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 811-2214
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Columbia Funds Trust I
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Vincent Pietropaolo, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3698
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Date of fiscal year end: 10/31/2004
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Date of reporting period: 10/31/2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Columbia Tax-Managed Funds
Annual Report
October 31, 2004
[photo of man and woman smiling]
[LOGO]:
COLUMBIA FUNDS
A MEMBER OF COLUMBIA MANAGEMENT
Table of Contents
Economic Update ....................... 1
Columbia Tax-Managed Aggressive
Growth Fund ........................ 2
Columbia Tax-Managed Growth Fund ...... 6
Columbia Tax-Managed Growth Fund II ... 8
Columbia Tax-Managed Value Fund ....... 12
Financial Statements .................. 16
Investment Portfolio ............... 17
Statements of Assets and Liabilities 27
Statements of Operations ........... 29
Statements of Changes in Net Assets 30
Notes to Financial Statements ...... 34
Financial Highlights ............... 42
Report of Independent Registered
Public Accounting Firm ............. 51
Unaudited Information ................. 52
Trustees and Officers ................. 53
Important Information
About This Report .................. 57
PRESIDENT'S MESSAGE
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Columbia Tax-Managed Funds
Dear Shareholder:
Your fund's legal and management teams 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 in principle 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 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 funds' managers 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 GUARANTEE
ECONOMIC UPDATE
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Columbia Tax-Managed Funds
The US economy grew at a solid pace of approximately 4.0% during the 12-month
period that began November 1, 2003 and ended October 31, 2004. The economy
encountered a soft patch in the second quarter of 2004, as disappointing job
growth and rising energy prices slowed the pace of consumer spending and
restrained business spending as well. Nevertheless, growth 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 faltered
during the summer months, confidence fell--and continued to fall--through the
end of the period. 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, leaving consumers cautious about job prospects for the
months ahead.
Consumer spending grew during 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. The business
sector also contributed to the economy's solid pace. Industrial production rose;
factories utilized more of their capacity; and spending on technology, capital
equipment and construction picked up. Yet, business spending was not as robust
as expected, given a maturing economic cycle and two straight years of
double-digit profit growth.
Stocks outperformed bonds
Buoyed by strong gains at the beginning of the period, the S&P 500 Index
returned 9.42% during this 12-month reporting period. However, concerns about
new terror threats, continued fighting in Iraq, higher oil prices and
uncertainty surrounding 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 months 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 bouts 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 oil prices and some disappointing
economic data gave the bond market a boost in the latter half of the period. The
10-year Treasury yield, a bellwether for the bond market, ended the period at
just over 4.0%, very close to where it started.
In this environment, the Lehman Brothers Aggregate Bond Index returned 5.53% for
the 12-month period. The municipal bond market did even better. The Lehman
Brothers Municipal Bond Index returned 6.03%. High-yield bonds led the fixed
income markets, as a stronger economy resulted in improved credit ratings,
stronger balance sheets and higher profits for many companies in the high yield
universe. The Merrill Lynch US High Yield, Cash Pay Index returned 12.07%.
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 federal
funds rate was raised to 2.0% on November 10, 2004. 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.
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[sidebar data]:
Summary
For the 12-month period
ended October 31, 2004
o Stocks outperformed bonds, as measured by the S&P 500 Index. Value stocks,
as measured by the S&P 500/Barra Value Index, were the period's strongest
performers.
S&P 500 Index 9.42%
S&P/Barra Value Index 14.46%
o Despite interest rate volatility, bonds chalked up respectable gains as
measured by the Lehman Brothers Aggregate Bond Index. High-yield bonds led
the fixed income markets, as measured by the Merrill Lynch US High Yield,
Cash Pay Index.
Merrill Lynch Index 12.07%
Lehman Aggregate Index 5.53%
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held, large capitalization US stocks.
The S&P 500/Barra Value Index is an unmanaged index that tracks the performance
of companies in the S&P 500 Index with low price-to-book ratios.
The Lehman Brothers Aggregate Bond Index is a market value-weighted index that
tracks the performance of 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.
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1
Performance Information
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Columbia Tax-Managed Aggressive Growth Fund
Performance of a $10,000 investment
08/01/00 - 10/31/04 ($)
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sales charge without with
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Class A 6,626 6,244
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Class B 6,419 6,291
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Class C 6,419 6,419
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Class Z 6,661 n/a
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Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares, 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.
[mountain chart data]:
Value of a $10,000 investment 08/01/00 - 10/31/04
Class A shares Class A shares Russell MidCap
without sales charge with sales charge Growth Index
08/2000 $10,000 $ 9,425 $10,000
11,648 10,978 11,508
11,709 11,035 10,945
10,664 10,051 10,197
8,335 7,856 7,981
8,914 8,401 8,401
9,500 8,954 8,881
7,723 7,279 7,345
6,757 6,368 6,294
7,343 6,921 7,343
7,516 7,083 7,308
7,809 7,360 7,312
7,334 6,912 6,819
6,842 6,448 6,325
5,815 5,480 5,279
6,048 5,700 5,834
6,557 6,180 6,463
6,877 6,481 6,708
6,825 6,433 6,490
6,575 6,196 6,122
6,963 6,563 6,589
6,877 6,481 6,241
6,756 6,367 6,055
6,342 5,977 5,386
5,660 5,334 4,863
5,565 5,245 4,846
5,366 5,058 4,461
5,556 5,237 4,807
5,694 5,366 5,183
5,392 5,082 4,870
5,358 5,050 4,822
5,254 4,952 4,780
5,254 4,952 4,869
5,539 5,220 5,201
5,988 5,643 5,701
6,109 5,757 5,783
6,238 5,879 5,989
6,566 6,189 6,319
6,239 5,880 6,196
6,748 6,360 6,696
6,920 6,522 6,875
6,946 6,547 6,950
7,102 6,693 7,180
7,084 6,677 7,300
6,990 6,588 7,286
6,636 6,254 7,081
6,722 6,336 7,248
6,869 6,474 7,363
6,239 5,880 6,876
6,101 5,750 6,791
6,368 6,002 7,045
10/2004 6,626 6,244 7,282
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
MidCap Growth Index is an unmanaged index that measures the performance of those
Russell MidCap companies with higher price-to-book ratios and higher forecasted
growth values. 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 August 1, 2000.
Average annual total return as of 10/31/04 (%)
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Share class A B C Z
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Inception 08/01/00 08/01/00 08/01/00 08/01/00
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Sales charge without with without with without with without
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1-year -1.79 -7.47 -2.49 -7.37 -2.49 -3.47 -1.40
==========================================================================================
Life -9.22 -10.49 -9.90 -10.33 -9.90 -9.90 -9.11
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Average annual total return as of 09/30/04 (%)
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Share class A B C Z
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Sales charge without with without with without with without
===========================================================================================
1-year 2.07 -3.78 1.13 -3.87 1.27 0.27 2.34
===========================================================================================
Life -10.27 -11.54 -10.94 -11.38 -10.94 -10.94 -10.15
===========================================================================================
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.
2
UNDERSTANDING YOUR EXPENSES
---------------------------------------------------
Columbia Tax-Managed Aggressive 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.
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[sidebar data]:
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 $8,600 at the end of the period, the result would be 8.6
2. In the section of the table below titled "Expenses paid during the period,"
locate the amount for your share class. You will find this number is in the
column labeled "actual." Multiply this number by the result from step 1.
Your answer is an estimate of the expenses you paid on your account during
the period
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May 1, 2004 - October 31, 2004
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Account value at the Account value at the Expenses paid Fund's annualized
beginning of the period ($) end of the period ($) during the period ($) expense ratio (%)
=========================================================================================================================
Actual Hypothetical Actual Hypothetical Actual Hypothetical
=========================================================================================================================
Class A 1,000.00 1,000.00 998.64 1,017.34 7.79 7.86 1.55
=========================================================================================================================
Class B 1,000.00 1,000.00 994.52 1,013.83 11.28 11.39 2.25
=========================================================================================================================
Class C 1,000.00 1,000.00 994.52 1,013.83 11.28 11.39 2.25
=========================================================================================================================
Class Z 1,000.00 1,000.00 999.95 1,018.85 6.28 6.34 1.25
=========================================================================================================================
Expenses paid during the period are equal to the fund's respective class
annualized expense ratio, multiplied by the average account value over the
period, then multiplied by the number of days in the fund's most recent fiscal
half-year and divided by 366.
Had the Investment Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
It is important to note that the expense amounts shown in the table are meant to
highlight only ongoing costs of investing in the fund and do not reflect any
transactional costs, such as sales charges, redemption or exchange fees.
Therefore, the hypothetical examples provided may not help you determine the
relative total costs of owning different funds. If these transactional costs
were included, your costs would have been higher.
COMPARE WITH OTHER FUNDS
Since all mutual fund companies are required to include the same hypothetical
calculations about expenses in shareholder reports, you can use this information
to compare the ongoing cost of investing in the fund with other funds. To do so,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical
examples of other funds, it is important to note that hypothetical examples are
meant to highlight the continuing cost of investing in a fund and do not reflect
any transactional costs, such as sales charges or redemption or exchange fees.
3
PORTFOLIO MANAGERS' REPORT
-----------------------------------------------------
Columbia Tax-Managed Aggressive Growth Fund
For the 12-month period ended October 31, 2004, Columbia Tax-Managed Aggressive
Growth Fund class A shares returned negative 1.79% without sales charge. The
fund trailed the Russell MidCap Growth Index, which returned 8.77%. The fund
also fell short of the Morningstar Mid-Cap Growth Funds Category average, which
was 5.68%.1 Much of the fund's weak performance occurred in the first half of
the reporting period, when an emphasis on technology stocks hurt the fund's
performance. Technology was one of the period's disappointments, and the fund's
stock selection within technology detracted from the fund's return. The fund had
less exposure than its benchmark to entertainment and consumer-related stocks,
which also had a negative impact on its return.
TECHNOLOGY LED DISAPPOINTMENTS
Technology stocks had a strong run in the fourth quarter of 2003 and many of the
fund's technology holdings generated gains. Unfortunately, these gains were not
sufficient to offset double digit losses in other technology holdings. As the
period progressed, the sector lost ground as investors retreated, in general,
from more aggressive segments of the stock market. Concerns about the economy,
interest rates, terrorism, continued fighting in Iraq and the presidential
election weighed on the stock market. Against this backdrop, technology stocks
were punished particularly hard for any earnings shortfall. The fund's
investments in software stocks, in particular, were disappointments. Veritas
Software Corp., lost approximately 39% for the 12-month period. Amkor
Technology, Inc., which makes packaging for semiconductors, lost 73%. We
eliminated the fund's position in Amkor and brought its technology exposure in
line with its benchmark by the end of the period. More generally, we eliminated
commodity-type stocks in favor of companies with proprietary products of higher
intellectual property content, and therefore, companies that have experienced
higher gross margins.
ENERGY AND MATERIALS STOCKS HELPED PERFORMANCE
The fund benefited from its investments in the energy and materials sectors.
Energy stocks were driven higher as the price of oil rose to a record high and
drilling activity increased. Among the fund's best energy stocks were
National-Oilwell, Inc., a supplier of components for drilling rigs, and XTO
Energy, Inc. an oil and gas production company. Although materials stocks were a
relatively small position in the fund, good stock selection and an overweight
position relative to the benchmark, helped performance.
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.
- --------------------------------------------------------------------------------
[sidebar data]:
Summary
o For the 12-month period ended October 31, 2004, the fund's class A shares
returned negative 1.79% without sales charge.
o The fund's returns trailed the Russell MidCap Growth Index and the average
return of the Morningstar Mid-Cap Growth Funds Category primarily because of
its emphasis on technology stocks, which were the period's weakest
performers.
o Stock selection in the technology sector and lower-than-benchmark exposure to
consumer-related stocks, which were strong, hurt performance.
artwork: one arrow down, one arrow up
Class A shares -1.79%
Russell MidCap Growth Index 8.77%
Objective
Seeks long-term capital
growth while reducing
shareholder exposure to taxes
Total net assets
$10.5 million
Net asset value per share
as of 10/31/04 ($)
- -------------------------------------
Class A 7.68
=====================================
Class B 7.44
=====================================
Class C 7.44
=====================================
Class Z 7.72
=====================================
4
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Columbia Tax-Managed Aggressive Growth Fund
Materials stocks benefited from a continued worldwide economic recovery. Potash
Corp of Saskatchewan, Inc., Peabody Energy Corp., Phelps Dodge Corp. and Florida
Rock Industries, Inc. logged returns of 35% or higher for the reporting period.
Health care stock Elan Corp. Plc was the fund's single best performer during the
period. Elan is a biotechnology company that focuses on therapies for neurology,
autoimmune diseases and pain. It has several therapies that have shown promise
in treating Alzheimer's disease. However, the strong gains from Elan were not
enough to offset losses from other health care positions. Overall, the fund's
health care investments detracted from performance. Over the past year, health
care stocks struggled as reimbursement issues and uncertainty over the outcome
of the presidential election clouded the investment environment. We are
generally optimistic that the sector has the potential to rebound as these
issues are clarified.
Kenneth A. Korngiebel has co-managed Columbia Tax-Managed Aggressive Growth Fund
since June 2004 and has been with the advisor or its predecessors or affiliate
organizations since 1996.
/s/ Kenneth A. Korngiebel
Trent E. Nevills has co-managed the fund since June 2004 and has been with the
advisor or its predecessors or affiliate organizations since 2003.
/s/ Trent E. Nevills
Investing in small- and mid-cap stocks may present special risks, including
possible illiquidity and greater price volatility than stocks of larger, more
established companies.
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.
Certain active tax-reduction techniques are used only if the fund's advisor
believes they will help the fund achieve its investment goals.
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.
We thank you for investing in Columbia Funds and look forward to serving you in
the future.
- --------------------------------------------------------------------------------
[sidebar data]:
Top 5 sectors as of 10/31/04 (%)
- --------------------------------------
Information technology 26.3
======================================
Health care 18.8
======================================
Consumer discretionary 18.3
======================================
Industrials 11.5
======================================
Energy 7.2
======================================
Top 10 holdings as of 10/31/04 (%)
- --------------------------------------
Medicis Pharmaceutical Corp. 1.8
======================================
Potash Corp. of
Saskatchewan, Inc. 1.7
======================================
Marvell Technology
Group Ltd. 1.6
======================================
Yum! Brands, Inc. 1.6
======================================
DaVita, Inc. 1.5
======================================
Corporate Executive
Board Co. 1.5
======================================
Advanced Micro Devices, Inc. 1.4
======================================
Manpower, Inc. 1.4
======================================
Fisher Scientific
International, Inc. 1.4
======================================
XM Satellite Radio
Holdings, Inc. 1.4
======================================
Holdings discussed in this report
as of 10/31/04 (%)
- --------------------------------------
VERITAS Software Corp. 0.6
======================================
National-Oilwell, Inc. 1.3
======================================
XTO Energy, Inc. 0.9
======================================
Potash Corp. of
Saskatchewan, Inc. 1.7
======================================
Peabody Energy Corp. 0.7
======================================
Phelps Dodge Corp. 0.7
======================================
Florida Rock Industries,
Inc. 0.3
======================================
Elan Corp. PLC 0.9
======================================
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
PERFORMANCE INFORMATION
-------------------------------------------------------
Columbia Tax-Managed Growth Fund
sidebar:
Performance of a $10,000 investment
12/30/96 - 10/31/04 ($)
- ---------------------------------------
sales
charge without with
=======================================
Class A 13,313 12,548
=======================================
Class B 12,550 12,550
=======================================
Class C 12,550 12,550
=======================================
Class E 13,234 12,639
=======================================
Class F 12,569 12,569
=======================================
Class Z 13,512 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.
[mountain chart data]:
Value of a $10,000 investment 12/30/96 - 10/31/04
Class A shares Class A shares
without with S&P 500
sales charge sales charge Index
12/1996 $10,000 $ 9,425 $10,000
9,960 9,387 9,827
10,386 9,789 10,441
10,227 9,639 10,523
9,672 9,116 10,090
9,959 9,387 10,693
10,723 10,107 11,344
11,239 10,593 11,852
12,131 11,434 12,795
11,595 10,928 12,079
12,349 11,639 12,741
11,943 11,256 12,315
12,221 11,518 12,885
12,389 11,677 13,107
12,627 11,901 13,252
13,500 12,724 14,208
14,086 13,276 14,935
14,076 13,267 15,086
13,728 12,939 14,827
14,036 13,229 15,429
13,926 13,125 15,265
11,674 11,003 13,058
12,429 11,714 13,895
13,281 12,517 15,025
14,204 13,387 15,935
15,048 14,183 16,853
15,227 14,351 17,557
15,029 14,165 17,011
15,743 14,838 17,692
16,080 15,155 18,376
15,732 14,828 17,943
17,002 16,024 18,939
16,575 15,622 18,348
16,456 15,510 18,258
16,148 15,220 17,757
17,051 16,071 18,882
17,240 16,249 19,265
19,275 18,166 20,400
18,342 17,287 19,375
18,510 17,446 19,009
19,532 18,409 20,868
18,720 17,643 20,240
17,827 16,802 19,825
18,709 17,633 20,315
18,670 17,596 19,998
19,900 18,756 21,240
18,907 17,820 20,118
18,232 17,184 20,034
16,130 15,203 18,455
16,319 15,380 18,546
17,459 16,456 19,204
15,366 14,482 17,453
14,166 13,351 16,346
15,187 14,314 17,616
15,128 14,258 17,734
14,821 13,969 17,303
14,673 13,829 17,134
13,681 12,894 16,061
12,183 11,482 14,763
12,580 11,857 15,045
13,642 12,857 16,199
13,691 12,904 16,342
13,354 12,586 16,103
13,136 12,381 15,793
13,672 12,886 16,386
12,829 12,091 15,393
12,749 12,016 15,280
11,608 10,941 14,192
10,825 10,202 13,086
10,913 10,286 13,171
9,892 9,323 11,739
10,785 10,165 12,773
11,460 10,801 13,525
10,666 10,053 12,731
10,527 9,922 12,397
10,478 9,875 12,211
10,617 10,007 12,330
11,520 10,857 13,346
11,986 11,297 14,049
11,877 11,194 14,229
12,205 11,503 14,479
12,522 11,802 14,762
12,254 11,550 14,605
12,988 12,242 15,432
13,117 12,363 15,568
13,673 12,887 16,383
13,902 13,102 16,685
14,060 13,252 16,917
13,901 13,102 16,661
13,573 12,793 16,400
13,732 12,942 16,625
13,880 13,082 16,947
13,215 12,455 16,386
13,165 12,408 16,452
13,205 12,445 16,629
10/2004 13,313 12,548 16,878
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. 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 December 30, 1996.
Average annual total return as of 10/31/04 (%)
- --------------------------------------------------------------------------------------------------------------------------------
Share class A B C E F Z
================================================================================================================================
Inception 12/30/96 12/30/96 12/30/96 12/30/96 12/30/96 01/11/99
================================================================================================================================
Sales charge without with without with without with without with without with without
================================================================================================================================
1-year 2.52 -3.37 1.77 -3.23 1.77 0.77 2.46 -2.15 1.85 -3.15 2.87
================================================================================================================================
5-year -4.83 -5.95 -5.54 -5.92 -5.54 -5.54 -4.92 -5.79 -5.52 -5.90 -4.59
================================================================================================================================
Life 3.72 2.94 2.94 2.94 2.94 2.94 3.64 3.03 2.96 2.96 3.92
================================================================================================================================
Average annual total return as of 09/30/04 (%)
- --------------------------------------------------------------------------------------------------------------------------------
Share class A B C E F Z
================================================================================================================================
Sales charge without with without with without with without with without with without
================================================================================================================================
1-year 7.77 1.58 6.90 1.90 6.90 5.90 7.57 2.73 6.89 1.89 8.00
================================================================================================================================
5-year -3.95 -5.08 -4.68 -5.07 -4.67 -4.67 -4.03 -4.91 -4.61 -4.99 -3.71
================================================================================================================================
Life 3.65 2.86 2.87 2.87 2.87 2.87 3.56 2.95 2.88 2.88 3.84
================================================================================================================================
THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF
5.75% FOR CLASS A SHARES AND 4.50% FOR CLASS E SHARES, MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND F 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 Z share
performance information includes returns for the fund's class A shares (as its
expense structure more closely resembles that of the newer class) for periods
prior to the inception of the newer class of shares. These class A share returns
were not restated to reflect any expense differential (e.g., Rule 12b-1 fees)
between class A and class Z shares. Had the expense differential been reflected,
the returns for the periods prior to the inception of the class Z shares would
have been higher.
6
UNDERSTANDING YOUR EXPENSES
-----------------------------------------------------
Columbia Tax-Managed 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.
- --------------------------------------------------------------------------------
[sidebar data]:
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 $8,600 at the end of the period, the result would be 8.6
2. In the section of the table below titled "Expenses paid during the period,"
locate the amount for your share class. You will find this number is in the
column labeled "actual." Multiply this number by the result from step 1. Your
answer is an estimate of the expenses you paid on your account during the
period
- --------------------------------------------------------------------------------
May 1, 2004 - October 31, 2004
- -------------------------------------------------------------------------------------------------------------------------
Account value at the Account value at the Expenses paid Fund's annualized
beginning of the period ($) end of the period ($) during the period ($) expense ratio (%)
=========================================================================================================================
Actual Hypothetical Actual Hypothetical Actual Hypothetical
=========================================================================================================================
Class A 1,000.00 1,000.00 981.30 1,018.35 6.72 6.85 1.35
=========================================================================================================================
Class B 1,000.00 1,000.00 977.08 1,014.58 10.44 10.63 2.10
=========================================================================================================================
Class C 1,000.00 1,000.00 977.83 1,014.58 10.44 10.63 2.10
=========================================================================================================================
Class E 1,000.00 1,000.00 980.49 1,017.85 7.22 7.35 1.45
=========================================================================================================================
Class F 1,000.00 1,000.00 977.83 1,014.58 10.44 10.63 2.10
=========================================================================================================================
Class Z 1,000.00 1,000.00 983.01 1,019.61 5.48 5.58 1.10
=========================================================================================================================
Expenses paid during the period are equal to the fund's respective class
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.
7
PERFORMANCE INFORMATION
--------------------------------------------------------
Columbia Tax-Managed Growth Fund II
sidebar:
Performance of a $10,000 investment
03/07/00 - 10/31/04 ($)
- --------------------------------------
sales charge without with
======================================
Class A 7,083 6,677
======================================
Class B 6,842 6,705
======================================
Class C 6,825 6,825
======================================
Class Z 7,158 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.
[mountain chart data]:
Value of a $10,000 investment 03/07/00 - 10/31/04
Class A shares Class A shares
without with S&P 500
sales charge sales charge Index
03/2000 $10,000 $ 9,425 $10,000
10,450 9,849 11,061
9,859 9,292 10,728
9,442 8,899 10,508
9,866 9,299 10,768
9,883 9,315 10,600
10,492 9,889 11,258
10,017 9,441 10,664
9,625 9,072 10,619
8,516 8,027 9,782
8,666 8,168 9,830
9,266 8,733 10,179
8,091 7,626 9,251
7,499 7,068 8,664
8,075 7,610 9,337
8,008 7,547 9,400
7,832 7,382 9,171
7,732 7,287 9,082
7,207 6,793 8,513
6,457 6,086 7,825
6,599 6,219 7,975
7,224 6,808 8,586
7,307 6,887 8,662
7,065 6,659 8,535
6,990 6,588 8,371
7,307 6,887 8,685
6,865 6,471 8,159
6,824 6,431 8,099
6,257 5,897 7,522
5,832 5,497 6,936
5,849 5,513 6,981
5,308 5,002 6,222
5,783 5,450 6,770
6,141 5,788 7,169
5,700 5,372 6,748
5,649 5,325 6,571
5,608 5,285 6,472
5,691 5,364 6,535
6,158 5,804 7,074
6,399 6,031 7,447
6,341 5,976 7,542
6,516 6,141 7,675
6,691 6,307 7,824
6,550 6,173 7,741
6,941 6,542 8,179
6,999 6,597 8,251
7,300 6,880 8,684
7,425 6,998 8,844
7,508 7,076 8,967
7,416 6,990 8,831
7,241 6,825 8,693
7,333 6,911 8,812
7,408 6,982 8,983
7,049 6,644 8,685
7,016 6,613 8,720
7,033 6,629 8,814
10/2004 7,083 6,677 8,948
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. 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 March 7, 2000.
Average annual total return as of 10/31/04 (%)
- -----------------------------------------------------------------------------------------
Share class A B C Z
=========================================================================================
Inception 03/07/00 03/07/00 03/07/00 03/07/00
=========================================================================================
Sales charge without with without with without with without
=========================================================================================
1-year 2.04 -3.85 1.36 -3.64 1.36 0.36 2.38
=========================================================================================
Life -7.14 -8.32 -7.83 -8.23 -7.88 -7.88 -6.93
=========================================================================================
Average annual total return as of 09/30/04 (%)
- -----------------------------------------------------------------------------------------
Share class A B C Z
=========================================================================================
Sales charge without with without with without with without
=========================================================================================
1-year 7.38 1.20 6.54 1.54 6.55 5.55 7.70
=========================================================================================
Life -7.42 -8.61 -8.12 -8.53 -8.17 -8.17 -7.20
=========================================================================================
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.
8
UNDERSTANDING YOUR EXPENSES
-----------------------------------------------------
Columbia Tax-Managed Growth Fund II
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 data]:
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 $8,600 at the end of the period, the result would be 8.6
2. In the section of the table below titled "Expenses paid during the period,"
locate the amount for your share class. You will find this number is in the
column labeled "actual." Multiply this number by the result from step 1. Your
answer is an estimate of the expenses you paid on your account during the
period
- --------------------------------------------------------------------------------
May 1, 2004 - October 31, 2004
- -------------------------------------------------------------------------------------------------------------------------
Account value at the Account value at the Expenses paid Fund's annualized
beginning of the period ($) end of the period ($) during the period ($) expense ratio (%)
=========================================================================================================================
Actual Hypothetical Actual Hypothetical Actual Hypothetical
=========================================================================================================================
Class A 1,000.00 1,000.00 978.13 1,017.60 7.46 7.61 1.50
=========================================================================================================================
Class B 1,000.00 1,000.00 974.91 1,013.83 11.17 11.39 2.25
=========================================================================================================================
Class C 1,000.00 1,000.00 974.86 1,013.83 11.17 11.39 2.25
=========================================================================================================================
Class Z 1,000.00 1,000.00 979.49 1,018.85 6.22 6.34 1.25
=========================================================================================================================
Expenses paid during the period are equal to the fund's respective class
annualized expense ratio, multiplied by the average account value over the
period, then multiplied by the number of days in the fund's most recent fiscal
half-year and divided by 366.
Had the Investment Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
It is important to note that the expense amounts shown in the table are meant to
highlight only ongoing costs of investing in the fund and do not reflect any
transactional costs, such as sales charges, redemption or exchange fees.
Therefore, the hypothetical examples provided may not help you determine the
relative total costs of owning different funds. If these transactional costs
were included, your costs would have been higher.
COMPARE WITH OTHER FUNDS
Since all mutual fund companies are required to include the same hypothetical
calculations about expenses in shareholder reports, you can use this information
to compare the ongoing cost of investing in the fund with other funds. To do so,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical
examples of other funds, it is important to note that hypothetical examples are
meant to highlight the continuing cost of investing in a fund and do not reflect
any transactional costs, such as sales charges or redemption or exchange fees.
9
PORTFOLIO MANAGER'S REPORT
------------------------------------------------------
Columbia Tax-Managed Growth Funds
For the 12-month period ended October 31, 2004, Columbia Tax-Managed Growth Fund
class A shares returned 2.52% without sales charge. Columbia Tax-Managed Growth
Fund II class A shares returned 2.04% without sales charge. The funds
underperformed their benchmark, the S&P 500 Index, which returned 9.42% for the
period. The funds also trailed their peer group, the Morningstar Large Cap
Growth Category, which averaged 3.15%.1 We believe stock selection in the
consumer and financial sectors and disappointments from semiconductor stocks in
the technology sector accounted for the funds' underperformance relative to
their benchmark and peer group.
STOCKS PEAK EARLY IN PERIOD
Driven by an expanding economy and strong corporate profit growth, large-cap
stocks generated positive returns this reporting period. However, the gains were
achieved in the first four months of the period. Stock prices peaked in March,
then moved sideways to downward as investors became concerned about rising
interest rates, sharply higher energy prices, the conflict in Iraq and the
outcome of the presidential election.
In this environment, media and retail stocks disappointed as the result of a
weaker-than-expected recovery in advertising spending and a slow-down in
consumer spending growth. We reduced the funds' media exposure by selling their
positions in cable television and high-speed Internet provider Comcast Corp.
Online auctioneer eBay, Inc. made the sector's only positive contribution to
return.
The financial sector was also a weak performer for the funds. Rising interest
rates took a toll on many financial stocks. New York Community Bank was
particularly affected, and we sold the stock during the period. Alleged
accounting improprieties hurt financial services firm Federal National Mortgage
Association (Fannie Mae) and insurance provider American International Group,
Inc. Unusually high catastrophic losses during this year's hurricane season had
an adverse impact on the funds' property and casualty insurance holdings.
TECHNOLOGY DISAPPOINTMENTS DEPRESSED RETURNS
Technology stocks stumbled in 2004 as demand was less robust than expected and
earnings were disappointing. Strong stock selection resulted in some attractive
gains for the funds. Among the strong technology performers were Affiliated
Computer Services, Inc., which provides business processing and information
technology outsourcing
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.
- --------------------------------------------------------------------------------
[sidebar data]:
Summary
o For the 12-month period ended October 31, 2004, the class A shares of
Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II
returned 2.52% and 2.04% without sales charge, respectively.
o The funds underperformed their benchmark, the S&P 500 Index, and their peer
group, the Morningstar Large Cap Growth Category.
o We believe stock selection in the technology, finance and consumer sectors
hurt the funds' performance relative to their benchmark and peer group.
Tax-Managed Growth Fund
Net asset value per share
as of 10/31/04 ($)
- --------------------------------------
Class A 13.42
======================================
Class B 12.65
======================================
Class C 12.65
======================================
Class E 13.34
======================================
Class F 12.67
======================================
Class Z 13.62
======================================
Tax-Managed Growth Fund II
Net asset value per share
as of 10/31/04 ($)
- --------------------------------------
Class A 8.50
======================================
Class B 8.21
======================================
Class C 8.19
======================================
Class Z 8.59
======================================
Tax-Managed Growth Fund
Top 5 sectors as of 10/31/04 (%)
- --------------------------------------
Information technology 20.2
======================================
Financials 18.5
======================================
Health care 17.6
======================================
Industrials 12.5
======================================
Consumer discretionary 10.6
======================================
Tax-Managed Growth Fund II
Top 5 sectors as of 10/31/04 (%)
- --------------------------------------
Information technology 19.6
======================================
Health care 17.8
======================================
Financials 17.7
======================================
Industrials 12.4
======================================
Consumer discretionary 10.6
======================================
Sector breakdowns are calculated as a percentage of net assets.
10
---------------------------------------------------------------
Columbia Tax-Managed Growth Funds
services, and network storage systems vendors Network Appliance, Inc. and EMC
Corp. Symantec Corp., a leading provider of computer security software, also
aided returns, and we took advantage of a price gain to sell the stock at a
profit during the period. However, these gains were not enough to offset losses
from the funds' semiconductor holdings. We reduced the funds' exposure to
semiconductors by eliminating positions in Microchip Technology, Inc. and
National Semiconductor Corp. We also pared some of the funds' other
semiconductor holdings.
STRONGEST GAINS FROM BASIC MATERIALS, INDUSTRIALS AND HEALTH CARE
Industrials and basic materials stocks benefited returns as continued economic
growth resulted in increased industrial production. The funds' strongest
performers were metals producer Phelps Dodge Corp. and machinery makers Eaton
Corp., Illinois Tool Works, Inc. and Deere & Co. We sold Phelps Dodge and Deere
& Co. when they reached our price objectives. In the health care sector, the
funds' investments in equipment, supplies and services stocks, such as St. Jude
Medical, Inc., Zimmer Holdings, Inc., Medtronic, Inc. and Express Scripts, Inc.
made strong positive contributions. These gains helped offset continued weakness
in the pharmaceutical sector, where growth trends have slowed. During the
period, we sold the funds' holdings in Pfizer, Inc. and AstraZeneca PLC and
replaced them with Caremark Rx, Inc. and Schering-Plough Corp., which we believe
have more dynamic growth prospects.
POSITIVE OUTLOOK DESPITE CHALLENGES
Now that the uncertainty surrounding the presidential election has been
resolved, we expect investors to focus once again on the outlook for the economy
and corporate profits. Rising interest rates and energy prices remain causes for
concern. However, we believe that the economy and corporate profits have the
potential to continue to grow in 2005, albeit at a slower pace. Against that
favorable backdrop, we believe investors could rotate back into the
higher-quality, large-cap stocks that make up the funds'core holdings.
William M. Hughes is a senior equity analyst at Stein Roe Investment Counsel,
LLC, sub-advisor to the funds. Mr. Hughes is also a member of the investment
management team for Columbia Tax-Managed Growth Fund and Columbia Tax-Managed
Growth Fund II. No single individual has primary management responsibility over
the funds' portfolio securities.
/s/ William M. Hughes
The funds' 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.
Certain active tax-reduction techniques are used only if the funds' advisor
believes they will help the funds achieve their investment goals. The funds
expect to distribute taxable income and capital gains from time to time. Market
conditions may limit the funds' ability to generate tax losses or to avoid
dividend income. The ability to use certain tax-managed techniques may be
curtailed or eliminated in the future by tax legislation, regulations,
administrative interpretations or court decisions.
[sisebar data} :
Tax-Managed Growth Fund
Top 10 holdings as of 10/31/04 (%)
- -----------------------------------------------------
General Electric Co. 3.4
=====================================================
Exxon Mobil Corp. 3.4
=====================================================
Wal-Mart Stores, Inc. 3.4
=====================================================
Bank of America Corp. 3.0
=====================================================
Microsoft Corp. 3.0
=====================================================
Kohl's Corp. 2.7
=====================================================
Lexmark International, Inc. 2.7
=====================================================
Lehman Brothers Holdings, Inc. 2.7
=====================================================
St. Jude Medical, Inc. 2.5
=====================================================
Univision Communications, Inc. 2.5
=====================================================
Tax-Managed Growth Fund II
Top 10 holdings as of 10/31/04 (%)
- -----------------------------------------------------
General Electric Co. 3.4
=====================================================
Exxon Mobil Corp. 3.4
=====================================================
Wal-Mart Stores, Inc. 3.2
=====================================================
Microsoft Corp. 2.9
=====================================================
Univision Communications, Inc. 2.7
=====================================================
Lehman Brothers Holdings, Inc. 2.6
=====================================================
Kohl's Corp. 2.6
=====================================================
Walgreen Co. 2.6
=====================================================
St. Jude Medical, Inc. 2.5
=====================================================
Lexmark International, Inc. 2.5
=====================================================
Columbia Columbia
Tax- Tax-
Holdings discussed Managed Managed
in this report as Growth Growth
of 10/31/04 (%) Fund Fund II
- -----------------------------------------------------
eBay, Inc. 1.1 1.1
=====================================================
Federal National
Mortgage Association
(Fannie Mae) 1.8 1.6
=====================================================
American International
Group, Inc. 2.3 2.4
=====================================================
Affiliated Computer
Services, Inc. 2.3 2.1
=====================================================
Network Appliance, Inc. 1.4 1.4
=====================================================
EMC Corp. 1.8 1.8
=====================================================
Eaton Corp. 2.3 2.2
=====================================================
Illinois Tool Works, Inc. 2.0 2.0
=====================================================
St. Jude Medical, Inc. 2.5 2.5
=====================================================
Zimmer Holdings, Inc. 1.9 1.9
=====================================================
Medtronic, Inc. 2.3 2.2
=====================================================
Express Scripts, Inc. 1.8 1.9
=====================================================
Caremark Rx, Inc. 1.9 2.0
=====================================================
Schering-Plough Corp. 1.9 1.9
=====================================================
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.
11
PERFORMANCE INFORMATION
---------------------------------------------------------
Columbia Tax-Managed Value Fund
sidebar:
Performance of a $10,000 investment
06/01/99 - 10/31/04 ($)
- -----------------------------------------
sales charge without with
=========================================
Class A 9,577 9,026
=========================================
Class B 9,227 9,134
=========================================
Class C 9,227 9,227
=========================================
Class Z 9,718 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.
Class A shares Class A shares Russell S&P 500/
without with 1000 Value S&P 500 Barra Value
sales charge sales charge Index Index Index
06/1999 $10,000 $ 9,425 $10,000 $10,000 $10,000
10,200 9,614 10,349 10,616 10,427
9,733 9,173 10,046 10,285 10,107
9,358 8,820 9,673 10,234 9,851
8,641 8,144 9,335 9,954 9,466
8,866 8,356 9,873 10,584 10,001
8,799 8,294 9,796 10,799 9,942
8,749 8,246 9,843 11,435 10,316
8,357 7,877 9,522 10,861 9,988
7,741 7,295 8,815 10,656 9,363
8,624 8,128 9,890 11,698 10,340
8,774 8,269 9,776 11,346 10,271
9,215 8,685 9,878 11,113 10,303
8,724 8,222 9,427 11,388 9,896
8,607 8,112 9,545 11,210 10,094
9,090 8,567 10,075 11,906 10,771
9,124 8,599 10,168 11,277 10,769
9,507 8,960 10,418 11,230 10,970
9,440 8,897 10,032 10,345 10,408
9,982 9,408 10,534 10,396 10,944
9,940 9,369 10,574 10,765 11,406
9,906 9,337 10,280 9,783 10,650
9,565 9,015 9,917 9,163 10,229
9,698 9,140 10,403 9,875 10,923
9,881 9,313 10,637 9,941 11,038
9,614 9,061 10,401 9,699 10,680
9,864 9,297 10,379 9,604 10,495
9,814 9,249 9,963 9,003 9,889
9,447 8,903 9,262 8,276 8,949
9,497 8,951 9,182 8,434 8,949
9,863 9,296 9,716 9,081 9,517
9,938 9,367 9,945 9,161 9,662
9,722 9,163 9,868 9,027 9,397
9,596 9,044 9,884 8,853 9,314
10,088 9,507 10,352 9,185 9,791
9,655 9,100 9,996 8,629 9,300
9,621 9,068 10,046 8,565 9,337
8,530 8,039 9,470 7,955 8,748
7,822 7,372 8,589 7,335 7,802
7,897 7,443 8,654 7,383 7,856
6,780 6,391 7,692 6,581 6,958
7,405 6,979 8,262 7,160 7,536
7,997 7,537 8,783 7,581 8,066
7,630 7,192 8,401 7,136 7,647
7,347 6,925 8,198 6,949 7,437
6,923 6,525 7,979 6,845 7,235
6,898 6,501 7,993 6,911 7,226
7,414 6,988 8,696 7,481 7,940
8,014 7,553 9,258 7,875 8,525
8,198 7,726 9,374 7,976 8,587
8,156 7,687 9,513 8,116 8,778
8,289 7,812 9,662 8,275 8,967
8,122 7,655 9,567 8,187 8,805
8,414 7,930 10,152 8,650 9,407
8,497 8,008 10,291 8,727 9,492
9,087 8,564 10,924 9,184 10,078
9,213 8,683 11,117 9,353 10,257
9,456 8,913 11,355 9,483 10,488
9,415 8,873 11,255 9,340 10,416
9,179 8,651 10,980 9,193 10,159
9,179 8,651 11,092 9,319 10,276
9,423 8,881 11,354 9,500 10,499
9,246 8,715 11,194 9,185 10,299
9,347 8,810 11,353 9,222 10,410
9,482 8,936 11,529 9,322 10,607
10/2004 9,577 9,026 11,720 9,462 10,766
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 Standard & Poor's (S&P) 500/Barra Value Index is an unmanaged index
that tracks the performance of companies in the S&P 500 Index with low
price-to-book ratios. The S&P 500 Index and the S&P 500/Barra Value Index were
the fund's previous benchmark. 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 June 1, 1999.
Average annual total return as of 10/31/04 (%)
- ------------------------------------------------------------------------------------------
Share class A B C Z
==========================================================================================
Inception 06/01/99 06/01/99 06/01/99 06/01/99
==========================================================================================
Sales charge without with without with without with without
==========================================================================================
1-year 13.78 7.24 12.98 7.98 12.98 11.98 14.10
==========================================================================================
5-year 1.55 0.36 0.86 0.47 0.86 0.86 1.83
==========================================================================================
Life -0.79 -1.87 -1.47 -1.66 -1.47 -1.47 -0.53
==========================================================================================
Average annual total return as of 09/30/04 (%)
- ------------------------------------------------------------------------------------------
Share class A B C Z
==========================================================================================
Sales charge without with without with without with without
==========================================================================================
1-year 16.73 10.02 15.98 10.98 15.98 14.98 17.14
==========================================================================================
5-year 1.88 0.68 1.17 0.79 1.17 1.17 2.18
==========================================================================================
Life -0.99 -2.08 -1.67 -1.85 -1.67 -1.67 -0.71
==========================================================================================
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.
12
UNDERSTANDING YOUR EXPENSES
-----------------------------------------------------
Columbia Tax-Managed 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.
- --------------------------------------------------------------------------------
[sidebar data]:
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 $8,600 at the end of the period, the result would be 8.6
2. In the section of the table below titled "Expenses paid during the period,"
locate the amount for your share class. You will find this number is in the
column labeled "actual." Multiply this number by the result from step 1. Your
answer is an estimate of the expenses you paid on your account during the
period
- --------------------------------------------------------------------------------
May 1, 2004 - October 31, 2004
- ------------------------------------------------------------------------------------------------------------------------
Account value at the Account value at the Expenses paid Fund's annualized
beginning of the period ($) end of the period ($) during the period ($) expense ratio (%)
========================================================================================================================
Actual Hypothetical Actual Hypothetical Actual Hypothetical
========================================================================================================================
Class A 1,000.00 1,000.00 1,045.55 1,017.65 7.66 7.56 1.49
========================================================================================================================
Class B 1,000.00 1,000.00 1,042.13 1,014.13 11.24 11.09 2.19
========================================================================================================================
Class C 1,000.00 1,000.00 1,042.13 1,014.13 11.24 11.09 2.19
========================================================================================================================
Class Z 1,000.00 1,000.00 1,046.90 1,019.15 6.12 6.04 1.19
========================================================================================================================
Expenses paid during the period are equal to the fund's respective class
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.
13
PORTFOLIO MANAGERS' REPORT
------------------------------------------------------
Columbia Tax-Managed Value Fund
For the 12-month period ended October 31, 2004, Columbia Tax-Managed Value Fund
class A shares returned 13.78% without sales charge. The fund's return trailed
the Russell 1000 Value Index, which returned 15.45%. It was higher than the
average return of the Morningstar Large Value Category, which was 12.14%.1
Favorable results from energy and utility investments helped the portfolio
achieve a double-digit gain for the period.
SECTOR SELECTION AIDS PERFORMANCE
Portfolio performance was led by investments in the utilities sector, which were
up approximately 52% during the period. Utilities are generally high-yielding
investments, and they became increasingly attractive to investors seeking higher
current yields in a favorable tax environment. A number of utility companies
improved their credit ratings through restructuring. In particular, TXU Corp.
engineered a successful sale of non-strategic assets, improving its financial
condition and enabling the company to preserve its dividend.
An overweight position in the energy sector also contributed favorably to
portfolio performance. The price of oil went higher and stayed higher longer
than many people expected, resulting in substantial profits for companies such
as BPPLC, ConocoPhillips and Halliburton Co. Because we believe these profits
may not be sustainable, we reduced the fund's position in the sector late in the
period, taking advantage of the group's price appreciation.
LIMITING THE IMPACT OF UNDERPERFORMING SECTORS
The worst performing sector during the period was technology, which rose only
5.6% for the twelve-month period. Corporate spending on new computer systems and
software has been disappointing, as many companies have been paying out
dividends, buying back stock or stockpiling cash as an alternative to spending.
Because technology companies tend not to pay generous dividends, they were out
of favor with investors for much of the period.
The weakness in technology shares had a limited impact on the portfolio, because
we maintained a market weight of approximately 6% of total assets. However, the
financial sector, which accounts for 30% of the fund's assets was up only
slightly during the period and consequently held down overall returns. Financial
stocks tend not to perform well during periods of rising short-term interest
rates, which occurred in the second half of the period. In addition, capital
market activities slowed
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.
- --------------------------------------------------------------------------------
[sidebar data]:
Summary
o For the 12-month period ended October 31, 2004, the fund's class A shares
returned 13.78% without sales charge.
o The fund's return was below its benchmark, the Russell 1000 Value Index, but
above the average for other funds in its category.
o The fund benefited from effective sector management, highlighting strong
performers such as energy while underweighting financial stocks and the
consumer discretionary sector.
artwork: 2 arrows up
Class A shares 13.78%
Russell 1000 Value Index 15.45%
Objective
Seeks long-term capital
growth while reducing
shareholder exposure to taxes
Total net assets
$73.1 million
Net asset value per share
as of 10/31/04 ($)
- ------------------------------------------
Class A 11.40
==========================================
Class B 11.07
==========================================
Class C 11.07
==========================================
Class Z 11.53
==========================================
Distributions declared per share
11/01/03 - 10/31/04 ($)
- ------------------------------------------
Class A 0.09
==========================================
Class B 0.00*
==========================================
Class C 0.00*
==========================================
Class Z 0.12
==========================================
* Rounds to less than $0.01 per share.
14
-------------------------------------------------------------
Columbia Tax-Managed Value Fund
down over the past year, and the banking industry experienced soft loan demand
at a time when many companies were content to let cash build up on their balance
sheets.
Consumer discretionary stocks were a drag on fund performance. However, we did
well to keep the fund's exposure in the sector lower than the fund's benchmark
because consumer stocks were weak during the period. We eliminated the fund's
position in General Motors Corp. and held back on investments in the retail
sector. Our view was that as the refinancing boom tailed off and the effect of
the 2003 tax credit waned, consumers would lose some of their spending strength
and that consumer-oriented companies would suffer as a result. The sector's weak
performance supported that view.
A TEMPERED OUTLOOK FOR VALUE INVESTMENTS
While value-oriented investments have outperformed significantly over the past
twelve months, our outlook is more restrained today. We believe that value
stocks are fairly valued at current levels. With rising interest rates likely to
constrain the market as a whole, we plan to continue to manage the fund with a
value-oriented eye to finding quality companies trading at reasonable prices.
Gregory M. Miller has co-managed Columbia Tax-Managed Value Fund since April
2003 and has been with the advisor or its predecessors or affiliate
organizations since 1985.
/s/ Gregory M. Miller
Richard Dahlberg has co-managed the fund since October 2003 and has been with
the advisor since September 2003.
/s/ Richard Dahlberg
Brian Cunningham has co-managed the fund since November 2003 and has been with
the advisor or its predecessors or affiliate organizations since 1987.
/s/ Brian Cunningham
An investment in the fund may present certain risks, including stock market
fluctuations that occur in response 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.
Certain active tax-reduction techniques are used only if the fund's advisor
believes they will help the fund achieve its investment goals. The fund expects
to distribute taxable income and capital gains from time to time. Market
conditions may limit the fund's ability to generate tax losses or to avoid
dividend income. The ability to use certain tax-management techniques may be
curtailed or eliminated in the future by tax legislation, regulations,
administrative interpretations or court decisions.
- --------------------------------------------------------------------------------
[sidebar data]:
Top 5 sectors as of 10/31/04 (%)
- --------------------------------------
Financials 29.7
======================================
Energy 13.9
======================================
Industrials 11.8
======================================
Consumer staples 10.5
======================================
Consumer discretionary 6.7
======================================
Top 10 holdings as of 10/31/04 (%)
- --------------------------------------
Citigroup, Inc. 4.1
======================================
Exxon Mobil Corp. 3.7
======================================
ConocoPhillips 3.0
======================================
JPMorgan Chase & Co. 2.9
======================================
BP PLC 2.8
======================================
General Electric Co. 2.8
======================================
U.S. Bancorp 2.2
======================================
SBC Communications, Inc. 2.2
======================================
Wells Fargo & Co. 2.2
======================================
TXU Corp. 2.1
======================================
Holdings discussed in this report
as of 10/31/04 (%)
- --------------------------------------
TXU Corp. 2.1
======================================
BPPLC 2.8
======================================
ConocoPhillips 3.0
======================================
Halliburton Co. 1.2
======================================
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.
15
FINANCIAL STATEMENTS
------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed 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).
16
INVESTMENT PORTFOLIO
------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Aggressive Growth Fund
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - 99.6%
CONSUMER DISCRETIONARY - 18.3%
Auto Components - 0.5%
Autoliv, Inc. 1,260 53,865
----------
Auto Components Total 53,865
Hotels, Restaurants & Leisure - 5.7%
Applebee's International, Inc. 2,580 59,005
Cheesecake Factory, Inc. (a) 1,390 60,340
Four Seasons Hotels, Inc. 540 36,515
Harrah's Entertainment, Inc. 1,610 94,217
Hilton Hotels Corp. 5,210 103,679
Marriott International, Inc.,
Class A 1,380 75,196
Yum! Brands, Inc. 3,810 165,735
----------
Hotels, Restaurants & Leisure Total 594,687
Household Durables - 2.0%
Centex Corp. 1,340 69,600
D.R. Horton, Inc. 2,290 68,700
Harman International Industries,
Inc. 350 42,063
Pulte Homes, Inc. 580 31,830
----------
Household Durables Total 212,193
Leisure Equipment & Products - 0.4%
Marvel Enterprises, Inc. (a) 3,000 46,200
----------
Leisure Equipment & Products Total 46,200
Media - 3.1%
Grupo Televisa SA, ADR 820 45,100
Lamar Advertising Co., Class A (a) 1,320 54,674
Sirius Satellite Radio, Inc. (a) 7,100 27,690
Univision Communications, Inc.,
Class A (a) 1,670 51,703
XM Satellite Radio Holdings, Inc.,
Class A (a) 4,600 148,672
----------
Media Total 327,839
Specialty Retail - 5.3%
Bed Bath & Beyond, Inc. (a) 1,220 49,764
Chico's FAS, Inc. (a) 3,340 133,700
PETCO Animal Supplies, Inc. (a) 1,760 62,955
PETsMART, Inc. 2,720 86,986
Staples, Inc. 4,080 121,339
Urban Outfitters, Inc. (a) 2,350 96,350
----------
Specialty Retail Total 551,094
Textiles, Apparel & Luxury Goods - 1.3%
Coach, Inc. (a) 2,930 136,626
----------
Textiles, Apparel & Luxury Goods Total 136,626
----------
CONSUMER DISCRETIONARY TOTAL 1,922,504
CONSUMER STAPLES - 3.8%
Food & Staples Retailing - 0.7%
Whole Foods Market, Inc. 920 74,915
----------
Food & Staples Retailing Total 74,915
Shares Value ($)
- --------------------------------------------------------------------------------
Food Products - 2.6%
Bunge Ltd. 2,800 133,644
Dean Foods Co. (a) 2,850 85,073
Hershey Foods Corp. 1,060 53,731
----------
Food Products Total 272,448
Personal Products - 0.5%
Alberto-Culver Co. 1,180 52,935
----------
Personal Products Total 52,935
----------
CONSUMER STAPLES TOTAL 400,298
ENERGY - 7.2%
Energy Equipment & Services - 4.6%
Baker Hughes, Inc. 2,330 99,794
BJ Services Co. 1,760 89,760
Nabors Industries Ltd. (a) 1,060 52,067
National-Oilwell, Inc. (a) 3,930 132,480
Patterson-UTI Energy, Inc. 1,810 34,806
Weatherford International Ltd. (a) 1,480 77,345
----------
Energy Equipment & Services Total 486,252
Oil & Gas - 2.6%
Apache Corp. 1,060 53,742
EOG Resources, Inc. 630 41,933
Murphy Oil Corp. 420 33,608
Ultra Petroleum Corp. (a) 1,000 48,600
XTO Energy, Inc. 2,920 97,470
----------
Oil & Gas Total 275,353
----------
ENERGY TOTAL 761,605
FINANCIALS - 4.6%
Capital Markets - 0.8%
E*TRADE Financial Corp. (a) 6,640 85,656
----------
Capital Markets Total 85,656
Commercial Banks - 2.1%
North Fork Bancorporation, Inc. 1,450 63,945
TCF Financial Corp. 2,870 90,462
Zions Bancorporation 940 62,200
----------
Commercial Banks Total 216,607
Insurance - 1.1%
Ambac Financial Group, Inc. 1,530 119,432
----------
Insurance Total 119,432
Real Estate - 0.6%
St. Joe Co. 1,280 65,152
----------
Real Estate Total 65,152
----------
FINANCIALS TOTAL 486,847
See Accompanying Notes to Financial Statements.
17
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Aggressive Growth Fund
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
HEALTH CARE - 18.8%
Biotechnology - 3.3%
Amylin Pharmaceuticals, Inc. (a) 4,390 93,507
Gen-Probe, Inc. (a) 2,150 75,336
Genzyme Corp. (a) 2,160 113,335
Martek Biosciences Corp. (a) 1,370 64,467
----------
Biotechnology Total 346,645
Health Care Equipment & Supplies - 6.4%
Beckman Coulter, Inc. 1,030 61,285
Biomet, Inc. 2,490 116,233
Fisher Scientific
International, Inc. (a) 2,600 149,136
Kinetic Concepts, Inc. (a) 2,850 142,016
Thermo Electron Corp. (a) 4,040 117,160
Varian Medical Systems, Inc. (a) 2,160 86,724
----------
Health Care Equipment & Supplies Total 672,554
Health Care Providers & Services - 4.1%
Accredo Health, Inc. (a) 2,340 53,890
Anthem, Inc. (a) 700 56,280
Community Health Systems, Inc. (a) 2,040 54,713
DaVita, Inc. (a) 5,310 157,282
McKesson Corp. 1,990 53,053
UnitedHealth Group, Inc. 719 52,056
----------
Health Care Providers & Services Total 427,274
Pharmaceuticals - 5.0%
Elan Corp. PLC, ADR (a) 3,800 98,040
Endo Pharmaceuticals Holdings,
Inc. (a) 3,230 70,414
IVAX Corp. (a) 3,075 55,657
Medicis Pharmaceutical Corp.,
Class A 4,720 191,962
Nektar Therapeutics (a) 3,860 55,623
Teva Pharmaceutical Industries
Ltd., ADR 2,110 54,860
----------
Pharmaceuticals Total 526,556
----------
HEALTH CARE TOTAL 1,973,029
INDUSTRIALS - 11.5%
Aerospace & Defense - 1.1%
L-3 Communications Holdings, Inc. 730 48,129
United Defense Industries, Inc. (a) 1,560 62,618
----------
Aerospace & Defense Total 110,747
Air Freight & Logistics - 1.3%
C.H. Robinson Worldwide, Inc. 1,380 74,437
Expeditors International
of Washington, Inc. 1,110 63,381
----------
Air Freight & Logistics Total 137,818
Shares Value ($)
- --------------------------------------------------------------------------------
Building Products - 0.5%
Masco Corp. 1,530 52,418
----------
Building Products Total 52,418
Commercial Services & Supplies - 7.8%
Avery Dennison Corp. 1,000 60,840
Career Education Corp. (a) 930 29,174
ChoicePoint, Inc. (a) 3,270 136,130
Cintas Corp. 1,240 53,494
Corporate Executive Board Co. 2,400 152,760
Education Management Corp. (a) 2,530 67,855
Iron Mountain, Inc. (a) 3,420 113,031
Manpower, Inc. 3,350 151,587
Robert Half International, Inc. 2,090 55,448
----------
Commercial Services & Supplies Total 820,319
Construction & Engineering - 0.8%
Jacobs Engineering Group, Inc. (a) 2,120 86,348
----------
Construction & Engineering Total 86,348
----------
INDUSTRIALS TOTAL 1,207,650
INFORMATION TECHNOLOGY - 26.3%
Communications Equipment - 3.7%
Avocent Corp. (a) 1,310 46,636
Comverse Technology, Inc. (a) 4,780 98,659
Harris Corp. 900 55,377
Juniper Networks, Inc. (a) 4,500 119,745
Polycom, Inc. (a) 3,300 68,145
----------
Communications Equipment Total 388,562
Computers & Peripherals - 1.5%
Lexmark International, Inc.,
Class A (a) 560 46,542
SanDisk Corp. (a) 5,000 104,350
----------
Computers & Peripherals Total 150,892
Electronic Equipment & Instruments - 1.0%
CDW Corp. 890 55,207
FLIR Systems, Inc. (a) 890 47,357
----------
Electronic Equipment & Instruments Total 102,564
Internet Software & Services - 0.7%
Ask Jeeves, Inc. (a) 2,870 73,989
----------
Internet Software & Services Total 73,989
IT Services - 1.4%
Cognizant Technology Solutions Corp.,
Class A (a) 2,970 100,980
SunGard Data Systems, Inc. (a) 1,880 49,801
----------
IT Services Total 150,781
See Accompanying Notes to Financial Statements.
18
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Aggressive Growth Fund
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
INFORMATION TECHNOLOGY - (continued)
Office Electronics - 1.0%
Zebra Technologies Corp.,
Class A (a) 1,920 101,741
----------
Office Electronics Total 101,741
Semiconductors & Semiconductor Equipment - 8.9%
Advanced Micro Devices, Inc. (a) 9,040 152,053
Altera Corp. (a) 2,200 50,006
Broadcom Corp., Class A (a) 5,100 137,955
Linear Technology Corp. 3,020 114,398
Marvell Technology Group Ltd. (a) 5,930 169,420
Microchip Technology, Inc. 2,580 78,045
National Semiconductor Corp. 2,180 36,406
NVIDIA Corp. (a) 5,620 81,321
Silicon Laboratories, Inc. (a) 3,860 115,684
----------
Semiconductors & Semiconductor
Equipment Total 935,288
Software - 8.1%
Amdocs Ltd. (a) 3,180 79,977
BMC Software, Inc. (a) 4,320 81,734
Business Objects SA, ADR (a) 850 21,692
Check Point Software Technologies
Ltd. (a) 4,140 93,651
Citrix Systems, Inc. (a) 4,470 107,861
Hyperion Solutions Corp. (a) 2,650 106,344
Intuit, Inc. (a) 1,260 57,154
Mercury Interactive Corp. (a) 2,950 128,118
Novell, Inc. (a) 7,950 57,161
Shanda Interactive Entertainment Ltd.,
ADR (a) 1,800 54,700
VERITAS Software Corp. (a) 3,010 65,859
----------
Software Total 854,251
----------
INFORMATION TECHNOLOGY TOTAL 2,758,068
MATERIALS - 5.2%
Chemicals - 1.7%
Potash Corp. of Saskatchewan, Inc. 2,600 173,654
----------
Chemicals Total 173,654
Construction Materials - 0.3%
Florida Rock Industries, Inc. 710 36,671
----------
Construction Materials Total 36,671
Metals & Mining - 3.2%
Allegheny Technologies, Inc. 1,960 32,948
Freeport-McMoRan Copper & Gold,
Inc., Class B 1,530 55,417
Inco Ltd. (a) 2,620 92,748
Peabody Energy Corp. 1,190 75,898
Phelps Dodge Corp. 880 77,035
----------
Metals & Mining Total 334,046
----------
MATERIALS TOTAL 544,371
Shares Value ($)
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 3.9%
Wireless Telecommunication Services - 3.9%
American Tower Corp., Class A (a) 2,670 45,897
Crown Castle International
Corp. (a) 6,060 92,779
Millicom International
Cellular SA (a) 4,380 87,031
Nextel Partners, Inc., Class A (a) 4,450 74,938
VimpelCom, ADR (a) 310 35,340
Western Wireless Corp.,
Class A (a) 2,460 71,684
----------
Wireless Telecommunication Services Total 407,669
----------
TELECOMMUNICATION SERVICES TOTAL 407,669
TOTAL COMMON STOCKS
(cost of $9,409,107) 10,462,041
TOTAL INVESTMENTS - 99.6%
(COST OF $9,409,107) (B) 10,462,041
OTHER ASSETS & Liabilities, Net - 0.4% 44,372
Net Assets - 100.0% 10,506,413
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing security.
(b) Cost for federal income tax purposes is $9,433,227.
SECTOR % OF NET ASSETS
------ ---------------
Information Technology 26.3%
Health Care 18.8
Consumer Discretionary 18.3
Industrials 11.5
Energy 7.2
Materials 5.2
Financials 4.6
Telecommunication Services 3.9
Consumer Staples 3.8
Other Assets &Liabilities, Net 0.4
--------------
100.0%
ACRONYM NAME
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
19
INVESTMENT PORTFOLIO
------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Growth Fund
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - 98.6%
CONSUMER DISCRETIONARY - 10.6%
Internet & Catalog Retail - 1.1%
eBay, Inc. (a) 32,000 3,123,520
----------
Internet & Catalog Retail Total 3,123,520
Media - 4.5%
Univision Communications, Inc.,
Class A (a) 221,000 6,842,160
Viacom, Inc., Class B 154,872 5,651,279
----------
Media Total 12,493,439
Multiline Retail - 2.7%
Kohl's Corp. (a) 148,000 7,512,480
----------
Multiline Retail Total 7,512,480
Specialty Retail - 2.3%
Lowe's Companies, Inc. 114,000 6,415,920
----------
Specialty Retail Total 6,415,920
----------
CONSUMER DISCRETIONARY TOTAL 29,545,359
CONSUMER STAPLES - 9.0%
Food & Staples Retailing - 5.8%
Wal-Mart Stores, Inc. 173,800 9,371,296
Walgreen Co. 190,000 6,819,100
----------
Food & Staples Retailing Total 16,190,396
Household Products - 3.2%
Colgate-Palmolive Co. 79,000 3,524,980
Procter & Gamble Co. 103,000 5,271,540
----------
Household Products Total 8,796,520
----------
CONSUMER STAPLES TOTAL 24,986,916
ENERGY - 8.5%
Energy Equipment & Services - 3.1%
Nabors Industries Ltd. (a) 105,000 5,157,600
Schlumberger Ltd. 54,000 3,398,760
----------
Energy Equipment & Services Total 8,556,360
Oil & Gas - 5.4%
Apache Corp. 115,000 5,830,500
Exxon Mobil Corp. 191,000 9,401,020
----------
Oil & Gas Total 15,231,520
----------
ENERGY TOTAL 23,787,880
FINANCIALS - 18.5%
Capital Markets - 5.1%
Lehman Brothers Holdings, Inc. 90,000 7,393,500
Merrill Lynch & Co., Inc. 125,100 6,747,894
----------
Capital Markets Total 14,141,394
Shares Value ($)
- --------------------------------------------------------------------------------
Commercial Banks - 3.0%
Bank of America Corp. (b) 188,600 8,447,394
----------
Commercial Banks Total 8,447,394
Diversified Financial Services - 1.3%
Citigroup, Inc. 82,155 3,645,217
----------
Diversified Financial Services Total 3,645,217
Insurance - 7.3%
American International Group, Inc.107,854 6,547,816
Chubb Corp. 61,000 4,399,930
RenaissanceRe Holdings Ltd. 135,080 6,324,446
XL Capital Ltd., Class A 42,500 3,081,250
----------
Insurance Total 20,353,442
Thrifts & Mortgage Finance - 1.8%
Fannie Mae 69,200 4,854,380
----------
Thrifts & Mortgage Finance Total 4,854,380
----------
FINANCIALS TOTAL 51,441,827
HEALTH CARE - 17.6%
Biotechnology - 1.9%
Amgen, Inc. (a) 93,800 5,327,840
----------
Biotechnology Total 5,327,840
Health Care Equipment & Supplies - 6.7%
Medtronic, Inc. 123,500 6,312,085
St. Jude Medical, Inc. (a) 90,300 6,914,271
Zimmer Holdings, Inc. (a) 70,000 5,431,300
----------
Health Care Equipment & Supplies Total 18,657,656
Health Care Providers & Services - 3.7%
Caremark Rx, Inc. (a) 180,000 5,394,600
Express Scripts, Inc. (a) 77,500 4,960,000
----------
Health Care Providers & Services Total 10,354,600
Pharmaceuticals - 5.3%
Eli Lilly & Co. 81,000 4,447,710
Schering-Plough Corp. 300,000 5,433,000
Teva Pharmaceutical Industries
Ltd., ADR 185,000 4,810,000
----------
Pharmaceuticals Total 14,690,710
----------
HEALTH CARE TOTAL 49,030,806
INDUSTRIALS - 12.5%
Aerospace & Defense - 1.1%
Goodrich Corp. 99,500 3,067,585
----------
Aerospace & Defense Total 3,067,585
Commercial Services & Supplies - 1.5%
Waste Management, Inc. 144,000 4,101,120
----------
Commercial Services & Supplies Total 4,101,120
See Accompanying Notes to Financial Statements.
20
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Growth Fund
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
INDUSTRIALS - (continued)
Electrical Equipment - 2.2%
Emerson Electric Co. 96,300 6,168,015
----------
Electrical Equipment Total 6,168,015
Industrial Conglomerates - 3.4%
General Electric Co. 278,500 9,502,420
----------
Industrial Conglomerates Total 9,502,420
Machinery - 4.3%
Eaton Corp. 101,000 6,458,950
Illinois Tool Works, Inc. 61,600 5,684,448
----------
Machinery Total 12,143,398
----------
INDUSTRIALS TOTAL 34,982,538
INFORMATION TECHNOLOGY - 20.2%
Communications Equipment - 1.8%
Cisco Systems, Inc. (a) 264,000 5,071,440
----------
Communications Equipment Total 5,071,440
Computers & Peripherals - 7.4%
Dell, Inc. (a) 117,000 4,102,020
EMC Corp. (a) 400,000 5,148,000
Lexmark International, Inc.,
Class A (a) 89,000 7,396,790
Network Appliance, Inc. (a) 165,000 4,037,550
----------
Computers & Peripherals Total 20,684,360
IT Services - 2.3%
Affiliated Computer Services, Inc.,
Class A (a) 117,000 6,382,350
----------
IT Services Total 6,382,350
Semiconductors & Semiconductor Equipment - 4.2%
Intel Corp. 240,000 5,342,400
Texas Instruments, Inc. 151,975 3,715,789
Xilinx, Inc. 83,000 2,539,800
----------
Semiconductors & Semiconductor
Equipment Total 11,597,989
Software - 4.5%
Electronic Arts, Inc. (a) 94,000 4,222,480
Microsoft Corp. 296,700 8,304,633
----------
Software Total 12,527,113
----------
INFORMATION TECHNOLOGY TOTAL 56,263,252
MATERIALS - 1.7%
Chemicals - 1.7%
Ecolab, Inc. 137,000 4,637,450
----------
Chemicals Total 4,637,450
----------
MATERIALS TOTAL 4,637,450
TOTAL COMMON STOCKS
(cost of $227,419,349) 274,676,028
Par ($) Value ($)
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 0.7%
Repurchase agreement with State
Street Bank & Trust Co., dated
10/29/04, due 11/01/04 at 1.750%,
collateralized by a U.S. Treasury
Bond maturing 08/15/17,
market value $2,109,779
(repurchase proceeds
$2,068,302) 2,068,000 2,068,000
----------
Total Short-Term Obligation
(cost of $2,068,000) 2,068,000
TOTAL INVESTMENTS - 99.3%
(COST OF $229,487,349) (C) 276,744,028
OTHER ASSETS & Liabilities, Net - 0.7% 1,955,911
Net Assets - 100.0% 278,699,939
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing security.
(b) Investments in affiliates as of October 31, 2004:
Security Name: Bank of America Corp. (As a result of the acquisition of
FleetBoston Financial Corp., effective April 1, 2004, Bank of America Corp.
became the parent company of the Investment Advisor).
Shares as of 10/31/03: 86,300
Shares purchased prior to 04/01/04: 41,500
Shares sold: (33,500)
Shares acquired through a
2 for 1 stock split: 94,300
Shares as of 10/31/04: 188,600
Net realized loss*: $ (39)
Dividend income earned*: $ 160,310
Value at end of period: $8,447,394
* Represents activity for the period April 1, 2004 through October 31, 2004
(See Note 6).
(c) Cost for federal income tax purposes is $231,070,052.
SECTOR % OF NET ASSETS
------ ---------------
Information Technology 20.2%
Financials 18.5
Health Care 17.6
Industrials 12.5
Consumer Discretionary 10.6
Consumer Staples 9.0
Energy 8.5
Materials 1.7
Cash Equivalents and Other Assets &
Liabilities, Net 1.4
---------------
100.0%
ACRONYM NAME
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
21
INVESTMENT PORTFOLIO
------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Growth Fund II
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.5%
CONSUMER DISCRETIONARY - 10.6%
Internet & Catalog Retail - 1.1%
eBay, Inc. (a) 4,400 429,484
----------
Internet & Catalog Retail Total 429,484
Media - 4.6%
Univision Communications, Inc.,
Class A (a) 34,130 1,056,665
Viacom, Inc., Class B 20,900 762,641
----------
Media Total 1,819,306
Multiline Retail - 2.6%
Kohl's Corp. (a) 20,400 1,035,504
----------
Multiline Retail Total 1,035,504
Specialty Retail - 2.3%
Lowe's Companies, Inc. 16,600 934,248
----------
Specialty Retail Total 934,248
----------
CONSUMER DISCRETIONARY TOTAL 4,218,542
CONSUMER STAPLES - 9.3%
Food & Staples Retailing - 5.8%
Wal-Mart Stores, Inc. 23,870 1,287,070
Walgreen Co. 28,500 1,022,865
----------
Food & Staples Retailing Total 2,309,935
Household Products - 3.5%
Colgate-Palmolive Co. 11,400 508,668
Procter & Gamble Co. 17,200 880,296
----------
Household Products Total 1,388,964
----------
CONSUMER STAPLES TOTAL 3,698,899
ENERGY - 8.4%
Energy Equipment & Services - 3.0%
Nabors Industries Ltd. (a) 14,400 707,328
Schlumberger Ltd. 7,500 472,050
----------
Energy Equipment & Services Total 1,179,378
Oil & Gas - 5.4%
Apache Corp. 16,000 811,200
Exxon Mobil Corp. 27,000 1,328,940
----------
Oil & Gas Total 2,140,140
----------
ENERGY TOTAL 3,319,518
FINANCIALS - 17.7%
Capital Markets - 5.0%
Lehman Brothers Holdings, Inc. 12,700 1,043,305
Merrill Lynch & Co., Inc. 17,200 927,768
----------
Capital Markets Total 1,971,073
Shares Value ($)
- --------------------------------------------------------------------------------
Commercial Banks - 2.3%
Bank of America Corp. (b) 20,600 922,674
----------
Commercial Banks Total 922,674
Diversified Financial Services - 1.2%
Citigroup, Inc. 10,800 479,196
----------
Diversified Financial Services Total 479,196
Insurance - 7.6%
American International Group, Inc. 15,663 950,901
Chubb Corp. 8,350 602,285
RenaissanceRe Holdings Ltd. 18,950 887,239
XL Capital Ltd., Class A 7,700 558,250
----------
Insurance Total 2,998,675
Thrifts & Mortgage Finance - 1.6%
Fannie Mae 9,085 637,313
----------
Thrifts & Mortgage Finance Total 637,313
----------
FINANCIALS TOTAL 7,008,931
HEALTH CARE - 17.8%
Biotechnology - 2.1%
Amgen, Inc. (a) 14,400 817,920
----------
Biotechnology Total 817,920
Health Care Equipment & Supplies - 6.7%
Medtronic, Inc. 17,300 884,203
St. Jude Medical, Inc. (a) 13,000 995,410
Zimmer Holdings, Inc. (a) 9,900 768,141
----------
Health Care Equipment & Supplies Total 2,647,754
Health Care Providers & Services - 3.9%
Caremark Rx, Inc. (a) 26,000 779,220
Express Scripts, Inc. (a) 12,000 768,000
----------
Health Care Providers & Services Total 1,547,220
Pharmaceuticals - 5.1%
Eli Lilly & Co. 11,300 620,483
Schering-Plough Corp. 41,000 742,510
Teva Pharmaceutical Industries
Ltd., ADR 25,800 670,800
----------
Pharmaceuticals Total 2,033,793
----------
HEALTH CARE TOTAL 7,046,687
INDUSTRIALS - 12.4%
Aerospace & Defense - 1.0%
Goodrich Corp. 13,500 416,205
----------
Aerospace & Defense Total 416,205
Commercial Services & Supplies - 1.7%
Waste Management, Inc. 23,000 655,040
----------
Commercial Services & Supplies Total 655,040
See Accompanying Notes to Financial Statements.
22
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Growth Fund II
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
INDUSTRIALS - (continued)
Electrical Equipment - 2.1%
Emerson Electric Co. 13,100 839,055
----------
Electrical Equipment Total 839,055
Industrial Conglomerates - 3.4%
General Electric Co. 39,500 1,347,740
----------
Industrial Conglomerates Total 1,347,740
Machinery - 4.2%
Eaton Corp. 13,500 863,325
Illinois Tool Works, Inc. 8,600 793,607
----------
Machinery Total 1,656,932
----------
INDUSTRIALS TOTAL 4,914,972
INFORMATION TECHNOLOGY - 19.6%
Communications Equipment - 1.7%
Cisco Systems, Inc. (a) 36,395 699,148
----------
Communications Equipment Total 699,148
Computers & Peripherals - 7.1%
Dell, Inc. (a) 16,500 578,490
EMC Corp. (a) 54,000 694,980
Lexmark International, Inc.,
Class A (a) 11,700 972,387
Network Appliance, Inc. (a) 23,000 562,810
----------
Computers & Peripherals Total 2,808,667
IT Services - 2.1%
Affiliated Computer Services, Inc.,
Class A (a) 15,000 818,250
----------
IT Services Total 818,250
Semiconductors & Semiconductor Equipment - 4.2%
Intel Corp. 33,200 739,032
Texas Instruments, Inc. 20,350 497,558
Xilinx, Inc. 13,700 419,220
----------
Semiconductors & Semiconductor
Equipment Total 1,655,810
Software - 4.5%
Electronic Arts, Inc. (a) 14,000 628,880
Microsoft Corp. 41,600 1,164,384
----------
Software Total 1,793,264
----------
INFORMATION TECHNOLOGY TOTAL 7,775,139
MATERIALS - 1.7%
Chemicals - 1.7%
Ecolab, Inc. 19,400 656,690
----------
Chemicals Total 656,690
MATERIALS TOTAL 656,690
TOTAL COMMON STOCKS
(cost of $34,871,013) 38,639,378
Par ($) Value ($)
- --------------------------------------------------------------------------------
Short-Term Obligation - 1.4%
Repurchase agreement with State
Street Bank & Trust Co., dated
10/29/04, due 11/01/04 at 1.750%,
collateralized by a U.S. Treasury
Bond maturing 08/15/17,
market value $587,258
(repurchase proceeds $573,084) 573,000 573,000
----------
TOTAL SHORT-TERM OBLIGATION
(COST OF $573,000) 573,000
TOTAL INVESTMENTS - 98.9%
(COST OF $35,444,013) (C) 39,212,378
OTHER ASSETS & LIABILITIES, NET - 1.1% 439,680
NET ASSETS - 100.0% 39,652,058
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing security.
(b) Investments in affiliates as of October 31, 2004:
Security name: Bank of America Corp. (As a result of the acquisition of
FleetBoston Financial Corp., effective April 1, 2004, Bank of America Corp.
became the parent company of the Investment Advisor).
Shares as of 10/31/03: 12,100
Shares purchased prior to 04/01/04: 2,800
Shares sold: (4,600)
Shares acquired through a
2 for 1 stock split: 10,300
Shares as of 10/31/04: 20,600
Net realized loss*: $ (5)
Dividend income earned*: $ 17,510
Value at end of period: $922,674
* Represents activity for the period April 1, 2004 through October 31, 2004
(See Note 6).
(c) Cost for federal income tax purposes is $35,625,074.
SECTOR % OF NET ASSETS
------ ---------------
Information Technology 19.6%
Health Care 17.8
Financials 17.7
Industrials 12.4
Consumer Discretionary 10.6
Consumer Staples 9.3
Energy 8.4
Materials 1.7
Cash Equivalents and Other Assets &
Liabilities, Net 2.5
--------------
100.0%
ACRONYM NAME
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
23
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Value Fund
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.8%
CONSUMER DISCRETIONARY - 6.7%
Hotels, Restaurants & Leisure - 0.9%
Harrah's Entertainment, Inc. 4,034 236,069
McDonald's Corp. 13,312 388,045
----------
Hotels, Restaurants & Leisure Total 624,114
Media - 3.5%
Clear Channel Communications, Inc. 15,161 506,378
McGraw-Hill Companies, Inc. 10,156 875,955
Time Warner, Inc. (a) 51,352 854,497
Viacom, Inc., Class A 9,168 339,766
----------
Media Total 2,576,596
Multiline Retail - 0.2%
May Department Stores Co. 6,987 182,081
----------
Multiline Retail Total 182,081
Specialty Retail - 2.1%
Home Depot, Inc. 9,231 379,210
Limited Brands 17,765 440,217
Office Depot, Inc. (a) 43,944 711,453
----------
Specialty Retail Total 1,530,880
----------
CONSUMER DISCRETIONARY TOTAL 4,913,671
CONSUMER STAPLES - 10.5%
Beverages - 1.8%
PepsiCo, Inc. 26,629 1,320,266
----------
Beverages Total 1,320,266
Food & Staples Retailing - 1.5%
Costco Wholesale Corp. 22,622 1,084,499
----------
Food & Staples Retailing Total 1,084,499
Food Products - 2.4%
ConAgra Foods, Inc. 27,746 732,495
Kraft Foods, Inc., Class A 29,514 983,111
----------
Food Products Total 1,715,606
Household Products - 3.8%
Clorox Co. 17,222 940,321
Kimberly-Clark Corp. 15,406 919,276
Procter & Gamble Co. 18,264 934,752
----------
Household Products Total 2,794,349
Tobacco - 1.0%
Altria Group, Inc. 15,136 733,490
----------
Tobacco Total 733,490
----------
CONSUMER STAPLES TOTAL 7,648,210
Shares Value ($)
- --------------------------------------------------------------------------------
ENERGY - 13.9%
Energy Equipment & Services - 1.2%
Halliburton Co. 24,317 900,702
----------
Energy Equipment & Services Total 900,702
Oil & Gas - 12.7%
BP PLC, ADR 34,806 2,027,449
ChevronTexaco Corp. 7,596 403,044
ConocoPhillips 26,307 2,217,943
Exxon Mobil Corp. 55,617 2,737,469
Marathon Oil Corp. 26,491 1,009,572
Royal Dutch Petroleum Co.,
N.Y. Registered Shares 16,538 897,021
----------
Oil & Gas Total 9,292,498
----------
ENERGY TOTAL 10,193,200
FINANCIALS - 29.7%
Capital Markets - 3.9%
Bank of New York Co., Inc. 31,425 1,020,055
Goldman Sachs Group, Inc. 6,733 662,392
Morgan Stanley 12,997 664,017
State Street Corp. 11,056 498,073
----------
Capital Markets Total 2,844,537
Commercial Banks - 6.8%
National City Corp. 19,539 761,435
U.S. Bancorp 56,867 1,626,965
Wachovia Corp. 19,848 976,720
Wells Fargo & Co. 26,565 1,586,462
----------
Commercial Banks Total 4,951,582
Consumer Finance - 0.8%
MBNA Corp. 22,733 582,647
----------
Consumer Finance Total 582,647
Diversified Financial Services - 7.1%
Citigroup, Inc. 67,980 3,016,273
JPMorgan Chase & Co. 55,789 2,153,455
----------
Diversified Financial Services Total 5,169,728
Insurance - 7.7%
AFLAC, Inc. 11,096 398,124
Ambac Financial Group, Inc. 9,853 769,125
American International Group, Inc. 22,731 1,379,999
Chubb Corp. 5,343 385,391
Hartford Financial Services
Group, Inc. 9,459 553,162
Lincoln National Corp. 19,952 873,898
Willis Group Holdings Ltd. 12,135 436,253
XL Capital Ltd., Class A 11,322 820,845
----------
Insurance Total 5,616,797
See Accompanying Notes to Financial Statements.
24
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Value Fund
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
FINANCIALS - (continued)
Real Estate - 1.8%
Archstone-Smith Trust, REIT 13,344 447,691
Avalonbay Communities, Inc., REIT 6,112 400,153
Kimco Realty Corp., REIT 9,117 497,332
----------
Real Estate Total 1,345,176
Thrifts & Mortgage Finance - 1.6%
Countrywide Financial Corp. 14,332 457,621
Freddie Mac 11,385 758,241
----------
Thrifts & Mortgage Finance Total 1,215,862
----------
FINANCIALS TOTAL 21,726,329
HEALTH CARE - 4.4%
Health Care Providers & Services - 1.6%
Aetna, Inc. 12,486 1,186,170
----------
Health Care Providers & Services Total 1,186,170
Pharmaceuticals - 2.8%
Bristol-Myers Squibb Co. 13,822 323,849
Johnson & Johnson 7,328 427,809
Merck & Co., Inc. 16,383 512,952
Pfizer, Inc. 26,617 770,562
----------
Pharmaceuticals Total 2,035,172
----------
HEALTH CARE TOTAL 3,221,342
INDUSTRIALS - 11.8%
Aerospace & Defense - 3.7%
General Dynamics Corp. 9,431 963,094
Raytheon Co. 11,300 412,224
United Technologies Corp. 13,831 1,283,793
----------
Aerospace & Defense Total 2,659,111
Commercial Services & Supplies - 1.8%
Cendant Corp. 16,972 349,453
Republic Services, Inc. 6,552 201,802
Waste Management, Inc. 27,463 782,146
----------
Commercial Services & Supplies Total 1,333,401
Industrial Conglomerates - 4.5%
General Electric Co. 59,314 2,023,794
Textron, Inc. 18,680 1,273,042
----------
Industrial Conglomerates Total 3,296,836
Shares Value ($)
- --------------------------------------------------------------------------------
Machinery - 1.8%
Deere & Co. 11,793 704,985
Eaton Corp. 1,100 70,345
Ingersoll-Rand Co., Class A 7,740 529,726
----------
Machinery Total 1,305,056
----------
INDUSTRIALS TOTAL 8,594,404
INFORMATION TECHNOLOGY - 6.2%
Communications Equipment - 1.1%
Nokia Oyj, ADR 53,528 825,402
----------
Communications Equipment Total 825,402
Computers & Peripherals - 2.1%
International Business
Machines Corp. 8,561 768,350
Lexmark International, Inc.,
Class A (a) 9,273 770,679
----------
Computers & Peripherals Total 1,539,029
IT Services - 1.2%
Accenture Ltd., Class A (a) 37,666 911,894
----------
IT Services Total 911,894
Office Electronics - 1.3%
Xerox Corp. (a) 62,893 928,929
----------
Office Electronics Total 928,929
Software - 0.5%
Microsoft Corp. 12,655 354,213
----------
Software Total 354,213
----------
INFORMATION TECHNOLOGY TOTAL 4,559,467
MATERIALS - 3.3%
Chemicals - 1.4%
Air Products & Chemicals, Inc. 19,318 1,027,331
----------
Chemicals Total 1,027,331
Paper & Forest Products - 1.9%
MeadWestvaco Corp. 24,616 776,143
Weyerhaeuser Co. 9,806 614,248
----------
Paper & Forest Products Total 1,390,391
----------
MATERIALS TOTAL 2,417,722
TELECOMMUNICATION SERVICES - 4.8%
Diversified Telecommunication Services - 4.8%
BellSouth Corp. 21,793 581,219
SBC Communications, Inc. 63,624 1,607,142
Verizon Communications, Inc. 34,686 1,356,223
----------
Diversified Telecommunication Services Total 3,544,584
----------
TELECOMMUNICATION SERVICES TOTAL 3,544,584
See Accompanying Notes to Financial Statements.
25
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Value Fund
Shares Value ($)
- --------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
UTILITIES - 6.5%
Electric Utilities - 6.5%
American Electric Power Co., Inc. 25,310 833,458
Consolidated Edison, Inc. 28,704 1,247,189
Entergy Corp. 11,382 743,927
PG&E Corp. (a) 12,146 389,158
TXU Corp. 24,962 1,528,174
----------
Electric Utilities Total 4,741,906
----------
UTILITIES TOTAL 4,741,906
TOTAL COMMON STOCKS
(cost of $58,558,382) 71,560,835
INVESTMENT COMPANY - 1.6%
iShares Russell 1000 Value
Index Fund 19,180 1,180,529
----------
TOTAL INVESTMENT COMPANY
(cost of $1,163,958) 1,180,529
Par ($) Value ($)
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 0.5%
Repurchase agreement with State
Street Bank & Trust Co., dated
10/29/04, due 11/01/04 at 1.750%,
collateralized by a U.S. Treasury
Bond maturing 08/15/17,
market value $377,005
(repurchase proceeds $367,054) 367,000 367,000
----------
TOTAL SHORT-TERM OBLIGATION
(COST OF $367,000) 367,000
TOTAL INVESTMENTS - 99.9%
(COST OF $60,089,340) (B) 73,108,364
OTHER ASSETS & LIABILITIES, NET - 0.1% 41,343
NET ASSETS - 100.0% 73,149,707
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing security.
(b) Cost for federal income tax purposes is $60,125,688.
SECTOR % OF NET ASSETS
------ ---------------
Financials 29.7%
Energy 13.9
Industrials 11.8
Consumer Staples 10.5
Consumer Discretionary 6.7
Utilities 6.5
Information Technology 6.2
Telecommunication Services 4.8
Health Care 4.4
Materials 3.3
Investment Company 1.6
Cash Equivalents and Other Assets &
Liabilities, Net 0.6
--------------
100.0%
ACRONYM NAME
------- ----
ADR American Depositary Receipt
REIT Real Estate Investment Trust
See Accompanying Notes to Financial Statements.
26
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
COLUMBIA
TAX-MANAGED COLUMBIA COLUMBIA COLUMBIA
AGGRESSIVE TAX-MANAGED TAX-MANAGED TAX-MANAGED
GROWTH GROWTH GROWTH VALUE
FUND ($) FUND ($) FUND II ($) FUND ($)
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
Unaffiliated investments, at cost 9,409,107 224,134,546 34,927,971 60,089,340
Affiliated investments, at cost -- 5,352,803 516,042 --
----------- ----------- ----------- -----------
Unaffiliated investments, at value 10,462,041 268,296,634 38,289,704 73,108,364
Affiliated investments, at value -- 8,447,394 922,674 --
Cash 13,097 205 420 170
Receivable for:
Investments sold 176,763 5,443,993 974,159 571,976
Fund shares sold 75 51,197 329 7,429
Interest -- 302 84 54
Dividends 2,624 123,355 17,469 162,319
Expense reimbursement due from Investment Advisor -- -- -- 14
Deferred Trustees' compensation plan 2,422 16,383 3,408 5,107
----------- ----------- ----------- -----------
Total Assets 10,657,022 282,379,463 40,208,247 73,855,433
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Expense reimbursement due to Investment Advisor 19,683 -- 38,139 --
Payable for:
Investments purchased 43,253 2,015,256 251,907 401,360
Fund shares repurchased 34,555 1,132,842 165,663 137,238
Investment advisory fee 7,238 148,391 27,780 50,720
Administration fee 382 64,040 2,096 3,883
Transfer agent fee 3,517 73,999 12,996 23,933
Pricing and bookkeeping fees 1,233 7,966 1,333 3,261
Trustees' fees -- 748 78 1,267
Audit fee 20,590 23,834 20,580 20,130
Custody fee 2,000 2,170 837 2,016
Distribution and service fees 6,564 171,444 26,189 47,170
Deferred Trustees' fees 2,422 16,383 3,408 5,107
Other liabilities 9,172 22,451 5,183 9,641
----------- ----------- ----------- -----------
Total Liabilities 150,609 3,679,524 556,189 705,726
NET ASSETS 10,506,413 278,699,939 39,652,058 73,149,707
- -------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital 22,283,385 397,691,481 65,921,776 81,926,664
Undistributed net investment income (accumulated net investment loss) (2,309) (17,221) (3,316) 198,251
Accumulated net realized loss (12,827,597)(166,231,000) (30,034,767) (21,994,232)
Net unrealized appreciation on investments 1,052,934 47,256,679 3,768,365 13,019,024
----------- ----------- ----------- -----------
NET ASSETS 10,506,413 278,699,939 39,652,058 73,149,707
See Accompanying Notes to Financial Statements.
27
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
Columbia Tax-Managed Funds
Columbia
Tax-Managed Columbia Columbia Columbia
Aggressive Tax-Managed Tax-Managed Tax-Managed
Growth Growth Growth Value
Fund ($) Fund ($) Fund II ($) Fund ($)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A
Net assets 2,624,010 62,390,146 6,634,208 14,522,286
Shares outstanding 341,890 4,648,149 780,085 1,274,026
Net asset value per share (a) 7.68 13.42 8.50 11.40
Maximum sales charge 5.75% 5.75% 5.75% 5.75%
Maximum offering price per share (b) (net asset value/0.9425) 8.15 14.24 9.02 12.10
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B
Net assets 6,442,178 173,189,499 26,583,682 46,717,034
Shares outstanding 865,879 13,691,396 3,239,127 4,221,252
Net asset value and offering price per share (a) 7.44 12.65 8.21 11.07
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C
Net assets 1,410,091 25,415,672 5,388,940 11,863,680
Shares outstanding 189,596 2,009,541 658,089 1,072,111
Net asset value and offering price per share (a) 7.44 12.65 8.19 11.07
- -------------------------------------------------------------------------------------------------------------------------------
CLASS E
Net assets -- 7,064,750 -- --
Shares outstanding -- 529,676 -- --
Net asset value per share (a) -- 13.34 -- --
Maximum sales charge -- 4.50% -- --
Maximum offering price per share (b) (net asset value/0.9550) -- 13.97 -- --
- -------------------------------------------------------------------------------------------------------------------------------
CLASS F
Net assets -- 10,353,474 -- --
Shares outstanding -- 817,444 -- --
Net asset value and offering price per share (a) -- 12.67 -- --
- -------------------------------------------------------------------------------------------------------------------------------
CLASS Z
Net assets 30,134 286,398 1,045,228 46,707
Shares outstanding 3,904 21,035 121,677 4,050
Net asset value, offering and redemption price per share 7.72 13.62 8.59 11.53
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See Accompanying Notes to Financial Statements.
28
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended October 31, 2004
Columbia Tax-Managed Funds
COLUMBIA
TAX-MANAGED COLUMBIA COLUMBIA COLUMBIA
AGGRESSIVE TAX-MANAGED TAX-MANAGED TAX-MANAGED
GROWTH GROWTH GROWTH VALUE
FUND ($) FUND ($) FUND II ($) FUND ($)
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends 37,875 3,236,075 461,599 1,855,044
Dividends from affiliates -- 160,310 17,510 --
Interest 2,867 69,403 10,347 8,784
Foreign withholding tax (331) (15,199) (2,148) (14,637)
----------- ----------- ----------- -----------
Total Investment Income 40,411 3,450,589 487,308 1,849,191
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fee 96,720 1,899,661 357,436 631,984
Administration fee 6,045 791,526 22,340 39,499
Distribution fee:
Class A 1,465 -- -- 8,025
Class B 56,901 1,504,955 226,640 374,240
Class C 11,337 217,747 46,654 97,545
Class E -- 7,204 -- --
Class F -- 79,922 -- --
Service fee:
Class A 7,324 171,640 18,027 40,125
Class B 18,967 501,652 75,547 124,747
Class C 3,779 72,583 15,551 32,516
Class E -- 18,010 -- --
Class F -- 26,640 -- --
Transfer agent fee 34,431 591,177 88,223 140,203
Pricing and bookkeeping fees 12,544 87,330 12,537 31,209
Trustees' fees 7,427 15,876 7,707 8,587
Custody fee 11,687 12,074 4,446 9,605
Audit fee 26,009 27,403 25,999 20,549
Registration fees 46,734 75,191 49,387 46,317
Non-recurring costs (See Note 9) 566 15,281 2,152 3,769
Other expenses 5,389 115,320 21,779 34,338
----------- ----------- ----------- -----------
Total Expenses 347,325 6,231,192 974,425 1,643,258
Fees and expenses waived or reimbursed by Investment Advisor (95,814) -- (31,354) --
Non-recurring costs assumed by Investment Advisor (See Note 9) (566) (15,281) (2,152) (3,769)
Custody earnings credit (47) (17) (5) (4)
----------- ----------- ----------- -----------
Net Expenses 250,898 6,215,894 940,914 1,639,485
----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) (210,487) (2,765,305) (453,606) 209,706
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Unaffiliated investment 1,682,143 24,338,909 2,350,273 5,025,651
Investment company shares -- -- -- (13,677)
Foreign currency transactions (1,067) -- -- --
Net realized loss on the disposal of investments
in violation of investment restrictions (See Note 6) -- -- -- --
----------- ----------- ----------- -----------
Net realized gain 1,681,076 24,338,909 2,350,273 5,011,974
Net change in unrealized appreciation/depreciation on investments (1,703,771) (14,071,268) (1,028,589) 4,760,872
----------- ----------- ----------- -----------
NET GAIN (LOSS) (22,695) 10,267,641 1,321,684 9,772,846
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS (233,182) 7,502,336 868,078 9,982,552
----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements.
29
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA TAX-MANAGED
AGGRESSIVE GROWTH FUND GROWTH FUND
---------------------- ----------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
---------------------- ----------------------
INCREASE (DECREASE) IN NET ASSETS: 2004 ($) 2003 ($) 2004 ($) 2003 ($)
- -------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income (loss) (210,487) (219,729) (2,765,305) (2,735,267)
Net realized gain (loss) on investments and foreign
currency transactions 1,681,076 39,575 24,338,909 (14,431,179)
Net realized loss on the disposal of investments in violation of
investment restrictions (See Note 6) -- -- -- --
Net change in unrealized appreciation/depreciation on investments (1,703,771) 2,524,929 (14,071,268) 73,959,918
----------- ----------- ----------- -----------
Net Increase (Decrease) from Operations (233,182) 2,344,775 7,502,336 56,793,472
- -------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Class A:
Subscriptions 617,825 2,125,101 11,000,198 6,638,498
Redemptions (1,813,881) (1,688,965) (20,308,238) (15,690,904)
----------- ----------- ----------- -----------
Net Increase (Decrease) (1,196,056) 436,136 (9,308,040) (9,052,406)
----------- ----------- ----------- -----------
Class B:
Subscriptions 198,982 671,525 3,075,969 6,283,356
Redemptions (2,214,998) (1,759,818) (47,951,084) (46,212,326)
----------- ----------- ----------- -----------
Net Decrease (2,016,016) (1,088,293) (44,875,115) (39,928,970)
----------- ----------- ----------- -----------
Class C:
Subscriptions 98,764 81,847 1,928,453 2,908,437
Redemptions (297,042) (418,954) (7,167,373) (8,956,641)
----------- ----------- ----------- -----------
Net Decrease (198,278) (337,107) (5,238,920) (6,048,204)
----------- ----------- ----------- -----------
Class E:
Subscriptions -- -- 172,365 105,637
Redemptions -- -- (181,336) (150,292)
----------- ----------- ----------- -----------
Net Decrease -- -- (8,971) (44,655)
----------- ----------- ----------- -----------
Class F:
Subscriptions -- -- 248,351 197,836
Redemptions -- -- (345,689) (330,673)
----------- ----------- ----------- -----------
Net Decrease -- -- (97,338) (132,837)
----------- ----------- ----------- -----------
Class Z:
Subscriptions 55,048 11,910 2,300 482,349
Redemptions (38,021) -- (171,734) (154,915)
----------- ----------- ----------- -----------
Net Increase (Decrease) 17,027 11,910 (169,434) 327,434
----------- ----------- ----------- -----------
Net Decrease from Share Transactions (3,393,323) (977,354) (59,697,818) (54,879,638)
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets (3,626,505) 1,367,421 (52,195,482) 1,913,834
----------- ----------- ----------- -----------
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 14,132,918 12,765,497 330,895,421 328,981,587
----------- ----------- ----------- -----------
End of period 10,506,413 14,132,918 278,699,939 330,895,421
----------- ----------- ----------- -----------
Accumulated net investment loss, at end of period (2,309) (986) (17,221) (16,158)
----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements.
30
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA TAX-MANAGED
GROWTH FUND II VALUE FUND
---------------------- ----------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
---------------------- ----------------------
INCREASE (DECREASE) IN NET ASSETS: 2004 ($) 2003 ($) 2004 ($) 2003 ($)
- -------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income (loss) (453,606) (417,616) 209,706 144,918
Net realized gain (loss) on investments and foreign
currency transactions 2,350,273 (2,632,362) 5,011,974 (11,323,355)
Net realized loss on the disposal of investments in violation of
investment restrictions (See Note 6) -- -- -- --
Net change in unrealized appreciation/depreciation on investments (1,028,589) 10,813,804 4,760,872 21,142,163
----------- ----------- ----------- -----------
Net Increase (Decrease) from Operations 868,078 7,763,826 9,982,552 9,963,726
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income:
Class A -- -- (137,968) --
Class B -- -- (9,533) --
Class C -- -- (2,579) --
Class Z -- -- (379) --
----------- ----------- ----------- -----------
Total Distributions Declared to Shareholders -- -- (150,459) --
- -------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Class A:
Subscriptions 1,081,802 1,444,961 1,585,454 3,592,454
Distributions reinvested -- -- 118,332 --
Redemptions (2,159,097) (2,899,754) (5,932,375) (8,719,434)
----------- ----------- ----------- -----------
Net Decrease (1,077,295) (1,454,793) (4,228,589) (5,126,980)
----------- ----------- ----------- -----------
Class B:
Subscriptions 981,443 1,882,364 1,722,973 3,240,450
Distributions reinvested -- -- 8,561 --
Redemptions (6,508,801) (6,472,623) (11,291,464) (11,898,465)
----------- ----------- ----------- -----------
Net Decrease (5,527,358) (4,590,259) (9,559,930) (8,658,015)
----------- ----------- ----------- -----------
Class C:
Subscriptions 668,640 713,546 927,117 1,542,556
Distributions reinvested -- -- 2,136 --
Redemptions (1,829,185) (1,816,426) (4,380,201) (7,135,678)
----------- ----------- ----------- -----------
Net Decrease (1,160,545) (1,102,880) (3,450,948) (5,593,122)
----------- ----------- ----------- -----------
Class Z:
Subscriptions 210,800 41,354 11,000 28,960
Distributions reinvested -- -- 379 --
Redemptions (8,127) (248,762) (1,175) --
----------- ----------- ----------- -----------
Net Increase (Decrease) 202,673 (207,408) 10,204 28,960
----------- ----------- ----------- -----------
Net Decrease from Share Transactions (7,562,525) (7,355,340) (17,229,263) (19,349,157)
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets (6,694,447) 408,486 (7,397,170) (9,385,431)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 46,346,505 45,938,019 80,546,877 89,932,308
----------- ----------- ----------- -----------
End of period 39,652,058 46,346,505 73,149,707 80,546,877
----------- ----------- ----------- -----------
Undistributed net investment income
(accumulated net investment loss), at end of period (3,316) (2,387) 198,251 141,865
----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements.
31
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA TAX-MANAGED
AGGRESSIVE GROWTH FUND GROWTH FUND
---------------------- ----------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
---------------------- ----------------------
INCREASE (DECREASE) IN NET ASSETS: 2004 2003 2004 2003
- -------------------------------------------------------------------------------------------------------------------------------
CHANGES IN SHARES
Class A:
Subscriptions 79,645 306,687 805,638 560,514
Redemptions (228,857) (254,160) (1,487,273) (1,375,186)
----------- ----------- ----------- -----------
Net Increase (Decrease) (149,212) 52,527 (681,635) (814,672)
----------- ----------- ----------- -----------
Class B:
Subscriptions 26,292 105,120 237,700 587,037
Redemptions (291,707) (274,407) (3,724,010) (4,268,593)
----------- ----------- ----------- -----------
Net Decrease (265,415) (169,287) (3,486,310) (3,681,556)
----------- ----------- ----------- -----------
Class C:
Subscriptions 13,155 12,186 149,808 270,413
Redemptions (39,117) (64,957) (557,500) (820,762)
----------- ----------- ----------- -----------
Net Decrease (25,962) (52,771) (407,692) (550,349)
----------- ----------- ----------- -----------
Class E:
Subscriptions -- -- 12,662 8,644
Redemptions -- -- (13,603) (13,658)
----------- ----------- ----------- -----------
Net Decrease -- -- (941) (5,014)
----------- ----------- ----------- -----------
Class F:
Subscriptions -- -- 19,307 17,598
Redemptions -- -- (26,808) (29,586)
----------- ----------- ----------- -----------
Net Decrease -- -- (7,501) (11,988)
----------- ----------- ----------- -----------
Class Z:
Subscriptions 6,871 1,861 174 40,880
Redemptions (5,292) -- (12,481) (14,872)
----------- ----------- ----------- -----------
Net Increase (Decrease) 1,579 1,861 (12,307) 26,008
----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements.
32
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA TAX-MANAGED
GROWTH FUND II VALUE FUND
---------------------- ----------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
---------------------- ----------------------
INCREASE (DECREASE) IN NET ASSETS: 2004 2003 2004 2003
- -------------------------------------------------------------------------------------------------------------------------------
CHANGES IN SHARES
Class A:
Subscriptions 125,099 201,123 144,681 393,479
Issued for distributions reinvested -- -- 11,163 --
Redemptions (247,337) (407,311) (537,879) (961,953)
----------- ----------- ----------- -----------
Net Decrease (122,238) (206,188) (382,035) (568,474)
----------- ----------- ----------- -----------
Class B:
Subscriptions 116,667 266,693 163,438 359,993
Issued for distributions reinvested -- -- 827 --
Redemptions (775,086) (911,307) (1,058,576) (1,316,603)
----------- ----------- ----------- -----------
Net Decrease (658,419) (644,614) (894,311) (956,610)
----------- ----------- ----------- -----------
Class C:
Subscriptions 79,377 100,076 86,814 169,090
Issued for distributions reinvested -- -- 206 --
Redemptions (218,906) (258,061) (410,804) (785,239)
----------- ----------- ----------- -----------
Net Decrease (139,529) (157,985) (323,784) (616,149)
----------- ----------- ----------- -----------
Class Z:
Subscriptions 23,586 5,807 1,008 3,007
Issued for distributions reinvested -- -- 36 --
Redemptions (937) (34,998) (105) --
----------- ----------- ----------- -----------
Net Increase (Decrease) 22,649 (29,191) 939 3,007
----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements.
33
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
NOTE 1. ORGANIZATION
Columbia Funds Trust I (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 Tax-Managed Aggressive Growth Fund
Columbia Tax-Managed Growth Fund
Columbia Tax-Managed Growth Fund II
Columbia Tax-Managed Value Fund
INVESTMENT GOAL
Each Fund seeks long-term capital growth while reducing shareholder exposure to
taxes. Columbia Tax-Managed Aggressive Growth Fund invests primarily in common
stocks of small capitalization and middle capitalization companies that the
Fund's investment advisor believes have long-term growth potential. Columbia
Tax-Managed Growth Fund, Columbia Tax-Managed Growth Fund II and Columbia
Tax-Managed Value Fund invest primarily in large capitalization and middle
capitalization stocks.
FUND SHARES
The Funds may issue an unlimited number of shares. Columbia Tax-Managed
Aggressive Growth Fund, Columbia Tax-Managed Growth Fund II, and Columbia
Tax-Managed Value Fund each offer four classes of shares: Class A, Class B,
Class C and Class Z. Columbia Tax-Managed Growth Fund offers six classes of
shares: Class A, Class B, Class C, Class E, Class F 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 E and Class F shares are trust shares.
Such shares are held in an irrevocable trust on behalf of the shareholder until
a trust termination date, as specified by the shareholder. At such time, the
shares pass to the shareholder's beneficiary. Class E shares are subject to a
maximum front-end sales charge of 4.50% based on the amount of initial
investment. Class E shares purchased without an initial sales charge are subject
to a 1.00% CDSC on shares sold within eighteen months on an original purchase of
$500,000 to $5 million. Class F shares are subject to a maximum CDSC of 5.00%
based upon the holding period after purchase. Class F shares will convert into
Class E shares after eight years. 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.
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 investment companies 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
34
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
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
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 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. 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 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.
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 May 1, 2004, the Columbia Tax-Managed Value 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
================================================================================
$2,493 $2,493
================================================================================
The effect of the change for the year ended October 31, 2004 is as follows:
Decrease in Cost Decrease in Dividend Income
================================================================================
$3,017 $3,017
================================================================================
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
Statements of Operations), and realized and unrealized gains (losses), are
allocated to each class of the Funds 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
35
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
subject to federal excise tax. Therefore, no federal income or excise tax
provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
The Funds are managed using investment strategies that are designed to reduce
(but not eliminate) the Funds' payment of taxable distributions to shareholders.
From time to time, the Funds expect to distribute taxable income and capital
gains. 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 each 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 October 31, 2004, permanent differences resulting primarily
from differing treatments for net operating losses, foreign currency
transactions and REIT adjustments were identified and reclassified among the
components of the Funds' net assets as follows:
Undistributed
Net Investment
Income Accumulated
(Accumulated Net Net Realized Paid-In
Investment Loss) Loss Capital
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund$ 209,164 $1,067 $ (210,231)
================================================================================
Columbia Tax-Managed
Growth Fund 2,764,242 -- (2,764,242)
================================================================================
Columbia Tax-Managed
Growth Fund II 452,677 -- (452,677)
================================================================================
Columbia Tax-Managed
Value Fund (368) 366 2
================================================================================
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 October 31, 2004
was as follows:
Ordinary Long-Term Tax Return
Income Capital Gains of Capital
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund $ -- $-- $--
================================================================================
Columbia Tax-Managed
Growth Fund -- -- --
================================================================================
Columbia Tax-Managed
Growth Fund II -- -- --
================================================================================
Columbia Tax-Managed
Value Fund 150,459 -- --
================================================================================
For the year ended October 31, 2003, the Funds did not distribute any taxable
income or capital gains.
As of October 31, 2004, the components of distributable earnings on a tax basis
were as follows:
Undistributed Undistributed Net
Ordinary Long-Term Unrealized
Income Capital Gains Appreciation*
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund $ -- $-- $ 1,028,814
================================================================================
Columbia Tax-Managed
Growth Fund -- -- 45,673,976
================================================================================
Columbia Tax-Managed
Growth Fund II -- -- 3,587,304
================================================================================
Columbia Tax-Managed
Value Fund 203,115 -- 12,982,676
================================================================================
* The difference between book-basis and tax-basis net unrealized appreciation
is primarily due to deferral of losses from wash sales.
36
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
Unrealized appreciation and depreciation at October 31, 2004, based on cost of
investments for federal income tax purposes, was:
Unrealized Unrealized Net Unrealized
Appreciation Depreciation Appreciation
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund$ 1,334,383 $ (305,569) $ 1,028,814
================================================================================
Columbia Tax-Managed
Growth Fund 54,421,213 (8,747,237) 45,673,976
================================================================================
Columbia Tax-Managed
Growth Fund II 6,003,910 (2,416,606) 3,587,304
================================================================================
Columbia Tax-Managed
Value Fund 14,268,803 (1,286,127) 12,982,676
================================================================================
The following capital loss carryforwards may be available to reduce taxable
income arising from future net realized gains on investments, if any, to the
extent permitted by the Internal Revenue Code:
Columbia Columbia Columbia
Tax-Managed Tax-Managed Tax-Managed Columbia
Aggressive Growth Growth Tax-Managed
Expiring in: Growth Fund* Fund Fund II Value Fund
================================================================================
2008 $ -- $ 5,548,322 $ -- $ --
================================================================================
2009 9,983,709 90,676,212 17,627,867 --
================================================================================
2010 2,819,769 55,723,137 9,577,005 10,685,137
================================================================================
2011 -- 12,700,626 2,648,834 11,272,748
================================================================================
Total $12,803,478 $164,648,297 $29,853,706 $21,957,885
================================================================================
* Columbia Tax-Managed Aggressive Growth Fund is expected to liquidate on or
about December 10, 2004. The capital loss carryforward for this Fund will not
be utilized.
Capital loss carryforwards utilized during the year ended October 31, 2004 were
as follows:
Columbia Tax-Managed Aggressive Growth Fund $ 1,650,310
================================================================================
Columbia Tax-Managed Growth Fund 22,969,197
================================================================================
Columbia Tax-Managed Growth Fund II 2,037,668
================================================================================
Columbia Tax-Managed Value Fund 4,904,665
================================================================================
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 each Fund's average
daily net assets at the following annual rates:
Fees on Fees on Fees on
Average Average Average
Daily Daily Daily
Net Assets Net Assets Net Assets
First Next Over
$500 Million $500 Million $1 Billion
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund 0.80% 0.75% 0.70%
================================================================================
Columbia Tax-Managed Growth Fund 0.60% 0.55% 0.50%
================================================================================
Columbia Tax-Managed Growth Fund II 0.80% 0.75% 0.70%
================================================================================
Columbia Tax-Managed Value Fund 0.80% 0.75% 0.70%
================================================================================
SUB-ADVISORY FEE
Stein Roe Investment Counsel LLC ("SRIC") has been retained by Columbia as
sub-advisor to Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth
Fund II to manage the day-to-day investment operations of the two Funds.
Columbia, out of the investment advisory fee it receives, pays SRIC a monthly
sub-advisory fee equal to a base rate of 0.20% annually of the average daily net
assets for each of the two Funds. This base fee of 0.20% can be adjusted
quarterly to an annual rate as high as 0.25% or to an annual rate as low as
0.15% depending on the investment performance, as determined by Morningstar,
Inc.'s Large Blend category, of each Fund over a specified period of time. In
addition, Columbia's contract with SRIC provides that SRIC shall not receive a
fee less than $350,000 per annum in the aggregate for managing both Columbia
Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II.
ADMINISTRATION FEE
Columbia provides administrative and other services to the Funds for a monthly
administration fee based on each Fund's average daily net assets at the
following annual rates:
Columbia Tax-Managed Aggressive Growth Fund 0.05%
================================================================================
Columbia Tax-Managed Growth Fund 0.25%
================================================================================
Columbia Tax-Managed Growth Fund II 0.05%
================================================================================
Columbia Tax-Managed Value Fund 0.05%
================================================================================
37
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
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 October 31, 2004, the effective pricing and bookkeeping fee
rates for the Funds, inclusive of out-of-pocket expenses, were as follows:
Columbia Tax-Managed Aggressive Growth Fund 0.104%
================================================================================
Columbia Tax-Managed Growth Fund 0.028%
================================================================================
Columbia Tax-Managed Growth Fund II 0.028%
================================================================================
Columbia Tax-Managed Value Fund 0.040%
================================================================================
TRANSFER AGENT FEE
Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia,
provides shareholder services to the Funds and has subcontracted with Boston
Financial Data Services ("BFDS") to serve as sub-transfer agent. 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.
For the year ended October 31, 2004, the Funds' effective transfer agent fee
rates, inclusive of out-of-pocket fees, were as follows:
Columbia Tax-Managed Aggressive Growth Fund 0.29%
================================================================================
Columbia Tax-Managed Growth Fund 0.19%
================================================================================
Columbia Tax-Managed Growth Fund II 0.20%
================================================================================
Columbia Tax-Managed Value Fund 0.18%
================================================================================
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 October 31, 2004,
the Distributor has retained net underwriting discounts and CDSC fees as
follows:
Front-End
Sales Charge
================================================================================
Class A Class E
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund $ 1,028 $ --
================================================================================
Columbia Tax-Managed
Growth Fund 10,836 --
================================================================================
Columbia Tax-Managed
Growth Fund II 3,622 --
================================================================================
Columbia Tax-Managed
Value Fund 3,754 --
================================================================================
CDSC
================================================================================
Class A Class B Class C Class E Class F
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund $ 50 $ 35,535 $ 71 $-- $--
================================================================================
Columbia Tax-Managed
Growth Fund -- 595,135 770 -- --
================================================================================
Columbia Tax-Managed
Growth Fund II -- 129,401 115 -- --
================================================================================
Columbia Tax-Managed
Value Fund -- 177,676 1,234 -- --
================================================================================
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 Fees: Class A Class B Class C Class E Class F
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund 0.05% 0.75% 0.75% N/A N/A
================================================================================
Columbia Tax-Managed
Growth Fund N/A 0.75% 0.75% 0.10% 0.75%
================================================================================
Columbia Tax-Managed
Growth Fund II N/A 0.75% 0.75% N/A N/A
================================================================================
Columbia Tax-Managed
Value Fund 0.05% 0.75% 0.75% N/A N/A
================================================================================
38
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
Service Fees: Class A Class B Class C Class E Class F
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund 0.25% 0.25% 0.25% N/A N/A
================================================================================
Columbia Tax-Managed
Growth Fund 0.25% 0.25% 0.25% 0.25% 0.25%
================================================================================
Columbia Tax-Managed
Growth Fund II 0.25% 0.25% 0.25% N/A N/A
================================================================================
Columbia Tax-Managed
Value Fund 0.25% 0.25% 0.25% N/A N/A
================================================================================
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.
FEE WAIVERS
Columbia has voluntarily agreed to waive fees and reimburse the Funds listed
below for certain expenses so that total expenses (exclusive of service fees,
distribution fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) would not exceed certain expense limitations. For the year
ended October 31, 2004, total expenses were limited to the following percentages
annually of the Funds' average daily net assets:
Average Daily Average Daily
Net Assets Net Assets
First Over
$100 Million $100 Million
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund 1.25% 1.25%
================================================================================
Columbia Tax-Managed Growth Fund II 1.25% 1.50%
================================================================================
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 TRUSTEES
With the exception of one officer, all officers of the Funds are employees of
Columbia or its affiliates and receive no compensation from the Funds. 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 Office of the Chief Compliance Officer. 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 October 31, 2004, the Funds paid fees to Columbia
for such services as follows:
Columbia Tax-Managed Aggressive Growth Fund $1,308
================================================================================
Columbia Tax-Managed Growth Fund 1,808
================================================================================
Columbia Tax-Managed Growth Fund II 1,359
================================================================================
Columbia Tax-Managed Value Fund 1,417
================================================================================
These amounts are included in "Other expenses" on the Statements of Operations.
NOTE 5. PORTFOLIO INFORMATION
For the year ended October 31, 2004, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were as follows:
Purchases Sales
================================================================================
Columbia Tax-Managed
Aggressive Growth Fund $ 15,307,518 $ 18,476,483
================================================================================
Columbia Tax-Managed
Growth Fund 122,357,799 178,418,440
================================================================================
Columbia Tax-Managed
Growth Fund II 16,674,701 24,382,886
================================================================================
Columbia Tax-Managed
Value Fund 29,718,314 44,196,653
================================================================================
NOTE 6. OTHER
During the period April 1, 2004 through October 31, 2004, Columbia Tax-Managed
Growth Fund and Columbia Tax-Managed Growth Fund II purchased shares of Bank of
America Corp. in violation of investment restrictions. The shares that caused
that violation were sold at a loss of $39 and $5 for Columbia Tax-Managed Growth
Fund and Columbia Tax-Managed Growth Fund II, respectively. The Funds have been
reimbursed by SRIC.
NOTE 7. OTHER RELATED PARTY TRANSACTIONS
During the year ended October 31, 2004, Columbia Tax-Managed Growth Fund and
Columbia Tax-Managed Growth Fund II used Bank of America
39
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
Securities, a wholly owned subsidiary of BOA, as a broker. Total commissions
paid to Bank of America Securities during the year were $500 and $50 for
Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II,
respectively.
NOTE 8. LINE OF CREDIT
The Funds and certain other affiliated funds participate in a $350,000,000
committed unsecured revolving line of credit provided by State Street Bank and
Trust Company. Borrowings under the line of credit will be used for temporary or
emergency purposes to facilitate portfolio liquidity. Interest is charged to
each participating fund based on its borrowings at a rate per annum equal to the
Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum
is accrued and apportioned among the participating funds based on their pro-rata
portion of the unutilized line of credit. The commitment fee is included in
"Other expenses" on the Statements of Operations. For the year ended October 31,
2004, the Funds did not borrow under this arrangement.
NOTE 9. DISCLOSURE OF SIGNIFICANT RISKS
AND CONTINGENCIES
INDUSTRY FOCUS
The Funds may focus their investments in certain industries, subjecting them to
greater risk than funds that are 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.
In connection with the events described in detail above, various parties have
filed suit against certain
40
- --------------------------------------------------------------------------------
October 31, 2004
Columbia Tax-Managed Funds
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 October 31, 2004, Columbia has assumed legal, consulting
services and Trustees' fees incurred by the Funds in connection with these
matters as follows:
Columbia Tax-Managed Aggressive Growth Fund $ 566
================================================================================
Columbia Tax-Managed Growth Fund 15,281
================================================================================
Columbia Tax-Managed Growth Fund II 2,152
================================================================================
Columbia Tax-Managed Value Fund 3,769
================================================================================
NOTE 10. SUBSEQUENT EVENT
On October 13, 2004, the Board of Trustees of the Columbia Tax-Managed
Aggressive Growth Fund voted to liquidate the Fund. The Fund was closed to new
investors as of the close of business on November 10, 2004. The effective date
of the liquidation is expected to be on or about December 10, 2004.
41
FINANCIAL HIGHLIGHTS
------------------------------------------------------------
Columbia Tax-Managed Aggressive Growth Fund
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS A SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $7.82 $6.44 $7.01 $12.36 $11.59
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.09) (0.08) (0.09) (0.09) (0.04)
Net realized and unrealized gain (loss)
on investments and foreign currency (0.05) 1.46 (0.48) (5.26) 0.81
-------- -------- -------- -------- --------
Total from investment operations (0.14) 1.38 (0.57) (5.35) 0.77
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $7.68 $7.82 $6.44 $7.01 $12.36
Total return (c)(d) (1.79)% 21.43% (8.13)% (43.28)% 6.64%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f) 1.55% 1.55% 1.55% 1.55% 1.55%(g)
Net investment loss (f) (1.21)% (1.25)% (1.27)% (1.05)% (1.19)%(g)
Waiver/reimbursement 0.79% 1.02% 0.69% 0.85% 1.82%(g)
Portfolio turnover rate 129% 116% 121% 188% 47%(e)
Net assets, end of period (000's) $2,624 $3,838 $2,825 $4,043 $5,227
- ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on July 24, 2000. The activity
shown is from the effective date of registration (August 1, 2000) with the
Securities and Exchange Commission.
(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/Administrator 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.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS B SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $7.63 $6.33 $6.95 $12.34 $11.59
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.15) (0.13) (0.14) (0.15) (0.06)
Net realized and unrealized gain (loss)
on investments and foreign currency (0.04) 1.43 (0.48) (5.24) 0.81
-------- -------- -------- -------- --------
Total from investment operations (0.19) 1.30 (0.62) (5.39) 0.75
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $7.44 $7.63 $6.33 $6.95 $12.34
Total return (c)(d) (2.49)% 20.54% (8.92)% (43.68)% 6.47%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f) 2.25% 2.25% 2.25% 2.25% 2.25%(g)
Net investment loss (f) (1.91)% (1.95)% (1.97)% (1.75)% (1.89)%(g)
Waiver/reimbursement 0.79% 1.02% 0.69% 0.85% 1.82%(g)
Portfolio turnover rate 129% 116% 121% 188% 47%(e)
Net assets, end of period (000's) $6,442 $8,632 $8,238 $10,979 $18,080
- ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on July 24, 2000. The activity shown
is from the effective date of registration (August 1, 2000) with the
Securities and Exchange Commission.
(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/Administrator 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.
42
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Aggressive Growth Fund
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS C SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $7.63 $6.33 $6.95 $12.34 $11.59
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.15) (0.13) (0.14) (0.15) (0.06)
Net realized and unrealized gain (loss)
on investments and foreign currency (0.04) 1.43 (0.48) (5.24) 0.81
-------- -------- -------- -------- --------
Total from investment operations (0.19) 1.30 (0.62) (5.39) 0.75
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $7.44 $7.63 $6.33 $6.95 $12.34
Total return (c)(d) (2.49)% 20.54% (8.92)% (43.68)% 6.47%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f) 2.25% 2.25% 2.25% 2.25% 2.25%(g)
Net investment loss (f) (1.91)% (1.95)% (1.97)% (1.75)% (1.89)%(g)
Waiver/reimbursement 0.79% 1.02% 0.69% 0.85% 1.82%(g)
Portfolio turnover rate 129% 116% 121% 188% 47%(e)
Net assets, end of period (000's) $1,410 $1,644 $1,699 $2,508 $1,567
- ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on July 24, 2000. The activity shown
is from the effective date of registration (August 1, 2000) with the
Securities and Exchange Commission.
(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/Administrator 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.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS Z SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $7.83 $6.43 $7.03 $12.37 $11.59
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.07) (0.07) (0.07) (0.07) (0.03)
Net realized and unrealized gain (loss)
on investments and foreign currency (0.04) 1.47 (0.53) (5.27) 0.81
-------- -------- -------- -------- --------
Total from investment operations (0.11) 1.40 (0.60) (5.34) 0.78
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $7.72 $7.83 $6.43 $7.03 $12.37
Total return (c)(d) (1.40)% 21.77% (8.53)% (43.17)% 6.73%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f) 1.25% 1.25% 1.25% 1.25% 1.25%(g)
Net investment loss (f) (0.91)% (0.95)% (0.97)% (0.75)% (0.89)%(g)
Waiver/reimbursement 0.79% 1.02% 0.69% 0.85% 1.82%(g)
Portfolio turnover rate 129% 116% 121% 188% 47%(e)
Net assets, end of period (000's) $30 $18 $3 $61 $128
- ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on July 24, 2000. The activity shown
is from the effective date of registration (August 1, 2000) with the
Securities and Exchange Commission.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Total return at net asset value.
(d)Had the Investment Advisor/Administrator 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.
43
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Growth Fund
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS A SHARES 2004 2003 2002 2001 2000
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $13.09 $10.87 $12.68 $18.38 $17.19
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a) (0.04) (0.03) (0.02) (0.06) (0.12)
Net realized and unrealized gain
(loss) on investments 0.37 2.25 (1.79) (5.64) 1.31
-------- -------- -------- -------- --------
Total from investment operations 0.33 2.22 (1.81) (5.70) 1.19
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.42 $13.09 $10.87 $12.68 $18.38
Total return (b) 2.52%(c) 20.42% (14.27)% (31.01)% 6.92%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (d) 1.39% 1.42% 1.41% 1.39% 1.44%
Net investment loss (d) (0.30)% (0.28)% (0.18)% (0.38)% (0.67)%
Portfolio turnover rate 40% 39% 42% 82% 69%
Net assets, end of period (000's) $62,390 $69,764 $66,760 $102,403 $163,502
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(c)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class A shares total return.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS B SHARES 2004 2003 2002 2001 2000
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $12.43 $10.39 $12.22 $17.85 $16.82
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a) (0.14) (0.11) (0.11) (0.17) (0.26)
Net realized and unrealized gain
(loss) on investments 0.36 2.15 (1.72) (5.46) 1.29
-------- -------- -------- -------- --------
Total from investment operations 0.22 2.04 (1.83) (5.63) 1.03
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.65 $12.43 $10.39 $12.22 $17.85
Total return (b) 1.77%(c) 19.63% (14.98)% (31.54)% 6.12%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (d) 2.14% 2.17% 2.16% 2.14% 2.19%
Net investment loss (d) (1.05)% (1.03)% (0.93)% (1.13)% (1.42)%
Portfolio turnover rate 40% 39% 42% 82% 69%
Net assets, end of period (000's) $173,189 $213,481 $216,801 $327,645 $532,082
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming no contingent deferred sales charge.
(c)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class B shares total return.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
44
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Growth Fund
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS C SHARES 2004 2003 2002 2001 2000
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $12.43 $10.39 $12.21 $17.85 $16.82
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a) (0.14) (0.11) (0.11) (0.17) (0.26)
Net realized and unrealized gain
(loss) on investments 0.36 2.15 (1.71) (5.47) 1.29
-------- -------- -------- -------- --------
Total from investment operations 0.22 2.04 (1.82) (5.64) 1.03
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.65 $12.43 $10.39 $12.21 $17.85
Total return (b) 1.77%(c) 19.63% (14.91)% (31.60)% 6.12%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (d) 2.14% 2.17% 2.16% 2.14% 2.19%
Net investment loss (d) (1.05)% (1.03)% (0.93)% (1.13)% (1.42)%
Portfolio turnover rate 40% 39% 42% 82% 69%
Net assets, end of period (000's) $25,416 $30,035 $30,837 $47,069 $80,232
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming no contingent deferred sales charge.
(c)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class C shares total return.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS E SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $13.02 $10.82 $12.63 $18.34 $17.17
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.05) (0.04) (0.03) (0.07) (0.14)
Net realized and unrealized gain
(loss) on investments 0.37 2.24 (1.78) (5.64) 1.31
-------- -------- -------- -------- --------
Total from investment operations 0.32 2.20 (1.81) (5.71) 1.17
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.34 $13.02 $10.82 $12.63 $18.34
Total return (c) 2.46%(d) 20.33% (14.33)% (31.13)% 6.81%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (e) 1.49% 1.52% 1.51% 1.49% 1.54%
Net investment loss (e) (0.40)% (0.38)% (0.28)% (0.48)% (0.77)%
Portfolio turnover rate 40% 39% 42% 82% 69%
Net assets, end of period (000's) $7,065 $6,908 $5,794 $6,820 $9,171
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Class E shares were collapsed into Class G shares on February 28, 2000, which
were then redesignated Class E shares.
(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)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class E shares total return.
(e)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
45
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Growth Fund
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS F SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $12.44 $10.41 $12.23 $17.87 $16.83
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.14) (0.11) (0.11) (0.17) (0.26)
Net realized and unrealized gain
(loss) on investments 0.37 2.14 (1.71) (5.47) 1.30
-------- -------- -------- -------- --------
Total from investment operations 0.23 2.03 (1.82) (5.64) 1.04
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.67 $12.44 $10.41 $12.23 $17.87
Total return (c) 1.85%(d) 19.50% (14.88)% (31.56)% 6.18%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (e) 2.14% 2.17% 2.16% 2.14% 2.19%
Net investment loss (e) (1.05)% (1.03)% (0.93)% (1.13)% (1.42)%
Portfolio turnover rate 40% 39% 42% 82% 69%
Net assets, end of period (000's) $10,353 $10,265 $8,709 $10,101 $13,368
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Class F shares were collapsed into Class H shares on February 28, 2000, which
were then redesignated Class F shares.
(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)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class F shares total return.
(e)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS Z SHARES 2004 2003 2002 2001 2000
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $13.24 $10.96 $12.76 $18.46 $17.23
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) (0.01) (0.01) 0.01 (0.02) (0.08)
Net realized and unrealized gain
(loss) on investments 0.39 2.29 (1.81) (5.68) 1.31
-------- -------- -------- -------- --------
Total from investment operations 0.38 2.28 (1.80) (5.70) 1.23
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.62 $13.24 $10.96 $12.76 $18.46
Total return (b) 2.87%(c) 20.80% (14.11)% (30.88)% 7.14%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (d) 1.14% 1.17% 1.16% 1.14% 1.19%
Net investment income (loss) (d) (0.06)% (0.03)% 0.07% (0.13)% (0.42)%
Portfolio turnover rate 40% 39% 42% 82% 69%
Net assets, end of period (000's) $286 $442 $80 $915 $1,941
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value.
(c)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class Z shares total return.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
46
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Growth Fund II
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS A SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $8.33 $6.94 $7.92 $11.55 $12.00
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.04) (0.02) (0.02) (0.04) (0.07)
Net realized and unrealized gain
(loss) on investments 0.21 1.41 (0.96) (3.59) (0.38)
-------- -------- -------- -------- --------
Total from investment operations 0.17 1.39 (0.98) (3.63) (0.45)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $8.50 $8.33 $6.94 $7.92 $11.55
Total return (c)(d) 2.04%(e) 20.03% (12.37)% (31.43)% (3.75)%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (g) 1.50% 1.50% 1.50% 1.50% 1.50%(h)
Net investment loss (g) (0.41)% (0.33)% (0.29)% (0.42)% (0.84)%(h)
Waiver/reimbursement 0.07% 0.25% 0.20% 0.16% 0.62%(h)
Portfolio turnover rate 38% 36% 49% 90% 32%(f)
Net assets, end of period (000's) $6,634 $7,515 $7,692 $9,486 $6,769
- ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on March 7, 2000.
(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/Administrator not waived or reimbursed a portion
of expenses, total return would have been reduced.
(e)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class A shares total return.
(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.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS B SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $8.10 $6.80 $7.82 $11.51 $12.00
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.10) (0.08) (0.08) (0.11) (0.12)
Net realized and unrealized gain
(loss) on investments 0.21 1.38 (0.94) (3.58) (0.37)
-------- -------- -------- -------- --------
Total from investment operations 0.11 1.30 (1.02) (3.69) (0.49)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $8.21 $8.10 $6.80 $7.82 $11.51
Total return (c)(d) 1.36%(e) 19.12% (13.04)% (32.06)% (4.08)%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (g) 2.25% 2.25% 2.25% 2.25% 2.25%(h)
Net investment loss (g) (1.16)% (1.08)% (1.04)% (1.17)% (1.59)%(h)
Waiver/reimbursement 0.07% 0.25% 0.20% 0.16% 0.62%(h)
Portfolio turnover rate 38% 36% 49% 90% 32%(f)
Net assets, end of period (000's) $26,584 $31,557 $30,871 $42,391 $50,859
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The Fund commenced investment operations on March 7, 2000.
(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/Administrator not waived or reimbursed a portion
of expenses, total return would have been reduced.
(e)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class B shares total return.
(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.
47
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Growth Fund II
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS C SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $8.08 $6.78 $7.80 $11.50 $12.00
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.10) (0.08) (0.08) (0.11) (0.12)
Net realized and unrealized gain
(loss) on investments 0.21 1.38 (0.94) (3.59) (0.38)
-------- -------- -------- -------- --------
Total from investment operations 0.11 1.30 (1.02) (3.70) (0.50)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $8.19 $8.08 $6.78 $7.80 $11.50
Total return (c)(d) 1.36%(e) 19.17% (13.08)% (32.17)% (4.17)%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (g) 2.25% 2.25% 2.25% 2.25% 2.25%(h)
Net investment loss (g) (1.16)% (1.08)% (1.04)% (1.17)% (1.59)%(h)
Waiver/reimbursement 0.07% 0.25% 0.20% 0.16% 0.62%(h)
Portfolio turnover rate 38% 36% 49% 90% 32%(f)
Net assets, end of period (000's) $5,389 $6,444 $6,481 $8,994 $5,801
- ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on March 7, 2000.
(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/Administrator not waived or reimbursed a portion
of expenses, total return would have been reduced.
(e)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class C shares total return.
(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.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS Z SHARES 2004 2003 2002 2001 2000 (A)
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $8.39 $6.97 $7.95 $11.58 $12.00
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.01) (0.01) --(c) (0.02) (0.05)
Net realized and unrealized gain
(loss) on investments 0.21 1.43 (0.98) (3.61) (0.37)
-------- -------- -------- -------- --------
Total from investment operations 0.20 1.42 (0.98) (3.63) (0.42)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $8.59 $8.39 $6.97 $7.95 $11.58
Total return (d)(e) 2.38%(f) 20.37% (12.33)% (31.35)% (3.50)%(g)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (h) 1.25% 1.25% 1.25% 1.25% 1.25%(i)
Net investment loss (h) (0.16)% (0.08)% (0.04)% (0.17)% (0.59)%(i)
Waiver/reimbursement 0.07% 0.25% 0.20% 0.16% 0.62%(i)
Portfolio turnover rate 38% 36% 49% 90% 32%(g)
Net assets, end of period (000's) $1,045 $831 $894 $1,211 $4,740
- ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on March 7, 2000.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Rounds to less than $0.01 per share.
(d)Had the Investment Advisor/Administrator not waived or reimbursed a portion
of expenses, total return would have been reduced.
(e)Total return at net asset value.
(f)Total return includes a voluntary reimbursement by the Investment Advisor for
a realized investment loss on an investment not meeting the Fund's investment
restrictions. This reimbursement had an impact of less than 0.01% on the
Fund's Class Z shares total return.
(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.
48
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Value Fund
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS A SHARES 2004 2003 2002 2001 2000
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $10.10 $8.89 $11.40 $11.41 $10.64
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.09 0.07 0.04 0.04 0.04
Net realized and unrealized gain
(loss) on investments 1.30 1.14 (2.55) (0.05) 0.73
-------- -------- -------- -------- --------
Total from investment operations 1.39 1.21 (2.51) (0.01) 0.77
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.09) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.40 $10.10 $8.89 $11.40 $11.41
Total return (b) 13.78% 13.61% (22.02)% (0.09)% 7.24%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (c) 1.52% 1.70% 1.61% 1.71% 1.80%
Net investment income (c) 0.82% 0.72% 0.34% 0.32% 0.39%
Portfolio turnover rate 38% 68% 72% 47% 76%
Net assets, end of period (000's) $14,522 $16,725 $19,767 $25,694 $14,017
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS B SHARES 2004 2003 2002 2001 2000
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $9.80 $8.68 $11.22 $11.30 $10.61
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) 0.01 --(b) (0.04) (0.04) (0.03)
Net realized and unrealized gain
(loss) on investments 1.26 1.12 (2.50) (0.04) 0.72
-------- -------- -------- -------- --------
Total from investment operations 1.27 1.12 (2.54) (0.08) 0.69
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (--)(b) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.07 $9.80 $8.68 $11.22 $11.30
Total return (c) 12.98% 12.90% (22.64)% (0.71)% 6.50%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (d) 2.22% 2.40% 2.31% 2.41% 2.50%
Net investment income (loss) (d) 0.12% 0.02% (0.36)% (0.38)% (0.31)%
Portfolio turnover rate 38% 68% 72% 47% 76%
Net assets, end of period (000's) $46,717 $50,117 $52,701 $69,720 $49,112
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Rounds to less than $0.01 per share.
(c)Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
49
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Tax-Managed Value Fund
Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31,
======================================================================
CLASS C SHARES 2004 2003 2002 2001 2000
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $9.80 $8.68 $11.22 $11.30 $10.61
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) 0.01 --(b) (0.04) (0.04) (0.03)
Net realized and unrealized gain
(loss) on investments 1.26 1.12 (2.50) (0.04) 0.72
-------- -------- -------- -------- --------
Total from investment operations 1.27 1.12 (2.54) (0.08) 0.69
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (--)(b) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.07 $9.80 $8.68 $11.22 $11.30
Total return (c) 12.98% 12.90% (22.64)% (0.71)% 6.50%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (d) 2.22% 2.40% 2.31% 2.41% 2.50%
Net investment income (loss) (d) 0.12% 0.02% (0.36)% (0.38)% (0.31)%
Portfolio turnover rate 38% 68% 72% 47% 76%
Net assets, end of period (000's) $11,864 $13,674 $17,463 $21,367 $10,331
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Rounds to less than $0.01 per share.
(c)Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31,
======================================================================
CLASS Z SHARES 2004 2003 2002 2001 2000
====================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $10.22 $8.96 $11.46 $11.43 $10.65
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.13 0.10 0.07 0.07 0.07
Net realized and unrealized gain
(loss) on investments 1.30 1.16 (2.57) (0.04) 0.71
-------- -------- -------- -------- --------
Total from investment operations 1.43 1.26 (2.50) 0.03 0.78
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.12) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.53 $10.22 $8.96 $11.46 $11.43
Total return (b) 14.10% 14.06% (21.82)% 0.26% 7.32%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (c) 1.22% 1.40% 1.31% 1.41% 1.50%
Net investment income (c) 1.12% 1.02% 0.64% 0.62% 0.69%
Portfolio turnover rate 38% 68% 72% 47% 76%
Net assets, end of period (000's) $47 $32 $1 $1 $1
- ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested.
(c)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------
Columbia Tax-Managed Funds
TO THE TRUSTEES OF COLUMBIA FUNDS TRUST I AND THE SHAREHOLDERS OF:
COLUMBIA TAX-MANAGED AGGRESSIVE GROWTH FUND
COLUMBIA TAX-MANAGED GROWTH FUND
COLUMBIA TAX-MANAGED GROWTH FUND II
COLUMBIA TAX-MANAGED VALUE 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
October 31, 2004, and the results of their operations, the changes in their net
assets, and their financial highlights for the periods indicated, except for
Columbia Tax-Managed Aggressive Growth Fund and Columbia Tax-Managed Growth Fund
II which is 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 October 31, 2004 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
The financial statements and financial highlights of the Columbia Tax-Managed
Aggressive Growth Fund and the Columbia Tax-Managed Growth Fund II as of October
31, 2003 and for fiscal periods ending on or prior to October 31, 2003 were
audited by other independent accountants, whose report dated December 9, 2003
expressed an unqualified opinion on those statements and highlights.
The Trustees of the Columbia Tax-Managed Aggressive Growth Fund approved a plan
of liquidation for the Fund as described in Note 10.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 21, 2004
51
UNAUDITED INFORMATION
-----------------------------------------------------------
Columbia Tax-Managed Funds
FEDERAL INCOME TAX INFORMATION
COLUMBIA TAX-MANAGED VALUE 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 November 1, 2003 to October 31, 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
October 31, 2004, qualifies for the corporate dividends received deduction.
52
TRUSTEES AND OFFICERS
-----------------------------------------------------------
Columbia Tax-Managed Funds
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
Chicago, IL 60666 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, None
-----------------------------------------------------------------------------------
JANET LANGFORD KELLY (age 47) 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 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
Department of Economics Louisa Van Voorhis Professor of Political Economy, University of Washington, since
University of Washington September 1993 (formerly Director, Institute for Economic Research, University of
Seattle, WA 98195 Washington from September 2001 to June 2003) Adjunct Professor of Statistics,
Trustee (since 1981) 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
-----------------------------------------------------------------------------------
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 LLP (law firm). Oversees 118, None
1120 N.W. Couch Street
Tenth Floor
Portland, OR 97209-4128
Trustee (since 2000)
-----------------------------------------------------------------------------------
53
- --------------------------------------------------------------------------------
Columbia Tax-Managed 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)
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. (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 119/4/, Chairman
Hopkinton, NH 03229 of the Board of Directors, Enesco Group, Inc. (designer, importer and distributor
Trustee (since 1998) 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 #1500 Regence Group (regional health insurer); Chairman and Chief Executive Officer,
Portland, OR 97207 BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Young &
Trustee (since 1991) Company). Oversees 118, Northwest Natural Gas Co. (natural gas service provider)
-----------------------------------------------------------------------------------
INTERESTED TRUSTEE
WILLIAM E. MAYER/2/ (age 64) Partner, Park Avenue Equity Partners (private equity) since February 1999
399 Park Avenue (formerly Partner, Development Capital LLC from November 1996 to February 1999).
Suite 3204 Oversees 120/3/, 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.
The Statement of Additional Information includes additional information about
the Trustees of the Funds and is available, without change, upon request by
calling 800-426-3750.
54
- --------------------------------------------------------------------------------
Columbia Tax-Managed Funds
NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA
FUNDS, YEAR FIRST ELECTED OR APPOINTED
TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
OFFICERS
CHRISTOPHER L. WILSON (age 47) Head of Mutual Funds of the Advisor since August 2004; President of the Columbia
One Financial Center Funds since October 2004 (formerly President and Chief Executive Officer, CDC IXIS
Boston, MA 02111 Asset Management Services, Inc. from 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 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;
(formerly Treasurer from December 2002 to December 2004 and President from
February 2004 to December 2004 of Columbia Management Multi-Strategy Hedge Fund,
LLC; 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 and of the
40 West 57th Street 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
Senior Vice President and LLP from November 1999 to December 2000; Vice President and Counsel, Equitable Life
Chief Compliance Officer Assurance Society of the 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
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
Chief Accounting Officer to May 2004; Vice President, Product Strategy & Development of the Liberty Funds
(since 2004) 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 35) Controller of the Columbia Funds and of the Liberty All-Star Funds since October
One Financial Center 2004 (formerly Vice President of CDC IXIS Asset Management Services, Inc. and
Boston, MA 02111 Deputy Treasurer of the CDC Nvest Funds and Loomis Sayles Funds from February 2003
Controller (since 2004) 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).
-----------------------------------------------------------------------------------
R. SCOTT HENDERSON (Age 45) Secretary of the Columbia Funds since December 2004 (formerly Of Counsel, Bingham
One Financial Center McCutchen from April 2001 to September 2004; Executive Director and General
Boston, MA 02111 Counsel, Massachusetts Pension Reserves Investment Management Board from September
Secretary (since 2004) 1997 to March 2001).
-----------------------------------------------------------------------------------
55
This page intentionally left blank.
IMPORTANT INFORMATION ABOUT THIS REPORT
- --------------------------------------------------------------------------------
Columbia Tax-Managed 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 Tax-Managed 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 Funds' proxy voting policies and procedures is available
(i) on the Funds' website, 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. Information regarding how the Funds voted
proxies relating to portfolio securities during the 12-month period ended June
30, 2004 is available from the SEC's website. Information regarding how the
Funds voted proxies relating to portfolio securities is also available from the
Funds' website.
The Funds file a complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q
are available on the SEC's website at www.sec.gov and may be reviewed and copied
at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Please note that on March 1, 2004, Ernst & Young LLP ("E&Y") resigned as the
independent registered public accounting firm for Columbia Tax-Managed
Aggressive Growth Fund and Columbia Tax-Managed Growth Fund II. 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 October
31, 2004.
Columbia Management is the primary investment management division of Bank of
America Corporation. Columbia Management entities furnish investment management
services and advise institutional and mutual fund portfolios.
57
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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 TAX-MANAGED FUNDS Annual Report, October 31, 2004
PRSRT STD
U.S. Postage
PAID
Holliston, MA
Permit NO. 20
[LOGO]:
COLUMBIA FUNDS
A MEMBER OF COLUMBIA MANAGEMENT
[C] 2004 COLUMBIA FUNDS DISTRIBUTOR, INC.
ONE FINANCIAL CENTER, BOSTON, MA 02111-2621
800.345.6611 WWW.COLUMBIAFUNDS.COM
TM-02/442T-1004 (12/04) 04/3598
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 four series of the
registrant whose reports to stockholders are included in this annual filing.
Effective March 1, 2004, two of the series of the registrant included in this
filing engaged a new independent accountant. 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 October 31, 2004 and October 31,
2003 are approximately as follows:
2004 2003
$71,780 $81,840
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 October 31, 2004
and October 31, 2003 are approximately as follows:
2004 2003
$14,000 $16,000
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 October 31, 2004 and October 31, 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 October 31, 2004 and October 31, 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 October 31, 2004 and October
31, 2003 was zero.
(c) Aggregate Tax Fees billed by the principal accountant for professional
services rendered during the fiscal years ended October 31, 2004 and October 31,
2003 are approximately as follows:
2004 2003
$8,600 $9,064
Tax Fees in both fiscal years 2004 and 2003 consist primarily of the review of
annual tax returns and 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 October 31, 2004 and October 31, 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 October 31, 2004 and October 31, 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 October 31, 2004 and October 31, 2003 was zero.
(d) Aggregate All Other Fees billed by the principal accountant for professional
services rendered during the fiscal years ended October 31, 2004 and October 31,
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 October 31, 2004 and October 31, 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 October 31, 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 October 31, 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 October 31, 2004 and October
31, 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 October 31, 2004 and
October 31, 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 October 31, 2004 and October 31, 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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. 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 11. 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 second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. 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 I
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By (Signature and Title) /s/ Christopher L. Wilson
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Christopher L. Wilson, President
Date December 27, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Christopher L. Wilson
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Christopher L. Wilson, President
Date December 27, 2004
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By (Signature and Title) /s/ J. Kevin Connaughton
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J. Kevin Connaughton, Treasurer
Date December 27, 2004
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