UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-6529 Columbia Funds Trust VI ----------------------------------------------------- (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 ----------------------------------------------------- (Address of principal executive offices) (Zip code) Vincent Pietropaolo, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 ----------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-772-3698 Date of fiscal year end: 06/30/05 ----------- Date of reporting period: 12/31/04 ----------- 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. Section 3507. ITEM 1. REPORTS TO STOCKHOLDERS. [GRAPHIC OMITTED] Columbia Small Cap Value Fund Semiannual Report December 31, 2004 Table of Contents Fund Profile ............................................................... 1 Performance Information .................................................... 2 Understanding Your Expenses ................................................ 3 Economic Update ............................................................ 4 Portfolio Manager's Report ................................................. 5 Financial Statements ....................................................... 7 Investment Portfolio ....................................................... 8 Statement of Assets and Liabilities ........................................ 16 Statement of Operations .................................................... 17 Statement of Changes in Net Assets ......................................... 18 Notes to Financial Statements .............................................. 20 Financial Highlights ....................................................... 25 Important Information About This Report .......................................................... 29 Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. Not FDIC May Lose Value Insured No Bank Guarantee PRESIDENT'S MESSAGE Columbia Small Cap Value Fund Dear Shareholder In 2004, Columbia Funds became part of the Bank of America family, one of the largest, most respected financial institutions in the United States. As a direct result of this merger, a number of changes are in the works that we believe may offer significant benefits for our shareholders. Plans are underway to combine various Nations Funds and Columbia Funds together to form a single fund family that covers a wide range of markets, sectors and asset classes under the management of talented, seasoned investment professionals. As a result, some funds will be merged in order to eliminate redundancies and fund management teams will be aligned to maximize performance potential. You will receive more detailed information about these proposed mergers, and you will be asked to vote on certain fund changes that may affect you and your account. In this matter, your timely response will help us to implement the changes in 2005. The increased efficiencies we expect from a more streamlined offering of funds may help us reduce fees charged to the funds, because larger funds often benefit from size and scale of operations. For example, significant savings for the combined complex may result from the consolidation of certain vendor agreements. In fact, negotiations are currently underway to consolidate the transfer agency of all of our funds and to consolidate custodial services, each under a single vendor. We have reduced management fees for many funds as part of our settlement agreement with the New York Attorney General. As a result of these changes, we believe we will offer shareholders an even stronger lineup of investment options, with management expenses that continue to be competitive and fair. What will not change as we enter this next phase of consolidation is our commitment to the highest standards of performance and our dedication to superior service. Change for the good has another name: it's called improvement. It helps move us forward, and we believe that it represents progress for all our shareholders in their quest for long-term financial success. In the pages that follow, you'll find a discussion of the economic environment during the period followed by a detailed report from the fund's manager or managers on key factors that influenced performance. We hope that you will read the manager reports carefully and discuss any questions you might have with your financial advisor. As always, we thank you for choosing Columbia Funds. We appreciate your continued confidence. And, we look forward to helping you keep your long-term financial goals on target in the years to come. 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 liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. Summary o For the six-month period ended December 31, 2004, the fund's class A shares returned 12.33% without sales charge. o The fund modestly trailed its benchmark, the Russell 2000 Value Index, but beat its peer group, the Morningstar Small Value Category average. o While the fund benefited from good stock selection, particularly in the materials and telecommunications sectors, its bias toward higher quality companies modestly hindered returns in the industrials sector. Class A shares [GRAPHIC] 12.33% Russell 2000 Value Index [GRAPHIC] 13.37% Objective Seeks long-term growth by investing primarily in smaller capitalization equity securities Total Net Assets $718.9 million Management Style Equity Style Value Blend Growth - ------------------------------------ Size Large - ------------------------------------ Med - ------------------------------------ Small X - ------------------------------------ FUND PROFILE Columbia Small Cap Value Fund The information below gives you a snapshot of your fund at the end of the reporting period. Your fund is actively managed and the composition of its portfolio will change over time. Top 10 holdings as of 12/31/04 (%) - -------------------------------------------------------------------------------- Carpenter Technology Corp. 1.2 - -------------------------------------------------------------------------------- Corn Products International, Inc. 0.9 - -------------------------------------------------------------------------------- Cash America International, Inc. 0.9 - -------------------------------------------------------------------------------- Willbros Group, Inc. 0.9 - -------------------------------------------------------------------------------- Consolidated Graphics, Inc. 0.9 - -------------------------------------------------------------------------------- MPS Group, Inc. 0.9 - -------------------------------------------------------------------------------- PS Business Parks, Inc., REIT 0.8 - -------------------------------------------------------------------------------- Harsco Corp. 0.8 - -------------------------------------------------------------------------------- Eagle Materials, Inc. 0.8 - -------------------------------------------------------------------------------- Greif, Inc., Class A 0.8 - -------------------------------------------------------------------------------- Top 5 sectors as of 12/31/04 (%) - -------------------------------------------------------------------------------- Financials 27.4 - -------------------------------------------------------------------------------- Industrial 19.1 - -------------------------------------------------------------------------------- Consumer discretionary 12.8 - -------------------------------------------------------------------------------- Information technology 11.7 - -------------------------------------------------------------------------------- Materials 9.7 - -------------------------------------------------------------------------------- Sector breakdown and portfolio holdings are calculated as a percentage of net assets. Management style is determined by Columbia Management, and is based on the investment strategy and process as outlined in the fund's prospectus. 1 Performance of a $10,000 investment 01/01/95 - 12/31/04 ($) - -------------------------------------------------------------------------------- sales charge without with - -------------------------------------------------------------------------------- Class A 39,906 37,612 - -------------------------------------------------------------------------------- Class B 36,997 36,997 - -------------------------------------------------------------------------------- Class C 36,422 36,422 - -------------------------------------------------------------------------------- Class Z 40,924 n/a - -------------------------------------------------------------------------------- Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION Columbia Small Cap Value Fund Value of a $10,000 investment 01/01/95 - 12/31/04 [The following table was represented by a Mountain Chart in the printed material.] Class A Shares Class A Shares Russell 2000 Without sales charge With sales charge Value Index 10000 9425 10000 10011 9435 9951 10429 9830 10319 10766 10147 10370 10952 10322 10678 11234 10588 10906 12110 11414 11279 13509 12732 11691 13651 12866 12038 13950 13148 12218 13383 12614 11730 13873 13076 12196 13754 12963 12574 13582 12801 12657 14258 13439 12855 14735 13887 13125 15514 14622 13484 16076 15151 13825 15176 14303 13662 14138 13325 12935 14762 13914 13496 15518 14626 13865 15261 14383 14026 16172 15242 14780 16277 15341 15261 16443 15497 15496 16099 15173 15643 15363 14480 15224 15589 14693 15447 17048 16068 16677 18140 17097 17521 19219 18114 18257 19480 18360 18547 20774 19579 19780 20097 18941 19242 20103 18947 19454 20163 19003 20113 20030 18878 19749 21676 20430 20944 22925 21607 21795 23227 21892 21901 21739 20489 21126 21575 20335 21008 19569 18444 19363 15596 14700 16331 15943 15026 17253 17166 16178 17766 18496 17432 18247 18918 17830 18820 18469 17407 18393 16583 15630 17137 16287 15350 16996 17523 16515 18548 18127 17085 19117 19142 18042 19809 19060 17964 19340 17880 16852 18632 17780 16758 18259 17899 16870 17894 18447 17386 17987 19696 18563 18540 18650 17578 18054 19514 18392 19157 20062 18908 19247 20182 19022 19360 19672 18541 19064 20529 19349 19621 20687 19498 20274 22371 21085 21181 22541 21245 21060 22559 21262 20984 20863 19663 20556 23431 22084 22764 23366 22022 23392 22644 21342 23359 22159 20885 22985 23617 22259 24050 24432 23027 24668 24610 23195 25659 24603 23188 25085 24158 22768 24997 21309 20084 22237 21808 20554 22818 23324 21983 24458 25043 23603 25955 25203 23754 26300 25629 24155 26461 27492 25911 28440 28050 26437 29441 27094 25536 28466 26194 24688 27837 22998 21676 23701 23417 22070 23596 21820 20565 21912 22256 20977 22240 23979 22600 24015 23300 21961 22990 22615 21315 22341 21455 20221 21591 21496 20260 21822 23153 21822 23895 25073 23631 26334 25627 24153 26779 26982 25431 28116 28216 26593 29184 27931 26325 28849 30210 28473 31200 31409 29603 32398 32486 30618 33571 33656 31721 34732 34211 32244 35406 34892 32886 35894 33451 31528 34039 33662 31726 34451 35513 33471 36201 33879 31931 34535 33720 31781 34874 35103 33084 36255 35601 33554 36817 38827 36594 40083 39906 37612 41044 The graph and table do not reflect the deduction of taxes a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. 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. Average annual total return as of 12/31/04 (%) Share class A B C Z - --------------------------------------------------------------------------------------------- Inception 07/25/86 11/09/92 01/15/96 07/31/95 - --------------------------------------------------------------------------------------------- Sales charge without with without with without with without - --------------------------------------------------------------------------------------------- 6-month (cumulative) 12.33 5.87 11.89 6.89 11.91 10.91 12.51 - --------------------------------------------------------------------------------------------- 1-year 22.81 15.75 21.87 16.87 21.90 20.90 23.18 - --------------------------------------------------------------------------------------------- 5-year 15.16 13.80 14.27 14.03 14.27 14.27 15.47 - --------------------------------------------------------------------------------------------- 10-year 14.84 14.16 13.98 13.98 13.80 13.80 15.13 - --------------------------------------------------------------------------------------------- The "with sales charge" returns include the maximum initial sales charge of 5.75% for class A shares, maximum contingent deferred sales charge of 5.00% for class B shares and 1.00% for class C shares for the first year only. The "without sales charge" returns do not include the effect of sales charges. If they had, returns would be lower. All results shown assume reinvestment of distributions. Class Z shares are sold at net asset value with no Rule 12b-1 fees. Performance for different share classes will vary based on differences in sales charges and fees associated with each class. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class C and class Z are newer classes of shares. Class C share performance information includes returns of the fund's class B shares for periods prior to the inception of class C shares. Class B shares would have substantially similar annual returns because class B and class C shares generally have similar expense structures. Class Z share performance information includes returns of the fund's class A shares (the oldest existing fund class) for periods prior to the inception of the newer class shares. These returns have not been adjusted to reflect any difference in expenses (such as 12b-1 fees) between any of the predecessor shares and the newer classes of shares. Had the expense differential been reflected, the returns for the periods prior to the inception of the newer class shares would have been different. Class A shares were initially offered on July 25, 1986, class B shares were initially offered on November 9, 1992, class C shares were initially offered on January 15, 1996 and class Z shares were initially offered on July 31, 1995. 2 Estimating your actual expenses To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 o For shareholders who receive their account statements from their brokerage firm, contact your brokerage firm to obtain your account balance 1. Divide your ending account balance by $1,000. For example, if an account balance was $8,600 at the end of the period, the result would be 8.6 2. In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period UNDERSTANDING YOUR EXPENSES Columbia Small Cap 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 continuing costs, which generally include investment advisory fees, Rule 12b-1 fee 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 $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 07/01/04 - 12/31/04 - ---------------------------------------------------------------------------------------------------------- Account value at the Account value at the Expenses paid Fund's annualized beginning of the period($) end of the period ($) during the period($) expense ratio (%) - ---------------------------------------------------------------------------------------------------------- Actual Hypothetical Actual Hypothetical Actual Hypothetical - --------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1,123.31 1,018.65 6.96 6.61 1.30 - ---------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1,118.92 1,014.87 10.95 10.41 2.05 - ---------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1,119.12 1,014.87 10.95 10.41 2.05 - ---------------------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 1,125.12 1,019.91 5.62 5.35 1.05 - ---------------------------------------------------------------------------------------------------------- Expenses paid during the period are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the fund's most recent fiscal half-year and divided by 365. 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 Summary For the six-month period ended December 31, 2004 o After a weak start, stock prices bounced back in November, helping the S&P 500 Index to a 7.19% gain for the six month period. Value stocks outperformed growth stocks, as measured by the Russell 1000 Growth and Value indices. S&P 500 Index [GRAPHIC] 7.19% Russell 1000 Value Index [GRAPHIC] 12.08% o Investment-grade bonds delivered solid gains. The Lehman Brothers Aggregate Bond Index returned 4.18%. High-yield bonds, which can be less sensitive to changing interest rates, led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 9.31%. Lehman Index [GRAPHIC] 4.18% Merrill Lynch Index [GRAPHIC] 9.31% The S&P 500 Index is an unmanaged index that tracks the performance of 500 widely held, large capitalization US stocks. The Russell 1000 Value Index is an unmanaged index that tracks the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated, non-convertible investment-grade debt issues. The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that tracks the performance of non-investment-grade corporate bonds. ECONOMIC UPDATE Columbia Small Cap Value Fund During the six-month period that began July 1, 2004, and ended December 31, 2004, the US economy grew at a healthy pace, despite rising energy prices and a host of geopolitical uncertainties. The nation's gross domestic product advanced 3.5% in the second half of 2004. For the year, the economy grew 4.4%, its strongest showing in five years. Employment dominated the economic news. Although job growth fell below expectations early in the period, the pace of new job creation picked up and more than two million jobs were created in 2004. In response, consumer confidence soared to its highest level of the year in December, and consumer spending ended the year on a high note. Holiday sales were reported to be the strongest in five years. Within the business sector, industrial production rose; factories utilized more of their capacity; and spending on technology, capital equipment and construction picked up. However, business spending for the year fell short of forecasts given the level of profit growth and the maturity of the economic cycle. Stocks picked up momentum Stock market performance picked up as economic news improved and uncertainty surrounding the presidential election was resolved. The S&P 500 Index returned 7.19% for the six-month period. The majority of that return was generated in November and December. Small- and mid-cap stocks led the market and value stocks generally outperformed growth stocks. Energy and utilities stocks were the best-performing sectors for the six-month period. Information technology rebounded strongly in the second half. Bonds delivered solid returns Despite a weak start--and a weak finish--all sectors of the US bond market delivered solid returns for the six-month period. As the Federal Reserve Board (the Fed) began to raise short-term interest rates, the bond market responded favorably. Yields on intermediate and long-term bonds edged lower--and prices rose. However, the 10-year Treasury yield rose sharply in November, before falling again in December, and bonds gave back some of their earlier gains. In this environment, the Lehman Brothers Aggregate Bond Index returned 4.18%. High-yield bonds, which can be less sensitive to changing interest rates, gained 9.31%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. A relatively strong economy helped improve credit quality and the sector's high yields attracted investors seeking income. Municipal and mortgage bonds outperformed Treasury bonds. Short-term rates moved higher After a year of the lowest short-term interest rates in recent history, the Fed raised the federal funds rate, a key short-term rate, from 1.00% to 2.25% in five equal steps between June 30 and December 31.(1) 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. Because the Fed's moves were widely anticipated, these rate increases have had little if any impact on the financial markets except to boost the yields on money market funds. (1) On February 2, the Fed raised the federal funds rate to 2.50%. 4 Net asset value per share as of 12/31/04 ($) - -------------------------------------------------------------------------------- Class A 43.64 - -------------------------------------------------------------------------------- Class B 38.59 - -------------------------------------------------------------------------------- Class C 40.22 - -------------------------------------------------------------------------------- Class Z 45.01 - -------------------------------------------------------------------------------- Distributions declared per share 07/01/04 - 12/31/04 ($) - -------------------------------------------------------------------------------- Class A 3.62 - -------------------------------------------------------------------------------- Class B 3.38 - -------------------------------------------------------------------------------- Class C 3.38 - -------------------------------------------------------------------------------- Class Z 3.72 - -------------------------------------------------------------------------------- PORTFOLIO MANAGER'S REPORT Columbia Small Cap Value Fund For the six-month period ended December 31, 2004, Columbia Small-Cap Value Fund class A shares returned 12.33% without sales charge. This was slightly lower than the Russell 2000 Value Index, which returned 13.37%. The fund's performance was ahead of the average return of its peer group, the Morningstar Small Value Category, which was 11.74% over the same period.(1) As small-cap stocks continued to rally in the second half of 2004, the fund benefited from strong stock selection, particularly in the materials and telecommunications sectors. Below-average returns in the industrial sector and greater exposure than the benchmark to the weak technology sector were slight detractors from performance relative to the Russell index. Stock picking strategy rewarded returns in materials and telecommunications We focused on companies that we believe have strong competitive and financial positions, good earnings growth prospects and reasonable stock valuations. Stock selection made the biggest difference in the materials and telecommunications sectors. In the materials sector, the fund had an overweight in metals, including steel and titanium, as well as coal. These stocks were big winners over the period, benefiting as commodity prices rose amid strong global demand and tightening supply. Telecommunications stocks rose modestly over the six-month period, making them one of the weaker sectors in the small-cap value universe. However, the fund benefited from having slightly less exposure than its benchmark to this poorly-performing sector and from owning stocks that posted exceptionally strong gains. Gains from financials offset by underweight in REITs Stock selection in the financial sector was also strong. Among the fund's best performers were consumer finance investments, including a credit card company and pawnshop. Banks and insurers also helped returns. The fund further benefited by largely avoiding thrifts, where returns overall were weak. Offsetting this positive performance was the fund's below-average exposure to the financial sector, specifically real estate investment trusts ("REITs"), where we thought valuations seemed (1) (C)2004, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. 5 We remain moderately positive on the US economy and expect it to continue to grow at a measured pace. Columbia Small Cap Value Fund expensive and performance would deteriorate as interest rates rose. Instead, REITs did quite well, as interest rates increased only modestly and investors continued to reach for yield. At the end of the period, the fund still had a below-average investment in REITs, which we believed remained vulnerable to further interest rate hikes. Economically sensitive bias hampered returns The fund had an above-average stake in industrials, which posted strong gains as the economy recovered. Our focus on higher quality industrial companies, however, caused returns to trail the sector average because lower quality companies gained favor with investors during the second half of the year. We maintained our focus on higher quality industrials, believing that companies with strong balance sheets and good competitive positioning will be the sector's long-term winners. The fund also had an above-average stake in the economically sensitive technology sector. Technology stocks made only modest headway during the period as the sector failed to keep up with investor expectations. Cautiously optimistic outlook We remain moderately positive on the US economy, the stock market and small-cap value stocks. We expect the economy to continue to grow at a measured pace. We also think stocks have room to climb. As long as economic expansion continues and stock valuations remain reasonable, we plan to maintain the fund's bias toward economically sensitive sectors. Although we believe small-cap stocks are no longer inexpensive compared to large-cap stocks, we still expect to find attractive investment opportunities in 2005. [PHOTO] Stephen Barbaro has managed the Columbia Small-Cap Value Fund since June 2002 and has been with the advisor or its predecessors or affiliate organizations since 1976. /s/ Stephen Barbaro Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. Investing in small-cap companies may present additional risks, including greater volatility and price fluctuations because small-cap stocks are generally thinly traded and less liquid than stocks of larger companies. Value stocks are securities of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor. If the manager's assessment of a company's prospects is wrong, the price of its stock may not approach the value the manager has placed on it. 6 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund A guide to understanding your fund's financial statements --------------------------------------------------------------------- Investment Portfolio The investment portfolio details all of the fund's holdings and their market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset, industry, country or geographic region (if applicable) to demonstrate areas of concentration and diversification. --------------------------------------------------------------------- Statements of Assests and Liabilities This statement details the fund's assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all the fund's liabilities (including any unpaid expenses) from the total of the fund's investment and non-investment assets. The share price for each class is calculated by dividing net assets for that class by the number of shares outstanding in that class as of the last day of the reporting period. --------------------------------------------------------------------- Statement of Operations This statement details income earned by the fund and the expenses accrued by the fund during the reporting period. The Statement of Operations also shows any net gain or loss the fund realized on the sales of its holdings during the period, as well as any unrealized gains or losses recognized over the period. The total of these results represents the fund's net increase or decrease in net assets from operations. --------------------------------------------------------------------- Statement of Changes in Net Assets This statement demonstrates how the fund's net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and dividend reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding. --------------------------------------------------------------------- Notes to Financial Statements These notes disclose the organizational background of the fund, its significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies. --------------------------------------------------------------------- Financial Highlights The financial highlights demonstrate how the fund's net asset value per share was affected by the fund's operating results. The financial highlights table also discloses the classes' performance and certain key ratios (e.g., class expenses and net investment income as a percentage of average net assets). 7 INVESTMENT PORTFOLIO - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Common Stocks - 99.1% CONSUMER DISCRETIONARY - 12.8% Shares Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Auto Components - 1.1% BorgWarner, Inc. 76,400 4,138,588 Modine Manufacturing Co. 58,343 1,970,243 Standard Motor Products, Inc. 133,600 2,110,880 Auto Components Total 8,219,711 - ---------------------------------------------- ----------------------------------------------------------------------------- Hotels, Restaurants & Leisure - 3.9% Bally Total Fitness Holding Corp. (a) 229,600 973,504 Bob Evans Farms, Inc. 73,350 1,917,369 Buca, Inc. (a) 311,750 2,169,780 Dave & Buster's, Inc. (a) 156,200 3,155,240 Landry's Restaurants, Inc. 128,700 3,740,022 Lone Star Steakhouse & Saloon 172,007 4,816,196 Marcus Corp. 161,000 4,047,540 Scientific Games Corp., Class A (a) 233,000 5,554,720 Total Entertainment Restaurant Corp. (a) 17,200 205,024 Vail Resorts, Inc. (a) 51,200 1,147,904 Hotels, Restaurants & Leisure Total 27,727,299 - ---------------------------------------------- ----------------------------------------------------------------------------- Household Durables - 1.2% American Greetings Corp., Class A 95,100 2,410,785 CSS Industries, Inc. 80,300 2,550,328 Kimball International, Inc., Class B 172,934 2,561,153 Russ Berrie & Co., Inc. 54,800 1,251,632 Household Durables Total 8,773,898 - ---------------------------------------------- ----------------------------------------------------------------------------- Leisure Equipment & Products - 0.3% Action Performance Companies, Inc. 194,100 2,133,159 Travis Boats & Motors, Inc. (a) 174,975 68,240 Leisure Equipment & Products Total 2,201,399 - ---------------------------------------------- ----------------------------------------------------------------------------- Media - 1.6% 4Kids Entertainment, Inc. (a) 152,400 3,203,448 Journal Communications, Inc., Class A 102,600 1,853,982 Liberty Corp. 73,600 3,235,456 Media General, Inc., Class A 43,600 2,825,716 Media Total 11,118,602 - ---------------------------------------------- ----------------------------------------------------------------------------- Multiline Retail - 0.3% ShopKo Stores, Inc. (a) 115,800 2,163,144 Multiline Retail Total 2,163,144 - ---------------------------------------------- ----------------------------------------------------------------------------- Specialty Retail - 2.5% Building Material Holding Corp. 77,143 2,953,806 GameStop Corp., Class A (a) 185,500 4,147,780 Goody's Family Clothing, Inc. 222,481 2,033,476 Monro Muffler, Inc. (a) 168,906 4,273,322 Movie Gallery, Inc. 54,678 1,042,709 Pier 1 Imports, Inc. 126,800 2,497,960 TBC Corp. (a) 46,921 1,304,404 Specialty Retail Total 18,253,457 - ---------------------------------------------- ----------------------------------------------------------------------------- Textiles, Apparel & Luxury Goods - 1.9% Culp, Inc. (a) 56,000 379,680 Delta Apparel, Inc. 48,100 1,166,425 Hampshire Group Ltd. (a) 89,400 2,816,279 Kellwood Co. 115,050 3,969,225 Russell Corp. 126,500 2,464,220 Stride Rite Corp. 158,700 1,772,679 Tandy Brands Accessories, Inc. 81,953 1,214,543 Textiles, Apparel & Luxury Goods Total 13,783,051 ----------- CONSUMER DISCRETIONARY TOTAL 92,240,561 8 See Accompanying Notes to Financial Statements. - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Common Stocks - (continued) CONSUMER STAPLES - 2.3% Shares Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Food & Staples Retailing - 0.6% BJ's Wholesale Club, Inc. (a) 69,600 2,027,448 Chronimed, Inc. (a) 184,300 1,203,479 Winn-Dixie Stores, Inc. 176,800 804,440 Food & Staples Retailing Total 4,035,367 ----------------------------------------------------------------------------- Food Products - 1.7% Central Garden & Pet Co. (a) 35,890 1,498,049 Corn Products International, Inc. 127,000 6,802,120 John B. Sanfilippo & Son, Inc. (a) 39,000 1,005,420 M&F Worldwide Corp. (a) 133,200 1,814,184 Omega Protein Corp. (a) 179,200 1,541,120 Food Products Total 12,660,893 ----------- CONSUMER STAPLES TOTAL 16,696,260 ENERGY - 6.8% - ---------------------------------------------- ----------------------------------------------------------------------------- Energy Equipment & Services - 1.9% Gulf Island Fabrication, Inc. 19,200 419,136 Lufkin Industries, Inc. 102,639 4,096,117 Universal Compression Holdings, Inc. (a) 90,000 3,141,900 Willbros Group, Inc. (a) 274,600 6,329,530 Energy Equipment & Services Total 13,986,683 ----------------------------------------------------------------------------- Oil & Gas - 4.9% Bill Barrett Corp. (a) 31,300 1,001,287 Brigham Exploration Co. (a) 194,700 1,752,300 Carrizo Oil & Gas, Inc. (a) 283,400 3,202,420 Cimarex Energy Co. (a) 83,100 3,149,490 Energy Partners Ltd. (a) 152,000 3,081,040 Harvest Natural Resources, Inc. (a) 224,200 3,871,934 InterOil Corp. (a) 65,400 2,474,736 Magnum Hunter Resources, Inc. (a) 252,100 3,252,090 Range Resources Corp. 158,200 3,236,772 Stone Energy Corp. (a) 89,400 4,031,046 Western Gas Resources, Inc. 130,700 3,822,975 Whiting Petroleum Corp. (a) 68,700 2,078,175 Oil & Gas Total 34,954,265 ----------- ENERGY TOTAL 48,940,948 FINANCIALS - 27.4% - ---------------------------------------------- ----------------------------------------------------------------------------- Capital Markets - 0.2% LaBranche & Co., Inc. (a) 146,300 1,310,848 Capital Markets Total 1,310,848 ----------------------------------------------------------------------------- Commercial Banks - 11.3% BancFirst Corp. 15,450 1,220,241 BancorpSouth, Inc. 119,200 2,904,904 BancTrust Financial Group, Inc. 81,600 2,008,176 Bank of Granite Corp. 114,593 2,394,994 Bryn Mawr Bank Corp. 140,710 3,094,213 Capitol Bancorp Ltd. 121,779 4,289,056 Chemical Financial Corp. 113,980 4,892,022 Chittenden Corp. 162,450 4,667,189 Columbia Banking System, Inc. 90,600 2,264,094 Community Bancorp (a) 2,600 79,560 Community Trust Bancorp, Inc. 76,945 2,489,930 Corus Bankshares, Inc. 106,400 5,108,264 First Citizens BancShares, Inc., Class A 17,600 2,609,200 First Financial Bankshares, Inc. 58,000 2,598,980 See Accompanying Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Common Stocks - (continued) FINANCIALS - (continued) Shares Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Commercial Banks - (continued) Greater Bay Bancorp 92,400 2,576,112 Hancock Holding Co. 53,588 1,793,054 ITLA Capital Corp. (a) 56,300 3,309,877 MASSBANK Corp. 39,100 1,464,295 Merchants Bancshares, Inc. 92,432 2,680,528 Mid-State Bancshares 163,860 4,694,589 Northrim BanCorp, Inc. 84,300 1,981,050 Riggs National Corp. 93,696 1,991,977 S.Y. Bancorp, Inc. 16,900 407,290 Sterling Bancshares, Inc. 275,400 3,929,958 TriCo Bancshares 232,830 5,448,222 UMB Financial Corp. 74,600 4,226,836 Whitney Holding Corp. 82,400 3,707,176 Wintrust Financial Corp. 50,200 2,859,392 Commercial Banks Total 81,691,179 - ---------------------------------------------- ----------------------------------------------------------------------------- Consumer Finance - 0.9% Cash America International, Inc. 213,100 6,335,463 Consumer Finance Total 6,335,463 - ---------------------------------------------- ----------------------------------------------------------------------------- Diversified Financial Services - 1.7% Advance America Cash Advance Centers, Inc. (a) 35,500 812,950 Metris Companies, Inc. (a) 349,600 4,457,400 MFC Bancorp Ltd. (a) 281,870 5,637,400 QC Holdings, Inc. (a) 81,700 1,565,372 Diversified Financial Services Total 12,473,122 - ---------------------------------------------- ----------------------------------------------------------------------------- Insurance - 5.7% AmerUs Group Co. 46,400 2,101,920 Baldwin & Lyons, Inc., Class B 60,644 1,624,653 CNA Surety Corp. (a) 181,400 2,421,690 Commerce Group, Inc. 32,000 1,953,280 Delphi Financial Group, Inc., Class A 103,002 4,753,542 Harleysville Group, Inc. 140,600 3,356,122 Horace Mann Educators Corp. 138,000 2,633,040 Kansas City Life Insurance Co. 13,100 619,630 Navigators Group, Inc. (a) 108,800 3,275,968 Phoenix Companies, Inc. 292,000 3,650,000 ProCentury Corp. 194,500 2,411,800 Quanta Capital Holdings Ltd. (a) 237,600 2,190,672 RLI Corp. 85,100 3,537,607 UICI 46,900 1,589,910 United National Group Ltd., Class A (a) 159,400 2,968,028 Universal American Financial Corp. (a) 119,494 1,848,572 Insurance Total 40,936,434 - ---------------------------------------------- ----------------------------------------------------------------------------- Real Estate - 7.6% Alexandria Real Estate Equities, Inc., REIT 61,300 4,561,946 American Financial Realty Trust, REIT 141,000 2,281,380 BioMed Realty Trust, Inc., REIT 207,000 4,597,470 Boykin Lodging Co., REIT (a) 233,400 2,137,944 Brandywine Realty Trust, REIT 91,500 2,689,185 EastGroup Properties, Inc., REIT 106,200 4,069,584 Equity One, Inc., REIT 137,200 3,255,756 First Potomac Realty Trust, REIT 123,700 2,820,360 Getty Realty Corp., REIT 91,500 2,628,795 Gladstone Commercial Corp., REIT 110,200 1,884,420 Mid-America Apartment Communities, Inc., REIT 107,400 4,427,028 10 See Accompanying Notes to Financial Statements. - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Common Stocks - (continued) FINANCIALS - (continued) Shares Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Real Estate - (continued) Nationwide Health Properties, Inc., REIT 181,900 4,320,125 PS Business Parks, Inc., REIT 129,100 5,822,410 Tanger Factory Outlet Centers, Inc., REIT 127,000 3,360,420 Universal Health Realty Income Trust, REIT 60,700 1,950,291 Urstadt Biddle Properties, Class A, REIT 134,000 2,284,700 U-Store-It Trust, REIT 82,400 1,429,640 Real Estate Total 54,521,454 ----------- FINANCIALS TOTAL 197,268,500 HEALTH CARE - 4.7% - ---------------------------------------------- ----------------------------------------------------------------------------- Health Care Providers & Services - 4.0% Capital Senior Living Corp. (a) 62,200 352,052 Cross Country Healthcare, Inc. (a) 132,400 2,393,792 Genesis HealthCare Corp. (a) 72,250 2,530,917 Gentiva Health Services, Inc. (a) 134,200 2,243,824 Hooper Holmes, Inc. 345,800 2,047,136 Kindred Healthcare, Inc. (a) 154,400 4,624,280 OCA, Inc. (a) 271,600 1,724,660 PAREXEL International Corp. (a) 170,100 3,453,030 Pediatrix Medical Group, Inc. (a) 66,500 4,259,325 Province Healthcare Co. (a) 89,700 2,004,795 Stewart Enterprises, Inc., Class A (a) 433,696 3,031,535 Health Care Providers & Services Total 28,665,346 ----------------------------------------------------------------------------- Pharmaceuticals - 0.7% Bradley Pharmaceuticals, Inc. (a) 128,500 2,492,900 Perrigo Co. 137,500 2,374,625 Pharmaceuticals Total 4,867,525 ----------- HEALTH CARE TOTAL 33,532,871 INDUSTRIAL - 19.1% - ---------------------------------------------- ----------------------------------------------------------------------------- Aerospace & Defense - 2.6% AAR Corp. (a) 193,802 2,639,583 Esterline Technologies Corp. (a) 133,600 4,362,040 Herley Industries, Inc. (a) 97,400 1,981,116 Kaman Corp., Class A 163,500 2,068,275 Ladish Co., Inc. (a) 205,938 2,366,228 Precision Castparts Corp. 79,400 5,214,992 Aerospace & Defense Total 18,632,234 ----------------------------------------------------------------------------- Air Freight & Logistics - 1.1% HUB Group, Inc., Class A (a) 98,571 5,147,377 Ryder System, Inc. 62,700 2,995,179 Air Freight & Logistics Total 8,142,556 ----------------------------------------------------------------------------- Airlines - 0.5% MAIR Holdings, Inc. (a) 105,324 968,981 Skywest, Inc. 144,700 2,902,682 Airlines Total 3,871,663 ----------------------------------------------------------------------------- Building Products - 0.6% NCI Building Systems, Inc. (a) 105,300 3,948,750 Building Products Total 3,948,750 ----------------------------------------------------------------------------- Commercial Services & Supplies - 4.6% ABM Industries, Inc. 144,900 2,857,428 Angelica Corp. 75,700 2,047,685 Casella Waste Systems, Inc., Class A (a) 304,690 4,460,661 Century Business Services, Inc. (a) 182,805 797,030 Consolidated Graphics, Inc. (a) 135,800 6,233,220 See Accompanying Notes to Financial Statements. 11 - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Common Stocks - (continued) INDUSTRIAL - (continued) Shares Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Commercial Services & Supplies - (continued) Danka Business Systems PLC, ADR (a) 200,280 632,885 Electro Rent Corp. 59,481 846,415 Healthcare Services Group, Inc. 173,700 3,619,908 Imagistics International, Inc. (a) 150,100 5,052,366 NCO Group, Inc. (a) 92,200 2,383,370 Sourcecorp, Inc. (a) 92,100 1,760,031 TeleTech Holdings, Inc. (a) 225,800 2,188,002 Commercial Services & Supplies Total 32,879,001 ----------------------------------------------------------------------------- Construction & Engineering - 1.9% Comfort Systems USA, Inc. (a) 308,000 2,365,440 Dycom Industries, Inc. (a) 135,700 4,141,564 EMCOR Group, Inc. (a) 44,600 2,015,028 MasTec, Inc. (a) 55,400 560,094 Quanta Services, Inc. (a) 92,000 736,000 Washington Group International, Inc. (a) 86,600 3,572,250 Construction & Engineering Total 13,390,376 ----------------------------------------------------------------------------- Electrical Equipment - 1.6% C&D Technologies, Inc. 133,000 2,266,320 Genlyte Group, Inc. (a) 51,318 4,396,926 Powell Industries, Inc. (a) 62,100 1,148,229 Woodward Governor Co. 50,600 3,623,466 Electrical Equipment Total 11,434,941 ----------------------------------------------------------------------------- Machinery - 3.4% Alamo Group, Inc. 64,700 1,757,252 Briggs & Stratton Corp. 95,000 3,950,100 EnPro Industries, Inc. (a) 146,500 4,332,005 Harsco Corp. 103,500 5,769,090 Kadant, Inc. (a) 134,600 2,759,300 Robbins & Myers, Inc. 124,635 2,970,052 Tecumseh Products Co., Class A 62,112 2,968,954 Machinery Total 24,506,753 ----------------------------------------------------------------------------- Road & Rail - 1.4% Covenant Transport, Inc., Class A (a) 104,300 2,171,526 Dollar Thrifty Automotive Group, Inc. (a) 91,100 2,751,220 U.S. Xpress Enterprises, Inc., Class A (a) 62,283 1,824,892 Werner Enterprises, Inc. 153,800 3,482,032 Road & Rail Total 10,229,670 ----------------------------------------------------------------------------- Trading Companies & Distributors - 1.4% Hughes Supply, Inc. 144,162 4,663,641 Watsco, Inc. 160,100 5,638,722 Trading Companies & Distributors Total 10,302,363 ----------- INDUSTRIAL TOTAL 137,338,307 INFORMATION TECHNOLOGY - 11.7% - ---------------------------------------------- ----------------------------------------------------------------------------- Communications Equipment - 1.2% Anaren, Inc. (a) 184,900 2,396,304 Belden CDT, Inc. 88,650 2,056,680 Black Box Corp. 55,900 2,684,318 Tollgrade Communications, Inc. (a) 147,410 1,804,299 Communications Equipment Total 8,941,601 ----------------------------------------------------------------------------- Computers & Peripherals - 1.1% ActivCard Corp. (a) 223,500 1,989,150 Advanced Digital Information Corp. (a) 41,700 417,834 Electronics for Imaging, Inc. (a) 47,700 830,457 Hypercom Corp. (a) 264,400 1,565,248 12 See Accompanying Notes to Financial Statements. - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Common Stocks - (continued) INFORMATION TECHNOLOGY - (continued) Shares Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Computers & Peripherals - (continued) Imation Corp. 25,800 821,214 Innovex, Inc. (a) 175,200 954,840 Intergraph Corp. (a) 54,100 1,456,913 Computers & Peripherals Total 8,035,656 ----------------------------------------------------------------------------- Electronic Equipment & Instruments - 3.5% Agilysys, Inc. 113,479 1,945,030 Anixter International, Inc. 56,700 2,040,633 Benchmark Electronics, Inc. (a) 74,450 2,538,745 Brightpoint, Inc. (a) 213,500 4,171,790 Checkpoint Systems, Inc. (a) 140,400 2,534,220 Identix, Inc. (a) 274,600 2,026,548 MTS Systems Corp. 102,282 3,458,154 NU Horizons Electronics Corp. (a) 233,607 1,864,184 OSI Systems, Inc. (a) 92,300 2,096,133 Planar Systems, Inc. (a) 109,300 1,227,439 Vishay Intertechnology, Inc. (a) 88,300 1,326,266 Electronic Equipment & Instruments Total 25,229,142 ----------------------------------------------------------------------------- Internet Software & Services - 0.6% Digitas, Inc. (a) 116,620 1,113,721 Keynote Systems, Inc. (a) 178,200 2,480,544 Stellent, Inc. (a) 117,400 1,035,468 Internet Software & Services Total 4,629,733 ----------------------------------------------------------------------------- IT Services - 2.1% Acxiom Corp. 135,941 3,575,248 Computer Horizons Corp. (a) 257,661 981,689 Inforte Corp. (a) 176,900 1,393,972 Lightbridge, Inc. (a) 218,200 1,317,928 MAXIMUS, Inc. (a) 46,400 1,443,968 MPS Group, Inc. (a) 506,950 6,215,207 IT Services Total 14,928,012 ----------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment - Exar Corp. (a) 142,400 2,020,656 0.5% Pericom Semiconductor Corp. (a) 141,845 1,337,598 Semiconductors & Semiconductor Equipment Total 3,358,254 ----------------------------------------------------------------------------- Software - 2.7% Ascential Software Corp. (a) 172,800 2,818,368 Captaris, Inc. (a) 359,300 1,853,988 Internet Security Systems, Inc. (a) 132,200 3,073,650 Lawson Software, Inc. (a) 176,300 1,211,181 MSC.Software Corp. (a) 228,500 2,392,395 PLATO Learning, Inc. (a) 293,791 2,188,743 SeaChange International, Inc. (a) 9,500 165,680 Sybase, Inc. (a) 109,000 2,174,550 Transaction Systems Architects, Inc., Class A (a) 171,200 3,398,320 Software Total 19,276,875 ----------- INFORMATION TECHNOLOGY TOTAL 84,399,273 MATERIALS - 9.7% - ---------------------------------------------- ----------------------------------------------------------------------------- Chemicals - 2.5% Cytec Industries, Inc. 69,200 3,558,264 H.B. Fuller Co. 80,300 2,289,353 LESCO, Inc. (a) 10,900 140,501 Lubrizol Corp. 50,100 1,846,686 Minerals Technologies, Inc. 51,800 3,455,060 Schulman (A.), Inc. 105,544 2,259,697 See Accompanying Notes to Financial Statements. 13 - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Common Stocks - (continued) MATERIALS - (continued) Shares Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Chemicals - (continued) Sensient Technologies Corp. 104,100 2,497,359 Stepan Co. 87,300 2,126,628 Chemicals Total 18,173,548 ----------------------------------------------------------------------------- Construction Materials - 0.8% Eagle Materials, Inc. 66,800 5,768,180 Construction Materials Total 5,768,180 ----------------------------------------------------------------------------- Containers & Packaging - 1.3% AptarGroup, Inc. 60,400 3,187,912 Greif, Inc., Class A 102,100 5,717,600 Containers & Packaging Total 8,905,512 ----------------------------------------------------------------------------- Metals & Mining - 4.3% AMCOL International Corp. 94,400 1,896,496 Carpenter Technology Corp. 144,800 8,465,008 Coeur d'Alene Mines Corp. (a) 554,500 2,179,185 Metal Management, Inc. 201,700 5,419,679 Peabody Energy Corp. 59,900 4,846,509 RTI International Metals, Inc. (a) 182,700 3,752,658 Steel Technologies, Inc. 147,300 4,052,223 Metals & Mining Total 30,611,758 ----------------------------------------------------------------------------- Paper & Forest Products - 0.8% Glatfelter 219,900 3,360,072 Mercer International, Inc. (a) 250,600 2,668,890 Paper & Forest Products Total 6,028,962 ----------- MATERIALS TOTAL 69,487,960 TELECOMMUNICATION SERVICES - 0.7% - ---------------------------------------------- ----------------------------------------------------------------------------- Diversified Telecommunication Services - 0.4% North Pittsburgh Systems, Inc. 107,913 2,668,689 Diversified Telecommunication Services Total 2,668,689 ----------------------------------------------------------------------------- Wireless Telecommunication Services - 0.3% Price Communications Corp. (a) 139,080 2,585,497 Wireless Telecommunication Services Total 2,585,497 ----------- TELECOMMUNICATION SERVICES TOTAL 5,254,186 UTILITIES - 3.9% - ---------------------------------------------- ----------------------------------------------------------------------------- Electric Utilities - 3.2% ALLETE, Inc. 62,900 2,311,575 Central Vermont Public Service Corp. 152,400 3,544,824 CH Energy Group, Inc. 102,400 4,920,320 El Paso Electric Co. (a) 173,000 3,276,620 Maine & Maritimes Corp. 33,500 882,725 MGE Energy, Inc. 59,986 2,161,295 Otter Tail Corp. 87,500 2,233,875 Puget Energy, Inc. 148,600 3,670,420 Electric Utilities Total 23,001,654 ----------------------------------------------------------------------------- Gas Utilities - 0.7% Cascade Natural Gas Corp. 65,700 1,392,840 Northwest Natural Gas Co. 49,300 1,663,382 WGL Holdings, Inc. 52,600 1,622,184 Gas Utilities Total 4,678,406 ----------- UTILITIES TOTAL 27,680,060 Total Common Stocks (Cost of $503,278,273) 712,838,926 14 See Accompanying Notes to Financial Statements. - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Short-Term Obligation - 1.0% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Repurchase agreement with State Street Bank & Trust Co., dated 12/31/04, due 01/03/05 at 1.500%, collateralized by a U.S. Treasury Bond maturing 02/15/26, market value of $7,089,776 (repurchase proceeds $6,950,869) 6,950,000 6,950,000 Total Short-Term Obligation (Cost of $6,950,000) 6,950,000 Total Investments - 100.1% (Cost of $510,228,273) (b) 719,788,926 Other Assets & Liabilities, Net - (0.1)% (860,485) Net Assets - 100.0% 718,928,441 Notes to Investment Portfolio: (a) Non-income producing security. (b) Cost for both financial statement and federal income tax purposes is $510,228,273. Acronym Name ------- ---- ADR American Depositary Receipt REIT Real Estate Investment Trust At December 31, 2004, the Fund held investments in the following sectors: % of Sector (unaudited) Net Assets ------------------------------------------- Financials 27.4% Industrial 19.1 Consumer Discretionary 12.8 Information Technology 11.7 Materials 9.7 Energy 6.8 Health Care 4.7 Utilities 3.9 Consumer Staples 2.3 Telecommunication Services 0.7 Short-Term Obligation 1.0 Other Assets & Liabilities, Net (0.1) ----- 100.0% ----- See Accompanying Notes to Financial Statements. 15 STATEMENT OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Assets Investments, at cost 510,228,273 ------------ Investments, at value 719,788,926 Cash 8,697 Receivable for: Fund shares sold 2,124,757 Interest 289 Dividends 690,680 Expense reimbursement due from Investment Advisor 309 Deferred Trustees' compensation plan 26,224 ------------ Total Assets 722,639,882 ----------------------------------------------------------------------------- Liabilities Payable for: Investments purchased 1,289,262 Fund shares repurchased 1,275,823 Investment advisory fee 482,296 Transfer agent fee 225,700 Pricing and bookkeeping fees 32,080 Trustees' fees 1,068 Distribution and service fees 299,567 Deferred Trustees' fees 26,224 Other liabilities 79,421 ------------ Total Liabilities 3,711,441 Net Assets 718,928,441 ----------------------------------------------------------------------------- Composition of Net Assets Paid-in capital 516,453,645 Accumulated net investment loss (233,646) Accumulated net realized loss (6,852,211) Net unrealized appreciation on investments 209,560,653 Net Assets 718,928,441 ----------------------------------------------------------------------------- Class A Net assets 366,797,093 Shares outstanding 8,405,919 Net asset value per share 43.64(a) Maximum offering price per share ($43.64/0.9425) 46.30(b) ----------------------------------------------------------------------------- Class B Net assets 215,128,702 Shares outstanding 5,574,097 Net asset value and offering price per share 38.59(a) ----------------------------------------------------------------------------- Class C Net assets 51,507,609 Shares outstanding 1,280,695 Net asset value and offering price per share 40.22(a) ----------------------------------------------------------------------------- Class Z Net assets 85,495,037 Shares outstanding 1,899,474 Net asset value, offering and redemption price per share 45.01 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. On sales of $50,000 or more the offering price is reduced. 16 See Accompanying Notes to Financial Statements. STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------- For the Six Months Ended December 31, 2004 (unaudited) Columbia Small Cap Value Fund ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Investment Income Dividends 4,714,452 Interest 34,545 ------------ Total Investment Income 4,748,997 ----------------------------------------------------------------------------- Expenses Investment advisory fee 2,503,724 Distribution fee: Class B 768,902 Class C 160,624 Service fee: Class A 391,213 Class B 256,301 Class C 53,541 Transfer agent fee 559,574 Pricing and bookkeeping fees 84,011 Trustees' fees 7,829 Custody fee 24,601 Non-recurring costs (See Note 7) 4,180 Other expenses 146,290 ------------ Total Expenses 4,960,790 Non-recurring costs assumed by Investment Advisor (See Note 7) (4,180) Custody earnings credit (748) ------------ Net Expenses 4,955,862 ------------ Net Investment Loss (206,865) - ---------------------------------------------- ----------------------------------------------------------------------------- Net Realized and Unrealized Net realized gain (loss) on: Gain (Loss) on Investments Investments 12,878,884 and Foreign Currency Foreign currency transactions (91) ------------ Net realized gain 12,878,793 Net change in unrealized appreciation on investments 65,529,800 ------------ Net Gain 78,408,593 ------------ Net Increase in Net Assets from Operations 78,201,728 See Accompanying Notes to Financial Statements. 17 STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- Columbia Small Cap Value Fund (unaudited) Six Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2004 ($) 2004 ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Operations Net investment loss (206,865) (559,272) Net realized gain on investments and foreign currency transactions 12,878,793 67,069,586 Net change in unrealized appreciation on investments 65,529,800 93,910,222 ------------------------- Net Increase from Operations 78,201,728 160,420,536 ----------------------------------------------------------------------------- Distributions Declared to Shareholders: From net realized gains: Class A (27,843,386) (7,140,239) Class B (17,697,004) (6,385,740) Class C (3,941,261) (920,797) Class I -- (77) Class Z (6,429,930) (1,339,466) ------------------------- Total Distributions Declared to Shareholders (55,911,581) (15,786,319) ----------------------------------------------------------------------------- Share Transactions Class A: Subscriptions 65,687,909 101,767,098 Distributions reinvested 25,655,209 6,411,053 Redemptions (29,130,782) (63,618,296) ------------------------- Net Increase 62,212,336 44,559,855 Class B: Subscriptions 11,951,958 22,762,819 Distributions reinvested 15,892,386 5,644,770 Redemptions (31,226,006) (62,684,239) ------------------------- Net Decrease (3,381,662) (34,276,650) Class C: Subscriptions 11,168,915 11,127,187 Distributions reinvested 3,099,402 752,490 Redemptions (3,063,728) (6,986,805) Net Increase 11,204,589 4,892,872 Class I: Subscriptions -- 1,050 Distributions reinvested -- 77 Redemptions -- (2,664) ------------------------- Net Decrease -- (1,537) Class Z: Subscriptions 26,055,021 56,563,959 Distributions reinvested 2,278,715 693,082 Redemptions (11,577,886) (14,611,150) ------------------------- Net Increase 16,755,850 42,645,891 Net Increase from Share Transactions 86,791,113 57,820,431 ------------------------- Total Increase in Net Assets 109,081,260 202,454,648 ----------------------------------------------------------------------------- Net Assets Beginning of period 609,847,181 407,392,533 End of period (including accumulated net investment loss of $(233,646) and $(26,781), respectively) 718,928,441 609,847,181 ----------------------------------------------------------------------------- 18 See Accompanying Notes to Financial Statements. - -------------------------------------------------------------------------------- Columbia Small Cap Value Fund (unaudited) Six Months Ended Year Ended December 31, June 30, 2004 2004 - ---------------------------------------------- ----------------------------------------------------------------------------- Changes in Shares Class A: Subscriptions 1,561,920 2,683,022 Issued for distributions reinvested 605,218 171,190 Redemptions (694,445) (1,699,383) ------------------------- Net Increase 1,472,693 1,154,829 Class B: Subscriptions 320,062 661,962 Issued for distributions reinvested 423,797 168,350 Redemptions (838,833) (1,841,257) ------------------------- Net Decrease (94,974) (1,010,945) Class C: Subscriptions 287,224 308,746 Issued for distributions reinvested 79,309 21,611 Redemptions (79,276) (198,317) ------------------------- Net Increase 287,257 132,040 Class I: Subscriptions -- 26 Issued for distributions reinvested -- 2 Redemptions -- (64) ------------------------- Net Decrease -- (36) Class Z: Subscriptions 599,374 1,477,519 Issued for distributions reinvested 52,121 18,002 Redemptions (261,567) (375,458) ------------------------- Net Increase 389,928 1,120,063 See Accompanying Notes to Financial Statements. 19 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund Note 1. Organization Columbia Small-Cap Value Fund (the "Fund"), a series of Columbia Funds Trust VI (the "Trust"), is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Investment Goal The Fund seeks long-term growth by investing primarily in smaller capitalization equity securities. Fund Shares The Fund may issue an unlimited number of shares and offers four classes of shares: Class A, Class B, Class C and Class Z. Each share class has its own sales charge and expense structure. Effective January 30, 2004, the Class I shares of the Fund were liquidated. Class A shares are subject to a maximum front-end sales charge of 5.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge in accounts aggregating $1 million to $25 million at the time of purchase are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months of the time of purchase. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. Note 2. Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. Security Valuation Equity securities are valued at the last sale price on the principal exchange on which they trade, except for securities traded on the NASDAQ, which are valued at the NASDAQ official close price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Security Transactions Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. Repurchase Agreements The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. Income Recognition Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded 20 - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund on the ex-date except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. Awards from class action litigation are recorded as a reduction of cost if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains. The Fund estimates components of distributions from Real Estate Investment Trusts (REITs). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. If the Fund no longer owns the applicable securities, any distributions received in excess of income are recorded as realized gains. Foreign Currency Transactions The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. For financial statement purposes, the Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. Determination of Class Net Asset Values All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. Federal Income Tax Status The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, such that the Fund should not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. Distributions to Shareholders Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Note 3. Federal Tax Information The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The tax character of distributions paid during the year ended June 30, 2004 and June 30, 2003 was as follows: - ---------------------------------------------------------- June 30, 2004 June 30, 2003 - ---------------------------------------------------------- Distributions Paid From: - ---------------------------------------------------------- Ordinary Income* $ 9,100,819 $ -- - ---------------------------------------------------------- Long-Term Capital Gains 6,685,500 49,176,784 - ---------------------------------------------------------- Tax Return of Capital -- 1,256,820 - ---------------------------------------------------------- $ 15,786,319 $ 50,433,604 - ---------------------------------------------------------- * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. Unrealized appreciation and depreciation at December 31, 2004, based on cost of investments for federal income tax purposes was: - ---------------------------------------------------------- Unrealized appreciation $222,050,810 - ---------------------------------------------------------- Unrealized depreciation (12,490,157) - ---------------------------------------------------------- Net unrealized appreciation $209,560,653 - ---------------------------------------------------------- 21 - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund The following capital loss carryforwards determined as of June 30, 2004, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: - ------------------------------------------ Year of Capital Loss Expiration Carryforward - ------------------------------------------ 2005 $1,233,446 - ------------------------------------------ 2006 1,233,446 - ------------------------------------------ 2007 1,233,446 - ------------------------------------------ 2009 2,466,892 - ------------------------------------------ 2012 3,700,337 - ------------------------------------------ $9,867,567 - ------------------------------------------ Utilization of these amounts is subject to limitations. Note 4. Fees and Compensation Paid to Affiliates Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the Fund. Columbia, the transfer agent and the distributor, are each indirect wholly owned subsidiaries of Bank of America Corporation ("BOA"). Investment Advisory Fee Columbia provides administrative and other services to the Fund in addition to investment advisory services. Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets as follows: - ------------------------------------------ Average Daily Net Assets Annual Fee Rate - ------------------------------------------ First $500 million 0.80% - ------------------------------------------ Next $500 million 0.75% - ------------------------------------------ Over $1 billion 0.70% - ------------------------------------------ For the six months ended December 31, 2004, the Fund's annualized effective investment advisory fee rate was 0.79%. Pricing and Bookkeeping Fees Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). As a result, Columbia pays the total fees received to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services based on the number of securities held by the Fund. For the six months ended December 31, 2004, the annualized effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.027%. Transfer Agent Fee Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services to the Fund and has subcontracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. For such services, the Transfer Agent receives an annual fee by class of $28.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. For the six months ended December 31, 2004, the Fund's annualized effective transfer agent fee rate, inclusive of out-of-pocket expenses, was 0.18%. Underwriting Discounts, Service and Distribution Fees Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. For the six months ended December 31, 2004, the Distributor has retained net underwriting discounts of $82,891 on sales of the Fund's Class A shares and received CDSC fees of $605, $128,151 and $3,022 on Class A, Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a monthly service fee to the Distributor at the annual rate of 0.25% of the average daily net assets of the Fund attributable to Class A, Class B and Class C shares. The Plan also requires the payment of a monthly distribution fee to the Distributor at the annual rate of 0.75% of the average daily net assets attributable to Class B and Class C shares only. 22 - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund 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 reimburse the Fund for certain expenses so that total expenses (exclusive of distribution and service fees, brokerage commissions, interest, taxes and extraordinary expenses, if any) will not exceed 1.25% annually of the Fund's average daily net assets. Columbia, at its discretion, may revise or discontinue this arrangement any time. Custody Credits The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. These credits are recorded as a reduction of total expenses on the Statement of Operations. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. Fees Paid to Officers and Trustees With the exception of one officer, all officers of the Fund are employees of Columbia or its affiliates and receive no compensation from the Fund. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer. The Fund's fee will not exceed $15,000 per year. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. Other Columbia provides certain services to the Fund related to Sarbanes-Oxley compliance. For the six months ended December 31, 2004, the Fund paid $729 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. Note 5. Purchases and Sales of Securities For the six months ended December 31, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $97,245,283 and $67,034,489, respectively. Note 6. Line of Credit The Fund and other affiliated funds participate in a $350,000,000 committed unsecured revolving line of credit provided by State Street Bank and Trust Company. Borrowings are 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 Statement of Operations. For the six months ended December 31, 2004, the Fund did not borrow under these arrangements. Note 7. Disclosure of Significant Risks and Contingencies Industry Focus The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. Legal Proceedings On February 9, 2005, Columbia and the Distributor (collectively the "Columbia Group") entered into an Assurance of Discontinuance with the New York Attorney General ("NYAG") (the "NYAG Settlement") and consented to the entry of a cease-and-desist order by the SEC (the "SEC Order" and together, the "Settlements"). The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle which Columbia Group entered into with the SEC and NYAG in March 2004. Under the terms of the SEC Order, the Columbia Group has agreed, among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions 23 - -------------------------------------------------------------------------------- December 31, 2004 (unaudited) Columbia Small Cap Value Fund of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review the Columbia Group's applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The Columbia Funds have also voluntarily undertaken to implement certain governance measures designed to maintain the independence of their boards of trustees. The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce certain Columbia Funds, Nations Funds and other mutual fund management fees collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions. Pursuant to the procedures set forth in the SEC Order, the $140 million in settlement amounts described above will be distributed in accordance with a distribution plan to be developed by an independent distribution consultant, who is acceptable to the SEC staff and the Columbia Funds' independent trustees. The distribution plan must be based on a methodology developed in consultation with the Columbia Group and the Fund's independent trustees and not unacceptable to the staff of the SEC. 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. A copy of the SEC Order will be available on the SEC website at http://www.sec.gov. A copy of the NYAG Settlement is available as part of the Bank of America Corporation Form 8-K filing on February 10, 2005. In connection with the events described in detail above, various parties have filed suit against certain funds, their Boards and/or Bank of America (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 direct and 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. On January 11, 2005 a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Fund and Columbia. The lawsuit alleges that defendants violated common law duties to fund shareholders as well as sections of the Investment Company Act of 1940, by failing to ensure that the Fund and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs allege that defendants failed to submit proof of claims in connection with settlements of securities class action lawsuits filed against companies in which the funds held positions. 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 proceedings 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 December 31, 2004, Columbia has assumed $4,180 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. 24 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Small Cap Value Fund Selected data for a share outstanding throughout each period is as follows: (unaudited) Six Months Ended Year Ended June 30, December 31, -------------------------------------------------------------------- Class A Shares 2004 2004 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 42.17 $ 31.39 $ 37.54 $ 37.49 $ 32.56 $ 30.36 - ----------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (loss)(a) 0.04 0.08 0.02 (0.20) 0.06 0.10 Net realized and unrealized gain (loss) on investments and foreign currency 5.05 11.88 (1.54) 2.42 6.38 2.30 -------- --------- --------- -------- --------- ----------- Total from Investment Operations 5.09 11.96 (1.52) 2.22 6.32 2.20 - ----------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net realized gains (3.62) (1.18) (4.51) (2.17) (1.39) -- Return of capital -- -- (0.12) -- -- -- -------- --------- --------- -------- --------- ----------- Total Distributions Declared to Shareholders (3.62) (1.18) (4.63) (2.17) (1.39) -- - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 43.64 $ 42.17 $ 31.39 $ 37.54 $ 37.49 $ 32.56 Total return (b) 12.33%(c) 38.58%(d) 2.16%(d) 6.43% 19.86% 7.25% - ----------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Operating Expenses (e) 1.30%(f) 1.42% 1.54% 1.57% 1.58% 1.49% Interest expense -- -- --%(g) -- -- -- Net investment income loss(e) 0.20%(f) 0.22% 0.07% (0.55)% 0.18% 0.33% Waiver/reimbursment -- 0.01% 0.12% -- -- -- Portfolio turnover rate 11%(c) 46% 118% 77% 29% 77% Net assets, end of period (000's) $366,797 $ 292,365 $ 181,377 $142,551 $ 137,042 $ 138,969 - ----------------------------------------------------------------------------------------------------------------------------- (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Not annualized. (d) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. (g) Rounds to less than 0.01%. 25 - -------------------------------------------------------------------------------- Columbia Small Cap Value Fund Selected data for a share outstanding throughout each period is as follows: (unaudited) Six Months Ended Year Ended June 30, December 31, -------------------------------------------------------------------- Class B Shares 2004 2004 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 37.60 $ 28.18 $ 34.50 $ 34.88 $ 30.64 $ 28.78 - ----------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment loss (a) (0.10) (0.18) (0.19) (0.44) (0.31) (0.31) Net realized and unrealized gain (loss) on investments and foreign currency 4.47 10.64 (1.50) 2.23 5.94 2.17 -------- --------- --------- -------- --------- ----------- Total from Investment Operations 4.37 10.46 (1.69) 1.79 5.63 1.86 - ----------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net realized gains (3.38) (1.04) (4.51) (2.17) (1.39) -- Return of capital -- -- (0.12) -- -- -- -------- --------- --------- -------- --------- ----------- Total Distributions Declared to Shareholders (3.38) (1.04) (4.63) (2.17) (1.39) -- - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 38.59 $ 37.60 $ 28.18 $ 34.50 $ 34.88 $ 30.64 Total return (b) 11.89%(c) 37.58%(d) (2.93)%(d) 5.65% 18.83% 6.46% - ----------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Operating expenses (e) 2.05%(f) 2.17% 2.30% 2.32% 2.33% 2.24% Interest expense -- -- --%(g) -- -- -- Net investment loss (e) (0.55)%(f) (0.53)% (0.71)% (1.30)% (0.93)% (1.08)% Waiver/reimbursement -- 0.01% 0.09% -- -- -- Portfolio turnover rate 11%(c) 46% 118% 77% 29% 77% Net assets, end of period (000's) $215,129 $ 213,159 $ 188,270 $231,602 $ 240,252 $ 238,607 - ----------------------------------------------------------------------------------------------------------------------------- (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (c) Not annualized. (d) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. (g) Rounds to less than 0.01%. 26 - -------------------------------------------------------------------------------- Columbia Small Cap Value Fund Selected data for a share outstanding throughout each period is as follows: (unaudited) Six Months Ended Year Ended June 30, December 31, -------------------------------------------------------------------- Class C Shares 2004 2004 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 39.05 $ 29.24 $ 35.59 $ 35.91 $ 31.50 $ 29.59 - ----------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment loss (a) (0.11) (0.19) (0.19) (0.45) (0.31) (0.32) Net realized and unrealized gain (loss) on investments and foreign currency 4.66 11.04 (1.53) 2.30 6.11 2.23 -------- --------- --------- -------- --------- ----------- Total from Investment Operations 4.55 10.85 (1.72) 1.85 5.80 1.91 - ----------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net realized gains (3.38) (1.04) (4.51) (2.17) (1.39) -- Return of capital -- -- (0.12) -- -- -- -------- --------- --------- -------- --------- ----------- Total Distributions Declared to Shareholders (3.38) (1.04) (4.63) (2.17) (1.39) -- - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 40.22 $ 39.05 $ 29.24 $ 35.59 $ 35.91 $ 31.50 Total return (b) 11.91%(c) 37.56%(d) (2.92)%(d) 5.66% 18.85% 6.45% - ----------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Operating expenses (e) 2.05%(f) 2.17% 2.30% 2.32% 2.33% 2.24% Interest expense -- -- --%(g) -- -- -- Net investment loss (e) (0.55)%(f) (0.53)% (0.71)% (1.30)% (0.93)% (1.08)% Waiver/reimbursement -- 0.01% 0.10% -- -- -- Portfolio turnover rate 11%(c) 46% 118% 77% 29% 77% Net assets, end of period (000's) $ 51,508 $ 38,798 $ 25,186 $ 26,726 $ 27,886 $ 27,400 - ----------------------------------------------------------------------------------------------------------------------------- (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (c) Not annualized. (d) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. (g) Rounds to less than 0.01%. 27 - -------------------------------------------------------------------------------- Columbia Small Cap Value Fund Selected data for a share outstanding throughout each period is as follows: (unaudited) Six Months Ended Year Ended June 30, December 31, -------------------------------------------------------------------- Class Z Shares 2004 2004 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 43.41 $ 32.24 $ 38.28 $ 38.09 $ 33.01 $ 30.70 - ----------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (loss) (a) 0.10 0.21 0.24 (0.12) 0.02 (0.02) Net realized and unrealized gain (loss) on investments and foreign currency 5.22 12.19 (1.65) 2.48 6.45 2.33 -------- --------- --------- -------- --------- ----------- Total from Investment Operations 5.32 12.40 (1.41) 2.36 6.47 2.31 - ----------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net realized gains (3.72) (1.23) (4.51) (2.17) (1.39) -- Return of capital -- -- (0.12) -- -- -- -------- --------- --------- -------- --------- ----------- Total Distributions Declared to Shareholders (3.72) (1.23) (4.63) (2.17) (1.39) -- - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 45.01 $ 43.41 $ 32.24 $ 38.28 $ 38.09 $ 33.01 Total return (b) 12.51%(c) 38.94%(d) (1.79)%(d) 6.71% 20.05% 7.52% - ----------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Operating expenses (e) 1.05%(f) 1.17% 1.25% 1.32% 1.33% 1.24% Interest expense -- -- --%(g) -- -- -- Net investment income (loss) (e) 0.45%(f) 0.52% 0.82% (0.30)% 0.07% (0.08)% Waiver/reimbursement -- 0.01% 0.38% -- -- -- Portfolio turnover rate 11%(c) 46% 118% 77% 29% 77% Net assets, end of period (000's) $ 85,495 $ 65,526 $ 12,558 $ 278 $ 21 $ 11,431 - ----------------------------------------------------------------------------------------------------------------------------- (a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Not annualized. (d) Had the Investment Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. (g) Rounds to less than 0.01%. 28 IMPORTANT INFORMATION ABOUT THIS REPORT - -------------------------------------------------------------------------------- Columbia Small Cap Value Fund Transfer Agent Columbia Funds Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800.345.6611 Distributor Columbia Funds Distributor, Inc. One Financial Center Boston MA 02111 Investment Advisor Columbia Management Advisors, Inc. 100 Federal Street Boston MA 02110 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 125 High Street Boston MA 02110 The funds mail one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of ColumbiaSmall Cap Value Fund. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the funds and with the most recent copy of the Columbia Funds Performance Update. A description of the policies and procedures that the fund uses to determine how to vote proxies and a copy of the fund's voting record are available (i) at www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the fund 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 fund voted proxies relating to portfolio securities is also available from the fund's website. The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is 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, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 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. 29 [GRAPHIC] eDelivery Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia Small Cap Value Fund Semiannual Report, December 31, 2004 PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 Columbia Management(R) (C)2005 Columbia Funds Distributor, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 www.columbiafunds.com 769-03/092U-0105 (02/05) 05/4356 ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS 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 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: Not applicable at this time. (a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (a)(3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Columbia Funds Trust VI ------------------------------------------------------------------ By (Signature and Title) /S/ Christopher L. Wilson ------------------------------------------------------ Christopher L. Wilson, President Date March 1, 2005 -------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /S/ Christopher L. Wilson ------------------------------------------------------ Christopher L. Wilson, President Date March 1, 2005 -------------------------------------------------------------------------- By (Signature and Title) /S/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, Treasurer Date March 1, 2005 --------------------------------------------------------------------------