UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4978 Columbia Funds Trust XI - ------------------------------------------------------------------------------ (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip code) Vincent Pietropaolo, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 -------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-772-3698 Date of fiscal year end: Septermber 30, 2005 Date of reporting period: September 30, 2005 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. COLUMBIA GROWTH STOCK FUND ANNUAL REPORT SEPTEMBER 30, 2005 PRESIDENT'S MESSAGE COLUMBIA GROWTH STOCK FUND sidebar TABLE OF CONTENTS PERFORMANCE INFORMATION ............... 1 FUND PROFILE .......................... 2 UNDERSTANDING YOUR EXPENSES ........... 3 ECONOMIC UPDATE ....................... 4 PORTFOLIO MANAGERS' REPORT ............ 5 INVESTMENT PORTFOLIO .................. 7 STATEMENT OF ASSETS AND LIABILITIES ... 10 STATEMENT OF OPERATIONS ............... 11 STATEMENT OF CHANGES IN NET ASSETS .... 12 NOTES TO FINANCIAL STATEMENTS ......... 13 FINANCIAL HIGHLIGHTS .................. 19 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ............. 23 TRUSTEES .............................. 24 OFFICERS .............................. 26 COLUMBIA FUNDS ........................ 27 IMPORTANT INFORMATION ABOUT THIS REPORT ..................... 29 The views expressed in the President's Message and Portfolio Managers' Report reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Fund. References to specific company securities should not be construed as a recommendation or investment advice. Graphic: - ----------------- Not FDIC Insured - ----------------- May Lose Value - ----------------- No Bank Guarantee - ----------------- end sidebar Photo of: Christopher L. Wilson DEAR SHAREHOLDER: Columbia Management, the asset management division of Bank of America, is in the final stages of a significant business integration effort. Over the last year, we have integrated various components of Nations Funds, Galaxy Funds and Columbia Funds, resulting in a single fund family under the Columbia name that covers a wide range of markets, sectors and asset classes. Our team of talented, seasoned investment professionals will continue to strive to achieve strong results within their investment categories. Our objective is not only to provide our shareholders with the best products, but also to enhance the breadth and availability of our services. In addition to expanding the level of services available to the funds, portfolio managers and shareholders, we have been able to achieve significant cost savings for the funds by aggregating our business. In September, we made major inroads in the initiative to streamline our product offerings. This included merging several funds and renaming Nations Funds as Columbia Funds, as well as consolidating the Nations and Columbia web sites. Over the summer, we completed the service provider consolidation for shareholder servicing. As we work to complete the remaining product and service provider consolidations by the end of 2005, we remain committed to building a mutual fund business that helps you meet, and hopefully exceed, your personal financial goals. We value the confidence you have placed in us to assist you in managing your funds during these changing times. As with all businesses within Bank of America, we understand that your trust must be continually earned and will remain focused on producing results for you. We will continue to strive for the highest standards of performance and service excellence. All of these efforts have been undertaken to enable you, as a shareholder, to benefit from the execution of a consolidated business plan. We believe a more streamlined fund family with consistent performance and lower fees will provide the best opportunity for investment growth. We also believe that providing more robust services to you through multiple channels (Web, phones, voice response) will be beneficial to you. 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 managers on key factors that influenced performance. We encourage you to read the manager reports carefully and discuss any questions you have with your financial advisor. As always, we thank you for choosing Columbia Management. We look forward to helping you keep your financial goals on target in the years to come. Sincerely, /s/ Christopher L. Wilson Christopher L. Wilson President, Columbia Funds Head of Mutual Funds, Columbia Management Christopher L. Wilson is Head of Mutual Funds for Columbia Management and responsible for the day-to-day delivery of mutual fund services to the firm's investors. Working closely with the Legal and Compliance teams, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. As President and CEO of Columbia Funds (formerly Nations, Galaxy and Columbia Funds), Chris serves as the primary interface to the Fund Boards. Chris joined Bank of America in 2004. PERFORMANCE INFORMATION COLUMBIA GROWTH STOCK FUND GROWTH OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 LINE CHART: CLASS A SHARES CLASS A SHARES RUSSELL 1000 WITHOUT SALES CHARGE WITH SALES CHARGE GROWTH INDEX OCT-95 10000 9425 10000 9943 9371 10007 10421 9822 10396 10532 9926 10456 10755 10137 10805 10898 10271 11002 11029 10395 11017 11159 10517 11307 11639 10970 11701 11764 11088 11717 11046 10411 11031 11323 10672 11315 12105 11409 12139 12357 11647 12212 13038 12288 13129 12738 12006 12872 13853 13056 13774 13574 12794 13680 12707 11976 12940 13707 12919 13800 14592 13753 14796 15264 14386 15388 16442 15497 16748 15347 14464 15768 16114 15188 16544 15763 14857 15932 16129 15201 16609 16769 15805 16795 16710 15749 17297 17910 16880 18598 18693 17618 19340 18945 17856 19607 18737 17659 19050 19865 18722 20216 19593 18466 20083 16205 15273 17068 16871 15901 18379 18194 17148 19857 19540 18417 21368 21052 19842 23295 22831 21519 24663 22185 20910 23536 23590 22233 24776 23196 21862 24808 22574 21276 24046 24247 22853 25730 23473 22124 24911 23173 21840 25318 22943 21624 24786 24359 22958 26657 25472 24008 28097 28761 27107 31019 28812 27156 29564 31674 29852 31010 33298 31384 33230 31643 29824 31648 29207 27527 30053 31809 29980 32331 30734 28967 30983 33709 31771 33787 30982 29201 30591 28569 26926 29144 24658 23240 24848 25498 24032 24063 26345 24830 25725 23131 21801 21357 21408 20177 19034 23452 22104 21441 22821 21509 21126 21901 20642 20636 20833 19635 20120 19214 18109 18474 17510 16503 16631 18035 16998 17504 19505 18383 19186 19394 18279 19149 18814 17732 18810 17894 16865 18030 18703 17627 18654 17640 16626 17131 17307 16312 16717 15917 15002 15171 14531 13695 14336 14471 13639 14379 13039 12289 12888 13718 12929 14070 14515 13680 14834 13599 12817 13809 13362 12594 13473 12994 12246 13411 13274 12511 13661 14294 13472 14670 14973 14112 15402 15031 14167 15615 15533 14640 16004 15814 14905 16402 15297 14417 16227 16109 15183 17139 16464 15517 17319 16951 15976 17918 16995 16018 18283 16803 15837 18400 16390 15447 18058 16095 15169 17849 16523 15573 18181 16508 15559 18408 15564 14669 17368 15268 14390 17283 15239 14363 17447 15638 14739 17719 15993 15074 18329 16465 15518 19047 16022 15101 18413 16274 15338 18608 15802 14893 18269 15359 14476 17922 16009 15088 18790 15684 14782 18720 16526 15576 19636 16335 15395 19382 SEP-05 16103 15177 19473 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Growth Stock Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. 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. sidebar 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 OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 ($) SALES CHARGE WITHOUT WITH CLASS A 16,103 15,177 CLASS B 15,723 15,723 CLASS C 15,739 15,739 CLASS Z 16,454 N/A end sidebar AVERAGE ANNUAL TOTAL RETURN AS OF 09/30/05 (%) SHARE CLASS A B C Z INCEPTION 07/15/02 07/15/02 07/15/02 07/01/58 SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT 1-YEAR 5.72 -0.37 4.89 -0.11 4.89 3.89 6.35 5-YEAR -12.26 -13.29 -12.68 -12.97 -12.66 -12.66 -11.88 10-YEAR 4.88 4.26 4.63 4.63 4.64 4.64 5.11 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. PERFORMANCE RESULTS REFLECT ANY VOLUNTARY WAIVERS OR REIMBURSEMENTS OF FUND EXPENSES BY THE ADVISOR OR ITS AFFILIATES. ABSENT THESE WAIVERS OR REIMBURSEMENT ARRANGEMENTS, PERFORMANCE RESULTS WOULD HAVE BEEN LOWER. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. The performance information for class A, B, and C shares (newer class shares) includes returns for the fund's class Z shares (the oldest existing fund class) for periods prior to the inception date of the newer class shares. The newer class shares returns are not restated to reflect any expense differential (e.g. Rule 12b-1 fees and transfer agent fees) between class Z shares and the newer class shares. Had the expense differential been reflected, the returns for the periods prior to the inception of the newer class shares would have been different. Class A, B, and C shares were initially offered July 15, 2002 and Class Z shares were initially offered July 1, 1958. 1 FUND PROFILE COLUMBIA GROWTH STOCK FUND The information below gives you a snapshot of your fund at the end of the reporting period. Your fund is actively managed, and the composition of its portfolio will change over time. SECTORS AS OF 09/30/05 (%) INFORMATION TECHNOLOGY 39.1 HEALTH CARE 18.7 CONSUMER STAPLES 14.5 CONSUMER DISCRETIONARY 12.4 FINANCIALS 7.9 INDUSTRIALS 4.8 ENERGY 2.5 TOP 10 HOLDINGS AS OF 09/30/05 (%) MICROSOFT 4.9 GENERAL ELECTRIC 4.8 MEDTRONIC 4.6 JOHNSON & JOHNSON 4.4 NOVARTIS 4.3 COSTCO WHOLESALE 4.2 AMGEN 3.9 COLGATE-PALMOLIVE 3.5 PROCTER & GAMBLE 3.4 CISCO SYSTEMS 3.4 sidebar SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005, THE FUND'S CLASS A SHARES RETURNED 5.72% WITHOUT SALES CHARGE. o THE FUND'S PERFORMANCE FELL SHORT OF THE RUSSELL 1000 GROWTH INDEX, AS WELL AS THE MORNINGSTAR LARGE GROWTH CATEGORY AVERAGE. o STOCK SELECTION IN THE TECHNOLOGY AND ENERGY SECTORS CONTRIBUTED TO THE FUND'S SHORTFALL. THE FUND ALSO HAD LESS EXPOSURE THAN THE INDEX TO THE TOP-PERFORMING ENERGY SECTOR. CLASS A SHARES RUSSELL 1000 GROWTH INDEX 5.72% 11.60% artwork: 2 arrows up OBJECTIVE Seeks long-term growth of capital TOTAL NET ASSETS $515.2 million MANAGEMENT STYLE artwork: Equity Style: Growth Size: Large end sidebar Portfolio holdings are calculated as a percentage of net assets. Sector breakdown is calculated as a percentage of total investments excluding short-term investments. Management Style is determined by Columbia Management, and is based on the investment strategy and process as outlined in the fund's prospectus. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 2 UNDERSTANDING YOUR EXPENSES COLUMBIA GROWTH STOCK FUND As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL CLASS A 1,000.00 1,000.00 1,019.60 1,017.08 8.06 8.05 1.59 CLASS B 1,000.00 1,000.00 1,014.79 1,013.37 11.78 11.77 2.33 CLASS C 1,000.00 1,000.00 1,015.79 1,013.72 11.43 11.42 2.26 CLASS Z 1,000.00 1,000.00 1,021.91 1,020.40 4.72 4.71 0.93 Expenses paid during the period are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the fund's most recent fiscal half-year and divided by (365.) Had the Investment Advisor/Transfer Agent not waived or reimbursed a portion of class A, B, C and Z shares' expenses, total return would have been reduced. Had the distributor not waived a portion of class A shares' distribution fee, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. COMPARE WITH OTHER FUNDS Since all mutual funds 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. sidebar ESTIMATING YOUR ACTUAL EXPENSES To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM COLUMBIA MANAGEMENT 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. end sidebar 3 ECONOMIC UPDATE COLUMBIA GROWTH STOCK FUND The US economy moved ahead at a healthy pace during the 12-month period that began October 1, 2004 and ended September 30, 2005. Gross domestic product (GDP) expanded at an annualized rate of 3.8% as job growth helped sustain consumer spending and rising profits boosted business spending. Employment data was solid, even in light of Hurricanes Katrina and Rita, which disrupted the labor market near the end of the period. During the first 11 months of the period, the economy added an average of 185,000 new jobs each month. In September, 8,000 jobs were lost as a direct result of the Gulf Coast floods, and the unemployment rate rose from 4.9% to 5.1%. However, the number of jobs lost was lower than originally estimated - and considerably lower than expected. Energy prices weighed on economic growth as the period wore on. The first signs of relief came in September as the price of crude oil retreated from a record high of $69.81 a barrel. Signs of slower growth cropped up in retail spending. And, consumer confidence readings dipped in July and fell sharply in September. The decline was the largest in 25 years, according to the University of Michigan's monthly survey. Despite these setbacks, the latest data on the economy suggest that it has retained momentum. Manufacturing activity remained strong, and business activity in non-manufacturing industries continued to expand, although the pace slowed in September. DESPITE VOLATILITY, STOCKS MOVED AHEAD The S&P 500 Index--a broad measure of large company stock market performance--returned 12.25% for this reporting period. The double-digit gain masked considerable volatility. Early in the period, stocks rallied after the presidential election then again in response to positive economic news midway through the period and in the aftermath of the two hurricanes. These rallies, however, alternated with declines linked to higher energy prices, rising interest rates and weakening consumer confidence. Small- and mid-cap stocks outperformed large-cap stocks. Value stocks led growth stocks except among small caps, where growth gained a small advantage over value. BONDS DELIVERED MODEST GAINS The US bond market delivered positive but modest returns despite steadily rising short-term interest rates and higher long-term rates in the final months of the period. Interest rates and bond prices move in opposite directions. The Lehman Brothers Aggregate Bond Index, a broad measure of the performance of investment-grade bonds returned 2.80% for the 12-month period. The yield on the 10-year US Treasury note, a bellwether for the bond market, ended the period at just over 4.3%--slightly higher than where it started the period. High-yield bonds led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 6.69%. SHORT-TERM INTEREST RATES MOVED HIGHER The Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.75% to 3.75% during the period. In the wake of Hurricanes Katrina and Rita, some market observers speculated that the Fed might curtail its rate hikes. However, Fed Chairman Greenspan indicated that inflation was a greater concern than the sustainability of economic growth and we believe that the Fed is likely to continue to raise short-term interest rates into the first half of 2006. sidebar SUMMARY FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005 o DESPITE BOUTS OF VOLATILITY, THE BROAD STOCK MARKET GENERATED A DOUBLE-DIGIT RETURN FOR THE PERIOD. THE S&P 500 INDEX RETURNED 12.25%. AS THE ECONOMY EXPANDED, SMALL-CAP STOCKS OUTPERFORMED LARGE-CAP STOCKS, AS MEASURED BY THE RUSSELL 2000 INDEX. S&P 500 INDEX RUSSELL 2000 INDEX 12.25% 17.95% artwork: 2 arrows up o INVESTMENT-GRADE BONDS CHALKED UP MODEST GAINS AS MEASURED BY THE LEHMAN BROTHERS AGGREGATE BOND INDEX. HIGH-YIELD BONDS LED THE FIXED INCOME MARKETS, AS MEASURED BY THE MERRILL LYNCH US HIGH YIELD, CASH PAY INDEX. LEHMAN INDEX MERRILL LYNCH INDEX 2.80% 6.69% artwork: 2 arrows up The S&P 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. The Russell 2000 Index is an unmanaged index that tracks the performance of the 2,000 smallest of the 3,000 largest US companies based on market capitalization. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated, non-convertible investment grade debt issues. The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that tracks the performance of non-investment-grade corporate bonds. end sidebar 4 PORTFOLIO MANAGERS' REPORT COLUMBIA GROWTH STOCK FUND For the 12-month period ended September 30, 2005, Columbia Growth Stock Fund class A shares returned 5.72% without sales charge. Performance came out behind the Russell 1000 Growth Index, which returned 11.60%, as well as the Morningstar Large Growth Category average, which was 13.39%.1 Stock selection in the technology sector and a below-average exposure to soaring energy returns hurt relative performance. A bias toward out-of-favor mega-cap stocks also dampened gains. Despite these disappointments, the fund remained concentrated on high quality companies that we believe have the potential to deliver superior stock performance over the long term. DISAPPOINTING TECHNOLOGY STOCK SELECTION A concentration in technology stocks hurt the fund's performance. Technology is a sector that traditionally has generated a continuous stream of new products that have the potential to drive companies to above average long-term growth. However, that trend was not apparent during the past year. Within technology, the fund had a large stake in semiconductor ("chip") and semiconductor capital equipment companies. We expected the industry to benefit from growing demand, the development of more powerful chips and the need for upgraded manufacturing equipment. However, some of these stocks declined amid weaker-than-anticipated demand from end markets. Detractors included equipment company Novellus Systems and manufacturer Altera. Microsoft also came under pressure as investors favored smaller, more nimble companies. Yet, some technology stocks produced strong gains, including Marvell Technology Group and ASML Holding. Marvell Technology Group benefited from expanded demand from new applications, such as iPods and the latest high-speed data networks, for which it manufacturers chips. ASML Holding is the leading manufacturer of lithography machines used in making semiconductors. It rallied as chip manufacturers upgraded obsolete equipment and looked ahead to the next generation of machines. MISSED OPPORTUNITIES IN ENERGY AND CONSUMER SECTORS Energy stocks soared as commodity prices rose and hurricanes in the Gulf of Mexico threatened refining capacity. However, the fund had less exposure to energy than the index and no exposure to smaller exploration and production companies, which led the sector's performance. The fund's only energy holding was Schlumberger, a leading provider of global oilfield services, which benefited from improved end demand and robust pricing for its services. Schlumberger made a solid contribution to the fund's return. The fund had more exposure to the consumer staples sector, which was a weak performer for the period. The biggest disappointment was Wal-Mart Stores, which was hurt by rising energy prices that cut into consumer buying. Within the consumer discretionary sector, the fund's industry allocations worked against it. We emphasized media stocks, which suffered from growing competition and stalled advertising revenues. Sizable stakes in both Viacom and Comcast detracted from returns. In addition, stock selection was weak 1 (C)2005, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. sidebar 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. NET ASSET VALUE PER SHARE AS OF 09/30/05 ($) CLASS A 10.91 CLASS B 10.30 CLASS C 10.30 CLASS Z 8.88 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/05 (%) NOVELLUS SYSTEMS 2.1 ALTERA 3.2 MICROSOFT 4.9 MARVELL TECHNOLOGY GROUP 2.3 ASML HOLDING 3.2 SCHLUMBERGER 2.5 WAL-MART STORES 3.4 VIACOM 2.8 COMCAST 3.0 HOME DEPOT 1.8 AMGEN 3.9 CARDINAL HEALTH 1.4 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. end sidebar 5 COLUMBIA GROWTH STOCK FUND among retailers. Home Depot, in particular, suffered from concerns over a potential housing slowdown. POSITIVE CONTRIBUTION FROM HEALTH CARE In health care, we identified several stocks that delivered solid gains. For example, we targeted Amgen, a biotechnology company that benefited from its new product line-up as well as a favorable resolution to reimbursement issues surrounding its blood products. Our investment in Cardinal Health was rewarded as the drug distribution company rebounded after addressing accounting irregularities that had surfaced in 2004. On the downside, concerns over patent expirations and a weak new product pipeline pressured Pfizer, which we sold. FAVORABLE OUTLOOK FOR LARGE-CAP GROWTH STOCKS We remain optimistic about the prospects for large-cap growth stocks. After years of trailing both smaller and value-oriented peers, large-cap growth stocks appear inexpensive by historical standards. They also seem poised to benefit if earnings growth becomes harder to find, which is often the case in the latter stages of an economic cycle. Going forward, we plan to maintain a large-cap growth focus and a concentrated structure, targeting stocks that we believe offer the best potential for long-term growth and capital appreciation. As we re-evaluate stocks that have lagged recently, we may broaden the fund's diversification across industries and sectors. Paul J. Berlinguet has co-managed Columbia Growth Stock Fund since September 2005 and has been with the advisor or its predecessors since 2003. /s/ Paul J. Berlinguet John T. Wilson has co-managed the fund since September 2005 and has been with the advisor since July 2005. /s/ John T. Wilson Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. Investing in growth stocks incurs the possibility of losses because their prices are sensitive to changes in current or expected earnings. sidebar Going forward, we plan to maintain a large-cap growth focus and a concentrated structure, targeting stocks that we believe offer the best potential for long-term growth and capital appreciation. end sidebar 6 INVESTMENT PORTFOLIO SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND COMMON STOCKS - 99.6% CONSUMER DISCRETIONARY - 12.4% SHARES VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- MEDIA - 10.6% Comcast Corp., Class A (a) 525,100 15,427,438 Liberty Global, Inc., Class A (a) 51,910 1,405,723 Liberty Global, Inc., Class C (a) 51,910 1,336,682 News Corp., Class B 496,700 8,195,550 Time Warner, Inc. 758,900 13,743,679 Viacom, Inc., Class B 442,900 14,620,129 Media Total 54,729,201 ----------------------------------------------------------------------------- SPECIALTY RETAIL - 1.8% Home Depot, Inc. 236,700 9,027,738 Specialty Retail Total 9,027,738 ------------ CONSUMER DISCRETIONARY TOTAL 63,756,939 CONSUMER STAPLES - 14.5% - ------------------------------------------ ----------------------------------------------------------------------------- FOOD & STAPLES RETAILING - 7.6% Costco Wholesale Corp. 500,100 21,549,309 Wal-Mart Stores, Inc. 397,000 17,396,540 Food & Staples Retailing Total 38,945,849 ----------------------------------------------------------------------------- HOUSEHOLD PRODUCTS - 6.9% Colgate-Palmolive Co. 338,500 17,869,415 Procter & Gamble Co. 297,200 17,671,512 Household Products Total 35,540,927 ------------ CONSUMER STAPLES TOTAL 74,486,776 ENERGY - 2.5% - ------------------------------------------ ----------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES - 2.5% Schlumberger Ltd. 155,000 13,078,900 Energy Equipment & Services Total 13,078,900 ------------ ENERGY TOTAL 13,078,900 FINANCIALS - 7.9% - ------------------------------------------ ----------------------------------------------------------------------------- CAPITAL MARKETS - 1.8% Merrill Lynch & Co., Inc. 149,600 9,177,960 Capital Markets Total 9,177,960 ----------------------------------------------------------------------------- COMMERCIAL BANKS - 3.2% Wells Fargo & Co. 279,300 16,358,601 Commercial Banks Total 16,358,601 ----------------------------------------------------------------------------- INSURANCE - 2.9% American International Group, Inc. 244,000 15,118,240 Insurance Total 15,118,240 ------------ FINANCIALS TOTAL 40,654,801 HEALTH CARE - 18.6% - ------------------------------------------ ----------------------------------------------------------------------------- BIOTECHNOLOGY - 3.9% Amgen, Inc. (a) 250,100 19,925,467 Biotechnology Total 19,925,467 ----------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES - 4.6% Medtronic, Inc. 443,700 23,791,194 Health Care Equipment & Supplies Total 23,791,194 ----------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 1.4% Cardinal Health, Inc. 115,700 7,340,008 Health Care Providers & Services Total 7,340,008 ----------------------------------------------------------------------------- PHARMACEUTICALS - 8.7% Johnson & Johnson 355,700 22,508,696 Novartis AG, ADR 436,700 22,271,700 Pharmaceuticals Total 44,780,396 ------------ HEALTH CARE TOTAL 95,837,065 See Accompanying Notes to Financial Statements. 7 SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND COMMON STOCKS - (CONTINUED) INDUSTRIALS - 4.8% SHARES VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES - 4.8% General Electric Co. 739,300 24,892,231 Industrial Conglomerates Total 24,892,231 ------------ INDUSTRIALS TOTAL 24,892,231 INFORMATION TECHNOLOGY - 38.9% - ------------------------------------------ ----------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 3.4% Cisco Systems, Inc. (a) 980,600 17,582,158 Communications Equipment Total 17,582,158 ----------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 3.2% Dell, Inc. (a) 484,300 16,563,060 Computers & Peripherals Total 16,563,060 ----------------------------------------------------------------------------- IT SERVICES - 2.2% Paychex, Inc. 306,100 11,350,188 IT Services Total 11,350,188 ----------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 23.1% Altera Corp. (a) 868,400 16,595,124 Applied Materials, Inc. 750,400 12,726,784 ASML Holding N.V., N.Y. Registered Shares (a) 1,011,200 16,694,912 Linear Technology Corp. 253,400 9,525,306 Marvell Technology Group Ltd. (a) 259,000 11,942,490 Maxim Integrated Products, Inc. 385,100 16,424,515 Microchip Technology, Inc. 296,000 8,915,520 Novellus Systems, Inc. (a) 431,700 10,827,036 Xilinx, Inc. 558,300 15,548,655 Semiconductors & Semiconductor Equipment Total 119,200,342 ----------------------------------------------------------------------------- SOFTWARE - 7.0% Microsoft Corp. 990,600 25,488,138 SAP AG, ADR 240,900 10,438,197 Software Total 35,926,335 ------------ INFORMATION TECHNOLOGY TOTAL 200,622,083 TOTAL COMMON STOCKS (COST OF $432,209,310) 513,328,795 SHORT-TERM OBLIGATION - 0.6% PAR ($) - ------------------------------------------ ----------------------------------------------------------------------------- Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by a U.S. Treasury Bond maturing 05/15/17, market value of $3,140,963 (repurchase proceeds $3,073,807) 3,073,000 3,073,000 TOTAL SHORT-TERM OBLIGATION (COST OF $3,073,000) 3,073,000 TOTAL INVESTMENTS - 100.2% (COST OF $435,282,310)(B) 516,401,795 OTHER ASSETS & LIABILITIES, NET - (0.2)% (1,180,975) NET ASSETS - 100.0% 515,220,820 See Accompanying Notes to Financial Statements. 8 SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $438,476,491. At September 30, 2005, the Fund held investments in the following sectors: SECTOR (UNAUDITED) % OF NET ASSETS --------------------------------------------------------------------- Information Technology 38.9% Health Care (18.6) Consumer Staples (14.5) Consumer Discretionary (12.4) Financials (7.9) Industrials (4.8) Energy (2.5) Short-Term Obligation (0.6) Other Assets & Liabilities, Net (0.2) ------ 100.0% ====== ACRONYM NAME ADR American Depositary Receipt See Accompanying Notes to Financial Statements. 9 STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND ($) - ------------------------------------------ ----------------------------------------------------------------------------- ASSETS Investments, at cost 435,282,310 ----------------------------------------------------------------------------- Investments , at value 516,401,795 Cash 665 Receivable for: Fund shares sold 145,296 Interest 269 Dividends 286,942 Foreign tax reclaims 5,688 Deferred Trustees' compensation plan 31,396 ------------ Total Assets 516,872,051 ----------------------------------------------------------------------------- LIABILITIES Payable for: Fund shares repurchased 820,175 Investment advisory fee 278,160 Administration fee 60,836 Transfer agent fee 171,797 Pricing and bookkeeping fees 11,849 Trustees' fees 994 Custody fee 2,743 Distribution and service fees 170,428 Chief compliance officer expenses and fees 1,562 Deferred Trustees' fees 31,396 Other liabilities 101,291 ------------ Total Liabilities 1,651,231 NET ASSETS 515,220,820 ----------------------------------------------------------------------------- COMPOSITION OF NET ASSETS Paid-in capital 874,832,435 Undistributed net investment income 663,738 Accumulated net realized loss (441,394,838) Net unrealized appreciation on investments 81,119,485 ------------ NET ASSETS 515,220,820 ----------------------------------------------------------------------------- CLASS A Net assets 51,510,461 Shares outstanding 4,722,426 Net asset value per share 10.91(a) Maximum offering price per share ($10.91/0.9425) 11.58(b) ----------------------------------------------------------------------------- CLASS B Net assets 181,760,193 Shares outstanding 17,647,323 Net asset value and offering price per share 10.30(a) ----------------------------------------------------------------------------- CLASS C Net assets 14,726,226 Shares outstanding 1,429,509 Net asset value and offering price per share 10.30(a) ----------------------------------------------------------------------------- CLASS Z Net assets 267,223,940 Shares outstanding 30,087,875 Net asset value, offering and redemption price per share 8.88 (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 10 STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND ($) - ------------------------------------------ ----------------------------------------------------------------------------- INVESTMENT INCOME Dividends 10,373,524 Interest 72,043 ------------ Total Investment Income (net of foreign taxes withheld of $84,145) 10,445,567 ----------------------------------------------------------------------------- EXPENSES Investment advisory fee 3,756,924 Administration fee 922,028 Distribution fee: Class A 58,530 Class B 1,630,437 Class C 131,560 Service fee: Class A 146,327 Class B 543,479 Class C 43,854 Transfer agent fee: Class A 318,758 Class B 1,277,365 Class C 92,706 Class Z 532,617 Pricing and bookkeeping fees 165,072 Trustees' fees 22,969 Custody fee 34,604 Chief compliance officer expenses and fees (See Note 4) 6,001 Non-recurring costs (See Note 8) 11,722 Other expenses 280,305 ------------ Total Operating Expenses 9,975,258 ------------ Interest expense 27,424 ------------ Total Expenses 10,002,682 Fees and expenses waived or reimbursed by Investment Advisor/Transfer Agent: Class A (9,132) Class B (37,693) Class C (2,994) Class Z (148,548) Fees waived by Distributor - Class A (29,265) Non-recurring costs assumed by Investment Advisor (See Note 8) (11,722) Custody earnings credit (164) ------------ Net Expenses 9,763,164 ------------ Net Investment Income 682,403 ----------------------------------------------------------------------------- NET REALIZED AND UNREALIZED Net realized gain on: GAIN (LOSS) ON INVESTMENTS Investments 46,939,381 Net realized loss on disposal of investments purchased/sold in error (See Note 6) -- ------------ Net realized gain 46,939,381 Net change in unrealized appreciation (depreciation) on investments (7,348,375) ------------ Net Gain 39,591,006 ------------ Net Increase in Net Assets from Operations 40,273,409 See Accompanying Notes to Financial Statements. 11 STATEMENT OF CHANGES IN NET ASSETS COLUMBIA GROWTH STOCK FUND YEAR ENDED SEPTEMBER 30, -------------------------- INCREASE (DECREASE) IN NET ASSETS: 2005 ($) 2004 ($) - ------------------------------------------ ----------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 682,403 (5,217,593) Net realized gain on investments 46,939,381 62,741,007 Net change in unrealized appreciation (depreciation) on investments (7,348,375) (53,726,795) ------------ ------------ Net Increase from Operations 40,273,409 3,796,619 ----------------------------------------------------------------------------- SHARE TRANSACTIONS Class A: Subscriptions 9,122,966 14,653,162 Redemptions (27,382,653) (31,034,051) ------------ ------------ Net Decrease (18,259,687) (16,380,889) Class B: Subscriptions 7,074,864 15,919,825 Redemptions (82,345,308) (74,892,692) ------------ ------------ Net Decrease (75,270,444) (58,972,867) Class C: Subscriptions 1,671,357 2,549,820 Redemptions (8,012,556) (10,634,792) ------------ ------------ Net Decrease (6,341,199) (8,084,972) Class Z: Subscriptions 50,526,851 70,908,194 Redemptions (166,978,056) (98,706,026) ------------ ------------ Net Decrease (116,451,205) (27,797,832) Net Decrease from Share Transactions (216,322,535) (111,236,560) ------------ ------------ Total Decrease in Net Assets (176,049,126) (107,439,941) ----------------------------------------------------------------------------- NET ASSETS Beginning of period 691,269,946 798,709,887 End of period (including undistributed net investment income (loss) of $663,738 and $(18,665), respectively) 515,220,820 691,269,946 - ------------------------------------------ ----------------------------------------------------------------------------- CHANGES IN SHARES Class A: Subscriptions 840,077 1,324,748 Redemptions (2,525,290) (2,828,087) ------------ ------------ Net Decrease (1,685,213) (1,503,339) Class B: Subscriptions 689,214 1,497,689 Redemptions (8,005,460) (7,140,520) ------------ ------------ Net Decrease (7,316,246) (5,642,831) Class C: Subscriptions 163,100 240,936 Redemptions (781,384) (1,008,828) ------------ ------------ Net Decrease (618,284) (767,892) Class Z: Subscriptions 5,795,759 7,969,960 Redemptions (18,830,170) (11,099,886) ------------ ------------ Net Decrease (13,034,411) (3,129,926) See Accompanying Notes to Financial Statements. 12 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND NOTE 1. ORGANIZATION Columbia Growth Stock Fund (the "Fund"), a series of Columbia Funds Trust XI (the "Trust"), is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOALS The Fund seeks long-term growth of capital. FUND SHARES The Fund may issue an unlimited number of shares and offers four classes of shares: Class A, Class B, Class C and Class Z. Each share class has its own sales charge and expense structure. Class A shares are subject to a maximum front-end sales charge of 5.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within twelve months on an original purchase of $1 million to $50 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. 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 that have 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. If a security is valued at "fair value", such value is likely to be different from the last quoted market price for the security. SECURITY TRANSACTIONS Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS 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. 13 SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND INCOME RECOGNITION Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. Awards from class action litigation are recorded as a reduction of cost if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains. 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. Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets would not be affected by these reclassifications. For the year ended September 30, 2005, the Fund had no permanent book and tax basis differences. As of September 30, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED NET UNREALIZED ORDINARY LONG-TERM APPRECIATION* INCOME CAPITAL GAINS - -------------------------------------------------------------------------------- $ 693,748 $ -- $ 77,925,304 * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales, non-deductible deferred trustees fees and capital loss carryovers. Unrealized appreciation and depreciation at September 30, 2005, based on cost of investments for federal income tax purposes was: UNREALIZED APPRECIATION $ 108,361,848 UNREALIZED DEPRECIATION (30,436,544) - -------------------------------------------------------------------------------- NET UNREALIZED APPRECIATION $ 77,925,304 The following capital loss carryforwards may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD - -------------------------------------------------------------------------------- 2009 $178,734,023 2011 253,937,044 2012 5,529,590 - -------------------------------------------------------------------------------- $438,200,657 Of these capital loss carryforwards, $178,734,023 ($178,117,533 expiring 09/30/09 and $616,490 expiring 09/30/09) were obtained upon the Fund's mergers with Liberty Growth Stock Fund and Stein Roe Focus Fund, respectively. Utilization of Liberty Growth Stock Fund's and Stein Roe Focus Fund's losses could be subject to limitations imposed by the Internal Revenue Code. Capital loss carryforwards of $45,841,436 were utilized during the year ended September 30, 2005. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions of the Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. 14 SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISORY FEE Columbia Management Advisors, LLC ("Columbia"), an indirect wholly owned subsidiary of Bank of America Corporation ("BOA"), is the investment advisor to the Fund. On September 30, 2005, Columbia Management Advisors, Inc. changed its name to Columbia Management Advisors, LLC. Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets at the following annual rates: AVERAGE DAILY NET ASSETS ANNUAL FEE RATE - -------------------------------------------------------------------------------- FIRST $500 MILLION 0.60% - -------------------------------------------------------------------------------- $500 MILLION TO $1 BILLION 0.55% - -------------------------------------------------------------------------------- $1 BILLION TO $2 BILLION 0.50% - -------------------------------------------------------------------------------- OVER $2 BILLION 0.45% For the year ended September 30, 2005, the Fund's effective investment advisory fee rate was 0.59%. ADMINISTRATION FEE Columbia provides administrative and other services to the Fund for a monthly administration fee based on the Fund's average daily net assets at the following annual rates: AVERAGE DAILY NET ASSETS ANNUAL FEE RATE - -------------------------------------------------------------------------------- FIRST $500 MILLION 0.150% - -------------------------------------------------------------------------------- $500 MILLION TO $1 BILLION 0.125% - -------------------------------------------------------------------------------- $1 BILLION TO $1.5 BILLION 0.100% - -------------------------------------------------------------------------------- $1.5 BILLION TO $2 BILLION 0.075% - -------------------------------------------------------------------------------- OVER $2 BILLION 0.050% For the year ended September 30, 2005, the Fund's effective administration fee rate was 0.14%. PRICING AND BOOKKEEPING FEES Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). As a result, Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services based on the number of securities held by the Fund. For the year ended September 30, 2005, the effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.026%. TRANSFER AGENT FEE Columbia Management Services, Inc. (the "Transfer Agent"), an affiliate of Columbia and a wholly-owned subsidiary of BOA, provides shareholder services to the Fund. The Transfer Agent has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. On August 22, 2005, Columbia Funds Services, Inc. was renamed Columbia Management Services, Inc. For its services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $28.00 per open account per class. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. The Transfer Agent has voluntarily agreed to waive a portion of the Class Z transfer agent fee so that such fee (exclusive of out-of-pocket expenses) will not exceed 0.05% annually of the Class Z average daily net assets. The Transfer Agent, at its discretion, may revise or discontinue this arrangement any time. For the period from September 1, 2005 through October 31, 2005, the Transfer Agent has voluntarily agreed to waive a portion of its fees to reflect reduced contractual fees that will be charged to the Fund effective November 1, 2005. UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES Columbia Management Distributors, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. On August 22, 2005, Columbia Funds Distributor, Inc. changed its name to Columbia Management Distributors, Inc. For the year ended September 30, 2005, the Distributor has retained net underwriting discounts of $11,792 on sales of the Fund's Class A shares and net CDSC fees of $901, $739,591 and $2,736 on Class A, Class B and Class C share redemptions, respectively. 15 SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND The Fund has adopted a 12b-1 plan (the "Plan") which allows the payment of a monthly service fee to the Distributor at the annual rate of 0.25% of the average daily net assets attributable to Class A, Class B and Class C shares of the Fund. The Plan also requires the payment of a monthly distribution fee to the Distributor at the annual rates of 0.10%, 0.75% and 0.75% of the average daily net assets attributable to Class A, Class B and Class C shares of the Fund, respectively. The Distributor has voluntarily agreed to waive a portion of the Class A share distribution fee so that it will not exceed 0.05% annually of Class A average daily net assets. The CDSC and the distribution 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. 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. The Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Chief Compliance Officer position. The Fund's fee will not exceed $15,000 per year. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. OTHER Columbia provides certain services to the Fund related to Sarbanes-Oxley compliance. For the year ended September 30, 2005, the Fund paid $2,195 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. NOTE 5. PORTFOLIO INFORMATION For the year ended September 30, 2005, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $15,377,668 and $227,853,227, respectively. NOTE 6. OTHER During the year ended September 30, 2005, the Fund sold shares of various securities due to trading errors. The positions were subsequently repurchased at a loss of $19,656 and the fund has been reimbursed by Columbia. NOTE 7. 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 year ended September 30, 2005, the average daily loan balance outstanding on days where borrowings existed was $28,888,889 at a weighted average interest rate of 3.89%. NOTE 8. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES 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 Securities and Exchange Commission ("SEC") (the "SEC Order"). The SEC Order and the NYAG Settlement are referred to collectively as the "Settlements". The Settlements contain substantially 16 SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND 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 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 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 funds 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 Funds' independent trustees and not unacceptable to the staff of the SEC. At this time, the distribution plan is still under development. As such, any gain to the Funds or its shareholders cannot currently be determined. 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 is 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, the Trustees of the Columbia Funds, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities. More than 300 cases including those filed against entities unaffiliated with the funds, their Boards, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities have been transferred to the Federal District Court in Maryland and consolidated in a multi-district proceeding (the "MDL"). The derivative cases purportedly brought on behalf of the Columbia Funds in the MDL have been consolidated under the lead case. The fund derivative plaintiffs allege that the funds were harmed by market timing and late trading activity and seek, among other things, the removal of the trustees of the Columbia Funds, removal of the Columbia Group, disgorgement of all management fees and monetary damages. On March 21, 2005 purported class action plaintiffs filed suit in Massachusetts state court alleging that the conduct, including market timing, entitles Class B shareholders in certain Columbia funds to an exemption from contingent deferred sales charges upon early redemption ("the CDSC Lawsuit"). The CDSC Lawsuit has been removed to federal court in Massachusetts and the federal Judicial Panel has transferred the CDSC Lawsuit to the MDL. The MDL is ongoing. Accordingly, an estimate of the financial impact of this litigation on any Fund, if any, cannot currently be made. On January 11, 2005, a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Columbia Funds and Columbia. The lawsuit alleged 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 Funds and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs alleged 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. Plaintiffs filed a notice of voluntary dismissal of the lawsuit as to all defendants and all claims, without prejudice, which was so-ordered by the judge on or about November 9, 2005. 17 SEPTEMBER 30, 2005 COLUMBIA GROWTH STOCK FUND In 2004, certain Columbia funds, advisers and affiliated entities were named as defendants in certain purported shareholder class and derivative actions making claims, including claims under the Investment Company and the Investment Advisers Acts of 1940 and state law. The suits allege, inter alia, that the fees and expenses paid by the funds are excessive and that the advisers and their affiliates inappropriately used fund assets to distribute the funds and for other improper purpose. On March 2, 2005, the actions were consolidated in the Massachusetts federal court as In re Columbia Entities Litigation. The plaintiffs filed a consolidated amended complaint on June 9, 2005. 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 (with the exception of the January 11, 2005 "failure to participate" litigation, which has been dismissed) are ongoing, however, based on currently available information, Columbia believes that these lawsuits are without merit, that the likelihood they will have a material adverse impact on any fund is remote, and that the lawsuits are not likely to materially affect its ability to provide investment management services to its clients, including the Funds. For the year ended September 30, 2005, Columbia has assumed $11,722 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. 18 FINANCIAL HIGHLIGHTS COLUMBIA GROWTH STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------------------------- CLASS A SHARES 2005 2004 2003 2002 (a) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.32 $ 10.36 $ 8.83 $ 9.98 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) --(c)(d) (0.08) (0.05) (0.01) Net realized and unrealized gain (loss) on investments 0.59 0.04 1.58 (1.14) --------- -------- -------- -------- Total from Investment Operations 0.59 (0.04) 1.53 (1.15) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 10.91 $ 10.32 $ 10.36 $ 8.83 Total return (e)(f) 5.72% (0.39)% 17.33% (11.52)%(g) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (h) 1.64% 1.55% 1.54% 1.63%(i) Interest expense --%(j) -- --%(j) -- Net expenses (h) 1.64% 1.55% 1.54% 1.63%(i) Net investment loss (h) (0.01)% (0.68)% (0.53)% (0.41)%(i) Waiver/reimbursement 0.07% 0.05% 0.05% 0.05%(i) Portfolio turnover rate 2% 51% 108% 71% Net assets, end of period (000's) $ 51,510 $ 66,142 $ 81,967 $ 81,442 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Class A shares were initially offered on July 15, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net investment loss per share reflects a special dividend. The effect of this dividend amounted to $0.06 per share. (d) Rounds to less than $0.01 per share. (e) Total return at net asset value assuming no initial sales charge or contingent deferred sales charge. (f) Had the Distributor/Investment Advisor/Transfer Agent not waived a portion of expenses, total return would have been reduced. (g) Not annualized. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. (j) Rounds to less than 0.01%. 19 COLUMBIA GROWTH STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------ CLASS B SHARES 2005 2004 2003 2002 (a) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 9.93 $ 8.52 $ 9.65 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.08)(c) (0.15) (0.11) (0.02) Net realized and unrealized gain (loss) on investments 0.56 0.04 1.52 (1.11) -------- -------- -------- -------- Total from Investment Operations 0.48 (0.11) 1.41 (1.13) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 10.30 $ 9.82 $ 9.93 $ 8.52 Total return (d) 4.89%(e) (1.11)% 16.55% (11.71)%(f) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (g) 2.39% 2.30% 2.24% 2.33%(h) Interest expense --%(i) -- --%(i) -- Net expenses (g) 2.39% 2.30% 2.24% 2.33%(h) Net investment loss (g) (0.75)% (1.43)% (1.23)% (1.11)%(h) Waiver/reimbursement 0.02% -- -- -- Portfolio turnover rate 2% 51% 108% 71% Net assets, end of period (000's) $181,760 $245,137 $303,943 $306,561 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Class B shares were initially offered on July 15, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net investment loss per share reflects a special dividend. The effect of this dividend amounted to $0.06 per share. (d) Total return at net asset value assuming no contingent deferred sales charge. (e) Had the Investment Advisor/Transfer Agent not waived a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. (i) Rounds to less than 0.01%. 20 COLUMBIA GROWTH STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------ CLASS C SHARES 2005 2004 2003 2002 (a) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 9.92 $ 8.52 $ 9.64 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.07)(c) (0.15) (0.11) (0.02) Net realized and unrealized gain (loss) on investments 0.55 0.05 1.51 (1.10) -------- -------- -------- -------- Total from Investment Operations 0.48 (0.10) 1.40 (1.12) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 10.30 $ 9.82 $ 9.92 $ 8.52 Total return (d) 4.89%(e) (1.01)% 16.43% (11.62)%(f) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (g) 2.33% 2.25% 2.24% 2.33%(h) Interest expense --%(i) -- --%(i) -- Net expenses (g) 2.33% 2.25% 2.24% 2.33%(h) Net investment loss (g) (0.69)% (1.39)% (1.23)% (1.11)%(h) Waiver/reimbursement 0.02% -- -- -- Portfolio turnover rate 2% 51% 108% 71% Net assets, end of period (000's) $ 14,726 $20,100 $27,938 $28,093 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Class C shares were initially offered on July 15, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net investment loss per share reflects a special dividend. The effect of this dividend amounted to $0.06 per share. (d) Total return at net asset value assuming no contingent deferred sales charge. (e) Had the Investment Advisor/Transfer Agent not waived a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. (i) Rounds to less than 0.01%. 21 COLUMBIA GROWTH STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------------------- CLASS Z SHARES 2005 2004 2003 (a) 2002 (a)(b) 2001 (a) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 8.35 $ 8.32 $ 7.05 $ 9.45 $ 19.89 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) 0.06(d) --(e) --(e) 0.01(f) (0.01)(f) Net realized and unrealized gain (loss) on investments 0.47 0.03 1.27 (2.41) (7.77) -------- -------- -------- -------- -------- Total from Investment Operations 0.53 0.03 1.27 (2.40) (7.78) - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- -- -- (2.66) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 8.88 $ 8.35 $ 8.32 $ 7.05 $ 9.45 Total return (g) 6.35%(h) 0.36%(h) 17.96%(h) (25.34)%(h) (43.48)% - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (i) 0.93% 0.89% 1.00% 0.88%(f) 0.95%(f) Interest expense --%(j) -- --%(j) -- -- Net expenses (i) 0.93% 0.89% 1.00% 0.88%(f) 0.95%(f) Net investment income (loss) (i) 0.71% (0.02)% 0.01% 0.08%(f) (0.05)%(f) Waiver/reimbursement 0.04% 0.05% 0.06% 0.01% -- Portfolio turnover rate 2% 51% 108% 71% 73%(k) Net assets, end of period (000's) $267,224 $359,891 $384,861 $360,240 $551,474 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Per share data has been restated to reflect a 3-for-1 share split effective July 25, 2003. (b) On July 15, 2002, the Stein Roe Growth Stock Fund was redesignated Liberty Growth Stock Fund, Class Z shares. (c) Per share data was calculated using average shares outstanding during the period. (d) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.06 per share. (e) Rounds to less than $0.01 per share. (f) Per share amounts and ratios reflect income and expenses inclusive of the Fund's proportionate share of the income and expenses of the SR&F Growth Stock Portfolio prior to the termination of their master/feeder fund structure on July 12, 2002. (g) Total return at net asset value assuming all distributions reinvested. (h) Had the Investment Advisor/Transfer Agent not waived a portion of expenses, total return would have been reduced. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Round to less than 0.01%. (k) Portfolio turnover rate disclosed is for the SR&F Growth Stock Portfolio. 22 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM COLUMBIA GROWTH STOCK FUND TO THE TRUSTEES OF COLUMBIA FUNDS TRUST XI AND THE SHAREHOLDERS OF COLUMBIA GROWTH STOCK FUND. In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Columbia Growth Stock Fund (the "Fund") (a series of Columbia Funds Trust XI) at September 30, 2005, the results of its operations, the changes in its net assets, and its financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts November 21, 2005 23 TRUSTEES COLUMBIA GROWTH STOCK FUND The Trustees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. NAME, ADDRESS AND AGE, POSITION WITH FUNDS, YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES DOUGLAS A. HACKER (Age 49) Executive Vice President-Strategy of United Airlines (airline) since December, 2002 (formerly President P.O. Box 66100 of UAL Loyalty Services (airline) from September, 2001 to December, 2002; Executive Vice President Chicago, IL 60666 and Chief Financial Officer of United Airlines from July, 1999 to September, 2001; Senior Vice Trustee (since 1996) President-Finance from March, 1993 to July, 1999). Oversees 86, Nash Finch Company (food distributor) ------------------------------------------------------------------------------------------------------- JANET LANGFORD KELLY Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP (law firm) since March, 2005; Adjunct Professor (Age 47) of Law, Northwestern University, since September, 2004 (formerly Chief Administrative Officer and 9534 W. Gull Lake Drive Senior Vice President, Kmart Holding Corporation (consumer goods) from September, 2003 to March, 2004; Richland, MI 49083-8530 Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Trustee (since 1996) Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999). Oversees 86, None ------------------------------------------------------------------------------------------------------- RICHARD W. LOWRY (Age 69) Private Investor since August, 1987 (formerly Chairman and Chief Executive Officer, U.S. Plywood 10701 Charleston Drive Corporation (building products manufacturer)). Oversees 89(3), None Vero Beach, FL 32963 Trustee (since 1995) ------------------------------------------------------------------------------------------------------- CHARLES R. NELSON (Age 62) Professor of Economics, University of Washington, since January, 1976; Ford and Louisa Van Voorhis Department of Economics Professor of Political Economy, University of Washington, since September, 1993 (formerly Director, University of Washington Institute for Economic Research, University of Washington from September, 2001 to June, 2003); Seattle, WA 98195 Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Trustee (since 1981) Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. Oversees 86, None ------------------------------------------------------------------------------------------------------- JOHN J. NEUHAUSER (Age 63) Academic Vice President and Dean of Faculties since August, 1999, Boston College (formerly Dean, 84 College Road Boston College School of Management from September, 1977 to August, 1999). Oversees 89(3), Chestnut Hill, MA 02467-3838 Saucony, Inc. (athletic footwear) Trustee (since 1985) ------------------------------------------------------------------------------------------------------- 24 NAME, ADDRESS AND AGE, POSITION WITH FUNDS, YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES PATRICK J. SIMPSON (Age 61) Partner, Perkins Coie L.L.P. (law firm). Oversees 86, None 1120 N.W. Couch Street Tenth Floor Portland, OR 97209-4128 Trustee (since 2000) ------------------------------------------------------------------------------------------------------- THOMAS E. STITZEL (Age 69) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, College of 2208 Tawny Woods Place Business, Boise State University); Chartered Financial Analyst. Oversees 86, None Boise, ID 83706 Trustee (since 1998) ------------------------------------------------------------------------------------------------------- THOMAS C. THEOBALD (Age 68) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) since September, 8 Sound Shore Drive, 2004 (formerly Managing Director, William Blair Capital Partners (private equity investing) from Suite 285 September, 1994 to September, 2004). Oversees 86, Anixter International (network support Greenwich, CT 06830 equipment distributor); Ventas, Inc. (real estate investment trust); Jones Lang LaSalle (real estate Trustee and Chairman management services) and Ambac Financial Group (financial guaranty insurance) of the Board(4) (since 1996) ------------------------------------------------------------------------------------------------------- ANNE-LEE VERVILLE (Age 60) Retired since 1997 (formerly General Manager, Global Education Industry, IBM Corporation 359 Stickney Hill Road (computer and technology) from 1994 to 1997). Oversees 86, Chairman of the Board of Directors, Hopkinton, NH 03229 Enesco Group, Inc. (designer, importer and distributor of giftware and collectibles) Trustee (since 1998) ------------------------------------------------------------------------------------------------------- RICHARD L. WOOLWORTH Retired since December, 2003 (formerly Chairman and Chief Executive Officer, The Regence Group (Age 64) (regional health insurer); Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon; 100 S.W. Market Certified Public Accountant, Arthur Young & Company). Oversees 86, Northwest Natural Gas Co. Street #1500 (natural gas service provider) Portland, OR 97207 Trustee (since 1991) ------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE WILLIAM E. MAYER(2) (Age 65) Partner, Park Avenue Equity Partners (private equity) since February, 1999 (formerly Partner, 399 Park Avenue Development Capital LLC from November 1996, to February, 1999). Oversees 89(3), Lee Enterprises Suite 3204 (print media), WR Hambrecht + Co. (financial service provider); Reader's Digest (publishing); New York, NY 10022 OPENFIELD Solutions (retail industry technology provider) Trustee (since 1994) ------------------------------------------------------------------------------------------------------- (1) In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex. (2) Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. (3) Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 3 funds, which are advised by an affiliate of the Advisor. (4) Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. The Statement of Additional Information includes additional information about the Trustees of the Funds and is available, without charge, upon request by calling 800-426-3750. 25 OFFICERS COLUMBIA GROWTH STOCK FUND NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA FUNDS, YEAR FIRST ELECTED OR APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS CHRISTOPHER L. WILSON (Age 48) Head of Mutual Funds since August, 2004 and Managing Director of the Advisor since September, One Financial Center 2005; President of the Columbia Funds, Liberty Funds and Stein Roe Funds since October, 2004; Boston, MA 02111 President and Chief Executive Officer of the Nations Funds since January, 2005; President of President (since 2004) the Galaxy Funds since April, 2005; Director of Bank of America Global Liquidity Funds, plc since May, 2005; Director of Banc of America Capital Management (Ireland), Limited since May, 2005; Director of FIM Funding, Inc. since January, 2005; Senior Vice President of Columbia Management Distributors, Inc. since January, 2005; Director of Columbia Management Services, Inc. since January, 2005 (formerly Senior Vice President of Columbia Management from January, 2005 to August, 2005; Senior Vice President of BACAP Distributors LLC from January, 2005 to July, 2005; President and Chief Executive Officer, CDC IXIS Asset Management Services, Inc. from September, 1998 to August, 2004). ------------------------------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (Age 41) Treasurer of the Columbia Funds since October, 2003 and of the Liberty Funds, Stein Roe Funds One Financial Center and All-Star Funds since December, 2000; Managing Director of the Advisor since September, Boston, MA 02111 (formerly Vice President of Columbia Management from April, 2003 to August, 2005; President Treasurer (since 2000) of 2005 the Columbia Funds, Liberty Funds and Stein Roe Funds from February, 2004 to October, 2004; Chief Accounting Officer and Controller of the Liberty Funds and All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002 (formerly Treasurer from December, 2002 to December, 2004 and President from February, 2004 to December, 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of Colonial Management Associates, Inc. from February, 1998 to October, 2000). ------------------------------------------------------------------------------------------------- MARY JOAN HOENE (Age 56) Senior Vice President and Chief Compliance Officer of the Columbia Funds, Liberty Funds, Stein 100 Federal Street Roe Funds and All-Star Funds since August, 2004; Chief Compliance Officer of the Columbia Boston, MA 02110 Management Multi-Strategy Hedge Fund, LLC since August 2004; Chief Compliance Officer of the Senior Vice President and Chief BACAP Alternative Multi-Strategy Hedge Fund LLC since October 2004 (formerly Partner, Carter, Compliance Ledyard & Milburn LLP from January, 2001 to August, 2004; Counsel, Carter, Ledyard & Milburn Officer (since 2004) LLP from November, 1999 to December, 2000; Vice President and Counsel, Equitable Life Assurance Society of the United States from April, 1998 to November, 1999). ------------------------------------------------------------------------------------------------- MICHAEL G. CLARKE (Age 35) Chief Accounting Officer of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds One Financial Center since October, 2004; Managing Director of the Advisor since September, 2005 (formerly Controller Boston, MA 02111 of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds from May, 2004 to Chief Accounting Officer October, 2004; Assistant Treasurer from June, 2002 to May, 2004; Vice President, Product Strategy (since 2004) & Development of the Liberty Funds and Stein Roe Funds from February, 2001 to June, 2002; Assistant Treasurer of the Liberty Funds, Stein Roe Funds and the All-Star Funds from August, 1999 to February, 2001; Audit Manager, Deloitte & Touche LLP from May, 1997 to August, 1999). ------------------------------------------------------------------------------------------------- JEFFREY R. COLEMAN (Age 35) Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds since One Financial Center October, 2004 (formerly Vice President of CDC IXIS Asset Management Services, Inc. and Deputy Boston, MA 02111 Treasurer of the CDC Nvest Funds and Loomis Sayles Funds from February, 2003 to September, 2004; Controller (since 2004) Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August, 2000 to February, 2003; Tax Manager of PFPC, Inc. from November, 1996 to August, 2000). ------------------------------------------------------------------------------------------------- R. SCOTT HENDERSON (Age 46) Secretary of the Columbia Funds, Liberty Funds and Stein Roe Funds since December, 2004 (formerly One Financial Center Of Counsel, Bingham McCutchen from April, 2001 to September, 2004; Executive Director and Boston, MA 02111 General Counsel, Massachusetts Pension Reserves Investment Management Board from September, Secretary (since 2004) 1997 to March, 2001). ------------------------------------------------------------------------------------------------- 26 COLUMBIA FUNDS COLUMBIA GROWTH STOCK FUND ---------------------------------------------------------------------------------------- GROWTH FUNDS Columbia Acorn Fund Columbia Acorn Select Columbia Acorn USA Columbia Growth Stock Fund Columbia Large Cap Growth Fund Columbia Marsico 21st Century Fund Columbia Marsico Focused Equities Fund Columbia Marsico Growth Fund Columbia Marsico Mid Cap Growth Fund Columbia Mid Cap Growth Fund Columbia Small Cap Growth Fund I Columbia Small Cap Growth Fund II Columbia Small Company Equity Fund Columbia Tax-Managed Growth Fund ---------------------------------------------------------------------------------------- CORE FUNDS Columbia Common Stock Fund Columbia Large Cap Core Fund Columbia Small Cap Core Fund Columbia Young Investor Fund ---------------------------------------------------------------------------------------- VALUE FUNDS Columbia Disciplined Value Fund Columbia Dividend Income Fund Columbia Large Cap Value Fund Columbia Mid Cap Value Fund Columbia Small Cap Value Fund I Columbia Small Cap Value Fund II Columbia Strategic Investor ---------------------------------------------------------------------------------------- ASSET ALLOCATION/HYBRID FUNDS Columbia Asset Allocation Fund Columbia Asset Allocation Fund II Columbia Balanced Fund Columbia Liberty Fund Columbia LifeGoalTM Balanced Growth Portfolio Columbia LifeGoalTM Growth Portfolio Columbia LifeGoalTM Income Portfolio Columbia LifeGoalTM Income and Growth Portfolio Columbia Thermostat Fund ---------------------------------------------------------------------------------------- INDEX FUNDS Columbia Large Cap Enhanced Core Fund Columbia Large Cap Index Fund Columbia Mid Cap Index Fund Columbia Small Cap Index Fund ---------------------------------------------------------------------------------------- SPECIALTY FUNDS Columbia Convertible Securities Fund Columbia Real Estate Equity Fund Columbia Technology Fund Columbia Utilities Fund ---------------------------------------------------------------------------------------- GLOBAL/INTERNATIONAL FUNDS Columbia Acorn International Columbia Acorn International Select Columbia Global Value Fund Columbia Greater China Fund Columbia International Stock Fund Columbia International Value Fund Columbia Marsico International Opportunities Fund Columbia Multi-Advisor International Equity Fund Columbia World Equity Fund ---------------------------------------------------------------------------------------- TAXABLE BOND FUNDS Columbia Conservative High Yield Fund Columbia Core Bond Fund Columbia Federal Securities Fund Columbia High Income Fund Columbia High Yield Opportunity Fund Columbia Income Fund Columbia Intermediate Bond Fund Columbia Intermediate Core Bond Fund Columbia Short Term Bond Fund Columbia Strategic Income Fund Columbia Total Return Bond Columbia U.S. Treasury Index Fund 27 COLUMBIA GROWTH STOCK FUND ---------------------------------------------------------------------------------------- TAX-EXEMPT BOND FUNDS Columbia California Tax-Exempt Fund Columbia CA Intermediate Municipal Bond Fund Columbia Connecticut Tax-Exempt Fund Columbia CT Intermediate Municipal Bond Fund Columbia FL Intermediate Municipal Bond Fund Columbia GA Intermediate Municipal Bond Fund Columbia High Yield Municipal Fund Columbia Intermediate Municipal Bond Fund Columbia MA Intermediate Municipal Bond Fund Columbia Massachusetts Tax-Exempt Fund Columbia MD Intermediate Municipal Bond Fund Columbia Municipal Income Fund Columbia NC Intermediate Municipal Bond Fund Columbia New York Tax-Exempt Fund Columbia NJ Intermediate Municipal Bond Fund Columbia NY Intermediate Municipal Bond Fund Columbia OR Intermediate Municipal Bond Fund Columbia RI Intermediate Municipal Bond Fund Columbia SC Intermediate Municipal Bond Fund Columbia Short Term Municipal Bond Fund Columbia Tax-Exempt Fund Columbia Tax-Exempt Insured Fund Columbia TX Intermediate Municipal Bond Fund Columbia VA Intermediate Municipal Bond Fund ---------------------------------------------------------------------------------------- MONEY MARKET FUNDS Columbia Cash Reserves Columbia CA Tax-Exempt Reserves Columbia Government Reserves Columbia Government Plus Reserves Columbia MA Municipal Reserves Columbia Money Market Reserves Columbia Municipal Reserves Columbia NY Tax-Exempt Reserves Columbia Prime Reserves Columbia Tax-Exempt Reserves Columbia Treasury Reserves For complete product information on any Columbia fund, visit our website at www.columbiafunds.com. 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. Columbia Management Advisors, Inc. and Banc of America Capital Management, LLC, both SEC registered investment advisors and wholly owned subsidiaries of Bank of America, N.A., merged on September 30, 2005. At that time, the newly combined advisor changed its name to Columbia Management Advisors, LLC ("CMA"). CMA will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 28 IMPORTANT INFORMATION ABOUT THIS REPORT COLUMBIA GROWTH STOCK FUND TRANSFER AGENT Columbia Management Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800-345-6611 DISTRIBUTOR Columbia Management Distributors, Inc. One Financial Center Boston MA 02111 INVESTMENT ADVISOR Columbia Management Advisors, LLC 100 Federal Street Boston MA 02110 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP 125 High Street Boston MA 02110 The funds mail one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia Growth Stock Fund. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the funds and with the most recent copy of the Columbia Funds Performance Update. A description of the policies and procedures that the funds use to determine how to vote proxies relating to its portfolio securities and a copy of the funds' voting record are available (i) at www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the funds voted proxies relating to portfolio securities during the 12-month period ended June 30, is available from the SEC's website. Information regarding how the funds voted proxies relating to portfolio securities is also available from the funds' website. The funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The funds' 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. Columbia Management Advisors, Inc. and Banc of America Capital Management, LLC, both SEC registered investment advisors and wholly owned subsidiaries of Bank of America, N.A., merged on September 30, 2005. At that time, the newly combined advisor changed its name to Columbia Management Advisors, LLC ("CMA"). CMA will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 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 Growth Stock Fund Annual Report, September 30, 2005 ------------- PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 ------------- Columbia Management(R) (c) 2005 Columbia Management Distributors, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 www.columbiafunds.com SHC-42/91121-0905 (11/05) 05/8399 COLUMBIA YOUNG INVESTOR FUND ANNUAL REPORT SEPTEMBER 30, 2005 sidebar TABLE OF CONTENTS PERFORMANCE INFORMATION ....................... 1 FUND PROFILE .................................. 2 UNDERSTANDING YOUR EXPENSES ................... 3 ECONOMIC UPDATE ............................... 4 PORTFOLIO MANAGER'S REPORT .................... 5 FINANCIAL STATEMENTS .......................... 7 INVESTMENT PORTFOLIO ....................... 8 STATEMENT OF ASSETS AND LIABILITIES ........ 15 STATEMENT OF OPERATIONS .................... 16 STATEMENT OF CHANGES IN NET ASSETS ......... 17 NOTES TO FINANCIAL STATEMENTS ................. 19 FINANCIAL HIGHLIGHTS .......................... 26 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ..................... 30 TRUSTEES ...................................... 31 OFFICERS ...................................... 33 COLUMBIA FUNDS ................................ 34 IMPORTANT INFORMATION ABOUT THIS REPORT ............................. 36 ACTIVITY PAGES ................................ I The views expressed in the President's Message and Portfolio Manager's Report reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Fund. References to specific company securities should not be construed as a recommendation or investment advice. Graphic: - ----------------- Not FDIC Insured - ----------------- May Lose Value - ----------------- No Bank Guarantee - ----------------- end sidebar PRESIDENT'S MESSAGE Photo of: Christopher L. Wilson DEAR SHAREHOLDER: Columbia Management, the asset management division of Bank of America, is in the final stages of a significant business integration effort. Over the last year, we have integrated various components of Nations Funds, Galaxy Funds and Columbia Funds, resulting in a single fund family under the Columbia name that covers a wide range of markets, sectors and asset classes. Our team of talented, seasoned investment professionals will continue to strive to achieve strong results within their investment categories. Our objective is not only to provide our shareholders with the best products, but also to enhance the breadth and availability of our services. In addition to expanding the level of services available to the funds, portfolio managers and shareholders, we have been able to achieve significant cost savings for the funds by aggregating our business. In September, we made major inroads in the initiative to streamline our product offerings. This included merging several funds and renaming Nations Funds as Columbia Funds, as well as consolidating the Nations and Columbia web sites. Over the summer, we completed the service provider consolidation for shareholder servicing. As we work to complete the remaining product and service provider consolidations by the end of 2005, we remain committed to building a mutual fund business that helps you meet, and hopefully exceed, your personal financial goals. We value the confidence you have placed in us to assist you in managing your funds during these changing times. As with all businesses within Bank of America, we understand that your trust must be continually earned and will remain focused on producing results for you. We will continue to strive for the highest standards of performance and service excellence. All of these efforts have been undertaken to enable you, as a shareholder, to benefit from the execution of a consolidated business plan. We believe a more streamlined fund family with consistent performance and lower fees will provide the best opportunity for investment growth. We also believe that providing more robust services to you through multiple channels (Web, phones, voice response) will be beneficial to you. 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 managers on key factors that influenced performance. We encourage you to read the manager reports carefully and discuss any questions you have with your financial advisor. As always, we thank you for choosing Columbia Management. We look forward to helping you keep your financial goals on target in the years to come. Sincerely, /s/ Christopher L. Wilson Christopher L. Wilson President, Columbia Funds Head of Mutual Funds, Columbia Management Christopher L. Wilson is Head of Mutual Funds for Columbia Management and responsible for the day-to-day delivery of mutual fund services to the firm's investors. Working closely with the Legal and Compliance teams, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. As President and CEO of Columbia Funds (formerly Nations, Galaxy and Columbia Funds), Chris serves as the primary interface to the Fund Boards. Chris joined Bank of America in 2004. PERFORMANCE INFORMATION COLUMBIA YOUNG INVESTOR FUND sidebar 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 OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 ($) SALES CHARGE: WITHOUT WITH CLASS A 20,982 19,778 CLASS B 20,522 20,522 CLASS C 20,537 20,537 CLASS Z 21,007 N/A end sidebar CLASS A SHARES CLASS A SHARES RUSSELL 3000 WITHOUT SALES CHARGE WITH SALES CHARGE INDEX OCT-95 10000 9425 10000 9797 9234 9914 10356 9761 10354 10427 9827 10523 10835 10212 10828 10980 10348 10988 11438 10780 11099 12208 11506 11310 12797 12061 11600 13044 12294 11563 12179 11479 10958 12725 11993 11290 13553 12774 11904 13741 12951 12122 14280 13459 12977 14086 13276 12821 14741 13893 13530 14358 13532 13545 13401 12631 12933 14003 13198 13570 15087 14219 14497 15810 14901 15100 16908 15936 16284 16328 15390 15623 17127 16142 16509 16630 15674 15954 17044 16064 16565 17787 16765 16896 17894 16865 16984 19329 18218 18198 20077 18923 19101 20306 19139 19288 19612 18484 18812 20734 19541 19448 20054 18900 19094 16334 15394 16169 17318 16323 17271 18510 17446 18582 19602 18475 19719 20925 19722 20974 21896 20637 21687 21121 19907 20919 22773 21463 21687 23351 22008 22665 22546 21249 22234 23648 22288 23357 22397 21109 22649 21942 20681 22391 21457 20224 21818 23226 21890 23186 24696 23276 23835 27553 25969 25356 26914 25366 24362 29379 27690 24588 30249 28509 26513 27753 26157 25580 25192 23743 24861 27522 25939 25597 27070 25514 25144 29780 28068 27010 28389 26757 25786 27450 25871 25420 24005 22625 23076 24785 23360 23464 26009 24514 24267 23333 21991 22049 21529 20291 20611 23570 22215 22264 23424 22077 22442 22562 21265 22029 21084 19872 21666 19661 18531 20388 17013 16035 18589 17593 16581 19022 19162 18060 20487 19335 18223 20776 18809 17727 20516 18310 17257 20098 19398 18283 20978 18219 17171 19877 17856 16829 19646 16578 15624 18232 15125 14256 16782 15047 14182 16861 13467 12692 15089 14558 13721 16290 15648 14748 17276 14589 13750 16300 14288 13467 15900 14067 13258 15638 14193 13377 15802 15283 14404 17093 16089 15164 18126 16135 15208 18370 16482 15535 18791 16988 16011 19208 16547 15595 18999 17574 16564 20148 17827 16802 20426 18571 17503 21360 18777 17697 21806 18902 17816 22100 18681 17607 21837 18285 17234 21385 18633 17561 21695 18964 17874 22127 18285 17234 21291 18190 17144 21378 18460 17398 21707 18618 17548 22063 19439 18322 23089 20133 18976 23911 19656 18526 23275 20212 19050 23787 19927 18782 23385 19499 18378 22878 20024 18872 23745 20024 18872 23911 20738 19546 24891 20722 19530 24655 SEP-05 20982 19778 24869 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Young Investor Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 3000 Index is an unmanaged index that tracks the performance of 3,000 of the largest US companies, based on market capitalization. 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 09/30/05 (%) - ------------------------------------------------------------------------------------------------------------------ SHARE CLASS A B C Z - ------------------------------------------------------------------------------------------------------------------ INCEPTION 07/29/02 07/29/02 07/29/02 04/29/94 - ------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------ 1-YEAR 13.62 7.11 12.87 7.87 12.86 11.86 13.95 - ------------------------------------------------------------------------------------------------------------------ 5-YEAR -5.88 -6.98 -6.29 -6.62 -6.28 -6.28 -5.85 - ------------------------------------------------------------------------------------------------------------------ 10-YEAR 7.69 7.06 7.45 7.45 7.46 7.46 7.70 - ------------------------------------------------------------------------------------------------------------------ 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. 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. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Class A, B and C shares (newer class shares) performance information includes returns for the fund's class Z shares (the oldest existing fund class) for periods prior to the inception of the newer class shares. The newer class shares returns are not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between class Z shares and the newer class shares. Had the expense differential been reflected, the returns for the periods prior to the inception of the newer class shares would have been lower. Class A, B and C shares were initially offered July 29, 2002 and class Z shares were initially offered April 29, 1994. 1 FUND PROFILE COLUMBIA YOUNG INVESTOR FUND sidebar SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005, THE FUND'S CLASS A SHARES RETURNED 13.62% WITHOUT SALES CHARGE. o STRONG STOCK MARKET RETURNS EARLY IN THE PERIOD HELPED THE FUND, ITS BENCHMARK AND PEER GROUP TO DOUBLE DIGIT RETURNS FOR THE PERIOD. o ENERGY AND HEALTH CARE STOCKS WERE THE FUND'S BEST PERFORMERS, WITH ADDITIONAL CONTRIBUTIONS FROM FINANCIAL STOCKS. CLASS A SHARES RUSSELL 3000 13.62% INDEX 14.57% artwork: 2 arrows up OBJECTIVE Seeks long-term growth TOTAL NET ASSETS $768.4 million MANAGEMENT STYLE artwork: Equity Style: Blend Size: Large end sidebar The information below gives you a snapshot of your fund at the end of the reporting period. Your fund is actively managed, and the composition of its portfolio will change over time. SECTORS AS OF 09/30/05 (%) FINANCIALS 18.6 INFORMATION TECHNOLOGY 17.0 HEALTH CARE 16.9 ENERGY 11.7 CONSUMER DISCRETIONARY 10.4 CONSUMER STAPLES 8.5 INDUSTRIALS 7.7 MATERIALS 5.0 UTILITIES 2.3 TELECOMMUNICATION SERVICES 1.9 TOP 10 HOLDINGS AS OF 09/30/05 (%) EXXON MOBIL 2.9 MICROSOFT 1.9 CITIGROUP 1.7 SCHLUMBERGER 1.7 JOHNSON & JOHNSON 1.5 MEDTRONIC 1.5 NOVARTIS 1.4 GENERAL ELECTRIC 1.4 AMERICAN INTERNATIONAL GROUP 1.3 NEWFIELD EXPLORATION 1.3 Portfolio holdings are calculated as a percentage of net assets. Sector breakdown is calculated as a percentage of total investments excluding short-term investments. Management Style is determined by Columbia Management, and is based on the investment strategy and process as outlined in the fund's prospectus. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 2 UNDERSTANDING YOUR EXPENSES COLUMBIA YOUNG INVESTOR FUND sidebar ESTIMATING YOUR ACTUAL EXPENSES To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM COLUMBIA MANAGEMENT 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. end sidebar As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 - --------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL CLASS A 1,000.00 1,000.00 1,052.59 1,018.31 6.94 6.82 1.35 - --------------------------------------------------------------------------------------------------------------------------- CLASS B 1,000.00 1,000.00 1,049.28 1,014.80 10.52 10.35 2.05 - --------------------------------------------------------------------------------------------------------------------------- CLASS C 1,000.00 1,000.00 1,049.28 1,014.80 10.52 10.35 2.05 - --------------------------------------------------------------------------------------------------------------------------- CLASS Z 1,000.00 1,000.00 1,059.47 1,025.07 5.64 5.54 1.09 - --------------------------------------------------------------------------------------------------------------------------- Expenses paid during the period are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the fund's most recent fiscal half-year and divided by (365.) Had the Investment Advisor/Transfer Agent not waived or reimbursed a portion of class A, B, C and Z shares' expenses, total return would have been reduced. Had the distributor not waived a portion of class A shares' distribution fee, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. COMPARE WITH OTHER FUNDS Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 3 ECONOMIC UPDATE COLUMBIA YOUNG INVESTOR FUND sidebar SUMMARY FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005 o DESPITE BOUTS OF VOLATILITY, THE BROAD STOCK MARKET GENERATED A DOUBLE-DIGIT RETURN FOR THE PERIOD. THE S&P 500 INDEX RETURNED 12.25%. AS THE ECONOMY EXPANDED, SMALL-CAP STOCKS OUTPERFORMED LARGE-CAP STOCKS, AS MEASURED BY THE RUSSELL 2000 INDEX. S&P 500 INDEX RUSSELL 2000 INDEX 12.25% 17.95% artwork: 2 arrows up o INVESTMENT-GRADE BONDS CHALKED UP MODEST GAINS AS MEASURED BY THE LEHMAN BROTHERS AGGREGATE BOND INDEX. HIGH-YIELD BONDS LED THE FIXED INCOME MARKETS, AS MEASURED BY THE MERRILL LYNCH US HIGH YIELD, CASH PAY INDEX. LEHMAN INDEX MERRILL LYNCH INDEX 2.80% 6.69% artwork: 2 arrows up The S&P 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. The Russell 2000 Index is an unmanaged index that tracks the performance of the 2,000 smallest of the 3,000 largest US companies based on market capitalization. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues. The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that tracks the performance of non-investment-grade corporate bonds. emd sidebar The US economy moved ahead at a healthy pace during the 12-month period that began October 1, 2004 and ended September 30, 2005. Gross domestic product (GDP) expanded at an annualized rate of 3.8% as job growth helped sustain consumer spending and rising profits boosted business spending. Employment data was solid, even in light of Hurricanes Katrina and Rita, which disrupted the labor market near the end of the period. During the first 11 months of the period, the economy added an average of 185,000 new jobs each month. In September, 8,000 jobs were lost as a direct result of the Gulf Coast floods, and the unemployment rate rose from 4.9% to 5.1%. However, the number of jobs lost was lower than originally estimated - and considerably lower than expected. Energy prices weighed on economic growth as the period wore on. The first signs of relief came in September as the price of crude oil retreated from a record high of $69.81 a barrel. Signs of slower growth cropped up in retail spending. And, consumer confidence readings dipped in July and fell sharply in September. The decline was the largest in 25 years, according to the University of Michigan's monthly survey. Despite these setbacks, the latest data on the economy suggest that it has retained momentum. Manufacturing activity remained strong, and business activity in non-manufacturing industries continued to expand, although the pace slowed in September. DESPITE VOLATILITY, STOCKS MOVED AHEAD The S&P 500 Index--a broad measure of large company stock market performance--returned 12.25% for this reporting period. The double-digit gain masked considerable volatility. Early in the period, stocks rallied after the presidential election then again in response to positive economic news midway through the period and in the aftermath of two hurricanes. These rallies, however, alternated with declines linked to higher energy prices, rising interest rates and weakening consumer confidence. Small- and mid-cap stocks outperformed large-cap stocks. Value stocks led growth stocks except among small caps, where growth gained a small advantage over value. BONDS DELIVERED MODEST GAINS The US bond market delivered positive but modest returns despite steadily rising short-term interest rates and higher long-term rates in the final months of the period. Interest rates and bond prices move in opposite directions. The Lehman Brothers Aggregate Bond Index, a broad measure of the performance of investment-grade bonds returned 2.80% for the 12-month period. The yield on the 10-year US Treasury note, a bellwether for the bond market, ended the period at just over 4.3%--slightly higher than where it started the period. High-yield bonds led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 6.69%. SHORT-TERM INTEREST RATES MOVED HIGHER The Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.75% to 3.75% during the period. In the wake of Hurricanes Katrina and Rita, some market observers speculated that the Fed might curtail its rate hikes. However, Fed Chairman Greenspan indicated that inflation was a greater concern than the sustainability of economic growth and we believe that the Fed is likely to continue to raise short-term interest rates into the first half of 2006. 4 PORTFOLIO MANAGER'S REPORT COLUMBIA YOUNG INVESTOR FUND sidebar 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. NET ASSET VALUE PER SHARE AS OF 09/30/05 ($) CLASS A 13.21 CLASS B 12.98 CLASS C 12.99 CLASS Z 11.52 DISTRIBUTIONS DECLARED PER SHARE 10/01/04 - 09/30/05 ($) CLASS A 0.06 CLASS B 0.00 CLASS C 0.00 CLASS Z 0.05 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/05 (%) EXXON MOBIL 2.9 AMERADA HESS 1.2 HUMANA 1.2 COVENTRY HEALTH CARE 1.0 PFIZER 1.2 GAP 0.5 MITSUBISHI TOKYO FINANCIAL GROUP 1.4 MIZUHO FINANCIAL GROUP 1.2 AVON PRODUCTS 0.6 ESTEE LAUDER COS. 0.4 COLGATE-PALMOLIVE 1.0 MARVELL TECHNOLOGY GROUP 0.6 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. end sidebar HOW DID THE FUND PERFORM? During the 12-month period ended September 30, 2005, the fund's class A shares returned 13.62% (without sales charges) slightly underperforming its benchmark the Russell 3000 Index which returned 14.57%. The fund's performance was better than the 13.17% average return of funds in its peer group, the Morningstar(R) Large Blend Category.1 Which sectors had the greatest positive impact on the fund's performance during the period? Several sectors, including energy, healthcare, consumer discretionary, financials and materials, made a positive contribution to the fund's relative performance. Throughout the reporting period a recurring theme in the news was the rising price of crude oil. We believe that emerging markets - like India and China - have propelled the demand for energy and raw materials, and companies in these sectors benefited as prices were driven upward by increased demand and limited supply. While the jump in oil prices hurt consumers, it helped oil producers. In the energy sector, the fund benefited from its investments in Exxon Mobil and Amerada Hess and the sector overall was a solid contributor to performance. The fund's health care investments also contributed to performance. Among the fund's strong performers in the health care sector were Humana and Coventry Health Care. Not all of the fund's health care stocks did well. Pfizer's share price declined as investors worried about the impact of upcoming patent expirations, as well as the risks associated with a popular pain management drug. In addition, the fund's investment in Pharmion was a disappointment and detracted from the fund's return. We sold the stock. In the consumer discretionary sector, Abercrombie & Fitch was a standout performer. However, within the context of a broader effort to reduce the portfolio's exposure to a potential slowdown in consumer demand, we took advantage of the stock's strong performance and sold our position. By contrast, Gap and PETsMART detracted from the fund's return. We held onto Gap but sold PETsMART. While financial stocks trailed the broader market due to concerns over rising interest rates, some of our investments in the sector were strong. The fund benefited from its investments in Japanese banks, Mitsubishi Tokyo Financial Group and Mizuho Financial Group. WHICH SECTORS HURT PERFORMANCE? Consumer staples, industrials, technology, telecom services and utilities, all detracted from fund returns. Avon Products, a global cosmetics company, struggled with sales in important overseas markets and the stock detracted from returns. The fund's investment in Estee Lauder Cos. was also a disappointment and the stock detracted from returns. However, both Chiquita Brands International and Colgate-Palmolive were strong 1 (C)2005, Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 5 COLUMBIA YOUNG INVESTOR FUND sidebar DID YOU KNOW? Consumer stocks fall into two broad categories. Consumer discretionary stocks include all types of retail stores, media companies, hotels and restaurants. They reflect the consumer's optional spending--those purchases that are not essential. These companies can or typically thrive when economic growth is strong, but they can pull back when the economy weakens and consumers become more careful with their spending. By contrast, the consumer staples sector includes companies that make and market products that consumers consider essentials, such as food, beverages, drugs and personal care products. These companies may not look very exciting when economic growth is strong, but investors tend to favor them in lean economic times on the theory that consumers still need to eat and do the laundry. end sidebar performers for the fund. We sold Chiquita Brands International but held onto Colgate-Palmolive. In addition, the fund's investments in the industrial sector overall were a disappointment and several stocks were sold, including Honeywell International and Emerson Electric. Within technology, the fund benefited from its investments in Marvell Technology Group, a company that makes integrated circuits, and Autodesk, which makes design and drafting software for businesses. We held onto Marvell Technology Group but sold Autodesk, taking profits. On the downside, Diebold and InfoSpace detracted from portfolio returns and were sold. WHAT IS YOUR STRATEGY GOING FORWARD? We believe that the economy could be entering the mature phase of its current cycle. With that in mind, we plan to seek out companies that have demonstrated the ability to maintain steady growth independent of the economy. We plan to focus on large companies and de-emphasize small and mid-sized companies. In addition, we have increased the fund's investments in markets outside the United States. We plan to continue to evaluate overseas markets for investment opportunities, seeking the reasonably priced stocks of companies with the opportunity to benefit from compelling growth trends. Photo of: Emil A. Gjester Emil A. Gjester has managed Columbia Young Investor Fund since May 2005. /s/ Emil A. Gjester Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. Investments in small- and mid-cap stocks may present special risks. They tend to be more volatile and may be less liquid than the stocks of larger companies. Small-cap stocks often have narrower markets, limited financial resources and tend to be more thinly traded 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 advisor's assessment of a company's prospects is wrong, the price of its stock may not approach the value the advisor has placed on it. 6 FINANCIAL STATEMENTS SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT PORTFOLIO The investment portfolio details all of the fund's holdings and their market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset, industry, country or geographic region (if applicable) to demonstrate areas of concentration and diversification. - ------------------------------------------------------------------------------------------------------------------------------------ STATEMENT OF ASSETS AND LIABILITIES This statement details the fund's assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all the fund's liabilities (including any unpaid expenses) from the total of the fund's investment and non-investment assets. The share price for each class is calculated by dividing net assets for that class by the number of shares outstanding in that class as of the last day of the reporting period. - ------------------------------------------------------------------------------------------------------------------------------------ STATEMENT OF OPERATIONS This statement details income earned by the fund and the expenses accrued by the fund during the reporting period. The Statement of Operations also shows any net gain or loss the fund realized on the sales of its holdings during the period, as well as any unrealized gains or losses recognized over the period. The total of these results represents the fund's net increase or decrease in net assets from operations. - ------------------------------------------------------------------------------------------------------------------------------------ STATEMENT OF CHANGES IN NET ASSETS This statement demonstrates how the fund's net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and dividend reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding. - ------------------------------------------------------------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS These notes disclose the organizational background of the fund, its significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies. - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS The financial highlights demonstrate how the fund's net asset value per share was affected by the fund's operating results. The financial highlights table also discloses the classes' performance and certain key ratios (e.g., class expenses and net investment income as a percentage of average net assets). 7 INVESTMENT PORTFOLIO SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND COMMON STOCKS - 95.4% CONSUMER DISCRETIONARY - 10.0% SHARES VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- AUTO COMPONENTS - 0.4% Nokian Renkaat Oyj 120,000 2,846,624 Auto Components Total 2,846,624 ----------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES - 0.7% Career Education Corp. (a) 150,000 5,334,000 Diversified Consumer Services Total 5,334,000 ----------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE - 1.5% McDonald's Corp. 50,000 1,674,500 Starbucks Corp. (a) 90,000 4,509,000 Yum! Brands, Inc. 110,000 5,325,100 Hotels, Restaurants & Leisure Total 11,508,600 ----------------------------------------------------------------------------- INTERNET & CATALOG RETAIL - 0.4% eBay, Inc. (a) 80,000 3,296,000 Internet & Catalog Retail Total 3,296,000 ----------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS - 0.5% Amer Sports Oyj 24,238 463,312 Marvel Enterprise, Inc. (a) 200,000 3,574,000 Leisure Equipment & Products Total 4,037,312 ----------------------------------------------------------------------------- MEDIA - 3.8% Grupo Televisa SA, ADR 14,200 1,018,282 Liberty Global, Inc., Class A (a) 40,000 1,083,200 Liberty Global, Inc., Class C (a) 40,000 1,030,000 McClatchy Co., Class A 67,800 4,422,594 McGraw-Hill Companies, Inc. 67,458 3,240,682 News Corp., Class B 170,000 2,805,000 Pixar (a) 75,000 3,338,250 R.H. Donnelley Corp. (a) 97,700 6,180,502 Time Warner, Inc. 230,000 4,165,300 Viacom, Inc., Class B 50,000 1,650,500 Media Total 28,934,310 ----------------------------------------------------------------------------- MULTILINE RETAIL - 0.2% Federated Department Stores, Inc. 25,000 1,671,750 Multiline Retail Total 1,671,750 ----------------------------------------------------------------------------- SPECIALTY RETAIL - 1.9% Barnes & Noble, Inc. 110,000 4,147,000 Gap, Inc. 200,000 3,486,000 Home Depot, Inc. 175,000 6,674,500 Specialty Retail Total 14,307,500 ----------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS - 0.6% NIKE, Inc., Class B 55,000 4,492,400 Textiles, Apparel & Luxury Goods Total 4,492,400 ------------ CONSUMER DISCRETIONARY TOTAL 76,428,496 CONSUMER STAPLES - 8.2% - ------------------------------------------ ----------------------------------------------------------------------------- BEVERAGES - 1.6% Coca-Cola Co. 200,000 8,638,000 PepsiCo, Inc. 71,032 4,028,225 Beverages Total 12,666,225 ----------------------------------------------------------------------------- FOOD & STAPLES RETAILING - 0.6% Walgreen Co. 100,000 4,345,000 Food & Staples Retailing Total 4,345,000 ----------------------------------------------------------------------------- See Accompanying Notes to Financial Statements. 8 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND COMMON STOCKS - (CONTINUED) CONSUMER STAPLES - (CONTINUED) SHARES VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- FOOD PRODUCTS - 2.6% Nestle SA, Registered Shares 27,000 7,912,558 Smithfield Foods, Inc. (a) 65,000 1,929,200 Unilever NV, NY Registered Shares 60,000 4,287,000 Wrigley (Wm.) Jr. Co. 80,000 5,750,400 Food Products Total 19,879,158 ----------------------------------------------------------------------------- HOUSEHOLD PRODUCTS - 2.4% Colgate-Palmolive Co. 141,800 7,485,622 Kimberly-Clark Corp. 30,000 1,785,900 Procter & Gamble Co. 150,000 8,919,000 Household Products Total 18,190,522 ----------------------------------------------------------------------------- PERSONAL PRODUCTS - 1.0% Avon Products, Inc. 175,000 4,725,000 Estee Lauder Cos., Inc., Class A 80,000 2,786,400 Personal Products Total 7,511,400 ------------ CONSUMER STAPLES TOTAL 62,592,305 ENERGY - 11.2% - ------------------------------------------ ----------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES - 3.1% Cooper Cameron Corp. (a) 35,000 2,587,550 National-Oilwell Varco, Inc. (a) 40,000 2,632,000 Schlumberger Ltd. 151,900 12,817,322 TGS Nopec Geophysical Co., ASA (a) 60,000 2,561,236 Veritas DGC, Inc. (a) 90,000 3,295,800 Energy Equipment & Services Total 23,893,908 ----------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS - 8.1% Amerada Hess Corp. 67,500 9,281,250 BP PLC, ADR 75,000 5,313,750 Chevron Corp. 85,000 5,502,050 ConocoPhillips 118,600 8,291,326 Exxon Mobil Corp. 350,000 22,239,000 Newfield Exploration Co. (a) 200,000 9,820,000 Plains Exploration & Production Co. (a) 40,000 1,712,800 Oil, Gas & Consumable Fuels Total 62,160,176 ------------ ENERGY TOTAL 86,054,084 FINANCIALS - 17.7% - ------------------------------------------ ----------------------------------------------------------------------------- CAPITAL MARKETS - 2.5% Bank of New York Co., Inc. 83,517 2,456,235 Federated Investors, Inc., Class B 50,000 1,661,500 Lazard Ltd., Class A 40,000 1,012,000 Merrill Lynch & Co., Inc. 75,383 4,624,747 Morgan Stanley 110,000 5,933,400 Nomura Holdings, Inc., ADR 220,000 3,418,800 Capital Markets Total 19,106,682 ----------------------------------------------------------------------------- COMMERCIAL BANKS - 6.1% City National Corp. 55,400 3,882,986 HSBC Holdings PLC, ADR 80,000 6,498,400 ICICI Bank Ltd., ADR 100,000 2,825,000 Mitsubishi Tokyo Financial Group, Inc. 600 7,951,083 Mitsubishi Tokyo Financial Group, Inc., ADR 200,000 2,606,000 Mizuho Financial Group, Inc. 1,400 8,974,774 U.S. Bancorp 160,000 4,492,800 See Accompanying Notes to Financial Statements. 9 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) SHARES VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- COMMERCIAL BANKS - (CONTINUED) Wachovia Corp. 80,000 3,807,200 Wells Fargo & Co. 99,831 5,847,102 Commercial Banks Total 46,885,345 ----------------------------------------------------------------------------- CONSUMER FINANCE - 1.9% American Express Co. 140,000 8,041,600 SLM Corp. 121,000 6,490,440 Consumer Finance Total 14,532,040 ----------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 3.1% Citigroup, Inc. 290,000 13,200,800 JPMorgan Chase & Co. 170,000 5,768,100 Principal Financial Group, Inc. 100,000 4,737,000 Diversified Financial Services Total 23,705,900 ----------------------------------------------------------------------------- INSURANCE - 4.1% American International Group, Inc. 167,291 10,365,350 Berkshire Hathaway, Inc., Class B (a) 3,200 8,739,200 Chubb Corp. 25,865 2,316,211 First American Corp. 50,000 2,283,500 Fuji Fire & Marine Insurance Co., Ltd. 250,000 957,789 Lincoln National Corp. 100,000 5,202,000 SAFECO Corp. 40,000 2,135,200 Insurance Total 31,999,250 ------------ FINANCIALS TOTAL 136,229,217 HEALTH CARE - 16.1% - ------------------------------------------ ----------------------------------------------------------------------------- BIOTECHNOLOGY - 2.1% Abgenix, Inc. (a) 100,000 1,268,000 Amgen, Inc. (a) 100,000 7,967,000 Applera Corp. - Applied Biosystems Group 75,000 1,743,000 Biogen Idec, Inc. (a) 57,500 2,270,100 Millennium Pharmaceuticals, Inc. (a) 125,000 1,166,250 Qiagen NV (a) 130,000 1,695,200 Biotechnology Total 16,109,550 ----------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES - 3.8% Adeza Biomedical Corp. (a) 150,000 2,611,500 DENTSPLY International, Inc. 50,000 2,701,000 Hospira, Inc. (a) 100,000 4,097,000 Medtronic, Inc. 214,300 11,490,766 Thermo Electron Corp. (a) 145,000 4,480,500 Zimmer Holdings, Inc. (a) 50,000 3,444,500 Health Care Equipment & Supplies Total 28,825,266 ----------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 4.9% Cardinal Health, Inc. 110,000 6,978,400 Coventry Health Care, Inc. (a) 85,000 7,311,700 Humana, Inc. (a) 200,000 9,576,000 IMS Health, Inc. 143,100 3,601,827 LifePoint Hospitals, Inc. (a) 50,000 2,186,500 Medco Health Solutions, Inc. (a) 60,000 3,289,800 Patterson Companies, Inc. (a) 80,000 3,202,400 Tenet Healthcare Corp. (a) 150,000 1,684,500 Health Care Providers & Services Total 37,831,127 ----------------------------------------------------------------------------- See Accompanying Notes to Financial Statements. 10 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) SHARES VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- PHARMACEUTICALS - 5.3% Bristol-Myers Squibb Co. 109,539 2,635,508 Gedeon Richter Ltd. 11,000 1,981,129 Johnson & Johnson 181,670 11,496,078 Novartis AG, ADR 217,993 11,117,643 Pfizer, Inc. 375,000 9,363,750 Schering-Plough Corp. 150,000 3,157,500 Valeant Pharmaceuticals International 60,000 1,204,800 Pharmaceuticals Total 40,956,408 ------------ HEALTH CARE TOTAL 123,722,351 INDUSTRIALS - 7.3% - ------------------------------------------ ----------------------------------------------------------------------------- AEROSPACE & DEFENSE - 0.7% United Technologies Corp. 99,640 5,165,338 Aerospace & Defense Total 5,165,338 ----------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS - 1.4% United Parcel Service, Inc., Class B 130,000 8,986,900 Yamato Transport Co., Ltd. 100,000 1,651,380 Air Freight & Logistics Total 10,638,280 ----------------------------------------------------------------------------- AIRLINES - 0.5% Alaska Air Group, Inc. (a) 50,200 1,458,812 Southwest Airlines Co. 175,000 2,598,750 Airlines Total 4,057,562 ----------------------------------------------------------------------------- BUILDING PRODUCTS - 0.3% Assa Abloy AB 175,000 2,472,083 Building Products Total 2,472,083 ----------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES - 0.3% Waste Management, Inc. 75,237 2,152,531 Commercial Services & Supplies Total 2,152,531 ----------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES - 2.4% 3M Co. 30,000 2,200,800 General Electric Co. 310,000 10,437,700 Siemens AG, ADR 75,000 5,799,750 Industrial Conglomerates Total 18,438,250 ----------------------------------------------------------------------------- MACHINERY - 0.8% Deere & Co. 75,000 4,590,000 Eaton Corp. 20,000 1,271,000 Illinois Tool Works, Inc. 10,000 823,300 Machinery Total 6,684,300 ----------------------------------------------------------------------------- MARINE - 0.9% A.P. Moller - Maersk A/S 500 5,108,057 Finnlines Oyj 90,000 1,581,444 Marine Total 6,689,501 ------------ INDUSTRIALS TOTAL 56,297,845 INFORMATION TECHNOLOGY - 16.2% - ------------------------------------------ ----------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 2.9% Avaya, Inc. (a) 260,000 2,678,000 Cisco Systems, Inc. (a) 409,700 7,345,921 Corning, Inc. (a) 200,000 3,866,000 Nokia Oyj, ADR 190,000 3,212,900 Plantronics, Inc. 60,000 1,848,600 Tandberg ASA 250,000 3,350,033 Communications Equipment Total 22,301,454 See Accompanying Notes to Financial Statements. 11 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY- (CONTINUED) SHARES VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 2.4% Apple Computer, Inc. (a) 30,000 1,608,300 Dell, Inc. (a) 180,000 6,156,000 Hewlett-Packard Co. 100,000 2,920,000 International Business Machines Corp. 44,062 3,534,654 NCR Corp. (a) 60,000 1,914,600 Synaptics, Inc. (a) 135,000 2,538,000 Computers & Peripherals Total 18,671,554 ----------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.6% Murata Manufacturing Co., Ltd. 60,000 3,364,022 Symbol Technologies, Inc. 80,000 774,400 Electronic Equipment & Instruments Total 4,138,422 ----------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES - 0.7% Google, Inc., Class A (a) 5,000 1,582,300 Yahoo!, Inc. (a) 120,000 4,060,800 Internet Software & Services Total 5,643,100 ----------------------------------------------------------------------------- IT SERVICES - 1.8% Accenture Ltd., Class A 80,000 2,036,800 First Data Corp. 100,000 4,000,000 Infosys Technologies Ltd., ADR 45,000 3,342,600 Paychex, Inc. 128,000 4,746,240 IT Services Total 14,125,640 ----------------------------------------------------------------------------- OFFICE ELECTRONICS - 0.3% Zebra Technologies Corp., Class A (a) 65,000 2,540,850 Office Electronics Total 2,540,850 ----------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.3% Altera Corp. (a) 145,000 2,770,950 Analog Devices, Inc. 117,500 4,363,950 Applied Materials, Inc. 100,000 1,696,000 Intel Corp. 290,000 7,148,500 Marvell Technology Group Ltd. (a) 108,300 4,993,713 Samsung Electronics Co., Ltd., GDR (b) 34,000 9,673,000 Xilinx, Inc. 75,000 2,088,750 Semiconductors & Semiconductor Equipment Total 32,734,863 ----------------------------------------------------------------------------- SOFTWARE - 3.2% Adobe Systems, Inc. (a) 75,000 2,238,750 Electronic Arts, Inc. (a) 70,000 3,982,300 Microsoft Corp. 566,239 14,569,329 Oracle Corp. (a) 100,000 1,239,000 SAP AG, ADR 35,000 1,516,550 Wind River Systems, Inc. (a) 50,000 646,500 Software Total 24,192,429 ------------ INFORMATION TECHNOLOGY TOTAL 124,348,312 MATERIALS - 4.7% - ------------------------------------------ ----------------------------------------------------------------------------- CHEMICALS - 1.1% E.I. du Pont de Nemours & Co. 60,000 2,350,200 Monsanto Co. 40,000 2,510,000 Potash Corp. of Saskatchewan, Inc. 37,000 3,452,840 Chemicals Total 8,313,040 ----------------------------------------------------------------------------- CONSTRUCTION MATERIALS - 0.4% Vulcan Materials Co. 40,000 2,968,400 Construction Materials Total 2,968,400 See Accompanying Notes to Financial Statements. 12 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND COMMON STOCKS - (CONTINUED) MATERIALS - (CONTINUED) SHARES VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- METALS & MINING - 1.9% Alcoa, Inc. 125,000 3,052,500 Mittal Steel Co. NV, Class A (a) 100,000 2,880,000 Newmont Mining Corp. 92,500 4,363,225 Phelps Dodge Corp. 32,000 4,157,760 Placer Dome, Inc. 35,000 600,250 Metals & Mining Total 15,053,735 ----------------------------------------------------------------------------- PAPER & FOREST PRODUCTS - 1.3% Potlatch Corp. 106,800 5,566,416 Votorantim Celulose e Papel SA, ADR 210,000 2,814,000 Weyerhaeuser Co. 25,000 1,718,750 Paper & Forest Products Total 10,099,166 ------------ MATERIALS TOTAL 36,434,341 TELECOMMUNICATION SERVICES - 1.8% - ------------------------------------------ ----------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES - 1.4% BellSouth Corp. 107,676 2,831,879 CenturyTel, Inc. 100,000 3,498,000 SBC Communications, Inc. 100,000 2,397,000 PT Telekomunikasi Indonesia, ADR 110,000 2,289,100 Diversified Telecommunication Services Total 11,015,979 ----------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES - 0.4% Vodafone Group PLC, ADR 105,000 2,726,850 Wireless Telecommunication Services Total 2,726,850 ------------ TELECOMMUNICATION SERVICES TOTAL 13,742,829 UTILITIES - 2.2% - ------------------------------------------ ----------------------------------------------------------------------------- ELECTRIC UTILITIES - 0.7% Entergy Corp. 44,000 3,270,080 Exelon Corp. 35,000 1,870,400 Electric Utilities Total 5,140,480 ----------------------------------------------------------------------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.6% Constellation Energy Group, Inc. 75,000 4,620,000 Independent Power Producers & Energy Traders Total 4,620,000 ----------------------------------------------------------------------------- MULTI-UTILITIES - 0.9% Dominion Resources, Inc. 65,000 5,599,100 PG&E Corp. 41,078 1,612,311 Multi-Utilities Total 7,211,411 ------------ UTILITIES TOTAL 16,971,891 TOTAL COMMON STOCKS (COST OF $605,167,747) 732,821,671 See Accompanying Notes to Financial Statements. 13 COLUMBIA YOUNG INVESTOR FUND SHORT-TERM OBLIGATION - 4.2% PAR ($) VALUE ($) - ------------------------------------------ ----------------------------------------------------------------------------- Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by U.S. Treasury Notes with various maturities to 06/15/09, market value of $33,073,606 (repurchase proceeds $32,430,511) 32,422,000 32,422,000 TOTAL SHORT-TERM OBLIGATION (COST OF $32,422,000) 32,422,000 TOTAL INVESTMENTS - 99.6% (COST OF $637,589,747) (C) 765,243,671 OTHER ASSETS & LIABILITIES, NET - 0.4% 3,206,059 NET ASSETS - 100.0% 768,449,730 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2005, the value of this security, which is not illiquid, represents 1.3% of net assets. (c) Cost for federal income tax purposes is $638,300,120. The Fund invested in the following countries at September 30, 2005: SUMMARY OF SECURITIES BY COUNTRY (UNAUDITED) VALUE % OF TOTAL INVESTMENTS -------------------------------------------- ----- ---------------------- United States* $624,162,930 81.6% Japan (28,923,828) (3.8) Netherlands (21,679,522) (2.8) Switzerland (19,030,201) (2.5) United Kingdom (14,539,000) (1.9) South Korea (9,673,000) (1.3) Finland (8,104,279) (1.0) Germany (7,316,300) (0.9) India (6,167,600) (0.8) Norway (5,911,270) (0.8) Denmark (5,108,057) (0.7) Canada (4,053,090) (0.5) Brazil (2,814,000) (0.4) Sweden (2,472,083) (0.3) Indonesia (2,289,100) (0.3) Hungary (1,981,129) (0.3) Mexico (1,018,282) (0.1) ------------ ------ $765,243,671 100.0% ============ ====== *Includes short-term obligation. Certain securities are listed by country of underlying exposure but may trade predominantly on other exchanges. ACRONYM NAME ------- ---- ADR American Depositary Receipt GDR Global Depositary Receipt See Accompanying Notes to Financial Statements. 14 STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND ($) - ------------------------------------------ ----------------------------------------------------------------------------- ASSETS Investments, at cost 637,589,747 ------------ Investments, at value 765,243,671 Cash 719 Receivable for: Investments sold 12,272,650 Fund shares sold 37,696 Interest 2,837 Dividends 528,132 Foreign tax reclaims 3,037 Expense reimbursement due from Investment Advisor 106,118 Deferred Trustees' compensation plan 26,209 ------------ Total Assets 778,221,069 ----------------------------------------------------------------------------- LIABILITIES Payable for: Investments purchased 8,183,501 Fund shares repurchased 407,963 Investment advisory fee 366,942 Administration fee 114,913 Transfer agent fee 413,275 Pricing and bookkeeping fees 16,136 Trustees' fees 2,494 Custody fee 632 Reports to shareholders 169,997 Distribution and service fees 30,391 Chief compliance officer expenses and fees 1,789 Deferred Trustees' fees 26,209 Other liabilities 37,097 ------------ Total Liabilities 9,771,339 NET ASSETS 768,449,730 ----------------------------------------------------------------------------- COMPOSITION OF NET ASSETS Paid-in capital 760,242,041 Undistributed net investment income 2,066,681 Accumulated net realized loss (121,506,604) Net unrealized appreciation (depreciation) on: Investments 127,653,924 Foreign currency translations (6,312) NET ASSETS 768,449,730 ----------------------------------------------------------------------------- CLASS A Net assets 90,537,894 Shares outstanding 6,853,093 Net asset value per share 13.21(a) Maximum offering price per share ($13.21/0.9425) 14.02(b) ----------------------------------------------------------------------------- CLASS B Net assets 5,693,168 Shares outstanding 438,576 Net asset value and offering price per share 12.98(a) ----------------------------------------------------------------------------- CLASS C Net assets 832,787 Shares outstanding 64,129 Net asset value and offering price per share 12.99(a) ----------------------------------------------------------------------------- CLASS Z Net assets 671,385,881 Shares outstanding 58,268,302 Net asset value, offering and redemption price per share 11.52 (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 15 STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND ($) - ------------------------------------------ ----------------------------------------------------------------------------- INVESTMENT INCOME Dividends 12,896,598 Interest 634,197 ----------- Total Investment Income (net of foreign taxes withheld of $66,768) 13,530,795 ----------------------------------------------------------------------------- EXPENSES Investment advisory fee 4,572,029 Administration fee 1,429,281 Distribution fee: Class A 93,573 Class B 44,651 Class C 5,956 Service fee: Class A 233,933 Class B 14,884 Class C 1,984 Transfer agent fee: Class A 659,789 Class B 41,977 Class C 5,601 Class Z 4,836,520 Pricing and bookkeeping fees 209,814 Trustees' fees 26,136 Custody fee 57,315 Chief compliance officer expenses and fees (See Note 4) 7,563 Non-recurring costs (See Note 9) 12,548 Other expenses 535,049 ----------- Total Expenses 12,788,603 Fees and expenses waived or reimbursed by Investment Advisor/Transfer Agent: Class A (538,014) Class B (31,229) Class C (4,218) Class Z (3,266,059) Fees waived by Distributor-Class A (46,787) Non-recurring costs assumed by Investment Advisor (See Note 9) (12,548) Custody earnings credit (3,725) ----------- Net Expenses 8,886,023 ----------- Net Investment Income 4,644,772 ----------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: ON INVESTMENTS AND FOREIGN CURRENCY Investments 62,838,956 Foreign currency transactions (27,606) ----------- Net realized gain 62,811,350 Net change in unrealized appreciation (depreciation) on: Investments 35,066,802 Foreign currency translations (6,312) ----------- Net change in unrealized appreciation (depreciation) 35,060,490 ----------- Net Gain 97,871,840 ----------- Net Increase in Net Assets from Operations 102,516,612 See Accompanying Notes to Financial Statements. 16 STATEMENT OF CHANGES IN NET ASSETS COLUMBIA YOUNG INVESTOR FUND YEAR ENDED SEPTEMBER 30, -------------------------- INCREASE (DECREASE) IN NET ASSETS 2005 ($) 2004 ($) - ------------------------------------------ ----------------------------------------------------------------------------- OPERATIONS Net investment income 4,644,772 1,142,785 Net realized gain on investments and foreign currency transactions 62,811,350 79,300,117 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations 35,060,490 7,949,049 -------------------------- Net Increase from Operations 102,516,612 88,391,951 ----------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income: Class A (453,783) -- Class Z (3,568,318) -- -------------------------- Total Distributions Declared to Shareholders (4,022,101) -- ----------------------------------------------------------------------------- SHARE TRANSACTIONS Class A: Subscriptions 4,038,449 5,875,316 Distributions reinvested 441,584 -- Redemptions (19,906,944) (16,955,769) -------------------------- Net Decrease (15,426,911) (11,080,453) Class B: Subscriptions 438,856 628,365 Redemptions (1,552,256) (2,147,700) -------------------------- Net Decrease (1,113,400) (1,519,335) Class C: Subscriptions 133,149 182,250 Redemptions (197,407) (113,350) -------------------------- Net Increase (Decrease) (64,258) 68,900 Class Z: Subscriptions 31,843,303 42,087,456 Distributions reinvested 3,530,424 -- Redemptions (128,226,734) (115,275,588) -------------------------- Net Decrease (92,853,007) (73,188,132) Net Decrease from Share Transactions (109,457,576) (85,719,020) -------------------------- Total Increase (Decrease) in Net Assets (10,963,065) 2,672,931 ----------------------------------------------------------------------------- NET ASSETS Beginning of period 779,412,795 776,739,864 End of period 768,449,730 779,412,795 -------------------------- Undistributed net investment income at end of period 2,066,681 1,488,435 ----------------------------------------------------------------------------- See Accompanying Notes to Financial Statements. 17 COLUMBIA YOUNG INVESTOR FUND YEAR ENDED SEPTEMBER 30, -------------------------- 2005 2004 - ------------------------------------------ ----------------------------------------------------------------------------- CHANGES IN SHARES Class A: Subscriptions 322,640 506,593 Issued for distributions reinvested 35,019 -- Redemptions (1,586,522) (1,458,671) -------------------------- Net Decrease (1,228,863) (952,078) Class B: Subscriptions 35,535 54,732 Redemptions (125,656) (187,544) -------------------------- Net Decrease (90,121) (132,812) Class C: Subscriptions 10,871 15,881 Redemptions (16,117) (10,012) -------------------------- Net Increase (Decrease) (5,246) 5,869 Class Z: Subscriptions 2,921,164 4,164,659 Issued for distributions reinvested 321,849 -- Redemptions (11,690,078) (11,357,922) -------------------------- Net Decrease (8,447,065) (7,193,263) See Accompanying Notes to Financial Statements. 18 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND NOTE 1. ORGANIZATION Columbia Young Investor Fund (the "Fund"), a series of Columbia Fund Trust XI (the "Trust"), is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOALS The Fund seeks long-term growth. The Fund also has an educational objective to teach children and teenagers about mutual funds, basic economic principles and personal finance through a variety of educational materials and the materials are paid for by the Fund. FUND SHARES The Fund may issue an unlimited number of shares and offers four classes of shares: Class A, Class B, Class C and Class Z. Each share class has its own sales charge and expense structure. Class A shares are subject to a maximum front-end sales charge of 5.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within twelve months on an original purchase of $1 million to $50 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. 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. Foreign securities are generally valued at the last sale price on the foreign exchange or market on which they trade. If any foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sales price of the local shares in the principal market in which such securities are normally traded. Generally, trading foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are generally determined at 2:00 p.m. Eastern (U.S.) time. Events affecting the values of such foreign securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE, which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the values of such foreign securities occur and it is determined that the market quotations are not reliable, then these foreign securities will be valued at their fair value using procedures approved by the Board of Trustees. The Fund may use a systematic fair valuation model provided by an independent third party to value securities principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. If a security is valued at a "fair value", such value is likely to be different from the last quoted market price for the security. 19 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND SECURITY TRANSACTIONS Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. Awards from class action litigation are recorded as a reduction of cost if the Fund still owns the applicable securities on payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains. The Fund estimates components of distributions from real estate investment trusts (REITs). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. If the Fund no longer owns the applicable securities, any distributions received in excess of income are recorded as realized gains. 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. 20 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND For the year ended September 30, 2005, permanent book and tax basis differences resulting primarily from differing treatments for REIT dividends and non-deductible excise taxes paid were identified and reclassified among the components of the Fund's net assets as follows: UNDISTRIBUTED NET INVESTMENT ACCUMULATED INCOME NET REALIZED LOSS PAID-IN CAPITAL - -------------------------------------------------------------------------------- $ (44,425) $ 58,134 $ (13,709) Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the year ended September 30, 2005 was as follows: SEPTEMBER 30, 2005 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM: - -------------------------------------------------------------------------------- ORDINARY INCOME* $ 4,022,101 - -------------------------------------------------------------------------------- LONG-TERM CAPITAL GAINS -- - -------------------------------------------------------------------------------- * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of September 30, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED LONG-TERM NET UNREALIZED ORDINARY INCOME CAPITAL GAINS APPRECIATION* - -------------------------------------------------------------------------------- $ 2,088,388 $ -- $ 126,943,551 * The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to deferral of losses from wash sales, capital loss carryovers and non-deductible deferred trustees fees. Unrealized appreciation and depreciation at September 30, 2005, based on cost of investments for federal income tax purposes was: UNREALIZED APPRECIATION $ 139,145,781 UNREALIZED DEPRECIATION (12,202,230) - -------------------------------------------------------------------------------- NET UNREALIZED APPRECIATION $ 126,943,551 The following capital loss carryforwards may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD - -------------------------------------------------------------------------------- 2007 $ 219,451 - -------------------------------------------------------------------------------- 2008 273,885 - -------------------------------------------------------------------------------- 2009 20,667,592 - -------------------------------------------------------------------------------- 2011 99,635,305 - -------------------------------------------------------------------------------- TOTAL $120,796,233 - -------------------------------------------------------------------------------- Of these carryforwards, $17,368,600 (expiring 09/30/09) and $3,792,328 ($219,451 expiring 09/30/07, $273,885 expiring 09/30/08 and $3,298,992 expiring 09/30/09) remain from the Fund's merger with Liberty Young Investor Fund and Liberty Growth Investor Fund, respectively. Utilization of Liberty Young Investor Fund's and Liberty Growth Investor Fund's losses could be subject to limitations imposed by the Internal Revenue Code. Capital loss carryforwards of $63,616,647 were utilized during the year ended September 30, 2005. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions of the Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISORY FEE Columbia Management Advisors, LLC ("Columbia"), an indirect wholly owned subsidiary of Bank of America Corporation ("BOA"), is the investment advisor to the Fund. On September 30, 2005, Columbia Management Advisors, Inc. changed its name to Columbia Management Advisors, LLC. Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets at the following annual rates: AVERAGE DAILY NET ASSETS ANNUAL FEE RATE - -------------------------------------------------------------------------------- FIRST $500 MILLION 0.60% - -------------------------------------------------------------------------------- $500 MILLION TO $1 BILLION 0.55% - -------------------------------------------------------------------------------- OVER $1 BILLION 0.50% For the year ended September 30, 2005, the Fund's effective investment advisory fee rate was 0.58%. 21 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND ADMINISTRATION FEE Columbia provides administrative and other services to the Fund for a monthly administration fee based on the Fund's average daily net assets at the following annual rates: AVERAGE DAILY NET ASSETS ANNUAL FEE RATE - -------------------------------------------------------------------------------- FIRST $500 MILLION 0.200% - -------------------------------------------------------------------------------- $500 MILLION TO $1 BILLION 0.150% - -------------------------------------------------------------------------------- OVER $1 BILLION 0.125% - -------------------------------------------------------------------------------- For the year ended September 30, 2005, the Fund's effective administration fee rate was 0.18%. PRICING AND BOOKKEEPING FEES Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). As a result, Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services based on the number of securities held by the Fund. For the year ended September 30, 2005, the effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.027%. TRANSFER AGENT FEE Columbia Management Services, Inc. (the "Transfer Agent"), an affiliate of Columbia and a wholly-owned subsidiary of BOA, provides shareholder services to the Fund. The Transfer Agent has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. On August 22, 2005, Columbia Funds Services, Inc. was renamed Columbia Management Services, Inc. For its services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $28.00 per open account per class. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. Effective November 1, 2004, Columbia has voluntarily agreed to reimburse the Fund for a portion of transfer agency fees so that transfer agent fees (exclusive of out-of-pocket expenses) will not exceed 0.10% annually for the Fund. Columbia, at its discretion, may revise or discontinue this arrangement any time. Prior to November 1, 2004, Columbia voluntarily agreed to reimburse a portion of transfer agency fees so that transfer agent fees (exclusive of out-of-pocket expenses) would not exceed 0.10% annually for Class A, Class B and Class C shares only. In addition, for the period from September 1, 2005 through October 31, 2005, the Transfer Agent has voluntarily agreed to waive a portion of its fees to reflect reduced contractual fees that will be charged to the Fund effective November 1, 2005. UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES Columbia Management Distributors, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. On August 22, 2005, Columbia Funds Distributor, Inc. changed its name to Columbia Management Distributors, Inc. For the year ended September 30, 2005, the Distributor has retained net underwriting discounts of $5,546 on sales of the Fund's Class A shares and net CDSC fees of $7,170, $10,046 and $1,307 on Class A, Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan"), which allows the payment of a monthly service fee to the Distributor at the annual rate of 0.25% of the average daily net assets attributable to Class A, Class B and Class C shares. The Plan also requires the payment of a monthly distribution fee to the Distributor equal to 0.10% annually of the average daily net assets attributable to Class A shares and 0.75% annually of the average daily net assets attributable to Class B and Class C shares. The Distributor has voluntarily agreed to waive a portion of the Class A share distribution fee so that it will not exceed 0.05% annually. The CDSC and the distribution 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. 22 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND 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. The Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Chief Compliance Officer position. The Fund's fee will not exceed $15,000 per year. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. OTHER Columbia provides certain services to the Fund related to Sarbanes-Oxley compliance. For the year ended September 30, 2005, the Fund paid $2,316 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. NOTE 5. PORTFOLIO INFORMATION For the year ended September 30, 2005, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $599,702,188 and $734,625,306, respectively. NOTE 6. OTHER During the year ended September 30, 2005, the Fund purchased shares of the iShares Russell 1000 Value Index Fund in violation of investment restrictions. This position was subsequently sold at a gain of $31,070. NOTE 7. SHARES OF BENEFICIAL INTEREST As of September 30, 2005, the Fund had a shareholder that held 5.81% of the shares outstanding. Subscription and redemption activity of this shareholder may have a material effect on the Fund. NOTE 8. 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 year ended September 30, 2005, the Fund did not borrow under this arrangement. NOTE 9. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES 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 Securities and Exchange Commission ("SEC") (the "SEC Order"). The SEC Order and the NYAG Settlement are referred to collectively as 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 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 23 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND and other policies and procedures; and retain an independent distribution consultant (see below). The Columbia Funds have also 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 funds 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 Funds' independent trustees and not unacceptable to the staff of the SEC. At this time, the distribution plan is still under development. As such, any gain to the Funds or its shareholders cannot currently be determined. 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 is 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, the Trustees of the Columbia Funds, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities. More than 300 cases including those filed against entities unaffiliated with the funds, their Boards, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities have been transferred to the Federal District Court in Maryland and consolidated in a multi-district proceeding (the "MDL"). The derivative cases purportedly brought on behalf of the Columbia Funds in the MDL have been consolidated under the lead case. The fund derivative plaintiffs allege that the funds were harmed by market timing and late trading activity and seek, among other things, the removal of the trustees of the Columbia Funds, removal of the Columbia Group, disgorgement of all management fees and monetary damages. On March 21, 2005 purported class action plaintiffs filed suit in Massachusetts state court alleging that the conduct, including market timing, entitles Class B shareholders in certain Columbia funds to an exemption from contingent deferred sales charges upon early redemption ("the CDSC Lawsuit"). The CDSC Lawsuit has been removed to federal court in Massachusetts and the federal Judicial Panel has transferred the CDSC Lawsuit to the MDL. The MDL is ongoing. Accordingly, an estimate of the financial impact of this litigation on any Fund, if any, cannot currently be made. On January 11, 2005, a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Columbia Funds and Columbia. The lawsuit alleged 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 Funds and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs alleged 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. Plaintiffs filed a notice of voluntary dismissal of the lawsuit as to all defendants and all claims, without prejudice, which was so-ordered by the judge on or about November 9, 2005. In 2004, certain Columbia funds, advisers and affiliated entities were named as defendants in certain purported shareholder class and derivative actions making claims, including claims under the Investment Company and the Investment Advisers Acts of 1940 and state law. The suits allege, inter alia, that the fees and expenses paid by the funds are excessive and that the advisers and their affiliates inappropriately used fund assets to distribute the funds and for other improper purpose. On March 2, 2005, the actions were consolidated in the Massachusetts federal court as In re Columbia Entities Litigation. The plaintiffs filed a consolidated amended complaint on June 9, 2005. 24 SEPTEMBER 30, 2005 COLUMBIA YOUNG INVESTOR FUND 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 (with the exception of the January 11, 2005 "failure to participate" litigation, which has been dismissed) are ongoing, however, based on currently available information, Columbia believes that these lawsuits are without merit, that the likelihood they will have a material adverse impact on any fund is remote, and that the lawsuits are not likely to materially affect its ability to provide investment management services to its clients, including the Funds. For the year ended September 30, 2005, Columbia has assumed $12,548 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. 25 FINANCIAL HIGHLIGHTS COLUMBIA YOUNG INVESTOR FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: PERIOD YEAR ENDED SEPTEMBER 30, ENDED -------------------------------------- SEPTEMBER 30, CLASS A SHARES 2005 2004 2003 2002 (a) - ----------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.68 $ 10.47 $ 8.52 $ 8.94 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (b) 0.05(c) 0.03 (0.03) (0.01) Net realized and unrealized gain (loss) on investments and foreign currency 1.54 1.18 1.98 (0.41) --------- --------- --------- --------- Total from Investment Operations 1.59 1.21 1.95 (0.42) - ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.06) -- -- -- --------- -------- --------- -------- Total Distributions Declared to Shareholders (0.06) -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.21 $ 11.68 $ 10.47 $ 8.52 Total return (d)(e) 13.62% 11.56% 22.89% (4.70)%(f) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 1.35% 1.33% 1.54% 1.67%(h) Net investment income (loss) (g) 0.38% 0.26% (0.35)% (0.49)%(h) Waiver/reimbursement 0.63% 1.10% 0.56% 0.80%(h) Portfolio turnover rate 79% 58% 128% 32% Net assets, end of period (000's) $ 90,538 $ 94,386 $ 94,617 $ 82,564 - ----------------------------------------------------------------------------------------------------------------------------------- (a) Class A shares were initially offered on July 29, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (e) Had the Investment Advisor/Transfer Agent and/or Distributor not waived or reimbursed a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 26 COLUMBIA YOUNG INVESTOR FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: PERIOD YEAR ENDED SEPTEMBER 30, ENDED -------------------------------------- SEPTEMBER 30, CLASS B SHARES 2005 2004 2003 2002 (a) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 11.50 $ 10.39 $ 8.51 $ 8.94 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.03)(c) (0.05) (0.10) (0.02) Net realized and unrealized gain (loss) on investments and foreign currency 1.51 1.16 1.98 (0.41) --------- -------- --------- -------- Total from Investment Operations 1.48 1.11 1.88 (0.43) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 12.98 $ 11.50 $ 10.39 $ 8.51 Total return (d)(e) 12.87% 10.68% 22.09% (4.81)%(f) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 2.05% 2.03% 2.24% 2.37%(h) Net investment loss (g) (0.32)% (0.44)% (1.05)% (1.19)%(h) Waiver/reimbursement 0.53% 0.46% 0.51% 0.75%(h) Portfolio turnover rate 79% 58% 128% 32% Net assets, end of period (000's) $ 5,693 $ 6,082 $ 6,872 $ 6,505 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Class B shares were initially offered on July 29, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net investment loss per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (d) Total return at net asset value assuming no contingent deferred sales charge. (e) Had the Investment Advisor/Transfer Agent not waived or reimbursed a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 27 COLUMBIA YOUNG INVESTOR FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: PERIOD YEAR ENDED SEPTEMBER 30, ENDED ------------------------------------- SEPTEMBER 30, CLASS C SHARES 2005 2004 2003 2002 (a) - ----------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.51 $ 10.39 $ 8.51 $ 8.94 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.03)(c) (0.05) (0.10) (0.02) Net realized and unrealized gain (loss) on investments and foreign currency 1.51 1.17 1.98 (0.41) --------- -------- -------- -------- Total from Investment Operations 1.48 1.12 1.88 (0.43) - ----------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.99 $ 11.51 $ 10.39 $ 8.51 Total return (d)(e) 12.86% 10.78% 22.09% (4.81)%(f) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 2.05% 2.03% 2.24% 2.37%(h) Net investment loss (g) (0.32)% (0.43)% (1.05)% (1.19)%(h) Waiver/reimbursement 0.53% 0.71% 0.50% 0.75%(h) Portfolio turnover rate 79% 58% 128% 32% Net assets, end of period (000's) $ 833 $ 798 $ 660 $ 488 - ----------------------------------------------------------------------------------------------------------------------------------- (a) Class C shares were initially offered on July 29, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net investment loss per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (d) Total return at net asset value assuming no contingent deferred sales charge. (e) Had the Investment Advisor/Transfer Agent not waived or reimbursed a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. 28 COLUMBIA YOUNG INVESTOR FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------------------- CLASS Z SHARES 2005 2004 2003 (a) 2002 (a)(b) 2001 (a) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.16 $ 9.13 $ 7.42 $ 9.38 $ 17.97 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (c) 0.07(d) 0.01 (0.03) (0.07)(e) (0.06)(e) Net realized and unrealized gain (loss) on investments and foreign currency 1.34 1.02 1.74 (1.89) (6.52) -------- -------- -------- -------- --------- Total from Investment Operations 1.41 1.03 1.71 (1.96) (6.58) - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.05) -- -- -- -- From net realized gains -- -- -- -- (1.56) In excess of net realized gains -- -- -- -- (0.45) -------- -------- -------- -------- --------- Total Distributions Declared to Shareholders (0.05) -- -- -- (2.01) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.52 $ 10.16 $ 9.13 $ 7.42 $ 9.38 Total return (f) 13.95%(g) 11.28% 23.05% (20.90)% (40.08)% - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.09% 1.46% 1.49% 1.58%(e) 1.26%(e) Net investment income (loss) (h) 0.63% 0.13% (0.30)% (0.71)%(e) (0.41)%(e) Waiver/reimbursement 0.48% -- -- -- -- Portfolio turnover rate 79% 58% 128% 32% 23% (i) Net assets, end of period (000's) $671,386 $678,146 $674,590 $573,111 $746,698 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Per share data has been restated to reflect a 2-for-1 share split effective July 25, 2003. (b) Class S shares were redesignated Class Z shares on July 29, 2002. (c) Per share data was calculated using average shares outstanding during the period. (d) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (e) Per share data and ratios reflect income and expenses inclusive of the Fund's proportionate share of the income and expenses of the SR&F Growth Investor Portfolio prior to the termination of the master feeder/fund structure on July 26, 2002. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor/Transfer Agent not waived or reimbursed a portion of expenses, total return would have been reduced. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Portfolio turnover disclosed is for the SR&F Growth Investor Portfolio. 29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM COLUMBIA YOUNG INVESTOR FUND TO THE TRUSTEES OF COLUMBIA FUNDS TRUST XI AND THE SHAREHOLDERS OF COLUMBIA YOUNG INVESTOR FUND In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia Young Investor Fund (the "Fund") (a series of Columbia Funds Trust XI) at September 30, 2005, the results of its operations, the changes in its net assets, and its financial highlights for the periods indicated, in conformity with accounting principles generally accepted the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts November 21, 2005 30 TRUSTEES COLUMBIA YOUNG INVESTOR FUND The Trustees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. NAME, ADDRESS AND AGE, POSITION WITH FUNDS, YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA OR APPOINTED TO OFFICE(1) FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES DOUGLAS A. HACKER (Age 49) Executive Vice President-Strategy of United Airlines (airline) since December, 2002 (formerly P.O. Box 66100 President of UAL Loyalty Services (airline) from September, 2001 to December, 2002; Executive Chicago, IL 60666 Vice President and Chief Financial Officer of United Airlines from July, 1999 to September, 2001; Trustee (since 1996) Senior Vice President-Finance from March, 1993 to July, 1999). Oversees 86, Nash Finch Company (food distributor) --------------------------------------------------------------------------------------------------- JANET LANGFORD KELLY (Age 47) Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP (law firm) since March, 2005; Adjunct Professor 9534 W. Gull Lake Drive Senior of Law, Northwestern University, since September, 2004 (formerly Chief Administrative Richland, MI 49083-8530 Officer and Vice President, Kmart Holding Corporation (consumer goods) from September, 2003 to Trustee (since 1996) March, 2004; Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer- products manufacturer) from January, 1995 to September, 1999). Oversees 86, None --------------------------------------------------------------------------------------------------- RICHARD W. LOWRY (Age 69) Private Investor since August, 1987 (formerly Chairman and Chief Executive Officer, U.S. Plywood 10701 Charleston Drive Corporation (building products manufacturer)). Oversees 89(3), None Vero Beach, FL 32963 Trustee (since 1995) --------------------------------------------------------------------------------------------------- CHARLES R. NELSON (Age 62) Professor of Economics, University of Washington, since January, 1976; Ford and Louisa Van Voorhis Department of Economics Professor of Political Economy, University of Washington, since September, 1993 (formerly Director, University of Washington Institute for Economic Research, University of Washington from September, 2001 to June, 2003); Seattle, WA 98195 Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Trustee (since 1981) Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. Oversees 86, None --------------------------------------------------------------------------------------------------- JOHN J. NEUHAUSER (Age 63) Academic Vice President and Dean of Faculties since August, 1999, Boston College (formerly Dean, 84 College Road Boston College School of Management from September, 1977 to August, 1999). Oversees 89(3), Chestnut Hill, MA 02467-3838 Saucony, Inc. (athletic footwear) Trustee (since 1985) --------------------------------------------------------------------------------------------------- 31 COLUMBIA YOUNG INVESTOR FUND NAME, ADDRESS AND AGE, POSITION WITH FUNDS, YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA OR APPOINTED TO OFFICE(1) FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES PATRICK J. SIMPSON (Age 61) Partner, Perkins Coie L.L.P. (law firm). Oversees 86, None 1120 N.W. Couch Street Tenth Floor Portland, OR 97209-4128 Trustee (since 2000) --------------------------------------------------------------------------------------------------- THOMAS E. STITZEL (Age 69) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, College of 2208 Tawny Woods Place Business, Boise State University); Chartered Financial Analyst. Oversees 86, None Boise, ID 83706 Trustee (since 1998) --------------------------------------------------------------------------------------------------- THOMAS C. THEOBALD (Age 68) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) since September, 8 Sound Shore Drive, 2004 (formerly Managing Director, William Blair Capital Partners (private equity investing) from Suite 285 September, 1994 to September, 2004). Oversees 86, Anixter International (network support Greenwich, CT 06830 equipment distributor); Ventas, Inc. (real estate investment trust); Jones Lang LaSalle (real Trustee and Chairman estate management services) and Ambac Financial Group (financial guaranty insurance) of the Board(4) (since 1996) --------------------------------------------------------------------------------------------------- ANNE-LEE VERVILLE (Age 60) Retired since 1997 (formerly General Manager, Global Education Industry, IBM Corporation 359 Stickney Hill Road (computer and technology) from 1994 to 1997). Oversees 86, Chairman of the Board of Directors, Hopkinton, NH 03229 Enesco Group, Inc. (designer, importer and distributor of giftware and collectibles) Trustee (since 1998) --------------------------------------------------------------------------------------------------- RICHARD L. WOOLWORTH (Age 64) Retired since December, 2003 (formerly Chairman and Chief Executive Officer, The Regence Group 100 S.W. Market Street #1500 (regional health insurer); Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon; Portland, OR 97207 Certified Public Accountant, Arthur Young & Company). Oversees 86, Northwest Natural Gas Co. Trustee (since 1991) (natural gas service provider) --------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE WILLIAM E. MAYER(2) (Age 65) Partner, Park Avenue Equity Partners (private equity) since February, 1999 (formerly Partner, 399 Park Avenue Development Capital LLC from November 1996, to February, 1999). Oversees 89(3), Lee Enterprises Suite 3204 (print media), WR Hambrecht + Co. (financial service provider); Reader's Digest (publishing); New York, NY 10022 OPENFIELD Solutions (retail industry technology provider) Trustee (since 1994) --------------------------------------------------------------------------------------------------- (1) In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex. (2) Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. (3) Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 3 funds, which are advised by an affiliate of the Advisor. (4) Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. The Statement of Additional Information includes additional information about the Trustees of the Funds and is available, without charge, upon request by calling 800-426-3750. 32 OFFICERS COLUMBIA YOUNG INVESTOR FUND NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA FUNDS, YEAR FIRST ELECTED OR APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS CHRISTOPHER L. WILSON (Age 48) Head of Mutual Funds since August, 2004 and Managing Director of the Advisor since September, 2005; One Financial Center President of the Columbia Funds, Liberty Funds and Stein Roe Funds since October, 2004; President Boston, MA 02111 and Chief Executive Officer of the Nations Funds since January, 2005; President of the Galaxy Funds President (since 2004) since April, 2005; Director of Bank of America Global Liquidity Funds, plc since May, 2005; Director of Banc of America Capital Management (Ireland), Limited since May, 2005; Director of FIM Funding, Inc. since January, 2005; Senior Vice President of Columbia Management Distributors, Inc. since January, 2005; Director of Columbia Management Services, Inc. since January, 2005 (formerly Senior Vice President of Columbia Management from January, 2005 to August, 2005; Senior Vice President of BACAP Distributors LLC from January, 2005 to July, 2005; President and Chief Executive Officer, CDC IXIS Asset Management Services, Inc. from September, 1998 to August, 2004). --------------------------------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (Age 41) Treasurer of the Columbia Funds since October, 2003 and of the Liberty Funds, Stein Roe Funds One Financial Center and All-Star Funds since December, 2000; Managing Director of the Advisor since September, 2005 Boston, MA 02111 (formerly Vice President of Columbia Management from April, 2003 to August, 2005; President of Treasurer (since 2000) the Columbia Funds, Liberty Funds and Stein Roe Funds from February, 2004 to October, 2004; Chief Accounting Officer and Controller of the Liberty Funds and All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002 (formerly Treasurer from December, 2002 to December, 2004 and President from February, 2004 to December, 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of Colonial Management Associates, Inc. from February, 1998 to October, 2000). --------------------------------------------------------------------------------------------------- MARY JOAN HOENE (Age 56) Senior Vice President and Chief Compliance Officer of the Columbia Funds, Liberty Funds, Stein Roe 100 Federal Street Funds and All-Star Funds since August, 2004; Chief Compliance Officer of the Columbia Management Boston, MA 02110 Multi-Strategy Hedge Fund, LLC since August 2004; Chief Compliance Officer of the BACAP Alternative Senior Vice President Multi-Strategy Hedge Fund LLC since October 2004 (formerly Partner, Carter, Ledyard & Milburn LLP and Chief Compliance from January, 2001 to August, 2004; Counsel, Carter, Ledyard & Milburn LLP from November, 1999 to Officer (since 2004) December, 2000; Vice President and Counsel, Equitable Life Assurance Society of the United States from April, 1998 to November, 1999). --------------------------------------------------------------------------------------------------- MICHAEL G. CLARKE (Age 35) Chief Accounting Officer of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds One Financial Center since October, 2004; Managing Director of the Advisor since September, 2005 (formerly Controller of Boston, MA 02111 the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds from May, 2004 to October, Chief Accounting Officer 2004; Assistant Treasurer from June, 2002 to May, 2004; Vice President, Product Strategy & (since 2004) Development of the Liberty Funds and Stein Roe Funds from February, 2001 to June, 2002; Assistant Treasurer of the Liberty Funds, Stein Roe Funds and the All-Star Funds from August, 1999 to February, 2001; Audit Manager, Deloitte & Touche LLP from May, 1997 to August, 1999). --------------------------------------------------------------------------------------------------- JEFFREY R. COLEMAN (Age 35) Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds since October, One Financial Center 2004 (formerly Vice President of CDC IXIS Asset Management Services, Inc. and Deputy Treasurer of Boston, MA 02111 the CDC Nvest Funds and Loomis Sayles Funds from February, 2003 to September, 2004; Assistant Vice Controller (since 2004) President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August, 2000 to February, 2003; Tax Manager of PFPC, Inc. from November, 1996 to August, 2000). --------------------------------------------------------------------------------------------------- R. SCOTT HENDERSON (Age 46) Secretary of the Columbia Funds, Liberty Funds and Stein Roe Funds since December, 2004 (formerly One Financial Center Of Counsel, Bingham McCutchen from April, 2001 to September, 2004; Executive Director and Boston, MA 02111 General Counsel, Massachusetts Pension Reserves Investment Management Board from September, Secretary (since 2004) 1997 to March, 2001 --------------------------------------------------------------------------------------------------- 33 COLUMBIA FUNDS COLUMBIA YOUNG INVESTOR FUND ---------------------------------------------------------------------------------------- GROWTH FUNDS Columbia Acorn Fund Columbia Acorn Select Columbia Acorn USA Columbia Growth Stock Fund Columbia Large Cap Growth Fund Columbia Marsico 21st Century Fund Columbia Marsico Focused Equities Fund Columbia Marsico Growth Fund Columbia Marsico Mid Cap Growth Fund Columbia Mid Cap Growth Fund Columbia Small Cap Growth Fund I Columbia Small Cap Growth Fund II Columbia Small Company Equity Fund Columbia Tax-Managed Growth Fund ---------------------------------------------------------------------------------------- CORE FUNDS Columbia Common Stock Fund Columbia Large Cap Core Fund Columbia Small Cap Core Fund Columbia Young Investor Fund ---------------------------------------------------------------------------------------- VALUE FUNDS Columbia Disciplined Value Fund Columbia Dividend Income Fund Columbia Large Cap Value Fund Columbia Mid Cap Value Fund Columbia Small Cap Value Fund I Columbia Small Cap Value Fund II Columbia Strategic Investor ---------------------------------------------------------------------------------------- ASSET ALLOCATION/HYBRID FUNDS Columbia Asset Allocation Fund Columbia Asset Allocation Fund II Columbia Balanced Fund Columbia Liberty Fund Columbia LifeGoalTM Balanced Growth Portfolio Columbia LifeGoalTM Growth Portfolio Columbia LifeGoalTM Income Portfolio Columbia LifeGoalTM Income and Growth Portfolio Columbia Thermostat Fund ---------------------------------------------------------------------------------------- INDEX FUNDS Columbia Large Cap Enhanced Core Fund Columbia Large Cap Index Fund Columbia Mid Cap Index Fund Columbia Small Cap Index Fund ---------------------------------------------------------------------------------------- SPECIALTY FUNDS Columbia Convertible Securities Fund Columbia Real Estate Equity Fund Columbia Technology Fund Columbia Utilities Fund ---------------------------------------------------------------------------------------- GLOBAL/INTERNATIONAL FUNDS Columbia Acorn International Columbia Acorn International Select Columbia Global Value Fund Columbia Greater China Fund Columbia International Stock Fund Columbia International Value Fund Columbia Marsico International Opportunities Fund Columbia Multi-Advisor International Equity Fund Columbia World Equity Fund ---------------------------------------------------------------------------------------- TAXABLE BOND FUNDS Columbia Conservative High Yield Fund Columbia Core Bond Fund Columbia Federal Securities Fund Columbia High Income Fund Columbia High Yield Opportunity Fund Columbia Income Fund Columbia Intermediate Bond Fund Columbia Intermediate Core Bond Fund Columbia Short Term Bond Fund Columbia Strategic Income Fund Columbia Total Return Bond Columbia U.S. Treasury Index Fund 34 COLUMBIA YOUNG INVESTOR FUND ---------------------------------------------------------------------------------------- TAX-EXEMPT BOND FUNDS Columbia California Tax-Exempt Fund Columbia CA Intermediate Municipal Bond Fund Columbia Connecticut Tax-Exempt Fund Columbia CT Intermediate Municipal Bond Fund Columbia FL Intermediate Municipal Bond Fund Columbia GA Intermediate Municipal Bond Fund Columbia High Yield Municipal Fund Columbia Intermediate Municipal Bond Fund Columbia MA Intermediate Municipal Bond Fund Columbia Massachusetts Tax-Exempt Fund Columbia MD Intermediate Municipal Bond Fund Columbia Municipal Income Fund Columbia NC Intermediate Municipal Bond Fund Columbia New York Tax-Exempt Fund Columbia NJ Intermediate Municipal Bond Fund Columbia NY Intermediate Municipal Bond Fund Columbia OR Intermediate Municipal Bond Fund Columbia RI Intermediate Municipal Bond Fund Columbia SC Intermediate Municipal Bond Fund Columbia Short Term Municipal Bond Fund Columbia Tax-Exempt Fund Columbia Tax-Exempt Insured Fund Columbia TX Intermediate Municipal Bond Fund Columbia VA Intermediate Municipal Bond Fund ---------------------------------------------------------------------------------------- MONEY MARKET FUNDS Columbia Cash Reserves Columbia CA Tax-Exempt Reserves Columbia Government Reserves Columbia Government Plus Reserves Columbia MA Municipal Reserves Columbia Money Market Reserves Columbia Municipal Reserves Columbia NY Tax-Exempt Reserves Columbia Prime Reserves Columbia Tax-Exempt Reserves Columbia Treasury Reserves For complete product information on any Columbia fund, visit our website at www.columbiafunds.com. 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. Columbia Management Advisors, Inc. and Banc of America Capital Management, LLC, both SEC registered investment advisors and wholly owned subsidiaries of Bank of America, N.A., merged on September 30, 2005. At that time, the newly combined advisor changed its name to Columbia Management Advisors, LLC ("CMA"). CMA will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 35 IMPORTANT INFORMATION ABOUT THIS REPORT COLUMBIA YOUNG INVESTOR FUND TRANSFER AGENT Columbia Management Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800-345-6611 DISTRIBUTOR Columbia Management Distributors, Inc. One Financial Center Boston MA 02111 INVESTMENT ADVISOR Columbia Management Advisors, LLC 100 Federal Street Boston MA 02110 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP 125 High Street Boston MA 02110 The funds mail one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia Young Investor Fund. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the funds and with the most recent copy of the Columbia Funds Performance Update. A description of the policies and procedures that the funds use to determine how to vote proxies relating to its portfolio securities and a copy of the funds' voting record are available (i) at www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the funds voted proxies relating to portfolio securities during the 12-month period ended June 30, is available from the SECwebsite. Information regarding how the funds voted proxies relating to portfolio securities is also available from the funds' website. The funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The funds' 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. Columbia Management Advisors, Inc. and Banc of America Capital Management, LLC, both SEC registered investment advisors and wholly owned subsidiaries of Bank of America, N.A., merged on September 30, 2005. At that time, the newly combined advisor changed its name to Columbia Management Advisors, LLC ("CMA"). CMA will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 36 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 Young Investor Fund ANNUAL REPORT, SEPTEMBER 30, 2005 ------------- PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 ------------- Columbia Management(R) (c) 2005 Columbia Management Distributors, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 www.columbiafunds.com SHC-42/91122-0905 (11/05) 05/8541 COLUMBIA EQUITY FUNDS ANNUAL REPORT SEPTEMBER 30, 2005 [PHOTO OF WOMAN HOLDING A PEN] TABLE OF CONTENTS ECONOMIC UPDATE .......................................................... 1 COLUMBIA ASSET ALLOCATION FUND ........................................... 2 COLUMBIA LARGE CAP GROWTH FUND ........................................... 6 COLUMBIA DISCIPLINED VALUE FUND .......................................... 10 COLUMBIA COMMON STOCK FUND ............................................... 14 COLUMBIA SMALL CAP CORE FUND ............................................. 18 COLUMBIA SMALL COMPANY EQUITY FUND ....................................... 22 FINANCIAL STATEMENTS ..................................................... 26 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ........................................ 126 UNAUDITED INFORMATION .................................................... 127 TRUSTEES ................................................................. 128 OFFICERS ................................................................. 130 COLUMBIA FUNDS ........................................................... 131 IMPORTANT INFORMATION ABOUT THIS REPORT ........................................................ 133 The views expressed in the President's message and Portfolio Managers' Report reflects the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Fund. References to specific company securities should not be construed as a recommendation or investment advice. Not FDIC | May Lose Value Insured | No Bank Guarantee PRESIDENT'S MESSAGE ____________________________________________________________ COLUMBIA EQUITY FUNDS DEAR SHAREHOLDER: [Photo of Christopher L. Wilson] Columbia Management, the asset management division of Bank of America, is in the final stages of a significant business integration effort. Over the last year, we have integrated various components of Nations Funds, Galaxy Funds and Columbia Funds, resulting in a single fund family under the Columbia name that covers a wide range of markets, sectors and asset classes. Our team of talented, seasoned investment professionals will continue to strive to achieve strong results within their investment categories. Our objective is not only to provide our shareholders with the best products, but also to enhance the breadth and availability of our services. In addition to expanding the level of services available to the funds, portfolio managers and shareholders, we have been able to achieve significant cost savings for the funds by aggregating our business. In September, we made major inroads in the initiative to streamline our product offerings. This included merging several funds and renaming Nations Funds as Columbia Funds, as well as consolidating the Nations and Columbia web sites. Over the summer, we completed the service provider consolidation for shareholder servicing. As we work to complete the remaining product and service provider consolidations by the end of 2005, we remain committed to building a mutual fund business that helps you meet, and hopefully exceed, your personal financial goals. We value the confidence you have placed in us to assist you in managing your funds during these changing times. As with all businesses within Bank of America, we understand that your trust must be continually earned and will remain focused on producing results for you. We will continue to strive for the highest standards of performance and service excellence. All of these efforts have been undertaken to enable you, as a shareholder, to benefit from the execution of a consolidated business plan. We believe a more streamlined fund family with consistent performance and lower fees will provide the best opportunity for investment growth. We also believe that providing more robust services to you through multiple channels (Web, phones, voice response) will be beneficial to you. 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 managers on key factors that influenced performance. We encourage you to read the manager reports carefully and discuss any questions you have with your financial advisor. As always, we thank you for choosing Columbia Management. We look forward to helping you keep your financial goals on target in the years to come. Sincerely, /s/ Christopher L. Wilson Christopher L. Wilson President, Columbia Funds Head of Mutual Funds, Columbia Management Christopher L. Wilson is Head of Mutual Funds for Columbia Management and responsible for the day-to-day delivery of mutual fund services to the firm's investors. Working closely with the Legal and Compliance teams, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. As President and CEO of Columbia Funds (formerly Nations, Galaxy and Columbia Funds), Chris serves as the primary interface to the Fund Boards. Chris joined Bank of America in 2004. SUMMARY FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005 o DESPITE BOUTS OF VOLATILITY, THE BROAD STOCK MARKET GENERATED A DOUBLE-DIGIT RETURN FOR THE PERIOD. THE S&P 500 INDEX RETURNED 12.25%. AS THE ECONOMY EXPANDED, SMALL-CAP STOCKS OUTPERFORMED LARGE-CAP STOCKS, AS MEASURED BY THE RUSSELL 2000(R) INDEX. [UP ARROW] [UP ARROW] S&P INDEX RUSSELL INDEX 12.25% 17.95% o INVESTMENT-GRADE BONDS CHALKED UP MODEST GAINS AS MEASURED BY THE LEHMAN BROTHERS AGGREGATE BOND INDEX. HIGH-YIELD BONDS LED THE FIXED-INCOME MARKETS, AS MEASURED BY THE MERRILL LYNCH US HIGH YIELD, CASH PAY INDEX. [UP ARROW] [UP ARROW] LEHMAN INDEX MERRILL LYNCH INDEX 2.80% 6.69% The S&P 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. The Russell 2000 Index is an unmanaged index that tracks the performance of the 2,000 smallest of the 3,000 largest US companies based on market capitalization. The Lehman Brothers Aggregate Bond Index is an unmanaged market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues. The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that tracks the performance of non-investment-grade corporate bonds. ECONOMIC UPDATE ________________________________________________________________ COLUMBIA EQUITY FUNDS The US economy moved ahead at a healthy pace during the 12-month period that began October 1, 2004, and ended September 30, 2005. Gross domestic product (GDP) expanded at an annualized rate of 3.6% as job growth helped sustain consumer spending and rising profits boosted business spending. Employment data was solid, even in light of Hurricanes Katrina and Rita, which disrupted the labor market near the end of the period. During the first 11 months of the period, the economy added an average of 185,000 new jobs each month. In September, 35,000 jobs were lost as a direct result of the Gulf Coast storms--a figure that was actually considerably lower than expected. The job losses raised the unemployment rate to 5.1%, up from a four-year low of 4.9%. Energy prices weighed on economic growth as the period wore on. The first signs of relief came in September as the price of crude oil retreated from a record high of more than $69.81 a barrel. Signs of slower growth cropped up in retail spending. And, consumer confidence readings dipped in July and fell sharply in September. The decline was the largest in 25 years, according to the University of Michigan's monthly survey. Despite these setbacks, the latest data on the economy suggest that it has retained momentum. Manufacturing activity remained strong, and business activity in non-manufacturing industries continued to expand, although the pace slowed in September. DESPITE VOLATILITY, STOCKS MOVED AHEAD The S&P 500 Index--a broad measure of large company stock market performance--returned 12.25% for this reporting period. The double-digit gain masked considerable volatility. Early in the period, stocks rallied after the presidential election then again in response to positive economic news midway through the period and in the aftermath of two hurricanes. These rallies, however, alternated with declines linked to higher energy prices, rising interest rates and weakening consumer confidence. Small- and mid-cap stocks outperformed large-cap stocks. Value stocks led growth stocks except among small caps, where growth gained a small advantage over value. BONDS DELIVERED MODEST GAINS The US bond market delivered positive but modest returns despite steadily rising short-term interest rates and higher long-term rates in the final months of the period. Interest rates and bond prices move in opposite directions. The Lehman Brothers Aggregate Bond Index, a broad measure of the performance of investment-grade bonds returned 2.80% for the 12-month period. The yield on the 10-year US Treasury note, a bellwether for the bond market, ended the period at just over 4.3%--slightly higher than where it started the period. High-yield bonds led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 6.69%. SHORT-TERM INTEREST RATES MOVED HIGHER The Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.75% to 3.75% during the period. In the wake of Hurricane Katrina, some market observers speculated that the Fed might curtail its rate hikes. However, Fed Chairman Greenspan indicated that inflation was a greater concern than the sustainability of economic growth, and we believe that the Fed is likely to continue to raise short-term interest rates into the first half of 2006. 1 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 OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 ($) SALES CHARGE: WITHOUT WITH ---------------------------------------- CLASS A 19,453 18,333 ---------------------------------------- CLASS B 18,523 18,523 ---------------------------------------- CLASS C 18,516 18,516 ---------------------------------------- CLASS G 18,097 18,097 ---------------------------------------- CLASS T 19,370 18,255 ---------------------------------------- CLASS Z 19,818 N/A PERFORMANCE INFORMATION ________________________________________________________ COLUMBIA ASSET ALLOCATION FUND GROWTH OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 [MOUNTAIN CHART] CLASS A SHARES CLASS A SHARES LEHMAN BROTHERS WITHOUT SALES CHARGE WITH SALES CHARGE S&P 500 INDEX AGGREGATE BOND INDEX -------------------- ----------------- ------------- -------------------- 10/95 10000.00 9425.00 10000.00 10000.00 10039.00 9462.00 9964.00 10130.00 10383.00 9786.00 10401.00 10282.00 10513.00 9909.00 10602.00 10426.00 10736.00 10119.00 10963.00 10495.00 10728.00 10112.00 11065.00 10312.00 10807.00 10185.00 11171.00 10240.00 10887.00 10261.00 11335.00 10183.00 11063.00 10427.00 11627.00 10162.00 11186.00 10543.00 11672.00 10298.00 10888.00 10262.00 11156.00 10326.00 11041.00 10406.00 11391.00 10309.00 11488.00 10827.00 12032.00 10488.00 11738.00 11063.00 12365.00 10721.00 12207.00 11505.00 13299.00 10904.00 12102.00 11406.00 13036.00 10803.00 12498.00 11779.00 13851.00 10836.00 12455.00 11739.00 13959.00 10863.00 12174.00 11474.00 13385.00 10743.00 12639.00 11912.00 14184.00 10904.00 13053.00 12303.00 15048.00 11007.00 13409.00 12638.00 15722.00 11138.00 14142.00 13329.00 16974.00 11439.00 13682.00 12895.00 16023.00 11342.00 14068.00 13259.00 16901.00 11509.00 14110.00 13299.00 16337.00 11676.00 14282.00 13461.00 17093.00 11729.00 14491.00 13658.00 17387.00 11848.00 14695.00 13850.00 17580.00 11999.00 15170.00 14297.00 18848.00 11990.00 15599.00 14702.00 19813.00 12031.00 15767.00 14861.00 20013.00 12093.00 15580.00 14684.00 19668.00 12208.00 15870.00 14957.00 20467.00 12312.00 15728.00 14824.00 20250.00 12338.00 14692.00 13847.00 17322.00 12539.00 15266.00 14389.00 18432.00 12832.00 16062.00 15138.00 19931.00 12764.00 16507.00 15558.00 21139.00 12837.00 17066.00 16085.00 22356.00 12875.00 17399.00 16399.00 23291.00 12967.00 17008.00 16030.00 22566.00 12740.00 17542.00 16533.00 23469.00 12810.00 17678.00 16662.00 24377.00 12851.00 17245.00 16254.00 23802.00 12738.00 17640.00 16626.00 25123.00 12697.00 17443.00 16440.00 24339.00 12643.00 17246.00 16254.00 24220.00 12636.00 17085.00 16103.00 23556.00 12783.00 17622.00 16608.00 25047.00 12830.00 17830.00 16804.00 25556.00 12829.00 18332.00 17278.00 27061.00 12767.00 17823.00 16798.00 25703.00 12725.00 17883.00 16855.00 25217.00 12879.00 19056.00 17961.00 27683.00 13049.00 18984.00 17892.00 26850.00 13011.00 18555.00 17488.00 26299.00 13005.00 19290.00 18181.00 26949.00 13275.00 19373.00 18259.00 26528.00 13396.00 20206.00 19044.00 28176.00 13590.00 19598.00 18471.00 26688.00 13676.00 19411.00 18295.00 26576.00 13766.00 18553.00 17487.00 24482.00 13992.00 18691.00 17616.00 24602.00 14252.00 19201.00 18097.00 25475.00 14486.00 18082.00 17042.00 23152.00 14612.00 17308.00 16312.00 21684.00 14685.00 17974.00 16940.00 23369.00 14623.00 17996.00 16961.00 23525.00 14711.00 17558.00 16549.00 22954.00 14767.00 17514.00 16507.00 22729.00 15098.00 16956.00 15981.00 21306.00 15271.00 16120.00 15193.00 19585.00 15450.00 16484.00 15536.00 19959.00 15773.00 17124.00 16139.00 21489.00 15555.00 17151.00 16165.00 21679.00 15456.00 16686.00 15727.00 21362.00 15581.00 16277.00 15341.00 20950.00 15732.00 16626.00 15670.00 21737.00 15471.00 15971.00 15052.00 20420.00 15771.00 15892.00 14979.00 20269.00 15905.00 15087.00 14219.00 18826.00 16042.00 14563.00 13726.00 17359.00 16236.00 14675.00 13831.00 17472.00 16510.00 13645.00 12861.00 15573.00 16778.00 14419.00 13590.00 16943.00 16701.00 14919.00 14061.00 17941.00 16696.00 14478.00 13645.00 16888.00 17041.00 14185.00 13369.00 16446.00 17057.00 14016.00 13210.00 16199.00 17292.00 14077.00 13267.00 16356.00 17278.00 14779.00 13929.00 17704.00 17421.00 15503.00 14612.00 18637.00 17746.00 15703.00 14800.00 18875.00 17710.00 15738.00 14833.00 19208.00 17115.00 16010.00 15089.00 19582.00 17228.00 15978.00 15059.00 19375.00 17684.00 16491.00 15543.00 20471.00 17520.00 16662.00 15704.00 20651.00 17562.00 17235.00 16244.00 21734.00 17741.00 17499.00 16493.00 22133.00 17883.00 17718.00 16699.00 22441.00 18076.00 17741.00 16721.00 22102.00 18212.00 17267.00 16274.00 21755.00 17738.00 17324.00 16328.00 22053.00 17667.00 17621.00 16607.00 22481.00 17768.00 17147.00 16161.00 21737.00 17944.00 17227.00 16237.00 21824.00 18287.00 17489.00 16483.00 22060.00 18336.00 17767.00 16745.00 22397.00 18490.00 18348.00 17293.00 23304.00 18342.00 18832.00 17750.00 24097.00 18511.00 18552.00 17485.00 23509.00 18628.00 18832.00 17749.00 24002.00 18518.00 18531.00 17465.00 23577.00 18423.00 18297.00 17245.00 23129.00 18672.00 18696.00 17621.00 23865.00 18874.00 18804.00 17723.00 23898.00 18977.00 19194.00 18090.00 24787.00 18805.00 19253.00 18146.00 24562.00 19045.00 09/05 19453.00 18333.00 24755.00 18852.00 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Asset Allocation Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Standard & Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization U.S. stocks. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the daily price, coupon, pay-downs, and total return performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues with at least $250 million par amount outstanding and with at least one year to final maturity. Unlike 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 09/30/05 (%) SHARE CLASS A B C G T Z - ----------------------------------------------------------------------------------------------------------------------------------- INCEPTION 11/01/98 11/01/98 11/18/02 03/04/96 12/30/91 12/30/91 - ----------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ----------------------------------------------------------------------------------------------------------------------------------- 1-YEAR 11.20 4.80 10.37 5.37 10.37 9.37 10.36 5.36 11.14 4.74 11.54 - ----------------------------------------------------------------------------------------------------------------------------------- 5-YEAR -0.15 -1.33 -0.85 -1.21 -0.86 -0.86 -0.86 -1.41 -0.18 -1.35 0.11 - ----------------------------------------------------------------------------------------------------------------------------------- 10-YEAR 6.88 6.25 6.36 6.36 6.35 6.35 6.11 6.11 6.83 6.20 7.08 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. The returns for class A and class B shares include the returns of Prime A shares (for class A shares) and Prime B shares (for class B shares) of the Galaxy Asset Allocation Fund for periods prior to November 18, 2002. The returns shown for class A shares and class B shares also include the returns of Retail A shares of the Galaxy Asset Allocation Fund (adjusted, as necessary, to reflect the sales charges applicable to class A shares and class B shares, respectively), for periods prior to the inception of Prime A shares (November 1, 1998) and Prime B shares (November 1, 1998). Class A and class B shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although returns would have been lower to the extent that expenses for class A and class B shares exceed expenses paid by Retail A shares. The returns shown for class C shares include the returns of Prime B shares of the Galaxy Asset Allocation Fund (adjusted to reflect the sales charge applicable to class C shares) for periods prior to November 18, 2002, the date on which class C shares were initially offered by the fund. The returns shown for class C shares also include the returns of Retail A shares of the Galaxy Asset Allocation Fund (adjusted to reflect the sales charges applicable to class C shares) for periods prior to the date of inception of Prime B shares (November 1, 1998). Class C shares generally would have had substantially similar returns because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class C shares exceed expenses paid by Retail A and Prime B shares. Retail A shares of the Galaxy Asset Allocation Fund were initially offered on December 30, 1991. Class A, B and C shares were initially offered on November 18, 2002. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Asset Allocation Fund for periods prior to November 18, 2002, the date on which class T and class G shares were initially offered by the fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect sales charges applicable to class G shares) for periods prior to the inception of Retail B shares of the Galaxy Asset Allocation Fund (March 4, 1996). Retail A shares of the Galaxy Asset Allocation Fund were initially offered on December 30, 1991. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy Asset Allocation Fund for periods prior to November 18, 2002, the date on which class Z shares were initially offered by the fund. Trust shares of the Galaxy Asset Allocation Fund were initially offered on December 30, 1991. 2 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 MANAGEMENT SERVICES, INC., YOUR ACCOUNT BALANCE IS AVAILABLE ONLINE AT WWW.COLUMBIAFUNDS.COM OR BY CALLING SHAREHOLDER SERVICES AT 800.345.6611 o FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM THEIR BROKERAGE FIRM, CONTACT YOUR BROKERAGE FIRM TO OBTAIN YOUR ACCOUNT BALANCE 1. DIVIDE YOUR ENDING ACCOUNT BALANCE BY $1,000. FOR EXAMPLE, IF AN ACCOUNT BALANCE WAS $8,600 AT THE END OF THE PERIOD, THE RESULT WOULD BE 8.6 2. IN THE SECTION OF THE TABLE BELOW TITLED "EXPENSES PAID DURING THE PERIOD," LOCATE THE AMOUNT FOR YOUR SHARE CLASS. YOU WILL FIND THIS NUMBER IS IN THE COLUMN LABELED "ACTUAL." MULTIPLY THIS NUMBER BY THE RESULT FROM STEP 1. YOUR ANSWER IS AN ESTIMATE OF THE EXPENSES YOU PAID ON YOUR ACCOUNT DURING THE PERIOD UNDERSTANDING YOUR EXPENSES ____________________________________________________ COLUMBIA ASSET ALLOCATION FUND As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ---------------------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ---------------------------------------------------------------------------------------------------------------------------- CLASS A 1,000.00 1,000.00 1,049.49 1,018.35 6.88 6.78 1.34 - ---------------------------------------------------------------------------------------------------------------------------- CLASS B 1,000.00 1,000.00 1,046.18 1,014.59 10.72 10.56 2.09 - ---------------------------------------------------------------------------------------------------------------------------- CLASS C 1,000.00 1,000.00 1,045.52 1,014.59 10.72 10.56 2.09 - ---------------------------------------------------------------------------------------------------------------------------- CLASS G 1,000.00 1,000.00 1,045.83 1,014.84 10.46 10.30 2.04 - ---------------------------------------------------------------------------------------------------------------------------- CLASS T 1,000.00 1,000.00 1,049.18 1,018.10 7.14 7.03 1.39 - ---------------------------------------------------------------------------------------------------------------------------- CLASS Z 1,000.00 1,000.00 1,052.09 1,019.60 5.61 5.52 1.09 Expenses paid during the period are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the fund's most recent fiscal half-year and divided by 365. Had the Fund's Transfer Agent not waived a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. COMPARE WITH OTHER FUNDS Since all mutual funds 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 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. o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005, THE FUND'S CLASS A SHARES RETURNED 11.20% WITHOUT SALES CHARGE. o IN KEEPING WITH OUR GENERAL EXPECTATIONS, THE FUND'S RETURN FELL BETWEEN THE RETURNS OF ITS BENCHMARKS, THE S&P 500 INDEX AND THE LEHMAN BROTHERS AGGREGATE BOND INDEX. THE FUND'S RETURN WAS HIGHER THAN THE MORNINGSTAR, MODERATE ASSET ALLOCATION CATEGORY AVERAGE OF 10.81%. o AN EMPHASIS ON STOCKS HELPED THE FUND'S PERFORMANCE AS STOCKS OUTPERFORMED BONDS FOR THE PERIOD. [UP ARROW] [UP ARROW] [UP ARROW] LEHMAN BROTHERS CLASS A S&P 500 AGGREGATE SHARES INDEX BOND INDEX 11.20% 12.25% 2.80% OBJECTIVE Seeks a high total return by providing both a current level of income greater than that provided by popular stock market averages, as well as long-term growth in the value of the fund's assets. TOTAL NET ASSETS $386.1 million The Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US and Canada. PORTFOLIO MANAGER'S REPORT _____________________________________________________ COLUMBIA ASSET ALLOCATION FUND For the 12-month period ended September 30, 2005, Columbia Asset Allocation Fund class A shares returned 11.20% without sales charge. The fund invests in a mix of stocks and bonds, and we expect its return to fall between the returns of its two benchmarks. In fact, the return compares favorably with a 12.25% return for the S&P 500 Index and a 2.80% return for the Lehman Brothers Aggregate Bond Index. The fund's return was somewhat higher than the average return of its peer group, the Morningstar(R) Moderate Asset Allocation Category, which was 10.81%. 1 FINANCIAL MARKETS BUOYED BY FAVORABLE ENVIRONMENT Steady economic growth, rising corporate profits and relatively low interest rates buoyed the financial markets in the United States and around the world during the reporting period. Most of the gains for stocks came in the fourth quarter of 2004. Most of the gains for bonds came in the first half of 2005. Since then, the broad market averages have reflected a less rewarding environment. Rising energy prices and the economic fallout of two major Gulf Coast hurricanes dampened investor enthusiasm for sectors of the stock and bond markets that are linked to economic growth. Intermediate and long-term interest rates edged higher and dampened investment-grade bond returns late in the period. However, as short-term interest rates moved higher, yields on money market mutual funds rose from their historical lows. FUND'S STOCK ALLOCATIONS DROVE PERFORMANCE Both the US and foreign stock markets delivered strong returns for the 12-month reporting periods. However, the overall performance figures of the fund's equity positions mask great diversity among sectors that make up the markets. For example, mid-cap stocks outperformed both small- and large-cap stocks by a comfortable margin. Value stocks continued to hold a performance advantage over growth stocks, except among small-cap stocks, where growth and value returns were nearly identical for the period. Stock performance was generally stronger outside the United States. The fund's international stocks returned 25.34% for the period, generally in line with its benchmark, the MSCI EAFE Index, which returned 25.79%. The fixed-income markets trailed the equity markets for the reporting period as rising interest rates put a damper on returns late in the period. High-yield bonds outperformed investment grade bonds, although their performance advantage narrowed late in the period. TACTICAL ASSET ALLOCATION CHANGES MADE TO POSITION FUND FOR OPPORTUNITY During the period, we made several small tactical changes to the fund's asset allocation. We reduced exposure to large-cap value stocks and added to the fund's large-cap growth allocation. Value stock valuations have risen as the group has outperformed. We believe that growth stocks may be positioned for a market rotation and we have positioned the portfolio to take advantage of that possibility. We also cut back on the fund's mid-cap and small-cap value exposure. In fact, we cut the fund's small-cap value holdings down to 1% of the portfolio, taking profits after the sector's long stretch of strong performance. We maintained a position of approximately 11% in international stocks. 1 (C)2005 Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 4 NET ASSET VALUE PER SHARE AS OF 09/30/05 ($) CLASS A 16.47 - ----------------------------------------------- CLASS B 16.47 - ----------------------------------------------- CLASS C 16.47 - ----------------------------------------------- CLASS G 16.46 - ----------------------------------------------- CLASS T 16.48 - ----------------------------------------------- CLASS Z 16.48 DISTRIBUTIONS DECLARED PER SHARE 10/01/04 - 09/30/05 ($) CLASS A 0.27 - ----------------------------------------------- CLASS B 0.15 - ----------------------------------------------- CLASS C 0.15 - ----------------------------------------------- CLASS G 0.16 - ----------------------------------------------- CLASS T 0.26 - ----------------------------------------------- CLASS Z 0.31 TOP 5 EQUITY SECTORS AS OF 09/30/05 (%) FINANCIALS 12.7 - ----------------------------------------------- INFORMATION TECHNOLOGY 10.4 - ----------------------------------------------- HEALTH CARE 8.2 - ----------------------------------------------- ENERGY 7.2 - ----------------------------------------------- CONSUMER DISCRETIONARY 6.8 TOP 10 EQUITY HOLDINGS AS OF 09/30/05 (%) GENERAL ELECTRIC 1.2 - ----------------------------------------------- EXXON MOBIL 1.0 - ----------------------------------------------- MICROSOFT 0.9 - ----------------------------------------------- CONOCOPHILLIPS 0.8 - ----------------------------------------------- HALLIBURTON 0.8 - ----------------------------------------------- AMERICAN INTERNATIONAL GROUP 0.7 - ----------------------------------------------- CITIGROUP 0.7 - ----------------------------------------------- MERRILL LYNCH 0.7 - ----------------------------------------------- JOHNSON & JOHNSON 0.7 - ----------------------------------------------- BP 0.7 PORTFOLIO STRUCTURE AS OF 09/30/05 (%) COMMON STOCKS 62.8 - ----------------------------------------------- CORPORATE FIXED-INCOME BONDS & NOTES 11.9 - ----------------------------------------------- MORTGAGE-BACKED SECURITIES 8.3 - ----------------------------------------------- GOVERNMENT AGENCIES & OBLIGATIONS 5.1 - ----------------------------------------------- ASSET-BACKED SECURITIES 3.7 - ----------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS 2.7 - ----------------------------------------------- INVESTMENT COMPANIES 0.2 - ----------------------------------------------- PREFERRED STOCK 0.0 - ----------------------------------------------- CONVERTIBLE BOND 0.0 - ----------------------------------------------- CONVERTIBLE PREFERRED STOCK 0.0 - ----------------------------------------------- CASH EQUIVALENTS, NET OTHER ASSETS AND LIABILITIES 5.3 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ COLUMBIA ASSET ALLOCATION FUND Within the fixed income portion of the portfolio, we cut back the fund's high-yield allocation back to its neutral position after a period of strong performance for the sector. The fund's position in investment grade bonds remained relatively steady at approximately 27.8% of assets throughout the period. The biggest allocation shift for the period was reflected in the fund's higher cash position. We raised cash from approximately 0.5% to 3.4% in an effort to create a cushion against a potentially weakening economy and rising interest rates. LOOKING AHEAD Rising energy prices have begun to cool economic growth. The full economic impact of two devastating hurricanes late in the period has yet to be assessed. However, data support our view that economic growth still has momentum in the United States and around the world. If gasoline and energy prices retreat within a relatively short period of time, and if the labor markets remain resilient, we believe that economic growth can be sustained. We have positioned the fund to take advantage of growth, if it continues, but also added a defensive tilt that should help it weather a weaker environment. Dr. Kuriyan and Ms. Wurdack are responsible for allocating the fund's assets among the various asset classes. The investment decisions for each asset class are made by professionals with expertise in that class. Vikram Kuriyan, PhD, is the lead manager for Columbia Asset Allocation Fund and has managed the fund since August 2005. He has been with the advisor or its predecessors or affiliate organizations since 2000. /s/ Vikram Kuriyan Karen Wurdack has co-managed the fund since August 2005 and has been with the advisor or its predecessors or affiliate organizations since 1993. /s/ Karen Wurdack Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. Investing in high-yield securities (commonly known as "junk bonds") offers the potential for high current income and attractive total return, but involves certain risks. Changes in economic conditions or other circumstances may adversely affect a junk bond issuer's ability to make principal and interest payments. Rising interest rates tend to lower the value of all bonds. High-yield bonds issued by foreign entities have greater potential risks, including less regulation, currency fluctuations, economic instability and political developments. The fund may be subject to the same types of risks associated with direct ownership of real estate including the decline of property value due to general, local and regional economic conditions. International investing may involve certain risks, including foreign taxation, currency fluctuations, risks associated with possible differences in financial standards and other monetary and political risks. 5 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 OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 ($) SALES CHARGE WITHOUT WITH ---------------------------------------- CLASS A 20,578 19,394 ---------------------------------------- CLASS B 19,546 19,546 ---------------------------------------- CLASS C 19,576 19,576 ---------------------------------------- CLASS G 18,939 18,939 ---------------------------------------- CLASS T 20,408 19,234 ---------------------------------------- CLASS Z 21,222 N/A PERFORMANCE INFORMATION ________________________________________________________ COLUMBIA LARGE CAP GROWTH FUND GROWTH OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 [MOUNTAIN CHART] CLASS A SHARES CLASS A SHARES RUSSELL 1000 WITHOUT SALES CHARGE WITH SALES CHARGE GROWTH INDEX -------------------- ----------------- ------------- 10/95 10000.00 9425.00 10000.00 10052.00 9474.00 10007.00 10464.00 9862.00 10396.00 10529.00 9924.00 10456.00 10879.00 10253.00 10805.00 11021.00 10387.00 11002.00 11097.00 10459.00 11017.00 11311.00 10661.00 11307.00 11567.00 10902.00 11701.00 11575.00 10909.00 11717.00 10951.00 10321.00 11031.00 11201.00 10557.00 11315.00 11830.00 11150.00 12139.00 12115.00 11419.00 12212.00 12931.00 12187.00 13129.00 12686.00 11957.00 12872.00 13313.00 12548.00 13774.00 13035.00 12285.00 13680.00 12661.00 11933.00 12940.00 13351.00 12583.00 13800.00 14269.00 13449.00 14796.00 14705.00 13859.00 15388.00 15985.00 15066.00 16748.00 15459.00 14570.00 15768.00 16265.00 15330.00 16544.00 15948.00 15031.00 15932.00 16316.00 15378.00 16609.00 16548.00 15596.00 16795.00 16697.00 15737.00 17297.00 17795.00 16772.00 18598.00 18712.00 17636.00 19340.00 19064.00 17967.00 19607.00 18391.00 17333.00 19050.00 18985.00 17893.00 20216.00 18700.00 17625.00 20083.00 15605.00 14708.00 17068.00 16764.00 15801.00 18379.00 18297.00 17245.00 19857.00 19283.00 18174.00 21368.00 20773.00 19579.00 23295.00 21683.00 20437.00 24663.00 20805.00 19609.00 23536.00 21989.00 20725.00 24776.00 22407.00 21118.00 24808.00 21786.00 20533.00 24046.00 23492.00 22141.00 25730.00 22752.00 21444.00 24911.00 22438.00 21148.00 25318.00 22220.00 20943.00 24786.00 23307.00 21967.00 26657.00 24193.00 22802.00 28097.00 26176.00 24671.00 31019.00 25203.00 23753.00 29564.00 25903.00 24414.00 31010.00 28507.00 26867.00 33230.00 28053.00 26440.00 31648.00 27013.00 25459.00 30053.00 27842.00 26241.00 32331.00 27544.00 25960.00 30983.00 29577.00 27876.00 33787.00 28074.00 26460.00 30591.00 27588.00 26002.00 29144.00 24943.00 23509.00 24848.00 25806.00 24322.00 24063.00 26428.00 24908.00 25725.00 23735.00 22370.00 21357.00 21769.00 20518.00 19034.00 23346.00 22003.00 21441.00 23453.00 22104.00 21126.00 22442.00 21152.00 20636.00 22072.00 20803.00 20120.00 20584.00 19401.00 18474.00 18592.00 17523.00 16631.00 19194.00 18090.00 17504.00 20634.00 19447.00 19186.00 20955.00 19751.00 19149.00 20207.00 19045.00 18810.00 19547.00 18423.00 18030.00 20841.00 19642.00 18654.00 19557.00 18432.00 17131.00 19099.00 18001.00 16717.00 17407.00 16406.00 15171.00 16124.00 15197.00 14336.00 16240.00 15306.00 14379.00 14441.00 13610.00 12888.00 15618.00 14720.00 14070.00 16453.00 15507.00 14834.00 15323.00 14442.00 13809.00 14923.00 14065.00 13473.00 14768.00 13919.00 13411.00 14924.00 14066.00 13661.00 16054.00 15131.00 14670.00 16921.00 15948.00 15402.00 16989.00 16012.00 15615.00 17145.00 16159.00 16004.00 17584.00 16573.00 16402.00 17135.00 16150.00 16227.00 18071.00 17032.00 17139.00 18295.00 17243.00 17319.00 18723.00 17647.00 17918.00 19045.00 17950.00 18283.00 19161.00 18060.00 18400.00 18937.00 17848.00 18058.00 18411.00 17352.00 17849.00 18908.00 17821.00 18181.00 19210.00 18106.00 18408.00 17964.00 16931.00 17368.00 17730.00 16711.00 17283.00 18090.00 17050.00 17447.00 18441.00 17381.00 17719.00 19308.00 18198.00 18329.00 20090.00 18935.00 19047.00 19583.00 18457.00 18413.00 19760.00 18624.00 18608.00 19428.00 18311.00 18269.00 18901.00 17814.00 17922.00 19799.00 18661.00 18790.00 19712.00 18579.00 18720.00 20433.00 19258.00 19636.00 20278.00 19112.00 19382.00 09/05 20578.00 19394.00 19473.00 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Large Cap Growth Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. 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 09/30/05 (%) SHARE CLASS A B C G T Z - ----------------------------------------------------------------------------------------------------------------------------------- INCEPTION 11/1/98 11/1/98 11/18/02 03/04/96 12/14/90 12/14/90 - ----------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ----------------------------------------------------------------------------------------------------------------------------------- 1-YEAR 13.80 7.27 13.01 8.01 12.98 11.98 13.02 8.02 13.76 7.20 14.12 - ----------------------------------------------------------------------------------------------------------------------------------- 5-YEAR -6.02 -7.13 -6.78 -7.11 -6.75 -6.75 -6.89 -7.38 -6.17 -7.28 -5.81 - ----------------------------------------------------------------------------------------------------------------------------------- 10-YEAR 7.48 6.85 6.93 6.93 6.95 6.95 6.59 6.59 7.39 6.76 7.81 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. The returns for class A and class B shares include the returns of Prime A shares (for class A shares) and Prime B shares (for class B shares) of the Galaxy Equity Growth Fund for periods prior to November 18, 2002, the date on which class A and class B shares were initially offered by the fund. The returns shown for class A shares and class B shares also include the returns of Retail A shares of the Galaxy Equity Growth Fund (adjusted, as necessary, to reflect the sales charges applicable to class A shares and class B shares, respectively) for periods prior to the date of inception of Prime A shares and Prime B shares (November 1, 1998). Class A and class B shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although returns would have been lower to the extent that expenses for class A and class B shares exceed expenses paid by Retail A shares. The returns shown for class C shares include the returns of Prime B shares of the Galaxy Equity Growth Fund (adjusted to reflect the sales charge applicable to class C shares) for periods prior to November 18, 2002, the date on which class C shares were initially offered by the fund. The returns shown for class C shares also include the returns of Retail A shares of the Galaxy Equity Growth Fund (adjusted to reflect the sales charges applicable to class C shares) for periods prior to the date of inception of Prime B shares (November 1, 1998). Class C shares generally would have had substantially similar returns because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class C shares exceed expenses paid by Retail A and Prime B shares. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Equity Growth Fund for periods prior to November 18, 2002, the date on which class T and class G shares were initially offered by the fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect sales charges applicable to class G shares) for periods prior to the inception of Retail B shares of the Galaxy Equity Growth Fund (March 4, 1996). Retail A shares were initially offered on December 14, 1990. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would be lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy Equity Growth Fund for periods prior to November 18, 2002, the date on which class Z shares were initially offered by the fund. Trust shares of the Galaxy Equity Growth Fund were initially offered on December 14, 1990. 6 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, INC., YOUR ACCOUNT BALANCE IS AVAILABLE ONLINE AT WWW.COLUMBIAFUNDS.COM OR BY CALLING SHAREHOLDER SERVICES AT 800.345.6611 o FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM THEIR BROKERAGE FIRM, CONTACT YOUR BROKERAGE FIRM TO OBTAIN YOUR ACCOUNT BALANCE 1. DIVIDE YOUR ENDING ACCOUNT BALANCE BY $1,000. FOR EXAMPLE, IF AN ACCOUNT BALANCE WAS $8,600 AT THE END OF THE PERIOD, THE RESULT WOULD BE 8.6 2. IN THE SECTION OF THE TABLE BELOW TITLED "EXPENSES PAID DURING THE PERIOD," LOCATE THE AMOUNT FOR YOUR SHARE CLASS. YOU WILL FIND THIS NUMBER IS IN THE COLUMN LABELED "ACTUAL." MULTIPLY THIS NUMBER BY THE RESULT FROM STEP 1. YOUR ANSWER IS AN ESTIMATE OF THE EXPENSES YOU PAID ON YOUR ACCOUNT DURING THE PERIOD UNDERSTANDING YOUR EXPENSES ____________________________________________________ COLUMBIA LARGE CAP GROWTH FUND As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees, and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ---------------------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ---------------------------------------------------------------------------------------------------------------------------- CLASS A 1,000.00 1,000.00 1,059.71 1,020.00 5.22 5.11 1.01 - ---------------------------------------------------------------------------------------------------------------------------- CLASS B 1,000.00 1,000.00 1,056.30 1,016.24 9.07 8.90 1.76 - ---------------------------------------------------------------------------------------------------------------------------- CLASS C 1,000.00 1,000.00 1,056.20 1,016.24 9.07 8.90 1.76 - ---------------------------------------------------------------------------------------------------------------------------- CLASS G 1,000.00 1,000.00 1,056.50 1,016.50 8.82 8.64 1.71 - ---------------------------------------------------------------------------------------------------------------------------- CLASS T 1,000.00 1,000.00 1,059.61 1,019.75 5.47 5.37 1.06 - ---------------------------------------------------------------------------------------------------------------------------- CLASS Z 1,000.00 1,000.00 1,061.22 1,021.26 3.93 3.85 0.76 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. Had the fund's transfer agent not waived a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning shares of different funds. If these transactional costs were included, your costs would have been higher. COMPARE WITH OTHER FUNDS Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 7 PERFORMANCE 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. SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005, THE FUND'S CLASS A SHARES RETURNED 13.80% WITHOUT SALES CHARGE. o THE FUND CAME OUT AHEAD OF ITS BENCHMARK, THE RUSSELL 1000 GROWTH INDEX, AS WELL AS ITS PEER GROUP, THE MORNINGSTAR LARGE GROWTH CATEGORY AVERAGE. o STRONG STOCK SELECTION, PARTICULARLY IN THE CONSUMER DISCRETIONARY AND HEALTH CARE SECTORS, DROVE PERFORMANCE. [UP ARROW] [UP ARROW] RUSSELL 1000 CLASS A SHARES GROWTH INDEX 13.80% 11.60% OBJECTIVE Seeks long-term capital appreciation. TOTAL NET ASSETS $1,526.7 million NET ASSET VALUE PER SHARE AS OF 09/30/05 ($) CLASS A 21.11 ---------------------------------------- CLASS B 20.07 ---------------------------------------- CLASS C 20.10 ---------------------------------------- CLASS G 19.45 ---------------------------------------- CLASS T 20.98 ---------------------------------------- CLASS Z 21.50 PORTFOLIO MANAGERS' REPORT _____________________________________________________ COLUMBIA LARGE CAP GROWTH FUND For the 12-month period ended September 30, 2005, class A shares of Columbia Large Cap Growth Fund returned 13.80% without sales charge. The fund did better than the Russell 1000 Growth Index, which returned 11.60%. It also outpaced the average return of its peer group, the Morningstar(R) Large Growth Category, which was 13.39%. 1 Our focus on companies with solid competitive standings, strong financial positions and superior sales growth resulted in strong stock selection across most sectors, especially consumer discretionary and health care. RETAILING AND HEALTH CARE WERE THE BIGGEST DRIVERS OF PERFORMANCE Healthy consumer spending helped fuel sizable gains in the consumer discretionary sector, especially among retailers such as Chico's, Nordstrom, Coach and Lowe's Companies. New store growth further aided sales at Chico's, a women's apparel chain, while solid operating improvements helped boost revenues at high-end retailer Nordstrom. We took profits and sold both stocks, reducing the fund's retailing stake. However, we maintained positions in Coach, which sells leather goods and accessories, and Lowe's Companies, the home improvement store. We believe that both companies have the potential for continued strong execution in their target markets. In health care, our decision to underweight the stocks of major pharmaceutical companies, many of which faced patent expirations and lackluster new product potential, proved beneficial to the portfolio. In addition, the fund benefited from standout performances from Amylin Pharmaceuticals, a biotech company that develops drugs for diabetics, and Alcon, which specializes in treatments for eye diseases. Caremark Rx, a leading pharmacy benefits manager, also posted strong gains, fueled in part by a recent acquisition. These gains more than offset a steep decline in Biogen Idec, which tumbled after pulling its new multiple sclerosis drug from the market. We sold the stock. CONSUMER STAPLES, ENERGY AND FINANCIALS FURTHER ADDED TO RETURNS In the consumer staples sector, Altria (the parent of Philip Morris) rallied nicely as investors became more optimistic that tobacco litigation concerns would subside. We sold Altria to lock in profits. The fund also benefited from a decision to reduce, then liquidate, its position in Wal-Mart. The stock suffered as rising gas prices hurt Wal-Mart customers, putting pressure on sales. Elsewhere, the fund had a slightly higher stake than the index in the top-performing energy sector, as well as strong returns from a mix of energy service companies and independent exploration and production companies. In the financials sector, the fund's returns were also positive versus the index. We made well-timed decisions to raise the fund's exposure to financials relative to the index when the group was outperforming and to lower its exposure when the group was underperforming. A focus on capital markets companies, including Goldman Sachs Group and Merrill Lynch, also benefited results. TECHNOLOGY STOCK RETURNS MODESTLY COST THE FUND Technology returns were positive, but they lagged the sector average. The fund's stake in Apple Computer was less than the index weight, and it failed to get the full benefit of gains when the stock rallied amid stronger-than-expected i-Pod sales. In addition, the fund had less exposure than the index to smaller technology companies, which were strong performers. Yet, some of the fund's technology holdings posted sharp gains. Among them were 1 (C)2005 by Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 8 DISTRIBUTIONS DECLARED PER SHARE 10/01/04 - 09/30/05 ($) CLASS A 0.02 - ----------------------------------------------- CLASS B 0.00 - ----------------------------------------------- CLASS C 0.00 - ----------------------------------------------- CLASS G 0.00 - ----------------------------------------------- CLASS T 0.02 - ----------------------------------------------- CLASS Z 0.03 SECTORS AS OF 09/30/05 (%) INFORMATION TECHNOLOGY 30.3 - ----------------------------------------------- HEATH CARE 20.2 - ----------------------------------------------- CONSUMER DISCRETIONARY 11.1 - ----------------------------------------------- CONSUMER STAPLES 10.8 - ----------------------------------------------- INDUSTRIALS 10.2 - ----------------------------------------------- FINANCIALS 7.9 - ----------------------------------------------- ENERGY 7.6 - ----------------------------------------------- MATERIALS 2.0 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/05 (%) GENERAL ELECTRIC 4.3 - ----------------------------------------------- MICROSOFT 4.0 - ----------------------------------------------- JOHNSON & JOHNSON 3.0 - ----------------------------------------------- AMERICAN INTERNATIONAL GROUP 2.4 - ----------------------------------------------- HALLIBURTON 2.2 - ----------------------------------------------- INTERNATIONAL BUSINESS MACHINES 2.2 - ----------------------------------------------- GILLETTE 2.0 - ----------------------------------------------- INTEL 2.0 - ----------------------------------------------- PRAXAIR 2.0 - ----------------------------------------------- PEPSI CO 2.0 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/05 (%) COACH 0.9 - ----------------------------------------------- LOWE'S COS 1.2 - ----------------------------------------------- AMYLIN PHARMACEUTICALS 0.5 - ----------------------------------------------- ALCON 0.6 - ----------------------------------------------- CAREMARK RX 1.2 - ----------------------------------------------- APPLE COMPUTER 0.6 - ----------------------------------------------- GOLDMAN SACHS GROUP 0.6 - ----------------------------------------------- MERRILL LYNCH 1.1 - ----------------------------------------------- MEMC ELECTRONIC MATERIALS 1.2 Your fund is actively managed and the composition of its portfolio will change over time. Holdings are calculated as a percentage of net assets. ________________________________________________________________________________ COLUMBIA LARGE CAP GROWTH FUND Cognizant Technology Solutions and MEMC Electronic Materials. Cognizant is a high-end outsourcer of programming services, while MEMC Electronic Materials supplies silicon used in semiconductors and solar cells. We sold Cognizant when it reached our price target, but kept MEMC Electronic Materials. LARGE-CAP GROWTH STOCKS REMAINED ATTRACTIVELY VALUED We are optimistic about the outlook for large-cap growth stocks, which have trailed small-and mid-cap stocks and value stocks in recent years. We think large-cap growth stocks are attractively priced by historical standards. Put another way, we believe some of America's best, strongest and most well-known household names represent good potential long-term value for relatively low risk. As we enter the latter stages of the economic cycle, we also think investors may favor bigger, more mature companies that have historically delivered predictable earnings growth in all types of market environments. Paul J. Berlinguet has managed or co-managed Columbia Large Cap Growth Fund since October 2003 and has been with the advisor or its predecessors or affiliate organizations since October 2003. /s/ Paul J. Berlinguet Edward P. Hickey has managed or co-managed the fund since June 2005 and has been with the advisor or its predecessors or affiliate organizations since November 1998. /s/ Edward P. Hickey Roger R. Sullivan has managed or co-managed the fund since June 2005 and has been with the advisor since January 2005. /s/ Roger R. Sullivan Mary-Ann Ward has managed or co-managed the fund since June 2005 and has been with the advisor or its predecessors or affiliate organizations since July 1997. /s/ Mary-Ann Ward John T. Wilson has managed or co-managed the fund since August 2005 and has been with the advisor since July 2005. /s/ John T. Wilson Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. International investing may involve certain risks, including foreign taxation, currency fluctuations, risks associated with possible differences in financial standards and other monetary and political risks. Investing in growth stocks incurs the possibility of losses because their prices are sensitive to changes in current or expected earnings. 9 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 OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 ($) SALES CHARGE: WITHOUT WITH ----------------------------------------- CLASS A 23,584 22,225 ----------------------------------------- CLASS B 22,004 22,004 ----------------------------------------- CLASS C 21,972 21,972 ----------------------------------------- CLASS G 22,040 22,040 ----------------------------------------- CLASS T 23,513 22,159 ----------------------------------------- CLASS Z 24,391 N/A PERFORMANCE INFORMATION ________________________________________________________ COLUMBIA DISCIPLINED VALUE FUND GROWTH OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 [MOUNTAIN CHART] CLASS A SHARES CLASS A SHARES RUSSELL 1000 WITHOUT SALES CHARGE WITH SALES CHARGE VALUE INDEX -------------------- ----------------- ------------- 10/95 10000 9425 10000 9951 9379 9901 10471 9869 10402 10414 9815 10663 10752 10134 10996 10948 10318 11079 10973 10342 11268 11170 10527 11311 11457 10798 11452 11421 10764 11461 10976 10345 11028 11353 10700 11343 11907 11223 11795 12089 11394 12251 13022 12273 13139 12611 11886 12971 13202 12443 13600 13150 12394 13800 12557 11835 13303 13259 12497 13862 14269 13449 14637 14516 13682 15265 15872 14959 16413 15401 14515 15829 16154 15225 16785 15655 14754 16316 16007 15086 17037 16100 15174 17535 16319 15380 17286 17631 16617 18449 18523 17458 19578 18689 17615 19710 17970 16937 19418 18495 17431 19666 17879 16851 19320 14950 14091 16445 15669 14768 17389 17202 16213 18737 18452 17391 19610 19923 18777 20277 20742 19549 20439 19792 18654 20151 20407 19234 20568 21001 19794 22489 20699 19509 22242 21908 20648 22887 21033 19824 22216 20041 18888 21392 19211 18106 20645 19718 18584 21835 19827 18687 21664 21254 20032 21768 19932 18786 21059 19508 18386 19494 21911 20651 21872 21549 20310 21619 21388 20158 21846 20252 19088 20847 19904 18759 21108 21749 20498 22281 20914 19711 22486 21263 20040 23040 19343 18231 22185 20575 19392 23296 22682 21378 23385 21033 19824 22735 20377 19205 21932 22088 20818 23007 22532 21237 23524 21784 20532 23002 22104 20833 22954 20959 19754 22033 18224 17176 20482 19079 17982 20306 20790 19595 21486 21564 20324 21993 21171 19954 21824 20214 19052 21859 21672 20426 22893 20560 19378 22107 20560 19378 22218 18414 17355 20943 16611 15656 18995 16486 15538 19139 14480 13647 17011 15013 14150 18271 15906 14991 19423 15154 14282 18580 14951 14091 18130 14387 13560 17646 14450 13619 17676 15657 14757 19231 16676 15717 20474 16943 15969 20730 17146 16160 21039 17491 16485 21367 17272 16279 21157 18245 17196 22452 18449 17388 22758 19436 18319 24159 19815 18676 24585 20130 18973 25111 19971 18823 24890 19544 18420 24282 19702 18569 24530 20264 19098 25109 19881 18737 24755 20135 18977 25107 20300 19133 25496 20396 19223 25919 21370 20142 27230 22044 20776 28143 21819 20564 27642 22574 21276 28557 22143 20869 28165 21804 20550 27661 22238 20959 28328 22478 21185 28637 23204 21870 29464 22995 21673 29338 09/05 23584 22225 29748 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Disciplined Value Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 1000 Value Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. 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 09/30/05 (%) SHARE CLASS A B C G T Z - ----------------------------------------------------------------------------------------------------------------------------------- INCEPTION 11/25/02 11/25/02 11/25/02 03/04/96 09/01/88 09/01/88 - ----------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ----------------------------------------------------------------------------------------------------------------------------------- 1-YEAR 16.21 9.49 15.30 10.30 15.33 14.33 15.35 10.35 16.06 9.36 16.43 - ----------------------------------------------------------------------------------------------------------------------------------- 5-YEAR 2.43 1.23 1.59 1.27 1.56 1.56 1.63 1.14 2.37 1.17 2.75 - ----------------------------------------------------------------------------------------------------------------------------------- 10-YEAR 8.96 8.31 8.21 8.21 8.19 8.19 8.22 8.22 8.93 8.28 9.33 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Class A, class B and class C are newer classes of shares. Their performance information includes returns of the Retail A shares (for class A shares) and Retail B shares (for class B and class C shares) of the Galaxy Equity Value Fund for periods prior to November 25, 2002, the date on which class A, B and C shares were initially offered by the fund. The returns shown for class B and class C shares also include the performance of Retail A shares of the Galaxy Equity Value Fund for periods prior to the inception of Retail B shares (March 4, 1996). Class B and class C shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class B and class C shares exceed expenses paid by Retail A shares. The returns have not been restated to reflect any differences in expenses (such as 12b-1 fees) between any of the predecessor shares and the newer classes of shares. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Equity Value Fund for periods prior to November 25, 2002, the date on which class T and class G shares were initially offered by the fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect the sales charge applicable to class G shares), for periods prior to the inception of Retail B shares of the Galaxy Equity Value Fund (March 4, 1996). Retail A shares were initially offered on September 1, 1988. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy Equity Value Fund for periods prior to November 25, 2002, the date on which class Z shares were initially offered by the fund. 10 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, INC., YOUR ACCOUNT BALANCE IS AVAILABLE ONLINE AT WWW.COLUMBIAFUNDS.COM OR BY CALLING SHAREHOLDER SERVICES AT 800.345.6611 o FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM THEIR BROKERAGE FIRM, CONTACT YOUR BROKERAGE FIRM TO OBTAIN YOUR ACCOUNT BALANCE 1. DIVIDE YOUR ENDING ACCOUNT BALANCE BY $1,000. FOR EXAMPLE, IF AN ACCOUNT BALANCE WAS $8,600 AT THE END OF THE PERIOD, THE RESULT WOULD BE 8.6 2. IN THE SECTION OF THE TABLE BELOW TITLED "EXPENSES PAID DURING THE PERIOD," LOCATE THE AMOUNT FOR YOUR SHARE CLASS. YOU WILL FIND THIS NUMBER IS IN THE COLUMN LABELED "ACTUAL." MULTIPLY THIS NUMBER BY THE RESULT FROM STEP 1. YOUR ANSWER IS AN ESTIMATE OF THE EXPENSES YOU PAID ON YOUR ACCOUNT DURING THE PERIOD UNDERSTANDING YOUR EXPENSES ____________________________________________________ COLUMBIA DISCIPLINED VALUE FUND As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees, and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ---------------------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ---------------------------------------------------------------------------------------------------------------------------- CLASS A 1,000.00 1,000.00 1,065.48 1,019.00 6.27 6.12 1.21 - ---------------------------------------------------------------------------------------------------------------------------- CLASS B 1,000.00 1,000.00 1,061.32 1,015.24 10.13 9.90 1.96 - ---------------------------------------------------------------------------------------------------------------------------- CLASS C 1,000.00 1,000.00 1,061.42 1,015.24 10.13 9.90 1.96 - ---------------------------------------------------------------------------------------------------------------------------- CLASS G 1,000.00 1,000.00 1,062.32 1,015.49 9.87 9.65 1.91 - ---------------------------------------------------------------------------------------------------------------------------- CLASS T 1,000.00 1,000.00 1,065.28 1,018.75 6.52 6.38 1.26 - ---------------------------------------------------------------------------------------------------------------------------- CLASS Z 1,000.00 1,000.00 1,067.08 1,020.26 4.97 4.86 0.96 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. Had the fund's transfer agent not waived a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning shares of different funds. If these transactional costs were included, your costs would have been higher. COMPARE WITH OTHER FUNDS Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 11 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. SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005, THE FUND'S CLASS A SHARES RETURNED 16.21% WITHOUT SALES CHARGE. o THE FUND PERFORMED IN LINE WITH ITS BENCHMARK, THE RUSSELL 1000 VALUE INDEX, WHICH RETURNED 16.69%. IT OUTPERFORMED ITS PEER GROUP AVERAGE, THE MORNINGSTAR LARGE VALUE CATEGORY, WHICH WAS 13.67%. o STOCK SELECTION AIDED PERFORMANCE ACROSS SEVERAL SECTORS, INCLUDING HEALTH CARE AND MATERIALS. [UP ARROW] [UP ARROW] RUSSELL 1000 CLASS A SHARES VALUE INDEX 16.21% 16.69% OBJECTIVE Seeks long-term capital appreciation, with income as a secondary goal. TOTAL NET ASSETS $431.0 million NET ASSET VALUE PER SHARE AS OF 09/30/05 ($) CLASS A 14.60 ----------------------------------------- CLASS B 13.96 ----------------------------------------- CLASS C 13.94 ----------------------------------------- CLASS G 13.97 ----------------------------------------- CLASS T 14.60 ----------------------------------------- CLASS Z 14.87 PORTFOLIO MANAGER'S REPORT _____________________________________________________ COLUMBIA DISCIPLINED VALUE FUND For the 12 months ended September 30, 2005, Columbia Disciplined Value Fund class A shares returned 16.21% without sales charge. Over the same period, the Russell 1000 Value Index returned 16.69% and the Morningstar(R) Large Value Category returned an average 13.67%. 1 Management fees and transactions costs accounted for the slight difference in performance between the fund and its benchmark. The fund incurs these costs while the index does not. We believe that stock selection accounted for the fund's outperformance relative to its peer group. STOCK SELECTION ACROSS SEVERAL SECTORS AIDED PERFORMANCE Good stock selection in health care and materials aided the fund's performance relative to its benchmark. In health care, the fund had more exposure to Medco Health Solutions than the index, which was rewarded when the stock delivered strong profit gains. The company experienced growth in clinical program revenue and formulary management while operating costs declined. In the materials sector, firming demand and pricing for copper, due in part to reconstruction efforts in the aftermath of Hurricane Katrina, energized the profit outlook for Phelps Dodge. The fund's position in the stock was larger than its weight in the index, which magnified the impact of the stock's gains on the fund's relative performance. In some sectors, the fund's benefit from stock selection was a matter of owning less than the index and thereby avoiding the full weight of a decline. For example, the fund's exposure to Verizon Communications was less than the index. The stock suffered a sharp decline as the result of continued price pressures and modest expense increases, which detracted from profits. An underweight in the stock helped the fund sidestep much of the decline. MIXED RESULTS FROM ENERGY AND FINANCIAL STOCKS Energy stocks were the fund's best performers. Higher oil and gas prices boosted profit forecasts for Devon Energy, which returned more than 94% for the fund during the period. Amerada Hess enjoyed higher refining margins. Its stock rose and returned 55% for the fund. The returns of both stocks were amplified because the fund had a larger weight in them than the index. However, the fund's energy returns lagged the sector's return in the index returns for two reasons: The fund had less exposure to energy than the index, and stock selection was a modest detractor. The fund's exposure to ConocoPhillips was lower than the index, and it missed out on some of its outsized gains. 1 (C)2005 Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 12 DISTRIBUTIONS DECLARED PER SHARE 10/01/04 - 09/30/05 ($) CLASS A 0.16 - ----------------------------------------------- CLASS B 0.06 - ----------------------------------------------- CLASS C 0.06 - ----------------------------------------------- CLASS G 0.06 - ----------------------------------------------- CLASS T 0.15 - ----------------------------------------------- CLASS Z 0.20 SECTORS AS OF 09/30/05 (%) FINANCIALS 34.7 - ----------------------------------------------- ENERGY 15.3 - ----------------------------------------------- CONSUMER DISCRETIONARY 9.4 - ----------------------------------------------- HEALTH CARE 7.2 - ----------------------------------------------- UTILITIES 7.2 - ----------------------------------------------- INDUSTRIALS 6.3 - ----------------------------------------------- TELECOMMUNICATION SERVICES 5.7 - ----------------------------------------------- CONSUMER STAPLES 5.7 - ----------------------------------------------- INFORMATION TECHNOLOGY 4.4 - ----------------------------------------------- MATERIALS 4.2 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/05 (%) EXXON MOBIL 5.9 - ----------------------------------------------- JPMORGAN CHASE 4.2 - ----------------------------------------------- CHEVRONTEXACO 4.1 - ----------------------------------------------- WACHOVIA 3.4 - ----------------------------------------------- FIRSTENERGY 3.1 - ----------------------------------------------- PRUDENTIAL FINANCIAL 3.1 - ----------------------------------------------- AMERADA HESS 3.0 - ----------------------------------------------- HARTFORD FINANCIAL SERVICES GROUP 2.9 - ----------------------------------------------- INTERNATIONAL BUSINESS MACHINES 2.9 - ----------------------------------------------- CITIGROUP 2.8 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/05 (%) MEDCO HEALTH SOLUTIONS 0.4 - ----------------------------------------------- PHELPS DODGE 1.4 - ----------------------------------------------- VERIZON COMMUNICATIONS 0.7 - ----------------------------------------------- DEVON ENERGY 2.0 - ----------------------------------------------- AMERADA HESS 3.0 - ----------------------------------------------- CONOCOPHILLIPS 0.2 - ----------------------------------------------- ANNALY MORTGAGE MANAGEMENT 1.6 - ----------------------------------------------- AMERICAN INTERNATIONAL GROUP 0.7 - ----------------------------------------------- PRUDENTIAL FINANCIAL 3.1 - ----------------------------------------------- HARTFORD FINANCIAL SERVICES GROUP 2.9 - ----------------------------------------------- CHUBB 2.7 - ----------------------------------------------- FIRST AMERICAN 1.4 Your fund is actively managed and the composition of its portfolio will change over time. Holdings are calculated as a percentage of net assets. ________________________________________________________________________________ COLUMBIA DISCIPLINED VALUE FUND Financial stocks also made a positive contribution to the fund's return, but the fund's financials trailed the index, generally because of stock selection. We overweighted Annaly Mortgage Management, which lost ground as homeowners prepaid their mortgages at a higher-than-expected rate and that cut into the company's profits. The fund also had a significant position in American International Group (AIG) whose stock price was battered due to concerns over storm-related losses. However, many of the fund's financial positions, including Prudential Financial, Hartford Financial Services Group, Chubb and First American delivered strong double-digit returns for the period. LOOKING AHEAD We continue to believe that large companies have the potential to do well in an environment of rising interest rates and slowing economic growth. We plan to continue to seek out high quality companies that are included in the fund's benchmark, that we believe have the potential for improved profit growth and that are selling at relatively attractive prices. As always, we will target companies in a variety of sectors and industry groups to maintain a diversified portfolio. Vikram Kuriyan has managed or co-managed the fund since June 2005 and has been with the advisor or its predecessors or affiliate organizations since 2000. /s/ Vikram Kuriyan Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. Investments in small- and mid-cap stocks may present special risks. They tend to be more volatile and may be less liquid than the stocks of larger companies. Small-cap stocks often have narrower markets, limited financial resources and tend to be more thinly traded 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 advisor's assessment of a company's prospects is wrong, the price of its stock may not approach the value the advisor has placed on it. 13 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 OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 ($) SALES CHARGE WITHOUT WITH ----------------------------------------- CLASS A 20,678 19,494 ----------------------------------------- CLASS B 19,622 19,622 ----------------------------------------- CLASS C 19,637 19,637 ----------------------------------------- CLASS G 19,118 19,118 ----------------------------------------- CLASS T 20,510 19,335 ----------------------------------------- CLASS Z 21,167 N/A PERFORMANCE INFORMATION ________________________________________________________ COLUMBIA COMMON STOCK FUND GROWTH OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 [MOUNTAIN CHART] CLASS A SHARES CLASS A SHARES RUSSELL WITHOUT SALES CHARGE WITH SALES CHARGE 1000 INDEX S&P 500 INDEX -------------------- ----------------- ------------- --------------- 10/95 10000.00 9425.00 10000.00 10000.00 9872.00 9304.00 9964.00 9954.00 10317.00 9724.00 10401.00 10398.00 10527.00 9921.00 10602.00 10556.00 10757.00 10139.00 10963.00 10897.00 10885.00 10259.00 11065.00 11039.00 11109.00 10471.00 11171.00 11138.00 11314.00 10663.00 11335.00 11307.00 11528.00 10865.00 11627.00 11579.00 11446.00 10788.00 11672.00 11591.00 10991.00 10359.00 11156.00 11033.00 11309.00 10659.00 11391.00 11333.00 11743.00 11068.00 12032.00 11970.00 11873.00 11190.00 12365.00 12234.00 12786.00 12050.00 13299.00 13137.00 12617.00 11891.00 13036.00 12924.00 13230.00 12469.00 13851.00 13691.00 13258.00 12495.00 13959.00 13743.00 12872.00 12132.00 13385.00 13124.00 13373.00 12604.00 14184.00 13834.00 14186.00 13370.00 15048.00 14720.00 14703.00 13858.00 15722.00 15329.00 15718.00 14814.00 16974.00 16583.00 15177.00 14305.00 16023.00 15800.00 15862.00 14950.00 16901.00 16666.00 15443.00 14555.00 16337.00 16126.00 15928.00 15012.00 17093.00 16826.00 16298.00 15360.00 17387.00 17168.00 16240.00 15307.00 17580.00 17295.00 17444.00 16441.00 18848.00 18528.00 18271.00 17220.00 19813.00 19462.00 18419.00 17360.00 20013.00 19662.00 17975.00 16941.00 19668.00 19237.00 18070.00 17031.00 20467.00 19949.00 17626.00 16612.00 20250.00 19710.00 14901.00 14044.00 17322.00 16763.00 15629.00 14731.00 18432.00 17891.00 16977.00 16000.00 19931.00 19305.00 17912.00 16882.00 21139.00 20500.00 18883.00 17797.00 22356.00 21805.00 19113.00 18014.00 23291.00 22584.00 18737.00 17659.00 22566.00 21868.00 19467.00 18348.00 23469.00 22706.00 20232.00 19069.00 24377.00 23655.00 20245.00 19081.00 23802.00 23144.00 21372.00 20143.00 25123.00 24324.00 20690.00 19501.00 24339.00 23582.00 19900.00 18756.00 24220.00 23360.00 19112.00 18013.00 23556.00 22718.00 19490.00 18370.00 25047.00 24245.00 19685.00 18553.00 25556.00 24868.00 20201.00 19040.00 27061.00 26367.00 19488.00 18367.00 25703.00 25289.00 19112.00 18013.00 25217.00 25221.00 21078.00 19866.00 27683.00 27518.00 21104.00 19890.00 26850.00 26602.00 21013.00 19805.00 26299.00 25913.00 20477.00 19300.00 26949.00 26574.00 20567.00 19385.00 26528.00 26132.00 21943.00 20681.00 28176.00 28066.00 20932.00 19728.00 26688.00 26764.00 21296.00 20071.00 26576.00 26443.00 20244.00 19080.00 24482.00 24026.00 20977.00 19771.00 24602.00 24317.00 21824.00 20569.00 25475.00 25117.00 20722.00 19530.00 23152.00 22773.00 19423.00 18306.00 21684.00 21261.00 20724.00 19532.00 23369.00 22968.00 20993.00 19786.00 23525.00 23125.00 20536.00 19355.00 22954.00 22602.00 20565.00 19382.00 22729.00 22292.00 19446.00 18328.00 21306.00 20935.00 17733.00 16713.00 19585.00 19159.00 18031.00 16994.00 19959.00 19558.00 19390.00 18275.00 21489.00 21064.00 19753.00 18617.00 21679.00 21289.00 18860.00 17775.00 21362.00 21019.00 18583.00 17514.00 20950.00 20601.00 19341.00 18229.00 21737.00 21447.00 18316.00 17263.00 20420.00 20218.00 18579.00 17511.00 20269.00 20041.00 17030.00 16051.00 18826.00 18562.00 15800.00 14892.00 17359.00 17188.00 15669.00 14768.00 17472.00 17277.00 13794.00 13001.00 15573.00 15422.00 14761.00 13912.00 16943.00 16703.00 15680.00 14779.00 17941.00 17680.00 14819.00 13967.00 16888.00 16680.00 14570.00 13733.00 16446.00 16276.00 14145.00 13332.00 16199.00 16024.00 14289.00 13468.00 16356.00 16190.00 15362.00 14479.00 17704.00 17497.00 16141.00 15213.00 18637.00 18494.00 16225.00 15292.00 18875.00 18739.00 16490.00 15541.00 19208.00 19111.00 16857.00 15888.00 19582.00 19499.00 16505.00 15556.00 19375.00 19300.00 17329.00 16332.00 20471.00 20431.00 17549.00 16540.00 20651.00 20677.00 18101.00 17061.00 21734.00 21667.00 18263.00 17212.00 22133.00 22079.00 18454.00 17393.00 22441.00 22383.00 18292.00 17240.00 22102.00 22079.00 17822.00 16797.00 21755.00 21679.00 18146.00 17103.00 22053.00 21992.00 18455.00 17393.00 22481.00 22387.00 17600.00 16588.00 21737.00 21602.00 17468.00 16464.00 21824.00 21707.00 17674.00 16658.00 22060.00 21981.00 17807.00 16783.00 22397.00 22335.00 18484.00 17421.00 23304.00 23291.00 19138.00 18037.00 24097.00 24134.00 18772.00 17693.00 23509.00 23526.00 19213.00 18109.00 24002.00 24055.00 18864.00 17779.00 23577.00 23675.00 18377.00 17320.00 23129.00 23239.00 19077.00 17980.00 23865.00 24062.00 19245.00 18139.00 23898.00 24161.00 20417.00 19243.00 24787.00 25101.00 20403.00 19230.00 24562.00 24882.00 09/05 20678.00 19494.00 24755.00 25120.00 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Common Stock Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's primary benchmark was changed to the Russell 1000 Index. Previously, the fund's returns were compared to the S&P 500 Index. The Russell 1000 Index is an unmanaged index that tracks the performance of 1000 of the largest U.S. companies, based on market capitalization. The Standard & Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization U.S. stocks. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. AVERAGE ANNUAL TOTAL RETURN AS OF 09/30/05 (%) SHARE CLASS A B C G T Z - ----------------------------------------------------------------------------------------------------------------------------------- INCEPTION 11/01/98 11/01/98 12/09/02 03/04/96 02/12/93 12/14/92 - ----------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ----------------------------------------------------------------------------------------------------------------------------------- 1-YEAR 16.98 10.28 16.02 11.02 16.10 15.10 16.10 11.10 16.97 10.23 17.25 - ----------------------------------------------------------------------------------------------------------------------------------- 5-YEAR -0.25 -1.42 -1.00 -1.35 -0.99 -0.99 -1.07 -1.58 -0.34 -1.51 0.01 - ----------------------------------------------------------------------------------------------------------------------------------- 10-YEAR 7.54 6.90 6.97 6.97 6.98 6.98 6.69 6.69 7.45 6.82 7.79 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. The returns for class A and class B shares include the returns of Prime A shares (for class A shares) and Prime B shares (for class B shares) of the Galaxy Growth & Income Fund for periods prior to December 9, 2002, the date on which class A and class B shares were initially offered by the fund. The returns shown for class A shares and class B shares also include the returns of Retail A shares of the Galaxy Growth & Income Fund (adjusted to reflect the sales charge applicable to class A shares and class B shares, respectively) for periods prior to the inception of Prime A and Prime B shares (November 1, 1998). Class A and class B shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class A and class B shares exceed expenses paid by Retail A shares. The returns shown for class C shares include the returns of Prime B shares of the Galaxy Growth & Income Fund (adjusted to reflect the sales charge applicable to class C shares) for periods prior to December 9, 2002, the date on which class C shares were initially offered. The returns shown for class C shares also include the returns of Retail A shares of the Galaxy Growth & Income Fund (adjusted to reflect the sales charges applicable to class C shares) for periods prior to the inception of Prime B shares (November 1, 1998). Class C shares generally would have had substantially similar returns to Retail A and Prime B shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class C shares exceed expenses paid by Retail A and Prime B shares. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Growth & Income Fund for periods prior to December 9, 2002, the date on which class T and class G shares were initially offered by the fund. The returns shown for class G shares also include the returns of Retail A shares for periods prior to the inception of Retail B shares of the Galaxy Growth & Income Fund (March 4, 1996). Retail A shares were initially offered on February 12, 1993. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include returns of Trust shares of the Galaxy Growth & Income Fund for periods prior to December 9, 2002, the date on which class Z shares were initially offered by the fund, and returns of Trust shares of the Shawmut Fund (whose shares were initially offered on December 14, 1992), for periods prior to December 14, 1995. 14 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 MANAGEMENT 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 COMMON STOCK FUND As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - --------------------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - --------------------------------------------------------------------------------------------------------------------------- CLASS A 1,000.00 1,000.00 1,096.01 1,019.35 5.99 5.77 1.14 - --------------------------------------------------------------------------------------------------------------------------- CLASS B 1,000.00 1,000.00 1,091.50 1,015.59 9.91 9.55 1.89 - --------------------------------------------------------------------------------------------------------------------------- CLASS C 1,000.00 1,000.00 1,091.40 1,015.59 9.91 9.55 1.89 - --------------------------------------------------------------------------------------------------------------------------- CLASS G 1,000.00 1,000.00 1,091.50 1,015.84 9.65 9.30 1.84 - --------------------------------------------------------------------------------------------------------------------------- CLASS T 1,000.00 1,000.00 1,095.61 1,019.10 6.25 6.02 1.19 - --------------------------------------------------------------------------------------------------------------------------- CLASS Z 1,000.00 1,000.00 1,097.22 1,020.61 4.68 4.51 0.89 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. Had the fund's investment advisor and transfer agent not reimbursed/waived a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. COMPARE WITH OTHER FUNDS Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 15 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. SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005, THE FUND'S CLASS A SHARES RETURNED 16.98% WITHOUT SALES CHARGE. o THE FUND OUTPERFORMED BOTH ITS BENCHMARK AND ITS PEER GROUP FOR THE PERIOD. o SUPERIOR STOCK SELECTION, ESPECIALLY WITHIN THE HEALTH CARE AND FINANCIAL SECTORS, WAS INSTRUMENTAL IN PRODUCING THE FUND'S ABOVE-AVERAGE RESULTS. [UP ARROW] [UP ARROW] RUSSELL 1000 CLASS A SHARES INDEX 16.98% 14.26% OBJECTIVE Seeks to provide a relatively high total return through long-term capital appreciation and current income. TOTAL NET ASSETS $517.7 million NET ASSET VALUE PER SHARE AS OF 09/30/05 ($) CLASS A 13.59 ----------------------------------------- CLASS B 13.12 ----------------------------------------- CLASS C 13.13 ----------------------------------------- CLASS G 13.00 ----------------------------------------- CLASS T 13.52 ----------------------------------------- CLASS Z 13.66 PORTFOLIO MANAGERS' REPORT _____________________________________________________ COLUMBIA COMMON STOCK FUND For the 12-month period ended September 30, 2005, class A shares of Columbia Common Stock Fund returned 16.98% without sales charge. The fund outperformed the 14.26% return of the Russell 1000 Index. It also outperformed the average return of the Morningstar(R) Large Blend Category, which was 13.17% during the same period. 1 Although the fund's sector allocations were not ideally suited to the period, our individual stock selections more than made up the difference. CONTRARIAN APPROACH LED TO OPPORTUNITY Our contrarian approach to stock selection enabled us to capitalize on several opportunities in the health care and financial sectors. Within health care, generic drug manufacturers were one of the fund's bright spots. They were able to sidestep the price competition that many investors feared would affect the traditional pharmaceutical industry. In this regard, portfolio holdings IVAX and Endo Pharmaceuticals Holdings were strong performers for the period. Drug distributors such as McKesson and Cardinal Health also generated solid returns. Both companies were able to improve their business models so that they now receive fees for specific services, which have made their earnings growth less dependent on the price appreciation of drugs held in inventory. By the end of the period, the fund's commitment to the health care sector had risen to 17% of the portfolio, up from 14% 12 months ago. Within the financial sector, the fund benefited from a decision to focus on brokerage companies and to limit exposure to bank stocks. Traditional brokerage powerhouses such as Merrill Lynch and Goldman Sachs Group performed well during a period of generally good health for the capital markets. E*TRADE Financial, which the fund had purchased during several periods of price weakness, moved higher amid the wave of consolidation that has swept over the discount brokerage industry. Bank stocks, by contrast, were poor performers during the period. Profit margins within the banking industry came under pressure from the Federal Reserve's repeated moves to raise short-term interest rates. Due to the strong stock selection, the financial sector added the greatest positive attribution to the Portfolio over the index. OPPORTUNITY LOST THROUGH SECTOR ALLOCATIONS Although we were successful in many of our individual stock selections, we lost some opportunity with respect to sector allocations. In particular, our contrarian style led us to take profits in our energy holdings prematurely, thereby missing the later stages of what became an extended rally. The fund was also underweight in the stocks of public utilities, many of which were pushed higher by the year-long spike in energy prices. 1 (C)2005 Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 16 DISTRIBUTIONS DECLARED PER SHARE 10/01/04 - 09/30/05 ($) CLASS A 0.42 - ----------------------------------------------- CLASS B 0.40 - ----------------------------------------------- CLASS C 0.40 - ----------------------------------------------- CLASS G 0.40 - ----------------------------------------------- CLASS T 0.42 - ----------------------------------------------- CLASS Z 0.43 SECTORS AS OF 09/30/05 (%) INFORMATION TECHNOLOGY 20.2 - ----------------------------------------------- FINANCIALS 17.9 - ----------------------------------------------- HEALTH CARE 17.0 - ----------------------------------------------- CONSUMER DISCRETIONARY 12.4 - ----------------------------------------------- INDUSTRIALS 11.1 - ----------------------------------------------- CONSUMER STAPLES 7.5 - ----------------------------------------------- ENERGY 7.5 - ----------------------------------------------- MATERIALS 4.5 - ----------------------------------------------- TELECOMMUNICATION SERVICES 1.9 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/05 (%) MICROSOFT 2.7 - ----------------------------------------------- CONOCOPHILLIPS 2.1 - ----------------------------------------------- AMERICAN INTERNATIONAL GROUP 1.9 - ----------------------------------------------- EXXON MOBIL 1.8 - ----------------------------------------------- BERKSHIRE HATHAWAY 1.8 - ----------------------------------------------- JPMORGAN CHASE 1.8 - ----------------------------------------------- UNUMPROVIDENT 1.8 - ----------------------------------------------- HONEYWELL INTERNATIONAL 1.7 - ----------------------------------------------- ATI TECHNOLOGIES 1.6 - ----------------------------------------------- CITIGROUP 1.6 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/05 (%) IVAX 0.7 - ----------------------------------------------- ENDO PHARMACEUTICALS HOLDINGS 0.9 - ----------------------------------------------- MCKESSON 0.6 - ----------------------------------------------- CARDINAL HEALTH 1.0 - ----------------------------------------------- MERRILL LYNCH 0.5 - ----------------------------------------------- GOLDMAN SACHS GROUP 0.4 - ----------------------------------------------- E*TRADE FINANCIAL 1.0 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ COLUMBIA COMMON STOCK FUND A MORE CAUTIOUS APPROACH We expect higher energy costs and interest rates to continue to affect corporate earnings over the next 12 months. Given this outlook, we expect larger-capitalization growth companies, a group that has been out of favor for a number of years, to fare better in the months ahead. As a result, we believe that this group presents a timely contrarian opportunity and we plan to have a higher weight in these stocks to take advantage of this potential opportunity. Guy W. Pope has co-managed Columbia Common Stock Fund since March 2005 and has been with the advisor or its predecessors or affiliate organizations since 1993. /s/ Guy W. Pope Jeffrey D. Huffman has co-managed the fund since August 2005 and has been with the advisor or its predecessors or affiliate organizations since 2000. /s/ Jeffrey D. Huffman Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. 17 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 OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 ($) SALES CHARGE WITHOUT WITH ----------------------------------------- CLASS A 38,359 36,143 ----------------------------------------- CLASS B 36,352 36,352 ----------------------------------------- CLASS C 36,368 36,368 ----------------------------------------- CLASS G 36,143 36,143 ----------------------------------------- CLASS T 37,882 35,694 ----------------------------------------- CLASS Z 39,380 N/A PERFORMANCE INFORMATION ________________________________________________________ COLUMBIA SMALL CAP CORE FUND GROWTH OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 [MOUNTIAN CHART] CLASS A SHARES CLASS A SHARES S&P SMALLCAP RUSSELL WITHOUT SALES CHARGE WITH SALES CHARGE 600 INDEX 2000 INDEX -------------------- ----------------- ------------- --------------- 10/95 10000.00 9425.00 10000.00 10000.00 9716.00 9157.00 9506.00 9553.00 10090.00 9510.00 9882.00 9954.00 10378.00 9781.00 10045.00 10217.00 10247.00 9658.00 10068.00 10206.00 10591.00 9982.00 10397.00 10524.00 10898.00 10272.00 10619.00 10739.00 11572.00 10906.00 11229.00 11313.00 12007.00 11317.00 11627.00 11759.00 11703.00 11030.00 11172.00 11276.00 11029.00 10395.00 10403.00 10291.00 11588.00 10922.00 11047.00 10889.00 12082.00 11387.00 11532.00 11315.00 12123.00 11426.00 11452.00 11141.00 12632.00 11906.00 12047.00 11600.00 13151.00 12395.00 12188.00 11904.00 13342.00 12575.00 12390.00 12142.00 13294.00 12530.00 12134.00 11848.00 12857.00 12117.00 11511.00 11289.00 12723.00 11991.00 11652.00 11320.00 14065.00 13256.00 13019.00 12579.00 14988.00 14126.00 13595.00 13119.00 16025.00 15104.00 14450.00 13729.00 16520.00 15570.00 14814.00 14043.00 17786.00 16763.00 15793.00 15071.00 17405.00 16404.00 15111.00 14410.00 17234.00 16243.00 15001.00 14316.00 17259.00 16266.00 15304.00 14567.00 16967.00 15991.00 15005.00 14336.00 17944.00 16912.00 16372.00 15396.00 19076.00 17980.00 16998.00 16030.00 19166.00 18064.00 17098.00 16118.00 18166.00 17121.00 16194.00 15250.00 17672.00 16655.00 16241.00 15282.00 16502.00 15553.00 14998.00 14044.00 14252.00 13433.00 12104.00 11317.00 14857.00 14003.00 12844.00 12203.00 15228.00 14353.00 13440.00 12700.00 15971.00 15053.00 14197.00 13366.00 16331.00 15392.00 15104.00 14193.00 16417.00 15473.00 14914.00 14382.00 15465.00 14576.00 13570.00 13217.00 15072.00 14206.00 13745.00 13423.00 16138.00 15210.00 14654.00 14626.00 16732.00 15770.00 15010.00 14840.00 17555.00 16546.00 15864.00 15510.00 17592.00 16580.00 15724.00 15085.00 16860.00 15891.00 15032.00 14527.00 16826.00 15859.00 15095.00 14530.00 16182.00 15251.00 15058.00 14590.00 16889.00 15918.00 15687.00 15461.00 18080.00 17040.00 16977.00 17211.00 17859.00 16832.00 16450.00 16934.00 18218.00 17170.00 18653.00 19730.00 18852.00 17768.00 17963.00 18429.00 18782.00 17702.00 17656.00 17320.00 18686.00 17612.00 17133.00 16310.00 19038.00 17943.00 18146.00 17732.00 18748.00 17670.00 17701.00 17161.00 19866.00 18724.00 19269.00 18471.00 20200.00 19038.00 18745.00 17928.00 19785.00 18648.00 18863.00 17128.00 19220.00 18114.00 16900.00 15369.00 21153.00 19937.00 18982.00 16689.00 21741.00 20491.00 19796.00 17559.00 21932.00 20671.00 18589.00 16407.00 21645.00 20401.00 17735.00 15605.00 22630.00 21329.00 19087.00 16825.00 23630.00 22272.00 19451.00 17239.00 24301.00 22904.00 20163.00 17834.00 23937.00 22560.00 19826.00 16869.00 23810.00 22441.00 19374.00 16324.00 21679.00 20432.00 16755.00 14127.00 22332.00 21047.00 17648.00 14953.00 23524.00 22171.00 18940.00 16111.00 25053.00 23613.00 20222.00 17105.00 25106.00 23662.00 20398.00 16927.00 25593.00 24121.00 20047.00 16463.00 27571.00 25986.00 21631.00 17785.00 28109.00 26492.00 22243.00 17947.00 27552.00 25968.00 21322.00 17150.00 27015.00 25462.00 20220.00 16299.00 23457.00 22108.00 17365.00 13838.00 23335.00 21993.00 17530.00 13803.00 22206.00 20929.00 16457.00 12812.00 21946.00 20684.00 16984.00 13224.00 23317.00 21977.00 17868.00 14403.00 22888.00 21572.00 17264.00 13601.00 22305.00 21022.00 16671.00 13224.00 21667.00 20421.00 16137.00 12825.00 21684.00 20437.00 16265.00 12990.00 23308.00 21968.00 17585.00 14222.00 25334.00 23877.00 19003.00 15748.00 25937.00 24445.00 19497.00 16033.00 27324.00 25753.00 20511.00 17036.00 28346.00 26716.00 21509.00 17817.00 27927.00 26321.00 20877.00 17487.00 29879.00 28161.00 22687.00 18956.00 30790.00 29020.00 23545.00 19629.00 31769.00 29943.00 23961.00 20027.00 32408.00 30544.00 24652.00 20897.00 32878.00 30987.00 25125.00 21085.00 33121.00 31217.00 25451.00 21281.00 32485.00 30617.00 24606.00 20195.00 32466.00 30599.00 24983.00 20517.00 33797.00 31853.00 26367.00 21380.00 31941.00 30105.00 24922.00 19941.00 31622.00 29804.00 24703.00 19840.00 32877.00 30987.00 26005.00 20770.00 33121.00 31216.00 26491.00 21179.00 35744.00 33688.00 28756.00 23016.00 36952.00 34827.00 29388.00 23697.00 35899.00 33835.00 28724.00 22709.00 36692.00 34582.00 29549.00 23092.00 36017.00 33946.00 28783.00 22432.00 33852.00 31906.00 27174.00 21147.00 35521.00 33479.00 28973.00 22532.00 36754.00 34640.00 29915.00 23402.00 38761.00 36532.00 31716.00 24885.00 38342.00 36137.00 31250.00 24425.00 9/05 38359.00 36143.00 31524.00 24500.00 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Small Cap Core Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 2000 Index is an unmanaged index that tracks the performance of the 2,000 smallest of the 3,000 largest U.S. companies, based on market capitalization. The Standard & Poor's (S&P) SmallCap 600 Index is an unmanaged index that tracks the performance of 600 domestic companies traded on the New York Stock Exchange, the American Stock Exchange and NASDAQ. The S&P SmallCap 600 Index is heavily weighted with the stocks of companies with small market capitalizations. 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 09/30/05 (%) SHARE CLASS A B C G T Z - ----------------------------------------------------------------------------------------------------------------------------------- INCEPTION 11/01/98 11/01/98 11/18/02 11/01/98 02/12/93 12/14/92 - ----------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ----------------------------------------------------------------------------------------------------------------------------------- 1- YEAR 16.69 9.98 15.87 10.87 15.79 14.79 15.91 10.91 16.58 9.89 16.96 - ----------------------------------------------------------------------------------------------------------------------------------- 5-YEAR 13.69 12.35 12.78 12.53 12.79 12.79 12.75 12.38 13.57 12.23 14.03 - ----------------------------------------------------------------------------------------------------------------------------------- 10-YEAR 14.39 13.71 13.78 13.78 13.78 13.78 13.71 13.71 14.25 13.57 14.69 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. On October 7, 2005, the Columbia Small Cap Fund was renamed the Columbia Small Cap Core Fund. Prior to November 18, 2002, the fund was named Galaxy Small Cap Value Fund, and offered Retail A, Retail B, Trust, Prime A and Prime B share classes. On that day, the fund changed its name to Liberty Small Cap Fund and began offering class A, B, C, G, T and Z shares. The returns for class A and B shares include returns of Prime A shares and Retail A shares (for class A shares) and Prime B shares and Retail A shares (for class B shares) of the former Galaxy Small Cap Value Fund for periods prior to the inception of class A and class B shares. Class C share performance information includes returns of Retail B shares and Retail A shares of the former Galaxy Small Cap Value Fund for periods prior to the inception of class C shares. The returns for class G and T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Small Cap Value Fund for periods prior to November 18, 2002. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect the sales charges applicable to class G shares) for periods prior to the inception of Retail B shares of the Galaxy Small Cap Value Fund (November 1, 1998). Retail A shares were initially offered on February 12, 1993. Class G shares generally would have had substantially similar returns because they would have been invested in the same portfolio of securities, although the returns would be lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include the returns of Trust shares of the Galaxy Small Cap Value Fund, for periods prior to November 18, 2002, and returns of Trust shares of the Small Cap portfolio of The Shawmut Funds (the "Shawmut Fund"), the predecessor to the Galaxy Small Cap Value Fund, for periods prior to December 4, 1995. Total returns are not restated to reflect any expense differential (e.g. Rule 12b-1 fees) between any of the share classes. Had the expense differential been reflected, the returns for the periods prior to the inception of class A, B and C shares would have been lower. 18 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 MANAGEMENT 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 CORE FUND As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - --------------------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - --------------------------------------------------------------------------------------------------------------------------- CLASS A 1,000.00 1,000.00 1,064.98 1,019.30 5.95 5.82 1.15 - --------------------------------------------------------------------------------------------------------------------------- CLASS B 1,000.00 1,000.00 1,061.82 1,015.54 9.82 9.60 1.90 - --------------------------------------------------------------------------------------------------------------------------- CLASS C 1,000.00 1,000.00 1,061.12 1,015.54 9.82 9.60 1.90 - --------------------------------------------------------------------------------------------------------------------------- CLASS G 1,000.00 1,000.00 1,061.72 1,015.79 9.56 9.35 1.85 - --------------------------------------------------------------------------------------------------------------------------- CLASS T 1,000.00 1,000.00 1,065.08 1,019.05 6.21 6.07 1.20 - --------------------------------------------------------------------------------------------------------------------------- CLASS Z 1,000.00 1,000.00 1,066.58 1,020.56 4.66 4.56 0.90 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. Had the fund's transfer agent not waived a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. COMPARE WITH OTHER FUNDS Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 19 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. SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005, THE FUND'S CLASS A SHARES RETURNED 16.69% WITHOUT SALES CHARGE. o SMALL CAP STOCKS MADE A STRONG SHOWING DURING THE PERIOD, AND THE FUND, ITS BENCHMARKS AND PEER GROUP DELIVERED SOLID RESULTS. o THE FUND TRAILED ITS BENCHMARKS GENERALLY BECAUSE IT HAD LESS EXPOSURE TO TECHNOLOGY STOCKS DURING THE LATE 2004 MARKET RALLY. HEALTHCARE STOCKS MADE THE LARGEST CONTRIBUTION TO PERFORMANCE, FOLLOWED BY INDUSTRIALS AND MATERIALS STOCKS. [UP ARROW] [UP ARROW] [UP ARROW] S&P CLASS A RUSSELL 2000 SMALLCAP SHARES INDEX 600 INDEX 16.69% 17.95% 21.23% OBJECTIVE Seeks long-term capital appreciation. TOTAL NET ASSETS $1,527.5 million NET ASSET VALUE PER SHARE AS OF 09/30/05 ($) CLASS A 19.32 ----------------------------------------- CLASS B 18.56 ----------------------------------------- CLASS C 18.57 ----------------------------------------- CLASS G 18.40 ----------------------------------------- CLASS T 19.15 ----------------------------------------- CLASS Z 19.54 PORTFOLIO MANAGERS' REPORT _____________________________________________________ COLUMBIA SMALL CAP CORE FUND For the 12-month period ended September 30, 2005, Columbia Small Cap Core Fund class A shares returned 16.69% without sales charge. The fund's benchmarks, the S&P SmallCap 600 Index and the Russell 2000 Index, returned 21.23% and 17.95%, respectively, for the same period. The average return of the fund's peer group, the Morningstar(R) Small Blend Category, was 19.24%. 1 SOLID PERFORMANCE--AND A CAUTIOUS STANCE The fund trailed its benchmarks largely because it had less exposure to technology stocks, which led the market advance in the fourth quarter of 2004. While the fund's conservative stance toward technology may restrain returns during a strong market rally, where riskier stocks lead, we believe it is a prudent long-term approach, with the potential to cushion returns during market declines, when riskier stocks are out of favor. An underweight in financials, as well as weak performance from Oriental Financial Group, a Puerto Rico bank, also detracted from the fund's return. ENERGY STOCKS LED PERFORMANCE Energy stocks made the strongest contribution to fund performance, as energy prices and profits surged throughout the period, but especially as oil refinery production in the Gulf of Mexico was curtailed in the wake of hurricane Katrina. Southwestern Energy, Gulfmark Offshore and Whiting Petroleum were some of the fund's best performers. After the sector's strong run up, we reduced the fund's energy exposure relative to the index because we believed that prices could decline, a trend that was already underway at the end of the period. STOCK SELECTION AIDED PERFORMANCE ACROSS INDUSTRIAL AND MATERIALS SECTORS In the industrials sector, Chicago Bridge & Iron Company (CBI) was one of the top stocks in the portfolio. A global engineering and construction company, CBI benefited from concerns about the oil supply, as it is a leader in the construction of liquefied natural gas (LNG) facilities. LSI Industries, a commercial lighting and design company; and EMCOR Group, a global mechanical and electrical construction company, also helped returns. In the materials sector, Greif Inc., a global industrial packaging company, was a significant help. This family-run business brought in a new management team that implemented a long-term restructuring plan. Greif delivered good earnings, and we believe that the company has some hidden asset value in the timberland it owns. We reduced the fund's position in the stock when it reached our target valuation. However, Greif remains an important part of the portfolio. VALUATIONS, ECONOMIC ENVIRONMENT DROVE PORTFOLIO CHANGES While we did not make substantial changes to the portfolio, we sold some small positions that had reached our target valuations and/or that we believed were in areas that could underperform over the longer term. For example, we reduced exposure to the consumer discretionary area because we were concerned that higher home heating costs and gasoline prices could have a negative impact on consumer spending. We also cut back on financial stocks with high valuations. Although banks benefited from low 1 (C)2005 Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 20 DISTRIBUTIONS DECLARED PER SHARE 10/01/04 - 09/30/05 ($) CLASS A 1.07 - ----------------------------------------------- CLASS B 0.95 - ----------------------------------------------- CLASS C 0.95 - ----------------------------------------------- CLASS G 0.95 - ----------------------------------------------- CLASS T 1.06 - ----------------------------------------------- CLASS Z 1.12 SECTORS AS OF 09/30/05 (%) CONSUMER DISCRETIONARY 20.3 - ----------------------------------------------- INDUSTRIALS 19.8 - ----------------------------------------------- INFORMATION TECHNOLOGY 17.0 - ----------------------------------------------- HEALTH CARE 15.5 - ----------------------------------------------- FINANCIALS 10.8 - ----------------------------------------------- MATERIALS 6.8 - ----------------------------------------------- ENERGY 4.3 - ----------------------------------------------- UTILITIES 2.8 - ----------------------------------------------- CONSUMER STAPLES 2.1 - ----------------------------------------------- TELECOMMUNICATION SERVICES 0.6 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/05 (%) BENCHMARK ELECTRONICS 1.8 - ----------------------------------------------- ALBANY INTERNATIONAL 1.5 - ----------------------------------------------- INVACARE 1.3 - ----------------------------------------------- ARMOR HOLDINGS 1.2 - ----------------------------------------------- RES-CARE 1.2 - ----------------------------------------------- WEST PHARMACEUTICAL SERVICES 1.1 - ----------------------------------------------- PEDIATRIX MEDICAL 1.1 - ----------------------------------------------- EMCOR GROUP 1.0 - ----------------------------------------------- SYBASE 1.0 - ----------------------------------------------- LSI INDUSTRIES 1.0 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/05 (%) ORIENTAL FINANCIAL GROUP 0.4 - ----------------------------------------------- SOUTHWESTERN ENERGY 0.8 - ----------------------------------------------- GULFMARK OFFSHORE 0.6 - ----------------------------------------------- WHITING PETROLEUM 0.5 - ----------------------------------------------- CHICAGO BRIDGE & IRON COMPANY 0.9 - ----------------------------------------------- LSI INDUSTRIES 1.0 - ----------------------------------------------- EMCOR GROUP 1.0 - ----------------------------------------------- GREIF 0.7 - ----------------------------------------------- WEST PHARMACEUTICAL SERVICES 1.1 - ----------------------------------------------- THORATEC 0.6 Your fund is actively managed and the composition of its portfolio will change over time. Holdings are calculated as a percentage of net assets. ________________________________________________________________________________ COLUMBIA SMALL CAP CORE FUND interest rates over the past two years, they became less attractive as short-term interest rates rose. Relatively high valuations were also the reason for trimming some health care holdings. However, some of the fund's health care holdings, such as West Pharmaceutical Services and Thoratec, made solid contributions to return. West Pharmaceutical's shares rose from depressed valuations after an explosion destroyed one of its facilities two years ago. Thoratec, a medical device company, has developed an important technology that is used in the treatment of heart disease. The stock has been such a strong performer that we have recently reduced the fund's holdings to recognize the strong gains. LOOKING AHEAD WITH CAUTION If higher energy prices lead to reduced consumer spending and cut into corporate profits, the impact on economic growth--and on stock prices--is likely to be negative. However, even with an uncertain backdrop, we believe that there are investment opportunities to be found among small cap stocks. Going forward, we plan to focus more on reasonably-valued growth stocks, because they have lagged value stocks for several years running and their valuations are now more attractive. As always, we plan to be selective in our investment choices, emphasizing companies with attractive valuations and strong business prospects. Peter Larson is the lead manager for Columbia Small Cap Core Fund. He has managed the fund since 1992 and has been with the advisor or its predecessors or affiliate organizations since 1963. /s/ Peter Larson Richard D'Auteuil has co-managed the fund since September 2005 and has been with the advisor or its predecessors or affiliate organizations since 1993. /s/ Richard D'Auteuil Allyn Seymour has co-managed the fund since September 2005 and has been with the advisor or its predecessors or affiliate organizations since 1993. /s/ Allyn Seymour Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. Investments in small-cap stocks may be subject to greater volatility and price fluctuations because they may be thinly traded and less liquid than investments in larger companies. 21 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 OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 ($) SALES CHARGE: WITHOUT WITH ----------------------------------------- CLASS A 17,027 16,049 ----------------------------------------- CLASS B 15,921 15,921 ----------------------------------------- CLASS C 15,874 15,874 ----------------------------------------- CLASS G 15,893 15,893 ----------------------------------------- CLASS T 16,990 16,013 ----------------------------------------- CLASS Z 17,745 N/A PERFORMANCE INFORMATION ________________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND [MOUNTAIN CHART] GROWTH OF A $10,000 INVESTMENT 10/01/95 - 09/30/05 CLASS A SHARES CLASS A SHARES RUSSELL 2000 RUSSELL 2000 WITHOUT SALES CHARGE WITH SALES CHARGE GROWTH INDEX INDEX -------------------- ----------------- ------------- -------------- 10/95 10000 9425 10000 10000 9731 9171 9508 9553 10083 9503 9927 9954 10088 9508 10148 10217 9870 9303 10063 10206 10529 9923 10522 10524 11036 10402 10731 10739 12304 11597 11555 11313 12788 12053 12148 11759 11930 11244 11358 11276 10969 10339 9971 10291 11640 10970 10709 10889 12395 11682 11261 11315 12063 11369 10775 11141 12099 11403 11075 11600 12190 11489 11291 11904 12657 11929 11573 12142 11415 10759 10874 11848 10702 10086 10106 11289 10366 9770 9989 11320 12170 11470 11490 12579 12836 12098 11880 13119 13529 12751 12488 13729 13934 13132 12863 14043 15058 14192 13889 15071 14365 13539 13055 14410 13775 12983 12744 14316 13918 13118 12751 14567 13584 12803 12582 14336 14718 13872 13693 15396 15348 14466 14267 16030 15154 14282 14354 16118 14088 13278 13310 15250 13909 13110 13446 15282 12666 11938 12323 14044 9535 8987 9479 11317 10568 9961 10440 12203 10592 9983 10985 12700 11299 10649 11838 13366 12395 11682 12909 14193 12528 11807 13490 14382 10740 10123 12255 13217 10515 9910 12692 13423 10771 10152 13812 14626 11129 10489 13835 14840 12038 11346 14564 15510 11851 11170 14114 15085 11642 10972 13586 14527 11952 11265 13848 14530 12170 11470 14202 14590 14167 13352 15704 15461 17221 16231 18472 17211 17066 16085 18300 16934 21139 19923 22559 19730 21077 19865 20188 18429 18350 17295 18149 17320 17278 16285 16559 16310 19269 18161 18699 17732 17357 16359 17096 17161 18997 17905 18895 18471 18266 17216 17956 17928 16905 15933 16498 17128 14885 14029 13502 15369 16280 15344 14328 16689 17247 16255 15487 17559 16008 15088 13364 16407 15032 14168 12149 15605 15970 15052 13636 16825 16420 15476 13952 17239 17021 16043 14333 17834 16495 15547 13111 16869 15791 14883 12291 16324 13118 12363 10307 14127 14028 13221 11299 14953 15107 14238 12242 16111 16261 15326 13005 17105 15557 14662 12542 16927 14393 13565 11731 16463 15537 14644 12750 17785 14938 14079 12475 17947 13859 13062 11745 17150 12779 12045 10749 16299 10649 10037 9097 13838 10668 10055 9092 13803 10162 9577 8436 12812 10537 9931 8863 13224 11512 10850 9741 14403 10771 10151 9069 13601 10245 9656 8822 13224 9954 9382 8587 12825 10236 9647 8716 12990 10939 10310 9541 14222 12177 11477 10616 15748 12469 11752 10821 16033 13097 12344 11639 17036 13716 12928 12264 17817 13228 12467 11954 17487 14608 13768 12987 18956 14945 14086 13410 19629 15320 14439 13470 20027 15968 15050 14178 20897 16119 15192 14156 21085 16381 15439 14223 21281 15687 14785 13509 20195 15743 14838 13778 20517 16099 15173 14236 21380 14542 13706 12958 19941 14148 13335 12679 19840 14955 14095 13381 20770 15321 14440 13706 21179 16429 15484 14864 23016 17010 16032 15397 23697 16081 15157 14705 22709 16287 15351 14906 23092 15659 14758 14347 22432 14758 13910 13435 21147 15762 14855 14382 22532 16324 15386 14846 23402 17150 16164 15884 24885 16831 15864 15660 24425 09/05 17027 16049 15787 24500 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Small Company Equity Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 2000 Growth Index is an unmanaged index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged index that tracks the performance of the 2,000 smallest of the 3,000 largest U.S. companies based on market capitalization. Unlike 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 09/30/05 (%) SHARE CLASS A B C G T Z - ----------------------------------------------------------------------------------------------------------------------------------- INCEPTION 11/18/02 11/18/02 11/18/02 03/04/96 12/30/91 12/30/91 - ----------------------------------------------------------------------------------------------------------------------------------- SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ----------------------------------------------------------------------------------------------------------------------------------- 1-YEAR 13.86 7.33 13.04 8.04 13.01 12.01 13.06 8.06 13.76 7.22 14.13 - ----------------------------------------------------------------------------------------------------------------------------------- 5-YEAR -1.39 -2.55 -2.18 -2.51 -2.24 -2.24 -2.22 -2.71 -1.44 -2.59 -1.06 - ----------------------------------------------------------------------------------------------------------------------------------- 10-YEAR 5.47 4.84 4.76 4.76 4.73 4.73 4.74 4.74 5.44 4.82 5.90 THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Class A, class B, and class C are newer classes of shares. Their performance information includes returns of Retail A shares (for class A shares) and Retail B shares (for class B and class C shares) of the Galaxy Small Company Equity Fund for periods prior to November 18, 2002, the date on which class A, B, and C shares were initially offered by the Fund. The returns of class B and class C shares also include the returns of Retail A shares for periods prior to the inception of Retail B shares of the Galaxy Small Company Equity Fund (March 4, 1996). Class B and class C shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would be lower to the extent that expenses for class B and class C shares exceed expenses paid by Retail A shares. The returns have not been restated to reflect any differences in expenses between the predecessor shares and the newer class of shares. If differences in expenses had been reflected, the returns shown for periods prior to the inception of the newer classes of shares would have been lower. The returns for class G and T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy Small Company Equity Fund for periods prior to November 18, 2002, the date on which class T and class G shares were initially offered by the fund. The returns shown for class G shares also include the returns of Retail A shares (adjusted to reflect the sales charge applicable to class G shares) for periods prior to the inception of Retail B shares of the Galaxy Small Company Equity Fund (March 4, 1996). Retail A shares were initially offered on December 30, 1991. Class G shares generally would have had substantially similar returns to Retail A shares because they would have been invested in the same portfolio of securities, although the returns would have been lower to the extent that expenses for class G shares exceed expenses paid by Retail A shares. The returns for class Z shares include the returns of Trust shares of the Galaxy Small Company Equity Fund for periods prior to November 18, 2002, the date on which class Z shares were initially offered by the fund. 22 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 MANAGEMENT SERVICES, INC., YOUR ACCOUNT BALANCE IS AVAILABLE ONLINE AT WWW.COLUMBIAFUNDS.COM OR BY CALLING SHAREHOLDER SERVICES AT 800.345.6611 o FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM THEIR BROKERAGE FIRM, CONTACT YOUR BROKERAGE FIRM TO OBTAIN YOUR ACCOUNT BALANCE 1. DIVIDE YOUR ENDING ACCOUNT BALANCE BY $1,000. FOR EXAMPLE, IF AN ACCOUNT BALANCE WAS $8,600 AT THE END OF THE PERIOD, THE RESULT WOULD BE 8.6 2. IN THE SECTION OF THE TABLE BELOW TITLED "EXPENSES PAID DURING THE PERIOD," LOCATE THE AMOUNT FOR YOUR SHARE CLASS. YOU WILL FIND THIS NUMBER IS IN THE COLUMN LABELED "ACTUAL." MULTIPLY THIS NUMBER BY THE RESULT FROM STEP 1. YOUR ANSWER IS AN ESTIMATE OF THE EXPENSES YOU PAID ON YOUR ACCOUNT DURING THE PERIOD UNDERSTANDING YOUR EXPENSES ____________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%) - ------------------------------------------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------------------- CLASS A 1,000.00 1,000.00 1,087.49 1,017.80 7.59 7.33 1.45 - ------------------------------------------------------------------------------------------------------------------------- CLASS B 1,000.00 1,000.00 1,083.78 1,014.04 11.49 11.11 2.20 - ------------------------------------------------------------------------------------------------------------------------- CLASS C 1,000.00 1,000.00 1,083.98 1,014.04 11.49 11.11 2.20 - ------------------------------------------------------------------------------------------------------------------------- CLASS G 1,000.00 1,000.00 1,083.88 1,014.29 11.23 10.86 2.15 - ------------------------------------------------------------------------------------------------------------------------- CLASS T 1,000.00 1,000.00 1,086.99 1,017.55 7.85 7.59 1.50 - ------------------------------------------------------------------------------------------------------------------------- CLASS Z 1,000.00 1,000.00 1,089.59 1,019.05 6.29 6.07 1.20 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. Had the fund's transfer agent not waived a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. COMPARE WITH OTHER FUNDS Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 23 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. SUMMARY o FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2005, THE FUND'S CLASS A SHARES RETURNED 13.86% WITHOUT SALES CHARGE. o FAVORABLE ENVIRONMENT FOR SMALL-CAP STOCKS HELPED THE FUND, ITS BENCHMARKS AND PEER GROUP TO STRONG, DOUBLE-DIGIT RETURNS. HOWEVER, THE FUND'S PERFORMANCE WAS LOWER THAN THAT OF ITS BENCHMARKS AND PEER GROUP. o STOCK SELECTION WAS STRONG IN THE TECHNOLOGY SECTOR, BUT DISAPPOINTING IN THE CONSUMER DISCRETIONARY, ENERGY AND HEALTH CARE SECTORS. [UP ARROW] [UP ARROW] [UP ARROW] CLASS A RUSSELL 2000 RUSSELL 2000 SHARES GROWTH INDEX INDEX 13.86% 17.97% 17.95% OBJECTIVE Seeks capital appreciation. TOTAL NET ASSETS $232.6 million NET ASSET VALUE PER SHARE AS OF 09/30/05 ($) CLASS A 18.15 ---------------------------------- CLASS B 16.82 ---------------------------------- CLASS C 16.77 ---------------------------------- CLASS G 16.79 ---------------------------------- CLASS T 18.11 ---------------------------------- CLASS Z 19.22 PORTFOLIO MANAGERS' REPORT _____________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND For the 12-month period ended September 30, 2005, class A shares of Columbia Small Company Equity Fund returned 13.86% without sales charge. The Russell 2000 Growth Index and the Russell 2000 Index returned 17.97% and 17.95%, respectively. The average return of the fund's peer group, the Morningstar(R) Small Growth Category average, was 18.53%. 1 Despite strong gains from technology stocks, returns in the consumer discretionary, energy and health care sectors were disappointing. SMALL-CAP STOCKS CONTINUED THEIR STRONG RUN Small-cap stocks were among the market leaders during the period, driven by strong earnings growth, brisk merger and acquisition activity, reasonable valuations and continued low interest rates. The fund focused on small-cap stocks with healthy balance sheets, attractive business models and strong management teams. However, after taking over as portfolio managers in July, we trimmed the fund's more speculative, micro-cap stocks and moved into "larger" small companies with leadership positions and superior financial returns. This boosted the fund's average market cap and gave it a higher quality focus. TECHNOLOGY STOCKS WERE WINNERS Long-time tech investments such as Itron, Retek and F5 Networks greatly aided performance. Itron, which provides software and hardware for automated meter reading, benefited as utilities increased their spending. Retek, a software company, was bought out at a nice premium, while F5 Networks saw resurgence in demand for the type of networking equipment it sells. In repositioning the portfolio, we trimmed more volatile semiconductor and semiconductor equipment stocks and added names like Microsemi, a semiconductor manufacturer that focuses on medical as well as defense applications. The company benefited from internal cost cutting as well as increased defense spending. Within the sector, we favored companies that are positioned to benefit from increased corporate spending and less vulnerable to a potential slowdown in consumer spending. STOCK SELECTION FELL SHORT IN CONSUMER CYCLICALS, ENERGY AND HEALTH CARE In the consumer discretionary sector, relative performance suffered from investments in struggling retailers such as CostPlus and Sharper Image. We sold both stocks in favor of companies with more predictable businesses. Among the fund's largest investments was Gaylord Entertainment, which operates hotel and convention centers that are booked years in advance. Its share price advanced strongly during the period. 1 (C)2005 Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. 24 SECTORS AS OF 09/30/05 (%) INFORMATION TECHNOLOGY 26.3 ------------------------------------------------- HEALTH CARE 18.5 ------------------------------------------------- CONSUMER DISCRETIONARY 15.8 ------------------------------------------------- INDUSTRIALS 12.9 ------------------------------------------------- FINANCIALS 9.5 ------------------------------------------------- ENERGY 6.9 ------------------------------------------------- MATERIALS 3.8 ------------------------------------------------- TELECOMMUNICATION SERVICES 1.8 ------------------------------------------------- CONSUMER STAPLES 1.4 ------------------------------------------------- UTILITIES 1.0 Sector breakdown is calculated as a percentage of total investments excluding short-term investments. TOP 10 HOLDINGS AS OF 09/30/05 (%) VCA ANTECH 2.1 ------------------------------------------------- AFFILIATED MANAGERS GROUP 2.1 ------------------------------------------------- UTI WORLDWIDE 1.6 ------------------------------------------------- GAYLORD ENTERTAINMENT 1.6 ------------------------------------------------- ISHARES NASDAQ BIOTECHNOLOGY INDEX 1.5 ------------------------------------------------- HUB GROUP 1.4 ------------------------------------------------- BOSTON PRIVATE FINANCIAL HOLDINGS 1.2 ------------------------------------------------- PROGRESS SOFTWARE 1.1 ------------------------------------------------- MICROSEMI 1.0 ------------------------------------------------- ENERGEN 1.0 HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/05 (%) ITRON 0.6 ------------------------------------------------- F5 NETWORKS 0.2 ------------------------------------------------- MICROSEMI 1.0 ------------------------------------------------- GAYLORD ENTERTAINMENT 1.6 ------------------------------------------------- DENBURY RESOURCES 0.8 ------------------------------------------------- VCA ANTECH 2.1 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. ________________________________________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND The fund's stake in energy was slightly below that of the index, which hurt performance as the sector soared. In addition, many of the fund's energy investments were smaller exploration and production companies without proven reserves. They did not fare nearly as well as companies whose earnings growth were more closely linked to rising commodity prices. Over the summer, we shifted toward larger exploration and production names, such as Denbury Resources, which uses carbon dioxide to pump more oil out of existing wells. We also focused on deep water drilling opportunities. In health care, a number of early stage biotechnology companies declined sharply, including Advancis Pharmaceuticals, which has developed a slow-release drug delivery technology that lowers dosage requirements. When a partner withdrew, Advancis was left with a worrisome funding shortfall. We sold the fund's stake and moved into less volatile companies. Additions included VCA Antech, which operates animal hospitals and provides animal lab tests. It benefited as owners paid more for sophisticated treatments for their pets. STOCK PICKING WILL BE KEY We believe that the outlook for small-cap stocks remains favorable, fueled by reasonable valuations, a pickup in merger and acquisition activity and expectations that the Federal Reserve is near the end of its interest rate cycle. We plan to focus on small-cap companies with outstanding products or services that have the potential to increase earnings consistently over time and deliver superior stock performance, regardless of the market environment. Christian Pineno has been lead manager of Columbia Small Company Equity Fund since June 2005 and has been with the advisor or its predecessors or affiliate organizations since July 1995. /s/ Christian Pineno Daniel H. Cole has co-managed the fund since June 2005 and has been with the advisor or its predecessors or affiliate organizations since September 2001. /s/ Daniel H. Cole Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. Investments in small-cap stocks may be subject to greater volatility and price fluctuations because they may be thinly traded and less liquid than investments in larger companies. 25 FINANCIAL STATEMENTS ___________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS -------------------------------------------------------------------------------------- INVESTMENT Portfolio The investment portfolio details all of the fund's holdings and their market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset, industry, country or geographic region (if applicable) to demonstrate areas of concentration and diversification. -------------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES This statement details the fund's assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all the fund's liabilities (including any unpaid expenses) from the total of the fund's investment and non-investment assets. The share price for each class is calculated by dividing net assets for that class by the number of shares outstanding in that class as of the last day of the reporting period. -------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS This statement details income earned by the fund and the expenses accrued by the fund during the reporting period. The Statement of Operations also shows any net gain or loss the fund realized on the sales of its holdings during the period, as well as any unrealized gains or losses recognized over the period. The total of these results represents the fund's net increase or decrease in net assets from operations. -------------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS This statement demonstrates how the fund's net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and dividend reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding. -------------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS These notes disclose the organizational background of the fund, its significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies. -------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS The financial highlights demonstrate how the fund's net asset value per share was affected by the fund's operating results. The financial highlights table also discloses the classes' performance and certain key ratios (e.g., class expenses and net investment income as a percentage of average net assets). 26 This page intentionally left blank. INVESTMENT PORTFOLIO ___________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - 62.8% CONSUMER DISCRETIONARY - 6.8% AUTO COMPONENTS - 0.4% Autoliv, Inc. 1,780 77,430 BorgWarner, Inc. 1,310 73,962 Compagnie Generale des Etablissements Michelin, Class B 3,400 200,050 Continental AG 3,100 254,786 Denso Corp. 8,700 253,667 Johnson Controls, Inc. 8,000 496,400 Modine Manufacturing Co. 510 18,707 Visteon Corp. (a) 1 10 ------------- Auto Components Total 1,375,012 AUTOMOBILES - 0.3% Nissan Motor Co., Ltd. 10,400 119,267 Renault SA 2,432 230,586 Thor Industries, Inc. 388 13,192 Toyota Motor Corp. 14,800 682,462 Winnebago Industries, Inc. 1,480 42,875 ------------- Automobiles Total 1,088,382 DISTRIBUTORS - 0.0% Building Material Holding Corp. 270 25,161 ------------- Distributors Total 25,161 DIVERSIFIED CONSUMER SERVICES - 0.1% Career Education Corp. (a) 1,770 62,941 Education Management Corp. (a) 3,600 116,064 ------------- Diversified Consumer Services Total 179,005 HOTELS, RESTAURANTS & LEISURE - 1.2% Accor SA 4,200 212,308 Applebee's International, Inc. 4,610 95,381 Bob Evans Farms, Inc. 390 8,857 Brinker International, Inc. (a) 2,770 104,041 Carnival Corp. 7,700 384,846 Cheesecake Factory, Inc. (a) 4,035 126,053 Dave & Buster's, Inc. (a) 830 11,080 Gaylord Entertainment Co. (a) 2,590 123,413 Harrah's Entertainment, Inc. 4,525 294,985 Hilton Hotels Corp. 5,220 116,510 Isle of Capris Casinos, Inc. (a) 1,670 35,705 Kerzner International Ltd. (a) 800 44,440 Lakes Entertainment, Inc. (a) 1,090 10,955 Landry's Restaurants, Inc. 680 19,924 Lone Star Steakhouse & Saloon 910 23,660 Marcus Corp. 440 8,818 Marriott International, Inc., Class A 8,540 538,020 McDonald's Corp. 27,920 935,041 Outback Steakhouse, Inc. 1,000 36,600 RARE Hospitality International, Inc. (a) 1,920 49,344 Scientific Games Corp., Class A (a) 2,330 72,230 Starbucks Corp. (a) 7,580 379,758 Starwood Hotels & Resorts Worldwide, Inc. 15,340 876,988 Vail Resorts, Inc. (a) 420 12,075 SHARES VALUE ($) - ---------------------------------------------------------------------- Wendy's International, Inc. 1,290 58,243 Yum! Brands, Inc. 3,100 150,071 ------------- Hotels, Restaurants & Leisure Total 4,729,346 HOUSEHOLD DURABLES - 0.3% American Greetings Corp., Class A 1,490 40,826 Centex Corp. 550 35,519 CSS Industries, Inc. 420 13,658 D.R. Horton, Inc. 1,816 65,776 Daiwa House Industry Co., Ltd. 13,000 170,753 Fortune Brands, Inc. 1,070 87,023 Kimball International, Inc., Class B 910 11,002 Matsushita Electric Industrial Co., Ltd. 15,000 255,967 Sharp Corp. 7,000 101,808 Sony Corp. 4,200 138,737 Tempur-Pedic International, Inc. (a) 13,150 155,696 Yankee Candle Co., Inc. 1,190 29,155 ------------- Household Durables Total 1,105,920 INTERNET & CATALOG RETAIL - 0.3% Blue Nile, Inc. (a) 1,340 42,398 Coldwater Creek, Inc. (a) 1,930 48,675 eBay, Inc. (a) 27,340 1,126,408 Netflix, Inc. (a) 3,630 94,344 Overstock.com, Inc. (a) 470 18,024 ------------- Internet & Catalog Retail Total 1,329,849 LEISURE EQUIPMENT & PRODUCTS - 0.1% Fuji Photo Film Co., Ltd. 3,200 105,814 Marvel Enterprise, Inc. (a) 4,420 78,985 SCP Pool Corp. 1,790 62,525 Sega Sammy Holdings, Inc. 4,000 156,953 ------------- Leisure Equipment & Products Total 404,277 MEDIA - 0.5% 4Kids Entertainment, Inc. (a) 810 14,086 aQuantive, Inc. (a) 1,150 23,149 Arbitron, Inc. 320 12,749 British Sky Broadcasting Group PLC 22,500 222,518 Dow Jones & Co., Inc. 1,900 72,561 Getty Images, Inc. (a) 990 85,180 Grupo Televisa SA, ADR 1,500 107,565 Journal Communications, Inc., Class A 750 11,175 Lamar Advertising Co., Class A (a) 1,300 58,968 Lions Gate Entertainment Corp. (a) 6,300 60,102 Media General, Inc., Class A 230 13,342 Pearson PLC 12,820 149,125 R.H. Donnelley Corp. (a) 1,040 65,790 Radio One, Inc., Class D (a) 4,440 58,386 Reader's Digest Association, Inc., Class A 560 8,943 Scholastic Corp. (a) 500 18,480 Valassis Communications, Inc. (a) 1,050 40,929 Viacom, Inc., Class A 9,716 322,766 Vivendi Universal SA 6,200 202,654 XM Satellite Radio Holdings, Inc., Class A (a) 8,110 291,230 ------------- Media Total 1,839,698 28 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) CONSUMER DISCRETIONARY - (CONTINUED) MULTILINE RETAIL - 1.0% Dollar General Corp. 2,200 40,348 Federated Department Stores, Inc. 25,700 1,718,559 J.C. Penney Co., Inc. 23,819 1,129,497 Kohl's Corp. (a) 8,300 416,494 Target Corp. 13,010 675,609 ------------- Multiline Retail Total 3,980,507 SPECIALTY RETAIL - 2.1% Abercrombie & Fitch Co., Class A 2,880 143,568 Aeropostale, Inc. (a) 920 19,550 Best Buy Co., Inc. 6,085 264,880 Charlotte Russe Holding, Inc. (a) 1,200 15,984 Chico's FAS, Inc. (a) 7,650 281,520 Children's Place Retail Stores, Inc. (a) 1,330 47,401 Finish Line, Inc., Class A 2,760 40,268 Gamestop Corp., Class A (a) 2,290 72,066 Guitar Center, Inc. (a) 360 19,876 Hibbett Sporting Goods, Inc. (a) 1,320 29,370 Home Depot, Inc. 36,891 1,407,023 Hot Topic, Inc. (a) 830 12,749 Jarden Corp. (a) 630 25,874 Lowe's Companies, Inc. 16,575 1,067,430 Monro Muffler, Inc. (a) 710 18,652 Movie Gallery, Inc. 620 6,442 Office Depot, Inc. (a) 48,640 1,444,608 PETCO Animal Supplies, Inc. (a) 830 17,563 PETsMART, Inc. 3,180 69,260 Pier 1 Imports, Inc. 670 7,551 Sherwin-Williams Co. 18,222 803,044 Staples, Inc. 43,920 936,375 Talbots, Inc. 1,420 42,486 TBC Corp. (a) 170 5,863 Tiffany & Co. 26,000 1,034,020 TJX Companies, Inc. 3,500 71,680 Tuesday Morning Corp. 1,490 38,546 Urban Outfitters, Inc. (a) 7,020 206,388 Yamada Denki Co., Ltd. 2,100 160,862 Zale Corp. (a) 480 13,046 ------------- Specialty Retail Total 8,323,945 TEXTILES, APPAREL & LUXURY GOODS - 0.5% Burberry Group PLC 27,200 207,351 Carter's, Inc. (a) 260 14,768 Coach, Inc. (a) 31,695 993,955 Delta Apparel, Inc. 510 7,298 Hampshire Group Ltd. (a) 950 22,420 Jos. A. Bank Clothiers, Inc. (a) 1,090 47,110 Kellwood Co. 310 8,014 NIKE, Inc., Class B 5,510 450,057 Russell Corp. 670 9,407 SHARES VALUE ($) - ---------------------------------------------------------------------- Stride Rite Corp. 840 10,769 Wolverine World Wide, Inc. 3,070 64,623 ------------- Textiles, Apparel & Luxury Goods Total 1,835,772 ------------- CONSUMER DISCRETIONARY TOTAL 26,216,874 CONSUMER STAPLES - 4.9% BEVERAGES - 1.2% Coca-Cola Co. 18,490 798,583 Diageo PLC 19,450 279,753 Diageo PLC, ADR 22,901 1,328,487 Pepsi Bottling Group, Inc. 2,100 59,955 PepsiCo, Inc. 40,974 2,323,635 ------------- Beverages Total 4,790,413 FOOD & STAPLES RETAILING - 0.7% BJ's Wholesale Club, Inc. (a) 370 10,286 CVS Corp. 45,490 1,319,665 FamilyMart Co., Ltd. 2,200 66,303 Kroger Co. (a) 3,500 72,065 Lawson, Inc. 1,800 67,831 SUPERVALU, Inc. 2,400 74,688 Tesco PLC 46,550 254,202 United Natural Foods, Inc. (a) 590 20,862 Walgreen Co. 15,810 686,945 Weis Markets, Inc. 830 33,208 Whole Foods Market, Inc. 650 87,393 ------------- Food & Staples Retailing Total 2,693,448 FOOD PRODUCTS - 1.0% Cadbury Schweppes PLC, ADR 19,500 794,235 Corn Products International, Inc. 6,270 126,466 Dean Foods Co. (a) 2,500 97,150 Delta & Pine Land Co. 1,280 33,805 Flowers Foods, Inc. 1,044 28,480 H.J. Heinz Co. 1,750 63,945 J & J Snack Foods Corp. 164 9,479 Kellogg Co. 19,610 904,609 Lancaster Colony Corp. 240 10,320 Lance, Inc. 660 11,524 Nestle SA, Registered Shares 2,974 871,554 Royal Numico NV (a) 5,886 257,779 Tyson Foods, Inc., Class A 4,670 84,294 Unilever PLC 36,210 378,541 ------------- Food Products Total 3,672,181 HOUSEHOLD PRODUCTS - 0.8% Colgate-Palmolive Co. 18,330 967,640 Kao Corp. 8,000 197,809 Kimberly-Clark Corp. 12,292 731,743 Procter & Gamble Co. 18,830 1,119,632 Reckitt Benckiser PLC 6,583 200,698 ------------- Household Products Total 3,217,522 See Accompanying Notes to Financial Statements. | 29 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) CONSUMER STAPLES - (CONTINUED) PERSONAL PRODUCTS - 0.5% Alberto-Culver Co., Class B 1,240 55,490 Estee Lauder Cos., Inc., Class A 1,190 41,448 Gillette Co. 30,710 1,787,322 Nu Skin Enterprises, Inc., Class A 3,090 58,864 ------------- Personal Products Total 1,943,124 TOBACCO - 0.7% Altria Group, Inc. 22,126 1,630,908 British American Tobacco PLC 16,759 352,979 Imperial Tobacco Group PLC 8,897 254,944 Japan Tobacco, Inc. 13 205,151 UST, Inc. 2,370 99,208 ------------- Tobacco Total 2,543,190 ------------- CONSUMER STAPLES TOTAL 18,859,878 ENERGY - 7.2% ENERGY EQUIPMENT & SERVICES - 1.4% Atwood Oceanics, Inc. (a) 640 53,894 CAL Dive International, Inc. (a) 910 57,703 Diamond Offshore Drilling, Inc. 1,250 76,563 Dresser-Rand Group, Inc. (a) 163 4,015 Dril-Quip, Inc. (a) 310 14,880 Energy Conversion Devices, Inc. (a) 830 37,250 FMC Technologies, Inc. (a) 3,360 141,490 Grant Prideco, Inc. (a) 1,960 79,674 Grey Wolf, Inc. (a) 2,050 17,282 Halliburton Co. 43,302 2,967,053 Hydril (a) 480 32,947 Lufkin Industries, Inc. 1,100 47,905 Maverick Tube Corp. (a) 320 9,600 Nabors Industries Ltd. (a) 1,300 93,379 National-Oilwell Varco, Inc. (a) 8,230 541,534 Noble Corp. 1,000 68,460 Saipem S.p.A. 18,600 312,897 Schlumberger Ltd. 5,724 482,991 Smith International, Inc. 3,730 124,246 Stolt Offshore SA (a) 9,400 108,707 Superior Well Services, Inc. (a) 200 4,620 Technip SA, ADR 1,100 65,395 Tetra Technologies, Inc. (a) 780 24,352 Transocean, Inc. (a) 1,100 67,441 Weatherford International Ltd. (a) 900 61,794 ------------- Energy Equipment & Services Total 5,496,072 OIL, GAS & CONSUMABLE FUELS - 5.8% Alpha Natural Resources, Inc. (a) 610 18,324 Amerada Hess Corp. 550 75,625 BG Group PLC 29,852 283,492 Bill Barrett Corp. (a) 261 9,610 Bois d'Arc Energy, Inc. (a) 810 13,940 BP PLC, ADR 38,852 2,752,664 Cheniere Energy, Inc. (a) 540 22,334 Chesapeake Energy Corp. 2,100 80,325 Chevron Corp. 12,197 789,512 SHARES VALUE ($) - ---------------------------------------------------------------------- Cimarex Energy Co. (a) 741 33,590 CNOOC Ltd. 354,000 253,750 Comstock Resources, Inc. (a) 560 18,374 ConocoPhillips 42,838 2,994,805 CONSOL Energy, Inc. 16,330 1,245,489 Denbury Resources, Inc. (a) 1,270 64,059 EnCana Corp. 6,200 362,272 Encore Acquisition Co. (a) 650 25,252 Energy Partners Ltd. (a) 810 25,288 ENI S.p.A. 14,313 424,241 EOG Resources, Inc. 23,140 1,733,186 Exxon Mobil Corp. 59,075 3,753,625 Frontier Oil Corp. 620 27,497 Harvest Natural Resources, Inc. (a) 1,190 12,769 Holly Corp. 430 27,511 Houston Exploration Co. (a) 250 16,813 InterOil Corp. (a) 350 8,155 KFx, Inc. (a) 480 8,218 LUKOIL, ADR 2,300 132,512 Marathon Oil Corp. 9,613 662,624 Massey Energy Co. 2,940 150,146 Murphy Oil Corp. 600 29,922 OMV AG 2,600 154,750 Peabody Energy Corp. 2,850 240,397 Pioneer Natural Resources Co. 15,700 862,244 Range Resources Corp. 840 32,432 Remington Oil & Gas Corp. (a) 1,520 63,080 Royal Dutch Shell PLC, Class A 3,846 127,151 Royal Dutch Shell PLC, Class B 14,768 509,843 Southwestern Energy Co. (a) 2,490 182,766 St. Mary Land & Exploration Co. 630 23,058 Statoil ASA 8,300 204,608 Stone Energy Corp. (a) 480 29,299 Superior Energy Services, Inc. (a) 3,500 80,815 Teekay Shipping Corp. 3,250 139,912 Tesoro Corp. 1,220 82,033 Total SA 2,890 786,230 Ultra Petroleum Corp. (a) 1,410 80,201 Western Gas Resources, Inc. 690 35,349 Williams Companies, Inc. 24,200 606,210 XTO Energy, Inc. 45,980 2,083,814 ------------- Oil, Gas & Consumable Fuels Total 22,380,116 ------------- ENERGY TOTAL 27,876,188 FINANCIALS - 12.7% CAPITAL MARKETS - 2.6% A.G. Edwards, Inc. 4,602 201,614 Affiliated Managers Group, Inc. (a) 4,070 294,749 Bank of New York Co., Inc. 33,692 990,882 Bear Stearns Companies, Inc. 400 43,900 Credit Suisse Group, Registered Shares 7,500 332,355 Deutsche Bank AG, Registered Shares 3,483 326,007 E*TRADE Financial Corp. (a) 5,300 93,280 Franklin Resources, Inc. 5,711 479,496 Goldman Sachs Group, Inc. 13,794 1,677,074 Lazard Ltd., Class A 5,150 130,295 Legg Mason, Inc. 550 60,329 Lehman Brothers Holdings, Inc. 3,500 407,680 30 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) CAPITAL MARKETS - (CONTINUED) Merrill Lynch & Co., Inc. 45,732 2,805,658 Morgan Stanley 7,613 410,645 Nomura Holdings, Inc. 22,100 343,151 Piper Jaffray Companies, Inc. (a) 390 11,645 State Street Corp. 18,540 906,977 T. Rowe Price Group, Inc. 1,770 115,581 UBS AG, Registered Shares 4,000 340,274 ------------- Capital Markets Total 9,971,592 COMMERCIAL BANKS - 4.3% Anglo Irish Bank Corp., PLC 9,900 134,862 Australia & New Zealand Banking Group Ltd. 18,300 335,204 Banca Popolare Italiana 10,100 99,111 BancFirst Corp. 158 13,430 Banco Bilbao Vizcaya Argentaria SA 25,000 438,660 Banco Santander Central Hispano SA 29,500 387,904 BancorpSouth, Inc. 820 18,737 BancTrust Financial Group, Inc. 628 12,108 Bank of Granite Corp. 610 11,614 Bank of Hawaii Corp. 900 44,298 Barclays PLC 49,620 502,442 BNP Paribas SA 6,419 488,337 Boston Private Financial Holdings, Inc. 3,590 95,279 Bryn Mawr Bank Corp. 707 15,144 Capitol Bancorp Ltd. 693 22,453 Chemical Financial Corp. 670 21,775 Chittenden Corp. 860 22,799 Citizens Banking Corp. 360 10,224 City Holding Co. 340 12,158 City National Corp. 2,210 154,899 Columbia Banking System, Inc. 540 14,164 Commerzbank AG 9,200 251,162 Community Trust Bancorp, Inc. 560 18,021 Corus Bankshares, Inc. 400 21,932 Cullen/Frost Bankers, Inc. 1,900 93,746 DNB NOR ASA 17,200 177,337 East West Bancorp, Inc. 3,330 113,353 Fidelity Bankshares, Inc. 1,550 47,352 First Citizens BancShares, Inc., Class A 90 15,359 First Financial Bankshares, Inc. 465 16,196 First Financial Corp. 500 13,500 Greater Bay Bancorp 620 15,277 Hancock Holding Co. 360 12,290 HBOS PLC 19,500 293,578 HSBC Holdings PLC 39,900 646,803 Marshall & Ilsley Corp. 22,408 974,972 Mercantile Bankshares Corp. 1,300 70,044 Merchants Bancshares, Inc. 490 12,681 Mid-State Bancshares 870 23,934 Mitsubishi Tokyo Financial Group, Inc. 42 550,480 Mitsui Trust Holdings, Inc. 12,000 165,755 Mizuho Financial Group, Inc. 67 429,507 National Bank of Greece SA 6,305 250,244 SHARES VALUE ($) - ---------------------------------------------------------------------- National City Corp. 11,663 390,011 North Fork Bancorporation, Inc. 10,154 258,927 Northrim BanCorp, Inc. 450 11,268 PNC Financial Services Group, Inc. 13,646 791,741 Prosperity Bancshares, Inc. 1,540 46,585 Resona Holdings, Inc. (a) 45 116,990 Societe Generale 3,453 394,620 South Financial Group, Inc. 1,660 44,554 Sterling Bancshares, Inc. 1,460 21,477 Sumitomo Mitsui Financial Group, Inc. 29 275,182 Texas Capital Bancshares, Inc. (a) 1,990 42,088 TriCo Bancshares 987 21,240 TrustCo Bank Corp. 1,120 14,034 U.S. Bancorp 54,839 1,539,879 UMB Financial Corp. 390 25,615 UnionBanCal Corp. 3,800 264,936 United Overseas Bank Ltd. 24,000 200,303 Wachovia Corp. 30,278 1,440,930 Wells Fargo & Co. 44,333 2,596,584 Westamerica Bancorporation 780 40,287 Westpac Banking Corp. 9,400 151,535 Whitney Holding Corp. 660 17,846 Zions Bancorporation 11,210 798,264 ------------- Commercial Banks Total 16,574,021 CONSUMER FINANCE - 0.1% Aiful Corp. 2,100 177,136 Cash America International, Inc. 1,130 23,448 Nelnet, Inc., Class A (a) 1,120 42,571 ORIX Corp. 900 163,329 Takefuji Corp. 1,700 133,226 World Acceptance Corp. (a) 1,897 48,203 ------------- Consumer Finance Total 587,913 DIVERSIFIED FINANCIAL SERVICES - 1.5% Advance America Cash Advance Centers, Inc. 1,070 14,177 Chicago Mercantile Exchange 290 97,817 CIT Group, Inc. 1,600 72,288 Citigroup, Inc. 62,231 2,832,755 Fortis 8,680 251,873 ING Groep NV 11,520 343,540 JPMorgan Chase & Co. 45,303 1,537,131 Metris Companies, Inc. (a) 1,640 23,993 MFC Bancorp Ltd. (a) 1,490 37,175 Nuveen Investments, Class A 10,100 397,839 Suncorp-Metway Ltd. 8,100 121,852 ------------- Diversified Financial Services Total 5,730,440 INSURANCE - 3.1% Ace Ltd. 18,500 870,795 Allianz AG, Registered Shares 2,454 331,537 Allstate Corp. 14,330 792,306 Ambac Financial Group, Inc. 10,580 762,395 American International Group, Inc. 45,855 2,841,176 AmerUs Group Co. 330 18,932 Argonaut Group, Inc. (a) 590 15,936 Aviva PLC 21,100 231,695 AXA 11,400 313,404 See Accompanying Notes to Financial Statements. | 31 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) INSURANCE - (CONTINUED) Baldwin & Lyons, Inc., Class B 510 12,765 Chubb Corp. 5,850 523,868 CNA Surety Corp. (a) 1,120 15,926 Commerce Group, Inc. 170 9,863 Delphi Financial Group, Inc., Class A 550 25,740 Endurance Specialty Holdings Ltd. 1,900 64,809 Genworth Financial, Inc., Class A 1,600 51,584 Harleysville Group, Inc. 750 18,000 Hartford Financial Services Group, Inc. 11,152 860,600 Horace Mann Educators Corp. 730 14,439 Lincoln National Corp. 1,400 72,828 Loews Corp. 1,100 101,651 Mitsui Sumitomo Insurance Co., Ltd. 20,000 230,819 Muenchener Rueckversicherungs AG, Registered Shares 1,200 137,093 Navigators Group, Inc. (a) 664 24,780 Old Republic International Corp. 2,550 68,009 Phoenix Companies, Inc. 1,550 18,910 ProCentury Corp. 1,340 13,722 QBE Insurance Group Ltd. 14,900 213,231 Quanta Capital Holdings Ltd. (a) 1,590 9,540 RLI Corp. 406 18,782 Sampo Oyj, Class A 22,100 351,155 Selective Insurance Group, Inc. 640 31,296 St. Paul Travelers Companies, Inc. 17,900 803,173 Storebrand ASA 13,200 129,061 Triad Guaranty, Inc. (a) 827 32,435 UICI 510 18,360 United America Indemnity Ltd., Class A (a) 840 15,414 UnumProvident Corp. 31,654 648,907 Willis Group Holdings Ltd. 11,333 425,554 XL Capital Ltd., Class A 11,479 780,916 ------------- Insurance Total 11,921,406 REAL ESTATE - 0.8% Alexandria Real Estate Equities, Inc., REIT 230 19,019 Archstone-Smith Trust, REIT 15,496 617,826 AvalonBay Communities, Inc., REIT 6,736 577,275 Bedford Property Investors, Inc., REIT 563 13,422 BioMed Realty Trust, Inc., REIT 510 12,648 Bluegreen Corp. (a) 2,415 42,625 Boston Properties, Inc., REIT 600 42,540 Brandywine Realty Trust, REIT 600 18,654 CapitaLand Ltd. 125,000 232,238 Cousins Properties, Inc., REIT 490 14,808 EastGroup Properties, Inc., REIT 560 24,500 Equity Office Properties Trust, REIT 2,100 68,691 Equity One, Inc., REIT 730 16,972 Franklin Street Properties Corp., REIT 197 3,227 Getty Realty Corp., REIT 590 16,980 Host Marriott Corp., REIT 5,500 92,950 SHARES VALUE ($) - ---------------------------------------------------------------------- Kimco Realty Corp., REIT 19,122 600,813 Mid-America Apartment Communities, Inc., REIT 620 28,836 Mitsui Fudosan Co., Ltd. 4,000 60,608 Nationwide Health Properties, Inc., REIT 480 11,184 ProLogis Trust, REIT 2,200 97,482 PS Business Parks, Inc., REIT 640 29,312 Strategic Hotel Capital, Inc., REIT 1,536 28,047 Sun Hung Kai Properties Ltd. 21,000 217,339 Swire Pacific Ltd., Class A 35,000 322,858 Tanger Factory Outlet Centers, Inc., REIT 670 18,633 Universal Health Realty Income Trust, REIT 330 10,973 Urstadt Biddle Properties, Inc., Class A, REIT 710 10,764 Washington REIT 550 17,110 ------------- Real Estate Total 3,268,334 THRIFTS & MORTGAGE FINANCE - 0.3% Countrywide Financial Corp. 11,316 373,201 Golden West Financial Corp. 7,300 433,547 PMI Group, Inc. 2,300 91,701 Sovereign Bancorp, Inc. 4,000 88,160 ------------- Thrifts & Mortgage Finance Total 986,609 ------------- FINANCIALS TOTAL 49,040,315 HEALTH CARE - 8.2% BIOTECHNOLOGY - 0.7% Abgenix, Inc. (a) 1,250 15,850 Amgen, Inc. (a) 20,080 1,599,773 Arena Pharmaceuticals, Inc. (a) 1,110 10,989 AtheroGenics, Inc. (a) 1,690 27,091 CV Therapeutics, Inc. (a) 1,540 41,195 Exelixis, Inc. (a) 4,180 32,061 Human Genome Sciences, Inc. (a) 1,930 26,229 Illumina, Inc. (a) 3,330 42,657 Martek Biosciences Corp. (a) 530 18,619 Medarex, Inc. (a) 1,530 14,566 MedImmune, Inc. (a) 2,290 77,058 Neurocrine Biosciences, Inc. (a) 1,640 80,672 Protein Design Labs, Inc. (a) 26,290 736,120 Vertex Pharmaceuticals, Inc. (a) 1,480 33,078 ------------- Biotechnology Total 2,755,958 HEALTH CARE EQUIPMENT & SUPPLIES - 1.9% Advanced Neuromodulation Systems, Inc. (a) 520 24,679 Alcon, Inc. 4,280 547,326 American Medical Systems Holdings, Inc. (a) 3,980 80,197 Analogic Corp. 240 12,098 Aspect Medical Systems, Inc. (a) 1,900 56,297 Baxter International, Inc. 35,190 1,403,025 Bio-Rad Laboratories, Inc., Class A (a) 290 15,947 Biomet, Inc. 3,370 116,973 32 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) HEALTH CARE EQUIPMENT & SUPPLIES - (CONTINUED) DENTSPLY International, Inc. 1,150 62,123 Foxhollow Technologies, Inc. (a) 250 11,903 Gen-Probe, Inc. (a) 2,620 129,559 GN Store Nord A/S 19,000 251,042 Greatbatch, Inc. (a) 474 13,007 Haemonetics Corp. (a) 420 19,963 Hologic, Inc. (a) 290 16,747 Hospira, Inc. (a) 1,000 40,970 Immucor, Inc. (a) 2,810 77,106 Intuitive Surgical, Inc. (a) 500 36,645 Invacare Corp. 460 19,168 Kinetic Concepts, Inc. (a) 1,380 78,384 Kyphon, Inc. (a) 1,440 63,274 Medtronic, Inc. 26,950 1,445,059 Meridian Bioscience, Inc. 1,100 22,770 Millipore Corp. (a) 800 50,312 Nektar Therapeutics (a) 4,980 84,411 ResMed, Inc. (a) 1,328 105,775 Respironics, Inc. (a) 1,000 42,180 Somanetics Corp. (a) 600 15,000 SonoSite, Inc. (a) 1,350 40,068 STERIS Corp. 840 19,984 Sybron Dental Specialties, Inc. (a) 470 19,543 Terumo Corp. 3,600 116,220 Thermo Electron Corp. (a) 41,590 1,285,131 Varian Medical Systems, Inc. (a) 24,680 975,107 Varian, Inc. (a) 250 8,580 Viasys Healthcare, Inc. (a) 400 9,996 Vital Signs, Inc. 200 9,218 Waters Corp. (a) 1,660 69,056 ------------- Health Care Equipment & Supplies Total 7,394,843 HEALTH CARE PROVIDERS & SERVICES - 1.6% Aetna, Inc. 11,010 948,401 Allion Healthcare, Inc. (a) 920 16,569 Apria Healthcare Group, Inc. (a) 980 31,272 Caremark Rx, Inc. (a) 22,000 1,098,460 Centene Corp. (a) 3,670 91,860 Cerner Corp. (a) 1,020 88,669 CIGNA Corp. 5,300 624,658 Community Health Systems, Inc. (a) 3,610 140,104 Coventry Health Care, Inc. (a) 2,180 187,524 Cross Country Healthcare, Inc. (a) 1,060 19,674 DaVita, Inc. (a) 3,330 153,413 Genesis HealthCare Corp. (a) 550 22,176 Gentiva Health Services, Inc. (a) 960 17,395 Health Management Associates, Inc., Class A 2,660 62,430 HealthExtras, Inc. (a) 957 20,461 Henry Schein, Inc. (a) 1,560 66,487 Hooper Holmes, Inc. 1,830 7,192 SHARES VALUE ($) - ---------------------------------------------------------------------- Humana, Inc. (a) 2,650 126,882 Kindred Healthcare, Inc. (a) 980 29,204 Laboratory Corp. of America Holdings (a) 2,330 113,494 LifePoint Hospitals, Inc. (a) 1,490 65,158 Medco Health Solutions, Inc. (a) 1,200 65,796 Owens & Minor, Inc. 490 14,382 PAREXEL International Corp. (a) 900 18,081 Pediatrix Medical Group, Inc. (a) 790 60,688 PRA International (a) 750 22,732 Psychiatric Solutions, Inc. (a) 180 9,761 Quest Diagnostics, Inc. 1,300 65,702 RehabCare Group, Inc. (a) 25 513 Res-Care, Inc. (a) 970 14,928 Symbion, Inc. (a) 630 16,298 Triad Hospitals, Inc. (a) 1,000 45,270 United Surgical Partners International, Inc. (a) 2,550 99,730 UnitedHealth Group, Inc. 31,270 1,757,374 VCA Antech, Inc. (a) 6,551 167,182 ------------- Health Care Providers & Services Total 6,289,920 PHARMACEUTICALS - 4.0% Abbott Laboratories 28,160 1,193,984 Allergan, Inc. 1,390 127,352 Amylin Pharmaceuticals, Inc. (a) 17,561 610,947 Astellas Pharma, Inc. 3,100 116,574 AstraZeneca PLC 7,377 344,903 AstraZeneca PLC, ADR 16,700 786,570 Connetics Corp. (a) 1,520 25,703 Eisai Co., Ltd. 4,000 171,540 Endo Pharmaceuticals Holdings, Inc. (a) 2,710 72,276 Forest Laboratories, Inc. (a) 2,140 83,396 GlaxoSmithKline PLC 26,240 668,110 GlaxoSmithKline PLC, ADR 8,218 421,419 IVAX Corp. (a) 26,230 691,423 Johnson & Johnson 43,840 2,774,195 Medicis Pharmaceutical Corp., Class A 5,000 162,800 MGI Pharma, Inc. (a) 1,560 36,364 New River Pharmaceuticals, Inc. (a) 490 23,491 Novartis AG, ADR 47,470 2,420,970 Novartis AG, Registered Shares 8,197 416,013 Par Pharmaceutical Companies, Inc. (a) 670 17,835 Penwest Pharmaceuticals Co. (a) 1,805 31,642 Pfizer, Inc. 38,933 972,157 Roche Holding AG, Genusschein 2,256 313,633 Salix Pharmaceuticals Ltd. (a) 1,790 38,037 Sanofi-Aventis 5,005 414,173 Shire Pharmaceuticals Group PLC, ADR 4,030 149,070 Takeda Pharmaceutical Co., Ltd. 6,200 369,548 Teva Pharmaceutical Industries Ltd., ADR 39,970 1,335,797 Wyeth 10,610 490,925 ------------- Pharmaceuticals Total 15,280,847 ------------- HEALTH CARE TOTAL 31,721,568 See Accompanying Notes to Financial Statements. | 33 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INDUSTRIALS - 6.7% AEROSPACE & DEFENSE - 1.0% AAR Corp. (a) 1,030 17,695 Armor Holdings, Inc. (a) 1,730 74,407 Aviall, Inc. (a) 500 16,890 DRS Technologies, Inc. 330 16,289 Esterline Technologies Corp. (a) 710 26,902 General Dynamics Corp. 9,364 1,119,466 Goodrich Corp. 1,800 79,812 Honeywell International, Inc. 25,540 957,750 Kaman Corp., Class A 430 8,794 L-3 Communications Holdings, Inc. 1,530 120,977 Moog, Inc., Class A (a) 240 7,085 Northrop Grumman Corp. 1,200 65,220 Precision Castparts Corp. 840 44,604 Rockwell Collins, Inc. 2,700 130,464 Singapore Technologies Engineering Ltd. 98,000 147,132 Teledyne Technologies, Inc. (a) 1,890 65,148 United Technologies Corp. 20,680 1,072,051 ------------- Aerospace & Defense Total 3,970,686 AIR FREIGHT & LOGISTICS - 0.2% C.H. Robinson Worldwide, Inc. 1,990 127,599 Deutsche Post AG, Registered Shares 5,400 126,392 HUB Group, Inc., Class A (a) 3,237 118,830 Ryder System, Inc. 330 11,293 UTI Worldwide, Inc. 2,830 219,891 ------------- Air Freight & Logistics Total 604,005 AIRLINES - 0.0% AirTran Holdings, Inc. (a) 2,370 30,004 Frontier Airlines, Inc. (a) 1,570 15,355 MAIR Holdings, Inc. (a) 534 3,113 Skywest, Inc. 770 20,651 Southwest Airlines Co. 5,090 75,587 ------------- Airlines Total 144,710 BUILDING PRODUCTS - 0.5% American Standard Companies, Inc. 33,630 1,565,477 NCI Building Systems, Inc. (a) 640 26,106 Nippon Sheet Glass Co., Ltd. 32,000 144,870 ------------- Building Products Total 1,736,453 COMMERCIAL SERVICES & SUPPLIES - 0.5% ABM Industries, Inc. 770 16,024 Avery Dennison Corp. 900 47,151 Casella Waste Systems, Inc., Class A (a) 1,610 21,139 CBIZ, Inc. (a) 970 4,947 ChoicePoint, Inc. (a) 3,460 149,368 Cintas Corp. 1,420 58,291 Consolidated Graphics, Inc. (a) 720 30,996 Corporate Executive Board Co. 2,940 229,261 Healthcare Services Group, Inc. 892 17,171 John H. Harland Co. 310 13,764 Korn/Ferry International (a) 2,438 39,959 Labor Ready, Inc. (a) 2,405 61,688 SHARES VALUE ($) - ---------------------------------------------------------------------- Manpower, Inc. 1,000 44,390 Mine Safety Appliances Co. 1,290 49,923 Navigant Consulting, Inc. (a) 770 14,753 NCO Group, Inc. (a) 690 14,255 Pitney Bowes, Inc. 1,600 66,784 Randstad Holding NV 3,500 134,479 Resources Connection, Inc. (a) 1,420 42,075 Robert Half International, Inc. 6,250 222,438 Securitas AB, Class B 6,800 105,248 Senomyx, Inc. (a) 1,519 25,869 Sourcecorp, Inc. (a) 490 10,506 Strayer Education, Inc. 220 20,794 TeleTech Holdings, Inc. (a) 1,520 15,230 United Stationers, Inc. (a) 360 17,230 Waste Connections, Inc. (a) 2,300 80,684 Waste Management, Inc. 14,110 403,687 ------------- Commercial Services & Supplies Total 1,958,104 CONSTRUCTION & ENGINEERING - 0.3% Dycom Industries, Inc. (a) 920 18,602 EMCOR Group, Inc. (a) 240 14,232 Fluor Corp. 800 51,504 Jacobs Engineering Group, Inc. (a) 2,990 201,526 Shaw Group, Inc. (a) 3,800 93,708 Shimizu Corp. 45,000 296,858 Vinci SA 5,120 441,323 Washington Group International, Inc. (a) 460 24,790 ------------- Construction & Engineering Total 1,142,543 ELECTRICAL EQUIPMENT - 0.5% ABB Ltd. (a) 24,400 178,689 Cooper Industries Ltd., Class A 800 55,312 Evergreen Solar, Inc. (a) 3,320 30,976 Genlyte Group, Inc. (a) 550 26,444 Mitsubishi Electric Corp. 43,000 276,748 Rockwell Automation, Inc. 24,050 1,272,245 Shanghai Electric Group Co., Ltd., Class H (a) 490,000 165,815 Woodward Governor Co. 270 22,963 ------------- Electrical Equipment Total 2,029,192 INDUSTRIAL CONGLOMERATES - 2.0% 3M Co. 12,430 911,865 General Electric Co. 138,287 4,656,123 Hutchison Whampoa Ltd. 22,000 228,232 Keppel Corp., Ltd. 15,000 112,772 SembCorp Industries Ltd. 79,900 141,874 Siemens AG, Registered Shares 2,187 168,572 Smiths Group PLC 13,533 229,001 Textron, Inc. 16,925 1,213,861 Walter Industries, Inc. 410 20,057 ------------- Industrial Conglomerates Total 7,682,357 MACHINERY - 1.3% Actuant Corp., Class A 550 25,740 AGCO Corp. (a) 2,300 41,860 Atlas Copco AB, Class B 15,300 264,663 Briggs & Stratton Corp. 260 8,993 34 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INDUSTRIALS - (CONTINUED) MACHINERY - (CONTINUED) Bucyrus International, Inc., Class A 800 39,304 Caterpillar, Inc. 14,700 863,625 Clarcor, Inc. 580 16,658 Dover Corp. 1,700 69,343 Eaton Corp. 10,445 663,780 EnPro Industries, Inc. (a) 780 26,278 ESCO Technologies, Inc. (a) 460 23,032 Harsco Corp. 550 36,063 Ingersoll-Rand Co., Ltd., Class A 20,000 764,600 ITT Industries, Inc. 6,980 792,928 JLG Industries, Inc. 740 27,077 Joy Global, Inc. 2,980 150,371 Kadant, Inc. (a) 337 6,760 Kennametal, Inc. 1,000 49,040 Komatsu Ltd. 24,000 330,436 Manitowoc Co., Inc. 420 21,105 Parker Hannifin Corp. 1,100 70,741 Pentair, Inc. 14,270 520,855 Terex Corp. (a) 3,840 189,811 THK Co., Ltd. 3,800 94,946 Wabtec Corp. 2,810 76,657 ------------- Machinery Total 5,174,666 MARINE - 0.1% Kawasaki Kisen Kaisha Ltd. 25,000 181,422 ------------- Marine Total 181,422 ROAD & RAIL - 0.2% Burlington Northern Santa Fe Corp. 900 53,820 Canadian Pacific Railway Ltd. 5,400 232,704 ComfortDelGro Corp., Ltd. 94,000 83,594 Dollar Thrifty Automotive Group, Inc. (a) 240 8,081 East Japan Railway Co. 37 211,823 Florida East Coast Industries, Inc. 940 42,573 Landstar System, Inc. 1,200 48,036 Norfolk Southern Corp. 2,500 101,400 Werner Enterprises, Inc. 1,230 21,267 ------------- Road & Rail Total 803,298 TRADING COMPANIES & DISTRIBUTORS - 0.1% Hughes Supply, Inc. 380 12,388 Mitsubishi Corp. 17,400 345,790 United Rentals, Inc. (a) 2,100 41,391 Watsco, Inc. 850 45,143 Wolseley PLC 5,100 107,919 ------------- Trading Companies & Distributors Total 552,631 ------------- INDUSTRIALS TOTAL 25,980,067 INFORMATION TECHNOLOGY - 10.4% COMMUNICATIONS EQUIPMENT - 1.7% Adtran, Inc. 1,050 33,075 Anaren, Inc. (a) 1,340 18,894 Andrew Corp. (a) 3,500 39,025 SHARES VALUE ($) - ---------------------------------------------------------------------- AudioCodes Ltd. (a) 4,360 48,004 Avocent Corp. (a) 1,260 39,866 Belden CDT, Inc. 470 9,132 Black Box Corp. 300 12,588 C-COR, Inc. (a) 1,480 9,990 Cisco Systems, Inc. (a) 97,545 1,748,982 Comverse Technology, Inc. (a) 6,420 168,653 Corning, Inc. (a) 19,360 374,229 Emulex Corp. (a) 630 12,732 F5 Networks, Inc. (a) 2,140 93,026 Harris Corp. 1,090 45,562 Juniper Networks, Inc. (a) 19,180 456,292 Motorola, Inc. 43,560 962,240 NICE Systems Ltd., ADR (a) 960 43,373 Nokia Oyj 13,150 221,737 Nokia Oyj, ADR 38,770 655,601 Packeteer, Inc. (a) 3,460 43,423 Plantronics, Inc. 630 19,410 QUALCOMM, Inc. 19,430 869,493 SiRF Technology Holdings, Inc. (a) 1,405 42,333 Tandberg ASA 8,700 116,581 Telefonaktiebolaget LM Ericsson, ADR 8,300 305,772 Tollgrade Communications, Inc. (a) 780 6,599 ------------- Communications Equipment Total 6,396,612 COMPUTERS & PERIPHERALS - 2.1% Apple Computer, Inc. (a) 10,590 567,730 Dell, Inc. (a) 40,755 1,393,821 Electronics for Imaging, Inc. (a) 780 17,893 EMC Corp. (a) 47,320 612,321 FUJITSU Ltd. 10,000 65,936 Hewlett-Packard Co. 72,920 2,129,264 Imation Corp. 380 16,291 Intergraph Corp. (a) 290 12,966 International Business Machines Corp. 34,246 2,747,214 M-Systems Flash Disk Pioneers Ltd. (a) 1,880 56,250 NCR Corp. (a) 328 10,466 Neoware Systems, Inc. (a) 1,985 33,229 SanDisk Corp. (a) 4,480 216,160 Stratasys, Inc. (a) 1,060 31,482 Toshiba Corp. 33,000 146,214 ------------- Computers & Peripherals Total 8,057,237 ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5% Agilent Technologies, Inc. (a) 20,300 664,825 Agilysys, Inc. 600 10,104 Anixter International, Inc. (a) 1,650 66,544 Arrow Electronics, Inc. (a) 2,700 84,672 AVX Corp. 2,525 32,168 Benchmark Electronics, Inc. (a) 610 18,373 Brightpoint, Inc. (a) 1,695 32,442 Daktronics, Inc. 2,110 50,598 Flextronics International Ltd. (a) 3,300 42,405 Flir Systems, Inc. (a) 730 21,593 Global Imaging Systems, Inc. (a) 1,629 55,467 Hoya Corp. 2,800 93,456 Hoya Corp. W/I (a)(f) 3,600 122,324 Ingram Micro, Inc., Class A (a) 3,000 55,620 See Accompanying Notes to Financial Statements. | 35 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - (CONTINUED) ELECTRONIC EQUIPMENT & INSTRUMENTS - (CONTINUED) Itron, Inc. (a) 1,030 47,030 Mettler-Toledo International, Inc. (a) 1,400 71,372 MTS Systems Corp. 540 20,396 Murata Manufacturing Co., Ltd. 3,500 196,235 Omron Corp. 6,500 158,675 Plexus Corp. (a) 3,500 59,815 TDK Corp. 2,000 143,452 Tektronix, Inc. 1,900 47,937 Vishay Intertechnology, Inc. (a) 1,630 19,479 ------------- Electronic Equipment & Instruments Total 2,114,982 INTERNET SOFTWARE & SERVICES - 0.6% CNET Networks, Inc. (a) 1,720 23,340 Digital River, Inc. (a) 930 32,410 Digitas, Inc. (a) 6,360 72,250 EarthLink, Inc. (a) 2,510 26,857 Equinix, Inc. (a) 260 10,829 Google, Inc., Class A (a) 2,200 696,212 InfoSpace, Inc. (a) 360 8,593 Keynote Systems, Inc. (a) 372 4,829 Openwave Systems, Inc. (a) 1,100 19,778 Secure Computing Corp. (a) 3,820 43,357 ValueClick, Inc. (a) 1,490 25,464 VeriSign, Inc. (a) 4,320 92,318 Yahoo!, Inc. (a) 39,340 1,331,266 ------------- Internet Software & Services Total 2,387,503 IT SERVICES - 0.2% Acxiom Corp. 720 13,478 Affiliated Computer Services, Inc., Class A (a) 1,520 82,992 Alliance Data Systems Corp. (a) 3,420 133,893 Anteon International Corp. (a) 1,670 71,409 Cognizant Technology Solutions Corp., Class A (a) 3,340 155,611 Euronet Worldwide, Inc. (a) 1,390 41,130 Fiserv, Inc. (a) 1,780 81,649 Global Payments, Inc. 1,250 97,150 MAXIMUS, Inc. 330 11,798 MPS Group, Inc. (a) 3,740 44,132 MTC Technologies, Inc. (a) 930 29,741 Paychex, Inc. 2,130 78,980 Sykes Enterprises, Inc. (a) 3,550 42,245 ------------- IT Services Total 884,208 OFFICE ELECTRONICS - 0.1% Canon, Inc. 3,700 200,457 ------------- Office Electronics Total 200,457 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.5% Advantest Corp. 1,400 108,537 Altera Corp. (a) 2,120 40,513 ASML Holding NV (a) 9,900 162,885 ATI Technologies, Inc. (a) 2,200 30,668 SHARES VALUE ($) - ---------------------------------------------------------------------- ATMI, Inc. (a) 500 15,500 Broadcom Corp., Class A (a) 17,870 838,282 Cymer, Inc. (a) 1,610 50,425 Cypress Semiconductor Corp. (a) 10,540 158,627 Entegris, Inc. (a) 5,977 67,540 Exar Corp. (a) 930 13,039 Fairchild Semiconductor International, Inc. (a) 25,980 386,063 Intel Corp. 80,397 1,981,786 Intersil Corp., Class A 3,800 82,764 KLA-Tencor Corp. 1,220 59,487 Lam Research Corp. (a) 300 9,141 Marvell Technology Group Ltd. (a) 8,860 408,534 MEMC Electronic Materials, Inc. (a) 57,520 1,310,881 Microchip Technology, Inc. 18,090 544,871 Microsemi Corp. (a) 3,354 85,661 National Semiconductor Corp. 2,300 60,490 NVIDIA Corp. (a) 1,910 65,475 Samsung Electronics Co., Ltd., GDR 876 249,673 Semtech Corp. (a) 2,500 41,175 Sigmatel, Inc. (a) 390 7,894 Silicon Laboratories, Inc. (a) 1,220 37,076 Skyworks Solutions, Inc. (a) 4,640 32,573 Standard Microsystems Corp. (a) 820 24,526 Taiwan Semiconductor Manufacturing Co., Ltd., ADR 139,780 1,148,991 Tessera Technologies, Inc. (a) 2,370 70,887 Texas Instruments, Inc. 49,850 1,689,915 Virage Logic Corp. (a) 5,880 45,570 ------------- Semiconductors & Semiconductor Equipment Total 9,829,449 SOFTWARE - 2.7% Activision, Inc. (a) 1,300 26,585 Amdocs Ltd. (a) 2,900 80,417 American Reprographics Co. (a) 1,106 18,913 Ansys, Inc. (a) 1,523 58,620 Autodesk, Inc. 21,939 1,018,847 Cadence Design Systems, Inc. (a) 1,500 24,240 Captaris, Inc. (a) 1,900 7,144 Check Point Software Technologies Ltd. (a) 3,880 94,362 Citrix Systems, Inc. (a) 4,900 123,186 Cognos, Inc. (a) 5,700 221,901 Electronic Arts, Inc. (a) 13,090 744,690 Epicor Software Corp. (a) 2,640 34,320 Hyperion Solutions Corp. (a) 3,360 163,464 Internet Security Systems, Inc. (a) 850 20,409 Kronos, Inc. (a) 790 35,266 Lawson Software, Inc. (a) 1,830 12,700 Macrovision Corp. (a) 610 11,651 McAfee, Inc. (a) 19,400 609,548 Mercury Interactive Corp. (a) 2,220 87,912 Micros Systems, Inc. (a) 470 20,563 Microsoft Corp. 136,280 3,506,484 MSC.Software Corp. (a) 1,210 19,021 NAVTEQ (a) 12,430 620,878 Open Solutions, Inc. (a) 1,880 41,022 36 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - (CONTINUED) SOFTWARE - (CONTINUED) Oracle Corp. (a) 52,090 645,395 Parametric Technology Corp. (a) 4,010 27,950 Phoenix Technologies Ltd. (a) 1,269 9,556 PLATO Learning, Inc. (a) 1,400 10,654 Progress Software Corp. (a) 2,810 89,274 Quest Software, Inc. (a) 2,150 32,400 RSA Security, Inc. (a) 2,300 29,233 Sage Group PLC 37,000 150,575 SAP AG 1,207 208,735 SAP AG, ADR 34,310 1,486,652 SeaChange International, Inc. (a) 380 2,417 Sybase, Inc. (a) 780 18,268 Synopsys, Inc. (a) 600 11,340 THQ, Inc. (a) 760 16,203 TIBCO Software, Inc. (a) 500 4,180 Transaction Systems Architects, Inc., Class A (a) 910 25,343 ------------- Software Total 10,370,318 ------------- INFORMATION TECHNOLOGY TOTAL 40,240,766 MATERIALS - 2.3% CHEMICALS - 1.5% Air Products & Chemicals, Inc. 19,585 1,079,917 Airgas, Inc. 1,460 43,260 Ashland, Inc. 700 38,668 BASF AG 4,378 329,165 Bayer AG 6,900 253,151 Celanese Corp., Series A 3,400 58,650 Cytec Industries, Inc. 430 18,653 Eastman Chemical Co. 800 37,576 Ecolab, Inc. 1,960 62,583 Engelhard Corp. 1,900 53,029 Georgia Gulf Corp. 460 11,077 H.B. Fuller Co. 640 19,891 Lubrizol Corp. 2,100 90,993 Minerals Technologies, Inc. 330 18,879 Nalco Holding Co. (a) 2,900 48,923 Potash Corp. of Saskatchewan, Inc. 2,550 237,966 PPG Industries, Inc. 5,577 330,103 Praxair, Inc. 36,700 1,759,031 Rohm and Haas Co. 1,800 74,034 Schulman (A.), Inc. 860 15,437 Sensient Technologies Corp. 550 10,422 Shin-Etsu Chemical Co., Ltd. 5,000 219,149 Solvay SA 1,100 128,003 Stepan Co. 460 11,528 Sumitomo Chemical Co., Ltd. 47,000 292,094 Symyx Technologies, Inc. (a) 2,580 67,390 Syngenta AG (a) 2,156 225,911 Teijin Ltd. 29,000 169,925 SHARES VALUE ($) - ---------------------------------------------------------------------- UAP Holding Corp. 460 8,326 Yara International ASA 8,400 151,749 ------------- Chemicals Total 5,865,483 CONSTRUCTION MATERIALS - 0.1% Cemex SA de CV, ADR 1,600 83,680 Eagle Materials, Inc. 1,250 151,712 Martin Marietta Materials, Inc. 1,025 80,422 ------------- Construction Materials Total 315,814 CONTAINERS & PACKAGING - 0.1% AptarGroup, Inc. 320 15,939 Bemis Co., Inc. 2,600 64,220 Crown Holdings, Inc. (a) 2,800 44,632 Greif, Inc., Class A 540 32,454 ------------- Containers & Packaging Total 157,245 METALS & MINING - 0.3% Allegheny Technologies, Inc. 900 27,882 AMCOL International Corp. 1,570 29,940 Anglo American PLC 10,000 298,266 Carpenter Technology Corp. 340 19,927 Cleveland-Cliffs, Inc. 320 27,875 Foundation Coal Holdings, Inc. 880 33,836 Freeport-McMoRan Copper & Gold, Inc., Class B 3,200 155,488 Inco Ltd. 1,910 90,438 Metal Management, Inc. 700 17,745 Nucor Corp. 1,300 76,687 Phelps Dodge Corp. 1,280 166,310 Quanex Corp. 290 19,204 Reliance Steel & Aluminum Co. 390 20,643 Rio Tinto PLC 6,500 266,464 RTI International Metals, Inc. (a) 480 18,888 Worthington Industries, Inc. 1,290 27,129 ------------- Metals & Mining Total 1,296,722 PAPER & FOREST PRODUCTS - 0.3% Georgia-Pacific Corp. 2,500 85,150 Glatfelter 1,260 17,753 MeadWestvaco Corp. 33,141 915,355 Mercer International, Inc. (a) 1,660 13,728 ------------- Paper & Forest Products Total 1,031,986 ------------- MATERIALS TOTAL 8,667,250 TELECOMMUNICATION SERVICES - 1.5% DIVERSIFIED TELECOMMUNICATION SERVICES - 0.9% BellSouth Corp. 23,999 631,174 Deutsche Telekom AG, Registered Shares 17,553 319,560 France Telecom SA 5,600 161,029 Nippon Telegraph & Telephone Corp. 32 158,201 North Pittsburgh Systems, Inc. 580 11,838 Qwest Communications International, Inc. (a) 1 4 SBC Communications, Inc. 40,152 962,443 See Accompanying Notes to Financial Statements. | 37 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) TELECOMMUNICATION SERVICES - (CONTINUED) DIVERSIFIED TELECOMMUNICATION SERVICES - (CONTINUED) TALK America Holdings, Inc. (a) 642 6,054 Tekelec (a) 473 9,909 Telekom Austria AG 8,900 177,190 Verizon Communications, Inc. 37,485 1,225,384 ------------- Diversified Telecommunication Services Total 3,662,786 WIRELESS TELECOMMUNICATION SERVICES - 0.6% Alamosa Holdings, Inc. (a) 2,260 38,669 American Tower Corp., Class A (a) 8,624 215,169 China Mobile Hong Kong Ltd. 29,500 145,177 Crown Castle International Corp. (a) 4,830 118,963 Dobson Communications Corp., Class A (a) 1,960 15,053 Jamdat Mobile, Inc. (a) 190 3,990 Millicom International Cellular SA (a) 6,435 118,533 NII Holdings, Inc. (a) 910 76,849 NTT DoCoMo, Inc. 83 148,667 O2 PLC 45,200 125,775 Price Communications Corp. (a) 674 11,087 SBA Communications Corp., Class A (a) 3,599 55,604 SpectraLink Corp. 1,801 22,963 Telephone & Data Systems, Inc. 1,000 39,000 Telephone & Data Systems, Inc., Special Shares 1,000 37,550 VimpelCom, ADR (a) 1,290 57,328 Vodafone Group PLC 409,700 1,066,639 ------------- Wireless Telecommunication Services Total 2,297,016 ------------- TELECOMMUNICATION SERVICES TOTAL 5,959,802 UTILITIES - 2.1% ELECTRIC UTILITIES - 1.2% ALLETE, Inc. 330 15,117 American Electric Power Co., Inc. 11,619 461,274 Central Vermont Public Service Corp. 810 14,175 E.ON AG 3,879 356,771 Edison International 11,300 534,264 El Paso Electric Co. (a) 920 19,182 Entergy Corp. 9,157 680,548 Exelon Corp. 16,847 900,304 Fortum Oyj 9,200 184,656 FPL Group, Inc. 11,704 557,111 Hawaiian Electric Industries, Inc. 1,700 47,396 Maine & Maritimes Corp. 180 3,546 MGE Energy, Inc. 320 11,683 Otter Tail Corp. 460 14,233 PPL Corp. 1,800 58,194 Puget Energy, Inc. 790 18,549 Reliant Energy, Inc. (a) 3,600 55,584 Scottish & Southern Energy PLC 17,400 315,916 Tokyo Electric Power Co., Inc. 10,200 257,782 ------------- Electric Utilities Total 4,506,285 SHARES VALUE ($) - ---------------------------------------------------------------------- GAS UTILITIES - 0.1% AGL Resources, Inc. 1,200 44,532 Cascade Natural Gas Corp. 350 7,620 Energen Corp. 1,970 85,222 Northwest Natural Gas Co. 260 9,677 Tokyo Gas Co., Ltd. 54,000 219,786 WGL Holdings, Inc. 280 8,996 ------------- Gas Utilities Total 375,833 INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.3% AES Corp. (a) 13,170 216,383 Constellation Energy Group, Inc. 2,000 123,200 TXU Corp. 7,385 833,619 ------------- Independent Power Producers & Energy Traders Total 1,173,202 MULTI-UTILITIES - 0.5% CH Energy Group, Inc. 550 26,114 Dominion Resources, Inc. 5,769 496,942 Energy East Corp. 2,300 57,937 PG&E Corp. 16,458 645,977 RWE AG 4,000 264,806 Sempra Energy 1,400 65,884 Veolia Environnement 9,800 414,090 ------------- Multi-Utilities Total 1,971,750 ------------- UTILITIES TOTAL 8,027,070 Total Common Stocks (cost of $203,521,657) 242,589,778 PAR ($) - ---------------------------------------------------------------------- CORPORATE FIXED-INCOME BONDS & NOTES - 11.9% BASIC MATERIALS - 0.4% CHEMICALS - 0.2% Airgas, Inc. 6.250% 07/15/14 5,000 5,075 9.125% 10/01/11 250,000 269,375 EquiStar Chemicals LP 10.125% 09/01/08 25,000 27,000 10.625% 05/01/11 85,000 92,650 Nalco Co. 7.750% 11/15/11 115,000 118,163 NOVA Chemicals Corp. 6.500% 01/15/12 85,000 83,300 ------------- Chemicals Total 595,563 FOREST PRODUCTS & PAPER - 0.1% Boise Cascade LLC 7.125% 10/15/14 190,000 180,025 International Paper Co. 4.250% 01/15/09 375,000 366,289 ------------- Forest Products & Paper Total 546,314 38 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND PAR ($) VALUE ($) - ---------------------------------------------------------------------- CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED) BASIC MATERIALS - (CONTINUED) IRON/STEEL - 0.0% Russel Metals, Inc. 6.375% 03/01/14 130,000 126,100 United States Steel Corp. 9.750% 05/15/10 40,000 43,750 ------------- Iron/Steel Total 169,850 METALS & MINING - 0.1% Alcan, Inc. 4.500% 05/15/13 400,000 385,536 ------------- Metals & Mining Total 385,536 ------------- BASIC MATERIALS TOTAL 1,697,263 COMMUNICATIONS - 1.4% ADVERTISING - 0.1% Lamar Media Corp. 7.250% 01/01/13 340,000 357,000 ------------- Advertising Total 357,000 MEDIA - 0.6% Dex Media West LLC 5.875% 11/15/11 205,000 202,950 9.875% 08/15/13 85,000 93,925 DirecTV Holdings LLC 6.375% 06/15/15 (b) 10,000 9,850 8.375% 03/15/13 229,000 250,755 EchoStar DBS Corp. 5.750% 10/01/08 210,000 207,637 6.625% 10/01/14 40,000 39,700 Emmis Operating Co. 6.875% 05/15/12 85,000 84,788 Jones Intercable, Inc. 7.625% 04/15/08 525,000 558,721 LIN Television Corp. 6.500% 05/15/13 175,000 165,375 R.H. Donnelley Finance Corp. 10.875% 12/15/12 (b) 180,000 202,050 Rogers Cable, Inc. 6.250% 06/15/13 225,000 219,375 7.875% 05/01/12 35,000 37,275 Time Warner, Inc. 6.625% 05/15/29 425,000 444,516 ------------- Media Total 2,516,917 TELECOMMUNICATION SERVICES - 0.7% Citizens Communications Co. 9.000% 08/15/31 60,000 60,975 Deutsche Telekom International Finance BV 8.500% 06/15/10 400,000 451,852 New Cingular Wireless Services, Inc. 8.750% 03/01/31 225,000 302,585 PAR ($) VALUE ($) - ---------------------------------------------------------------------- Nextel Communications, Inc. 5.950% 03/15/14 20,000 20,500 7.375% 08/01/15 100,000 107,250 Rogers Wireless, Inc. 7.500% 03/15/15 110,000 118,525 8.000% 12/15/12 90,000 94,950 Sprint Capital Corp. 6.875% 11/15/28 275,000 303,396 Verizon Global Funding Corp. 7.750% 12/01/30 700,000 852,726 Vodafone Group PLC 7.750% 02/15/10 225,000 250,859 ------------- Telecommunication Services Total 2,563,618 ------------- COMMUNICATIONS TOTAL 5,437,535 CONSUMER CYCLICAL - 1.4% AIRLINES - 0.3% United Airlines, Inc. 7.032% 10/01/10(c) 585,035 568,947 9.200% 03/22/08(d) 1,014,042 507,021 ------------- Airlines Total 1,075,968 AUTO MANUFACTURERS - 0.1% DaimlerChrysler NA Holding Corp. 8.500% 01/18/31 225,000 272,734 ------------- Auto Manufacturers Total 272,734 AUTO PARTS & EQUIPMENT - 0.0% Accuride Corp. 8.500% 02/01/15 85,000 83,300 TRW Automotive, Inc. 9.375% 02/15/13 55,000 59,675 ------------- Auto Parts & Equipment Total 142,975 ENTERTAINMENT - 0.1% Cinemark USA, Inc. 9.000% 02/01/13 165,000 171,187 Speedway Motorsports, Inc. 6.750% 06/01/13 167,000 171,384 Warner Music Group 7.375% 04/15/14 125,000 125,781 ------------- Entertainment Total 468,352 HOME BUILDERS - 0.1% Beazer Homes USA 6.875% 07/15/15 (b) 115,000 111,406 K. Hovnanian Enterprises, Inc. 6.000% 01/15/10 60,000 57,450 6.375% 12/15/14 50,000 47,625 6.500% 01/15/14 70,000 67,725 KB Home 8.625% 12/15/08 150,000 162,000 ------------- Home Builders Total 446,206 See Accompanying Notes to Financial Statements. | 39 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND PAR ($) VALUE ($) - ---------------------------------------------------------------------- CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED) CONSUMER CYCLICAL - (CONTINUED) HOME FURNISHINGS - 0.0% Sealy Mattress Co. 8.250% 06/15/14 95,000 94,525 ------------- Home Furnishings Total 94,525 LEISURE TIME - 0.1% Leslie's Poolmart 7.750% 02/01/13 105,000 106,050 Royal Caribbean Cruises Ltd. 6.750% 03/15/08 80,000 81,900 6.875% 12/01/13 100,000 104,875 8.750% 02/02/11 145,000 163,488 ------------- Leisure Time Total 456,313 LODGING - 0.4% Caesars Entertainment, Inc. 7.875% 03/15/10 40,000 43,500 8.875% 09/15/08 35,000 38,238 9.375% 02/15/07 35,000 37,013 CCM Merger, Inc. 8.000% 08/01/13 (b) 100,000 101,250 MGM Mirage 6.000% 10/01/09 95,000 93,813 8.500% 09/15/10 245,000 266,437 Starwood Hotels & Resorts Worldwide, Inc. 7.875% 05/01/12 150,000 165,000 Station Casinos, Inc. 6.500% 02/01/14 345,000 345,862 Wynn Las Vegas LLC 6.625% 12/01/14 175,000 166,687 ------------- Lodging Total 1,257,800 RETAIL - 0.3% AutoNation, Inc. 9.000% 08/01/08 160,000 172,800 Couche-Tard 7.500% 12/15/13 165,000 170,362 Domino's, Inc. 8.250% 07/01/11 115,000 120,750 Group 1 Automotive, Inc. 8.250% 08/15/13 90,000 90,000 Suburban Propane Partners LP 6.875% 12/15/13 50,000 46,750 Wal-Mart Stores, Inc. 4.000% 01/15/10 600,000 584,640 ------------- Retail Total 1,185,302 ------------- CONSUMER CYCLICAL TOTAL 5,400,175 PAR ($) VALUE ($) - ---------------------------------------------------------------------- CONSUMER NON-CYCLICAL - 1.6% BEVERAGES - 0.3% Constellation Brands, Inc. 8.125% 01/15/12 250,000 263,750 Cott Beverages, Inc. 8.000% 12/15/11 295,000 303,850 Diageo Capital PLC 3.375% 03/20/08 550,000 533,984 ------------- Beverages Total 1,101,584 COMMERCIAL SERVICES - 0.2% Corrections Corp. of America 6.250% 03/15/13 50,000 49,500 7.500% 05/01/11 225,000 232,312 Iron Mountain, Inc. 7.750% 01/15/15 10,000 10,175 8.625% 04/01/13 250,000 262,500 Mac-Gray Corp. 7.625% 08/15/15 (b) 105,000 107,100 Stewart Enterprises, Inc. 6.250% 02/15/13 (b) 95,000 90,250 United Rentals, Inc. 7.000% 02/15/14 90,000 83,250 ------------- Commercial Services Total 835,087 COSMETICS/PERSONAL CARE - 0.1% Procter & Gamble Co. 4.750% 06/15/07 550,000 552,618 ------------- Cosmetics/Personal Care Total 552,618 FOOD - 0.3% Del Monte Corp. 6.750% 02/15/15 (b) 130,000 130,650 General Mills, Inc. 2.625% 10/24/06 500,000 490,075 Kroger Co. 6.200% 06/15/12 450,000 472,329 ------------- Food Total 1,093,054 HEALTHCARE PRODUCTS - 0.1% Baxter FinCo BV 4.750% 10/15/10 (b) 450,000 446,741 ------------- Healthcare Products Total 446,741 HEALTHCARE SERVICES - 0.5% Community Health Systems 6.500% 12/15/12 40,000 40,100 Coventry Health Care, Inc. 5.875% 01/15/12 175,000 178,938 Extendicare Health Services, Inc. 6.875% 05/01/14 85,000 83,725 9.500% 07/01/10 15,000 16,050 Fisher Scientific International, Inc. 6.750% 08/15/14 165,000 172,425 HCA, Inc. 6.950% 05/01/12 340,000 350,839 Select Medical Corp. 7.625% 02/01/15 90,000 86,400 40 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND PAR ($) VALUE ($) - ---------------------------------------------------------------------- CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED) CONSUMER NON-CYCLICAL - (CONTINUED) HEALTHCARE SERVICES - (CONTINUED) Triad Hospitals, Inc. 7.000% 05/15/12 225,000 231,187 7.000% 11/15/13 30,000 30,375 UnitedHealth Group, Inc. 3.375% 08/15/07 600,000 587,412 ------------- Healthcare Services Total 1,777,451 HOUSEHOLD PRODUCTS/WARES - 0.0% Scotts Co. 6.625% 11/15/13 175,000 179,375 ------------- Household Products/Wares Total 179,375 PHARMACEUTICALS - 0.1% AmerisourceBergen Corp. 5.625% 09/15/12 (b) 90,000 89,100 Mylan Laboratories, Inc. 6.375% 08/15/15 (b) 40,000 40,050 Omnicare, Inc. 8.125% 03/15/11 90,000 93,825 ------------- Pharmaceuticals Total 222,975 ------------- CONSUMER NON-CYCLICAL TOTAL 6,208,885 ENERGY - 1.0% COAL - 0.1% Peabody Energy Corp. 5.875% 04/15/16 75,000 74,438 6.875% 03/15/13 260,000 271,700 ------------- Coal Total 346,138 OIL & GAS - 0.6% Chesapeake Energy Corp. 6.375% 06/15/15 150,000 150,938 7.500% 09/15/13 160,000 170,400 7.750% 01/15/15 25,000 26,656 Devon Energy Corp. 7.950% 04/15/32 350,000 447,300 Marathon Oil Corp. 6.800% 03/15/32 375,000 432,131 Newfield Exploration Co. 6.625% 09/01/14 255,000 265,200 Plains Exploration & Production Co. 7.125% 06/15/14 205,000 216,275 Pogo Producing Co. 6.625% 03/15/15 (b) 130,000 131,788 Pride International, Inc. 7.375% 07/15/14 120,000 129,600 Vintage Petroleum, Inc. 7.875% 05/15/11 165,000 172,012 ------------- Oil & Gas Total 2,142,300 OIL & GAS SERVICES - 0.1% Grant Prideco, Inc. 6.125% 08/15/15 (b) 200,000 202,000 PAR ($) VALUE ($) - ---------------------------------------------------------------------- Hornbeck Offshore Services, Inc. 6.125% 12/01/14 130,000 129,188 Universal Compression, Inc. 7.250% 05/15/10 155,000 160,812 ------------- Oil & Gas Services Total 492,000 PIPELINES - 0.2% Kinder Morgan Energy Partners LP 7.300% 08/15/33 500,000 579,890 MarkWest Energy Partners LP 6.875% 11/01/14 (b) 115,000 113,275 Williams Companies, Inc. 7.125% 09/01/11 35,000 36,487 8.125% 03/15/12 205,000 225,500 ------------- Pipelines Total 955,152 ------------- ENERGY TOTAL 3,935,590 FINANCIALS - 3.7% BANKS - 1.0% HSBC Capital Funding LP 9.547% 12/31/49 (b)(e) 800,000 951,752 Rabobank Capital Funding II 5.260% 12/31/49 (b)(e) 850,000 866,073 Wachovia Corp. 4.875% 02/15/14 (e) 825,000 816,981 Wells Fargo & Co. 3.874% 03/10/08 (e) 1,050,000 1,049,769 ------------- Banks Total 3,684,575 DIVERSIFIED FINANCIAL SERVICES - 2.1% American Express Credit Corp. 3.000% 05/16/08 600,000 576,420 Capital One Bank 4.875% 05/15/08 275,000 275,875 Caterpillar Financial Services Corp. 3.625% 11/15/07 350,000 343,291 Citicorp 8.040% 12/15/19 (b) 1,900,000 2,339,451 Countrywide Home Loans, Inc. 2.875% 02/15/07 450,000 439,416 Credit Suisse First Boston USA, Inc. 4.875% 08/15/10 500,000 500,600 E*Trade Financial Corp. 7.375% 09/15/13 (b) 85,000 85,425 Goldman Sachs Group, Inc. 6.345% 02/15/34 475,000 493,867 John Deere Capital Corp. 4.625% 04/15/09 500,000 499,500 JPMorgan Chase Capital XV 5.875% 03/15/35 600,000 588,072 Merrill Lynch & Co., Inc. 4.125% 01/15/09 575,000 564,247 Morgan Stanley 6.750% 04/15/11 570,000 618,632 SLM Corp. 5.125% 08/27/12 800,000 808,256 ------------- Diversified Financial Services Total 8,133,052 See Accompanying Notes to Financial Statements. | 41 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND PAR ($) VALUE ($) - ---------------------------------------------------------------------- CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED) INDUSTRIALS - (CONTINUED) INSURANCE - 0.3% American International Group, Inc. 2.875% 05/15/08 850,000 812,838 Prudential Insurance Co. of America 7.650% 07/01/07 (b) 500,000 523,600 ------------- Insurance Total 1,336,438 REAL ESTATE INVESTMENT TRUSTS - 0.2% Health Care Property Investors, Inc. 6.450% 06/25/12 525,000 555,807 Host Marriott LP 6.375% 03/15/15 90,000 87,188 ------------- Real Estate Investment Trusts Total 642,995 VENTURE CAPITAL - 0.1% Arch Western Finance LLC 6.750% 07/01/13 260,000 265,200 ------------- Venture Capital Total 265,200 ------------- FINANCIALS TOTAL 14,062,260 INDUSTRIALS - 1.6% AEROSPACE & DEFENSE - 0.3% L-3 Communications Corp. 6.125% 07/15/13 20,000 19,950 6.375% 10/15/15 (b) 20,000 20,100 7.625% 06/15/12 300,000 316,500 Raytheon Co. 8.300% 03/01/10 500,000 566,055 Sequa Corp. 9.000% 08/01/09 35,000 37,188 TransDigm, Inc. 8.375% 07/15/11 145,000 152,250 ------------- Aerospace & Defense Total 1,112,043 AUTO MANUFACTURERS - 0.2% Ford Motor Credit Co. 7.375% 10/28/09 775,000 752,029 ------------- Auto Manufacturers Total 752,029 ENVIRONMENTAL CONTROL - 0.2% Allied Waste North America, Inc. 6.375% 04/15/11 65,000 62,400 9.250% 09/01/12 100,000 108,500 Waste Management, Inc. 7.375% 08/01/10 500,000 548,805 ------------- Environmental Control Total 719,705 MACHINERY-DIVERSIFIED - 0.1% Manitowoc Co., Inc. 7.125% 11/01/13 120,000 124,500 Westinghouse Air Brake Technologies Corp. 6.875% 07/31/13 175,000 178,500 ------------- Machinery-Diversified Total 303,000 PAR ($) VALUE ($) - ---------------------------------------------------------------------- MISCELLANEOUS MANUFACTURING - 0.3% General Electric Co. 5.000% 02/01/13 1,025,000 1,034,440 Trinity Industries, Inc. 6.500% 03/15/14 20,000 19,600 ------------- Miscellaneous Manufacturing Total 1,054,040 PACKAGING & CONTAINERS - 0.3% Ball Corp. 6.875% 12/15/12 300,000 307,500 Jefferson Smurfit Corp. 8.250% 10/01/12 100,000 94,000 Owens-Brockway Glass Container, Inc. 6.750% 12/01/14 25,000 24,125 Owens-Illinois, Inc. 7.500% 05/15/10 240,000 243,000 Silgan Holdings, Inc. 6.750% 11/15/13 350,000 351,750 Smurfit-Stone Container Corp. 8.375% 07/01/12 125,000 119,375 ------------- Packaging & Containers Total 1,139,750 TRANSPORTATION - 0.2% FedEx Corp. 7.530% 09/23/06 117,156 119,573 Offshore Logistics, Inc. 6.125% 06/15/13 155,000 151,900 Overseas Shipholding Group 8.250% 03/15/13 165,000 179,025 Teekay Shipping Corp. 8.875% 07/15/11 415,000 472,062 ------------- Transportation Total 922,560 ------------- INDUSTRIALS TOTAL 6,003,127 TECHNOLOGY - 0.1% COMPUTERS - 0.1% International Business Machines Corp. 5.875% 11/29/32 325,000 345,885 ------------- Computers Total 345,885 SEMICONDUCTORS - 0.0% Freescale Semiconductor, Inc. 6.875% 07/15/11 150,000 156,000 ------------- Semiconductors Total 156,000 ------------- TECHNOLOGY TOTAL 501,885 UTILITIES - 0.7% ELECTRIC - 0.6% AES Corp. 7.750% 03/01/14 225,000 240,750 Exelon Generation Co. 6.950% 06/15/11 400,000 434,168 Nevada Power Co. 5.875% 01/15/15 80,000 79,607 6.500% 04/15/12 50,000 51,375 NorthWestern Corp. 5.875% 11/01/14 10,000 10,213 42 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND PAR ($) VALUE ($) - ---------------------------------------------------------------------- CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED) UTILITIES - (CONTINUED) ELECTRIC - (CONTINUED) Scottish Power PLC 4.910% 03/15/10 525,000 523,829 TECO Energy, Inc. 6.750% 05/01/15 (b) 100,000 104,625 7.000% 05/01/12 65,000 68,656 Texas Genco LLC 6.875% 12/15/14 (b) 170,000 172,975 Virginia Electric & Power Co. 5.375% 02/01/07 625,000 630,550 ------------- Electric Total 2,316,748 GAS - 0.1% Sempra Energy 4.750% 05/15/09 275,000 273,226 ------------- Gas Total 273,226 ------------- UTILITIES TOTAL 2,589,974 ------------- Total Corporate Fixed-Income Bonds & Notes (cost of $45,790,981) 45,836,694 MORTGAGE-BACKED SECURITIES - 8.3% AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS - 1.4% Federal Home Loan Mortgage Corp. 4.500% 03/15/18 2,000,000 1,966,431 5.000% 12/15/15 2,280,210 2,290,474 Federal National Mortgage Association 5.000% 12/25/15 1,200,000 1,200,632 ------------- AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS TOTAL 5,457,537 ------------- MORTGAGE-BACKED SECURITIES - 6.9% Federal Home Loan Mortgage Corp. 5.000% 06/01/20 2,390,821 2,385,333 5.000% 08/01/20 3,021,425 3,014,490 6.500% 02/01/11 100,259 103,534 6.500% 04/01/11 138,820 143,342 6.500% 05/01/11 74,946 77,387 6.500% 10/01/11 55,688 57,503 6.500% 07/01/16 27,154 28,037 6.500% 04/01/26 44,911 46,373 6.500% 06/01/26 50,775 52,428 6.500% 02/01/27 225,679 232,959 6.500% 03/01/27 150,613 155,496 6.500% 09/01/28 123,805 127,748 6.500% 06/01/31 83,575 86,086 6.500% 07/01/31 24,257 25,000 7.000% 07/01/28 91,496 95,753 7.000% 04/01/29 51,141 53,521 7.000% 01/01/30 66,240 69,237 7.000% 06/01/31 16,161 16,888 7.000% 08/01/31 204,774 213,986 7.500% 07/01/15 16,718 17,653 7.500% 08/01/15 1,324 1,399 7.500% 01/01/30 75,098 79,632 8.000% 09/01/15 65,430 69,966 PAR ($) VALUE ($) - ---------------------------------------------------------------------- Federal National Mortgage Association 5.000% 01/01/18 769,314 768,134 5.000% 06/01/18 5,436,826 5,426,262 5.000% 08/01/20 932,956 930,814 5.500% 05/01/16 472,097 479,330 5.500% 12/01/17 979,073 993,815 5.500% 10/01/33 3,610,231 3,611,905 6.000% 01/01/09 57,894 59,458 6.000% 06/01/14 235,241 242,059 6.000% 10/13/35 (f) 590,000 599,772 6.120% 10/01/08 2,284,564 2,229,327 6.500% 03/01/11 8,731 9,032 6.500% 01/01/26 16,494 17,045 6.500% 08/01/31 406,878 419,453 6.500% 10/01/31 415,801 428,651 7.000% 03/01/15 129,817 135,720 7.000% 07/01/16 24,613 25,725 7.000% 02/01/31 30,940 32,386 7.000% 07/01/31 259,156 271,286 7.000% 07/01/32 54,479 57,026 7.500% 06/01/15 67,440 71,327 7.500% 08/01/15 73,316 77,542 7.500% 09/01/15 35,420 37,462 7.500% 02/01/31 51,478 54,487 7.500% 08/01/31 41,665 44,095 8.000% 12/01/29 42,145 45,094 8.000% 04/01/30 68,383 73,111 8.000% 05/01/30 11,571 12,371 8.000% 07/01/31 34,235 36,597 Government National Mortgage Association 6.000% 04/15/13 15,818 16,376 6.500% 05/15/13 31,938 33,255 6.500% 06/15/13 23,497 24,466 6.500% 08/15/13 46,287 48,196 6.500% 11/15/13 150,151 156,345 6.500% 07/15/14 83,735 87,172 6.500% 01/15/29 16,141 16,821 6.500% 03/15/29 124,240 129,477 6.500% 04/15/29 325,457 339,178 6.500% 05/15/29 223,322 232,737 6.500% 07/15/31 82,550 85,916 7.000% 11/15/13 393,052 412,704 7.000% 05/15/29 34,156 35,939 7.000% 09/15/29 69,538 73,169 7.000% 06/15/31 58,917 61,965 7.500% 06/15/23 2,410 2,576 7.500% 01/15/26 36,501 38,849 7.500% 09/15/29 156,014 165,745 8.000% 07/15/25 21,888 23,469 8.500% 12/15/30 6,517 7,080 9.000% 12/15/17 50,275 54,580 ------------- MORTGAGE-BACKED SECURITIES TOTAL 26,389,052 ------------- Total Mortgage-Backed Securities (cost of $31,769,376) 31,846,589 See Accompanying Notes to Financial Statements. | 43 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND PAR ($) VALUE ($) - ---------------------------------------------------------------------- GOVERNMENT AGENCIES & OBLIGATIONS - 5.1% FOREIGN GOVERNMENT OBLIGATIONS - 0.4% Province of Quebec 7.000% 01/30/07 800,000 826,032 United Mexican States 7.500% 04/08/33 550,000 636,075 ------------- FOREIGN GOVERNMENT OBLIGATIONS TOTAL 1,462,107 U.S. GOVERNMENT AGENCIES & OBLIGATIONS - 4.7% Federal Home Loan Bank System 2.250% 05/15/06 (g) 125,000 123,470 4.375% 09/11/09 1,200,000 1,195,756 Federal National Mortgage Association 4.625% 10/15/14 1,355,000 1,355,433 6.625% 09/15/09 1,000,000 1,074,622 U.S. Treasury Bonds 4.750% 05/15/14 740,000 762,373 6.250% 08/15/23 7,125,000 8,519,662 U.S. Treasury Notes 3.375% 10/15/09 1,725,000 1,671,701 4.250% 11/15/13 3,600,000 3,584,390 ------------- U.S. GOVERNMENT AGENCIES & OBLIGATIONS TOTAL 18,287,407 ------------- Total Government Agencies & Obligations (cost of $19,654,208) 19,749,514 ASSET-BACKED SECURITIES - 3.7% AmeriCredit Automobile Receivables Trust 3.930% 10/06/11 950,000 927,532 California Infrastructure 6.420% 12/26/09 2,000,000 2,060,800 Capital One Multi-Asset Execution Trust 3.650% 07/15/11 1,360,000 1,327,183 Chemical Bank Master Credit Card Trust I 5.980% 09/15/08 1,550,000 1,558,339 Citibank Credit Card Issuance Trust 2.900% 05/17/10 1,200,000 1,151,724 4.950% 02/09/09 225,000 226,339 Consumer Funding LLC 5.430% 04/20/15 820,000 847,544 Green Tree Financial Corp. 6.870% 01/15/29 245,601 256,290 Navistar Financial Corp. Owner Trust 3.250% 10/15/10 2,600,000 2,546,232 Origen Manufactured Housing 3.380% 08/15/17 870,000 847,136 PG&E Energy Recovery Funding LLC 3.870% 06/25/11 990,000 975,239 Providian Gateway Master Trust 3.350% 09/15/11 (b) 250,000 243,853 Standard Credit Card Master Trust 6.550% 10/07/07 1,395,000 1,395,195 ------------- Total Asset-Backed Securities (cost of $14,868,226) 14,363,406 PAR ($) VALUE ($) - ---------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 2.7% COLLATERALIZED MORTGAGE OBLIGATIONS - 0.6% American Mortgage Trust 8.445% 09/27/22 22,348 15,644 Countrywide Alternative Loan Trust 5.250% 08/25/35 964,915 967,375 5.500% 10/25/35 1,187,402 1,197,423 Rural Housing Trust 6.330% 04/01/26 75,245 74,712 ------------- COLLATERALIZED MORTGAGE OBLIGATIONS TOTAL 2,255,154 COMMERCIAL MORTGAGE-BACKED SECURITIES - 2.1% First Union Chase Commercial Mortgage 6.645% 06/15/31 440,197 460,793 GS Mortgage Securities Corp. II 6.620% 10/18/30 2,000,000 2,068,660 JPMorgan Commercial Mortgage Finance Corp. 6.507% 10/15/35 1,600,000 1,658,800 LB-UBS Commercial Mortgage Trust 6.510% 12/15/26 1,000,000 1,071,280 Wachovia Bank Commercial Mortgage Trust 3.989% 06/15/35 3,000,000 2,828,670 ------------- COMMERCIAL MORTGAGE-BACKED SECURITIES TOTAL 8,088,203 ------------- Total Collateralized Mortgage Obligations (cost of $10,455,679) 10,343,357 SHARES - ---------------------------------------------------------------------- INVESTMENT COMPANIES - 0.2% iShares Dow Jones U.S. Real Estate Index Fund 660 42,418 iShares MSCI South Korea Index Fund 4,400 173,580 iShares MSCI Taiwan Index Fund 19,100 223,661 iShares Nasdaq Biotechnology Index Fund (a) 1,690 130,130 iShares Russell 2000 Index Fund 1,830 121,494 ------------- Total Investment Companies (cost of $676,557) 691,283 PREFERRED STOCK - 0.0% CONSUMER DISCRETIONARY - 0.0% AUTOMOBILES - 0.0% Porsche AG 214 164,385 ------------- Automobiles Total 164,385 ------------- CONSUMER DISCRETIONARY TOTAL 164,385 ------------- Total Preferred Stock (cost of $136,504) 164,385 44 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA ASSET ALLOCATION FUND PAR ($) VALUE ($) - ---------------------------------------------------------------------- CONVERTIBLE BOND - 0.0% COMMUNICATIONS - 0.0% TELECOMMUNICATION SERVICES - 0.0% Lucent Technologies, Inc. 2.750% 06/15/25 31,418 37,894 ------------- Telecommunication Services Total 37,894 ------------- COMMUNICATIONS TOTAL 37,894 ------------- Total Convertible Bond (cost of $35,918) 37,894 SHARES - ---------------------------------------------------------------------- CONVERTIBLE PREFERRED STOCK - 0.0% BASIC MATERIALS - 0.0% CHEMICALS - 0.0% Celanese Corp. (a) 300 7,920 ------------- Chemicals Total 7,920 ------------- BASIC MATERIALS TOTAL 7,920 ------------- Total Convertible Preferred Stock (cost of $7,500) 7,920 PAR ($) - ---------------------------------------------------------------------- SHORT-TERM OBLIGATIONS - 5.5% REPURCHASE AGREEMENT - 5.4% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by U.S. Government Agencies with various maturities to 11/15/16, market value of $21,122,071 (repurchase proceeds $20,696,431) 20,691,000 20,691,000 ------------- U.S. GOVERNMENT OBLIGATIONS - 0.1% U.S. Treasury Bills 3.300% 12/15/05 (g) 50,000 49,620 3.370% 12/15/05 (g) 400,000 396,480 ------------- 446,100 ------------- Total Short-Term Obligations (cost of $21,137,100) 21,137,100 TOTAL INVESTMENTS - 100.2% (COST OF $348,053,706) (h) 386,767,920 OTHER ASSETS & LIABILITIES, NET - (0.2)% (636,310) NET ASSETS - 100.0% 386,131,610 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2005, these securities amounted to $7,083,364, which represents 1.8% of net assets. (c) The issuer has filed for bankruptcy protection under Chapter 11, and is in default of certain debt covenants. Income is being accrued. At September 30, 2005, the value of this security represents 0.1% of net assets. (d) The issuer has filed for bankruptcy protection under Chapter 11, and is in default of certain debt covenants. Income is not being accrued. At September 30, 2005, the value of this security represents 0.1% of net assets. (e) The interest rate shown on floating rate or variable rate securities reflects the rate at September 30, 2005. (f) Security purchased on a delayed delivery basis. (g) The securities or a portion of the securities pledged as collateral for open future contracts. At September 30, 2005, the total market value of securities pledged amounted to $569,570. (h) Cost for federal income tax purposes is $350,365,368. At September 30, 2005, the asset allocation of the Fund is as follows: % OF ASSET ALLOCATION (UNAUDITED) NET ASSETS ---------------------------- ---------- Common Stocks 62.8% Corporate Fixed-Income Bonds & Notes 11.9 Mortgage-Backed Securities 8.3 Government Agencies & Obligations 5.1 Asset-Backed Securities 3.7 Collateralized Mortgage Obligations 2.7 Investment Companies 0.2 Preferred Stock 0.0 Convertible Bond 0.0 Convertible Preferred Stock 0.0 Short-Term Obligations 5.5 Other Assets & Liabilities, Net (0.2) ----- 100.0% ===== At September 30, 2005, the Fund held the following open long futures contract: AGGREGATE EXPIRATION UNREALIZED TYPE CONTRACTS VALUE FACE VALUE DATE DEPRECIATION ----------------------------------------------------------------------- S&P 500 Index Futures 25 $7,714,375 $7,803,325 Dec-2005 $(88,950) At September 30, 2005, the Fund held the following open short futures contract: AGGREGATE EXPIRATION UNREALIZED TYPE CONTRACTS VALUE FACE VALUE DATE APPRECIATION ----------------------------------------------------------------------- 2-Year U.S. Treasury Note 30 $6,176,719 $6,189,210 Dec-2005 $12,491 ACRONYM NAME ------- ---- ADR American Depositary Receipt GDR Global Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. | 45 INVESTMENT PORTFOLIO ___________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA LARGE CAP GROWTH FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - 99.8% CONSUMER DISCRETIONARY - 11.1% HOTELS, RESTAURANTS & LEISURE - 0.9% Marriott International, Inc., Class A 123,470 7,778,610 Starbucks Corp. (a) 125,800 6,302,580 ------------- Hotels, Restaurants & Leisure Total 14,081,190 INTERNET & CATALOG RETAIL - 1.2% eBay, Inc. (a) 459,300 18,923,160 ------------- Internet & Catalog Retail Total 18,923,160 MULTILINE RETAIL - 1.9% Federated Department Stores, Inc. 157,800 10,552,086 Kohl's Corp. (a) 140,000 7,025,200 Target Corp. 219,200 11,383,056 ------------- Multiline Retail Total 28,960,342 SPECIALTY RETAIL - 5.6% Best Buy Co., Inc. 105,130 4,576,309 Home Depot, Inc. 379,180 14,461,925 Lowe's Companies, Inc. 284,550 18,325,020 Office Depot, Inc. (a) 544,600 16,174,620 Sherwin-Williams Co. 167,600 7,386,132 Staples, Inc. 290,725 6,198,257 Tiffany & Co. 446,500 17,757,305 ------------- Specialty Retail Total 84,879,568 TEXTILES, APPAREL & LUXURY GOODS - 1.5% Coach, Inc. (a) 457,030 14,332,461 NIKE, Inc., Class B 94,410 7,711,409 ------------- Textiles, Apparel & Luxury Goods Total 22,043,870 ------------- CONSUMER DISCRETIONARY TOTAL 168,888,130 CONSUMER STAPLES - 10.7% BEVERAGES - 3.2% Coca-Cola Co. 317,760 13,724,054 Diageo PLC, ADR 88,493 5,133,479 PepsiCo, Inc. 532,980 30,225,296 ------------- Beverages Total 49,082,829 FOOD & STAPLES RETAILING - 2.2% CVS Corp. 768,700 22,299,987 Walgreen Co. 268,200 11,653,290 ------------- Food & Staples Retailing Total 33,953,277 FOOD PRODUCTS - 1.0% Kellogg Co. 337,100 15,550,423 ------------- Food Products Total 15,550,423 HOUSEHOLD PRODUCTS - 2.3% Colgate-Palmolive Co. 308,300 16,275,157 Procter & Gamble Co. 313,540 18,643,089 ------------- Household Products Total 34,918,246 SHARES VALUE ($) - ---------------------------------------------------------------------- PERSONAL PRODUCTS - 2.0% Gillette Co. 523,800 30,485,160 ------------- Personal Products Total 30,485,160 ------------- CONSUMER STAPLES TOTAL 163,989,935 ENERGY - 7.6% ENERGY EQUIPMENT & SERVICES - 2.2% Halliburton Co. 492,800 33,766,656 ------------- Energy Equipment & Services Total 33,766,656 OIL, GAS & CONSUMABLE FUELS - 5.4% CONSOL Energy, Inc. 279,300 21,302,211 EOG Resources, Inc. 216,700 16,230,830 Pioneer Natural Resources Co. 269,600 14,806,432 XTO Energy, Inc. 665,700 30,169,524 ------------- Oil, Gas & Consumable Fuels Total 82,508,997 ------------- ENERGY TOTAL 116,275,653 FINANCIALS - 7.9% CAPITAL MARKETS - 2.7% Goldman Sachs Group, Inc. 75,050 9,124,579 Merrill Lynch & Co., Inc. 264,800 16,245,480 State Street Corp. 315,950 15,456,274 ------------- Capital Markets Total 40,826,333 COMMERCIAL BANKS - 1.8% Wells Fargo & Co. 300,440 17,596,771 Zions Bancorporation 146,600 10,439,386 ------------- Commercial Banks Total 28,036,157 DIVERSIFIED FINANCIAL SERVICES - 1.0% Citigroup, Inc. 333,356 15,174,365 ------------- Diversified Financial Services Total 15,174,365 INSURANCE - 2.4% American International Group, Inc. 585,350 36,268,286 ------------- Insurance Total 36,268,286 ------------- FINANCIALS TOTAL 120,305,141 HEALTH CARE - 20.1% BIOTECHNOLOGY - 2.5% Amgen, Inc. (a) 332,370 26,479,918 Protein Design Labs, Inc. (a) 396,300 11,096,400 ------------- Biotechnology Total 37,576,318 HEALTH CARE EQUIPMENT & SUPPLIES - 5.5% Alcon, Inc. 71,430 9,134,468 Baxter International, Inc. 298,900 11,917,143 Medtronic, Inc. 463,530 24,854,479 Thermo Electron Corp. (a) 644,260 19,907,634 Varian Medical Systems, Inc. (a) 477,870 18,880,644 ------------- Health Care Equipment & Supplies Total 84,694,368 46 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA LARGE CAP GROWTH FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) HEALTH CARE PROVIDERS & SERVICES - 3.1% Caremark Rx, Inc. (a) 378,120 18,879,531 UnitedHealth Group, Inc. 519,830 29,214,446 ------------- Health Care Providers & Services Total 48,093,977 PHARMACEUTICALS - 9.0% Abbott Laboratories 484,360 20,536,864 Amylin Pharmaceuticals, Inc. (a) 204,700 7,121,513 IVAX Corp. (a) 414,910 10,937,028 Johnson & Johnson 731,640 46,298,179 Novartis AG, ADR 556,770 28,395,270 Teva Pharmaceutical Industries Ltd., ADR 463,846 15,501,733 Wyeth 178,840 8,274,927 ------------- Pharmaceuticals Total 137,065,514 ------------- HEALTH CARE TOTAL 307,430,177 INDUSTRIALS - 10.2% AEROSPACE & DEFENSE - 1.1% Honeywell International, Inc. 427,580 16,034,250 ------------- Aerospace & Defense Total 16,034,250 BUILDING PRODUCTS - 1.1% American Standard Companies, Inc. 365,690 17,022,870 ------------- Building Products Total 17,022,870 ELECTRICAL EQUIPMENT - 1.3% Rockwell Automation, Inc. 362,820 19,193,178 ------------- Electrical Equipment Total 19,193,178 INDUSTRIAL CONGLOMERATES - 5.3% 3M Co. 205,100 15,046,136 General Electric Co. 1,946,415 65,535,793 ------------- Industrial Conglomerates Total 80,581,929 MACHINERY - 1.4% ITT Industries, Inc. 119,180 13,538,848 Pentair, Inc. 235,310 8,588,815 ------------- Machinery Total 22,127,663 ------------- INDUSTRIALS TOTAL 154,959,890 INFORMATION TECHNOLOGY - 30.2% COMMUNICATIONS EQUIPMENT - 5.2% Cisco Systems, Inc. (a) 1,627,765 29,185,827 Corning, Inc. (a) 323,800 6,259,054 Juniper Networks, Inc. (a) 320,000 7,612,800 Motorola, Inc. 437,800 9,671,002 Nokia Oyj, ADR 664,830 11,242,275 QUALCOMM, Inc. 323,800 14,490,050 ------------- Communications Equipment Total 78,461,008 SHARES VALUE ($) - ---------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 6.1% Apple Computer, Inc. (a) 181,800 9,746,298 Dell, Inc. (a) 604,640 20,678,688 EMC Corp. (a) 812,090 10,508,445 Hewlett-Packard Co. 657,480 19,198,416 International Business Machines Corp. 412,280 33,073,101 ------------- Computers & Peripherals Total 93,204,948 INTERNET SOFTWARE & SERVICES - 2.3% Google, Inc., Class A (a) 38,000 12,025,480 Yahoo!, Inc. (a) 676,750 22,901,220 ------------- Internet Software & Services Total 34,926,700 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 7.2% Broadcom Corp., Class A (a) 164,800 7,730,768 Fairchild Semiconductor International, Inc. (a) 398,000 5,914,280 Intel Corp. 1,228,870 30,291,645 MEMC Electronic Materials, Inc. (a) 799,500 18,220,605 Microchip Technology, Inc. 303,640 9,145,637 Taiwan Semiconductor Manufacturing Co., Ltd., ADR 1,380,020 11,343,764 Texas Instruments, Inc. 822,010 27,866,139 ------------- Semiconductors & Semiconductor Equipment Total 110,512,838 SOFTWARE - 9.4% Autodesk, Inc. 347,140 16,121,182 Electronic Arts, Inc. (a) 211,630 12,039,631 McAfee, Inc. (a) 312,500 9,818,750 Microsoft Corp. 2,386,420 61,402,587 NAVTEQ (a) 160,470 8,015,476 Oracle Corp. (a) 894,900 11,087,811 SAP AG, ADR 585,480 25,368,848 ------------- Software Total 143,854,285 ------------- INFORMATION TECHNOLOGY TOTAL 460,959,779 MATERIALS - 2.0% CHEMICALS - 2.0% Praxair, Inc. 631,680 30,276,422 ------------- Chemicals Total 30,276,422 ------------- MATERIALS TOTAL 30,276,422 ------------- Total Common Stocks (cost of $1,321,735,561) 1,523,085,127 See Accompanying Notes to Financial Statements. | 47 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA LARGE CAP GROWTH FUND PAR ($) VALUE ($) - ---------------------------------------------------------------------- SHORT-TERM OBLIGATION - 0.9% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by a U.S. Treasury Note maturing 01/31/07, market value of $14,698,925 (repurchase proceeds $14,413,783) 14,410,000 14,410,000 ------------- Total Short-Term Obligation (cost of $14,410,000) 14,410,000 TOTAL INVESTMENTS - 100.7% (COST OF $1,336,145,561) (b) 1,537,495,127 OTHER ASSETS & LIABILITIES, NET - (0.7)% (10,748,640) NET ASSETS - 100.0% 1,526,746,487 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $1,343,394,022. At September 30, 2005, the Fund held investments in the following sectors: % OF SECTOR (UNAUDITED) NET ASSETS ------------------ ---------- Information Technology 30.2% Health Care 20.1 Consumer Discretionary 11.1 Consumer Staples 10.7 Industrials 10.2 Financials 7.9 Energy 7.6 Materials 2.0 Short-Term Obligation 0.9 Other Assets & Liabilities, Net (0.7) ----- 100.0% ===== ACRONYM NAME ------- ---- ADR American Depositary Receipt 48 | See Accompanying Notes to Financial Statements. INVESTMENT PORTFOLIO ___________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA DISCIPLINED VALUE FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - 99.7% CONSUMER DISCRETIONARY - 9.3% HOTELS, RESTAURANTS & LEISURE - 2.8% McDonald's Corp. 361,000 12,089,890 ------------- Hotels, Restaurants & Leisure Total 12,089,890 HOUSEHOLD DURABLES - 0.5% Pulte Homes, Inc. 47,000 2,017,240 ------------- Household Durables Total 2,017,240 MEDIA - 2.6% Time Warner, Inc. 264,300 4,786,473 Walt Disney Co. 233,400 5,631,942 Warner Music Group Corp. 40,000 740,400 ------------- Media Total 11,158,815 MULTILINE RETAIL - 1.1% Dillard's, Inc., Class A 234,300 4,892,184 ------------- Multiline Retail Total 4,892,184 SPECIALTY RETAIL - 2.3% Autonation, Inc. (a) 96,800 1,933,096 Barnes & Noble, Inc. 216,600 8,165,820 ------------- Specialty Retail Total 10,098,916 ------------- CONSUMER DISCRETIONARY TOTAL 40,257,045 CONSUMER STAPLES - 5.7% BEVERAGES - 1.7% Coca-Cola Co. 166,900 7,208,411 ------------- Beverages Total 7,208,411 FOOD PRODUCTS - 1.5% Archer-Daniels-Midland Co. 212,800 5,247,648 Tyson Foods, Inc., Class A 60,100 1,084,805 ------------- Food Products Total 6,332,453 HOUSEHOLD PRODUCTS - 0.8% Procter & Gamble Co. 55,700 3,311,922 ------------- Household Products Total 3,311,922 TOBACCO - 1.7% Loews Corp. - Carolina Group 36,500 1,446,495 Reynolds American, Inc. 67,400 5,595,548 UST, Inc. 13,600 569,296 ------------- Tobacco Total 7,611,339 ------------- CONSUMER STAPLES TOTAL 24,464,125 ENERGY - 15.2% OIL, GAS & CONSUMABLE FUELS - 15.2% Amerada Hess Corp. 92,900 12,773,750 ChevronTexaco Corp. 274,400 17,761,912 SHARES VALUE ($) - ---------------------------------------------------------------------- ConocoPhillips 13,700 957,767 Devon Energy Corp. 126,900 8,710,416 Exxon Mobil Corp. 401,700 25,524,018 ------------- Oil, Gas & Consumable Fuels Total 65,727,863 ------------- ENERGY TOTAL 65,727,863 FINANCIALS - 34.6% CAPITAL MARKETS - 3.3% Goldman Sachs Group, Inc. 17,200 2,091,176 Lehman Brothers Holdings, Inc. 18,000 2,096,640 Mellon Financial Corp. 105,800 3,382,426 State Street Corp. 139,800 6,839,016 ------------- Capital Markets Total 14,409,258 COMMERCIAL BANKS - 4.6% KeyCorp 64,800 2,089,800 U.S. Bancorp 3,000 84,240 Wachovia Corp. 306,500 14,586,335 Wells Fargo & Co. 53,700 3,145,209 ------------- Commercial Banks Total 19,905,584 DIVERSIFIED FINANCIAL SERVICES - 9.7% Citigroup, Inc. 267,000 12,153,840 JPMorgan Chase & Co. 531,500 18,033,795 Nuveen Investments, Class A 89,100 3,509,649 Principal Financial Group, Inc. 168,500 7,981,845 ------------- Diversified Financial Services Total 41,679,129 INSURANCE - 14.8% AFLAC, Inc. 17,900 810,870 Allmerica Financial Corp. (a) 4,100 168,674 Allstate Corp. 87,900 4,859,991 American Financial Group, Inc. 20,600 698,958 American International Group, Inc. 50,400 3,122,784 Assurant, Inc. 48,800 1,857,328 Chubb Corp. 129,400 11,587,770 Conseco, Inc. (a) 51,800 1,093,498 First American Corp. 130,200 5,946,234 Hartford Financial Services Group, Inc. 161,200 12,439,804 MetLife, Inc. 1,000 49,830 Nationwide Financial Services, Inc., Class A 26,500 1,061,325 Prudential Financial, Inc. 196,500 13,275,540 SAFECO Corp. 102,100 5,450,098 W.R. Berkley Corp. 32,000 1,263,360 ------------- Insurance Total 63,686,064 REAL ESTATE - 1.6% Annaly Mortgage Management, Inc., REIT 519,700 6,730,115 ------------- Real Estate Total 6,730,115 See Accompanying Notes to Financial Statements. | 49 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA DISCIPLINED VALUE FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) THRIFTS & MORTGAGE FINANCE - 0.6% Fannie Mae 33,900 1,519,398 Freddie Mac 18,300 1,033,218 ------------- Thrifts & Mortgage Finance Total 2,552,616 ------------- FINANCIALS TOTAL 148,962,766 HEALTH CARE - 7.2% HEALTH CARE PROVIDERS & SERVICES - 4.0% AmerisourceBergen Corp. 137,500 10,628,750 McKesson Corp. 98,000 4,650,100 Medco Health Solutions, Inc. (a) 35,200 1,930,016 ------------- Health Care Providers & Services Total 17,208,866 PHARMACEUTICALS - 3.2% Merck & Co., Inc. 164,500 4,476,045 Pfizer, Inc. 365,800 9,134,026 ------------- Pharmaceuticals Total 13,610,071 ------------- HEALTH CARE TOTAL 30,818,937 INDUSTRIALS - 6.3% AEROSPACE & DEFENSE - 2.5% Boeing Co. 41,200 2,799,540 Northrop Grumman Corp. 81,900 4,451,265 Raytheon Co. 91,500 3,478,830 ------------- Aerospace & Defense Total 10,729,635 AIR FREIGHT & LOGISTICS - 0.3% FedEx Corp. 16,100 1,402,793 ------------- Air Freight & Logistics Total 1,402,793 COMMERCIAL SERVICES & SUPPLIES - 2.3% Cendant Corp. 462,300 9,541,872 R.R. Donnelley & Sons Co. 9,600 355,872 ------------- Commercial Services & Supplies Total 9,897,744 MACHINERY - 0.9% Parker Hannifin Corp. 61,200 3,935,772 ------------- Machinery Total 3,935,772 TRANSPORTATION - 0.3% Laidlaw International, Inc. 46,600 1,126,322 ------------- Transportation Total 1,126,322 ------------- INDUSTRIALS TOTAL 27,092,266 INFORMATION TECHNOLOGY - 4.4% COMPUTERS & PERIPHERALS - 2.9% International Business Machines Corp. 153,600 12,321,792 ------------- Computers & Peripherals Total 12,321,792 SHARES VALUE ($) - ---------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% Freescale Semiconductor, Inc., Class B (a) 6,000 141,480 ------------- Semiconductors & Semiconductor Equipment Total 141,480 SOFTWARE - 1.5% Microsoft Corp. 166,100 4,273,753 Reynolds & Reynolds Co., Class A 84,600 2,318,886 ------------- Software Total 6,592,639 ------------- INFORMATION TECHNOLOGY TOTAL 19,055,911 MATERIALS - 4.2% CHEMICALS - 0.2% Celanese Corp., Series A 33,000 569,250 ------------- Chemicals Total 569,250 METALS & MINING - 1.4% Phelps Dodge Corp. 47,500 6,171,675 ------------- Metals & Mining Total 6,171,675 PAPER & FOREST PRODUCTS - 2.6% Georgia-Pacific Corp. 332,400 11,321,544 ------------- Paper & Forest Products Total 11,321,544 ------------- MATERIALS TOTAL 18,062,469 TELECOMMUNICATION SERVICES - 5.7% DIVERSIFIED TELECOMMUNICATION SERVICES - 4.3% AT&T Corp. 55,500 1,098,900 BellSouth Corp. 160,100 4,210,630 CenturyTel, Inc. 127,400 4,456,452 SBC Communications, Inc. 229,000 5,489,130 Sprint Nextel Corp. 200 4,756 Verizon Communications, Inc. 97,000 3,170,930 ------------- Diversified Telecommunication Services Total 18,430,798 WIRELESS TELECOMMUNICATION SERVICES - 1.4% Crown Castle International Corp. (a) 244,800 6,029,424 ------------- Wireless Telecommunication Services Total 6,029,424 ------------- TELECOMMUNICATION SERVICES TOTAL 24,460,222 UTILITIES - 7.1% ELECTRIC UTILITIES - 6.3% American Electric Power Co., Inc. 168,000 6,669,600 CenterPoint Energy, Inc. 69,900 1,039,413 FirstEnergy Corp. 255,000 13,290,600 PG&E Corp. 158,800 6,232,900 ------------- Electric Utilities Total 27,232,513 GAS UTILITIES - 0.3% UGI Corp. 40,600 1,142,890 ------------- Gas Utilities Total 1,142,890 50 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA DISCIPLINED VALUE FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) UTILITIES - (CONTINUED) MULTI-UTILITIES - 0.5% Wisconsin Energy Corp. 59,000 2,355,280 ------------- Multi-Utilities Total 2,355,280 ------------- UTILITIES TOTAL 30,730,683 Total Common Stocks (cost of $381,594,053) 429,632,287 PAR ($) - ---------------------------------------------------------------------- SHORT-TERM OBLIGATION - 0.8% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by a U.S. Treasury Note maturing 08/15/07, market value of $3,411,188 (repurchase proceeds $3,344,878) 3,344,000 3,344,000 ------------- Total Short-Term Obligation (cost of $3,344,000) 3,344,000 TOTAL INVESTMENTS - 100.5% (COST OF $384,938,053) (b) 432,976,287 OTHER ASSETS & LIABILITIES, NET - (0.5)% (1,976,032) NET ASSETS - 100.0% 431,000,255 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $386,175,975. At September 30, 2005, the Fund held investments in the following sectors: % OF SECTOR (UNAUDITED) NET ASSETS ------------------ ---------- Financials 34.6% Energy 15.2 Consumer Discretionary 9.3 Health Care 7.2 Utilities 7.1 Industrials 6.3 Consumer Staples 5.7 Telecommunication Services 5.7 Information Technology 4.4 Materials 4.2 Short-Term Obligation 0.8 Other Assets & Liabilities, Net (0.5) ----- 100.0% ===== ACRONYM NAME ------- ---- REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. | 51 INVESTMENT PORTFOLIO ___________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA COMMON STOCK FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - 98.3% CONSUMER DISCRETIONARY - 12.2% DIVERSIFIED CONSUMER SERVICES - 1.3% Career Education Corp. (a) 194,010 6,898,996 ------------- Diversified Consumer Services Total 6,898,996 HOUSEHOLD DURABLES - 0.8% Sony Corp., ADR 130,900 4,344,571 ------------- Household Durables Total 4,344,571 INTERNET & CATALOG RETAIL - 1.5% Amazon.com, Inc. (a) 92,100 4,172,130 Expedia, Inc. (a) 175,400 3,474,674 ------------- Internet & Catalog Retail Total 7,646,804 LEISURE EQUIPMENT & PRODUCTS - 0.2% Hasbro, Inc. 66,680 1,310,262 ------------- Leisure Equipment & Products Total 1,310,262 MEDIA - 6.8% Clear Channel Communications, Inc. 67,390 2,216,457 Comcast Corp., Class A (a) 207,242 6,088,770 Liberty Global, Inc., Class A (a) 32,033 867,454 Liberty Global, Inc., Series C (a) 32,033 824,850 Liberty Media Corp., Class A (a) 666,410 5,364,600 News Corp., Class A 457,490 7,132,269 Time Warner, Inc. 416,160 7,536,658 Viacom, Inc., Class B 150,750 4,976,257 ------------- Media Total 35,007,315 MULTILINE RETAIL - 1.1% Kohl's Corp. (a) 109,310 5,485,176 ------------- Multiline Retail Total 5,485,176 SPECIALTY RETAIL - 0.5% RadioShack Corp. 99,110 2,457,928 ------------- Specialty Retail Total 2,457,928 ------------- CONSUMER DISCRETIONARY TOTAL 63,151,052 CONSUMER STAPLES - 7.4% BEVERAGES - 2.6% Coca-Cola Co. 148,160 6,399,030 PepsiCo, Inc. 128,390 7,280,997 ------------- Beverages Total 13,680,027 FOOD & STAPLES RETAILING - 0.7% Wal-Mart Stores, Inc. 82,820 3,629,172 ------------- Food & Staples Retailing Total 3,629,172 FOOD PRODUCTS - 1.4% McCormick & Co., Inc. 75,300 2,457,039 Smithfield Foods, Inc. (a) 164,100 4,870,488 ------------- Food Products Total 7,327,527 SHARES VALUE ($) - ---------------------------------------------------------------------- HOUSEHOLD PRODUCTS - 0.9% Colgate-Palmolive Co. 91,820 4,847,178 ------------- Household Products Total 4,847,178 PERSONAL PRODUCTS - 0.9% Gillette Co. 75,900 4,417,380 ------------- Personal Products Total 4,417,380 TOBACCO - 0.9% Altria Group, Inc. 60,415 4,453,190 ------------- Tobacco Total 4,453,190 ------------- CONSUMER STAPLES TOTAL 38,354,474 ENERGY - 7.4% ENERGY EQUIPMENT & SERVICES - 0.8% BJ Services Co. 73,200 2,634,468 Transocean, Inc. (a) 24,190 1,483,089 ------------- Energy Equipment & Services Total 4,117,557 OIL, GAS & CONSUMABLE FUELS - 6.6% Apache Corp. 36,730 2,762,831 BP PLC, ADR 19,360 1,371,656 ConocoPhillips 157,400 11,003,834 Devon Energy Corp. 30,210 2,073,614 EOG Resources, Inc. 50,620 3,791,438 Exxon Mobil Corp. 148,590 9,441,408 Peabody Energy Corp. 43,420 3,662,477 ------------- Oil, Gas & Consumable Fuels Total 34,107,258 ------------- ENERGY TOTAL 38,224,815 FINANCIALS - 17.6% CAPITAL MARKETS - 3.0% E*TRADE Financial Corp. (a) 294,560 5,184,256 Goldman Sachs Group, Inc. 16,200 1,969,596 Lazard Ltd., Class A 163,890 4,146,417 Merrill Lynch & Co., Inc. 45,200 2,773,020 Morgan Stanley 30,580 1,649,485 ------------- Capital Markets Total 15,722,774 COMMERCIAL BANKS - 1.1% Wachovia Corp. 52,355 2,491,574 Wells Fargo & Co. 25,450 1,490,607 Zions Bancorporation 22,030 1,568,756 ------------- Commercial Banks Total 5,550,937 CONSUMER FINANCE - 0.6% American Express Co. 49,240 2,828,346 ------------- Consumer Finance Total 2,828,346 DIVERSIFIED FINANCIAL SERVICES - 3.4% Citigroup, Inc. 180,889 8,234,067 JPMorgan Chase & Co. 271,772 9,221,224 ------------- Diversified Financial Services Total 17,455,291 52 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA COMMON STOCK FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) INSURANCE - 8.2% Ace Ltd. 122,010 5,743,011 Ambac Financial Group, Inc. 76,300 5,498,178 American International Group, Inc. 154,180 9,552,993 Berkshire Hathaway, Inc., Class B (a) 3,439 9,391,909 Chubb Corp. 36,735 3,289,619 UnumProvident Corp. 446,490 9,153,045 ------------- Insurance Total 42,628,755 THRIFTS & MORTGAGE FINANCE - 1.3% MGIC Investment Corp. 107,530 6,903,426 ------------- Thrifts & Mortgage Finance Total 6,903,426 ------------- FINANCIALS TOTAL 91,089,529 HEALTH CARE - 16.7% BIOTECHNOLOGY - 3.8% Amgen, Inc. (a) 89,782 7,152,932 MedImmune, Inc. (a) 147,540 4,964,721 Millennium Pharmaceuticals, Inc. (a) 812,360 7,579,319 ------------- Biotechnology Total 19,696,972 HEALTH CARE EQUIPMENT & SUPPLIES - 3.4% Biomet, Inc. 109,800 3,811,158 Medtronic, Inc. 50,700 2,718,534 Thermo Electron Corp. (a) 188,350 5,820,015 Waters Corp. (a) 125,440 5,218,304 ------------- Health Care Equipment & Supplies Total 17,568,011 HEALTH CARE PROVIDERS & SERVICES - 4.0% AmerisourceBergen Corp. 47,600 3,679,480 Cardinal Health, Inc. 81,680 5,181,779 McKesson Corp. 61,510 2,918,650 WebMD Corp. (a) 557,840 6,180,867 WellPoint, Inc. (a) 35,720 2,708,290 ------------- Health Care Providers & Services Total 20,669,066 PHARMACEUTICALS - 5.5% Abbott Laboratories 86,590 3,671,416 Barr Pharmaceuticals, Inc. (a) 131,100 7,200,012 Eli Lilly & Co. 40,350 2,159,532 Endo Pharmaceuticals Holdings, Inc. (a) 171,500 4,573,905 IVAX Corp. (a) 136,070 3,586,805 Johnson & Johnson 76,190 4,821,303 Pfizer, Inc. 99,934 2,495,352 ------------- Pharmaceuticals Total 28,508,325 ------------- HEALTH CARE TOTAL 86,442,374 SHARES VALUE ($) - ---------------------------------------------------------------------- INDUSTRIALS - 10.9% AEROSPACE & DEFENSE - 2.7% Honeywell International, Inc. 231,350 8,675,625 United Technologies Corp. 99,240 5,144,602 ------------- Aerospace & Defense Total 13,820,227 AIR FREIGHT & LOGISTICS - 0.5% United Parcel Service, Inc., Class B 37,280 2,577,166 ------------- Air Freight & Logistics Total 2,577,166 AIRLINES - 0.9% Southwest Airlines Co. 337,895 5,017,741 ------------- Airlines Total 5,017,741 COMMERCIAL SERVICES & SUPPLIES - 2.3% ARAMARK Corp., Class B 172,410 4,605,071 Cintas Corp. 116,970 4,801,618 Waste Management, Inc. 82,655 2,364,760 ------------- Commercial Services & Supplies Total 11,771,449 INDUSTRIAL CONGLOMERATES - 2.7% General Electric Co. 238,740 8,038,376 Tyco International Ltd. 208,800 5,815,080 ------------- Industrial Conglomerates Total 13,853,456 MACHINERY - 1.4% Dover Corp. 182,885 7,459,879 ------------- Machinery Total 7,459,879 ROAD & RAIL - 0.4% Union Pacific Corp. 28,110 2,015,487 ------------- Road & Rail Total 2,015,487 ------------- INDUSTRIALS TOTAL 56,515,405 INFORMATION TECHNOLOGY - 19.8% COMMUNICATIONS EQUIPMENT - 3.8% Avaya, Inc. (a) 471,800 4,859,540 Cisco Systems, Inc. (a) 410,600 7,362,058 Corning, Inc. (a) 144,120 2,785,840 Nortel Networks Corp. (a) 1,467,660 4,784,571 ------------- Communications Equipment Total 19,792,009 COMPUTERS & PERIPHERALS - 4.3% Dell, Inc. (a) 214,810 7,346,502 Hewlett-Packard Co. 228,660 6,676,872 International Business Machines Corp. 63,115 5,063,085 SanDisk Corp. (a) 67,220 3,243,365 ------------- Computers & Peripherals Total 22,329,824 ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.4% Agilent Technologies, Inc. (a) 182,480 5,976,220 Celestica, Inc. (a) 289,820 3,277,864 Symbol Technologies, Inc. 304,200 2,944,656 ------------- Electronic Equipment & Instruments Total 12,198,740 See Accompanying Notes to Financial Statements. | 53 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA COMMON STOCK FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - (CONTINUED) SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.1% ATI Technologies, Inc. (a) 595,700 8,304,058 Broadcom Corp., Class A (a) 122,980 5,768,992 Intel Corp. 279,680 6,894,112 Linear Technology Corp. 84,380 3,171,844 Marvell Technology Group Ltd. (a) 47,270 2,179,620 ------------- Semiconductors & Semiconductor Equipment Total 26,318,626 SOFTWARE - 4.2% Electronic Arts, Inc. (a) 53,460 3,041,339 Microsoft Corp. 542,720 13,964,186 Oracle Corp. (a) 401,740 4,977,559 ------------- Software Total 21,983,084 ------------- INFORMATION TECHNOLOGY TOTAL 102,622,283 MATERIALS - 4.4% CHEMICALS - 0.4% Cytec Industries, Inc. 53,500 2,320,830 ------------- Chemicals Total 2,320,830 CONTAINERS & PACKAGING - 1.8% Sealed Air Corp. (a) 65,040 3,086,799 Smurfit-Stone Container Corp. (a) 581,320 6,022,475 ------------- Containers & Packaging Total 9,109,274 METALS & MINING - 2.2% Alcoa, Inc. 157,200 3,838,824 Companhia Vale do Rio Doce, ADR 98,600 3,836,526 Mittal Steel Co. NV, Class A 124,820 3,594,816 ------------- Metals & Mining Total 11,270,166 ------------- MATERIALS TOTAL 22,700,270 TELECOMMUNICATION SERVICES - 1.9% DIVERSIFIED TELECOMMUNICATION SERVICES - 1.9% CenturyTel, Inc. 37,350 1,306,503 Qwest Communications International, Inc. (a) 491,690 2,015,929 Sprint Nextel Corp. 93,466 2,222,622 Telefonos de Mexico SA de CV, ADR 196,430 4,178,065 ------------- Diversified Telecommunication Services Total 9,723,119 ------------- TELECOMMUNICATION SERVICES TOTAL 9,723,119 ------------- Total Common Stocks (cost of $429,742,276) 508,823,321 PAR ($) VALUE ($) - ---------------------------------------------------------------------- SHORT-TERM OBLIGATION - 1.3% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by a U.S. Treasury Note maturing 05/15/08, market value of $6,731,000 (repurchase proceeds $6,598,732) 6,597,000 6,597,000 ------------- Total Short-Term Obligation (cost of $6,597,000) 6,597,000 TOTAL INVESTMENTS - 99.6% (COST OF $436,339,276) (b) 515,420,321 OTHER ASSETS & LIABILITIES, NET - 0.4% 2,240,016 NET ASSETS - 100.0% 517,660,337 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $438,314,958. At September 30, 2005, the Fund held investments in the following sectors: % OF SECTOR (UNAUDITED) NET ASSETS ------------------ ---------- Information Technology 19.8% Financials 17.6 Health Care 16.7 Consumer Discretionary 12.2 Industrials 10.9 Consumer Staples 7.4 Energy 7.4 Materials 4.4 Telecommunication Services 1.9 Short-Term Obligation 1.3 Other Assets & Liabilities, Net 0.4 ----- 100.0% ===== ACRONYM NAME ------- ---- ADR American Depositary Receipt 54 | See Accompanying Notes to Financial Statements. INVESTMENT PORTFOLIO ___________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL CAP CORE FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - 96.2% CONSUMER DISCRETIONARY - 19.5% AUTO COMPONENTS - 1.2% Cooper Tire & Rubber Co. 239,870 3,662,815 Keystone Automotive Industries, Inc. (a) 270,000 7,778,700 R&B, Inc. (a) 422,016 4,325,664 Sauer-Danfoss, Inc. 112,200 2,244,000 ------------- Auto Components Total 18,011,179 DIVERSIFIED CONSUMER SERVICES - 0.6% Regis Corp. 243,400 9,205,388 ------------- Diversified Consumer Services Total 9,205,388 HOTELS, RESTAURANTS & LEISURE - 4.3% Buca, Inc. (a) 374,300 2,272,001 CEC Entertainment, Inc. (a) 257,930 8,191,857 Checkers Drive-In Restaurant, Inc. (a)(b)584,400 8,929,632 Famous Dave's of America, Inc. (a) 462,500 5,513,000 Fox & Hound Restaurant Group (a)(b) 501,000 5,100,180 Friendly Ice Cream Corp. (a) 230,000 2,079,200 Gaylord Entertainment Co. (a) 118,400 5,641,760 Jack in the Box, Inc. (a) 233,900 6,995,949 O'Charleys, Inc. (a) 627,005 8,972,442 Ruby Tuesday, Inc. 210,500 4,580,480 Ryan's Restaurant Group, Inc. (a) 418,650 4,885,645 Steak n Shake Co. (a) 182,000 3,303,300 ------------- Hotels, Restaurants & Leisure Total 66,465,446 HOUSEHOLD DURABLES - 0.4% Yankee Candle Co., Inc. 268,300 6,573,350 ------------- Household Durables Total 6,573,350 INTERNET & CATALOG RETAIL - 0.3% Valuevision Media, Inc., Class A (a) 409,000 4,642,150 ------------- Internet & Catalog Retail Total 4,642,150 LEISURE EQUIPMENT & PRODUCTS - 1.7% Callaway Golf Co. 367,700 5,548,593 RC2 Corp. (a) 350,900 11,846,384 Steinway Musical Instruments, Inc. (a) 230,600 6,076,310 Topps Co., Inc. 268,900 2,207,669 ------------- Leisure Equipment & Products Total 25,678,956 MEDIA - 2.8% ADVO, Inc. 360,699 11,286,272 Catalina Marketing Corp. 370,400 8,422,896 Journal Register Co. 367,500 5,946,150 Paxson Communications Corp. (a) 1,275,400 573,930 Regent Communications, Inc. (a) 839,100 4,413,666 Scholastic Corp. (a) 249,600 9,225,216 Sinclair Broadcast Group, Inc., Class A 263,100 2,333,697 Young Broadcasting, Inc., Class A (a) 229,400 800,606 ------------- Media Total 43,002,433 SHARES VALUE ($) - ---------------------------------------------------------------------- SPECIALTY RETAIL - 6.7% Buckle, Inc. 280,700 9,535,379 Dress Barn, Inc. (a) 231,400 5,266,664 Gaiam, Inc. (a) 448,600 4,629,552 Gymboree Corp. (a) 557,200 7,600,208 Hancock Fabrics, Inc. 424,300 2,855,539 Haverty Furniture Companies, Inc. 186,200 2,277,226 Hot Topic, Inc. (a) 276,600 4,248,576 Jarden Corp. (a) 136,375 5,600,921 Kirkland's, Inc. (a) 256,200 1,949,682 Lithia Motors, Inc., Class A 354,800 10,282,104 Men's Wearhouse, Inc. (a) 85,200 2,274,840 Monro Muffler, Inc. 220,000 5,779,400 Party City Corp. (a) 499,400 8,449,848 Payless Shoesource, Inc. (a) 212,500 3,697,500 Rent-A-Center, Inc. (a) 397,950 7,684,415 Rush Enterprises, Inc., Class A (a) 150,000 2,292,000 Rush Enterprises, Inc., Class B (a) 200,000 3,002,000 Sports Authority Inc. (a) 229,927 6,769,051 Stage Stores, Inc. 299,250 8,040,847 ------------- Specialty Retail Total 102,235,752 TEXTILES, APPAREL & LUXURY GOODS - 1.5% Ashworth, Inc. (a) 300,000 2,049,000 Phillips-Van Heusen Corp. 173,600 5,385,072 Quiksilver, Inc. (a) 424,000 6,126,800 Rocky Shoes & Boots, Inc. (a) 133,600 3,820,960 Tommy Hilfiger Corp. (a) 293,300 5,088,755 ------------- Textiles, Apparel & Luxury Goods Total 22,470,587 ------------- CONSUMER DISCRETIONARY TOTAL 298,285,241 CONSUMER STAPLES - 2.0% FOOD & STAPLES RETAILING - 0.4% Casey's General Stores, Inc. 174,570 4,050,024 Wild Oats Markets, Inc. (a) 193,300 2,485,838 ------------- Food & Staples Retailing Total 6,535,862 FOOD PRODUCTS - 0.7% Corn Products International, Inc. 291,600 5,881,572 Delta & Pine Land Co. 168,200 4,442,162 ------------- Food Products Total 10,323,734 HOUSEHOLD PRODUCTS - 0.9% Central Garden & Pet Co. (a) 188,600 8,534,150 Spectrum Brands, Inc. (a) 244,300 5,753,265 ------------- Household Products Total 14,287,415 ------------- CONSUMER STAPLES TOTAL 31,147,011 ENERGY - 4.2% ENERGY EQUIPMENT & SERVICES - 1.6% Core Laboratories NV (a) 84,200 2,716,292 Gulfmark Offshore, Inc. (a) 261,400 8,435,378 Hanover Compressor Co. (a) 2,659 36,854 See Accompanying Notes to Financial Statements. | 55 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL CAP CORE FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) ENERGY - (CONTINUED) ENERGY EQUIPMENT & SERVICES - (CONTINUED) Newpark Resources, Inc. (a) 831,000 6,997,020 Oceaneering International, Inc. (a) 103,700 5,538,617 Superior Well Services, Inc. (a) 38,700 893,970 ------------- Energy Equipment & Services Total 24,618,131 OIL, GAS & CONSUMABLE FUELS - 2.6% Houston Exploration Co. (a) 90,900 6,113,025 Southwestern Energy Co. (a) 159,000 11,670,600 Vintage Petroleum, Inc. 128,200 5,853,612 Warren Resources, Inc. (a) 102,300 1,713,525 Western Gas Resources, Inc. 100,000 5,123,000 Whiting Petroleum Corp. (a) 189,000 8,285,760 ------------- Oil, Gas & Consumable Fuels Total 38,759,522 ------------- ENERGY TOTAL 63,377,653 FINANCIALS - 10.4% CAPITAL MARKETS - 0.3% Waddell & Reed Financial, Inc., Class A 221,000 4,278,560 ------------- Capital Markets Total 4,278,560 COMMERCIAL BANKS - 1.9% EuroBancshares, Inc. (a) 129,200 1,926,372 First Niagara Financial Group, Inc. 465,500 6,721,820 Oriental Financial Group 483,140 5,913,633 Republic Bancorp, Inc. 128,863 1,822,123 SNB Bancshares Inc. (a) 233,700 2,629,125 Taylor Capital Group, Inc. 129,628 4,902,531 UMB Financial Corp. 86,500 5,681,320 ------------- Commercial Banks Total 29,596,924 DIVERSIFIED FINANCIAL SERVICES - 0.5% Prospect Energy Corp. 158,997 2,122,610 QC Holdings, Inc. (a) 350,900 4,575,736 ------------- Diversified Financial Services Total 6,698,346 INSURANCE - 3.6% AmerUs Group Co. 75,420 4,326,845 Bristol West Holdings, Inc. 256,100 4,673,825 Direct General Corp. 215,100 4,243,923 EMC Insurance Group, Inc. 193,800 3,498,090 Hilb Rogal & Hobbs Co. 83,000 3,097,560 Horace Mann Educators Corp. 217,000 4,292,260 Hub International Ltd. 210,000 4,762,800 Midland Co. 178,700 6,438,561 National Interstate Corp. 34,200 591,660 Navigators Group, Inc. (a) 152,800 5,702,496 NYMAGIC, Inc. 105,000 2,554,650 Ohio Casualty Corp. 295,600 8,016,672 Phoenix Companies, Inc. 199,900 2,438,780 ------------- Insurance Total 54,638,122 SHARES VALUE ($) - ---------------------------------------------------------------------- REAL ESTATE - 2.3% Acadia Realty Trust, REIT 231,100 4,157,489 DiamondRock Hospitality Co., REIT 367,962 4,323,554 First Potomac Realty Trust, REIT 400,000 10,280,000 Gramercy Capital Corp., REIT 272,400 6,526,704 Innkeepers USA Trust, Inc., REIT 466,100 7,201,245 Jones Lang LaSalle, Inc. 57,300 2,639,238 ------------- Real Estate Total 35,128,230 THRIFTS & MORTGAGE FINANCE - 1.8% Dime Community Bancshares 283,200 4,168,704 Flagstar BanCorp, Inc. 230,600 3,712,660 Jefferson Bancshares, Inc. 266,400 3,447,216 Matrix Bancorp, Inc. (a) 227,400 2,924,364 NewAlliance Bancshares, Inc. 498,500 7,298,040 Webster Financial Corp. 106,300 4,779,248 Willow Grove Bancorp, Inc. 110,132 1,724,667 ------------- Thrifts & Mortgage Finance Total 28,054,899 ------------- FINANCIALS TOTAL 158,395,081 HEALTH CARE - 15.0% BIOTECHNOLOGY - 2.1% BioMarin Pharmaceuticals, Inc. (a) 399,850 3,490,690 Cambrex Corp. 488,200 9,256,272 CV Therapeutics, Inc. (a) 184,200 4,927,350 Serologicals Corp. (a) 320,500 7,230,480 Strategic Diagnostics, Inc. (a) 653,200 2,678,120 Threshold Pharmaceuticals, Inc. (a) 288,600 3,939,390 ------------- Biotechnology Total 31,522,302 HEALTH CARE EQUIPMENT & SUPPLIES - 6.1% Analogic Corp. 158,700 8,000,067 Criticare Systems, Inc. (a) 48,200 245,820 Cytyc Corp. (a) 144,300 3,874,455 Datascope Corp. 229,150 7,108,233 Greatbatch, Inc. (a) 106,200 2,914,128 Haemonetics Corp. (a) 91,900 4,368,007 Invacare Corp. 473,800 19,743,246 Langer, Inc. (a) 320,769 1,630,790 Lifecore Biomedical, Inc. (a) 304,400 3,680,196 STAAR Surgical Co. (a) 645,900 3,558,909 SurModics, Inc. (a) 71,499 2,766,296 Thoratec Corp. (a) 523,100 9,290,256 Viasys Healthcare, Inc. (a) 347,000 8,671,530 West Pharmaceutical Services, Inc. 565,700 16,784,319 ------------- Health Care Equipment & Supplies Total 92,636,252 HEALTH CARE PROVIDERS & SERVICES - 5.4% LabOne, Inc. (a) 126,400 5,498,400 Life Sciences Research, Inc. (a) 140,074 2,117,919 LifePoint Hospitals, Inc. (a) 189,598 8,291,121 Magellan Health Services, Inc. (a) 176,200 6,193,430 Pediatrix Medical Group, Inc. (a) 212,200 16,301,204 Priority Healthcare Corp., Class B (a) 316,975 8,830,923 PSS World Medical, Inc. (a) 640,700 8,546,938 56 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL CAP CORE FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - (CONTINUED) HEALTH CARE PROVIDERS & SERVICES - (CONTINUED) Res-Care, Inc. (a) 1,145,925 17,635,786 Triad Hospitals, Inc. (a) 114,800 5,196,996 U.S. Physical Therapy, Inc. (a) 232,300 4,218,568 ------------- Health Care Providers & Services Total 82,831,285 PHARMACEUTICALS - 1.4% Acusphere, Inc. (a) 425,100 2,342,301 Critical Therapeutics, Inc. (a) 229,200 2,159,064 KV Pharmaceutical Co., Class A (a) 236,800 4,207,936 Perrigo Co. 288,300 4,125,573 Valeant Pharmaceuticals International 431,526 8,665,042 ------------- Pharmaceuticals Total 21,499,916 ------------- HEALTH CARE TOTAL 228,489,755 INDUSTRIALS - 19.0% AEROSPACE & DEFENSE - 2.0% Armor Holdings, Inc. (a) 440,265 18,935,798 Ladish Co., Inc. (a) 276,300 4,818,672 Moog, Inc., Class A (a) 234,000 6,907,680 ------------- Aerospace & Defense Total 30,662,150 AIR FREIGHT & LOGISTICS - 0.6% EGL, Inc. (a) 356,500 9,678,975 ------------- Air Freight & Logistics Total 9,678,975 BUILDING PRODUCTS - 1.2% Jacuzzi Brands, Inc. (a) 1,122,000 9,043,320 NCI Building Systems, Inc. (a) 222,900 9,092,091 ------------- Building Products Total 18,135,411 COMMERCIAL SERVICES & SUPPLIES - 5.8% Bennett Environmental, Inc. (a) 500,000 1,425,000 Cornell Companies, Inc. (a) 610,200 8,976,042 Danka Business Systems PLC, ADR (a) 1,600,000 4,272,000 FTI Consulting, Inc. (a) 558,000 14,095,080 G&K Services, Inc., Class A 155,500 6,125,145 HMS Holdings Corp. (a) 257,100 1,781,703 infoUSA, Inc. 358,100 3,803,022 Kforce, Inc. (a) 920,350 9,479,605 McGrath Rentcorp 140,800 3,988,864 Nashua Corp. (a) 169,600 1,051,520 NCO Group, Inc. (a) 368,330 7,609,698 Nobel Learning Communities, Inc. (a) 200,100 1,872,936 RemedyTemp, Inc. (a) 125,210 1,041,747 Spherion Corp. (a) 499,200 3,793,920 Tetra Tech, Inc. (a) 519,100 8,731,262 Unifirst Corp. 291,800 10,233,426 ------------- Commercial Services & Supplies Total 88,280,970 SHARES VALUE ($) - ---------------------------------------------------------------------- CONSTRUCTION & ENGINEERING - 1.9% Chicago Bridge & Iron Co., NV, N.Y. Registered Shares 419,100 13,029,819 EMCOR Group, Inc. (a) 261,500 15,506,950 ------------- Construction & Engineering Total 28,536,769 ELECTRICAL EQUIPMENT - 1.4% General Cable Corp. (a) 345,900 5,811,120 LSI Industries, Inc. 765,365 14,541,935 Metrologic Instruments, Inc. (a) 12,376 225,120 Wood's (T.B.) Corp. 108,207 779,090 ------------- Electrical Equipment Total 21,357,265 MACHINERY - 4.6% AGCO Corp. (a) 226,300 4,118,660 Albany International Corp., Class A 600,005 22,122,184 Briggs & Stratton Corp. 173,200 5,990,988 CIRCOR International, Inc. 163,200 4,479,840 Key Technology, Inc. (a)(b) 259,265 3,681,563 Lydall, Inc. (a) 219,300 1,958,349 Nordson Corp. 173,000 6,579,190 Oshkosh Truck Corp. 129,000 5,567,640 Terex Corp. (a) 228,344 11,287,044 Watts Water Technologies, Inc., Class A 170,000 4,904,500 ------------- Machinery Total 70,689,958 ROAD & RAIL - 1.5% Arkansas Best Corp. 253,000 8,822,110 Kansas City Southern (a) 251,845 5,870,507 RailAmerica, Inc. (a) 376,800 4,483,920 Werner Enterprises, Inc. 240,325 4,155,219 ------------- Road & Rail Total 23,331,756 ------------- INDUSTRIALS TOTAL 290,673,254 INFORMATION TECHNOLOGY - 16.3% COMMUNICATIONS EQUIPMENT - 0.7% EFJ, Inc. (a) 193,647 1,992,628 Integral Systems, Inc. 168,100 3,469,584 Performance Technologies, Inc. (a)(b) 751,700 5,374,655 Zhone Technologies, Inc. (a) 732 1,910 ------------- Communications Equipment Total 10,838,777 COMPUTERS & PERIPHERALS - 1.7% Cray, Inc. (a) 92,044 84,680 Hypercom Corp. (a) 545,800 3,558,616 Imation Corp. 309,500 13,268,265 Presstek, Inc. (a) 397,600 5,160,848 Rimage Corp. (a) 162,900 4,344,543 ------------- Computers & Peripherals Total 26,416,952 ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.3% Agilysys, Inc. 259,713 4,373,567 Benchmark Electronics, Inc. (a) 942,750 28,395,630 Keithley Instruments, Inc. 343,640 5,017,144 LeCroy Corp. (a) 170,200 2,527,470 See Accompanying Notes to Financial Statements. | 57 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL CAP CORE FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY -- (CONTINUED) ELECTRONIC EQUIPMENT & INSTRUMENTS -- (CONTINUED) Merix Corp. (a) 403,600 2,260,160 Rogers Corp. (a) 82,200 3,181,140 Technitrol, Inc. 313,010 4,795,313 ------------- Electronic Equipment & Instruments Total 50,550,424 INTERNET SOFTWARE & SERVICES - 0.7% S1 Corp. (a) 280,400 1,096,364 Selectica, Inc. (a) 872,800 2,801,688 Tumbleweed Communications Corp. (a) 815,000 3,463,750 webMethods, Inc. (a) 458,820 3,243,857 ------------- Internet Software & Services Total 10,605,659 IT SERVICES - 2.2% Analysts International Corp. (a) 761,700 2,018,505 Computer Task Group, Inc. (a) 900,200 3,330,740 Inforte Corp. 500,000 2,095,000 ProQuest Co. (a) 394,230 14,271,126 Startek, Inc. 449,900 5,938,680 TNS, Inc. (a) 255,600 6,198,300 ------------- IT Services Total 33,852,351 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.4% ATMI, Inc. (a) 223,347 6,923,757 Exar Corp. (a) 117,201 1,643,158 Fairchild Semiconductor International, Inc. (a) 587,500 8,730,250 hifn, Inc. (a) 500,000 2,775,000 IXYS Corp. (a) 191,000 2,016,960 ON Semiconductor Corp. (a) 1,153,200 5,962,044 Peak International Ltd. (a) 244,650 741,290 Pericom Semiconductor Corp. (a) 400,460 3,540,066 Ultratech, Inc. (a) 230,600 3,595,054 ------------- Semiconductors & Semiconductor Equipment Total 35,927,579 SOFTWARE - 5.3% BindView Development Corp. (a) 1,510,500 5,362,124 FARO Technologies, Inc. (a) 165,700 3,229,493 Lawson Software, Inc. (a) 607,787 4,218,042 MapInfo Corp. (a) 249,000 3,050,250 Mediware Information Systems (a) 314,600 2,504,216 Mentor Graphics Corp. (a) 352,400 3,030,640 MSC.Software Corp. (a) 460,515 7,239,296 NetIQ Corp. (a) 343,400 4,203,216 PLATO Learning, Inc. (a) 663,700 5,050,757 Progress Software Corp. (a) 296,500 9,419,805 SafeNet, Inc. (a) 166,900 6,060,139 Sonic Solutions (a) 346,000 7,439,000 Sybase, Inc. (a) 640,600 15,002,852 THQ, Inc. (a) 249,450 5,318,274 ------------- Software Total 81,128,104 ------------- INFORMATION TECHNOLOGY TOTAL 249,319,846 SHARES VALUE ($) - ---------------------------------------------------------------------- MATERIALS - 6.5% CHEMICALS - 3.5% Airgas, Inc. 251,900 7,463,797 Albemarle Corp. 246,360 9,287,772 H.B. Fuller Co. 330,860 10,283,129 MacDermid, Inc. 475,200 12,478,752 Sensient Technologies Corp. 307,800 5,832,810 Spartech Corp. 468,400 9,152,536 ------------- Chemicals Total 54,498,796 CONTAINERS & PACKAGING - 0.7% Greif, Inc., Class A 170,000 10,217,000 ------------- Containers & Packaging Total 10,217,000 METALS & MINING - 1.9% Brush Engineered Materials, Inc. (a) 290,800 4,617,904 Foundation Coal Holdings, Inc. 43,100 1,657,195 GrafTech International Ltd. (a) 431,200 2,341,416 Hecla Mining Co. (a) 298,300 1,306,554 Northwest Pipe Co. (a) 303,150 7,848,553 Reliance Steel & Aluminum Co. 219,500 11,618,135 ------------- Metals & Mining Total 29,389,757 PAPER & FOREST PRODUCTS - 0.4% Buckeye Technologies, Inc. (a) 144,900 1,176,588 Glatfelter 331,440 4,669,990 ------------- Paper & Forest Products Total 5,846,578 ------------- MATERIALS TOTAL 99,952,131 TELECOMMUNICATION SERVICES - 0.6% DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5% General Communication, Inc., Class A (a) 417,300 4,131,270 Premiere Global Services, Inc. (a) 388,300 3,176,294 ------------- Diversified Telecommunication Services Total 7,307,564 WIRELESS TELECOMMUNICATION SERVICES - 0.1% LCC International, Inc., Class A (a) 560,700 1,401,750 ------------- Wireless Telecommunication Services Total 1,401,750 ------------- TELECOMMUNICATION SERVICES TOTAL 8,709,314 UTILITIES - 2.7% ELECTRIC UTILITIES - 0.2% IDACORP, Inc. 122,800 3,699,964 ------------- Electric Utilities Total 3,699,964 GAS UTILITIES - 1.6% New Jersey Resources Corp. 148,777 6,840,767 Northwest Natural Gas Co. 111,300 4,142,586 South Jersey Industries, Inc. 193,344 5,634,044 Southwest Gas Corp. 301,500 8,258,085 ------------- Gas Utilities Total 24,875,482 58 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL CAP CORE FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) MULTI-UTILITIES - 0.3% California Water Service Group 104,200 4,293,040 ------------- Multi-Utilities Total 4,293,040 WATER UTILITIES - 0.6% American States Water Co. 135,150 4,522,119 Aqua America, Inc. 101,968 3,876,823 ------------- Water Utilities Total 8,398,942 ------------- UTILITIES TOTAL 41,267,428 ------------- Total Common Stocks (cost of $1,171,029,274) 1,469,616,714 PAR ($) - ---------------------------------------------------------------------- SHORT-TERM OBLIGATION - 4.0% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by a U.S. Treasury Note maturing 02/15/10, market value of $62,833,875(repurchase proceeds $61,616,170) 61,600,000 61,600,000 ------------- Total Short-Term Obligation (cost of $61,600,000) 61,600,000 TOTAL INVESTMENTS - 100.2% (COST OF $1,232,629,274) (c) 1,531,216,714 OTHER ASSETS & LIABILITIES, NET - (0.2)% (3,720,718) NET ASSETS - 100.0% 1,527,495,996 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Investments in affiliated companies at September 30, 2005: An affiliated company is a company in which the Fund has ownership of at least 5% of the voting shares outstanding. Security Name: Checkers Drive-In Restaurant, Inc. Shares as of 09/30/04: 607,900 Shares sold: (23,500) Shares as of 09/30/05: 584,400 Net realized gain: $ 63,699 Dividend income earned: $ -- Value at end of period: $ 8,929,632 Security Name: Fox & Hound Restaurant Group (formerly Total Entertainment Restaurant Corp.) Shares as of 09/30/04: 501,000 Shares purchased: -- Shares as of 09/30/05: 501,000 Net realized gain or loss: $ -- Dividend income earned: $ -- Value at end of period: $ 5,100,180 Security Name: Key Technology, Inc. Shares as of 09/30/04: 259,265 Shares purchased: -- Shares as of 09/30/05: 259,265 Net realized gain or loss: $ -- Dividend income earned: $ -- Value at end of period: $ 3,681,563 Security Name: Performance Technologies, Inc. Shares as of 09/30/04: 609,400 Shares purchased: 142,300 Shares as of 09/30/05: 751,700 Net realized gain or loss: $ -- Dividend income earned: $ -- Value at end of period: $ 5,374,655 (c) Cost for federal income tax purposes is $1,233,722,859. At September 30, 2005, the Fund held investments in the following sectors: % OF SECTOR (UNAUDITED) NET ASSETS ------------------ ---------- Consumer Discretionary 19.5% Industrials 19.0 Information Technology 16.3 Health Care 15.0 Financials 10.4 Materials 6.5 Energy 4.2 Utilities 2.7 Consumer Staples 2.0 Telecommunication Services 0.6 Short-Term Obligation 4.0 Other Assets & Liabilities, Net (0.2) ----- 100.0% ===== ACRONYM NAME ------- ---- ADR American Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. | 59 INVESTMENT PORTFOLIO ___________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL COMPANY EQUITY FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - 97.5% CONSUMER DISCRETIONARY - 15.7% AUTOMOBILES - 0.7% Thor Industries, Inc. 10,758 365,772 Winnebago Industries, Inc. 43,780 1,268,307 ------------- Automobiles Total 1,634,079 DIVERSIFIED CONSUMER SERVICES - 0.7% Education Management Corp. (a) 52,400 1,689,376 ------------- Diversified Consumer Services Total 1,689,376 HOTELS, RESTAURANTS & LEISURE - 4.0% Gaylord Entertainment Co. (a) 76,940 3,666,191 Kerzner International Ltd. (a) 27,220 1,512,071 Lakes Entertainment, Inc. (a) 30,040 301,902 Pinnacle Entertainment, Inc. (a) 63,380 1,161,755 RARE Hospitality International, Inc. (a) 56,560 1,453,592 Scientific Games Corp., Class A (a) 37,720 1,169,320 ------------- Hotels, Restaurants & Leisure Total 9,264,831 HOUSEHOLD DURABLES - 0.4% Yankee Candle Co., Inc. 36,530 894,985 ------------- Household Durables Total 894,985 INTERNET & CATALOG RETAIL - 1.6% Blue Nile, Inc. (a) 37,280 1,179,539 Coldwater Creek, Inc. (a) 56,870 1,434,261 Netflix, Inc. (a) 23,710 616,223 Overstock.com, Inc. (a) 12,950 496,633 ------------- Internet & Catalog Retail Total 3,726,656 MEDIA - 3.3% aQuantive, Inc. (a) 34,490 694,284 Arbitron, Inc. 8,820 351,389 Lions Gate Entertainment Corp. (a) 187,910 1,792,661 R.H. Donnelley Corp. (a) 28,910 1,828,847 Radio One, Inc., Class D (a) 131,870 1,734,090 Valassis Communications, Inc. (a) 31,030 1,209,549 ------------- Media Total 7,610,820 SPECIALTY RETAIL - 3.7% Charlotte Russe Holding, Inc. (a) 33,040 440,093 Finish Line, Inc., Class A 82,430 1,202,654 GameStop Corp., Class A (a) 35,350 1,112,464 Guitar Center, Inc. (a) 9,990 551,548 Hibbett Sporting Goods, Inc. (a) 35,702 794,358 Hot Topic, Inc. (a) 60,600 930,816 Jarden Corp. (a) 17,215 707,020 PETCO Animal Supplies, Inc. (a) 22,960 485,834 Talbots, Inc. 42,660 1,276,387 Tuesday Morning Corp. 48,310 1,249,780 ------------- Specialty Retail Total 8,750,954 SHARES VALUE ($) - ---------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS - 1.3% Carter's, Inc. (a) 7,230 410,664 Jos. A. Bank Clothiers, Inc. (a) 32,680 1,412,430 Wolverine World Wide, Inc. 58,630 1,234,161 ------------- Textiles, Apparel & Luxury Goods Total 3,057,255 ------------- CONSUMER DISCRETIONARY TOTAL 36,628,956 CONSUMER STAPLES - 1.4% FOOD & STAPLES RETAILING - 0.2% United Natural Foods, Inc. (a) 16,480 582,733 ------------- Food & Staples Retailing Total 582,733 FOOD PRODUCTS - 0.5% Delta & Pine Land Co. 40,020 1,056,928 ------------- Food Products Total 1,056,928 PERSONAL PRODUCTS - 0.7% Nu Skin Enterprises, Inc., Class A 83,710 1,594,675 ------------- Personal Products Total 1,594,675 ------------- CONSUMER STAPLES TOTAL 3,234,336 ENERGY - 6.8% ENERGY EQUIPMENT & SERVICES - 2.6% Atwood Oceanics, Inc. (a) 17,780 1,497,254 CAL Dive International, Inc. (a) 24,940 1,581,446 Dril-Quip, Inc. (a) 8,400 403,200 Energy Conversion Devices, Inc. (a) 22,860 1,025,957 Hydril (a) 13,430 921,835 Tetra Technologies, Inc. (a) 21,510 671,542 ------------- Energy Equipment & Services Total 6,101,234 OIL, GAS & CONSUMABLE FUELS - 4.2% Cheniere Energy, Inc. (a) 14,890 615,850 Denbury Resources, Inc. (a) 37,480 1,890,491 Encore Acquisition Co. (a) 18,090 702,796 Frontier Oil Corp. 17,080 757,498 Holly Corp. 11,760 752,405 KFx, Inc. (a) 13,380 229,066 Remington Oil & Gas Corp. (a) 44,830 1,860,445 St. Mary Land & Exploration Co. 16,980 621,468 Superior Energy Services, Inc. (a) 102,620 2,369,496 ------------- Oil, Gas & Consumable Fuels Total 9,799,515 ------------- ENERGY TOTAL 15,900,749 FINANCIALS - 9.4% CAPITAL MARKETS - 2.1% Affiliated Managers Group, Inc. (a) 66,620 4,824,620 ------------- Capital Markets Total 4,824,620 60 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL COMPANY EQUITY FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) COMMERCIAL BANKS - 4.7% Boston Private Financial Holdings, Inc. 105,690 2,805,013 City National Corp. 25,000 1,752,250 Fidelity Bankshares, Inc. 46,930 1,433,711 Prosperity Bancshares, Inc. 45,710 1,382,727 South Financial Group, Inc. 49,460 1,327,506 Texas Capital Bancshares, Inc. (a) 55,650 1,176,998 Westamerica Bancorporation 21,710 1,121,322 ------------- Commercial Banks Total 10,999,527 CONSUMER FINANCE - 1.1% Nelnet, Inc., Class A (a) 31,160 1,184,391 World Acceptance Corp. (a) 52,692 1,338,904 ------------- Consumer Finance Total 2,523,295 INSURANCE - 0.4% Selective Insurance Group, Inc. 22,280 1,089,492 ------------- Insurance Total 1,089,492 REAL ESTATE - 1.1% Bluegreen Corp. (a) 66,565 1,174,872 Strategic Hotel Capital, Inc., REIT 46,073 841,293 Washington REIT 15,540 483,450 ------------- Real Estate Total 2,499,615 ------------- FINANCIALS TOTAL 21,936,549 HEALTH CARE - 18.5% BIOTECHNOLOGY - 4.2% Abgenix, Inc. (a) 35,320 447,858 Arena Pharmaceuticals, Inc. (a) 31,150 308,385 AtheroGenics, Inc. (a) 47,210 756,776 CV Therapeutics, Inc. (a) 42,850 1,146,237 Exelixis, Inc. (a) 128,500 985,595 Human Genome Sciences, Inc. (a) 58,380 793,384 Illumina, Inc. (a) 100,470 1,287,021 Martek Biosciences Corp. (a) 14,790 519,573 Medarex, Inc. (a) 43,050 409,836 Protein Design Labs, Inc. (a) 76,590 2,144,520 Vertex Pharmaceuticals, Inc. (a) 44,650 997,927 ------------- Biotechnology Total 9,797,112 HEALTH CARE EQUIPMENT & SUPPLIES - 6.3% Advanced Neuromodulation Systems, Inc. (a) 14,530 689,594 American Medical Systems Holdings, Inc. (a) 112,750 2,271,912 Aspect Medical Systems, Inc. (a) 53,060 1,572,168 Foxhollow Technologies, Inc. (a) 7,080 337,079 Hologic, Inc. (a) 8,150 470,662 Immucor, Inc. (a) 83,020 2,278,069 Intuitive Surgical, Inc. (a) 14,050 1,029,724 Kyphon, Inc. (a) 48,840 2,146,030 SHARES VALUE ($) - ---------------------------------------------------------------------- Meridian Bioscience, Inc. 30,740 636,318 Nektar Therapeutics (a) 33,000 559,350 Respironics, Inc. (a) 27,662 1,166,783 Somanetics Corp. (a) 16,650 416,250 SonoSite, Inc. (a) 37,645 1,117,304 ------------- Health Care Equipment & Supplies Total 14,691,243 HEALTH CARE PROVIDERS & SERVICES - 4.8% Allion Healthcare, Inc. (a) 25,760 463,937 Apria Healthcare Group, Inc. (a) 27,070 863,804 HealthExtras, Inc. (a) 30,560 653,373 LifePoint Hospitals, Inc. (a) 43,690 1,910,564 Pediatrix Medical Group, Inc. (a) 9,470 727,485 PRA International (a) 20,780 629,842 Psychiatric Solutions, Inc. (a) 4,940 267,896 United Surgical Partners International, Inc. (a) 14,930 583,912 VCA Antech, Inc. (a) 190,682 4,866,205 ------------- Health Care Providers & Services Total 10,967,018 PHARMACEUTICALS - 3.2% Amylin Pharmaceuticals, Inc. (a) 43,080 1,498,753 Connetics Corp. (a) 43,570 736,769 Medicis Pharmaceutical Corp., Class A 23,770 773,951 MGI Pharma, Inc. (a) 46,210 1,077,155 New River Pharmaceuticals, Inc. (a) 13,820 662,531 Par Pharmaceutical Companies, Inc. (a) 18,560 494,067 Penwest Pharmaceuticals Co. (a) 50,381 883,179 Salix Pharmaceuticals Ltd. (a) 63,290 1,344,913 ------------- Pharmaceuticals Total 7,471,318 ------------- HEALTH CARE TOTAL 42,926,691 INDUSTRIALS - 12.9% AEROSPACE & DEFENSE - 1.2% Aviall, Inc. (a) 13,660 461,435 DRS Technologies, Inc. 9,130 450,657 Teledyne Technologies, Inc. (a) 52,390 1,805,883 ------------- Aerospace & Defense Total 2,717,975 AIR FREIGHT & LOGISTICS - 3.0% HUB Group, Inc., Class A (a) 88,436 3,246,486 UTI Worldwide, Inc. 47,630 3,700,851 ------------- Air Freight & Logistics Total 6,947,337 AIRLINES - 0.6% AirTran Holdings, Inc. (a) 72,490 917,723 Frontier Airlines, Inc. (a) 48,200 471,396 ------------- Airlines Total 1,389,119 COMMERCIAL SERVICES & SUPPLIES - 4.3% John H. Harland Co. 8,360 371,184 Korn/Ferry International (a) 73,884 1,210,959 Labor Ready, Inc. (a) 66,851 1,714,728 Mine Safety Appliances Co. 35,850 1,387,395 Navigant Consulting, Inc. (a) 21,300 408,108 Resources Connection, Inc. (a) 39,590 1,173,052 Senomyx, Inc. (a) 42,803 728,935 See Accompanying Notes to Financial Statements. | 61 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL COMPANY EQUITY FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INDUSTRIALS - (CONTINUED) COMMERCIAL SERVICES & SUPPLIES - (CONTINUED) Strayer Education, Inc. 6,050 571,846 Waste Connections, Inc. (a) 68,160 2,391,053 ------------- Commercial Services & Supplies Total 9,957,260 ELECTRICAL EQUIPMENT - 0.4% Evergreen Solar, Inc. (a) 92,920 866,944 ------------- Electrical Equipment Total 866,944 INDUSTRIAL CONGLOMERATES - 0.2% Walter Industries, Inc. 11,350 555,242 ------------- Industrial Conglomerates Total 555,242 MACHINERY - 2.7% Actuant Corp., Class A 15,150 709,020 Bucyrus International, Inc., Class A 22,170 1,089,212 Clarcor, Inc. 15,930 457,510 ESCO Technologies, Inc. (a) 13,000 650,910 JLG Industries, Inc. 20,360 744,972 Manitowoc Co., Inc. 11,420 573,855 Wabtec Corp. 78,590 2,143,935 ------------- Machinery Total 6,369,414 ROAD & RAIL - 0.5% Florida East Coast Industries, Inc. 25,660 1,162,141 ------------- Road & Rail Total 1,162,141 ------------- INDUSTRIALS TOTAL 29,965,432 INFORMATION TECHNOLOGY - 26.2% COMMUNICATIONS EQUIPMENT - 3.9% Adtran, Inc. 32,010 1,008,315 Anaren, Inc. (a) 1,689 23,815 AudioCodes Ltd. (a) 131,310 1,445,723 Avocent Corp. (a) 37,500 1,186,500 C-COR, Inc. (a) 46,460 313,605 Emulex Corp. (a) 17,630 356,302 F5 Networks, Inc. (a) 13,130 570,761 NICE Systems Ltd., ADR (a) 26,100 1,179,198 Packeteer, Inc. (a) 103,880 1,303,694 Plantronics, Inc. 17,300 533,013 SiRF Technology Holdings, Inc. (a) 38,006 1,145,121 ------------- Communications Equipment Total 9,066,047 COMPUTERS & PERIPHERALS - 1.4% M-Systems Flash Disk Pioneers Ltd. (a) 51,450 1,539,384 Neoware Systems, Inc. (a) 55,212 924,249 Stratasys, Inc. (a) 30,200 896,940 ------------- Computers & Peripherals Total 3,360,573 SHARES VALUE ($) - ---------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.5% Anixter International, Inc. (a) 37,070 1,495,033 Daktronics, Inc. 58,960 1,413,861 Flir Systems, Inc. (a) 20,200 597,516 Global Imaging Systems, Inc. (a) 45,398 1,545,802 Itron, Inc. (a) 28,760 1,313,181 Plexus Corp. (a) 103,410 1,767,277 ------------- Electronic Equipment & Instruments Total 8,132,670 INTERNET SOFTWARE & SERVICES - 3.3% CNET Networks, Inc. (a) 53,920 731,694 Digital River, Inc. (a) 25,820 899,827 Digitas, Inc. (a) 162,780 1,849,181 EarthLink, Inc. (a) 69,940 748,358 Equinix, Inc. (a) 13,600 566,440 InfoSpace, Inc. (a) 9,940 237,268 Openwave Systems, Inc. (a) 30,850 554,683 Secure Computing Corp. (a) 106,620 1,210,137 ValueClick, Inc. (a) 44,790 765,461 ------------- Internet Software & Services Total 7,563,049 IT SERVICES - 2.4% CACI International, Inc., Class A (a) 31,770 1,925,262 Euronet Worldwide, Inc. (a) 39,460 1,167,621 MPS Group, Inc. (a) 29,430 347,274 MTC Technologies, Inc. (a) 25,200 805,896 Sykes Enterprises, Inc. (a) 101,760 1,210,944 ------------- IT Services Total 5,456,997 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.8% Cymer, Inc. (a) 49,980 1,565,374 Cypress Semiconductor Corp. (a) 150,800 2,269,540 Entegris, Inc. (a) 182,646 2,063,900 Microsemi Corp. (a) 95,201 2,431,434 Semtech Corp. (a) 68,340 1,125,560 Skyworks Solutions, Inc. (a) 131,660 924,253 Tessera Technologies, Inc. (a) 64,800 1,938,168 Virage Logic Corp. (a) 163,950 1,270,612 ------------- Semiconductors & Semiconductor Equipment Total 13,588,841 SOFTWARE - 5.9% American Reprographics Co. (a) 30,839 527,347 Ansys, Inc. (a) 44,510 1,713,190 Epicor Software Corp. (a) 78,450 1,019,850 Hyperion Solutions Corp. (a) 43,570 2,119,680 Kronos, Inc. (a) 22,100 986,544 Macrovision Corp. (a) 16,660 318,206 Micros Systems, Inc. (a) 13,000 568,750 Open Solutions, Inc. (a) 56,400 1,230,648 Parametric Technology Corp. (a) 112,270 782,522 Progress Software Corp. (a) 78,770 2,502,523 Quest Software, Inc. (a) 64,820 976,837 RSA Security, Inc. (a) 68,500 870,635 TIBCO Software, Inc. (a) 13,960 116,706 ------------- Software Total 13,733,438 ------------- INFORMATION TECHNOLOGY TOTAL 60,901,615 62 | See Accompanying Notes to Financial Statements. ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA SMALL COMPANY EQUITY FUND SHARES VALUE ($) - ---------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) MATERIALS - 3.8% CHEMICALS - 1.6% Airgas, Inc. 52,170 1,545,797 Symyx Technologies, Inc. (a) 73,190 1,911,723 UAP Holding Corp. 12,530 226,793 ------------- Chemicals Total 3,684,313 CONSTRUCTION MATERIALS - 0.4% Eagle Materials, Inc. 7,710 935,763 ------------- Construction Materials Total 935,763 METALS & MINING - 1.8% Allegheny Technologies, Inc. 25,170 779,767 AMCOL International Corp. 29,960 571,337 Cleveland-Cliffs, Inc. 8,870 772,666 Foundation Coal Holdings, Inc. 24,590 945,485 Quanex Corp. 7,960 527,111 Reliance Steel & Aluminum Co. 10,700 566,351 ------------- Metals & Mining Total 4,162,717 ------------- MATERIALS TOTAL 8,782,793 TELECOMMUNICATION SERVICES - 1.8% DIVERSIFIED TELECOMMUNICATION SERVICES - 0.1% Tekelec (a) 13,420 281,149 ------------- Diversified Telecommunication Services Total 281,149 WIRELESS TELECOMMUNICATION SERVICES - 1.7% Alamosa Holdings, Inc. (a) 62,960 1,077,246 Dobson Communications Corp., Class A (a) 54,770 420,634 Jamdat Mobile, Inc. (a) 5,110 107,310 SBA Communications Corp., Class A (a) 108,321 1,673,559 SpectraLink Corp. 49,328 628,932 ------------- Wireless Telecommunication Services Total 3,907,681 ------------- TELECOMMUNICATION SERVICES TOTAL 4,188,830 UTILITIES - 1.0% GAS UTILITIES - 1.0% Energen Corp. 55,860 2,416,504 ------------- Gas Utilities Total 2,416,504 ------------- UTILITIES TOTAL 2,416,504 ------------- Total Common Stocks (cost of $201,660,857) 226,882,455 SHARES VALUE ($) - ---------------------------------------------------------------------- INVESTMENT COMPANIES - 2.1% iShares Dow Jones U.S. Real Estate Index Fund 18,450 1,185,782 iShares Nasdaq Biotechnology Index Fund (a) 46,810 3,604,370 ------------- Total Investment Companies (cost of $4,564,622) 4,790,152 PAR ($) - ---------------------------------------------------------------------- SHORT-TERM OBLIGATION - 1.4% Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by a U.S. Treasury Bond maturing 05/15/17, market value of $3,375,469 (repurchase proceeds $3,309,869) 3,309,000 3,309,000 ------------- Total Short-Term Obligation (cost of $3,309,000) 3,309,000 TOTAL INVESTMENTS - 101.0% (COST OF $209,534,479) (b) 234,981,607 OTHER ASSETS & LIABILITIES, NET - (1.0)% (2,388,338) NET ASSETS - 100.0% 232,593,269 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $210,075,649. At September 30, 2005, the Fund held investments in the following sectors: % OF SECTOR (UNAUDITED) NET ASSETS ------------------ ---------- Information Technology 26.2% Health Care 18.5 Consumer Discretionary 15.7 Industrials 12.9 Financials 9.4 Energy 6.8 Materials 3.8 Telecommunication Services 1.8 Consumer Staples 1.4 Utilities 1.0 Investment Companies 2.1 Short-Term Obligation 1.4 Other Assets & Liabilities, Net (1.0) ----- 100.0% ===== ACRONYM NAME ------- ---- ADR American Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. | 63 This page intentionally left blank. STATEMENTS OF ASSETS AND LIABILITIES ___________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS COLUMBIA COLUMBIA COLUMBIA ASSET LARGE CAP DISCIPLINED ALLOCATION GROWTH VALUE FUND ($) FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------- ASSETS Unaffiliated investments, at identified cost 348,053,706 1,336,145,561 384,938,053 Affiliated investments, at identified cost -- -- -- ----------- ------------- ----------- Total investments, at identified cost 348,053,706 1,336,145,561 384,938,053 ----------- ------------- ----------- Unaffiliated investments, at value 386,767,920 1,537,495,127 432,976,287 Affiliated investments, at value -- -- -- ----------- ------------- ----------- Total investments, at value 386,767,920 1,537,495,127 432,976,287 Cash 88,149 990 786 Foreign currency (cost of $13,618) 13,189 -- -- Receivable for: Investments sold 3,658,980 34,618,467 -- Fund shares sold 78,469 1,177,915 507,987 Interest 1,200,761 1,261 293 Dividends 321,476 936,651 459,415 Foreign tax reclaim 34,981 50,257 -- Futures variation margin 22,188 -- -- Expense reimbursement due from Investment Advisor -- -- -- Deferred Trustees' compensation plan 37,523 92,150 31,538 ----------- ------------- ----------- Total assets 392,223,636 1,574,372,818 433,976,306 - ------------------------------------------------------------------------------------------------------------- LIABILITIES: Payable for: Investments purchased on a delayed delivery basis 603,533 -- -- Investments purchased 3,829,249 40,885,238 -- Fund shares repurchased 1,127,273 5,476,997 2,519,326 Investment advisory fee 209,626 638,295 244,537 Administration fee 21,706 62,887 23,430 Transfer agent fee 77,635 241,410 59,687 Pricing and bookkeeping fees 22,693 11,013 4,700 Merger costs -- 63,949 -- Trustees' fees 1,000 1,000 1,000 Distribution and service fees 71,390 101,733 41,286 Custody fee 23,889 3,596 2,310 Chief compliance officer expenses and fees 1,279 2,860 1,330 Deferred Trustees' fees 37,523 92,150 31,538 Other liabilities 65,230 45,203 46,907 ----------- ------------- ----------- Total liabilities 6,092,026 47,626,331 2,976,051 NET ASSETS 386,131,610 1,526,746,487 431,000,255 - ------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital 322,717,326 1,551,511,921 356,449,199 Undistributed (overdistributed) net investment income (93,970) 4,367,800 319,610 Accumulated net investment loss -- -- -- Accumulated net realized gain (loss) 24,873,234 (230,482,800) 26,193,212 Unrealized appreciation (depreciation) on: Investments 38,714,214 201,349,566 48,038,234 Foreign currency translations (2,735) -- -- Futures contracts (76,459) -- -- ----------- ------------- ----------- NET ASSETS 386,131,610 1,526,746,487 431,000,255 COLUMBIA COLUMBIA COLUMBIA SMALL COMMON SMALL COMPANY STOCK CAP CORE EQUITY FUND ($) FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------- ASSETS Unaffiliated investments, at identified cost 436,339,276 1,211,801,940 209,534,479 Affiliated investments, at identified cost -- 20,827,334 -- ----------- ------------- ----------- Total investments, at identified cost 436,339,276 1,232,629,274 209,534,479 ----------- ------------- ----------- Unaffiliated investments, at value 515,420,321 1,508,130,684 234,981,607 Affiliated investments, at value -- 23,086,030 -- ----------- ------------- ----------- Total investments, at value 515,420,321 1,531,216,714 234,981,607 Cash 120 12,652 819 Foreign currency (cost of $13,618) -- -- -- Receivable for: Investments sold 5,495,626 3,935,103 5,706,332 Fund shares sold 52,020 732,733 117,943 Interest 577 5,390 289 Dividends 324,797 957,802 32,432 Foreign tax reclaim 1,248 2,045 -- Futures variation margin -- -- -- Expense reimbursement due from Investment Advisor 5,106 -- -- Deferred Trustees' compensation plan 40,091 46,833 27,723 ----------- ------------- ----------- Total assets 521,339,906 1,536,909,272 240,867,145 - ------------------------------------------------------------------------------------------------------------- LIABILITIES: Payable for: Investments purchased on a delayed delivery basis -- -- -- Investments purchased 1,525,447 4,284,732 7,535,232 Fund shares repurchased 1,411,982 3,732,724 432,190 Investment advisory fee 301,540 880,168 145,962 Administration fee 30,738 82,344 13,039 Transfer agent fee 85,971 114,804 40,970 Pricing and bookkeeping fees 7,785 11,570 5,036 Merger costs 63,913 -- -- Trustees' fees 1,000 1,000 1,000 Distribution and service fees 60,904 169,268 23,537 Custody fee 3,000 4,300 2,500 Chief compliance officer expenses and fees 1,476 2,764 1,052 Deferred Trustees' fees 40,091 46,833 27,723 Other liabilities 145,722 82,769 45,635 ----------- ------------- ----------- Total liabilities 3,679,569 9,413,276 8,273,876 NET ASSETS 517,660,337 1,527,495,996 232,593,269 - ------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF Paid-in capital 446,687,252 1,125,578,268 192,297,877 Undistributed (overdistributed) net investment income 651,326 -- -- Accumulated net investment loss -- (21,979) (15,054) Accumulated net realized gain (loss) (8,759,286) 103,352,267 14,863,318 Unrealized appreciation (depreciation) on: Investments 79,081,045 298,587,440 25,447,128 Foreign currency translations -- -- -- Futures contracts -- -- -- ----------- ------------- ----------- NET ASSETS 517,660,337 1,527,495,996 232,593,269 See Accompanying Notes to Financial Statements. | 65 STATEMENTS OF ASSETS AND LIABILITIES ___________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS COLUMBIA COLUMBIA COLUMBIA ASSET LARGE CAP DISCIPLINED ALLOCATION GROWTH VALUE FUND ($) FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------- CLASS A Net assets 4,206,287 10,421,714 4,269,327 Shares outstanding 255,441 493,604 292,407 Net asset value per share (a) 16.47 21.11 14.60 Maximum sales charge 5.75% 5.75% 5.75% Maximum offering price per share (b) 17.47 22.40 15.49 - ------------------------------------------------------------------------------------------------------------- CLASS B Net assets 7,165,940 7,799,312 3,974,128 Shares outstanding 435,203 388,635 284,634 Net asset value and offering price per share (a) 16.47 20.07 13.96 - ------------------------------------------------------------------------------------------------------------- CLASS C Net assets 704,408 1,419,101 452,516 Shares outstanding 42,769 70,615 32,462 Net asset value and offering price per share (a) 16.47 20.10 13.94 - ------------------------------------------------------------------------------------------------------------- CLASS G Net assets 21,982,280 46,275,732 4,325,565 Shares outstanding 1,335,259 2,379,228 309,631 Net asset value and offering price per share (a) 16.46 19.45 13.97 - ------------------------------------------------------------------------------------------------------------- CLASS T Net assets 184,795,054 218,094,907 134,792,178 Shares outstanding 11,211,185 10,394,849 9,231,802 Net asset value per share (a) 16.48 20.98 14.60 Maximum sales charge 5.75% 5.75% 5.75% Maximum offering price per share (b) 17.49 22.26 15.49 - ------------------------------------------------------------------------------------------------------------- CLASS Z Net assets 167,277,641 1,242,735,721 283,186,541 Shares outstanding 10,152,341 57,801,146 19,040,508 Net asset value, offering and redemption price per share 16.48 21.50 14.87 COLUMBIA COLUMBIA COLUMBIA SMALL COMMON SMALL COMPANY STOCK CAP CORE EQUITY FUND ($) FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------- CLASS A Net assets 10,392,939 211,527,352 5,286,583 Shares outstanding 764,820 10,946,737 291,282 Net asset value per share (a) 13.59 19.32 18.15 Maximum sales charge 5.75% 5.75% 5.75% Maximum offering price per share (b) 14.42 20.50 19.26 - ------------------------------------------------------------------------------------------------------------- CLASS B Net assets 6,627,877 42,438,769 2,398,112 Shares outstanding 505,016 2,287,104 142,594 Net asset value and offering price per share (a) 13.12 18.56 16.82 - ------------------------------------------------------------------------------------------------------------- CLASS C Net assets 605,065 56,162,974 1,073,972 Shares outstanding 46,080 3,024,261 64,050 Net asset value and offering price per share (a) 13.13 18.57 16.77 - ------------------------------------------------------------------------------------------------------------- CLASS G Net assets 9,217,950 8,962,507 3,675,638 Shares outstanding 708,913 487,190 218,972 Net asset value and offering price per share (a) 13.00 18.40 16.79 - ------------------------------------------------------------------------------------------------------------- CLASS T Net assets 180,344,736 150,041,997 67,373,851 Shares outstanding 13,342,034 7,833,382 3,720,052 Net asset value per share (a) 13.52 19.15 18.11 Maximum sales charge 5.75% 5.75% 5.75% Maximum offering price per share (b) 14.34 20.32 19.21 - ------------------------------------------------------------------------------------------------------------- CLASS Z Net assets 310,471,770 1,058,362,397 152,785,113 Shares outstanding 22,728,374 54,163,597 7,951,333 Net asset value, offering and redemption price per share 13.66 19.54 19.22 (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. 66 | See Accompanying Notes to Financial Statements. STATEMENTS OF OPERATIONS _______________________________________________________ FOR THE YEAR ENDED SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS COLUMBIA COLUMBIA COLUMBIA ASSET LARGE CAP DISCIPLINED ALLOCATION GROWTH VALUE FUND ($) FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME INCOME Dividends 5,283,559 17,442,830 10,946,438 Interest 7,149,598 586,578 41,435 Foreign withholding tax (138,877) (141,047) -- ------------ ------------ ------------ Total income 12,294,280 17,888,361 10,987,873 - ------------------------------------------------------------------------------------------------------------------------------ EXPENSES Investment advisory fee 2,685,695 7,192,091 3,085,211 Administration fee 273,139 707,053 293,562 Distribution fee: Class B 46,219 43,385 25,393 Class C 4,518 8,211 3,033 Class G 204,207 318,849 40,322 Service fee: Class A 8,822 18,679 8,463 Class B 15,406 14,462 8,457 Class C 1,506 2,737 1,011 Class G 94,250 147,161 18,610 Shareholder service fee-Class T 558,113 664,958 406,788 Transfer agent fee 887,150 2,390,689 659,012 Pricing and bookkeeping fees 164,954 115,542 56,790 Trustees' fees 16,211 29,388 16,497 Custody fee 231,560 41,656 22,262 Merger costs -- 63,949 -- Chief compliance officer expenses and fees (See Note 4) 4,670 8,513 4,793 Non-recurring costs (See Note 9) 7,420 21,580 7,982 Other expenses 229,637 385,384 185,968 ------------ ------------ ------------ Total expenses 5,433,477 12,174,287 4,844,154 Expenses waived or reimbursed by Investment Advisor -- -- -- Fees waived by Transfer Agent (21,634) (57,245) (14,456) Custody earnings credit (1,820) (79) (2,732) Non-recurring costs assumed by Investment Advisor (See Note 9) (7,420) (21,580) (7,982) ------------ ------------ ------------ Net expenses 5,402,603 12,095,383 4,818,984 ------------ ------------ ------------ Net Investment Income (Loss) 6,891,677 5,792,978 6,168,889 - ------------------------------------------------------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, FUTURES CONTRACTS AND FOREIGN CAPITAL GAINS TAX Net realized gain (loss) on: Unaffiliated investments 38,316,449 150,841,082 37,360,323 Affiliated investments -- -- -- Foreign currency transactions (110,274) -- -- Futures contracts 86,771 -- -- ------------ ------------ ------------ Net realized gain 38,292,946 150,841,082 37,360,323 ------------ ------------ ------------ Net change in unrealized appreciation (depreciation) on: Investments (1,123,182) 2,914,418 22,679,978 Foreign currency translations (2,152) -- -- Futures contracts (76,459) -- -- Foreign capital gains tax 28,954 -- -- ------------ ------------ ------------ Net change in unrealized appreciation (depreciation) (1,172,839) 2,914,418 22,679,978 ------------ ------------ ------------ Net Gain 37,120,107 153,755,500 60,040,301 ------------ ------------ ------------ Net Increase Resulting from Operations 44,011,784 159,548,478 66,209,190 COLUMBIA COLUMBIA COLUMBIA SMALL COMMON SMALL COMPANY STOCK CAP CORE EQUITY FUND ($) FUND ($) FUND ($) - ------------------------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME INCOME Dividends 8,067,674 11,290,903 698,507 Interest 125,900 1,804,927 162,055 Foreign withholding tax (36,335) (43,860) (487) ------------ ------------ ------------ Total income 8,157,239 13,051,970 860,075 - ------------------------------------------------------------------------------------------------------------------------------ EXPENSES Investment advisory fee 3,267,063 11,013,724 2,372,659 Administration fee 312,885 1,062,628 211,957 Distribution fee: Class B 37,936 315,878 16,189 Class C 3,470 478,354 7,976 Class G 85,698 68,965 26,749 Service fee: Class A 23,803 538,558 12,855 Class B 12,670 105,293 5,396 Class C 1,159 159,451 2,659 Class G 39,553 31,830 12,346 Shareholder service fee-Class T 537,492 451,624 206,720 Transfer agent fee 1,007,385 1,280,874 629,901 Pricing and bookkeeping fees 74,988 134,932 57,949 Trustees' fees 16,056 42,798 15,261 Custody fee 32,915 52,224 27,721 Merger costs 63,913 -- -- Chief compliance officer expenses and fees (See Note 4) 4,786 9,073 4,327 Non-recurring costs (See Note 9) 8,084 29,179 6,128 Other expenses 237,334 420,262 186,179 ------------ ------------ ------------ Total expenses 5,767,190 16,195,647 3,802,972 Expenses waived or reimbursed by Investment Advisor (369,244) -- -- Fees waived by Transfer Agent (40,455) (9,893) (45,471) Custody earnings credit (10) (4,003) (1,228) Non-recurring costs assumed by Investment Advisor (See Note 9) (8,084) (29,179) (6,128) ------------ ------------ ------------ Net expenses 5,349,397 16,152,572 3,750,145 ------------ ------------ ------------ Net Investment Income (Loss) 2,807,842 (3,100,602) (2,890,070) - ------------------------------------------------------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, FUTURES CONTRACTS AND FOREIGN CAPITAL GAINS TAX Net realized gain (loss) on: Unaffiliated investments 30,797,221 123,589,248 52,614,588 Affiliated investments -- 63,699 -- Foreign currency transactions -- -- -- Futures contracts -- -- -- ------------ ------------ ------------ Net realized gain 30,797,221 123,652,947 52,614,588 ------------ ------------ ------------ Net change in unrealized appreciation (depreciation) on: Investments 39,085,905 125,933,034 (12,574,773) Foreign currency translations -- -- -- Futures contracts -- -- -- Foreign capital gains tax -- -- -- ------------ ------------ ------------ Net change in unrealized appreciation (depreciation) 39,085,905 125,933,034 (12,574,773) ------------ ------------ ------------ Net Gain 69,883,126 249,585,981 40,039,815 ------------ ------------ ------------ Net Increase Resulting from Operations 72,690,968 246,485,379 37,149,745 See Accompanying Notes to Financial Statements. | 67 STATEMENTS OF CHANGES IN NET ASSETS ____________________________________________ COLUMBIA EQUITY FUNDS COLUMBIA ASSET ALLOCATION FUND ----------------------------------------------- YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 30, 2005 ($) SEPTEMBER 30, 2004 ($) - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 6,891,677 6,588,100 Net realized gain on investments, foreign currency transactions, futures contracts and foreign capital gains tax 38,292,946 29,766,534 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations, futures contracts and foreign capital gains tax (1,172,839) 6,931,847 -------------- -------------- Net increase resulting from operations 44,011,784 43,286,481 - ----------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A (60,529) (38,123) Class B (57,776) (39,489) Class C (5,763) (3,850) Class G (294,862) (532,662) Class T (2,998,187) (3,361,232) Class Z (3,406,583) (4,367,911) -------------- -------------- Total distributions to shareholders (6,823,700) (8,343,267) - ----------------------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS (74,283,896) (79,551,611) Net increase (decrease) in net assets (37,095,812) (44,608,397) - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 423,227,422 467,835,819 End of period 386,131,610 423,227,422 -------------- -------------- Undistributed (overdistributed) net investment income at end of period (93,970) (577,690) Accumulated net investment loss at end of period -- -- COLUMBIA LARGE CAP GROWTH FUND ----------------------------------------------- YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 30, 2005 ($) SEPTEMBER 30, 2004 ($) - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 5,792,978 (2,858,299) Net realized gain on investments, foreign currency transactions, futures contracts and foreign capital gains tax 150,841,082 35,926,964 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations, futures contracts and foreign capital gains tax 2,914,418 24,493,437 -------------- -------------- Net increase resulting from operations 159,548,478 57,562,102 - ----------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A (4,773) -- Class B -- -- Class C -- -- Class G -- -- Class T (218,026) -- Class Z (1,100,339) (344,225) -------------- -------------- Total distributions to shareholders (1,323,138) (344,225) - ----------------------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS 460,512,265 (113,980,519) Net increase (decrease) in net assets 618,737,605 (56,762,642) - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 908,008,882 964,771,524 End of period 1,526,746,487 908,008,882 -------------- -------------- Undistributed (overdistributed) net investment income at end of period 4,367,800 -- Accumulated net investment loss at end of period -- (31,890) COLUMBIA DISCIPLINED VALUE FUND ----------------------------------------------- YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 30, 2005 ($) SEPTEMBER 30, 2004 ($) - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 6,168,889 6,193,345 Net realized gain on investments, foreign currency transactions, futures contracts and foreign capital gains tax 37,360,323 56,049,664 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations, futures contracts and foreign capital gains tax 22,679,978 2,235,576 -------------- -------------- Net increase resulting from operations 66,209,190 64,478,585 - ----------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A (39,394) (34,019) Class B (13,386) (10,336) Class C (1,604) (1,620) Class G (33,655) (60,722) Class T (1,511,678) (2,222,608) Class Z (4,027,029) (5,958,609) -------------- -------------- Total distributions to shareholders (5,626,746) (8,287,914) - ----------------------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS (58,819,727) 8,578,064 Net increase (decrease) in net assets 1,762,717 64,768,735 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 429,237,538 364,468,803 End of period 431,000,255 429,237,538 -------------- -------------- Undistributed (overdistributed) net investment income at end of period 319,610 (13,047) Accumulated net investment loss at end of period -- -- See Accompanying Notes to Financial Statements. 68-69 Spread STATEMENTS OF CHANGES IN NET ASSETS ____________________________________________ COLUMBIA EQUITY FUNDS COLUMBIA COMMON STOCK FUND ----------------------------------------------- YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 30, 2005 ($) SEPTEMBER 30, 2004 ($) - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 2,807,842 137,755 Net realized gain on investments 30,797,221 31,566,846 Net change in unrealized appreciation (depreciation) on investments 39,085,905 (1,396,341) -------------- -------------- Net increase resulting from operations 72,690,968 30,308,260 - ----------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A (48,639) (3,718) Class B (12,827) -- Class C (1,388) -- Class G (58,216) -- Class T (943,447) (53,896) Class Z (1,028,430) (307,876) From net realized gains: Class A (258,532) -- Class B (104,749) -- Class C (11,323) -- Class G (458,781) -- Class T (5,128,778) -- Class Z (4,890,150) -- -------------- -------------- Total distributions to shareholders (12,945,260) (365,490) - ----------------------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS 73,987,511 (60,613,547) Net increase (decrease) in net assets 133,733,219 (30,670,777) - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 383,927,118 414,597,895 End of period 517,660,337 383,927,118 -------------- -------------- Undistributed (overdistributed) net investment income at end of period 651,326 (16,638) Accumulated net investment loss at end of period -- -- COLUMBIA SMALL CAP CORE FUND ----------------------------------------------- YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 30, 2005 ($) SEPTEMBER 30, 2004 ($) - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) (3,100,602) (3,982,558) Net realized gain on investments 123,652,947 101,709,890 Net change in unrealized appreciation (depreciation) on investments 125,933,034 100,021,971 -------------- -------------- Net increase resulting from operations 246,485,379 197,749,303 - ----------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A -- -- Class B -- -- Class C -- -- Class G -- -- Class T -- -- Class Z -- From net realized gains: Class A (12,731,838) (2,842,592) Class B (2,238,027) (388,822) Class C (3,566,257) (673,375) Class G (614,205) (236,658) Class T (8,769,533) (3,762,956) Class Z (68,581,877) (26,575,680) -------------- -------------- Total distributions to shareholders (96,501,737) (34,480,083) - ----------------------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS (197,861,353) 396,376,350 Net increase (decrease) in net assets (47,877,711) 559,645,570 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 1,575,373,707 1,015,728,137 End of period 1,527,495,996 1,575,373,707 -------------- -------------- Undistributed (overdistributed) net investment income at end of period -- -- Accumulated net investment loss at end of period (21,979) (12,009) COLUMBIA SMALL COMPANY EQUITY FUND ----------------------------------------------- YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS SEPTEMBER 30, 2005 ($) SEPTEMBER 30, 2004 ($) - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) (2,890,070) (3,957,642) Net realized gain on investments 52,614,588 63,906,432 Net change in unrealized appreciation (depreciation) on investments (12,574,773) (10,180,101) -------------- -------------- Net increase resulting from operations 37,149,745 49,768,689 - ----------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Class A -- -- Class B -- -- Class C -- -- Class G -- -- Class T -- -- Class Z -- From net realized gains: Class A -- -- Class B -- -- Class C -- -- Class G -- -- Class T -- -- Class Z -- -- -------------- -------------- Total distributions to shareholders -- -- - ----------------------------------------------------------------------------------------------------------------------------- NET CAPITAL SHARE TRANSACTIONS (184,983,212) (37,019,466) Net increase (decrease) in net assets (147,833,467) 12,749,223 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 380,426,736 367,677,513 End of period 232,593,269 380,426,736 -------------- -------------- Undistributed (overdistributed) net investment income at end of period -- -- Accumulated net investment loss at end of period (15,054) (11,506) See Accompanying Notes to Financial Statements. 70-71 Spread STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY _________________________________________________________ COLUMBIA EQUITY FUNDS COLUMBIA ASSET ALLOCATION FUND ------------------------------------------------------------ YEAR ENDED YEAR ENDED SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) - ----------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 130,504 2,085,407 156,246 2,338,730 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 3,548 56,759 2,480 37,011 Redemptions (71,163) (1,138,127) (52,637) (794,225) ------------ ------------ ------------ ------------ Net increase 62,889 1,004,039 106,089 1,581,516 CLASS B Subscriptions 174,907 2,788,321 187,791 2,806,475 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 3,197 51,095 2,375 35,373 Redemptions (70,052) (1,121,692) (44,405) (665,807) ------------ ------------ ------------ ------------ Net increase 108,052 1,717,724 145,761 2,176,041 CLASS C Subscriptions 19,854 317,542 26,605 398,392 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 305 4,878 225 3,354 Redemptions (11,503) (184,894) (6,084) (90,769) ------------ ------------ ------------ ------------ Net increase 8,656 137,526 20,746 310,977 CLASS G Subscriptions 28,778 455,566 46,210 691,443 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 18,128 289,212 35,018 520,503 Redemptions (1,361,012) (21,660,524) (1,460,481) (21,741,477) ------------ ------------ ------------ ------------ Net decrease (1,314,106) (20,915,746) (1,379,253) (20,529,531) CLASS T Subscriptions 1,120,997 17,883,389 1,030,515 15,369,640 Distributions reinvested 180,816 2,892,160 218,543 3,254,741 Redemptions (2,263,695) (36,112,600) (2,605,902) (39,012,056) ------------ ------------ ------------ ------------ Net decrease (961,882) (15,337,051) (1,356,844) (20,387,675) CLASS Z Subscriptions 540,254 8,601,545 885,247 13,242,156 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 176,136 2,815,074 240,806 3,584,314 Redemptions (3,284,919) (52,307,007) (3,966,326) (59,529,409) ------------ ------------ ------------ ------------ Net increase (decrease) (2,568,529) (40,890,388) (2,840,273) (42,702,939) COLUMBIA LARGE CAP GROWTH FUND ------------------------------------------------------------ YEAR ENDED YEAR ENDED SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) - ----------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 162,826 3,286,461 185,141 3,529,297 Proceeds received in connection with merger 237,271 4,724,720 -- -- Distributions reinvested 228 4,637 -- -- Redemptions (114,957) (2,328,346) (84,167) (1,611,464) ------------ ------------ ------------ ------------ Net increase 285,368 5,687,472 100,974 1,917,833 CLASS B Subscriptions 154,916 2,984,821 173,093 3,184,607 Proceeds received in connection with merger 117,001 2,223,353 -- -- Distributions reinvested -- -- -- -- Redemptions (63,160) (1,222,902) (52,933) (968,494) ------------ ------------ ------------ ------------ Net increase 208,757 3,985,272 120,160 2,216,113 CLASS C Subscriptions 24,777 480,986 33,259 603,292 Proceeds received in connection with merger 16,591 315,731 -- -- Distributions reinvested -- -- -- -- Redemptions (14,610) (288,945) (20,280) (369,823) ------------ ------------ ------------ ------------ Net increase 26,758 507,772 12,979 233,469 CLASS G Subscriptions 69,440 1,287,163 100,874 1,790,776 Proceeds received in connection with merger 701,867 12,922,807 -- -- Distributions reinvested -- -- -- -- Redemptions (1,084,192) (20,252,191) (748,063) (13,235,279) ------------ ------------ ------------ ------------ Net decrease (312,885) (6,042,221) (647,189) (11,444,503) CLASS T Subscriptions 750,265 15,040,440 593,336 11,219,286 Distributions reinvested 10,490 212,533 -- -- Redemptions (2,236,284) (44,688,960) (2,197,901) (41,619,482) ------------ ------------ ------------ ------------ Net decrease (1,475,529) (29,435,987) (1,604,565) (30,400,196) CLASS Z Subscriptions 4,869,526 99,446,257 5,402,218 104,135,991 Proceeds received in connection with merger 33,471,430 677,813,755 -- -- Distributions reinvested 26,715 553,278 9,645 181,333 Redemptions (14,201,392) (292,003,333) (9,359,449) (180,820,559) ------------ ------------ ------------ ------------ Net increase (decrease) 24,166,279 485,809,957 (3,947,586) (76,503,235) See Accompanying Notes to Financial Statements. 72-73 Spread STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY _________________________________________________________ COLUMBIA EQUITY FUNDS COLUMBIA DISCIPLINED VALUE FUND ------------------------------------------------------------ YEAR ENDED YEAR ENDED SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) - ----------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 126,900 1,751,310 136,953 1,686,613 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 2,723 37,625 2,599 32,080 Redemptions (34,738) (479,047) (23,995) (300,932) ------------ ------------ ------------ ------------ Net increase (decrease) 94,885 1,309,888 115,557 1,417,761 CLASS B Subscriptions 131,730 1,715,092 179,802 2,124,921 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 927 12,088 761 9,119 Redemptions (42,877) (565,044) (17,928) (213,057) ------------ ------------ ------------ ------------ Net increase 89,780 1,162,136 162,635 1,920,983 CLASS C Subscriptions 22,152 294,858 40,005 458,582 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 76 993 72 858 Redemptions (13,726) (184,724) (18,365) (206,697) ------------ ------------ ------------ ------------ Net increase 8,502 111,127 21,712 252,743 CLASS G Subscriptions 9,707 126,540 17,943 210,409 Distributions reinvested 2,555 33,269 5,027 60,020 Redemptions (319,087) (4,205,829) (461,561) (5,407,849) ------------ ------------ ------------ ------------ Net decrease (306,825) (4,046,020) (438,591) (5,137,420) CLASS T Subscriptions 353,301 4,868,563 474,406 5,826,432 Distributions reinvested 107,641 1,481,494 176,846 2,178,280 Redemptions (1,695,699) (23,345,089) (1,818,952) (22,446,540) ------------ ------------ ------------ ------------ Net decrease (1,234,757) (16,995,032) (1,167,700) (14,441,828) CLASS Z Subscriptions 2,521,590 34,976,439 5,864,057 73,282,626 Proceeds received in connection with merger -- -- -- -- Distributions reinvested 91,647 1,285,642 165,325 2,065,049 Redemptions (5,462,971) (76,623,907) (4,080,140) (50,781,850) ------------ ------------ ------------ ------------ Net increase (decrease) (2,849,734) (40,361,826) 1,949,242 24,565,825 COLUMBIA COMMON STOCK FUND ------------------------------------------------------------ YEAR ENDED YEAR ENDED SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) - ----------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 108,558 1,388,221 223,985 2,723,272 Proceeds received in connection with merger 62,244 778,064 -- -- Distributions reinvested 23,431 291,720 298 3,571 Redemptions (204,142) (2,570,318) (124,083) (1,510,141) ------------ ------------ ------------ ------------ Net increase (decrease) (9,909) (112,313) 100,200 1,216,702 CLASS B Subscriptions 115,833 1,427,209 191,409 2,257,015 Proceeds received in connection with merger 170,610 2,067,274 -- -- Distributions reinvested 9,018 109,121 -- -- Redemptions (83,734) (1,032,390) (57,832) (683,878) ------------ ------------ ------------ ------------ Net increase 211,727 2,571,214 133,577 1,573,137 CLASS C Subscriptions 12,851 159,428 44,391 521,233 Proceeds received in connection with merger 13,831 167,732 -- -- Distributions reinvested 1,020 12,348 -- -- Redemptions (11,138) (136,885) (35,218) (416,189) ------------ ------------ ------------ ------------ Net increase 16,564 202,623 9,173 105,044 CLASS G Subscriptions 18,719 225,260 30,324 358,212 Distributions reinvested 42,570 509,989 -- -- Redemptions (771,770) (9,379,766) (1,265,623) (14,874,554) ------------ ------------ ------------ ------------ Net decrease (710,481) (8,644,517) (1,235,299) (14,516,342) CLASS T Subscriptions 656,808 8,281,746 1,137,554 13,775,855 Distributions reinvested 454,301 5,628,793 4,431 52,863 Redemptions (2,770,705) (34,867,921) (2,774,051) (33,648,875) ------------ ------------ ------------ ------------ Net decrease (1,659,596) (20,957,382) (1,632,066) (19,820,157) CLASS Z Subscriptions 1,462,638 18,470,958 2,978,947 36,327,362 Proceeds received in connection with merger 16,749,769 210,158,531 -- -- Distributions reinvested 276,781 3,459,761 7,263 87,150 Redemptions (10,293,029) (131,161,364) (5,362,164) (65,586,443) ------------ ------------ ------------ ------------ Net increase (decrease) 8,196,159 100,927,886 (2,375,954) (29,171,931) See Accompanying Notes to Financial Statements. 74-75 Spread STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY _________________________________________________________ COLUMBIA EQUITY FUNDS COLUMBIA SMALL CAP CORE FUND ------------------------------------------------------------ YEAR ENDED YEAR ENDED SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) - ----------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 1,740,783 32,340,329 9,975,214 170,177,084 Distributions reinvested 681,437 12,306,744 166,652 2,743,101 Redemptions (3,533,610) (64,908,038) (1,839,971) (31,780,743) ------------ ------------ ------------ ------------ Net increase (decrease) (1,111,390) (20,260,965) 8,301,895 141,139,442 CLASS B Subscriptions 70,629 1,241,220 1,835,057 30,371,535 Distributions reinvested 118,979 2,074,993 22,302 355,492 Redemptions (280,456) (4,959,941) (233,273) (3,860,617) ------------ ------------ ------------ ------------ Net increase (decrease) (90,848) (1,643,728) 1,624,086 26,866,410 CLASS C Subscriptions 149,269 2,631,776 3,168,245 52,152,651 Distributions reinvested 179,879 3,140,708 37,782 603,008 Redemptions (1,131,002) (20,065,584) (237,693) (3,942,134) ------------ ------------ ------------ ------------ Net increase (decrease) (801,854) (14,293,100) 2,968,334 48,813,525 CLASS G Subscriptions 8,559 150,672 15,992 262,179 Distributions reinvested 34,295 592,962 14,620 230,995 Redemptions (209,511) (3,673,042) (84,274) (1,387,033) ------------ ------------ ------------ ------------ Net decrease (166,657) (2,929,408) (53,662) (893,859) CLASS T Subscriptions 595,469 10,820,249 1,032,837 17,432,562 Distributions reinvested 439,303 7,867,925 221,143 3,611,276 Redemptions (1,636,535) (29,690,023) (1,687,801) (28,719,170) ------------ ------------ ------------ ------------ Net decrease (601,763) (11,001,849) (433,821) (7,675,332) CLASS Z Subscriptions 8,733,661 161,432,242 23,044,663 396,797,303 Distributions reinvested 2,299,186 41,891,167 1,091,817 18,124,145 Redemptions (18,999,553) (351,055,712) (13,111,013) (226,795,284) ------------ ------------ ------------ ------------ Net increase (decrease) (7,966,706) (147,732,303) 11,025,467 188,126,164 COLUMBIA SMALL COMPANY EQUITY FUND ------------------------------------------------------------ YEAR ENDED YEAR ENDED SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 ---------------------------- ---------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) - ----------------------------------------------------------------------------------------------------------------- CLASS A Subscriptions 102,573 1,750,364 296,504 4,933,872 Distributions reinvested -- -- -- -- Redemptions (98,902) (1,685,570) (36,147) (662,030) ------------ ------------ ------------ ------------ Net increase (decrease) 3,671 64,794 260,357 4,271,842 CLASS B Subscriptions 50,158 804,186 131,387 2,053,177 Distributions reinvested -- -- -- -- Redemptions (30,235) (488,378) (24,027) (359,925) ------------ ------------ ------------ ------------ Net increase (decrease) 19,923 315,808 107,360 1,693,252 CLASS C Subscriptions 20,773 335,210 69,159 1,059,859 Distributions reinvested -- -- -- -- Redemptions (22,904) (369,462) (7,231) (109,723) ------------ ------------ ------------ ------------ Net increase (decrease) (2,131) (34,252) 61,928 950,136 CLASS G Subscriptions 4,124 65,348 7,992 121,923 Distributions reinvested -- -- -- -- Redemptions (92,469) (1,454,609) (203,048) (3,089,126) ------------ ------------ ------------ ------------ Net decrease (88,345) (1,389,261) (195,056) (2,967,203) CLASS T Subscriptions 105,752 1,793,306 219,277 3,570,127 Distributions reinvested -- -- -- -- Redemptions (678,837) (11,638,661) (666,822) (10,915,948) ------------ ------------ ------------ ------------ Net decrease (573,085) (9,845,355) (447,545) (7,345,821) CLASS Z Subscriptions 1,982,620 36,092,250 4,555,081 78,677,281 Distributions reinvested -- -- -- -- Redemptions (11,850,416) (210,187,196) (6,507,999) (112,298,953) ------------ ------------ ------------ ------------ Net increase (decrease) (9,867,796) (174,094,946) (1,952,918) (33,621,672) See Accompanying Notes to Financial Statements. 76-77 Spread NOTES TO FINANCIAL STATEMENTS __________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS NOTE 1. ORGANIZATION The Columbia Fund Trust XI (the "Trust") is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Information presented in these financial statements pertains to the following diversified portfolios (individually referred to as a "Fund", collectively referred to as the "Funds"): Columbia Asset Allocation Fund Columbia Large Cap Growth Fund Columbia Disciplined Value Fund Columbia Common Stock Fund Columbia Small Cap Core Fund Columbia Small Company Equity Fund Effective September 23, 2005, the Columbia Large Cap Core Fund changed its name to the Columbia Common Stock Fund. Effective October 7, 2005, the Columbia Small Cap Fund changed its name to the Columbia Small Cap Core Fund. INVESTMENT GOALS The Columbia Asset Allocation Fund seeks a high total return by providing both a current level of income greater than that provided by popular stock market averages, as well as long-term growth in the value of the Fund's assets. Columbia Large Cap Growth Fund and Columbia Small Cap Core Fund seek long term capital appreciation. Columbia Disciplined Value Fund seeks long term capital appreciation, with income as a secondary goal. Columbia Common Stock Fund seeks to provide a relatively high total return through long-term capital appreciation and current income. Columbia Small Company Equity Fund seeks capital appreciation. FUND SHARES The Funds may issue an unlimited number of shares. Each Fund offers six classes of shares: Class A, Class B, Class C, Class G, Class T and Class Z. Each share class has its own sales charge and expense structure. The Columbia Small Cap Core Fund is closed to new investors and new accounts. Class A and Class T shares are subject to a front-end sales charge of based on the amount of initial investment. Class A and Class T shares purchased without an initial sales charge in accounts aggregating up to $50 million at the time of purchase are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within twelve months of the time of purchase. Class B and Class G shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class G shares will convert to Class T shares in eight years after purchase. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in each Fund's prospectus. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. SECURITY VALUATION Equity securities and securities of certain investment companies are valued at the last sale price on the principal exchange on which they trade, except for securities traded on the NASDAQ, which are valued at the NASDAQ official close price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Debt securities generally are valued by pricing services approved by the Funds' Board of Trustees, based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. Debt securities for which quotations are readily available are valued at an over-the-counter or exchange bid quotation. Certain debt securities, which tend to be more thinly traded and of lesser quality, are priced based on fundamental analysis of the financial condition of the issuer and the estimated value of any collateral. Valuations developed through pricing techniques may vary from the actual amounts realized upon sale of the securities, and the potential variation may be greater for those securities valued using fundamental analysis. 78 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value. Foreign securities are generally valued at the last sale price on the foreign exchange or market on which they trade. If any foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sale price of the local shares in the principal market in which such securities are normally traded. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Funds' shares are determined as of such times. Foreign currency exchange rates are generally determined at 2:00 p.m. Eastern (U.S.) time. Events affecting the values of such foreign securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE, which would not be reflected in the computation of the Funds' net asset value. If events materially affecting the values of such foreign securities occur and it is determined that market quotations are not reliable, then these foreign securities will be valued at their fair value using procedures approved by the Board of Trustees. The Funds may use a systematic fair valuation model provided by an independent third party to value securities principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. If a security is valued at a "fair value", such value is likely to be different from the last quoted market price for the security. Investments for which market quotations are not readily available, or that have 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 Each Fund may engage in repurchase agreement transactions with institutions that the Funds' investment advisor has determined are creditworthy. Each Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon each Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Funds seek to assert their rights. MORTGAGE DOLLAR ROLL TRANSACTIONS Certain Funds may enter into mortgage dollar roll transactions. A mortgage dollar roll transaction involves a sale by a Fund of investments from its portfolio with an agreement by the Fund to repurchase similar, but not identical, securities at an agreed upon price and date. During the period between the sale and repurchase, the Fund will not be entitled to accrue interest and receive principal payment on the securities sold. Mortgage dollar roll transactions involve the risk that the market value of the securities sold by the Fund may decline below the repurchase price of those securities. In the event the buyer of the securities under a mortgage dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of proceeds of the transaction may be restricted pending a determination by or with respect to the other party. The Funds identify U.S. Government securities or other liquid high grade debt obligations in an amount equal to the mortgage dollar roll transactions. DELAYED DELIVERY SECURITIES Certain Funds may trade securities on other than normal settlement terms, including securities purchased or sold on a "when-issued" basis. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. The Fund identifies cash or liquid portfolio securities as segregated with the custodian in an amount equal to the delayed delivery commitment. FUTURES CONTRACTS Certain Funds may invest in municipal, index and U.S. Treasury futures contracts. The Funds will invest in these instruments to hedge against the effects of changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions, for duration management, or when the transactions are economically appropriate to the 79 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS reduction of risk inherent in the management of the Funds and not for trading purposes. The use of futures contracts involves certain risks, which include: (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out positions due to differing trading hours, or the temporary absence of a liquid market, for either the instrument or the underlying securities, or (3) an inaccurate prediction by Columbia Management Advisors, Inc. of the future direction of interest rates. Any of these risks may involve amounts exceeding the variation margin recorded in the Funds' Statement of Assets and Liabilities at any given time. Upon entering into a futures contract, each Fund deposits cash or securities with the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Funds equal to the daily change in the contract value and are recorded as variation margin receivable or payable and offset in unrealized gains or losses. Each Fund also identifies portfolio securities as segregated with the custodian in a separate account in an amount equal to the futures contract. The Funds recognize a realized gain or loss when the contract is closed or expires. INCOME RECOGNITION Interest income is recorded on the accrual basis. Premium and discount are amortized and accreted, respectively, on all debt securities. Corporate actions and dividend income are recorded on the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Funds become aware of such, net of non-reclaimable tax withholdings. Awards from class action litigation are recorded as a reduction of cost if the Funds still own the applicable securities on the payment date. If the Funds no longer own the applicable securities, the proceeds are recorded as realized gains. The Funds estimate components of distributions from real estate investment trusts (REITs). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. If the Funds no longer own the applicable securities, any distributions received in excess of income are recorded as realized gains. FOREIGN CURRENCY TRANSACTIONS The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. For financial statement purposes, the Funds do not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. DETERMINATION OF CLASS NET ASSET VALUES All income, expenses (other than class-specific expenses, as shown on the Statements of Operations) and realized and unrealized gains (losses), are allocated to each class of a Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FEDERAL INCOME TAX STATUS Each Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, each Fund intends to distribute in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, such that each Fund should not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. FOREIGN CAPITAL GAINS TAXES Realized gains in certain countries may be subject to foreign taxes at the fund level, at rates ranging from approximately 10% to 15%. The Funds accrue for such foreign taxes on net realized and unrealized gains at the appropriate rate for each jurisdiction. DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income are declared and paid quarterly for Columbia Asset Allocation Fund, Columbia Disciplined Value Fund and Columbia Common Stock Fund. Dividends from net investment income are declared and paid annually for Columbia Large Cap Growth Fund, Columbia Small Cap Core Fund and Columbia Small Company Equity Fund. Net realized capital gains, if any, are distributed at least annually for all Funds. 80 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS NOTE 3. FEDERAL TAX INFORMATION The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to a Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended September 30, 2005, permanent book and tax basis differences resulting primarily from differing treatments for amortization/accretion adjustments, foreign currency transactions, redemption based payments treated as dividends received deduction, foreign capital gains tax, paydown reclassifications, net operating loss reclassifications, REIT adjustments, market discount reclassifications, permanently lost capital loss carryforward and distribution reclassifications were identified and reclassified among the components of the Funds' net assets as follows: UNDISTRIBUTED (OVERDISTRIBUTED) OR (ACCUMULATED) ACCUMULATED NET INVESTMENT NET REALIZED PAID-IN INCOME (LOSS) GAIN (LOSS) CAPITAL ----------------------------------------------------- Columbia Asset Allocation Fund ..... $ 415,743 $ (2,500,949) $ 2,085,206 Columbia Large Cap Growth Fund ..... (70,150) (240,048,164) 240,118,314 Columbia Disciplined Value Fund .... (209,486) 209,486 -- Columbia Common Stock Fund ......... (46,931) (38,276,442) 38,323,373 Columbia Small Cap Core Fund ....... 3,090,632 (14,201,369) 11,110,737 Columbia Small Company Equity Fund . 2,886,522 -- (2,886,522) Net investment income and net realized gains (losses), as disclosed on the Statements of Operations, and net assets were not affected by these reclassifications. The tax character of distributions paid during the years ended September 30, 2005 and September 30, 2004 was as follows: SEPTEMBER 30, 2005 ORDINARY LONG-TERM INCOME* CAPITAL GAINS ---------------------------- Columbia Asset Allocation Fund ................ $ 6,823,700 $ -- Columbia Large Cap Growth Fund ................ 1,323,138 -- Columbia Disciplined Value Fund ............... 5,626,746 -- Columbia Common Stock Fund .................... 2,102,205 10,843,055 Columbia Small Cap Core Fund .................. 26,654,040 69,847,697 SEPTEMBER 30, 2004 ORDINARY LONG-TERM INCOME* CAPITAL GAINS ---------------------------- Columbia Asset Allocation Fund ................ $ 8,343,267 $ -- Columbia Large Cap Growth Fund ................ 344,225 -- Columbia Disciplined Value Fund ............... 8,287,914 -- Columbia Common Stock Fund .................... 347,473 18,017 Columbia Small Cap Core Fund .................. 9,268,588 25,211,495 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. 81 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS As of September 30, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED NET ORDINARY LONG-TERM UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ------------------------------------------- Columbia Asset Allocation Fund ... $ 1,389,685 $ 25,645,823 $ 36,402,552 Columbia Large Cap Growth Fund ... 4,410,515 -- 194,101,105 Columbia Disciplined Value Fund .. 7,022,907 20,745,146 46,800,312 Columbia Common Stock Fund ....... 14,174,311 10,012,054 77,105,363 Columbia Small Cap Core Fund ..... 16,177,402 88,268,449 297,493,855 Columbia Small Company Equity Fund -- 15,404,488 24,905,958 * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales. Unrealized appreciation and depreciation at September 30, 2005, based on cost of investments for federal income tax purposes, excluding any unrealized appreciation and depreciation from changes in the value of other assets and liabilities resulting from changes in exchange rates, was: NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION DEPRECIATION APPRECIATION ------------------------------------------- Columbia Asset Allocation Fund ... $ 42,142,393 $ (5,739,841) $ 36,402,552 Columbia Large Cap Growth Fund ... 217,320,881 (23,219,776) 194,101,105 Columbia Disciplined Value Fund .. 59,948,914 (13,148,602) 46,800,312 Columbia Common Stock Fund ....... 85,962,050 (8,856,687) 77,105,363 Columbia Small Cap Core Fund ..... 410,635,326 (113,141,471) 297,493,855 Columbia Small Company Equity Fund 31,676,305 (6,770,347) 24,905,958 The following capital loss carryforwards may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: COLUMBIA COLUMBIA LARGE CAP COMMON GROWTH STOCK YEAR OF EXPIRATION FUND FUND - -------------------------------------------------------------------------------- 2006 ............................................. $ 5,036,657 $ -- 2007 ............................................. 5,036,657 -- 2009 ............................................. 137,035,449 11,843,809 2010 ............................................. 53,908,485 18,452,682 2011 ............................................. 22,217,091 -- ------------- ------------- Total ............................................ $ 223,234,339 $ 30,296,491 ------------- ------------- The following capital loss carryforwards were utilized during the year ended September 30, 2005: Columbia Asset Allocation Fund................................... $ 7,043,928 Columbia Large Cap Growth Fund................................... 139,819,082 Columbia Disciplined Value Fund.................................. 10,720,416 Columbia Common Stock Fund....................................... 7,834,662 Columbia Small Company Equity Fund............................... 36,913,639 Of the capital loss carryforwards attributable to Columbia Large Cap Growth Fund, $176,932,413 ($5,036,657 expiring September 30, 2006, $5,036,657 expiring September 30, 2007, $137,035,449 expiring September 30, 2009 and $29,823,650 expiring September 30, 2010) remain from the Columbia Large Cap Growth Fund merger with the Columbia Growth Fund (See Note 10). Total capital loss carryforwards acquired in the current year from the Columbia Growth Fund were $252,093,928 of which $18,845,258 were permanently lost and $56,316,257 were utilized to offset current year gains. The availability of a portion of the remaining capital loss carryforwards from the Columbia Large Cap Growth Fund may be limited in a given year. 82 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS All of the Columbia Common Stock Fund's capital loss carryforwards were acquired in the merger of Columbia Large Cap Core Fund with Columbia Common Stock Fund (the "target fund") (See Note 10). Total capital loss carryforwards acquired in the current year from the target fund were $38,131,153 of which $7,834,662 were utilized to offset current year gains. The availability of a portion of the remaining capital loss carryforwards may be limited in a given year. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISORY FEE Columbia Management Advisors, LLC ("Columbia"), an indirect wholly owned subsidiary of Bank of America Corporation ("BOA"), is the investment advisor to the Funds. On September 30, 2005, Columbia Management Advisors, Inc. changed its name to Columbia Management Advisors, LLC. Columbia receives a monthly investment advisory fee based on each Fund's average daily net assets at the following annual rates: $200 MILLION $500 MILLION $1 BILLION $1.5 BILLION $2 BILLION $3 BILLION FIRST TO $500 TO TO TO TO TO OVER $200 MILLION MILLION $1 BILLION $1.5 BILLION $2 BILLION $3 BILLION $6 BILLION $6 BILLION ------------ ------------ ------------ ------------ ------------ ---------- ---------- ---------- Columbia Asset Allocation Fund....... 0.650% 0.650% 0.600% 0.550% 0.500% 0.500% 0.480% 0.460% Columbia Large Cap Growth Fund........... 0.700% 0.575% 0.450% 0.450% 0.450% 0.450% 0.450% 0.450% Columbia Disciplined Value Fund............ 0.700% 0.700% 0.650% 0.600% 0.550% 0.550% 0.530% 0.510% Columbia Common Stock Fund............ 0.700% 0.700% 0.650% 0.600% 0.550% 0.550% 0.530% 0.510% Columbia Small Cap Core Fund............. 0.750% 0.750% 0.700% 0.650% 0.600% 0.550% 0.550% 0.550% Columbia Small Company Equity Fund........... 0.750% 0.750% 0.700% 0.650% 0.650% 0.650% 0.650% 0.650% For the period November 1, 2004 through March 18, 2005, Columbia received a monthly investment advisory fee from the Columbia Large Cap Growth Fund based on the Fund's average daily net assets of at the following annual rates: AVERAGE DAILY NET ASSETS ANNUAL FEE RATE ------------------------------------------------------ First $500 million 0.700% $500 million to $1 billion 0.650% $1 billion to $1.5 billion 0.600% $1.5 billion to $3 billion 0.550% $3 billion to $6 billion 0.530% Over $6 billion 0.510% Prior to November 1, 2004, Columbia received a monthly investment advisory fee based on each Fund's average daily net assets at the following annual rates: $500 MILLION $1 BILLION $1.5 BILLION FIRST TO TO TO OVER $500 MILLION $1 BILLION $1.5 BILLION $2 BILLION $2 BILLION ------------ ------------ ------------ ------------ ----------- Columbia Asset Allocation Fund........... 0.750% 0.700% 0.650% 0.600% 0.550% Columbia Large Cap Growth Fund........... 0.750% 0.700% 0.650% 0.600% 0.550% Columbia Disciplined Value Fund.......... 0.750% 0.700% 0.650% 0.600% 0.550% Columbia Common Stock Fund............... 0.750% 0.700% 0.650% 0.600% 0.550% Columbia Small Cap Core Fund............. 0.750% 0.700% 0.650% 0.600% 0.550% Columbia Small Company Equity Fund....... 0.750% 0.700% 0.650% 0.650% 0.650% 83 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS For the year ended September 30, 2005, the effective investment advisory fee rates for the Funds were as follows: Columbia Asset Allocation Fund....... 0.66% Columbia Large Cap Growth Fund....... 0.57% Columbia Disciplined Value Fund...... 0.70% Columbia Common Stock Fund........... 0.70% Columbia Small Cap Core Fund......... 0.69% Columbia Small Company Equity Fund... 0.75% ADMINISTRATION FEE Columbia provides administrative and other services to each Fund, except Columbia Large Cap Growth Fund, for a monthly administration fee at the annual rate of 0.067% of each Fund's average daily net assets. Columbia provides administrative and other services to Columbia Large Cap Growth Fund for a monthly administration fee at the annual rate of 0.05% of the Fund's average daily net assets. Prior to March 19, 2005, Columbia received a monthly administration fee at the annual rate of 0.067% of the Fund's average daily net assets. For the year ended September 30, 2005, the Fund's effective administration fee rate was 0.056%. PRICING AND BOOKKEEPING FEES Columbia is responsible for providing pricing and bookkeeping services to the Funds under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). As a result, Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Funds, Columbia receives an annual fee based on the average daily net assets of each Fund at the following annual rates: ANNUAL FEE AVERAGE DAILY NET ASSETS RATE ------------------------ -------- Under $50 million $ 25,000 Over $50 million but less than $200 million $ 35,000 Over $200 million but less than $500 million $ 50,000 Over $500 million but less than $1 billion $ 85,000 Over $1 billion $125,000 An additional annual fee of $10,000 is charged to each Fund due to its multiple class structure. The Funds also pay additional fees for pricing services based on the number of securities held by each Fund. For the year ended September 30, 2005, the effective pricing and bookkeeping fee rates for the Funds, inclusive of out-of-pocket expenses, were as follows: Columbia Asset Allocation Fund................... 0.040% Columbia Large Cap Growth Fund................... 0.009% Columbia Disciplined Value Fund.................. 0.013% Columbia Common Stock Fund....................... 0.016% Columbia Small Cap Core Fund..................... 0.009% Columbia Small Company Equity Fund............... 0.018% TRANSFER AGENT FEE Columbia Management Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services to the Fund and has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. On August 22, 2005, Columbia Funds Services, Inc. changed its name to Columbia Management Services, Inc. For its services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $28.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. For the period from October 1, 2004 through September 30, 2005, the Transfer Agent has voluntarily agreed to waive a portion of its transfer agent fee for the Columbia Common Stock Fund and the Columbia Small Company Equity Fund. This arrangement will be discontinued by the Transfer Agent effective November 1, 2005. In addition, for the period from September 1, 2005 through October 31, 2005, the Transfer Agent has voluntarily agreed to waive a portion of its fees for all Funds to reflect reduced contractual fees that will be charged to the Funds effective November 1, 2005. For the year ended September 30, 2005, the Transfer Agent waived fees as follows: Columbia Asset Allocation Fund................... $ 21,634 Columbia Large Cap Growth Fund................... $ 57,245 Columbia Disciplined Value Fund.................. $ 14,456 Columbia Common Stock Fund....................... $ 40,455 Columbia Small Cap Core Fund..................... $ 9,893 Columbia Small Company Equity Fund............... $ 45,471 For the year ended September 30, 2005, the effective transfer agent fee rates for the Funds, inclusive of out-of-pocket expenses and net of fee waivers, were as follows: Columbia Asset Allocation Fund................... 0.21% Columbia Large Cap Growth Fund................... 0.18% Columbia Disciplined Value Fund.................. 0.15% Columbia Common Stock Fund....................... 0.21% Columbia Small Cap Core Fund..................... 0.08% Columbia Small Company Equity Fund............... 0.18% 84 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES Columbia Management Distributors, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Funds. On August 22, 2005, Columbia Funds Distributor, Inc. changed its name to Columbia Management Distributors, Inc. For the year ended September 30, 2005, the Distributor has retained net underwriting discounts and net CDSC fees as follows: FRONT-END SALES CHARGE CDSC ---------------------- ---------------------------------------------------- CLASS A CLASS T CLASS A CLASS B CLASS C CLASS G CLASS T --------- ---------- -------- -------- -------- -------- -------- Columbia Asset Allocation Fund ... $ 6,025 $ 4,155 $ -- $ 11,396 $ 66 $ 64,620 $ -- Columbia Large Cap Growth Fund ... 7,452 11,354 -- 17,927 1,121 115,202 -- Columbia Disciplined Value Fund .. 5,034 4,243 -- 4,732 18 14,177 -- Columbia Common Stock Fund ....... 3,702 5,375 3,331 13,544 205 36,245 -- Columbia Small Cap Core Fund ..... 10,108 5.992 1,266 82,915 7,386 29,707 1 Columbia Small Company Equity Fund 4,209 2,233 1,302 6,730 453 8,563 -- The Funds have adopted a 12b-1 plan (the "Plan") which allows the payment of a monthly service and distribution fee to the Distributor based on the average daily net assets of each Fund at the following annual rates: DISTRIBUTION FEE ------------------------------------- CLASS A CLASS B CLASS C CLASS G ------- ------- ------- ------- Columbia Asset Allocation Fund .......... 0.10% 0.75% 0.75% 0.65% Columbia Large Cap Growth Fund .......... 0.10% 0.75% 0.75% 0.65% Columbia Disciplined Value Fund ......... 0.10% 0.75% 0.75% 0.65% Columbia Common Stock Fund .............. 0.10% 0.75% 0.75% 0.65% Columbia Small Cap Core Fund ............ 0.10% 0.75% 0.75% 0.65% Columbia Small Company Equity Fund....... 0.10% 0.75% 0.75% 0.65% SERVICE FEE ------------------------------------- CLASS A CLASS B CLASS C CLASS G ------- ------- ------- ------- Columbia Asset Allocation Fund .......... 0.25% 0.25% 0.25% 0.50% Columbia Large Cap Growth Fund .......... 0.25% 0.25% 0.25% 0.50% Columbia Disciplined Value Fund ......... 0.25% 0.25% 0.25% 0.50% Columbia Common Stock Fund .............. 0.25% 0.25% 0.25% 0.50% Columbia Small Cap Core Fund ............ 0.25% 0.25% 0.25% 0.50% Columbia Small Company Equity Fund ...... 0.25% 0.25% 0.25% 0.50% The Funds do not intend to pay total distribution and service fees in excess of 0.25% and 0.95% annually for Class A and Class G shares of the Funds, respectively. Of the 0.50% service fee for Class G shares, 0.25% relates to shareholder liaison fees and 0.25% relates to administration support fees. The CDSC and the distribution 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. SHAREHOLDER SERVICES FEES The Funds have adopted shareholder services plans that permit them to pay for certain services provided to Class T and Class Z shareholders by their financial advisors. Currently, the service plan has not been implemented with respect to the Funds' Class Z shares. The annual service fee may equal up to 0.50% for Class T shares. The Funds do not intend to pay more than 0.30% annually for Class T shareholder services fees. EXPENSE LIMITS AND FEE WAIVERS Effective March 19, 2005, Columbia has contractually agreed to waive fees and reimburse certain expenses to the extent that total expenses (exclusive of distribution and service fees, brokerage commissions, interest, taxes and extraordinary expenses, if any) exceed 0.84% and 0.89% annually of the average daily net assets for the Columbia Large Cap Growth Fund and the Columbia Common Stock Fund, respectively. 85 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS CUSTODY CREDITS Each 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 Statements of Operations. The Funds could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if they had not entered into such an agreement. FEES PAID TO OFFICERS AND TRUSTEES With the exception of one officer, all officers of the Funds are employees of Columbia or its affiliates and receive no compensation from the Funds. The Board of Trustees appointed a Chief Compliance Officer to the Funds in accordance with federal securities regulations. Each Fund, along with other affiliated funds, pays its pro-rata share of the expenses associated with the Chief Compliance Officer position. Each Fund's fee will not exceed $15,000 per year. The Funds' Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Funds' assets. OTHER Columbia provides certain services to the Funds related to Sarbanes-Oxley compliance. These amounts are included in "Other expenses" on the Statements of Operations. For the year ended September 30, 2005, the Funds paid fees to Columbia for such services as follows: Columbia Asset Allocation Fund................ $ 1,928 Columbia Large Cap Growth Fund................ 2,461 Columbia Disciplined Value Fund............... 1,950 Columbia Common Stock Fund.................... 1,887 Columbia Small Cap Core Fund.................. 3,202 Columbia Small Company Equity Fund............ 1,914 NOTE 5. PORTFOLIO INFORMATION For the year ended September 30, 2005, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were as follows: OTHER INVESTMENT SECURITIES -------------------------------- PURCHASES SALES -------------------------------- Columbia Asset Allocation Fund......... $ 277,477,845 $ 359,948,427 Columbia Large Cap Growth Fund......... 1,410,541,698 1,631,379,141 Columbia Disciplined Value Fund........ 407,735,267 465,178,227 Columbia Common Stock Fund............. 481,539,671 634,052,038 Columbia Small Cap Core Fund........... 237,161,800 467,858,669 Columbia Small Company Equity Fund..... 344,307,585 531,434,666 U.S. GOVERNMENT SECURITIES -------------------------------- PURCHASES SALES -------------------------------- Columbia Asset Allocation Fund......... $ 62,042,077 $ 62,670,654 86 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS NOTE 6. SHARES OF BENEFICIAL INTEREST As of September 30, 2005, the following Funds had shareholders whose shares were beneficially owned by participant accounts over which Bank of America and/or its affiliates had either sole or joint investment discretion. Subscription and redemption activity of these accounts may have a significant effect on the operations of the Funds. The number of such accounts and the percentage of shares of beneficial interest outstanding held therein are as follows: NUMBER % OF SHARES OF OUTSTANDING SHAREHOLDERS HELD ----------------------------------------------------------------- Columbia Asset Allocation Fund................... 1 5.6% Columbia Large Cap Growth Fund....................... 2 39.8 Columbia Disciplined Value Fund........................ 1 53.0 Columbia Common Stock Fund........................ 1 23.6 Columbia Small Cap Core Fund......................... 1 49.4 Columbia Small Company Equity Fund....................... 1 51.1 NOTE 7. LINE OF CREDIT The Funds 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 Statements of Operations. For the year ended September 30, 2005, the Funds did not borrow under this arrangement. NOTE 8. OTHER RELATED PARTY TRANSACTIONS During the year ended September 30, 2005, the Columbia Asset Allocation Fund, Columbia Small Cap Core Fund and Columbia Small Company Equity Fund used Bank of America Securities, a wholly-owned subsidiary of BOA, as a broker. Total commissions paid to Bank of America Securities during the period were $55, $13,690 and $12,685, respectively. NOTE 9. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES FOREIGN SECURITIES There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. In addition, the liquidity of foreign securities may be more limited than that of domestic securities. Investments in emerging market countries are subject to additional risk. The risk of foreign investments is typically increased in less developed countries. These countries are also more likely to experience high levels of inflation, deflation or currency devaluation which could hurt their economies and securities markets. HIGH-YIELD SECURITIES Investing in high-yield securities may involve greater credit risk and considerations not typically associated with investing in U.S. government bonds and other higher quality fixed income securities. These securities are non-investment grade securities, often referred to as "junk" bonds. Economic downturns may disrupt the high yield market and impair the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high-yield securities may be less liquid to the extent that there is no established secondary market. INDUSTRY FOCUS The Funds may focus their investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS 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 Securities and Exchange Commission ("SEC") (the "SEC Order"). The SEC Order and the NYAG Settlement are referred to collectively as the 87 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS "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 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 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 funds 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 Funds' independent trustees and not unacceptable to the staff of the SEC. At this time, the distribution plan is still under development. As such, any gain to the Funds or its shareholders cannot currently be determined. 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 is 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, the Trustees of the Columbia Funds, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities. More than 300 cases including those filed against entities unaffiliated with the funds, their Boards, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities have been transferred to the Federal District Court in Maryland and consolidated in a multi-district proceeding (the "MDL"). The derivative cases purportedly brought on behalf of the Columbia Funds in the MDL have been consolidated under the lead case. The fund derivative plaintiffs allege that the funds were harmed by market timing and late trading activity and seek, among other things, the removal of the trustees of the Columbia Funds, removal of the Columbia Group, disgorgement of all management fees and monetary damages. On March 21, 2005 purported class action plaintiffs filed suit in Massachusetts state court alleging that the conduct, including market timing, entitles Class B shareholders in certain Columbia funds to an exemption from contingent deferred sales charges upon early redemption ("the CDSC Lawsuit"). The CDSC Lawsuit has been removed to federal court in Massachusetts and the federal Judicial Panel has transferred the CDSC Lawsuit to the MDL. The MDL is ongoing. Accordingly, an estimate of the financial impact of this litigation on any Fund, if any, cannot currently be made. On January 11, 2005, a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Columbia Funds and Columbia. The lawsuit alleged 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 Funds and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs alleged 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. Plaintiffs filed a notice of voluntary dismissal of the lawsuit as to all defendants and all claims, without prejudice, which was so-ordered by the judge on or about November 9, 2005. In 2004, certain Columbia funds, advisers and affiliated entities were named as defendants in certain purported shareholder class and derivative actions making claims, including claims under the Investment Company and the Investment Advisers Acts of 1940 88 ________________________________________________________________________________ SEPTEMBER 30, 2005 COLUMBIA EQUITY FUNDS and state law. The suits allege, inter alia, that the fees and expenses paid by the funds are excessive and that the advisers and their affiliates inappropriately used fund assets to distribute the funds and for other improper purpose. On March 2, 2005, the actions were consolidated in the Massachusetts federal court as IN RE COLUMBIA ENTITIES LITIGATION. The plaintiffs filed a consolidated amended complaint on June 9, 2005. 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 (with the exception of the January 11, 2005 "failure to participate" litigation, which has been dismissed) are ongoing, however, based on currently available information, Columbia believes that these lawsuits are without merit, that the likelihood they will have a material adverse impact on any fund is remote, and that the lawsuits are not likely to materially affect its ability to provide investment management services to its clients, including the Funds. For the year ended September 30, 2005, Columbia has assumed legal, consulting services and Trustees' fees incurred by the Funds in connection with these matters as follows: Columbia Asset Allocation Fund................ $ 7,420 Columbia Large Cap Growth Fund................ 21,580 Columbia Disciplined Value Fund............... 7,982 Columbia Common Stock Fund.................... 8,084 Columbia Small Cap Core Fund.................. 29,179 Columbia Small Company Equity Fund............ 6,128 NOTE 10. BUSINESS COMBINATIONS AND MERGERS As of the end of business on March 18, 2005, the Columbia Growth Fund, a series of Columbia Fund Trust XI, merged into the Columbia Large Cap Growth Fund. The Columbia Large Cap Growth Fund received a tax-free transfer of assets from the Columbia Growth Fund as follows: SHARES NET ASSETS UNREALIZED ISSUED RECEIVED APPRECIATION 1 ------------ ------------- -------------- 34,544,160 $698,000,366 $75,087,939 NET ASSETS OF NET ASSETS OF COLUMBIA COLUMBIA NET ASSETS LARGE CAP LARGE CAP OF COLUMBIA GROWTH FUND GROWTH FUND GROWTH FUND IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION ------------ ------------- -------------- $698,000,366 $902,362,481 $1,600,362,847 1 Unrealized appreciation is included in the Net Assets Received amount. As of the end of business on March 18, 2005, the Columbia Common Stock Fund, a series of Columbia Fund Trust XI, merged into the Columbia Large Cap Core Fund. The Columbia Large Cap Core Fund received a tax-free transfer of assets from the Columbia Common Stock Fund as follows: SHARES NET ASSETS UNREALIZED ISSUED RECEIVED APPRECIATION 1 ------------ ------------- -------------- 16,996,454 $213,171,601 $16,036,196 NET ASSETS OF NET ASSETS OF NET ASSETS COLUMBIA COLUMBIA OF COLUMBIA LARGE CAP LARGE CAP COMMON CORE FUND CORE FUND STOCK FUND IMMEDIATELY IMMEDIATELY PRIOR TO PRIOR TO AFTER COMBINATION COMBINATION COMBINATION ------------ ------------- -------------- $213,171,601 $367,205,776 $580,377,377 1 Unrealized appreciation is included in the Net Assets Received amount. Also, on October 10, 2005, the Columbia Large Cap Core Fund was renamed as the Columbia Common Stock Fund. 89 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA ASSET ALLOCATION FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ----------------------- SEPTEMBER 30, --------------------------------- CLASS A SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.06 $ 14.01 $ 12.86 $ 14.95 $ 18.77 $ 17.73 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.27(d)(e) 0.21(d) 0.20(d) 0.26(f) 0.34(d) 0.39(d) Net realized and unrealized gain (loss) on investments, foreign currency, futures contracts and foreign capital gains tax 1.41 1.11 1.17 (2.12)(f) (3.06) 1.36 ------- -------- ------- ------- ------- ------- Total from investment operations 1.68 1.32 1.37 (1.86) (2.72) 1.75 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.27) (0.27) (0.22) (0.23) (0.36) (0.40) From net realized gains -- -- -- -- (0.74) (0.31) ------- -------- ------- ------- ------- ------- Total distributions declared to shareholders (0.27) (0.27) (0.22) (0.23) (1.10) (0.71) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.47 $ 15.06 $ 14.01 $ 12.86 $ 14.95 $ 18.77 Total return (g)(h) 11.20% 9.46% 10.80%(i) (12.53)% (15.08)% 10.15% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.35% 1.43% 1.49%(k) 1.40% 1.26% 1.15% Net investment income (j) 1.66% 1.43% 1.55%(k) 1.73%(f) 2.07% 2.15% Waiver/reimbursement 0.01% --%(l) 0.01%(k) 0.13% 0.12% 0.15% Portfolio turnover rate 86% 75% 122%(i) 40% 65% 59% Net assets, end of period (000's) $ 4,206 $ 2,901 $ 1,211 $ 43 $ 60 $ 186 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Prime A shares were redesignated Liberty Asset Allocation Fund, Class A shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (g) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 90 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA ASSET ALLOCATION FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ----------------------- SEPTEMBER 30, --------------------------------- CLASS B SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.06 $ 14.00 $ 12.85 $ 14.93 $ 18.75 $ 17.71 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.15(d)(e) 0.10(d) 0.12(d) 0.14(f) 0.22(d) 0.26(d) Net realized and unrealized gain (loss) on investments, foreign currency, futures contracts and foreign capital gains tax 1.41 1.11 1.17 (2.08)(f) (3.06) 1.35 ------- -------- ------- ------- ------- ------- Total from investment operations 1.56 1.21 1.29 (1.94) (2.84) 1.61 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.15) (0.15) (0.14) (0.14) (0.24) (0.26) From net realized gains -- -- -- -- (0.74) (0.31) ------- -------- ------- ------- ------- ------- Total distributions declared to shareholders (0.15) (0.15) (0.14) (0.14) (0.98) (0.57) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.47 $ 15.06 $ 14.00 $ 12.85 $ 14.93 $ 18.75 Total return (g) 10.37%(h) 8.68%(h) 10.13%(h)(i) (13.06)% (15.68)%(h) 9.29%(h) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 2.10% 2.18% 2.17%(k) 2.06% 1.99% 1.89% Net investment income (j) 0.91% 0.68% 0.95%(k) 1.07%(f) 1.34% 1.41% Waiver/reimbursement 0.01% --%(l) 0.01%(k) -- 0.04% 0.17% Portfolio turnover rate 86% 75% 122%(i) 40% 65% 59% Net assets, end of period (000's) $ 7,166 $ 4,926 $ 2,539 $ 276 $ 389 $ 526 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Prime B shares were redesignated Liberty Asset Allocation Fund, Class B shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (g) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 91 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA ASSET ALLOCATION FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED ----------------------- SEPTEMBER 30, CLASS C SHARES 2005 2004 (a) 2003 (b)(c) - ------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.06 $ 14.00 $ 13.08 - ------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (d) 0.14(e) 0.10 0.10 Net realized and unrealized gain on investments, foreign currency, futures contracts and foreign capital gains tax 1.42 1.11 0.93 ------- -------- ------- Total from investment operations 1.56 1.21 1.03 - ------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.15) (0.15) (0.11) - ------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.47 $ 15.06 $ 14.00 Total return (f)(g) 10.37% 8.67% 7.93%(h) - ------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.10% 2.19% 2.28%(j) Net investment income (i) 0.91% 0.69% 0.85%(j) Waiver/reimbursement 0.01% --%(k) 0.01%(j) Portfolio turnover rate 86% 75% 122%(h) Net assets, end of period (000's) $ 704 $ 514 $ 187 - ------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 18, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 92 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA ASSET ALLOCATION FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ----------------------- SEPTEMBER 30, ------------------------------------ CLASS G SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.06 $ 14.00 $ 12.84 $ 14.92 $ 18.74 $ 17.70 - --------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.16(d)(e) 0.11(d) 0.12(d) 0.14(f) 0.22(d) 0.24(d) Net realized and unrealized gain (loss) on investments, foreign currency, futures contracts and foreign capital gains tax 1.40 1.11 1.17 (2.08)(f) (3.06) 1.36 -------- -------- -------- -------- -------- -------- Total from investment operations 1.56 1.22 1.29 (1.94) (2.84) 1.60 - --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.16) (0.16) (0.13) (0.14) (0.24) (0.25) From net realized gains -- -- -- -- (0.74) (0.31) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.16) (0.16) (0.13) (0.14) (0.98) (0.56) - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.46 $ 15.06 $ 14.00 $ 12.84 $ 14.92 $ 18.74 Total return (g) 10.36%(h) 8.72%(h) 10.12%(h)(i) (13.08)%(h) (15.72)%(h) 9.20% - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 2.05% 2.15% 2.19%(k) 2.09% 2.01% 1.99% Net investment income (j) 0.98% 0.71% 1.02%(k) 1.04%(f) 1.33% 1.31% Waiver/reimbursement 0.01% --%(l) 0.01%(k) 0.03% 0.01% -- Portfolio turnover rate 86% 75% 122%(i) 40% 65% 59% Net assets, end of period (000's) $ 21,982 $ 39,892 $ 56,383 $ 73,183 $106,074 $105,980 - --------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Retail B shares were redesignated Liberty Asset Allocation Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (g) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 93 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA ASSET ALLOCATION FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ----------------------- SEPTEMBER 30, ------------------------------------ CLASS T SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.07 $ 14.01 $ 12.87 $ 14.95 $ 18.79 $ 17.74 - --------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.26(d)(e) 0.21(d) 0.21(d) 0.25(f) 0.33(d) 0.37(d) Net realized and unrealized gain (loss) on investments, foreign currency, futures contracts and foreign capital gains tax 1.41 1.11 1.16 (2.09)(f) (3.08) 1.36 -------- -------- -------- -------- -------- -------- Total from investment operations 1.67 1.32 1.37 (1.84) (2.75) 1.73 - --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.26) (0.26) (0.23) (0.24) (0.35) (0.37) From net realized gains -- -- -- -- (0.74) (0.31) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.26) (0.26) (0.23) (0.24) (1.09) (0.68) - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.48 $ 15.07 $ 14.01 $ 12.87 $ 14.95 $ 18.79 Total return (g) 11.14%(h) 9.47%(h) 10.75%(h)(i) (12.45)%(h) (15.18)%(h) 9.98% - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.40% 1.49% 1.49%(k) 1.37% 1.33% 1.29% Net investment income (j) 1.62% 1.37% 1.73%(k) 1.76%(f) 2.01% 2.01% Waiver/reimbursement 0.01% --%(l) 0.01%(k) 0.01% 0.01% -- Portfolio turnover rate 86% 75% 122%(i) 40% 65% 59% Net assets, end of period (000's) $184,795 $183,438 $189,580 $198,154 $289,882 $371,590 - --------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Retail A shares were redesignated Liberty Asset Allocation Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (g) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 94 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA ASSET ALLOCATION FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ----------------------- SEPTEMBER 30, ------------------------------------ CLASS Z SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.06 $ 14.01 $ 12.87 $ 14.94 $ 18.78 $ 17.73 - --------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.31(d)(e) 0.25(d) 0.25(d) 0.29(f) 0.37(d) 0.41(d) Net realized and unrealized gain (loss) on investments, foreign currency, futures contracts and foreign capital gains tax 1.42 1.11 1.16 (2.09)(f) (3.08) 1.36 -------- -------- -------- -------- -------- -------- Total from investment operations 1.73 1.36 1.41 (1.80) (2.71) 1.77 - --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.31) (0.31) (0.27) (0.27) (0.39) (0.41) From net realized gains -- -- -- -- (0.74) (0.31) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.31) (0.31) (0.27) (0.27) (1.13) (0.72) - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.48 $ 15.06 $ 14.01 $ 12.87 $ 14.94 $ 18.78 Total return (g) 11.54%(h) 9.75%(h) 11.07%(h)(i) (12.23)%(h) (14.94)% 10.21% - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.10% 1.19% 1.16%(k) 1.12% 1.11% 1.09% Net investment income (j) 1.92% 1.67% 2.04%(k) 2.01%(f) 2.23% 2.21% Waiver/reimbursement 0.01% --%(l) 0.01%(k) 0.03% -- -- Portfolio turnover rate 86% 75% 122%(i) 40% 65% 59% Net assets, end of period (000's) $167,278 $191,556 $217,935 $163,934 $230,562 $290,970 - --------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Asset Allocation Fund was renamed the Columbia Asset Allocation Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Asset Allocation Fund, Trust shares were redesignated Liberty Asset Allocation Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) The Fund adopted the provisions of the AICPA Audit Guide for Investment Companies effective November 1, 2001. The effect of the changes for the year ended October 31, 2002 on the net investment income per share, net realized and unrealized gain per share and the ratio of net investment income to average net assets is $(0.01), $0.01 and (0.05)%, respectively. (g) Total return at net asset value assuming all distributions reinvested. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 95 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA LARGE CAP GROWTH FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ----------------------------------- CLASS A SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 18.57 $ 17.59 $ 16.06 $ 19.74 $ 32.31 $ 28.95 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.05(d)(e) (0.08)(d) (0.05)(d) 0.03(d) (0.02) (0.05)(d) Net realized and unrealized gain (loss) on investments 2.51 1.06 1.61 (3.71) (8.92) 5.13 -------- -------- -------- -------- -------- -------- Total from investment operations 2.56 0.98 1.56 (3.68) (8.94) 5.08 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.02) -- (0.03) -- -- -- From net realized gains -- -- -- -- (3.63) (1.72) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.02) -- (0.03) -- (3.63) (1.72) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 21.11 $ 18.57 $ 17.59 $ 16.06 $ 19.74 $ 32.31 Total return (f)(g) 13.80% 5.57% 9.72%(h) (18.64)% (30.43)% 18.36% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.11% 1.28% 1.30%(j) 1.12% 1.13% 1.12% Net investment income (loss) (i) 0.25% (0.40)% (0.30)%(j) 0.14% (0.10)% (0.17)% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.05% 0.03% 0.11% Portfolio turnover rate 113% 126% 91%(h) 43% 48% 54% Net assets, end of period (000's) $ 10,422 $ 3,867 $ 1,887 $ 56 $ 671 $ 142 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Prime A shares were redesignated Liberty Equity Growth Fund, Class A shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.09 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 96 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA LARGE CAP GROWTH FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ---------------------------------- CLASS B SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 17.76 $ 16.96 $ 15.57 $ 19.32 $ 31.94 $ 28.84 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.09)(d)(e) (0.21)(d) (0.14)(d) (0.14)(d) (0.19) (0.29)(d) Net realized and unrealized gain (loss) on investments 2.40 1.01 1.53 (3.61) (8.80) 5.11 -------- -------- -------- -------- -------- -------- Total from investment operations 2.31 0.80 1.39 (3.75) (8.99) 4.82 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- -- -- (3.63) (1.72) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 20.07 $ 17.76 $ 16.96 $ 15.57 $ 19.32 $ 31.94 Total return (f)(g) 13.01% 4.72% 8.93%(h) (19.41)% (31.00)% 17.48% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.86% 2.03% 2.13%(j) 1.99% 1.95% 1.87% Net investment loss (i) (0.48)% (1.15)% (0.97)%(j) (0.73)% (0.92)% (0.92)% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.05% 0.03% 0.15% Portfolio turnover rate 113% 126% 91%(h) 43% 48% 54% Net assets, end of period (000's) $ 7,799 $ 3,195 $ 1,013 $ 207 $ 309 $ 450 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Prime B shares were redesignated Liberty Equity Growth Fund, Class B shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.09 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 97 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA LARGE CAP GROWTH FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED ----------------------- SEPTEMBER 30, CLASS C SHARES 2005 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 17.79 $ 16.98 $ 16.04 - -------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.09)(e) (0.21) (0.13) Net realized and unrealized gain on investments 2.40 1.02 1.07 ------- -------- ------- Total from investment operations 2.31 0.81 0.94 - -------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 20.10 $ 17.79 $ 16.98 Total return (f)(g) 12.98% 4.77% 5.86%(h) - -------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.86% 2.03% 2.00%(j) Net investment loss (i) (0.45)% (1.15)% (0.92)%(j) Waiver/reimbursement --%(k) --%(k) 0.02%(j) Portfolio turnover rate 113% 126% 91%(h) Net assets, end of period (000's) $ 1,419 $ 780 $ 524 - -------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 18, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.09 per share. (f) Total return at net asset value assuming no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 98 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA LARGE CAP GROWTH FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ---------------------------------- CLASS G SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 17.21 $ 16.43 $ 15.11 $ 18.79 $ 31.22 $ 28.27 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.06)(d)(e) (0.20)(d) (0.15)(d) (0.17)(d) (0.21) (0.35)(d) Net realized and unrealized gain (loss) on investments 2.30 0.98 1.47 (3.51) (8.59) 5.02 -------- -------- -------- -------- -------- -------- Total from investment operations 2.24 0.78 1.32 (3.68) (8.80) 4.67 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- -- -- (3.63) (1.72) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 19.45 $ 17.21 $ 16.43 $ 15.11 $ 18.79 $ 31.22 Total return (f)(g) 13.02% 4.75% 8.66%(h) (19.49)% (31.16)% 17.29% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.81% 2.02% 2.31%(j) 2.18% 2.11% 2.07% Net investment loss (i) (0.33)% (1.14)% (1.02)%(j) (0.92)% (1.08)% (1.11)% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.07% 0.02% 0.02% Portfolio turnover rate 113% 126% 91%(h) 43% 48% 54% Net assets, end of period (000's) $ 46,276 $ 46,328 $ 54,850 $ 64,156 $ 92,292 $130,347 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Retail B shares were redesignated Liberty Equity Growth Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.09 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 99 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA LARGE CAP GROWTH FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ----------------------- SEPTEMBER 30, ----------------------------------- CLASS T SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 18.46 $ 17.50 $ 15.98 $ 19.70 $ 32.31 $ 28.99 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.07(d)(e) (0.09)(d) (0.02)(d) (0.02)(d) (0.07) (0.10)(d) Net realized and unrealized gain (loss) on investments 2.47 1.05 1.54 (3.70) (8.91) 5.14 -------- -------- -------- -------- -------- -------- Total from investment operations 2.54 0.96 1.52 (3.72) (8.98) 5.04 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.02) -- -- -- -- -- From net realized gains -- -- -- -- (3.63) (1.72) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.02) -- -- -- (3.63) (1.72) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 20.98 $ 18.46 $ 17.50 $ 15.98 $ 19.70 $ 32.31 Total return (f) 13.76%(g) 5.49%(g) 9.51%(g)(h) (18.88)%(g) (30.57)%(g) 18.18% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.16% 1.35% 1.45%(j) 1.34% 1.31% 1.28% Net investment income (loss) (i) 0.33% (0.47)% (0.16)%(j) (0.08)% (0.28)% (0.33)% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.07% 0.02% -- Portfolio turnover rate 113% 126% 91%(h) 43% 48% 54% Net assets, end of period (000's) $218,095 $219,129 $235,849 $239,279 $346,214 $580,417 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Retail A shares were redesignated Liberty Equity Growth Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.09 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 100 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA LARGE CAP GROWTH FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------- SEPTEMBER 30, ------------------------------------- CLASS Z SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 18.87 $ 17.84 $ 16.28 $ 19.99 $ 32.61 $ 29.15 - --------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.11(d)(e) (0.03)(d) 0.05(d) 0.07(d) 0.02 0.01(d) Net realized and unrealized gain (loss) on investments 2.55 1.07 1.57 (3.78) (9.01) 5.18 ---------- -------- -------- -------- -------- ---------- Total from investment operations 2.66 1.04 1.62 (3.71) (8.99) 5.19 - --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.03) (0.01) (0.06) -- -- (0.01) From net realized gains -- -- -- -- (3.63) (1.72) ---------- -------- -------- -------- -------- ---------- Total distributions declared to shareholders (0.03) (0.01) (0.06) -- (3.63) (1.73) - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 21.50 $ 18.87 $ 17.84 $ 16.28 $ 19.99 $ 32.61 Total return (f) 14.12%(g) 5.83%(g) 9.93%(g)(h) (18.51)%(g) (30.29)%(g) 18.63% - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 0.86% 1.03% 0.99%(j) 0.91% 0.93% 0.91% Net investment income (loss) (i) 0.53% (0.15)% 0.30%(j) 0.35% 0.10% 0.04% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.05% 0.01% -- Portfolio turnover rate 113% 126% 91%(h) 43% 48% 54% Net assets, end of period (000's) $1,242,736 $634,710 $670,649 $699,215 $845,887 $1,258,399 - --------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Growth Fund was renamed the Columbia Large Cap Growth Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Equity Growth Fund, Trust shares were redesignated Liberty Equity Growth Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.09 per share. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 101 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA DISCIPLINED VALUE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED ----------------------- SEPTEMBER 30, CLASS A SHARES 2005 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.71 $ 11.02 $ 10.06 - -------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (d) 0.17(e) 0.17 0.04 Net realized and unrealized gain on investments 1.88 1.75 0.92 ------- -------- --------- Total from investment operations 2.05 1.92 0.96 - -------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.16) (0.23) -- - -------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 14.60 $ 12.71 $ 11.02 Total return (f) 16.21%(g) 17.53% 9.54%(h) - -------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.23% 1.31% 1.31%(j) Net investment income (i) 1.21% 1.34% 0.49%(j) Waiver/reimbursement 0.01% -- -- Portfolio turnover rate 94% 101% 50%(h) Net assets, end of period (000's) $ 4,269 $ 2,511 $ 903 - -------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class A shares were initially offered on November 25, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 102 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA DISCIPLINED VALUE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED ----------------------- SEPTEMBER 30, CLASS B SHARES 2005 2004 (a) 2003 (b)(c) - -------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.16 $ 10.49 $ 9.67 - -------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (d) 0.06(e) 0.07 (0.02) Net realized and unrealized gain on investments 1.80 1.67 0.84 ------- -------- --------- Total from investment operations 1.86 1.74 0.82 - -------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.06) (0.07) -- - -------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.96 $ 12.16 $ 10.49 Total return (f) 15.30%(g) 16.64% 8.48%(h) - -------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.98% 2.06% 2.26%(j) Net investment income (loss) (i) 0.46% 0.60% (0.27)%(j) Waiver/reimbursement 0.01% -- -- Portfolio turnover rate 94% 101% 50%(h) Net assets, end of period (000's) $ 3,974 $ 2,370 $ 338 - -------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class B shares were initially offered on November 25, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 103 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA DISCIPLINED VALUE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED ----------------------- SEPTEMBER 30, CLASS C SHARES 2005 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.14 $ 10.47 $ 9.67 - ---------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (d) 0.06(e) 0.07 (0.05) Net realized and unrealized gain on investments 1.80 1.67 0.85 ------- -------- --------- Total from investment operations 1.86 1.74 0.80 - ---------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.06) (0.07) -- - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.94 $ 12.14 $ 10.47 Total return (f) 15.33%(g) 16.67% 8.27%(g)(h) - ---------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.98% 2.07% 2.49%(j) Net investment income (loss) (i) 0.49% 0.63% (0.60)%(j) Waiver/reimbursement 0.01% -- 0.49%(j) Portfolio turnover rate 94% 101% 50%(h) Net assets, end of period (000's) $ 453 $ 291 $ 24 - ---------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 25, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 104 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA DISCIPLINED VALUE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS G SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.17 $ 10.50 $ 9.21 $ 12.10 $ 16.73 $ 18.08 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.08(d)(e) 0.08(d) (0.04)(d) (0.19) (0.10) (0.15) Net realized and unrealized gain (loss) on investments 1.78 1.67 1.33 (2.35) (1.64) 1.25 -------- -------- -------- -------- -------- -------- Total from investment operations 1.86 1.75 1.29 (2.54) (1.74) 1.10 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.06) (0.08) -- -- -- -- From net realized gains -- -- -- 0.35) (2.89) (2.45) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.06) (0.08) -- (0.35) (2.89) (2.45) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.97 $ 12.17 $ 10.50 $ 9.21 $ 12.10 $ 16.73 Total return (f) 15.35%(g) 16.67% 14.01%(h) (21.85)% (11.00)%(g) 7.12%(g) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.93% 2.06% 2.31%(j) 2.18% 2.13% 2.09% Net investment income (loss) (i) 0.64% 0.64% (0.47)%(j) (1.15)% (0.91)% (0.83)% Waiver/reimbursement 0.01% -- -- -- 0.02% 0.03% Portfolio turnover rate 94% 101% 50%(h) 99% 127% 72% Net assets, end of period (000's) $ 4,326 $ 7,502 $ 11,074 $ 16,791 $ 25,776 $ 30,555 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, the Galaxy Equity Value Fund, Retail B shares were redesignated Liberty Equity Value Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 105 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA DISCIPLINED VALUE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS T SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.72 $ 11.00 $ 9.58 $ 12.48 $ 17.05 $ 18.28 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.17(d)(e) 0.16(d) 0.03(d) (0.05) (0.02) (0.02) Net realized and unrealized gain (loss) on investments 1.86 1.76 1.39 (2.50) (1.66) 1.25 -------- -------- -------- -------- -------- -------- Total from investment operations 2.03 1.92 1.42 (2.55) (1.68) 1.23 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.15) (0.20) -- -- -- (0.01) In excess of net investment income -- -- -- -- -- --(f) From net realized gains -- -- -- (0.35) (2.89) (2.45) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.15) (0.20) -- (0.35) (2.89) (2.46) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 14.60 $ 12.72 $ 11.00 $ 9.58 $ 12.48 $ 17.05 Total return (g) 16.06%(h) 17.54% 14.82%(i) (21.31)% (10.27)%(h) 7.83% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.28% 1.38% 1.50%(k) 1.41% 1.39% 1.36% Net investment income (loss) (j) 1.22% 1.31% 0.35%(k) (0.38)% (0.17)% (0.10)% Waiver/reimbursement 0.01% -- -- -- 0.01% -- Portfolio turnover rate 94% 101% 50%(i) 99% 127% 72% Net assets, end of period (000's) $134,792 $133,094 $127,993 $123,085 $180,435 $226,836 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, the Galaxy Equity Value Fund, Retail A shares were redesignated Liberty Equity Value Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) Rounds to less than $0.01 per share. (g) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. 106 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA DISCIPLINED VALUE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS Z SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.95 $ 11.24 $ 9.75 $ 12.65 $ 17.17 $ 18.35 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.21(d)(e) 0.20(d) 0.08(d) (0.02) 0.02 0.04 Net realized and unrealized gain (loss) on investments 1.91 1.79 1.41 (2.53) (1.65) 1.25 -------- -------- -------- -------- -------- -------- Total from investment operations 2.12 1.99 1.49 (2.55) (1.63) 1.29 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.20) (0.28) -- -- -- (0.02) In excess of net investment income -- -- -- -- -- --(f) From net realized gains -- -- -- (0.35) (2.89) (2.45) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.20) (0.28) -- (0.35) (2.89) (2.47) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 14.87 $ 12.95 $ 11.24 $ 9.75 $ 12.65 $ 17.17 Total return (g) 16.43%(h) 17.86% 15.28%(i) (20.96)% (9.91)% 8.22% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 0.98% 1.06% 1.04%(k) 0.98% 1.00% 1.00% Net investment income (j) 1.53% 1.62% 0.82%(k) 0.05% 0.22% 0.26% Waiver/reimbursement 0.01% -- -- -- -- -- Portfolio turnover rate 94% 101% 50%(i) 99% 127% 72% Net assets, end of period (000's) $283,187 $283,469 $224,137 $167,867 $152,002 $164,864 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Equity Value Fund was renamed the Columbia Disciplined Value Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 25, 2002, the Galaxy Equity Value Fund, Trust shares were redesignated Liberty Equity Value Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.02 per share. (f) Rounds to less than $0.01 per share. (g) Total return at net asset value assuming all distributions reinvested. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. 107 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA COMMON STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------- CLASS A SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.01 $ 11.22 $ 10.08 $ 12.74 $ 16.41 $ 16.00 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.07(e)(f) --(e)(g) 0.03(e) 0.03(e) 0.02 0.04 Net realized and unrealized gain (loss) on investments 1.93 0.80 1.16 (2.23) (2.38) 1.34 -------- -------- -------- -------- -------- -------- Total from investment operations 2.00 0.80 1.19 (2.20) (2.36) 1.38 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.07) (0.01) (0.05) (0.02) (0.03) (0.06) In excess of net investment income -- -- -- -- --(g) -- From net realized gains (0.35) -- -- (0.44) (1.28) (0.91) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.42) (0.01) (0.05) (0.46) (1.31) (0.97) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.59 $ 12.01 $ 11.22 $ 10.08 $ 12.74 $ 16.41 Total return (h) 16.98%(i) 7.09%(i) 11.82%(j) (18.14)%(i) (15.34)%(i) 9.27%(i) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (k) 1.24% 1.35% 1.48%(l) 1.28% 1.19% 1.14% Net investment income (loss) (k) 0.59% (0.02)% 0.37%(l) 0.25% 0.22% 0.30% Waiver/reimbursement 0.09% --%(m) -- 0.24% 0.03% 0.10% Portfolio turnover rate 105% 115% 55%(j) 13% 19% 42% Net assets, end of period (000's) $ 10,393 $ 9,304 $ 7,570 $ 15 $ 60 $ 156 - -------------------------------------------------------------------------------------------------------------------------------- (a) On September 23, 2005, the Columbia Large Cap Core Fund was renamed the Columbia Common Stock Fund. (b) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On December 9, 2002, the Galaxy Growth & Income Fund, Prime A shares were redesignated Liberty Large Cap Core Fund, Class A shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.05 per share. (g) Rounds to less than $0.01 per share. (h) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (i) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (j) Not annualized. (k) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (l) Annualized. (m) Rounds to less than 0.01%. 108 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA COMMON STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------- CLASS B SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.68 $ 10.99 $ 9.90 $ 12.59 $ 16.32 $ 15.97 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.04)(e)(f) (0.09)(e) (0.04)(e) (0.06)(e) (0.07) (0.07) Net realized and unrealized gain (loss) on investments 1.88 0.78 1.14 (2.19) (2.38) 1.33 -------- -------- -------- -------- -------- -------- Total from investment operations 1.84 0.69 1.10 (2.25) (2.45) 1.26 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.05) -- (0.01) -- -- -- From net realized gains (0.35) -- -- (0.44) (1.28) (0.91) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.40) -- (0.01) (0.44) (1.28) (0.91) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.12 $ 11.68 $ 10.99 $ 9.90 $ 12.59 $ 16.32 Total return (g) 16.02%(h) 6.28%(h) 11.12%(i) (18.75)%(h) (15.95)%(h) 8.38%(h) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.99% 2.09% 2.19%(k) 2.02% 1.96% 1.89% Net investment loss (j) (0.31)% (0.76)% (0.38)%(k) (0.49)% (0.55)% (0.45)% Waiver/reimbursement 0.09% --%(l) -- 0.02% 0.04% 0.18% Portfolio turnover rate 105% 115% 55%(i) 13% 19% 42% Net assets, end of period (000's) $ 6,628 $ 3,425 $ 1,755 $ 55 $ 109 $ 129 - -------------------------------------------------------------------------------------------------------------------------------- (a) On September 23, 2005, the Columbia Large Cap Core Fund was renamed the Columbia Common Stock Fund. (b) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On December 9, 2002, the Galaxy Growth & Income Fund, Prime B shares were redesignated Liberty Large Cap Core Fund, Class B shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Net investment loss per share reflects a special dividend. The effect of this dividend amounted to $0.05 per share. (g) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 109 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA COMMON STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED -------------------------- SEPTEMBER 30, CLASS C SHARES 2005 (a) 2004 (b) 2003 (c)(d) - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.68 $ 10.99 $ 10.21 - ---------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (e) (0.03)(f) (0.09) (0.04) Net realized and unrealized gain on investments 1.88 0.78 0.83 Total from investment operations 1.85 0.69 0.79 - ---------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.05) -- -- From net realized gains (0.35) -- (0.01) Total distributions declared to shareholders (0.40) -- (0.01) - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.13 $ 11.68 $ 10.99 Total return (g) 16.10%(h) 6.28%(h) 7.74%(i) - ---------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.99% 2.09% 2.18%(k) Net investment loss (j) (0.25)% (0.74)% (0.42)%(k) Waiver/reimbursement 0.09% --%(l) -- Portfolio turnover rate 105% 115% 55%(i) Net assets, end of period (000's) $ 605 $ 345 $ 223 - ---------------------------------------------------------------------------------------------- (a) On September 23, 2005, the Columbia Large Cap Core Fund was renamed the Columbia Common Stock Fund. (b) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) Class C shares were initially offered on December 9, 2002. Per share data and total return reflect activity from that date. (e) Per share data was calculated using average shares outstanding during the period. (f) Net investment loss per share reflects a special dividend. The effect of this dividend amounted to $0.05 per share. (g) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 110 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA COMMON STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, -------------------------- SEPTEMBER 30, ---------------------------------- CLASS G SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.57 $ 10.89 $ 9.82 $ 12.50 $ 16.23 $ 15.90 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) --(e)(f)(g) (0.09)(e) (0.02)(e) (0.06)(e) (0.09) (0.10) Net realized and unrealized gain (loss) on investments 1.83 0.77 1.10 (2.18) (2.36) 1.34 -------- -------- -------- -------- -------- -------- Total from investment operations 1.83 0.68 1.08 (2.24) (2.45) 1.24 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.05) -- (0.01) -- -- -- From net realized gains (0.35) -- -- (0.44) (1.28) (0.91) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.40) -- (0.01) (0.44) (1.28) (0.91) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.00 $ 11.57 $ 10.89 $ 9.82 $ 12.50 $ 16.23 Total return (h) 16.10%(i) 6.24%(i) 11.00%(i)(j) (18.80)%(i) (16.11)% 8.35% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (k) 1.94% 2.09% 2.19%(l) 2.08% 2.05% 2.04% Net investment income (loss) (k) 0.03% (0.77)% (0.28)%(l) (0.55)% (0.64)% (0.60)% Waiver/reimbursement 0.09% 0.02% 0.05%(l) 0.02% -- -- Portfolio turnover rate 105% 115% 55%(j) 13% 19% 42% Net assets, end of period (000's) $ 9,218 $ 16,419 $ 28,917 $ 31,407 $ 48,512 $ 61,857 - -------------------------------------------------------------------------------------------------------------------------------- (a) On September 23, 2005, the Columbia Large Cap Core Fund was renamed the Columbia Common Stock Fund. (b) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On December 9, 2002, the Galaxy Growth & Income Fund, Retail B shares were redesignated Liberty Large Cap Core Fund, Class G shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Rounds to less than $0.01 per share. (g) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.05 per share. (h) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (i) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (j) Not annualized. (k) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (l) Annualized. 111 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA COMMON STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS T SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 11.95 $ 11.18 $ 10.05 $ 12.70 $ 16.37 $ 15.98 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.07(e)(f) (0.01)(e) 0.04(e) 0.02(e) 0.02 0.02 Net realized and unrealized gain (loss) on investments 1.92 0.78 1.14 (2.22) (2.39) 1.33 -------- -------- -------- -------- -------- -------- Total from investment operations 1.99 0.77 1.18 (2.20) (2.37) 1.35 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.07) --(g) (0.05) (0.01) (0.02) (0.05) In excess of net investment income -- -- -- -- --(g) --(g) From net realized gains (0.35) -- -- (0.44) (1.28) (0.91) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.42) -- (0.05) (0.45) (1.30) (0.96) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.52 $ 11.95 $ 11.18 $ 10.05 $ 12.70 $ 16.37 Total return (h) 16.97%(i) 6.92%(i) 11.76%(j) (18.16)%(i) (15.46)%(i) 9.06%(i) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (k) 1.29% 1.40% 1.46%(l) 1.35% 1.34% 1.28% Net investment income (loss) (k) 0.57% (0.07)% 0.45%(l) 0.18% 0.07% 0.16% Waiver/reimbursement 0.09% --%(m) -- 0.01% 0.02% 0.09% Portfolio turnover rate 105% 115% 55%(j) 13% 19% 42% Net assets, end of period (000's) $180,345 $179,310 $185,938 $180,269 $259,884 $217,423 - -------------------------------------------------------------------------------------------------------------------------------- (a) On September 23, 2005, the Columbia Large Cap Core Fund was renamed the Columbia Common Stock Fund. (b) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On December 9, 2002, the Galaxy Growth & Income Fund, Retail A shares were redesignated Liberty Large Cap Core Fund, Class T shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.05 per share. (g) Rounds to less than $0.01 per share. (h) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (i) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (j) Not annualized. (k) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (l) Annualized. (m) Rounds to less than 0.01%. 112 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA COMMON STOCK FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS Z SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 12.05 $ 11.25 $ 10.11 $ 12.77 $ 16.43 $ 16.02 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.09(e)(f) 0.03(e) 0.08(e) 0.07(e) 0.06 0.08 Net realized and unrealized gain (loss) on investments 1.95 0.79 1.15 (2.23) (2.39) 1.32 -------- -------- -------- -------- -------- -------- Total from investment operations 2.04 0.82 1.23 (2.16) (2.33) 1.40 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.08) (0.02) (0.09) (0.06) (0.05) (0.08) In excess of net investment income -- -- -- -- --(g) --(g) From net realized gains (0.35) -- -- (0.44) (1.28) (0.91) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (0.43) (0.02) (0.09) (0.50) (1.33) (0.99) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 13.66 $ 12.05 $ 11.25 $ 10.11 $ 12.77 $ 16.43 Total return (h) 17.25%(i) 7.28%(i) 12.20%(j) (17.85)%(i) (15.12)% 9.38% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (k) 0.99% 1.07% 1.03%(l) 0.97% 0.97% 1.00% Net investment income (k) 0.67% 0.26% 0.89%(l) 0.56% 0.44% 0.44% Waiver/reimbursement 0.09% --%(m) -- 0.03% -- -- Portfolio turnover rate 105% 115% 55%(j) 13% 19% 42% Net assets, end of period (000's) $310,472 $175,124 $190,195 $340,496 $460,302 $678,398 - -------------------------------------------------------------------------------------------------------------------------------- (a) On September 23, 2005, the Columbia Large Cap Core Fund was renamed the Columbia Common Stock Fund. (b) On October 13, 2003, the Liberty Large Cap Core Fund was renamed the Columbia Large Cap Core Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On December 9, 2002, the Galaxy Growth & Income Fund, Trust shares were redesignated Liberty Large Cap Core Fund, Class Z shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Net investment income per share reflects a special dividend. The effect of this dividend amounted to $0.05 per share. (g) Rounds to less than $0.01 per share. (h) Total return at net asset value assuming all distributions reinvested. (i) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (j) Not annualized. (k) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (l) Annualized. (m) Rounds to less than 0.01%. 113 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL CAP CORE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS A SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 17.54 $ 15.30 $ 12.64 $ 14.05 $ 14.33 $ 13.04 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (e) (0.06) (0.07) (0.04) (0.03) 0.02 0.05 Net realized and unrealized gain (loss) on investments 2.91 2.75 3.35 (0.07) 1.61 2.64 -------- -------- -------- -------- -------- -------- Total from investment operations 2.85 2.68 3.31 (0.10) 1.63 2.69 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- -- (0.04) (0.04) From net realized gains (1.07) (0.44) (0.65) (1.31) (1.87) (1.36) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (1.07) (0.44) (0.65) (1.31) (1.91) (1.40) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 19.32 $ 17.54 $ 15.30 $ 12.64 $ 14.05 $ 14.33 Total return (f)(g) 16.69% 17.73% 27.25%(h) (1.73)% 12.87% 22.26% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.13% 1.15% 1.24%(j) 1.29% 1.23% 1.16% Net investment income (loss) (i) (0.31)% (0.40)% (0.28)%(j) (0.19)% 0.17% 0.36% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.01% 0.04% 0.16% Portfolio turnover rate 16% 26% 19%(h) 23% 46% 43% Net assets, end of period (000's) $211,527 $211,502 $ 57,462 $ 210 $ 168 $ 189 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 7, 2005, the Columbia Small Cap Fund was renamed the Columbia Small Cap Core Fund. (b) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On November 18, 2002, the Galaxy Small Cap Value Fund, Prime A shares were redesignated Liberty Small Cap Fund, Class A shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 114 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL CAP CORE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS B SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 16.89 $ 14.75 $ 12.31 $ 13.82 $ 14.19 $ 12.98 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (e) (0.19) (0.19) (0.15) (0.14) (0.10) (0.05) Net realized and unrealized gain (loss) on investments 2.81 2.67 3.24 (0.06) 1.60 2.62 -------- -------- -------- -------- -------- -------- Total from investment operations 2.62 2.48 3.09 (0.20) 1.50 2.57 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (0.95) (0.34) (0.65) (1.31) (1.87) (1.36) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 18.56 $ 16.89 $ 14.75 $ 12.31 $ 13.82 $ 14.19 Total return (f)(g) 15.87% 16.96% 26.14%(h) (2.55)% 11.91% 21.46% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.88% 1.90% 2.10%(j) 2.12% 2.08% 1.93% Net investment loss (i) (1.06)% (1.15)% (1.14)%(j) (1.02)% (0.68)% (0.41)% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.01% 0.07% 0.53% Portfolio turnover rate 16% 26% 19%(h) 23% 46% 43% Net assets, end of period (000's) $ 42,439 $ 40,170 $ 11,122 $ 282 $ 198 $ 170 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 7, 2005, the Columbia Small Cap Fund was renamed the Columbia Small Cap Core Fund. (b) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On November 18, 2002, the Galaxy Small Cap Value Fund, Prime B shares were redesignated Liberty Small Cap Fund, Class B shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 115 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL CAP CORE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED -------------------------- SEPTEMBER 30, CLASS C SHARES 2005 (a) 2004 (b) 2003 (c)(d) - ------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 16.91 $ 14.77 $ 12.55 - ------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (e) (0.19) (0.19) (0.14) Net realized and unrealized gain on investments 2.80 2.67 3.01 --------- --------- ---------- Total from investment operations 2.61 2.48 2.87 - ------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (0.95) (0.34) (0.65) - ------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 18.57 $ 16.91 $ 14.77 Total return (f)(g) 15.79% 16.94% 23.90%(h) - ------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.88% 1.90% 2.03%(j) Net investment loss (i) (1.06)% (1.15)% (1.10)%(j) Waiver/reimbursement --%(k) --%(k) 0.02%(j) Portfolio turnover rate 16% 26% 19%(h) Net assets, end of period (000's) $ 56,163 $ 64,686 $ 12,670 - ------------------------------------------------------------------------------------------------ (a) On October 7, 2005, the Columbia Small Cap Fund was renamed the Columbia Small Cap Core Fund. (b) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) Class C shares were initially offered on November 18, 2002. Per share data and total return reflect activity from that date. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 116 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL CAP CORE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS G SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 16.75 $ 14.63 $ 12.22 $ 13.72 $ 14.13 $ 12.96 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (e) (0.18) (0.18) (0.12) (0.14) (0.11) (0.10) Net realized and unrealized gain (loss) on investments 2.78 2.64 3.18 (0.05) 1.57 2.63 -------- -------- -------- -------- -------- -------- Total from investment operations 2.60 2.46 3.06 (0.19) 1.46 2.53 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (0.95) (0.34) (0.65) (1.31) (1.87) (1.36) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 18.40 $ 16.75 $ 14.63 $ 12.22 $ 13.72 $ 14.13 Total return (f) 15.91%(g) 16.97%(g) 26.09%(g)(h) (2.49)%(g) 11.73% 21.06%(g) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.83% 1.87% 2.10%(j) 2.12% 2.21% 2.23% Net investment loss (i) (1.01)% (1.11)% (1.03)%(j) (1.02)% (0.80)% (0.71)% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.01% -- 0.18% Portfolio turnover rate 16% 26% 19%(h) 23% 46% 43% Net assets, end of period (000's) $ 8,963 $ 10,952 $ 10,353 $ 9,046 $ 5,278 $ 2,838 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 7, 2005, the Columbia Small Cap Fund was renamed the Columbia Small Cap Core Fund. (b) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On November 18, 2002, the Galaxy Small Cap Value Fund, Retail B shares were redesignated Liberty Small Cap Fund, Class G shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 117 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL CAP CORE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS T SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 17.40 $ 15.16 $ 12.55 $ 13.96 $ 14.25 $ 12.98 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (e) (0.07) (0.08) (0.03) (0.03) --(f) 0.01 Net realized and unrealized gain (loss) on investments 2.88 2.74 3.29 (0.07) 1.59 2.63 -------- -------- -------- -------- -------- -------- Total from investment operations 2.81 2.66 3.26 (0.10) 1.59 2.64 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- -- (0.01) (0.01) From net realized gains (1.06) (0.42) (0.65) (1.31) (1.87) (1.36) -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders (1.06) (0.42) (0.65) (1.31) (1.88) (1.37) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 19.15 $ 17.40 $ 15.16 $ 12.55 $ 13.96 $ 14.25 Total return (g) 16.58%(h) 17.73%(h) 27.03%(h)(i) (1.75)%(h) 12.66% 21.96%(h) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (j) 1.18% 1.21% 1.34%(k) 1.33% 1.42% 1.44% Net investment income (loss) (j) (0.36)% (0.45)% (0.26)%(k) (0.23)% (0.02)% 0.08% Waiver/reimbursement --%(l) --%(l) 0.02%(k) 0.01% -- 0.11% Portfolio turnover rate 16% 26% 19%(i) 23% 46% 43% Net assets, end of period (000's) $150,042 $146,752 $134,455 $115,468 $100,159 $ 87,457 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 7, 2005, the Columbia Small Cap Fund was renamed the Columbia Small Cap Core Fund. (b) On October 13, 2003, the Liberty Small Cap Fund was redesignated the Columbia Small Cap Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On November 18, 2002, the Galaxy Small Cap Value Fund, Retail A shares were renamed Liberty Small Cap Fund, Class T shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Rounds to less than $0.01 per share. (g) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (h) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (i) Not annualized. (j) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k) Annualized. (l) Rounds to less than 0.01%. 118 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL CAP CORE FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, -------------------------- SEPTEMBER 30, ------------------------------------ CLASS Z SHARES 2005 (a) 2004 (b) 2003 (c)(d) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 17.73 $ 15.45 $ 12.75 $ 14.11 $ 14.38 $ 13.07 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (e) (0.01) (0.03) 0.02 0.03 0.07 0.08 Net realized and unrealized gain (loss) on investments 2.94 2.80 3.34 (0.07) 1.60 2.65 ---------- ---------- -------- -------- -------- -------- Total from investment operations 2.93 2.77 3.36 (0.04) 1.67 2.73 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- (0.01) (0.01) (0.07) (0.06) From net realized gains (1.12) (0.49) (0.65) (1.31) (1.87) (1.36) ---------- ---------- -------- -------- -------- -------- Total distributions declared to shareholders (1.12) (0.49) (0.66) (1.32) (1.94) (1.42) - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 19.54 $ 17.73 $ 15.45 $ 12.75 $ 14.11 $ 14.38 Total return (f) 16.96%(g) 18.12%(g) 27.44%(g)(h) (1.26)%(g) 13.20% 22.62% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 0.88% 0.90% 0.92%(j) 0.90% 0.92% 0.94% Net investment income (loss) (i) (0.06)% (0.15)% 0.14%(j) 0.20% 0.48% 0.58% Waiver/reimbursement --%(k) --%(k) 0.02%(j) 0.01% -- -- Portfolio turnover rate 16% 26% 19%(h) 23% 46% 43% Net assets, end of period (000's) $1,058,362 $1,101,312 $789,666 $485,197 $425,687 $332,703 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 7, 2005, the Columbia Small Cap Fund was renamed the Columbia Small Cap Core Fund. (b) On October 13, 2003, the Liberty Small Cap Fund was renamed the Columbia Small Cap Fund. (c) The Fund changed its fiscal year end from October 31 to September 30. (d) On November 18, 2002, the Galaxy Small Cap Value Fund, Trust shares were redesignated Liberty Small Cap Fund, Class Z shares. (e) Per share data was calculated using average shares outstanding during the period. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. (k) Rounds to less than 0.01%. 119 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED -------------------------- SEPTEMBER 30, CLASS A SHARES 2005 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.94 $ 14.10 $ 11.74 - ---------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.18) (0.19) (0.17) Net realized and unrealized gain on investments 2.39 2.03 2.53 --------- --------- ---------- Total from investment operations 2.21 1.84 2.36 - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 18.15 $ 15.94 $ 14.10 Total return (e) 13.86%(f) 13.05%(f) 20.10%(g) - ---------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.34% 1.35% 1.62%(i) Net investment loss (h) (1.07)% (1.16)% (1.42)%(i) Waiver/reimbursement 0.02% 0.01% -- Portfolio turnover rate 110% 54% 123%(g) Net assets, end of period (000's) $ 5,287 $ 4,586 $ 384 - ---------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class A shares were initially offered on November 18, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares outstanding during the period. (e) Total return at net asset value assuming no initial sales charge or contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (g) Not annualized. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 120 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED -------------------------- SEPTEMBER 30, CLASS B SHARES 2005 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.88 $ 13.26 $ 11.13 - ---------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.29) (0.29) (0.25) Net realized and unrealized gain on investments 2.23 1.91 2.38 --------- --------- ---------- Total from investment operations 1.94 1.62 2.13 - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.82 $ 14.88 $ 13.26 Total return (e) 13.04%(f) 12.22%(f) 19.14%(g) - ---------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.09% 2.09% 2.47%(i) Net investment loss (h) (1.82)% (1.90)% (2.24)%(i) Waiver/reimbursement 0.02% 0.01% -- Portfolio turnover rate 110% 54% 123%(g) Net assets, end of period (000's) $ 2,398 $ 1,826 $ 203 - ---------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class B shares were initially offered on November 18, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares outstanding during the period. (e) Total return at net asset value assuming no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (g) Not annualized. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 121 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED -------------------------- SEPTEMBER 30, CLASS C SHARES 2005 2004 (a) 2003 (b)(c) - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.84 $ 13.22 $ 11.13 - ---------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (d) (0.29) (0.29) (0.29) Net realized and unrealized gain on investments 2.22 1.91 2.38 --------- --------- ---------- Total from investment operations 1.93 1.62 2.09 - ---------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.77 $ 14.84 $ 13.22 Total return (e) 13.01%(f) 12.25%(f) 18.78%(g) - ---------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 2.09% 2.09% 2.84%(i) Net investment loss (h) (1.82)% (1.90)% (2.59)%(i) Waiver/reimbursement 0.02% 0.01% -- Portfolio turnover rate 110% 54% 123%(g) Net assets, end of period (000's) $ 1,074 $ 982 $ 56 - ---------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) Class C shares were initially offered on November 18, 2002. Per share data and total return reflect activity from that date. (d) Per share data was calculated using average shares outstanding during the period. (e) Total return at net asset value assuming no contingent deferred sales charge. (f) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (g) Not annualized. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. 122 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS G SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.85 $ 13.24 $ 10.65 $ 14.30 $ 21.10 $ 15.31 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.28)(d) (0.30)(d) (0.25)(d) (0.27)(d) (0.25) (0.37) Net realized and unrealized gain (loss) on investments 2.22 1.91 2.84 (3.38) (3.15) 6.16 -------- -------- -------- -------- -------- -------- Total from investment operations 1.94 1.61 2.59 (3.65) (3.40) 5.79 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- -- -- (3.40) -- In excess of net realized gains -- -- -- -- --(e) -- -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders -- -- -- -- (3.40) -- - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 16.79 $ 14.85 $ 13.24 $ 10.65 $ 14.30 $ 21.10 Total return (f) 13.06%(g) 12.16%(g) 24.32%(h) (25.52)%(g) (17.66)% 37.82%(g) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 2.04% 2.16% 2.53%(j) 2.29% 2.25% 2.24% Net investment loss (i) (1.77)% (1.98)% (2.34)%(j) (1.97)% (1.74)% (1.79)% Waiver/reimbursement 0.02% 0.01% -- 0.03% -- 0.01% Portfolio turnover rate 110% 54% 123%(h) 96% 75% 91% Net assets, end of period (000's) $ 3,676 $ 4,565 $ 6,651 $ 9,148 $ 15,190 $ 18,936 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Company Equity Fund, Retail B shares were redesignated Liberty Small Company Equity Fund, Class G shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 123 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS T SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 15.92 $ 14.09 $ 11.23 $ 14.95 $ 21.75 $ 15.66 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.19)(d) (0.20)(d) (0.15)(d) (0.16)(d) (0.17) (0.22) Net realized and unrealized gain (loss) on investments 2.38 2.03 3.01 (3.56) (3.23) 6.31 -------- -------- -------- -------- -------- -------- Total from investment operations 2.19 1.83 2.86 (3.72) (3.40) 6.09 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- -- -- (3.40) -- In excess of net realized gains -- -- -- -- --(e) -- -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders -- -- -- -- (3.40) -- - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 18.11 $ 15.92 $ 14.09 $ 11.23 $ 14.95 $ 21.75 Total return (f) 13.76%(g) 12.99%(g) 25.47%(g)(h) (24.88)%(g) (17.03)% 38.89% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.39% 1.41% 1.54%(j) 1.46% 1.42% 1.44% Net investment loss (i) (1.12)% (1.23)% (1.35)%(j) (1.14)% (0.91)% (0.99)% Waiver/reimbursement 0.02% 0.02% 0.05%(j) 0.03% -- -- Portfolio turnover rate 110% 54% 123%(h) 96% 75% 91% Net assets, end of period (000's) $ 67,374 $ 68,359 $ 66,780 $ 57,537 $ 84,332 $125,427 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Company Equity Fund, Retail A shares were redesignated Liberty Small Company Equity Fund, Class T shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 124 FINANCIAL HIGHLIGHTS ___________________________________________________________ COLUMBIA SMALL COMPANY EQUITY FUND SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: YEAR ENDED SEPTEMBER 30, PERIOD ENDED YEAR ENDED OCTOBER 31, ------------------------ SEPTEMBER 30, ------------------------------------ CLASS Z SHARES 2005 2004 (a) 2003 (b)(c) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 16.84 $ 14.85 $ 11.79 $ 15.63 $ 22.48 $ 16.13 - -------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (0.15)(d) (0.15)(d) (0.11)(d) (0.11)(d) (0.10) (0.12) Net realized and unrealized gain (loss) on investments 2.53 2.14 3.17 (3.73) (3.35) 6.47 -------- -------- -------- -------- -------- -------- Total from investment operations 2.38 1.99 3.06 (3.84) (3.45) 6.35 - -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains -- -- -- -- (3.40) -- In excess of net realized gains -- -- -- -- --(e) -- -------- -------- -------- -------- -------- -------- Total distributions declared to shareholders -- -- -- -- (3.40) -- - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 19.22 $ 16.84 $ 14.85 $ 11.79 $ 15.63 $ 22.48 Total return (f) 14.13%(g) 13.40%(g) 25.95%(h) (24.62)%(g) (16.63)% 39.43% - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (i) 1.09% 1.08% 1.12%(j) 1.04% 1.03% 1.03% Net investment loss (i) (0.82)% (0.90)% (0.93)%(j) (0.72)% (0.52)% (0.58)% Waiver/reimbursement 0.02% 0.01% -- 0.01% -- -- Portfolio turnover rate 110% 54% 123%(h) 96% 75% 91% Net assets, end of period (000's) $152,785 $300,109 $293,603 $217,377 $318,414 $422,579 - -------------------------------------------------------------------------------------------------------------------------------- (a) On October 13, 2003, the Liberty Small Company Equity Fund was renamed the Columbia Small Company Equity Fund. (b) The Fund changed its fiscal year end from October 31 to September 30. (c) On November 18, 2002, the Galaxy Small Company Equity Fund, Trust shares were redesignated Liberty Small Company Equity Fund, Class Z shares. (d) Per share data was calculated using average shares outstanding during the period. (e) Rounds to less than $0.01 per share. (f) Total return at net asset value assuming all distributions reinvested. (g) Had the Investment Advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced. (h) Not annualized. (i) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j) Annualized. 125 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ______________________________________________ COLUMBIA EQUITY FUNDS TO THE TRUSTEES OF COLUMBIA FUNDS TRUST XI AND THE SHAREHOLDERS OF: COLUMBIA ASSET ALLOCATION FUND COLUMBIA LARGE CAP GROWTH FUND COLUMBIA DISCIPLINED VALUE FUND COLUMBIA INTERNATIONAL EQUITY FUND COLUMBIA COMMON STOCK FUND (FORMERLY COLUMBIA LARGE CAP CORE FUND) COLUMBIA SMALL CAP CORE FUND (FORMERLY COLUMBIA SMALL CAP FUND) COLUMBIA SMALL COMPANY EQUITY FUND In our opinion, the accompanying statements of assets and liabilities, including the investment portfolios, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the above Funds (the "Funds") at September 30, 2005, the results of their operations, for the years then ended, the changes in their net assets, and their financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial statements and financial highlights of the funds as of September 30, 2003 and for fiscal periods ending on or prior to September 30, 2003 were audited by other independent accountants, whose report dated November 14, 2003 expressed an unqualified opinion on those statements and highlights. PricewaterhouseCoopers LLP Boston, Massachusetts November 21, 2005 126 UNAUDITED INFORMATION __________________________________________________________ COLUMBIA EQUITY FUNDS FEDERAL INCOME TAX INFORMATION COLUMBIA ASSET ALLOCATION FUND For the fiscal year ended September 30, 2005, the Fund designates long-term capital gains of $27,645,883. For non-corporate shareholders 58.39% or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2004 to September 30, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. 41.75% of the ordinary income distributed by the Fund, for the year ended September 30, 2005, qualifies for the corporate dividends received deduction. COLUMBIA LARGE CAP GROWTH FUND For non-corporate shareholders 100.00% or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2004 to September 30, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. 100.00% of the ordinary income distributed by the Fund, for the year ended September 30, 2005, qualifies for the corporate dividends received deduction. COLUMBIA DISCIPLINED VALUE FUND For the fiscal year ended September 30, 2005, the Fund designates long-term capital gains of $20,745,146. For non-corporate shareholders 84.76% or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2004 to September 30, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. 77.75% of the ordinary income distributed by the Fund, for the year ended September 30, 2005, qualifies for the corporate dividends received deduction. COLUMBIA COMMON STOCK FUND For the fiscal year ended September 30, 2005, the Fund designates long-term capital gains of $10,012,054. For non-corporate shareholders 46.98% or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2004 to September 30, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. 45.27% of the ordinary income distributed by the Fund, for the year ended September 30, 2005, qualifies for the corporate dividends received deduction. COLUMBIA SMALL CAP CORE FUND For the fiscal year ended September 30, 2005, the Fund designates long-term capital gains of $100,246,715. For non-corporate shareholders 50.18% or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2004 to September 30, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. 59.96% of the ordinary income distributed by the Fund, for the year ended September 30, 2005, qualifies for the corporate dividends received deduction. COLUMBIA SMALL COMPANY EQUITY FUND For the fiscal year ended September 30, 2005, the Fund designates long-term capital gains of $15,404,488. 127 TRUSTEES _______________________________________________________________________ COLUMBIA EQUITY FUNDS The Trustees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN YEAR FIRST ELECTED OR APPOINTED TO OFFICE (1) COLUMBIA FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES DOUGLAS A. HACKER (Age 49) Executive Vice President-Strategy of United Airlines (airline) since December, P.O. Box 66100 2002 (formerly President of UAL Loyalty Services (airline) from September, 2001 Chicago, IL 60666 to December, 2002; Executive Vice President and Chief Financial Officer of Trustee (since 1996) United Airlines from July, 1999 to September, 2001; Senior Vice President-Finance from March, 1993 to July, 1999). Oversees 86, Nash Finch Company (food distributor) -------------------------------------------------------------------------------- JANET LANGFORD KELLY (Age 47) Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP (law firm) since March, 9534 W. Gull Lake Drive 2005; Adjunct Professor of Law, Northwestern University, since September, 2004 Richland, MI 49083-8530 (formerly Chief Administrative Officer and Senior Vice President, Kmart Holding Trustee (since 1996) Corporation (consumer goods) from September, 2003 to March, 2004; Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999). Oversees 86 None -------------------------------------------------------------------------------- RICHARD W. LOWRY (Age 69) Private Investor since August, 1987 (formerly Chairman and Chief Executive 10701 Charleston Drive Officer, U.S. Plywood Corporation (building products manufacturer)). Oversees 89 Vero Beach, FL 32963 (3), None Trustee (since 1995) -------------------------------------------------------------------------------- CHARLES R. NELSON (Age 62) Professor of Economics, University of Washington, since January, 1976; Ford and Department of Economics Louisa Van Voorhis Professor of Political Economy, University of Washington, University of Washington since September, 1993 (formerly Director, Institute for Economic Research, Seattle, WA 98195 University of Washington from September, 2001 to June, 2003); Adjunct Professor Trustee (since 1981) of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. Oversees 86, None -------------------------------------------------------------------------------- JOHN J. NEUHAUSER (Age 63) Academic Vice President and Dean of Faculties since August, 1999, Boston College 84 College Road (formerly Dean, Boston College School of Management from September, 1977 to Chestnut Hill, MA 02467-3838 August, 1999). Oversees 89 (3), Saucony, Inc. (athletic footwear) Trustee (since 1985) -------------------------------------------------------------------------------- 128 ________________________________________________________________________________ COLUMBIA EQUITY FUNDS NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN YEAR FIRST ELECTED OR APPOINTED TO OFFICE (1) COLUMBIA FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES PATRICK J. SIMPSON (Age 61) Partner, Perkins Coie L.L.P. (law firm). Oversees 86, None 1120 N.W. Couch Street Tenth Floor Portland, OR 97209-4128 Trustee (since 2000) -------------------------------------------------------------------------------- THOMAS E. STITZEL (Age 69) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, 2208 Tawny Woods Place College of Business, Boise State University); Chartered Financial Analyst. Boise, ID 83706 Oversees 86, None Trustee (since 1998) -------------------------------------------------------------------------------- THOMAS C. THEOBALD (Age 68) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) 8 Sound Shore Drive, since September, 2004 (formerly Managing Director, William Blair Capital Suite 285 Partners (private equity investing) from September, 1994 to September, 2004). Greenwich, CT 06830 Oversees 86, Anixter International (network support equipment distributor); Trustee and Chairman of the Ventas, Inc. (real estate investment trust); Jones Lang LaSalle (real estate Board (4) (since 1996) management services) and Ambac Financial Group (financial guaranty insurance) -------------------------------------------------------------------------------- ANNE-LEE VERVILLE (Age 60) Retired since 1997 (formerly General Manager, Global Education Industry, IBM 359 Stickney Hill Road Corporation (computer and technology) from 1994 to 1997). Oversees 86, Chairman Hopkinton, NH 03229 of the Board of Directors, Enesco Group, Inc. (designer, importer and Trustee (since 1998) distributor of giftware and collectibles) -------------------------------------------------------------------------------- RICHARD L. WOOLWORTH (Age 64) Retired since December, 2003 (formerly Chairman and Chief Executive Officer, The 100 S.W. Market Street #1500 Regence Group (regional health insurer); Chairman and Chief Executive Officer, Portland, OR 97207 BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Young & Trustee (since 1991) Company). Oversees 86, Northwest Natural Gas Co. (natural gas service provider) -------------------------------------------------------------------------------- INTERESTED TRUSTEE WILLIAM E. MAYER (2) (Age 65) Partner, Park Avenue Equity Partners (private equity) since February, 1999 399 Park Avenue (formerly Partner, Development Capital LLC from November 1996, to February, Suite 3204 1999). Oversees 89 (3), Lee Enterprises (print media), WR Hambrecht + Co. New York, NY 10022 (financial service provider); Reader's Digest (publishing); OPENFIELD Solutions Trustee (since 1994) (retail industry technology provider) -------------------------------------------------------------------------------- (1) In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex. (2) Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. (3) Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 3 funds, which are advised by an affiliate of the Advisor. (4) Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. The Statement of Additional Information includes additional information about the Trustees of the Funds and is available, without charge, upon request by calling 800-426-3750. 129 OFFICERS _______________________________________________________________________ COLUMBIA EQUITY FUNDS NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA FUNDS, YEAR FIRST ELECTED OR APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS CHRISTOPHER L. WILSON (Age 48) Head of Mutual Funds since August, 2004 and Managing Director of the Advisor One Financial Center since September, 2005; President of the Columbia Funds, Liberty Funds and Stein Boston, MA 02111 Roe Funds since October, 2004; President and Chief Executive Officer of the President (since 2004) Nations Funds since January, 2005; President of the Galaxy Funds since April, 2005; Director of Bank of America Global Liquidity Funds, plc since May, 2005; Director of Banc of America Capital Management (Ireland), Limited since May, 2005; Director of FIM Funding, Inc. since January, 2005; Senior Vice President of Columbia Management Distributors, Inc. since January, 2005; Director of Columbia Management Services, Inc. since January, 2005 (formerly Senior Vice President of Columbia Management from January, 2005 to August, 2005; Senior Vice President of BACAP Distributors LLC from January, 2005 to July, 2005; President and Chief Executive Officer, CDC IXIS Asset Management Services, Inc. from September, 1998 to August, 2004). -------------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (Age 41) Treasurer of the Columbia Funds since October, 2003 and of the Liberty Funds, One Financial Center Stein Roe Funds and All-Star Funds since December, 2000; Managing Director of Boston, MA 02111 the Advisor since September, 2005 (formerly Vice President of Columbia Treasurer (since 2000) Management from April, 2003 to August, 2005; President of the Columbia Funds, Liberty Funds and Stein Roe Funds from February, 2004 to October, 2004; Chief Accounting Officer and Controller of the Liberty Funds and All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002 (formerly Treasurer from December, 2002 to December, 2004 and President from February, 2004 to December, 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of Colonial Management Associates, Inc. from February, 1998 to October, 2000). -------------------------------------------------------------------------------- MARY JOAN HOENE (Age 56) Senior Vice President and Chief Compliance Officer of the Columbia Funds, 100 Federal Street Liberty Funds, Stein Roe Funds and All-Star Funds since August, 2004; Chief Boston, Ma 02110 Compliance Officer of the Columbia Management Multi-Strategy Hedge Fund, LLC Senior Vice President and Chief Compliance since August 2004; Chief Compliance Officer of the BACAP Alternative Officer (since 2004) Multi-Strategy Hedge Fund LLC since October 2004 (formerly Partner, Carter, Ledyard & Milburn LLP from January, 2001 to August, 2004; Counsel, Carter, Ledyard & Milburn LLP from November, 1999 to December, 2000; Vice President and Counsel, Equitable Life Assurance Society of the United States from April, 1998 to November, 1999). -------------------------------------------------------------------------------- MICHAEL G. CLARKE (Age 35) Chief Accounting Officer of the Columbia Funds, Liberty Funds, Stein Roe Funds One Financial Center and All-Star Funds since October, 2004; Managing Director of the Advisor since Boston, MA 02111 September, 2005 (formerly Controller of the Columbia Funds, Liberty Funds, Stein Chief Accounting Officer (since 2004) Roe Funds and All-Star Funds from May, 2004 to October, 2004; Assistant Treasurer from June, 2002 to May, 2004; Vice President, Product Strategy & Development of the Liberty Funds and Stein Roe Funds from February, 2001 to June, 2002; Assistant Treasurer of the Liberty Funds, Stein Roe Funds and the All-Star Funds from August, 1999 to February, 2001; Audit Manager, Deloitte & Touche LLP from May, 1997 to August, 1999). -------------------------------------------------------------------------------- JEFFREY R. COLEMAN (Age 35) Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star One Financial Center Funds since October, 2004 (formerly Vice President of CDC IXIS Asset Management Boston, MA 02111 Services, Inc. and Deputy Treasurer of the CDC Nvest Funds and Loomis Sayles Controller (since 2004) Funds from February, 2003 to September, 2004; Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August, 2000 to February, 2003; Tax Manager of PFPC, Inc. from November, 1996 to August, 2000). -------------------------------------------------------------------------------- R. SCOTT HENDERSON (Age 46) Secretary of the Columbia Funds, Liberty Funds and Stein Roe Funds since One Financial Center December, 2004 (formerly Of Counsel, Bingham McCutchen from April, 2001 to Boston, MA 02111 September, 2004; Executive Director and General Counsel, Massachusetts Pension Secretary (since 2004) Reserves Investment Management Board from September, 1997 to March, 2001). -------------------------------------------------------------------------------- 130 COLUMBIA FUNDS _________________________________________________________________ COLUMBIA EQUITY FUNDS ------------------------------------------------- GROWTH FUNDS Columbia Acorn Fund Columbia Acorn Select Columbia Acorn USA Columbia Growth Stock Fund Columbia Large Cap Growth Fund Columbia Marsico 21st Century Fund Columbia Marsico Focused Equities Fund Columbia Marsico Growth Fund Columbia Marsico Mid Cap Growth Fund Columbia Mid Cap Growth Fund Columbia Small Cap Growth Fund I Columbia Small Cap Growth Fund II Columbia Small Company Equity Fund Columbia Tax-Managed Growth Fund ------------------------------------------------- CORE FUNDS Columbia Common Stock Fund Columbia Large Cap Core Fund Columbia Small Cap Core Fund Columbia Young Investor Fund ------------------------------------------------- VALUE FUNDS Columbia Disciplined Value Fund Columbia Dividend Income Fund Columbia Large Cap Value Fund Columbia Mid Cap Value Fund Columbia Small Cap Value Fund I Columbia Small Cap Value Fund II Columbia Strategic Investor ------------------------------------------------- ASSET ALLOCATION/HYBRID FUNDS Columbia Asset Allocation Fund Columbia Asset Allocation Fund II Columbia Balanced Fund Columbia Liberty Fund Columbia LifeGoal TM Balanced Growth Portfolio Columbia LifeGoal TM Growth Portfolio Columbia LifeGoal TM Income Portfolio Columbia LifeGoal TM Income and Growth Portfolio Columbia Thermostat Fund ------------------------------------------------- INDEX FUNDS Columbia Large Cap Enhanced Core Fund Columbia Large Cap Index Fund Columbia Mid Cap Index Fund Columbia Small Cap Index Fund ------------------------------------------------- SPECIALTY FUNDS Columbia Convertible Securities Fund Columbia Real Estate Equity Fund Columbia Technology Fund Columbia Utilities Fund ------------------------------------------------- GLOBAL/INTERNATIONAL FUNDS Columbia Acorn International Columbia Acorn International Select Columbia Global Value Fund Columbia Greater China Fund Columbia International Stock Fund Columbia International Value Fund Columbia Marsico International Opportunities Fund Columbia Multi-Advisor International Equity Fund Columbia World Equity Fund ------------------------------------------------- TAXABLE BOND FUNDS Columbia Conservative High Yield Fund Columbia Core Bond Fund Columbia Federal Securities Fund Columbia High Income Fund Columbia High Yield Opportunity Fund Columbia Income Fund Columbia Intermediate Bond Fund Columbia Intermediate Core Bond Fund Columbia Short Term Bond Fund Columbia Strategic Income Fund Columbia Total Return Bond Columbia U.S. Treasury Index Fund 131 ________________________________________________________________________________ COLUMBIA EQUITY FUNDS ------------------------------------------------- TAX-EXEMPT BOND FUNDS Columbia California Tax-Exempt Fund Columbia CA Intermediate Municipal Bond Fund Columbia Connecticut Tax-Exempt Fund Columbia CT Intermediate Municipal Bond Fund Columbia FL Intermediate Municipal Bond Fund Columbia GA Intermediate Municipal Bond Fund Columbia High Yield Municipal Fund Columbia Intermediate Municipal Bond Fund Columbia MA Intermediate Municipal Bond Fund Columbia Massachusetts Tax-Exempt Fund Columbia MD Intermediate Municipal Bond Fund Columbia Municipal Income Fund Columbia NC Intermediate Municipal Bond Fund Columbia New York Tax-Exempt Fund Columbia NJ Intermediate Municipal Bond Fund Columbia NY Intermediate Municipal Bond Fund Columbia OR Intermediate Municipal Bond Fund Columbia RI Intermediate Municipal Bond Fund Columbia SC Intermediate Municipal Bond Fund Columbia Short Term Municipal Bond Fund Columbia Tax-Exempt Fund Columbia Tax-Exempt Insured Fund Columbia TX Intermediate Municipal Bond Fund Columbia VA Intermediate Municipal Bond Fund ------------------------------------------------- MONEY MARKET FUNDS Columbia Cash Reserves Columbia CA Tax-Exempt Reserves Columbia Government Reserves Columbia Government Plus Reserves Columbia MA Municipal Reserves Columbia Money Market Reserves Columbia Municipal Reserves Columbia NY Tax-Exempt Reserves Columbia Prime Reserves Columbia Tax-Exempt Reserves Columbia Treasury Reserves For complete product information on any Columbia fund, visit our website at www.columbiafunds.com. 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. Columbia Management Advisors, Inc. and Banc of America Capital Management, LLC, both SEC registered investment advisors and wholly owned subsidiaries of Bank of America, N.A., merged on September 30, 2005. At that time, the newly combined advisor changed its name to Columbia Management Advisors, LLC ("CMA"). CMA will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 132 IMPORTANT INFORMATION ABOUT THIS REPORT ________________________________________ COLUMBIA EQUITY FUNDS TRANSFER AGENT 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 Columbia Management Services, Inc. additional reports will be sent to you. P.O. Box 8081 Boston MA 02266-8081 This report has been prepared for shareholders of Columbia Equity Funds. This 800-345-6611 report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment DISTRIBUTOR objectives and operating policies of the funds and with the most recent copy of the Columbia Funds Performance Update. Columbia Management Distributors, Inc. A description of the policies and procedures that the funds use to determine how One Financial Center to vote proxies relating to its portfolio securities and a copy of the funds' Boston MA 02111 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 INVESTMENT ADVISOR charge, upon request, by calling 800-368-0346. Information regarding how the funds voted proxies relating to portfolio securities during the 12-month period Columbia Management Advisors, LLC ended June 30, is available from the SEC's website. Information regarding how 100 Federal Street the funds voted proxies relating to portfolio securities is also available from Boston MA 02110 the funds' website. INDEPENDENT REGISTERED The funds file a complete schedule of portfolio holdings with the SEC for the PUBLIC ACCOUNTING FIRM first and third quarters of each fiscal year on Form N-Q. The funds' Form N-Q is available on the SEC's website at www.sec.gov and may be reviewed and copied at PricewaterhouseCoopers LLP the SEC's Public Reference Room in Washington, D.C. Information on the operation 125 High Street of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Boston MA 02110 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. Columbia Management Advisors, Inc. and Banc of America Capital Management, LLC, both SEC registered investment advisors and wholly owned subsidiaries of Bank of America, N.A, merged on September 30, 2005. At that time, the newly combined advisor changed its name to Columbia Management Advisors, LLC ("CMA"). CMA will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 133 - -------------------------------------------------------------------------------- [PHOTO OF EDELIVERY] Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. - -------------------------------------------------------------------------------- COLUMBIA EQUITY FUNDS ANNUAL REPORT, SEPTEMBER 30, 2005 ------------- PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 ------------- COLUMBIA MANAGEMENT(R) (c)2005 Columbia Management Distributor, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 www.columbiafunds.com SHC-42/90888-0905 (11/05) 05/8401 [GRAPHIC] COLUMBIA DIVIDEND INCOME FUND Annual Report September 30, 2005 PRESIDENT'S MESSAGE ----------------------------------------------------------- Columbia Dividend Income Fund [PHOTO] Christopher L. Wilson Dear Shareholder: Columbia Management, the asset management division of Bank of America, is in the final stages of a significant business integration effort. Over the last year, we have integrated various components of Nations Funds, Galaxy Funds and Columbia Funds, resulting in a single fund family under the Columbia name that covers a wide range of markets, sectors and asset classes. Our team of talented, seasoned investment professionals will continue to strive to achieve strong results within their investment categories. Our objective is not only to provide our shareholders with the best products, but also to enhance the breadth and availability of our services. In addition to expanding the level of services available to the funds, portfolio managers and shareholders, we have been able to achieve significant cost savings for the funds by aggregating our business. In September, we made major inroads in the initiative to streamline our product offerings. This included merging several funds and renaming Nations Funds as Columbia Funds, as well as consolidating the Nations and Columbia web sites. Over the summer, we completed the service provider consolidation for shareholder servicing. As we work to complete the remaining product and service provider consolidations by the end of 2005, we remain committed to building a mutual fund business that helps you meet, and hopefully exceed, your personal financial goals. We value the confidence you have placed in us to assist you in managing your funds during these changing times. As with all businesses within Bank of America, we understand that your trust must be continually earned and will remain focused on producing results for you. We will continue to strive for the highest standards of performance and service excellence. All of these efforts have been undertaken to enable you, as a shareholder, to benefit from the execution of a consolidated business plan. We believe a more streamlined fund family with consistent performance and lower fees will provide the best opportunity for investment growth. We also believe that providing more robust services to you through multiple channels (Web, phones, voice response) will be beneficial to you. 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 managers on key factors that influenced performance. We encourage you to read the manager reports carefully and discuss any questions you have with your financial advisor. As always, we thank you for choosing Columbia Management. We look forward to helping you keep your financial goals on target in the years to come. Sincerely, /s/ Christopher L. Wilson Christopher L. Wilson President, Columbia Funds Head of Mutual Funds, Columbia Management Christopher L. Wilson is Head of Mutual Funds for Columbia Management and responsible for the day-to-day delivery of mutual fund services to the firm's investors. Working closely with the Legal and Compliance teams, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. As President and CEO of Columbia Funds (formerly Nations, Galaxy and Columbia Funds), Chris serves as the primary interface to the Fund Boards. Chris joined Bank of America in 2004. Table of Contents Performance Information.... 1 Fund Profile............... 2 Understanding Your Expenses 3 Economic Update............ 4 Portfolio Managers' Report. 5 Financial Statements....... 7 Investment Portfolio..... 8 Statement of Assets and Liabilities.. 13 Statement of Operations.............. 15 Statement of Changes in Net Assets... 16 Notes to Financial Statements........ 18 Financial Highlights................. 24 Report of Independent Registered Public Accounting Firm...... 30 Unaudited Information.................. 31 Trustees............................... 32 Officers............................... 34 Columbia Funds......................... 35 Important Information About This Report...................... 37 The views expressed in the President's Message and Portfolio Managers' Report reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Fund. References to specific company securities should not be construed as a recommendation or investment advice. -------------------------- Not FDIC May Lose Value Insured ----------------- No Bank Guarantee - ----------------- PERFORMANCE INFORMATION ----------------------------- Columbia Dividend Income Fund 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 of a $10,000 investment 03/04/98 - 09/30/05 ($) sales charge: without with ---------------------------- Class A 15,570 14,675 ---------------------------- Class B 14,806 14,806 ---------------------------- Class C 14,794 14,794 ---------------------------- Class G 14,800 14,800 ---------------------------- Class T 15,542 14,649 ---------------------------- Class Z 16,064 n/a Growth of a $10,000 investment 03/04/98 - 09/30/05 [CHART] Class A Class A shares without shares with Russell 1000 sales charge sales charge Value Index -------------- ------------- ------------- $10,000 $ 9,425 $10,000 03/05/1998 - 03/31/1998 10,230 9,642 10,565 04/01/1998 - 04/30/1998 10,170 9,585 10,636 05/01/1998 - 05/31/1998 9,760 9,199 10,478 06/01/1998 - 06/30/1998 9,635 9,081 10,612 07/01/1998 - 07/31/1998 9,425 8,883 10,426 08/01/1998 - 08/31/1998 7,864 7,412 8,874 09/01/1998 - 09/30/1998 8,555 8,063 9,384 10/01/1998 - 10/31/1998 9,625 9,071 10,111 11/01/1998 - 11/30/1998 9,835 9,269 10,582 12/01/1998 - 12/31/1998 10,262 9,672 10,942 01/01/1999 - 01/31/1999 10,302 9,710 11,030 02/01/1999 - 02/28/1999 10,072 9,492 10,874 03/01/1999 - 03/31/1999 10,489 9,885 11,099 04/01/1999 - 04/30/1999 11,351 10,698 12,136 05/01/1999 - 05/31/1999 11,431 10,774 12,002 06/01/1999 - 06/30/1999 11,693 11,021 12,350 07/01/1999 - 07/31/1999 11,251 10,604 11,988 08/01/1999 - 08/31/1999 10,759 10,141 11,544 09/01/1999 - 09/30/1999 10,097 9,516 11,141 10/01/1999 - 10/31/1999 9,936 9,365 11,783 11/01/1999 - 11/30/1999 9,885 9,317 11,691 12/01/1999 - 12/31/1999 10,266 9,676 11,747 01/01/2000 - 01/31/2000 9,876 9,308 11,364 02/01/2000 - 02/29/2000 9,704 9,146 10,519 03/01/2000 - 03/31/2000 11,088 10,450 11,803 04/01/2000 - 04/30/2000 11,191 10,548 11,666 05/01/2000 - 05/31/2000 11,409 10,753 11,788 06/01/2000 - 06/30/2000 10,965 10,335 11,250 07/01/2000 - 07/31/2000 10,839 10,216 11,390 08/01/2000 - 08/31/2000 11,460 10,801 12,024 09/01/2000 - 09/30/2000 11,481 10,821 12,134 10/01/2000 - 10/31/2000 12,033 11,341 12,433 11/01/2000 - 11/30/2000 11,665 10,994 11,971 12/01/2000 - 12/31/2000 12,549 11,828 12,571 01/01/2001 - 01/31/2001 13,644 12,859 12,619 02/01/2001 - 02/28/2001 13,227 12,467 12,268 03/01/2001 - 03/31/2001 12,856 12,117 11,835 04/01/2001 - 04/30/2001 13,677 12,891 12,415 05/01/2001 - 05/31/2001 13,856 13,060 12,694 06/01/2001 - 06/30/2001 13,565 12,785 12,413 07/01/2001 - 07/31/2001 13,530 12,752 12,386 08/01/2001 - 08/31/2001 12,804 12,067 11,890 09/01/2001 - 09/30/2001 11,590 10,923 11,053 10/01/2001 - 10/31/2001 11,935 11,249 10,958 11/01/2001 - 11/30/2001 12,971 12,225 11,594 12/01/2001 - 12/31/2001 13,555 12,775 11,868 01/01/2002 - 01/31/2002 13,135 12,379 11,777 02/01/2002 - 02/28/2002 13,160 12,403 11,795 03/01/2002 - 03/31/2002 13,737 12,947 12,353 04/01/2002 - 04/30/2002 13,502 12,726 11,930 05/01/2002 - 05/31/2002 13,317 12,552 11,989 06/01/2002 - 06/30/2002 12,168 11,468 11,301 07/01/2002 - 07/31/2002 11,081 10,444 10,250 08/01/2002 - 08/31/2002 11,218 10,573 10,328 09/01/2002 - 09/30/2002 9,759 9,198 9,180 10/01/2002 - 10/31/2002 10,564 9,956 9,860 11/01/2002 - 11/30/2002 11,237 10,590 10,481 12/01/2002 - 12/31/2002 10,759 10,140 10,026 01/01/2003 - 01/31/2003 10,449 9,848 9,783 02/01/2003 - 02/28/2003 9,879 9,311 9,522 03/01/2003 - 03/31/2003 9,882 9,313 9,538 04/01/2003 - 04/30/2003 10,616 10,005 10,378 05/01/2003 - 05/31/2003 11,449 10,791 11,048 06/01/2003 - 06/30/2003 11,700 11,027 11,186 07/01/2003 - 07/31/2003 11,612 10,944 11,353 08/01/2003 - 08/31/2003 11,775 11,098 11,530 09/01/2003 - 09/30/2003 11,611 10,943 11,417 10/01/2003 - 10/31/2003 12,037 11,345 12,116 11/01/2003 - 11/30/2003 12,125 11,428 12,281 12/01/2003 - 12/31/2003 13,028 12,279 13,037 01/01/2004 - 01/31/2004 13,179 12,422 13,266 02/01/2004 - 02/29/2004 13,469 12,695 13,550 03/01/2004 - 03/31/2004 13,383 12,614 13,431 04/01/2004 - 04/30/2004 13,130 12,375 13,103 05/01/2004 - 05/31/2004 13,155 12,399 13,237 06/01/2004 - 06/30/2004 13,453 12,679 13,549 07/01/2004 - 07/31/2004 13,338 12,571 13,358 08/01/2004 - 08/31/2004 13,554 12,775 13,548 09/01/2004 - 09/30/2004 13,771 12,979 13,758 10/01/2004 - 10/31/2004 13,873 13,075 13,986 11/01/2004 - 11/30/2004 14,485 13,652 14,694 12/01/2004 - 12/31/2004 14,927 14,068 15,186 01/01/2005 - 01/31/2005 14,697 13,852 14,916 02/01/2005 - 02/28/2005 15,221 14,346 15,410 03/01/2005 - 03/31/2005 14,999 14,137 15,199 04/01/2005 - 04/30/2005 14,896 14,039 14,927 05/01/2005 - 05/31/2005 15,127 14,257 15,286 06/01/2005 - 06/30/2005 15,157 14,285 15,453 07/01/2005 - 07/31/2005 15,480 14,590 15,900 08/01/2005 - 08/31/2005 15,376 14,492 15,831 09/01/2005 - 09/30/2005 15,570 14,675 16,052 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A shares of Columbia Dividend Income Fund during the stated period, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 1000 Value Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Index performance is from March 4, 1998. Average annual total return as of 09/30/05 (%) Share class A B C G T Z - --------------------------------------------------------------------------------------- Inception 11/25/02 11/25/02 11/25/02 03/04/98 03/04/98 03/04/98 - --------------------------------------------------------------------------------------- Sales charge without with without with without with without with without with without - --------------------------------------------------------------------------------------- 1-year 13.10 6.59 12.23 7.23 12.24 11.24 12.30 7.30 13.04 6.53 13.38 - --------------------------------------------------------------------------------------- 5-year 6.28 5.03 5.46 5.14 5.44 5.44 5.45 4.96 6.24 4.99 6.69 - --------------------------------------------------------------------------------------- Life 6.02 5.19 5.32 5.32 5.31 5.31 5.31 5.31 5.99 5.17 6.46 - --------------------------------------------------------------------------------------- THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A AND T SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND G SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. 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. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Class A, class B and class C are newer classes of shares. Their performance information includes returns of the fund's class T shares (for class A) and class G shares (for class B and class C) for periods prior to their inception. The returns shown for class T and G shares include the returns of Retail A shares (for class T) and Retail B shares (for class G) of the Galaxy fund for periods prior to November 25, 2002, the date on which class A, B and C shares were initially offered by the fund and the date the Galaxy fund merged into the existing fund. The returns have not been restated to reflect any differences in expenses between the predecessor shares and the newer classes of shares. If differences in expenses had been reflected, the returns shown for periods prior to the inception of the newer classes of shares would have been lower. The returns for class G and class T shares include the returns of Retail A shares (for class T shares) and Retail B shares (for class G shares) of the Galaxy fund for periods prior to November 25, 2002, the date on which class T and class G shares were initially offered by the fund. Retail A shares and Retail B shares of the Galaxy fund were initially offered on March 4, 1998. The returns for class Z shares include returns of Trust shares of the Galaxy fund for periods prior to November 25, 2002, the date on which class Z shares were initially offered by the fund. Trust shares were initially offered by the Galaxy fund on March 4, 1998. 1 FUND PROFILE ----------------------------- Columbia Dividend Income Fund The information below gives you a snapshot of your fund at the end of the reporting period. Your fund is actively managed and the composition of its portfolio will change over time. Top 10 holdings as of 09/30/05 (%) Exxon Mobil 4.5 -------------------- General Electric 3.8 -------------------- Citigroup 3.3 -------------------- Pfizer 3.2 -------------------- GlaxoSmithKline 2.2 -------------------- Altria Group 2.1 -------------------- ChevronTexaco 2.1 -------------------- BP 2.0 -------------------- Hewlett-Packard 2.0 -------------------- Lincoln National 1.8 -------------------- Sectors as of 09/30/05 (%) Financials 31.8 ------------------------------- Energy 12.1 ------------------------------- Health care 10.2 ------------------------------- Industrials 9.7 ------------------------------- Consumer staples 9.4 ------------------------------- Information technology 7.4 ------------------------------- Consumer discretionary 5.7 ------------------------------- Telecommunication services 5.2 ------------------------------- Utilities 4.9 ------------------------------- Materials 3.8 ------------------------------- Portfolio holdings are calculated as a percentage of net assets. Sector breakdown is calculated as a percentage of total investments excluding short-term investments. Management style is determined by Columbia Management and is based on the investment strategy and process as outlined in the fund's prospectus. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Summary .. For the 12-month period ended September 30, 2005, the fund's class A shares returned 13.10% without sales charge. .. A generally favorable environment for value stocks helped the fund, its benchmark and peer group to a double-digit return for the period. .. We took a relatively cautious approach to energy and utilities stocks, which were factors in the fund's shortfall relative to its benchmark, the Russell 1000 Value Index, and the average return of its peer group, the Lipper Equity Income Funds Category. .. We increased the fund's dividend by 17.6% over the previous one-year period. [GRAPHIC] Class A shares 13.10% Russell 1000 Value Index 16.69% Objective Seeks current income and capital appreciation. Total Net Assets $509.4 million Management style [GRAPHIC] 2 UNDERSTANDING YOUR EXPENSES --------------------------------------------------- Columbia Dividend Income Fund Estimating your actual expenses To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: .. For shareholders who receive their account statements from Columbia Management Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611. .. For shareholders who receive their account statements from their brokerage firm, contact your brokerage firm to obtain your account balance. 1.Divide your ending account balance by $1,000. For example, if an account balance was $8,600 at the end of the period, the result would be 8.6. 2.In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period. As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory fees, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. Analyzing your fund's expenses by share class To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 04/01/05 - 09/30/05 Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) - ------------------------------------------------------------------------------------------------- Actual Hypothetical Actual Hypothetical Actual Hypothetical - ------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1,038.40 1,019.80 5.37 5.32 1.05 - ------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1,034.29 1,016.04 9.18 9.10 1.80 - ------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1,034.39 1,016.04 9.18 9.10 1.80 - ------------------------------------------------------------------------------------------------- Class G 1,000.00 1,000.00 1,034.59 1,016.29 8.93 8.85 1.75 - ------------------------------------------------------------------------------------------------- Class T 1,000.00 1,000.00 1,038.10 1,019.55 5.62 5.57 1.10 - ------------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 1,039.61 1,021.06 4.09 4.05 0.80 - ------------------------------------------------------------------------------------------------- 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. Had the Investment Advisor and Transfer Agent not waived or reimbursed a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning shares of different funds. If these transactional costs were included, your costs would have been higher. Compare with other funds Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 3 ECONOMIC UPDATE --------------------------------------------------------------- Columbia Dividend Income Fund The US economy moved ahead at a healthy pace during the 12-month period that began October 1, 2004 and ended September 30, 2005. Gross domestic product (GDP) expanded at an annualized rate of 3.8% as job growth helped sustain consumer spending and rising profits boosted business spending. Employment data was solid, even in light of Hurricanes Katrina and Rita, which disrupted the labor market near the end of the period. During the first 11 months of the period, the economy added an average of 185,000 new jobs each month. In September, 8,000 jobs were lost as a direct result of the Gulf Coast floods, and the unemployment rate rose from 4.9% to 5.1%. However, the number of jobs lost was lower than originally estimated -- and considerably lower than expected. Energy prices weighed on economic growth as the period wore on. The first signs of relief came in September as the price of crude oil retreated from a record high of $69.81 a barrel. Signs of slower growth cropped up in retail spending. And, consumer confidence readings dipped in July and fell sharply in September. The decline was the largest in 25 years, according to the University of Michigan's monthly survey. Despite these setbacks, the latest data on the economy suggest that it has retained momentum. Manufacturing activity remained strong, and business activity in non-manufacturing industries continued to expand, although the pace slowed in September. Despite volatility, stocks moved ahead The S&P 500 Index -- a broad measure of large company stock market performance - -- returned 12.25% for this reporting period. The double-digit gain masked considerable volatility. Early in the period, stocks rallied after the presidential election then again in response to positive economic news midway through the period and in the aftermath of two hurricanes. These rallies, however, alternated with declines linked to higher energy prices, rising interest rates and weakening consumer confidence. Small- and mid-cap stocks outperformed large-cap stocks. Value stocks led growth stocks except among small caps, where growth gained a small advantage over value. Bonds delivered modest gains The US bond market delivered positive but modest returns despite steadily rising short-term interest rates and higher long-term rates in the final months of the period. Interest rates and bond prices move in opposite directions. The Lehman Brothers Aggregate Bond Index, a broad measure of the performance of investment-grade bonds returned 2.80% for the 12-month period. The yield on the 10-year US Treasury note, a bellwether for the bond market, ended the period at just over 4.3% -- slightly higher than where it started the period. High-yield bonds led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 6.69%. Short-term interest rates moved higher The Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.75% to 3.75% during the period. In the wake of Hurricanes Katrina and Rita, some market observers speculated that the Fed might curtail its rate hikes. However, Fed Chairman Greenspan indicated that inflation was a greater concern than the sustainability of economic growth and we believe that the Fed is likely to continue to raise short-term interest rates into the first half of 2006. Summary For the 12-month period ended September 30, 2005 .. Despite bouts of volatility, the broad stock market generated a double-digit return for the period. The S&P 500 Index returned 12.25%. As the economy expanded, small-cap stocks outperformed large-cap stocks, as measured by the Russell 2000 Index. [GRAPHIC] .. Investment-grade bonds chalked up modest gains as measured by the Lehman Brothers Aggregate Bond Index. High-yield bonds led the fixed income markets, as measured by the Merrill Lynch US High Yield, Cash Pay Index. [GRAPHIC] The S&P 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization US stocks. The Russell 2000 Index is an unmanaged index that tracks the performance of the 2,000 smallest of the 3,000 largest US companies based on market capitalization. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues. The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that tracks the performance of non-investment-grade corporate bonds. 4 PORTFOLIO MANAGERS' REPORT ---------------------------------------------------- Columbia Dividend Income Fund For the 12-month period ended September 30, 2005, class A shares of Columbia Dividend Income Fund returned 13.10% without sales charge. The fund's benchmark, the Russell 1000 Value Index, returned 16.69% for the same period. The average return of its peer group, the Lipper Equity Income Funds Category, was 13.69%./1/ Compared to its benchmark, the fund had less exposure to the top-performing energy and utility stocks, which held back results. Energy and utility holdings reduced after strong performance Growing corporate earnings drove stocks higher during the first half of the period, but the rally stalled when investors paused to assess the economic impacts of costly energy and higher interest rates. In this environment, we decided to cut back on the fund's energy holdings because valuations were high and yields were declining. This move was a factor in the fund's performance shortfall relative to the index. However, we believe it was a prudent move, especially in light of declining oil and gas prices at the end of the period. An underweight in the strong-performing utilities area also detracted somewhat from results. Within the energy sector, Exxon Mobil and ConocoPhillips were solid contributors. We sold most of the fund's stake in oil services giant Halliburton following a dramatic price rise and realized profits for the fund. In the utility sector, TXU and Public Service Enterprise Group also delivered outstanding performances. In search of value in health care As we moved away from energy, we found attractive valuations in health care, where we doubled the fund's exposure during the period. We emphasized European drug manufacturers, notably Novartis and GlaxoSmithKline, whose dividend yields and growth rates appeared attractive; both stocks made positive contributions to the fund's return. Health insurer Aetna rose sharply. Pfizer and Merck & Co. were disappointments for the period. However, we maintained our positions because we believe that current valuations fail to reflect the long-term potential of both stocks. We also doubled the fund's technology investments, and this move benefited the fund's results. Shares of Hewlett-Packard rose as new management sharpened the company's competitive stance by focusing on costs and core competencies. Cell phone maker Nokia's operational turnaround pushed its shares higher. Within the consumer discretionary sector, we did well to avoid auto and media stocks, which were weak during the period. We took some profits in J.C. Penney Co. because we believe that future earnings gains may be harder to achieve if consumer spending growth slows. Within the consumer staples sector, the fund's position in Altria Group, parent of /1/Lipper Inc., a widely respected data provider in the industry, calculates an average total return for mutual funds with similar investment objectives as those of the fund. 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. Net asset value per share as of 09/30/05 ($) Class A 12.01 ------------- Class B 11.77 ------------- Class C 11.76 ------------- Class G 11.76 ------------- Class T 12.01 ------------- Class Z 12.01 Distributions declared per share 10/01/04 - 09/30/05 ($) Class A 0.20 ------------ Class B 0.11 ------------ Class C 0.11 ------------ Class G 0.12 ------------ Class T 0.19 ------------ Class Z 0.23 5 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Kraft Foods and Philip Morris, benefited from reduced litigation costs. Gillette rose as approval of its acquisition by a leading consumer products company was approved. However, PepsiCo failed to advance despite the company's good operating results. In financials, gains among insurers outweighed declines in banks and brokerages. Chubb and Travelers Property Casualty recorded sharp gains but JPMorgan Chase fell as integration of its BankOne acquisition progressed slowly. Looking ahead Over the past year, the US economy expanded despite sharply increased energy costs and a string of interest-rate hikes. The economic outlook going forward is less clear, and the key to growth is likely to lie in the hands -- and the spending habits -- of American consumers. With this environment in mind, we plan to continue lowering the fund's risk exposure and focusing on companies with good balance sheets, strong cash flow and the demonstrated potential to increase their dividends. The strong growth in corporate profits over the past several years suggests that many companies could have the ability to increase their dividend payouts. In fact, payout ratios of dividends-to-corporate earnings have hit an all-time low. Dividends have historically made a significant contribution to investor returns. And in the current environment of generally modest returns, we believe that a fund with an emphasis on dividends can continue to play an important role in an investor's portfolio. As a result of the change in the fund's objective regarding dividends, the dividend paid by the fund increased 55% in fiscal year 2004 and 17.6% in fiscal year 2005. Scott Davis has co-managed Columbia Dividend Income Fund since November 2001 and has been with the advisor or its predecessors or affiliate organizations since 1985. /s/ Scott L. Davis Richard Dahlberg, CFA, has co-managed the fund since October 2003 and has been with the advisor or its predecessors or affiliate organizations since September 2003. /s/ Richard E. Dahlberg Equity investments are affected by stock market fluctuations that occur in response to economic and business developments. Value stocks are securities of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor. If the advisor's assessment of a company's prospects is wrong, the price of its stock may not approach the value the advisor has placed on it. Holdings discussed in this report as of 09/30/05 (%) Exxon Mobil 4.5 ----------------------------------- ConocoPhillips 0.8 ----------------------------------- Halliburton 0.3 ----------------------------------- TXU 0.8 ----------------------------------- Public Service Enterprise Group 1.2 ----------------------------------- Novartis 1.6 ----------------------------------- GlaxoSmithKline 2.2 ----------------------------------- Aetna 0.8 ----------------------------------- Pfizer 3.2 ----------------------------------- Merck & Co. 0.5 ----------------------------------- Hewlett-Packard 2.0 ----------------------------------- Nokia 1.2 ----------------------------------- J.C. Penney Co. 1.3 ----------------------------------- Altria Group 2.1 ----------------------------------- Gillette 0.7 ----------------------------------- PepsiCo 0.8 ----------------------------------- Chubb 1.0 ----------------------------------- Travelers Property Casualty 0.6 ----------------------------------- JPMorgan Chase 1.7 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. In the current environment of generally modest returns, we believe that a fund with an emphasis on dividends can continue to play an important role in an investor's portfolio. 6 FINANCIAL STATEMENTS ---------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund A guide to understanding your fund's financial statements --------------------------------------------------------------------------- Investment Portfolio The investment portfolio details all of the fund's holdings and their market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset, industry, country or geographic region (if applicable) to demonstrate areas of concentration and diversification. --------------------------------------------------------------------------- Statement of Assets and Liabilities This statement details the fund's assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all the fund's liabilities (including any unpaid expenses) from the total of the fund's investment and non-investment assets. The share price for each class is calculated by dividing net assets for that class by the number of shares outstanding in that class as of the last day of the reporting period. --------------------------------------------------------------------------- Statement of Operations This statement details income earned by the fund and the expenses accrued by the fund during the reporting period. The Statement of Operations also shows any net gain or loss the fund realized on the sales of its holdings during the period, as well as any unrealized gains or losses recognized over the period. The total of these results represents the fund's net increase or decrease in net assets from operations. --------------------------------------------------------------------------- Statement of Changes in Net Assets This statement demonstrates how the fund's net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and dividend reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding. --------------------------------------------------------------------------- Notes to Financial Statements These notes disclose the organizational background of the fund, its significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies. --------------------------------------------------------------------------- Financial Highlights The financial highlights demonstrate how the fund's net asset value per share was affected by the fund's operating results. The financial highlights table also discloses the classes' performance and certain key ratios (e.g., class expenses and net investment income as a percentage of average net assets). 7 INVESTMENT PORTFOLIO ---------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund Common Stocks - 91.7% CONSUMER DISCRETIONARY - 5.5% Shares Value ($) - ------------------------------------ ----------------------------------- --------- ---------- Hotels, Restaurants & Leisure - 1.2% McDonald's Corp. 186,525 6,246,722 Hotels, Restaurants & Leisure Total 6,246,722 ----------------------------------- --------- ---------- Media - 1.9% McGraw-Hill Companies, Inc. 56,000 2,690,240 Meredith Corp. 48,000 2,394,720 Time Warner, Inc. 261,000 4,726,710 Media Total 9,811,670 ----------------------------------- --------- ---------- Multiline Retail - 1.9% Federated Department Stores, Inc. 38,000 2,541,060 J.C. Penney Co., Inc. 144,500 6,852,190 Multiline Retail Total 9,393,250 ----------------------------------- --------- ---------- Specialty Retail - 0.5% Sherwin-Williams Co. 56,000 2,467,920 Specialty Retail Total 2,467,920 ---------- CONSUMER DISCRETIONARY TOTAL 27,919,562 CONSUMER STAPLES - 9.2% - ------------------------------------ ----------------------------------- --------- ---------- Beverages - 2.7% Anheuser-Busch Companies, Inc. 34,000 1,463,360 Diageo PLC, ADR 140,500 8,150,405 PepsiCo, Inc. 74,500 4,224,895 Beverages Total 13,838,660 ----------------------------------- --------- ---------- Food Products - 0.9% General Mills, Inc. 50,000 2,410,000 Kraft Foods, Inc., Class A 72,000 2,202,480 Food Products Total 4,612,480 ----------------------------------- --------- ---------- Household Products - 1.5% Clorox Co. 44,000 2,443,760 Kimberly-Clark Corp. 86,000 5,119,580 Household Products Total 7,563,340 ----------------------------------- --------- ---------- Personal Products - 0.7% Gillette Co. 60,000 3,492,000 Personal Products Total 3,492,000 ----------------------------------- --------- ---------- Tobacco - 3.4% Altria Group, Inc. 148,500 10,945,935 Reynolds American, Inc. 44,000 3,652,880 UST, Inc. 60,000 2,511,600 Tobacco Total 17,110,415 ---------- CONSUMER STAPLES TOTAL 46,616,895 ENERGY - 11.7% - ------------------------------------ ----------------------------------- --------- ---------- Energy Equipment & Services - 0.3% Halliburton Co. 20,000 1,370,400 Energy Equipment & Services Total 1,370,400 ----------------------------------- --------- ---------- Oil, Gas & Consumable Fuels - 11.4% BP PLC, ADR 146,500 10,379,525 ChevronTexaco Corp. 164,500 10,648,085 ConocoPhillips 60,000 4,194,600 Exxon Mobil Corp. 359,000 22,810,860 Kinder Morgan, Inc. 58,000 5,577,280 Royal Dutch Shell PLC, Class A, ADR 72,500 4,758,900 Oil, Gas & Consumable Fuels Total 58,369,250 ---------- ENERGY TOTAL 59,739,650 See Accompanying Notes to Financial Statements. 8 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund Common Stocks - (continued) FINANCIALS - 26.2% Shares Value ($) - --------------------------------------- ------------------------------------ ------- ----------- Capital Markets - 3.4% Bank of New York Co., Inc. 119,500 3,514,495 Federated Investors, Inc., Class B 240,000 7,975,200 Morgan Stanley 102,500 5,528,850 Capital Markets Total 17,018,545 ------------------------------------ ------- ----------- Commercial Banks - 5.5% National City Corp. 159,650 5,338,696 PNC Financial Services Group, Inc. 42,250 2,451,345 U.S. Bancorp 263,000 7,385,040 Wachovia Corp. 150,500 7,162,295 Wells Fargo & Co. 97,500 5,710,575 Commercial Banks Total 28,047,951 ------------------------------------ ------- ----------- Consumer Finance - 0.8% MBNA Corp. 162,000 3,991,680 Consumer Finance Total 3,991,680 ------------------------------------ ------- ----------- Diversified Financial Services - 5.0% Citigroup, Inc. 371,000 16,887,920 JPMorgan Chase & Co. 254,000 8,618,220 Diversified Financial Services Total 25,506,140 ------------------------------------ ------- ----------- Insurance - 8.2% Allstate Corp. 50,000 2,764,500 Arthur J. Gallagher & Co. 201,000 5,790,810 Chubb Corp. 55,000 4,925,250 Lincoln National Corp. 175,500 9,129,510 MBIA, Inc. 85,000 5,152,700 St. Paul Travelers Companies, Inc. 136,500 6,124,755 UnumProvident Corp. 255,000 5,227,500 Willis Group Holdings Ltd. 72,500 2,722,375 Insurance Total 41,837,400 ------------------------------------ ------- ----------- Real Estate - 2.4% Archstone-Smith Trust, REIT 45,000 1,794,150 AvalonBay Communities, Inc., REIT 11,000 942,700 Equity Office Properties Trust, REIT 64,000 2,093,440 Kimco Realty Corp., REIT 72,000 2,262,240 New Plan Excel Realty Trust, REIT 183,000 4,199,850 Vornado Realty Trust, REIT 10,500 909,510 Real Estate Total 12,201,890 ------------------------------------ ------- ----------- Thrifts & Mortgage Finance - 0.9% Freddie Mac 84,500 4,770,870 Thrifts & Mortgage Finance Total 4,770,870 ----------- FINANCIALS TOTAL 133,374,476 HEALTH CARE - 9.8% - --------------------------------------- ------------------------------------ ------- ----------- Health Care Providers & Services - 0.8% Aetna, Inc. 46,000 3,962,440 Health Care Providers & Services Total 3,962,440 ------------------------------------ ------- ----------- Pharmaceuticals - 9.0% Abbott Laboratories 130,500 5,533,200 Bristol-Myers Squibb Co. 112,000 2,694,720 GlaxoSmithKline PLC, ADR 216,000 11,076,480 Merck & Co., Inc. 88,500 2,408,085 Novartis AG, ADR 155,500 7,930,500 Pfizer, Inc. 662,000 16,530,140 Pharmaceuticals Total 46,173,125 ----------- HEALTH CARE TOTAL 50,135,565 See Accompanying Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund Common Stocks - (continued) INDUSTRIALS - 9.4% Shares Value ($) - --------------------------------------------- ------------------------------------------------- ------- ---------- Aerospace & Defense - 1.7% Boeing Co. 60,000 4,077,000 United Technologies Corp. 84,500 4,380,480 Aerospace & Defense Total 8,457,480 ------------------------------------------------- ------- ---------- Building Products - 0.9% Masco Corp. 155,500 4,770,740 Building Products Total 4,770,740 ------------------------------------------------- ------- ---------- Commercial Services & Supplies - 1.2% Waste Management, Inc. 206,000 5,893,660 Commercial Services & Supplies Total 5,893,660 ------------------------------------------------- ------- ---------- Industrial Conglomerates - 4.8% General Electric Co. 582,000 19,595,940 Textron, Inc. 68,500 4,912,820 Industrial Conglomerates Total 24,508,760 ------------------------------------------------- ------- ---------- Machinery - 0.8% Deere & Co. 66,500 4,069,800 Machinery Total 4,069,800 ---------- INDUSTRIALS TOTAL 47,700,440 INFORMATION TECHNOLOGY - 7.1% - --------------------------------------------- ------------------------------------------------- ------- ---------- Communications Equipment - 1.2% Nokia Oyj, ADR 351,500 5,943,865 Communications Equipment Total 5,943,865 ------------------------------------------------- ------- ---------- Computers & Peripherals - 2.8% Diebold, Inc. 117,194 4,038,505 Hewlett-Packard Co. 348,000 10,161,600 Computers & Peripherals Total 14,200,105 ------------------------------------------------- ------- ---------- IT Services - 0.9% Automatic Data Processing, Inc. 110,500 4,755,920 IT Services Total 4,755,920 ------------------------------------------------- ------- ---------- Semiconductors & Intel Corp. 191,000 4,708,150 Semiconductor Equipment - 2.2% KLA-Tencor Corp. 36,000 1,755,360 Taiwan Semiconductor Manufacturing Co., Ltd., ADR 602,500 4,952,550 Semiconductors & Semiconductor Equipment Total 11,416,060 ---------- INFORMATION TECHNOLOGY TOTAL 36,315,950 MATERIALS - 3.1% - --------------------------------------------- ------------------------------------------------- ------- ---------- Chemicals - 2.3% Dow Chemical Co. 115,000 4,792,050 E.I. du Pont de Nemours & Co. 106,000 4,152,020 Lyondell Chemical Co. 96,000 2,747,520 Chemicals Total 11,691,590 ------------------------------------------------- ------- ---------- Paper & Forest Products - 0.8% Weyerhaeuser Co. 56,000 3,850,000 Paper & Forest Products Total 3,850,000 ---------- MATERIALS TOTAL 15,541,590 TELECOMMUNICATION SERVICES - 5.0% - --------------------------------------------- ------------------------------------------------- ------- ---------- Diversified Telecommunication Services - 4.2% BellSouth Corp. 263,000 6,916,900 SBC Communications, Inc. 297,000 7,119,090 Verizon Communications, Inc. 231,000 7,551,390 Diversified Telecommunication Services Total 21,587,380 See Accompanying Notes to Financial Statements. 10 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund Common Stocks - (continued) TELECOMMUNICATION SERVICES - (continued) Shares Value ($) - ------------------------------------------ ------------------------------------------------ ------- ----------- Wireless Telecommunication Services - 0.8% Vodafone Group PLC, ADR 158,000 4,103,260 Wireless Telecommunication Services Total 4,103,260 ----------- TELECOMMUNICATION SERVICES TOTAL 25,690,640 UTILITIES - 4.7% - ------------------------------------------ ------------------------------------------------ ------- ----------- Electric Utilities - 0.7% Southern Co. 92,000 3,289,920 Electric Utilities Total 3,289,920 ------------------------------------------------ ------- ----------- Independent Power TXU Corp. 38,000 4,289,440 Producers & Energy Traders - 0.8% Independent Power Producers & Energy Traders Total 4,289,440 ------------------------------------------------ ------- ----------- Multi-Utilities - 3.2% Consolidated Edison, Inc. 20,000 971,000 Dominion Resources, Inc. 70,500 6,072,870 Public Service Enterprise Group, Inc. 96,000 6,178,560 Sempra Energy 70,000 3,294,200 Multi-Utilities Total 16,516,630 ----------- UTILITIES TOTAL 24,095,990 Total Common Stocks (cost of $423,628,468) 467,130,758 Convertible Preferred Stocks - 5.3% FINANCIALS - 4.6% - ------------------------------------------ ------------------------------------------------ ------- ----------- Diversified Financial Services - 0.5% Merrill Lynch & Co., Inc., 6.750% 74,500 2,812,375 Diversified Financial Services Total 2,812,375 ------------------------------------------------ ------- ----------- Insurance - 4.1% Hartford Financial Services Group, Inc., 7.000% 44,000 3,086,600 Travelers Property Casualty Corp., 4.500% 132,500 3,187,950 XL Capital Ltd., 6.500% 263,000 6,004,290 UnumProvident Corp., 8.250% 144,500 5,720,466 Genworth Financial, Inc., 6.000% 74,000 2,656,600 Insurance Total 20,655,906 ----------- FINANCIALS TOTAL 23,468,281 MATERIALS - 0.7% - ------------------------------------------ ------------------------------------------------ ------- ----------- Metals & Mining - 0.7% Freeport-McMoRan Copper & Gold, Inc., 5.500% (a) 2,425 2,678,412 Freeport-McMoRan Copper & Gold, Inc., 5.500% 575 635,088 Metals & Mining Total 3,313,500 ----------- MATERIALS TOTAL 3,313,500 Total Convertible Preferred Stocks (cost of $25,287,559) 26,781,781 See Accompanying Notes to Financial Statements. 11 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund Short-Term Obligation - 3.0% Par ($) Value ($) - ---------------------------- -------------------------------------------------- ---------- ----------- Repurchase agreement with State Street Bank & Trust Co., dated 09/30/05, due 10/03/05 at 3.150%, collateralized by a U.S. Treasury Bond maturing 08/15/19, market value of $15,594,159 (repurchase proceeds $15,287,012) 15,283,000 15,283,000 Total Short-Term Obligation (cost of $15,283,000) 15,283,000 Total Investments - 100.0% (cost of $464,199,027) (b) 509,195,539 Other Assets & Liabilities, Net - 0.0% 221,037 Net Assets - 100.0% 509,416,576 NOTES TO INVESTMENT PORTFOLIO: (a)Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2005, this security, which is not illiquid, amounted to $2,678,412, which represents 0.5% of net assets. (b)Cost for federal income tax purposes is $464,845,505. At September 30, 2005, the Fund held investments in the following sectors: SECTOR (UNAUDITED) % OF NET ASSETS ----------------------------------------------- Financials 30.8% Energy 11.7 Health Care 9.8 Industrials 9.4 Consumer Staples 9.2 Information Technology 7.1 Consumer Discretionary 5.5 Telecommunication Services 5.0 Utilities 4.7 Materials 3.8 Short-Term Obligation 3.0 Other Assets & Liabilities, Net 0.0 ----- 100.0% ----- ACRONYM NAME ------------------------------------ ADR American Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. 12 STATEMENT OF ASSETS AND LIABILITIES ------------------------------------------- September 30, 2005 Columbia Dividend Income Fund ($) - ------------------------- ------------------------------------------------- ----------- Assets Investments, at cost 464,199,027 ----------- Investments, at value 509,195,539 Cash 72,432 Receivable for: Fund shares sold 2,179,186 Interest 1,337 Dividends 1,163,919 Foreign tax reclaims 3,157 Expense reimbursement due from Investment Advisor 73,989 Deferred Trustees' compensation plan 22,691 ----------- Total Assets 512,712,250 ------------------------------------------------- ----------- Liabilities Payable for: Investments purchased 74,200 Fund shares repurchased 1,041,499 Distributions 1,700,815 Investment advisory fee 283,366 Administration fee 26,528 Transfer agent fee 36,685 Pricing and bookkeeping fees 7,757 Trustees' fees 1,000 Custody fee 1,900 Distribution and service fees 49,719 Chief compliance officer expenses and fees 1,325 Deferred Trustees' fees 22,691 Other liabilities 48,189 ----------- Total Liabilities 3,295,674 Net Assets 509,416,576 ------------------------------------------------- ----------- Composition of Net Assets Paid-in capital 489,482,202 Undistributed net investment income 691,668 Accumulated net realized loss (25,753,806) Net unrealized appreciation on investments 44,996,512 ----------- Net Assets 509,416,576 See Accompanying Notes to Financial Statements. 13 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund ($) ------- -------------------------------------------------------- ----------- Class A Net assets 27,533,814 Shares outstanding 2,291,918 Net asset value per share 12.01(a) Maximum offering price per share ($12.01/0.9425) 12.74(b) -------------------------------------------------------- ----------- Class B Net assets 17,359,442 Shares outstanding 1,474,474 Net asset value and offering price per share 11.77(a) -------------------------------------------------------- ----------- Class C Net assets 3,959,346 Shares outstanding 336,560 Net asset value and offering price per share 11.76(a) -------------------------------------------------------- ----------- Class G Net assets 3,291,196 Shares outstanding 279,791 Net asset value and offering price per share 11.76(a) -------------------------------------------------------- ----------- Class T Net assets 99,147,649 Shares outstanding 8,253,636 Net asset value per share 12.01(a) Maximum offering price per share ($12.01/0.9425) 12.74(b) -------------------------------------------------------- ----------- Class Z Net assets 358,125,129 Shares outstanding 29,812,803 Net asset value, offering and redemption price per share 12.01 (a)Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b)On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 14 STATEMENT OF OPERATIONS ------------------------------------------------------- For the Year Ended September 30, 2005 Columbia Dividend Income Fund ($) - --------------------------------------- -------------------------------------------------------------------- ---------- Investment Income Dividends 11,310,319 Interest 488,364 ---------- Total Investment Income (net of foreign taxes withheld of $97,457) 11,798,683 -------------------------------------------------------------------- ---------- Expenses Investment advisory fee 2,620,258 Administration fee 249,737 Distribution fee: Class B 101,801 Class C 23,255 Class G 32,558 Service fee: Class A 45,248 Class B 33,934 Class C 7,747 Class G 15,027 Shareholder service fee - Class T 305,335 Transfer agent fee 444,428 Pricing and bookkeeping fees 60,286 Trustees' fees 12,894 Custody fee 21,045 Chief compliance officer expenses and fees (See Note 4) 4,154 Non-recurring costs (See Note 8) 6,687 Other expenses 248,738 ---------- Total Operating Expenses 4,233,132 Fees and expenses waived or reimbursed by Investment Advisor (640,062) Fees waived by Transfer Agent (36,389) Non-recurring costs assumed by Investment Advisor (See Note 8) (6,687) Custody earnings credit (878) ---------- Net Expenses 3,549,116 ---------- Net Investment Income 8,249,567 -------------------------------------------------------------------- ---------- Net Realized and Unrealized Gain (Loss) Net realized gain on investments 8,581,689 on Investments Net change in unrealized appreciation (depreciation) on investments 22,296,364 ---------- Net Gain 30,878,053 ---------- Net Increase in Net Assets from Operations 39,127,620 See Accompanying Notes to Financial Statements. 15 STATEMENT OF CHANGES IN NET ASSETS -------------------------------------------- Columbia Dividend Income Fund Year Ended September 30, ------------------------- Increase (Decrease) in Net Assets: 2005 ($) 2004 ($) - -------------------------------------- ---------------------------------------------------- ----------- ----------- Operations Net investment income 8,249,567 3,438,007 Net realized gain (loss) on investments 8,581,689 (2,366,483) Net change in unrealized appreciation (depreciation) on investments 22,296,364 32,219,303 ----------- ----------- Net Increase from Operations 39,127,620 33,290,827 ---------------------------------------------------- ----------- ----------- Distributions Declared to Shareholders From net investment income: Class A (357,318) (74,299) Class B (142,463) (40,442) Class C (32,507) (9,211) Class G (47,160) (73,058) Class T (1,662,095) (1,626,505) Class Z (5,177,094) (1,531,132) ----------- ----------- Total Distributions Declared to Shareholders (7,418,637) (3,354,647) ---------------------------------------------------- ----------- ----------- Share Transactions Class A: Subscriptions 21,781,034 9,356,105 Distributions reinvested 220,237 66,013 Redemptions (3,073,652) (2,933,744) ----------- ----------- Net Increase 18,927,619 6,488,374 Class B: Subscriptions 9,590,976 8,241,367 Distributions reinvested 117,335 34,605 Redemptions (2,399,995) (1,056,587) ----------- ----------- Net Increase 7,308,316 7,219,385 Class C: Subscriptions 2,188,684 2,110,907 Distributions reinvested 21,719 6,757 Redemptions (562,289) (333,548) ----------- ----------- Net Increase 1,648,114 1,784,116 Class G: Subscriptions 133,105 107,766 Distributions reinvested 44,844 71,095 Redemptions (3,469,119) (5,168,967) ----------- ----------- Net Decrease (3,291,170) (4,990,106) Class T: Subscriptions 3,886,648 5,028,502 Distributions reinvested 1,603,116 1,571,011 Redemptions (18,016,121) (17,969,184) ----------- ----------- Net Decrease (12,526,357) (11,369,671) Class Z: Subscriptions 280,460,678 32,779,209 Distributions reinvested 625,654 346,486 Redemptions (30,665,757) (28,389,060) ----------- ----------- Net Increase 250,420,575 4,736,635 Net Increase from Share Transactions 262,487,097 3,868,733 ----------- ----------- Total Increase in Net Assets 294,196,080 33,804,913 ---------------------------------------------------- ----------- ----------- Net Assets Beginning of period 215,220,496 181,415,583 End of period 509,416,576 215,220,496 Undistributed (overdistributed) net investment income, at end of period 691,668 (9,785) See Accompanying Notes to Financial Statements. 16 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Year Ended September 30, ----------------------- 2005 2004 - ----------------- ------------------------------------- ---------- ---------- Changes in Shares Class A: Subscriptions 1,856,286 891,438 Issued for distributions reinvested 18,682 6,319 Redemptions (260,817) (280,897) ---------- ---------- Net Increase 1,614,151 616,860 Class B: Subscriptions 842,820 807,527 Issued for distributions reinvested 10,161 3,385 Redemptions (210,560) (103,938) ---------- ---------- Net Increase 642,421 706,974 Class C: Subscriptions 192,318 207,466 Issued for distributions reinvested 1,883 660 Redemptions (49,277) (33,197) ---------- ---------- Net Increase 144,924 174,929 Class G: Subscriptions 11,785 10,547 Issued for distributions reinvested 3,910 7,037 Redemptions (302,708) (514,799) ---------- ---------- Net Decrease (287,013) (497,215) Class T: Subscriptions 332,237 487,272 Issued for distributions reinvested 136,534 151,877 Redemptions (1,550,861) (1,739,989) ---------- ---------- Net Decrease (1,082,090) (1,100,840) Class Z: Subscriptions 24,000,232 3,178,656 Issued for distributions reinvested 53,224 33,472 Redemptions (2,601,629) (2,764,193) ---------- ---------- Net Increase 21,451,827 447,935 See Accompanying Notes to Financial Statements. 17 NOTES TO FINANCIAL STATEMENTS ------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund Note 1. Organization Columbia Dividend Income Fund (the "Fund"), a series of Columbia Funds Trust XI (the "Trust"), is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Investment Goals The Fund seeks current income and capital appreciation. Fund Shares The Fund may issue an unlimited number of shares and offers six classes of shares: Class A, Class B, Class C, Class G, Class T and Class Z. Each share class has its own sales charge and expense structure. Class A and Class T shares are subject to a front-end sales charge based on the amount of initial investment. Class A and Class T shares purchased without an initial sales charge in accounts aggregating up to $50 million at the time of purchase are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within twelve months of the time of purchase. Class B and Class G shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class G shares will convert to Class T shares in eight years after purchase. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. 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 that have 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. If a security is valued at a "fair value", such value is likely to be different from the last quoted market price for the security. Security Transactions Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. Repurchase Agreements 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. 18 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund Income Recognition Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date, except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such, net of non-reclaimable tax withholdings. Awards from class action litigation are recorded as a reduction of cost if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains. The Fund estimates components of distributions from real estate investment trusts (REITs). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. If the Fund no longer owns the applicable securities, any distributions received in excess of income are recorded as realized gains. Determination of Class Net Asset Values All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. Federal Income Tax Status The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, such that the Fund should not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. Distributions to Shareholders Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. Note 3. Federal Tax Information The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended September 30, 2005, permanent book and tax basis differences resulting primarily from differing treatments for REIT dividends were identified and reclassified among the components of the Fund's net assets as follows: Undistributed Accumulated Net Investment Net Realized Paid-In Income Loss Capital ------------------------------------- $(129,477) $146,742 $(17,265) ------------------------------------- Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended September 30, 2005 and September 30, 2004 was as follows: September 30, September 30, 2005 2004 ---------------------------------------------------- Distributions paid from: ---------------------------------------------------- Ordinary income* $7,418,637 $3,354,647 ---------------------------------------------------- *For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of September 30, 2005, the components of distributable earnings on a tax basis were as follows: Undistributed Undistributed Ordinary Long-Term Net Unrealized Income Capital Gains Appreciation* ------------------------------------------ $2,560,499 $-- $44,350,034 ------------------------------------------ *The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales, capital loss carryovers, non-deductible deferred trustees fees and current year income distributions. Unrealized appreciation and depreciation at September 30, 2005, based on cost of investments for federal income tax purposes was: Unrealized appreciation $ 65,270,573 ------------------------------------------ Unrealized depreciation (20,920,539) ------------ Net unrealized appreciation $ 44,350,034 ------------------------------------------ 19 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund The following capital loss carryforwards may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: Year of Capital Loss Expiration Carryforward ----------------------- 2009 $13,541,445 ----------------------- 2010 2,470,255 ----------------------- 2011 9,095,627 ------------ $25,107,327 ----------------------- Of the capital loss carryforwards attributable to the Fund, $13,862,173 ($13,541,445 expiring 09/30/09 and $320,728 expiring 09/30/10) remain from the Fund's merger with Galaxy Equity Income Fund. Utilization of these losses could be subject to limitations imposed by the Internal Revenue Code. Capital loss carryforwards of $6,223,285 were utilized during the year ended September 30, 2005. Note 4. Fees and Compensation Paid to Affiliates Investment Advisory Fee Columbia Management Advisors, LLC ("Columbia"), an indirect wholly owned subsidiary of Bank of America Corporation ("BOA"), is the investment advisor to the Fund. On September 30, 2005, Columbia Management Advisors, Inc. changed its name to Columbia Management Advisors, LLC. Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets at the following annual rates: Average Daily Net Assets Annual Fee Rate ---------------------------------------------- First $500 million 0.70% ---------------------------------------------- $500 million to $1 billion 0.65% ---------------------------------------------- $1 billion to $1.5 billion 0.60% ---------------------------------------------- $1.5 billion to $3 billion 0.55% ---------------------------------------------- $3 billion to $6 billion 0.53% ---------------------------------------------- Over $6 billion 0.51% ---------------------------------------------- Prior to November 1, 2004, Columbia received a monthly investment advisory fee based on the Fund's average daily net assets at the following annual rates: Average Daily Net Assets Annual Fee Rate ---------------------------------------------- First $500 million 0.75% ---------------------------------------------- $500 million to $1 billion 0.70% ---------------------------------------------- $1 billion to $1.5 billion 0.65% ---------------------------------------------- $1.5 billion to $2 billion 0.60% ---------------------------------------------- Over $2 billion 0.55% ---------------------------------------------- For the year ended September 30, 2005, the Fund's effective investment advisory fee rate was 0.70%. Administration Fee Columbia provides administrative and other services to the Fund for a monthly administration fee at the annual rate of 0.067% of the Fund's average daily net assets. Pricing and Bookkeeping Fees Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). As a result, Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives an annual fee based on the average daily net assets of the Fund at the following annual rates: Average Daily Net Assets Annual Fee Rate ------------------------------------------ Under $50 million $ 25,000 ------------------------------------------ Over $50 million but less than $200 million $ 35,000 ------------------------------------------ Over $200 million but less than $500 million $ 50,000 ------------------------------------------ Over $500 million but less than $1 billion $ 85,000 ------------------------------------------ Over $1 billion $125,000 ------------------------------------------ An additional annual fee of $10,000 is charged to the Fund due to its multiple class structure. The Fund also pays additional fees for pricing services based on the number of securities held by the Fund. For the year ended September 30, 2005, the effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.016%. 20 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund Transfer Agent Fee Columbia Management Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services to the Fund and has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. On August 22, 2005, Columbia Funds Services, Inc. changed its name to Columbia Management Services, Inc. For its services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $28.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. For the period from October 1, 2004 through September 30, 2005, the Transfer Agent has voluntarily agreed to waive a portion of its transfer agent fee for the Fund. This arrangement will be discontinued by the Transfer Agent effective November 1, 2005. In addition, for the period from September 1, 2005 through October 31, 2005, the Transfer Agent has voluntarily agreed to waive a portion of its fees to reflect reduced contractual fees that will be charged to the Fund effective November 1, 2005. For the year ended September 30, 2005, the Transfer Agent waived fees of $36,389 for the Fund. For the year ended September 30, 2005, the Fund's effective transfer agent fee rate, inclusive of out-of-pocket expenses and net of fee waivers, was 0.11%. Underwriting Discounts, Service and Distribution Fees Columbia Management Distributors, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. On August 22, 2005, Columbia Funds Distributor, Inc. changed its name to Columbia Management Distributors, Inc. For the year ended September 30, 2005, the Distributor has retained net underwriting discounts of $39,016 and $2,608 on sales of the Fund's Class A and Class T shares. For the same period, the Distributor received net CDSC fees of $686, $24,838, $2,485 and $9,268 on Class A, Class B, Class C and Class G share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan"), which allows the payment of a monthly distribution and service fee to the Distributor at an annual fee rate as follows: Distribution Fee Service Fee --------------------------------------------------------------- Class A Class B Class C Class G Class A Class B Class C Class G --------------------------------------------------------------- 0.10% 0.75% 0.75% 0.65% 0.25% 0.25% 0.25% 0.50% --------------------------------------------------------------- The Fund does not intend to pay total distribution and service fees in excess of 0.25% and 0.95% annually for Class A and Class G shares of the Fund, respectively. Of the 0.50% service fee for Class G shares, 0.25% relates to shareholder liaison fees and 0.25% relates to administration support fees. The CDSC and the distribution 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. Shareholder Services Fees The Fund has adopted a shareholder services plan that permits it to pay for certain services provided to Class T and Class Z shareholders by their financial advisor. Currently, the service plan has not been implemented with respect to the Fund's Class Z shares. The annual service fee may equal up to 0.50% for Class T shares. The Fund does not intend to pay more than 0.30% annually for Class T shareholder services fees. Expense Limits and Fee Reimbursements Columbia has contractually agreed to waive fees and reimburse the Fund through December 31, 2006 for certain expenses to the extent that total expenses (exclusive of distribution and service fees, brokerage commissions, interest, taxes and extraordinary expenses, if any) exceed 0.80% annually of the Fund's average daily net assets. Custody Credits The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. 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. 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 21 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund pro-rata share of the expenses associated with the Chief Compliance Officer position. The Fund's fee will not exceed $15,000 per year. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. Other Columbia provides certain services to the Fund related to Sarbanes-Oxley compliance. For the year ended September 30, 2005, the Fund paid $1,803 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. Note 5. Portfolio Information For the year ended September 30, 2005, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $319,466,360 and $63,396,024, 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 year ended September 30, 2005, the Fund did not borrow under this arrangement. Note 7. Shares of Beneficial Interest As of September 30, 2005, the Fund had shareholders whose shares were beneficially owned by participant accounts over which Bank of America and/or its affiliates had either sole or joint investment discretion. Subscription and redemption activity of these accounts may have a significant effect on the operations of the Fund. The number of such accounts and the percentage of shares of beneficial interest outstanding held therein are as follows: Number of % of Shares Accounts Outstanding Held -------------------------- 2 67.8% -------------------------- Note 8. Disclosure of Significant Risks and Contingencies 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 Securities and Exchange Commission ("SEC") (the "SEC Order"). The SEC Order and the NYAG Settlement are referred to collectively as 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 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 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 funds 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 Funds' independent trustees and not 22 - -------------------------------------------------------------------------------- September 30, 2005 Columbia Dividend Income Fund unacceptable to the staff of the SEC. At this time, the distribution plan is still under development. As such, any gain to the Funds or its shareholders cannot currently be determined. 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 is 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, the Trustees of the Columbia Funds, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities. More than 300 cases including those filed against entities unaffiliated with the funds, their Boards, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities have been transferred to the Federal District Court in Maryland and consolidated in a multi-district proceeding (the "MDL"). The derivative cases purportedly brought on behalf of the Columbia Funds in the MDL have been consolidated under the lead case. The fund derivative plaintiffs allege that the funds were harmed by market timing and late trading activity and seek, among other things, the removal of the trustees of the Columbia Funds, removal of the Columbia Group, disgorgement of all management fees and monetary damages. On March 21, 2005 purported class action plaintiffs filed suit in Massachusetts state court alleging that the conduct, including market timing, entitles Class B shareholders in certain Columbia funds to an exemption from contingent deferred sales charges upon early redemption (the "CDSC Lawsuit"). The CDSC Lawsuit has been removed to federal court in Massachusetts and the federal Judicial Panel has transferred the CDSC Lawsuit to the MDL. The MDL is ongoing. Accordingly, an estimate of the financial impact of this litigation on any Fund, if any, cannot currently be made. On January 11, 2005, a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Columbia Funds and Columbia. The lawsuit alleged 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 Funds and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs alleged 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. Plaintiffs filed a notice of voluntary dismissal of the lawsuit as to all defendants and all claims without prejudice, which was so-ordered by the judge on or about November 9, 2005. In 2004, certain Columbia funds, advisers and affiliated entities were named as defendants in certain purported shareholder class and derivative actions making claims, including claims under the Investment Company and the Investment Advisers Acts of 1940 and state law. The suits allege, inter alia, that the fees and expenses paid by the funds are excessive and that the advisers and their affiliates inappropriately used fund assets to distribute the funds and for other improper purpose. On March 2, 2005, the actions were consolidated in the Massachusetts federal court as In re Columbia Entities Litigation. The plaintiffs filed a consolidated amended complaint on June 9, 2005. The Funds and 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 (with the exception of the January 11, 2005 "failure to participate" litigation, which has been dismissed) are ongoing, however, based on currently available information, Columbia believes that these lawsuits are without merit, that the likelihood they will have a material adverse impact on any fund is remote, and that the lawsuits are not likely to materially affect its ability to provide investment management services to its clients, including the Funds. For the year ended September 30, 2005, Columbia has assumed $6,687 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. 23 FINANCIAL HIGHLIGHTS ---------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Period Year Ended September 30, Ended ------------------------- September 30, Class A Shares 2005 2004(a) 2003(b)(c) - --------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.80 $ 9.26 $ 9.01 - -------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (d) 0.25 0.18 0.11 Net realized and unrealized gain on investments 1.16 1.53 0.25 --------- -------- ------------- Total from Investment Operations 1.41 1.71 0.36 - -------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.20) (0.17) (0.11) - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 12.01 $ 10.80 $ 9.26 Total return (e)(f) 13.10% 18.60% 4.02%(g) - -------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (h) 1.05% 1.36% 1.42%(i) Net investment income (h) 2.11% 1.71% 1.38%(i) Waiver/reimbursement 0.18% 0.06% --%(i)(j) Portfolio turnover rate 18% 44% 33%(g) Net assets, end of period (000's) $27,534 $ 7,319 $ 564 - -------------------------------------------------------------------------------------------- (a)On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b)The Fund changed its fiscal year end from October 31 to September 30. (c)Class A shares were initially offered on November 25, 2002. Per share data and total return reflect activity from that date. (d)Per share data was calculated using average shares outstanding during the period. (e)Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (f)Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (g)Not annualized. (h)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i)Annualized. (j)Rounds to less than 0.01%. 24 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Period Year Ended September 30, Ended ------------------------- September 30, Class B Shares 2005 2004(a) 2003(b)(c) - --------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.59 $ 9.08 $ 8.82 - -------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (d) 0.16 0.10 0.05 Net realized and unrealized gain on investments 1.13 1.50 0.26 --------- -------- ------------- Total from Investment Operations 1.29 1.60 0.31 - -------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.11) (0.09) (0.05) - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 11.77 $ 10.59 $ 9.08 Total return (e)(f) 12.23% 17.69% 3.51%(g) - -------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (h) 1.80% 2.11% 2.34%(i) Net investment income (h) 1.36% 0.94% 0.47%(i) Waiver/reimbursement 0.18% 0.06% --%(i)(j) Portfolio turnover rate 18% 44% 33%(g) Net assets, end of period (000's) $17,359 $ 8,808 $ 1,136 - -------------------------------------------------------------------------------------------- (a)On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b)The Fund changed its fiscal year end from October 31 to September 30. (c)Class B shares were initially offered on November 25, 2002. Per share data and total return reflect activity from that date. (d)Per share data was calculated using average shares outstanding during the period. (e)Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (f)Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (g)Not annualized. (h)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i)Annualized. (j)Rounds to less than 0.01%. 25 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Period Year Ended September 30, Ended ------------------------- September 30, Class C Shares 2005 2004(a) 2003(b)(c) - --------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.58 $ 9.07 $ 8.82 - ------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (d) 0.16 0.10 0.07 Net realized and unrealized gain on investments 1.13 1.50 0.23 --------- --------- ------------- Total from Investment Operations 1.29 1.60 0.30 - ------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.11) (0.09) (0.05) - ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $11.76 $10.58 $ 9.07 Total return (e)(f) 12.24% 17.70% 3.41%(g) - ------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (h) 1.80% 2.11% 2.18%(i) Net investment income (h) 1.36% 0.94% 0.95%(i) Waiver/reimbursement 0.18% 0.06% --%(i)(j) Portfolio turnover rate 18% 44% 33%(g) Net assets, end of period (000's) $3,959 $2,027 $ 152 - ------------------------------------------------------------------------------------------- (a)On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b)The Fund changed its fiscal year end from October 31 to September 30. (c)Class C shares were initially offered on November 25, 2002. Per share data and total return reflect activity from that date. (d)Per share data was calculated using average shares outstanding during the period. (e)Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (f)Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (g)Not annualized. (h)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i)Annualized. (j)Rounds to less than 0.01%. 26 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Period Ended Year Ended September 30, September 30, Year Ended October 31, - -------------------------------------- Class G Shares 2005 2004(a) 2003(b)(c) 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $ 10.58 $ 9.07 $ 8.36 $ 9.87 $ 10.37 $ 9.84 - ------------------------------------------------------------------------------------------------------------------------ Income from Investment Operations: Net investment income (loss) 0.16(d) 0.10(d) 0.05(d) (0.07)(d) (0.06)(d) (0.04) Net realized and unrealized gain (loss) on investments 1.14 1.50 0.71 (1.05)(e) (0.11) 1.75 ------- ------- ------------- ------- ------- ------- Total from Investment Operations 1.30 1.60 0.76 (1.12) (0.17) 1.71 - ------------------------------------------------------------------------------------------------------------------------ Less Distributions Declared to Shareholders: From net investment income (0.12) (0.09) (0.05) -- -- --(f) From net realized gains -- -- -- (0.39) (0.33) (1.18) ------- ------- ------------- ------- ------- ------- Total Distributions Declared to Shareholders (0.12) (0.09) (0.05) (0.39) (0.33) (1.18) - ------------------------------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $ 11.76 $ 10.58 $ 9.07 $ 8.36 $ 9.87 $ 10.37 Total return (g)(h) 12.30% 17.71% 9.08%(i) (12.16)% (1.71)% 20.33% - ------------------------------------------------------------------------------------------------------------------------ Ratios to Average Net Assets/ Supplemental Data: Expenses (j) 1.75% 2.14% 2.21%(k) 2.17% 2.02% 1.95% Net investment income (loss) (j) 1.38% 0.97% 0.71%(k) (0.72)% (0.53)% (0.35)% Waiver/reimbursement 0.18% 0.03% --%(k)(l) 0.25% 0.24% 0.40% Portfolio turnover rate 18% 44% 33%(i) 65%(m) 81% 81% Net assets, end of period (000's) $ 3,291 $ 5,995 $ 9,650 $ 2,093 $ 2,286 $ 1,555 - ------------------------------------------------------------------------------------------------------------------------ (a)On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b)The Fund changed its fiscal year end from October 31 to September 30. (c)On November 25, 2002, Galaxy Strategic Equity Fund, Retail B shares were redesignated Liberty Strategic Equity Fund, Class G shares. (d)Per share data was calculated using average shares outstanding during the period. (e)The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund. (f)Rounds to less than $0.01 per share. (g)Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (h)Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (i)Not annualized. (j)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (k)Annualized. (l)Rounds to less than 0.01%. (m)Portfolio turnover rate excludes securities delivered from processing a redemption-in-kind. 27 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Period Ended Year Ended September 30, September 30, - Class T Shares 2005 2004(a) 2003(b)(c) - ------------------------------------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $ 10.80 $ 9.26 $ 8.54 - ------------------------------------------------------------------------------------------------------------------------------ Income from Investment Operations: Net investment income 0.24(d) 0.17(d) 0.11(d) Net realized and unrealized gain (loss) on investments 1.16 1.54 0.73 ------------------- -------- ------------------- Total from Investment Operations 1.40 1.71 0.84 - ------------------------------------------------------------------------------------------------------------------------------ Less Distributions Declared to Shareholders: From net investment income (0.19) (0.17) (0.12) From net realized gains -- -- -- ------------------- -------- ------------------- Total Distributions Declared to Shareholders (0.19) (0.17) (0.12) - ------------------------------------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $ 12.01 $ 10.80 $ 9.26 Total return (f)(g) 13.04% 18.50% 9.86%(h) - ------------------------------------------------------------------------------------------------------------------------------ Ratios to Average Net Assets/Supplemental Data: Expenses (i) 1.10% 1.45% 1.49%(j) Net investment income (i) 2.04% 1.64% 1.42%(j) Waiver/reimbursement 0.18% 0.04% 0.01%(j) Portfolio turnover rate 18% 44% 33%(h) Net assets, end of period (000's) $ 99,148 $100,803 $ 96,638 - ------------------------------------------------------------------------------------------------------------------------------ Year Ended October 31, -------------------------------------- Class T Shares 2002 2001 2000 - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.02 $ 10.46 $ 9.89 - -------------------------------------------------------------------------------- Income from Investment Operations: Net investment income 0.01(d) 0.03(d) 0.04 Net realized and unrealized gain (loss) on investments (1.08)(e) (0.11) 1.75 -------- -------- -------- Total from Investment Operations (1.07) (0.08) 1.79 - -------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.02) (0.03) (0.04) From net realized gains (0.39) (0.33) (1.18) -------- -------- -------- Total Distributions Declared to Shareholders (0.41) (0.36) (1.22) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $ 8.54 $ 10.02 $ 10.46 Total return (f)(g) (11.50)% (0.83)% 21.09% - -------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (i) 1.40% 1.24% 1.20% Net investment income (i) 0.05% 0.25% 0.40% Waiver/reimbursement 0.29% 0.26% 0.40% Portfolio turnover rate 65%(k) 81% 81% Net assets, end of period (000's) $ 6,578 $ 8,400 $ 8,505 - -------------------------------------------------------------------------------- (a)On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b)The Fund changed its fiscal year end from October 31 to September 30. (c)On November 25, 2002, Galaxy Strategic Equity Fund, Retail A shares were redesignated Liberty Strategic Equity Fund, Class T shares. (d)Per share data was calculated using average shares outstanding during the period. (e)The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund. (f)Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (g)Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (h)Not annualized. (i)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j)Annualized. (k)Portfolio turnover rate excludes securities delivered from processing a redemption-in-kind. 28 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Selected data for a share outstanding throughout each period is as follows: Period Ended Year Ended September 30, September 30, - Class Z Shares 2005 2004(a) 2003(b)(c) - --------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.80 $ 9.26 $ 8.56 - --------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income 0.28(d) 0.21(d) 0.15(d) Net realized and unrealized gain (loss) on investments 1.16 1.53 0.72 ------------------- -------- ------------------- Total from Investment Operations 1.44 1.74 0.87 - --------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.23) (0.20) (0.17) From net realized gains -- -- -- ------------------- -------- ------------------- Total Distributions Declared to Shareholders (0.23) (0.20) (0.17) - --------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 12.01 $ 10.80 $ 9.26 Total return (f)(g) 13.38% 18.93% 10.22%(h) - --------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/ Supplemental Data: Expenses (i) 0.80% 1.10% 1.02%(j) Net investment income (i) 2.37% 1.98% 1.89%(j) Waiver/reimbursement 0.18% 0.05% 0.02%(j) Portfolio turnover rate 18% 44% 33%(h) Net assets, end of period (000's) $358,125 $ 90,269 $ 73,276 - --------------------------------------------------------------------------------------------------------------------------- Year Ended October 31, -------------------------------------- Class Z Shares 2002 2001 2000 - ------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.03 $ 10.48 $ 9.90 - ------------------------------------------------------------------------- Income from Investment Operations: Net investment income 0.06(d) 0.08(d) 0.08 Net realized and unrealized gain (loss) on investments (1.07)(e) (0.12) 1.76 -------- -------- -------- Total from Investment Operations (1.01) (0.04) 1.84 - ------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.07) (0.08) (0.08) From net realized gains (0.39) (0.33) (1.18) -------- -------- -------- Total Distributions Declared to Shareholders (0.46) (0.41) (1.26) - ------------------------------------------------------------------------- Net Asset Value, End of Period $ 8.56 $ 10.03 $ 10.48 Total return (f)(g) (11.07)% (0.43)% 21.69% - ------------------------------------------------------------------------- Ratios to Average Net Assets/ Supplemental Data: Expenses (i) 0.82% 0.75% 0.78% Net investment income (i) 0.63% 0.74% 0.83% Waiver/reimbursement 0.24% 0.21% 0.20% Portfolio turnover rate 65%(k) 81% 81% Net assets, end of period (000's) $ 19,896 $102,909 $ 93,558 - ------------------------------------------------------------------------- (a)On October 13, 2003, the Liberty Strategic Equity Fund was renamed Columbia Strategic Equity Fund. On October 27, 2003, the Columbia Strategic Equity Fund was renamed Columbia Dividend Income Fund. (b)The Fund changed its fiscal year end from October 31 to September 30. (c)On November 25, 2002, Galaxy Strategic Equity Fund, Trust shares were redesignated Liberty Strategic Equity Fund, Class Z shares. (d)Per share data was calculated using average shares outstanding during the period. (e)The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund. (f)Total return at net asset value assuming all distributions reinvested. (g)Had the Investment Advisor and/or any of its affiliates not waived a portion of expenses, total return would have been reduced. (h)Not annualized. (i)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (j)Annualized. (k)Portfolio turnover rate excludes securities delivered from processing a redemption-in-kind. 29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ----------------------------- Columbia Dividend Income Fund To the Trustees of Columbia Funds Trust XI and the Shareholders of Columbia Dividend Income Fund In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia Dividend Income Fund (the "Fund") (a series of Columbia Funds Trust XI) at September 30, 2005, the results of its operations for the year then ended, and the changes in its net assets, and its financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2005 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The financial statements and financial highlights of the Fund as of September 30, 2003 and for fiscal periods ending on or prior to September 30, 2003 were audited by other independent accountants whose report dated November 14, 2003 expressed an unqualified opinion on those statements. PricewaterhouseCoopers LLP Boston, Massachusetts November 21, 2005 30 UNAUDITED INFORMATION ----------------------------- Columbia Dividend Income Fund Federal Income Tax Information For non-corporate shareholders, 100.00%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period October 1, 2004 to September 30, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. 100.00% of the ordinary income distributed by the Fund for the year ended September 30, 2005, qualifies for the corporate dividends received deduction. 31 TRUSTEES ----------------------------- Columbia Dividend Income Fund The Trustees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. Name, address and age, Position with funds, Year Principal occupation(s) during past five years, Number of portfolios in first elected or appointed to office/1/ Columbia Funds Complex overseen by trustee/director, Other directorships held Disinterested Trustees DOUGLAS A. HACKER (Age 49) Executive Vice President-Strategy of United Airlines (airline) since P.O. Box 66100 December, 2002 (formerly President of UAL Loyalty Services (airline) from Chicago, IL 60666 September, 2001 to December, 2002; Executive Vice President and Chief Trustee (since 1996) Financial Officer of United Airlines from July, 1999 to September, 2001; Senior Vice President-Finance from March, 1993 to July, 1999). Oversees 86, Nash Finch Company (food distributor) --------------------------------------------------------------------------- JANET LANGFORD KELLY (Age 47) Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP (law firm) since 9534 W. Gull Lake Drive March, 2005; Adjunct Professor of Law, Northwestern University, since Richland, MI 49083-8530 September, 2004 (formerly Chief Administrative Officer and Senior Vice Trustee (since 1996) President, Kmart Holding Corporation (consumer goods) from September, 2003 to March, 2004; Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999). Oversees 86, None --------------------------------------------------------------------------- RICHARD W. LOWRY (Age 69) Private Investor since August, 1987 (formerly Chairman and Chief Executive 10701 Charleston Drive Officer, U.S. Plywood Corporation (building products manufacturer)). Vero Beach, FL 32963 Oversees 89(3), None Trustee (since 1995) --------------------------------------------------------------------------- CHARLES R. NELSON (Age 62) Professor of Economics, University of Washington, since January, 1976; Department of Economics Ford and Louisa Van Voorhis Professor of Political Economy, University of University of Washington Washington, since September, 1993 (formerly Director, Institute for Seattle, WA 98195 Economic Research, University of Washington from September, 2001 to June, Trustee (since 1981) 2003); Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. Oversees 86, None --------------------------------------------------------------------------- JOHN J. NEUHAUSER (Age 63) Academic Vice President and Dean of Faculties since August, 1999, Boston 84 College Road College (formerly Dean, Boston College School of Management from Chestnut Hill, MA 02467-3838 September, 1977 to August, 1999). Oversees 89, Saucony, Inc. (athletic Trustee (since 1985) footwear) --------------------------------------------------------------------------- /1/In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex. 32 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund Name, address and age, Position with funds, Year Principal occupation(s) during past five years, Number of portfolios in first elected or appointed to office/1/ Columbia Funds Complex overseen by trustee/director, Other directorships held Disinterested Trustees PATRICK J. SIMPSON (Age 61) Partner, Perkins Coie L.L.P. (law firm). Oversees 86, None 1120 N.W. Couch Street Tenth Floor Portland, OR 97209-4128 Trustee (since 2000) --------------------------------------------------------------------------- THOMAS E. STITZEL (Age 69) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 2208 Tawny Woods Place 1999, College of Business, Boise State University); Chartered Financial Boise, ID 83706 Analyst. Oversees 86, None Trustee (since 1998) --------------------------------------------------------------------------- THOMAS C. THEOBALD (Age 68) Partner and Senior Advisor, Chicago Growth Partners (private equity 8 Sound Shore Drive, investing) since September, 2004 (formerly Managing Director, William Suite 285 Blair Capital Partners (private equity investing) from September, 1994 to Greenwich, CT 06830 September, 2004). Oversees 86, Anixter International (network support Trustee and Chairman equipment distributor); Ventas, Inc. (real estate investment trust); Jones of the Board/4/ Lang LaSalle (real estate management services) and Ambac Financial Group (financial guaranty insurance) --------------------------------------------------------------------------- ANNE-LEE VERVILLE (Age 60) Retired since 1997 (formerly General Manager, Global Education Industry, 359 Stickney Hill Road IBM Corporation (computer and technology) from 1994 to 1997). Oversees 86, Hopkinton, NH 03229 Chairman of the Board of Directors, Enesco Group, Inc. (designer, importer Trustee (since 1998) and distributor of giftware and collectibles) --------------------------------------------------------------------------- RICHARD L. WOOLWORTH (Age 64) Retired since December 2003 (formerly Chairman and Chief Executive 100 S.W. Market Street Officer, The Regence Group (regional health insurer); Chairman and Chief #1500 Executive Officer, BlueCross BlueShield of Oregon; Certified Public Portland, OR 97207 Accountant, Arthur Young & Company). Oversees 86, Northwest Natural Gas Trustee (since 1991) Co. (natural gas service provider) --------------------------------------------------------------------------- Interested Trustee WILLIAM E. MAYER/2/ (Age 65) Partner, Park Avenue Equity Partners (private equity) since February, 1999 399 Park Avenue (formerly Partner, Development Capital LLC from November, 1996 to Suite 3204 February, 1999). Oversees 89/3/, Lee Enterprises (print media), WR New York, NY 10022 Hambrecht + Co. (financial service provider); Reader's Digest Trustee (since 1994) (publishing); OPENFIELD Solutions (retail industry technology provider) --------------------------------------------------------------------------- /1/In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L.Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex. /2/Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. /3/Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 3 funds, which are advised by an affiliate of the Advisor. /4/Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. The Statement of Additional Information Includes additional information about the Trustees of the Funds and is available, without charge, upon request by calling 800-426-3750. 33 OFFICERS ----------------------------- Columbia Dividend Income Fund The Statement of Additional Information Includes additional information about the Trustees of the Funds and is available, without charge, upon request by calling 800-426-3750. Name, address and age, Position with Columbia Funds, Year first elected or appointed to office Principal occupation(s) during past five years CHRISTOPHER L. WILSON (Age 48) Head of Mutual Funds since August, 2004 and Managing Director of the One Financial Center Advisor since September, 2005; President of the Columbia Funds, Liberty Boston, MA 02111 Funds and Stein Roe Funds since October, 2004; President and Chief President (since 2004) Executive Officer of the Nations Funds since January, 2005; President of the Galaxy Funds since April, 2005; Director of Bank of America Global Liquidity Funds, plc since May, 2005; Director of Banc of America Capital Management (Ireland), Limited since May, 2005; Director of FIM Funding, Inc. since January, 2005; Senior Vice President of Columbia Management Distributors, Inc. since January, 2005; Director of Columbia Management Services, Inc. since January, 2005 (formerly Senior Vice President of Columbia Management from January, 2005 to August, 2005; Senior Vice President of BACAP Distributors LLC from January, 2005 to July, 2005; President and Chief Executive Officer, CDC IXIS Asset Management Services, Inc. from September, 1998 to August, 2004). --------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (Age 41) Treasurer of the Columbia Funds since October, 2003 and of the Liberty One Financial Center Funds, Stein Roe Funds and All-Star Funds since December, 2000; Managing Boston, MA 02111 Director of the Advisor since September, 2005 (formerly Vice President of Treasurer (since 2000) Columbia Management from April, 2003 to August, 2005; President of the Columbia Funds, Liberty Funds and Stein Roe Funds from February, 2004 to October, 2004; Chief Accounting Officer and Controller of the Liberty Funds and All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002 (formerly Treasurer from December, 2002 to December, 2004 and President from February, 2004 to December, 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of Colonial Management Associates, Inc. from February, 1998 to October, 2000). --------------------------------------------------------------------------- MARY JOAN HOENE (Age 56) Senior Vice President and Chief Compliance Officer of the Columbia Funds, 100 Federal Street Liberty Funds, Stein Roe Funds and All-Star Funds since August, 2004; Boston, MA 02110 Chief Compliance Officer of the Columbia Management Multi-Strategy Hedge Senior Vice President and Fund, LLC since August; 2004. Chief Compliance Officer of the BACAP Chief Compliance Officer (since 2004) Alternative Multi-Strategy Hedge Fund LLC since October 2004 (formerly Partner, Carter, Ledyard & Milburn LLP from January, 2001 to August, 2004; Counsel, Carter, Ledyard & Milburn LLP from November, 1999 to December, 2000; Vice President and Counsel, Equitable Life Assurance Society of the United States from April, 1998 to November, 1999). --------------------------------------------------------------------------- MICHAEL G. CLARKE (Age 35) Chief Accounting Officer of the Columbia Funds, Liberty Funds, Stein Roe One Financial Center Funds and All-Star Funds since October, 2004; Managing Director of the Boston, MA 02111 Advisor since September, 2005 (formerly Controller of the Columbia Funds, Chief Accounting Officer (since 2004) Liberty Funds, Stein Roe Funds and All-Star Funds from May, 2004 to October, 2004; Assistant Treasurer from June, 2002 to May, 2004; Vice President, Product Strategy & Development of the Liberty Funds and Stein Roe Funds from February, 2001 to June, 2002; Assistant Treasurer of the Liberty Funds, Stein Roe Funds and the All- Star Funds from August, 1999 to February, 2001; Audit Manager, Deloitte & Touche LLP from May, 1997 to August, 1999). --------------------------------------------------------------------------- JEFFREY R. COLEMAN (Age 35) Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and One Financial Center All-Star Funds since October, 2004 (formerly Vice President of CDC IXIS Boston, MA 02111 Asset Management Services, Inc. and Deputy Treasurer of the CDC Nvest Controller (since 2004) Funds and Loomis Sayles Funds from February, 2003 to September, 2004; Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August, 2000 to February, 2003; Tax Manager of PFPC, Inc. from November, 1996 to August, 2000). --------------------------------------------------------------------------- R. SCOTT HENDERSON (Age 46) Secretary of the Columbia Funds, Liberty Funds and Stein Roe Funds since One Financial Center December, 2004 (formerly Of Counsel, Bingham McCutchen from April, 2001 to Boston, MA 02111 September, 2004; Executive Director and General Counsel, Massachusetts Secretary (since 2004) Pension Reserves Investment Management Board from September, 1997 to March, 2001). --------------------------------------------------------------------------- 34 COLUMBIA FUNDS ----------------------------- Columbia Dividend Income Fund - ------------------------------ --------------------------------------------------------------------------- Growth funds Columbia Acorn Fund Columbia Acorn Select Columbia Acorn USA Columbia Growth Stock Fund Columbia Large Cap Growth Fund Columbia Marsico 21st Century Fund Columbia Marsico Focused Equities Fund Columbia Marsico Growth Fund Columbia Marsico Mid Cap Growth Fund Columbia Mid Cap Growth Fund Columbia Small Cap Growth Fund I Columbia Small Cap Growth Fund II Columbia Small Company Equity Fund Columbia Tax-Managed Growth Fund --------------------------------------------------------------------------- Core funds Columbia Common Stock Fund Columbia Large Cap Core Fund Columbia Small Cap Core Fund Columbia Young Investor Fund --------------------------------------------------------------------------- Value funds Columbia Disciplined Value Fund Columbia Dividend Income Fund Columbia Large Cap Value Fund Columbia Mid Cap Value Fund Columbia Small Cap Value Fund I Columbia Small Cap Value Fund II Columbia Strategic Investor --------------------------------------------------------------------------- Asset Allocation/Hybrid funds Columbia Asset Allocation Fund Columbia Asset Allocation Fund II Columbia Balanced Fund Columbia Liberty Fund Columbia LifeGoal(TM) Balanced Growth Portfolio Columbia LifeGoal(TM) Growth Portfolio Columbia LifeGoal(TM) Income Portfolio Columbia LifeGoal(TM) Income and Growth Portfolio Columbia Thermostat Fund --------------------------------------------------------------------------- Index funds Columbia Large Cap Enhanced Core Fund Columbia Large Cap Index Fund Columbia Mid Cap Index Fund Columbia Small Cap Index Fund --------------------------------------------------------------------------- Specialty funds Columbia Convertible Securities Fund Columbia Real Estate Equity Fund Columbia Technology Fund Columbia Utilities Fund --------------------------------------------------------------------------- Global/International funds Columbia Acorn International Columbia Acorn International Select Columbia Global Value Fund Columbia Greater China Fund Columbia International Stock Fund Columbia International Value Fund Columbia Marsico International Opportunities Fund Columbia Multi-Advisor International Equity Fund Columbia World Equity Fund 35 - -------------------------------------------------------------------------------- Columbia Dividend Income Fund - ---------------------- --------------------------------------------------------------------------- Taxable Bond funds Columbia Conservative High Yield Fund Columbia Core Bond Fund Columbia Federal Securities Fund Columbia High Income Fund Columbia High Yield Opportunity Fund Columbia Income Fund Columbia Intermediate Bond Fund Columbia Intermediate Core Bond Fund Columbia Short Term Bond Fund Columbia Strategic Income Fund Columbia Total Return Bond Columbia U.S. Treasury Index Fund --------------------------------------------------------------------------- Tax-Exempt Bond funds Columbia California Tax-Exempt Fund Columbia CA Intermediate Municipal Bond Fund Columbia Connecticut Tax-Exempt Fund Columbia CT Intermediate Municipal Bond Fund Columbia FL Intermediate Municipal Bond Fund Columbia GA Intermediate Municipal Bond Fund Columbia High Yield Municipal Fund Columbia Intermediate Municipal Bond Fund Columbia MA Intermediate Municipal Bond Fund Columbia Massachusetts Tax-Exempt Fund Columbia MD Intermediate Municipal Bond Fund Columbia Municipal Income Fund Columbia NC Intermediate Municipal Bond Fund Columbia New York Tax-Exempt Fund Columbia NJ Intermediate Municipal Bond Fund Columbia NY Intermediate Municipal Bond Fund Columbia OR Intermediate Municipal Bond Fund Columbia RI Intermediate Municipal Bond Fund Columbia SC Intermediate Municipal Bond Fund Columbia Short Term Municipal Bond Fund Columbia Tax-Exempt Fund Columbia Tax-Exempt Insured Fund Columbia TX Intermediate Municipal Bond Fund Columbia VA Intermediate Municipal Bond Fund --------------------------------------------------------------------------- Money Market funds Columbia Cash Reserves Columbia CA Tax-Exempt Reserves Columbia Government Reserves Columbia Government Plus Reserves Columbia MA Municipal Reserves Columbia Money Market Reserves Columbia Municipal Reserves Columbia NY Tax-Exempt Reserves Columbia Prime Reserves Columbia Tax-Exempt Reserves Columbia Treasury Reserves For complete product information on any Columbia fund, visit our website at www.columbiafunds.com. 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. Columbia Management Advisors, Inc. and Banc of America Capital Management, LLC, both SEC registered investment advisors and wholly owned subsidiaries of Bank of America, N.A, merged on September 30, 2005. At that time, the newly combined advisor changed its name to Columbia Management Advisors, LLC ("CMA"). CMA will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 36 IMPORTANT INFORMATION ABOUT THIS REPORT ----------------------------- Columbia Dividend Income Fund Transfer Agent Columbia Management Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800.345.6611 Distributor Columbia Management Distributors, Inc. One Financial Center Boston MA 02111 Investment Advisor Columbia Management Advisors, LLC 100 Federal Street Boston MA 02110 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 125 High Street Boston, MA 02110 The fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia Dividend Income Fund. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the fund and with the most recent copy of the Columbia Funds Performance Update. A description of the fund's proxy voting policies and procedures is available (i) on the fund's website, www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the fund voted proxies relating to portfolio securities during the 12-month period ended June 30 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, DC. 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. Columbia Management Advisors, Inc. and Banc of America Capital Management, LLC, both SEC registered investment advisors and wholly owned subsidiaries of Bank of America, N.A, merged on September 30, 2005. At that time, the newly combined advisor changed its name to Columbia Management Advisors, LLC ("CMA"). CMA will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 37 [GRAPHIC APPEARS HERE] eDelivery Help your fund reduce printing and postage costs! Elect to get your shareholder reports by eletronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia Dividend Income Fund Annual Report, September 30, 2005 Columbia Management(R) (C)2005 Columbia Management Distributors, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 www.columbiafunds.com SHC-42/90889-0905 (11/05) 05/8400 ITEM 2. CODE OF ETHICS. (a) The registrant has, as of the end of the period covered by this report, adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (b) During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, there were not any waivers or implicit waivers to a provision of the code of ethics adopted in 2(a) above. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members of the registrant's Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr. Woolworth are each independent trustees, as defined in paragraph (a)(2) of this item's instructions and collectively constitute the entire Audit Committee. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Fee information below is disclosed for the nine series of the registrant whose report to stockholders is included in this annual filing, as well as the three series of the registrant whose report to stockholders would have been included in this filing had they not liquidated during the period. Effective March 1, 2004, seven of the series of the registrant included in this filing engaged new independent accountants. Unless otherwise noted, fees disclosed below represent fees paid or accrued to the current and predecessor principal accountants while each was engaged by the registrant. (a) Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended September 30, 2005 and September 30, 2004 are approximately as follows: 2005 2004 $220,300 $253,400 Audit Fees include amounts related to the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. (b) Aggregate Audit-Related Fees billed by the principal accountant for professional services rendered during the fiscal years ended September 30, 2005 and September 30, 2004 are approximately as follows: 2005 2004 $69,700 $42,000 Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported in Audit Fees above. In both fiscal years 2005 and 2004, Audit-Related Fees include certain agreed-upon procedures performed for semi-annual shareholder reports. In fiscal year 2005 Audit-Related Fees also include certain agreed-upon procedures related to the review of the registrant's anti-money laundering program and agreed-upon procedures related to fund liquidations. (c) Aggregate Tax Fees billed by the principal accountant for professional services rendered during the fiscal years ended September 30, 2005 and September 30, 2004 are approximately as follows: 2005 2004 $44,300 $32,300 Tax Fees in both fiscal years 2005 and 2004 consist primarily of the review of annual tax returns and the review of calculations of required shareholder distributions. Tax fees include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning. Fiscal year 2005 also includes agreed-upon procedures related to fund liquidations and the review of final tax returns. (d) Aggregate All Other Fees billed by the principal accountant for professional services rendered during the fiscal years ended September 30, 2005 and September 30, 2004 are approximately as follows: 2005 2004 $0 $0 All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above. None of the amounts described in paragraphs (a) through (d) above were approved pursuant to the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES I. GENERAL OVERVIEW The Audit Committee of the registrant has adopted a formal policy (the "Policy") which sets forth the procedures and the conditions pursuant to which the Audit Committee will pre-approve (i) all audit and non-audit (including audit related, tax and all other) services provided by the registrant's independent auditor to the registrant and individual funds (collectively "Fund Services"), and (ii) all non-audit services provided by the registrant's independent auditor to the funds' adviser or a control affiliate of the adviser, that relate directly to the funds' operations and financial reporting (collectively "Fund-related Adviser Services"). A "control affiliate" is an entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the funds, and the term "adviser" is deemed to exclude any unaffiliated sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser. The adviser and control affiliates are collectively referred to as "Adviser Entities." The Audit Committee uses a combination of specific (on a case-by-case basis as potential services are contemplated) and general (pre-determined list of permitted services) pre-approvals. Unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent auditor. The Policy does not delegate the Audit Committee's responsibilities to pre-approve services performed by the independent auditor to management. II. GENERAL PROCEDURES On an annual basis, the Fund Treasurer and/or Director of Trustee Administration shall submit to the Audit Committee a schedule of the types of Fund Services and Fund-related Adviser Services that are subject to general pre-approval. These schedules will provide a description of each type of service that is subject to general pre-approval and, where possible, will provide estimated fees for each instance of providing each service. This general pre-approval and related fees (where provided) will generally cover a one-year period (for example, from June 1 through May 31 of the following year). The Audit Committee will review and approve the types of services and review the projected fees for the next one-year period and may add to, or subtract from, the list of general pre-approved services from time to time, based on subsequent determinations. This approval acknowledges that the Audit Committee is in agreement with the specific types of services that the independent auditor will be permitted to perform. The fee amounts will be updated to the extent necessary at other regularly scheduled meetings of the Audit Committee. In addition to the fees for each individual service, the Audit Committee has the authority to implement a fee cap on the aggregate amount of non-audit services provided to an individual fund. If, subsequent to general pre-approval, a fund, its investment adviser or a control affiliate determines that it would like to engage the independent auditor to perform a service that requires pre-approval and that is not included in the general pre-approval list, the specific pre-approval procedure shall be as follows: o A brief written request shall be prepared by management detailing the proposed engagement with explanation as to why the work is proposed to be performed by the independent auditor; o The request should be addressed to the Audit Committee with copies to the Fund Treasurer and/or Director of Trustee Administration; o The Fund Treasurer and/or Director of Trustee Administration will arrange for a discussion of the service to be included on the agenda for the next regularly scheduled Audit Committee meeting, when the Committee will discuss the proposed engagement and approve or deny the request. o If the timing of the project is critical and the project needs to commence before the next regularly scheduled meeting, the Chairperson of the Audit Committee may approve or deny the request on behalf of the Audit Committee, or, in the Chairperson's discretion, determine to call a special meeting of the Audit Committee for the purpose of considering the proposal. Should the Chairperson of the Audit Committee be unavailable, any other member of the Audit Committee may serve as an alternate for the purpose of approving or denying the request. Discussion with the Chairperson (or alternate, if necessary) will be arranged by the Fund Treasurer and/or Director of Trustee Administration. The independent auditor will not commence any such project unless and until specific approval has been given. III. CERTAIN OTHER SERVICES PROVIDED TO ADVISER ENTITIES The Audit Committee recognizes that there are cases where services proposed to be provided by the independent auditor to the adviser or control affiliates are not Fund-related Adviser Services within the meaning of the Policy, but nonetheless may be relevant to the Audit Committee's ongoing evaluation of the auditor's independence and objectivity with respect to its audit services to the funds. As a result, in all cases where an Adviser Entity engages the independent auditor to provide audit or non-audit services that are not Fund Services or Fund-related Adviser Services, were not subject to pre-approval by the Audit Committee, and the projected fees for any such engagement (or the aggregate of all such engagements during the period covered by the Policy) exceeds a pre-determined threshold established by the Audit Committee; the independent auditor, Fund Treasurer and/or Director of Trustee Administration will notify the Audit Committee not later than its next meeting. Such notification shall include a general description of the services provided, the entity that is to be the recipient of such services, the timing of the engagement, the entity's reasons for selecting the independent auditor, and the projected fees. Such information will allow the Audit Committee to consider whether non-audit services provided to the adviser and Adviser Entities, which were not subject to Audit Committee pre-approval, are compatible with maintaining the auditor's independence with respect to the Funds. IV. REPORTING TO THE AUDIT COMMITTEE The Fund Treasurer or Director of Trustee Administration shall report to the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services initiated since the last such report was rendered, including: o A general description of the services, and o Actual billed and projected fees, and o The means by which such Fund Services or Fund-related Adviser Services were pre-approved by the Audit Committee. In addition, the independent auditor shall report to the Audit Committee annually, and no more than 90 days prior to the filing of audit reports with the SEC, all non-audit services provided to entities in the funds' "investment company complex," as defined by SEC rules, that did not require pre-approval under the Policy. V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE The Policy may be amended from time to time by the Audit Committee. Prompt notice of any amendments will be provided to the independent auditor, Fund Treasurer and Director of Trustee Administration. The Policy shall be reviewed and approved at least annually by the Audit Committee. ***** (e)(2) The percentage of services described in paragraphs (b) through (d) of this Item approved pursuant to the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during both fiscal years ended September 30, 2005 and September 30, 2004 was zero. (f) Not applicable. (g) All non-audit fees billed by the registrant's accountant for services rendered to the registrant for the fiscal years ended September 30, 2005 and September 30, 2004 are disclosed in (b) through (d) of this Item. During the fiscal years ended September 30, 2005 and September 30, 2004, there were no Audit-Related Fees or Tax Fees that were approved for services to the investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. During the fiscal years ended September 30, 2005 and September 30, 2004, All Other Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were approximately $95,500 and $95,000, respectively. For both fiscal years, All Other Fees consist primarily of internal controls reviews of the registrant's transfer agent. The percentage of Audit-Related Fees, Tax Fees and All Other Fees required to be approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception during both fiscal years ended September 30, 2005 and September 30, 2004 was zero. (h) The registrant's Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant's adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence. The Audit Committee determined that the provision of such services is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS The registrant's "Schedule I - Investments in securities of unaffiliated issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not 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 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, has concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant's management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH. (a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (a)(3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Columbia Funds Trust XI ------------------------------------------------------------------ By (Signature and Title) /s/ Christopher L. Wilson ------------------------------------------------------ Christopher L. Wilson, President Date November 28, 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 November 28, 2005 -------------------------------------------------------------------------- By (Signature and Title) /s/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, Treasurer Date November 28, 2005 --------------------------------------------------------------------------