the euro and the dollar are similar. How are they different? [IMAGES OF THE EURO] III TAX TIME FOR TEENS With tax season right around the corner, you might be thinking about that summer job, the money you made, and whether you might need to pay taxes on your earnings. The IRS has three basic questions you need to ask yourself to determine whether you have to file a tax return and maybe even give up some of your summer wages to the government: 1. WHAT IS YOUR FILING STATUS? Since you are still in school, we'll assume that you are single. But if you were older, you might either file as: a. married filing a joint return with your spouse c.head of household b. married but filing separately from your spouse d.widow or widower 2. HOW OLD ARE YOU? Sometimes kids aged 14 or younger and people aged 65 or older don't have to file as long as they don't earn over a certain amount in any given tax year. If your parents claim you as their dependent on their tax return, chances are you don't have to pay taxes on your wages. 3. HOW MUCH DID YOU EARN THIS CALENDAR YEAR? If you're not exempt from filing a tax return based on your filing status and/or your age, whether you need to file may come down to how much money you actually earned. Your parents can help you figure out your gross income, which is what this question is really all about. (Gross income is your total personal income before any deductions, including tax deductions.) To learn more about taxes, go to www.irs.gov. Under the "information for" heading, click on "Individuals." Then, under "information for," click on "Students." Click on "Understanding Taxes," then "Student Site." In this section, you'll find lessons, activities, tutorials and simulations to help you understand all there is to know about taxes and tax returns. See if you can answer these questions about taxes. (Hint: The answers can be found by doing some research on the website mentioned above!) QUESTIONS: 1. What is Form W-2? _____________________________________________________ 2. What was the standard deduction for a single person filing a tax return for the 2003 tax year? ________________________________________________ 3. Can a person receive a refund from the government after filing his tax return? Why? __________________________________________________________ 4. Name three national programs that federal taxes are used to fund. _______________________________________________________________________ 5. What is interest income? ______________________________________________ 6. How many options does a married person have when choosing her filing status? What are they? ________________________________________________ 7. Do self-employed people have to pay taxes? ____________________________ 8. Can people file their tax returns on the internet? _______________________________________________________________________ IV YOUR ALLOWANCE: A BALANCING ACT CALLED A BUDGET Have you ever wanted something - a new bike, tickets to a concert, a CD player - that your parents wouldn't buy for you and that you didn't have the money to buy for yourself? It can be tough to be in this situation because most kids don't have much money of their own. But with a savings plan and a budget, you'd be surprised at how quickly your buying power can grow. In order to budget your money, you first need to have some. One way kids often earn money is through an allowance. If you have an allowance, start by writing down the amount you receive and how often you receive it - for example: allowance = $7, once a week. Next, separate your allowance income into savings and spending money. Many experts recommend dividing your allowance into thirds: o One third is for spending now on anything you want. o Another third is for short-term saving, for bigger items that you can't afford to pay for all at once. o The last third is for long-term saving, for things like college. However you divide your money amongst these three categories, this is your budget. Sticking to it will allow you to make major progress toward your goals, buy big items you really want, and still have spending money each week. Try budgeting your allowance to see how long it will take you to save for what you want. How many words can you find in ALLOWANCE? (Hint: there are at least 45.) WORD GAME ALLOWANCE V COMPANY PROFILE YOUR FUND OWNS A PART OF . . . COSTCO WHOLESALE Looking for a new pair of jeans? Want to load up on your favorite candy bar? The latest CDs? Chances are you'll find them at a nearby Costco Wholesale warehouse. Costco is a shopping club that sells a wide variety of merchandise at bargain prices. At Costco, you can buy many of the same items and brands that you'll find in your local grocery store. However, in order to buy your favorite breakfast cereal at Costco, you'll probably have to buy a jumbo-sized box. In addition to food, you can buy clothes, toys, candy, CDs, DVDs, cameras, television sets, computers-and more. Some Costco warehouses even have pharmacies, gas stations, one-hour photo developing, copy centers and food courts. You have to be a member to shop at Costco. But if you shop wisely you could save far more than the $45 your family will spend to become a member. [Illustration of a computer, cd, cereal box and shirt] Shopping at Costco is like going on a treasure hunt-you'll find something different on the shelves every time you go. And since your parents can get almost everything they need at Costco, running errands can take a lot less time. Costco opened its first warehouse more than 20 years ago in Seattle, Washington. Today, the company has 441 outlets in the United States and Puerto Rico and seven foreign countries, including Canada, Japan, Mexico, South Korea, Taiwan, England and Scotland. Worldwide, more than 23 million families are members of Costco. The company employs over 100,000 people in its offices and warehouses. o As of September 30, 2004, Columbia Young Investor Fund held 331,103 shares of Costco Wholesale, which represented 1.8% of the portfolio's net assets. Columbia Young Investor Fund's managers bought the stock at an average price of $32.68 per share. Since then, the stock's price has risen about 26%. The fund's managers invested in Costco Wholesale because they think the company is a strong retailer with the potential to grow faster than its competition. Customers get more of a product at Costco than at other stores for the same amount of money. If Costco can continue to increase sales and profits, the fund's managers think the company's stock price could rise even higher. VI LET'S GO SHOPPING! Running low on school supplies? Your parents gave you $100 to stock up. Where can you shop to get the most for your money? How about a visit to Costco? On the left is a list of items you might typically find at Costco. You can use the table on the right to keep track of your purchases. If you live in a state with sales tax, don't forget to add it in. Be sure to stay within your budget! COSTCO PRICE LIST Ski jacket 27.99 Gym socks - 6-pack 9.99 - ---------------------------------------------------------------------------------------------------------------------- One-time use camera 13.49 Running shoes 24.99 - ---------------------------------------------------------------------------------------------------------------------- Diskman 44.99 Crayons - tin of 120 9.99 - ---------------------------------------------------------------------------------------------------------------------- Jeans 22.49 Basketball 19.49 - ---------------------------------------------------------------------------------------------------------------------- Scientific calculator 13.99 Sports drink - 24 bottles 9.99 - ---------------------------------------------------------------------------------------------------------------------- CD 12.99 Breakfast cereal - 3-lb box 6.79 - ---------------------------------------------------------------------------------------------------------------------- Granola bars - box of 48 7.39 Gel pens - 56-pack assorted colors 9.49 - ---------------------------------------------------------------------------------------------------------------------- Microwave popcorn - 36 bags 7.59 Photo album 10.79 - ---------------------------------------------------------------------------------------------------------------------- Shampoo - 40-oz bottle 5.79 Fleece pullover 17.99 - ---------------------------------------------------------------------------------------------------------------------- Football 14.00 Unabridged dictionary 24.99 - ---------------------------------------------------------------------------------------------------------------------- COSTCO SHOPPING SPREE Item Cost Sales Tax Balance (if any) $100.00 1. - ------------------------------------------------------------------------------------------------------- 2. - ------------------------------------------------------------------------------------------------------- 3. - ------------------------------------------------------------------------------------------------------- 4. - ------------------------------------------------------------------------------------------------------- 5. - ------------------------------------------------------------------------------------------------------- 6. - ------------------------------------------------------------------------------------------------------- 7. - ------------------------------------------------------------------------------------------------------- 8. - ------------------------------------------------------------------------------------------------------- 9. - ------------------------------------------------------------------------------------------------------- 10. - ------------------------------------------------------------------------------------------------------- VII [eDelivery logo] Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia Young Investor Fund ANNUAL REPORT, SEPTEMBER 30, 2004 PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [LOGO]: COLUMBIA FUNDS A MEMBER OF COLUMBIA MANAGEMENT GROUP [C] 2004 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 800.345.6611 756-02/975S-0904 (11/04) 04/3402 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 twelve series of the registrant whose reports to stockholders are included in this annual filing. Effective March 1, 2004, ten of the series of the registrant included in this filing engaged new independent accountants. Unless otherwise noted, fees disclosed below represent fees paid or accrued to the current and predecessor principal accountants while each was engaged by the registrant. (a) Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended September 30, 2004 and September 30, 2003 are approximately as follows: 2004 2003 $253,430 $273,720 Audit Fees include amounts related to the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. (b) Aggregate Audit-Related Fees billed by the principal accountant for professional services rendered during the fiscal years ended September 30, 2004 and September 30, 2003 are approximately as follows: 2004 2003 $42,000 $48,000 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 2004 and 2003, Audit-Related Fees include certain agreed-upon procedures performed for semi-annual shareholder reports. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. For the registrant, the percentage of Audit-Related services that were approved under the "de minimis" exception during the fiscal years ended September 30, 2004 and September 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 September 30, 2004 and September 30, 2003, there were no Audit-Related Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The percentage of Audit-Related fees required to be approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception during the fiscal years ended September 30, 2004 and September 30, 2003 was zero. (c) Aggregate Tax Fees billed by the principal accountant for professional services rendered during the fiscal years ended September 30, 2004 and September 30, 2003 are approximately as follows: 2004 2003 $32,253 $34,801 Tax Fees in both fiscal years 2004 and 2003 consist primarily of the review of annual tax returns and the review of calculations of required shareholder distributions. Tax Fees include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. For the registrant, the percentage of Tax Fees that were approved under the "de minimis" exception during the fiscal years ended September 30, 2004 and September 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 September 30, 2004 and September 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 September 30, 2004 and September 30, 2003 was zero. (d) Aggregate All Other Fees billed by the principal accountant for professional services rendered during the fiscal years ended September 30, 2004 and September 30, 2003 are as follows: 2004 2003 $0 $0 All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in (a)-(c) above. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. For the registrant, the percentage of All Other Fees that were approved under the "de minimis" exception during the fiscal years ended September 30, 2004 and September 30, 2003 was zero. The pre-approval requirements for services to the investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal year ended September 30, 2004, All Other Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were approximately $95,000 (note that fees were paid to the current principal accountant). During the fiscal year ended September 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 (note that fees were paid to the current principal accountant). For both fiscal years, All Other Fees relate to internal controls reviews of the registrant's transfer agent. The percentage of All Other Fees required to be approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception during the fiscal years ended September 30, 2004 and September 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 August 31 of the following year). The Audit Committee will review and approve the types of services and review the projected fees for the next one-year period and may add to, or subtract from, the list of general pre-approved services from time to time, based on subsequent determinations. This approval acknowledges that the Audit Committee is in agreement with the specific types of services that the independent auditor will be permitted to perform. The fee amounts will be updated to the extent necessary at other regularly scheduled meetings of the Audit Committee. In addition to the fees for each individual service, the Audit Committee has the authority to implement a fee cap on the aggregate amount of non-audit services provided to an individual fund. If, subsequent to general pre-approval, a fund, its investment adviser or a control affiliate determines that it would like to engage the independent auditor to perform a service that requires pre-approval and that is not included in the general pre-approval list, the specific pre-approval procedure shall be as follows: o A brief written request shall be prepared by management detailing the proposed engagement with explanation as to why the work is proposed to be performed by the independent auditor; o The request should be addressed to the Audit Committee with copies to the Fund Treasurer and/or Director of Trustee Administration; o The Fund Treasurer and/or Director of Trustee Administration will arrange for a discussion of the service to be included on the agenda for the next regularly scheduled Audit Committee meeting, when the Committee will discuss the proposed engagement and approve or deny the request. o If the timing of the project is critical and the project needs to commence before the next regularly scheduled meeting, the Chairperson of the Audit Committee may approve or deny the request on behalf of the Audit Committee, or, in the Chairperson's discretion, determine to call a special meeting of the Audit Committee for the purpose of considering the proposal. Should the Chairperson of the Audit Committee be unavailable, any other member of the Audit Committee may serve as an alternate for the purpose of approving or denying the request. Discussion with the Chairperson (or alternate, if necessary) will be arranged by the Fund Treasurer and/or Director of Trustee Administration. The independent auditor will not commence any such project unless and until specific approval has been given. III. CERTAIN OTHER SERVICES PROVIDED TO ADVISER ENTITIES The Audit Committee recognizes that there are cases where services proposed to be provided by the independent auditor to the adviser or control affiliates are not Fund-related Adviser Services within the meaning of the Policy, but nonetheless may be relevant to the Audit Committee's ongoing evaluation of the auditor's independence and objectivity with respect to its audit services to the funds. As a result, in all cases where an Adviser Entity engages the independent auditor to provide audit or non-audit services that are not Fund Services or Fund-related Adviser Services, were not subject to pre-approval by the Audit Committee, and the projected fees for any such engagement (or the aggregate of all such engagements during the period covered by the Policy) exceeds a pre-determined threshold established by the Audit Committee; the independent auditor, Fund Treasurer and/or Director of Trustee Administration will notify the Audit Committee not later than its next meeting. Such notification shall include a general description of the services provided, the entity that is to be the recipient of such services, the timing of the engagement, the entity's reasons for selecting the independent auditor, and the projected fees. Such information will allow the Audit Committee to consider whether non-audit services provided to the adviser and Adviser Entities, which were not subject to Audit Committee pre-approval, are compatible with maintaining the auditor's independence with respect to the Funds. IV. REPORTING TO THE AUDIT COMMITTEE The Fund Treasurer or Director of Trustee Administration shall report to the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services initiated since the last such report was rendered, including: o A general description of the services, and o Actual billed and projected fees, and o The means by which such Fund Services or Fund-related Adviser Services were pre-approved by the Audit Committee. In addition, the independent auditor shall report to the Audit Committee annually, and no more than 90 days prior to the filing of audit reports with the SEC, all non-audit services provided to entities in the funds' "investment company complex," as defined by SEC rules, that did not require pre-approval under the Policy. V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE The Policy may be amended from time to time by the Audit Committee. Prompt notice of any amendments will be provided to the independent auditor, Fund Treasurer and Director of Trustee Administration. The Policy shall be reviewed and approved at least annually by the Audit Committee. ***** (e)(2) This information has been included in items (b)-(d) above. (f) Not applicable. (g) All non-audit fees billed by the registrant's accountant for services rendered to the registrant for the fiscal years ended September 30, 2004 and September 30, 2003 are disclosed in (b)-(d) above. All non-audit fees billed by the registrant's accountant for services rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the fiscal years ended September 30, 2004 and September 30, 2003 are also disclosed in (b)-(d) above. Such fees were approximately $95,000 and $95,000, respectively. (h) The registrant's Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant's adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence. The Audit Committee determined that the provision of such services is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS 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. There have not been any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, since those procedures were last disclosed in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officers, based on their evaluation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant's management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half- year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR 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 XI ----------------------------------------------------------------- By (Signature and Title) /s/ Christopher L. Wilson ----------------------------------------------------- Christopher L. Wilson, President Date November 24, 2004 ------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ Christopher L. Wilson ----------------------------------------------------- Christopher L. Wilson, President Date November 24, 2004 ------------------------------------------------------------------------- By (Signature and Title) /s/ J. Kevin Connaughton ----------------------------------------------------- J. Kevin Connaughton, Treasurer Date November 24, 2004 -------------------------------------------------------------------------