<Page>
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 811-9709
---------------------------------------------
Columbia Floating Rate Advantage Fund
- -------------------------------------------------------------------------------
(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: August 31, 2004
--------------------------
Date of reporting period: February 29, 2004
-------------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609. The OMB has reviewed this collection of
information under the clearance requirements of 44 U.S.C. Section 3507.
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
[GRAPHIC]
COLUMBIA FLOATING
RATE ADVANTAGE FUND
SEMIANNUAL REPORT
FEBRUARY 29, 2004
[COLUMBIA(R) FUNDS LOGO]
A MEMBER OF COLUMBIA MANAGEMENT GROUP
<Page>
Table of Contents
<Table>
Fund Profile 1
Performance Information 2
Economic Update 3
Portfolio Managers' Report 4
Financial Statements 6
Investment Portfolio 7
Statement of Assets and Liabilities 17
Statement of Operations 18
Statement of Changes in Net Assets 19
Statement of Cash Flows 20
Notes to Financial Statements 21
Financial Highlights 27
Important Information About This Report 31
Columbia Funds 32
</Table>
Economic and market conditions change frequently. There is no assurance that the
trends described in this report will continue or commence.
Not FDIC May Lose Value
Insured No Bank Guarantee
TO OUR FELLOW SHAREHOLDERS
COLUMBIA FLOATING RATE ADVANTAGE FUND
DEAR SHAREHOLDER:
We are pleased to let you know that FleetBoston Financial Corporation and Bank
of America Corporation have merged, effective April 1, 2004. As as a result of
the merger, Columbia Management Group became part of the Bank of America family
of companies. Looking ahead, we believe this merger will be a real benefit to
our shareholders. Preserving and leveraging our strengths, the combined
organization will deliver additional research, management, and product
capabilities to you.
We also want to take this opportunity to advise a change in your fund's
investment advisor. On April 15, Highland Capital Management, L.P. became the
investment advisor to Columbia Floating Rate Advantage Fund. Our board
transferred management of the fund to Highland because regulations prohibited
Columbia Management from purchasing bank loans underwritten by Bank of America.
The change of investment advisor will not impact the fund's investment strategy
and will give your fund access to the full bank loan marketplace. For more
information, please read the sidebar on page 5 of this report and the letter
included in this mailing. If you have additional questions about this transfer
or about your account, please contact Shareholder Services at 800-345-6611.
As you might know, on March 15, 2004, FleetBoston Financial announced an
agreement in principle with the staff of the Securities and Exchange Commission
("SEC") and the New York Attorney General to settle charges involving market
timing in Columbia Management mutual funds. (Bank of America came to a similar
settlement in principle at the same time.) The agreement will require the final
approval of the SEC. This action reflects our full cooperation with the
investigation and our strong wish to put this regrettable situation behind us.
Columbia Management has taken and will continue to take steps to strengthen
policies, procedures and oversight to curb frequent trading of Columbia fund
shares.
We also want you to know that your fund's Board of Trustees has been energetic
over the past year in strengthening its capacity to oversee the Columbia funds.
Recently, the Board of Trustees:
- ELECTED AN INDEPENDENT TRUSTEE TO CHAIR THE TWELVE-PERSON BOARD. IN
ADDITION, EACH COMMITTEE OF THE BOARD IS COMPRISED OF TRUSTEES WHO ARE
COMPLETELY INDEPENDENT OF THE ADVISOR AND ITS AFFILIATES.
- APPOINTED A CHIEF COMPLIANCE OFFICER OF THE COLUMBIA FUNDS, WHO REPORTS
DIRECTLY TO EACH FUND'S AUDIT COMMITTEE. TRUSTEES WERE ALSO ASSIGNED TO
FOUR SEPARATE INVESTMENT OVERSIGHT COMMITTEES, EACH BETTER ABLE TO
MONITOR PERFORMANCE OF INDIVIDUAL FUNDS.
- VOTED TO DOUBLE THE REQUIRED INVESTMENT BY EACH TRUSTEE IN THE COLUMBIA
FUNDS -- TO FURTHER ALIGN THE INTERESTS OF THE TRUSTEES WITH THOSE OF
OUR FUND SHAREHOLDERS. AT THE SAME TIME, NEW POLICIES WERE INSTITUTED
REQUIRING ALL INVESTMENT PERSONNEL AND TRUSTEES TO HOLD THEIR COLUMBIA
FUND SHARES FOR A MINIMUM OF ONE YEAR (UNLESS EXTRAORDINARY
CIRCUMSTANCES WARRANT AN EXCEPTION TO BE GRANTED BY A BOARD DESIGNATED
COMMITTEE).
Both your fund's trustees and Columbia Management are committed to serving the
interests of our shareholders, and we will continue to work hard to help you
achieve your financial goals.
In the pages that follow, you'll find valuable information about the economic
environment and the performance of your Columbia fund. The "Economic Update"
provides an overview of the investing environment during the past six months. In
the "Portfolio Managers' Report," your fund's management team discusses
investment performance and the impact of decisions made during the period. This
discussion is followed by financial statements for your fund. We hope that you
will take time to read this report and discuss it with your financial advisor if
you have any questions.
As always, thank you for choosing Columbia funds. It is a privilege to play a
role in your financial future.
Sincerely,
/s/ Thomas C. Theobald /s/ J. Kevin Connaughton
Thomas C. Theobald J. Kevin Connaughton
Chairman, Board of Trustees President, Columbia Funds
J. Kevin Connaughton was named president of Columbia Funds on February 27, 2004.
<Page>
FUND PROFILE
COLUMBIA FLOATING RATE ADVANTAGE 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.
QUALITY AS OF 02/29/04 (%)
<Table>
Ba1 4.6
Ba2 8.2
Ba3 20.6
B1 20.3
B2 12.6
B3 8.2
Caa1 4.3
Caa2 2.7
Ca 1.9
Non-rated 9.6
Other 7.0
Total 100%
</Table>
TOP 10 ISSUERS AS OF 02/29/04 (%)
<Table>
Allied Waste North America 2.9
Century Cable Holdings 2.3
Mission Energy Holdings 2.3
Washington Group International 2.1
Charter Communications 2.0
Cricket Communications 2.0
Huntsman 2.0
Huntsman International 1.9
Nextel Finance 1.8
Michael Foods 1.7
</Table>
TOP 5 SECTORS AS OF 02/29/04 (%)
<Table>
Cable 9.4
Telecommunications - wireless 7.9
Electric utilities 7.3
Food manufacturer 5.3
Chemicals 4.8
</Table>
Quality is calculated as a percentage of total investments. Sectors and issuers
are calculated as a percentage of net assets.
(C) 2004 Morningstar, Inc. All Rights Reserved. The information contained
herein: (1) is proprietary to Morningstar and/or its content providers; (2) may
not be copied or distributed; and (3) is not warranted to be accurate, complete
or timely. Neither Morningstar nor its content providers are responsible for any
damages or losses arising from any use of this information. Past performance is
no guarantee of future results.
The Morningstar Style Box(TM) reveals a fund's investment strategy. For equity
funds the vertical axis shows the market capitalization of the stocks owned and
the horizontal axis shows investment style (value, blend or growth). For
fixed-income funds the vertical axis shows the average credit quality of the
bonds owned, and the horizontal axis shows interest rate sensitivity as measured
by a bond's duration (short, intermediate or long). All of these numbers are
drawn from the data most recently provided by the fund and entered into
Morningstar's database as of month-end. Although the data are gathered from
reliable sources, Morningstar cannot guarantee completeness and accuracy. As of
02/29/2004.
[SIDENOTE]
SUMMARY
- - FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 9.72% WITHOUT SALES CHARGE.
- - THE FUND'S RETURN WAS HIGHER THAN THE RETURN OF ITS BENCHMARK, THE CSFB
LEVERAGED LOAN PLUS INDEX, AND THE AVERAGE RETURN OF ITS PEER GROUP, THE
LIPPER LOAN PARTICIPATION FUNDS CATEGORY.
- - THE FUND'S EMPHASIS ON RECOVERING INDUSTRIES, SUCH AS WIRELESS AND CABLE
TELEVISION, AIDED ITS STRONG RETURN. RETURNS WERE FURTHER ASSISTED BY THE USE
OF LEVERAGE.
<Table>
<Caption>
CSFB LEVERAGED
CLASS A SHARES LOAN PLUS INDEX
9.72% 4.68%
</Table>
OBJECTIVE
To provide a high level of current income, consistent with preservation of
capital
TOTAL NET ASSETS
$470.0 million
[CHART]
MORNINGSTAR STYLE BOX
1
<Page>
PERFORMANCE INFORMATION
COLUMBIA FLOATING RATE ADVANTAGE FUND
[CHART]
VALUE OF A $10,000 INVESTMENT 01/13/00 - 02/29/04
<Table>
<Caption>
CLASS A SHARES CLASS A SHARES CSFB LEVERAGED
WITHOUT SALES CHARGE WITH SALES CHARGE LOAN PLUS INDEX
1/13/2000 $ 10,000 $ 9,650 $ 10,000
01/13/2000 - 01/31/2000 $ 10,050 $ 9,698 $ 10,097
02/01/2000 - 02/29/2000 $ 10,141 $ 9,787 $ 10,130
03/01/2000 - 03/31/2000 $ 10,151 $ 9,795 $ 10,050
04/01/2000 - 04/30/2000 $ 10,210 $ 9,853 $ 10,086
05/01/2000 - 05/31/2000 $ 10,316 $ 9,955 $ 10,171
06/01/2000 - 06/30/2000 $ 10,420 $ 10,055 $ 10,233
07/01/2000 - 07/31/2000 $ 10,521 $ 10,153 $ 10,307
08/01/2000 - 08/31/2000 $ 10,604 $ 10,233 $ 10,359
09/01/2000 - 09/30/2000 $ 10,696 $ 10,322 $ 10,393
10/01/2000 - 10/31/2000 $ 10,778 $ 10,400 $ 10,398
11/01/2000 - 11/30/2000 $ 10,821 $ 10,442 $ 10,421
12/01/2000 - 12/31/2000 $ 10,895 $ 10,514 $ 10,494
01/01/2001 - 01/31/2001 $ 10,998 $ 10,613 $ 10,557
02/01/2001 - 02/28/2001 $ 11,049 $ 10,663 $ 10,647
03/01/2001 - 03/31/2001 $ 11,020 $ 10,634 $ 10,660
04/01/2001 - 04/30/2001 $ 10,915 $ 10,533 $ 10,615
05/01/2001 - 05/31/2001 $ 11,027 $ 10,641 $ 10,742
06/01/2001 - 06/30/2001 $ 11,041 $ 10,654 $ 10,755
07/01/2001 - 07/31/2001 $ 11,176 $ 10,785 $ 10,782
08/01/2001 - 08/31/2001 $ 11,316 $ 10,920 $ 10,868
09/01/2001 - 09/30/2001 $ 11,128 $ 10,739 $ 10,660
10/01/2001 - 10/31/2001 $ 10,873 $ 10,493 $ 10,494
11/01/2001 - 11/30/2001 $ 11,007 $ 10,622 $ 10,659
12/01/2001 - 12/31/2001 $ 11,176 $ 10,784 $ 10,769
01/01/2002 - 01/31/2002 $ 11,344 $ 10,947 $ 10,829
02/01/2002 - 02/28/2002 $ 11,274 $ 10,879 $ 10,788
03/01/2002 - 03/31/2002 $ 11,493 $ 11,090 $ 10,913
04/01/2002 - 04/30/2002 $ 11,652 $ 11,245 $ 11,029
05/01/2002 - 05/31/2002 $ 11,683 $ 11,274 $ 11,022
06/01/2002 - 06/30/2002 $ 11,455 $ 11,054 $ 10,855
07/01/2002 - 07/31/2002 $ 11,051 $ 10,664 $ 10,690
08/01/2002 - 08/31/2002 $ 10,878 $ 10,497 $ 10,659
09/01/2002 - 09/30/2002 $ 10,723 $ 10,347 $ 10,683
10/01/2002 - 10/31/2002 $ 10,621 $ 10,249 $ 10,540
11/01/2002 - 11/30/2002 $ 10,806 $ 10,427 $ 10,721
12/01/2002 - 12/31/2002 $ 11,067 $ 10,680 $ 10,889
01/01/2003 - 01/31/2003 $ 11,232 $ 10,839 $ 11,036
02/01/2003 - 02/28/2003 $ 11,249 $ 10,855 $ 11,094
03/01/2003 - 03/31/2003 $ 11,398 $ 10,999 $ 11,130
04/01/2003 - 04/30/2003 $ 11,778 $ 11,366 $ 11,287
05/01/2003 - 05/31/2003 $ 12,143 $ 11,718 $ 11,438
06/01/2003 - 06/30/2003 $ 12,421 $ 11,986 $ 11,600
07/01/2003 - 07/31/2003 $ 12,494 $ 12,057 $ 11,679
08/01/2003 - 08/31/2003 $ 12,572 $ 12,132 $ 11,704
09/01/2003 - 09/30/2003 $ 12,810 $ 12,361 $ 11,821
10/01/2003 - 10/31/2003 $ 13,040 $ 12,584 $ 11,928
11/01/2003 - 11/30/2003 $ 13,283 $ 12,818 $ 12,015
12/01/2003 - 12/31/2003 $ 13,473 $ 13,001 $ 12,089
01/01/2004 - 01/31/2004 $ 13,777 $ 13,295 $ 12,215
02/01/2004 - 02/29/2004 $ 13,791 $ 13,308 $ 12,256
</Table>
The graph and table do not reflect a deduction of the taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. The CSFB
Leveraged Loan Plus Index is an unmanaged index that tracks the performance of
senior floating rate bank loans. Unlike the fund, indices are not investments,
do not incur fees or expenses, and are not professionally managed. It is not
possible to invest directly in an index. Securities in the fund may not match
those in an index. Index performance is from December 31, 1999.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
<Table>
<Caption>
SHARE CLASS A B C Z
---------------------------------------------------------------------------------------
INCEPTION 1/13/00 1/13/00 1/13/00 1/13/00
---------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
---------------------------------------------------------------------------------------
6-month (cumulative) 9.72 5.88 9.53 6.28 9.44 8.44 9.91
1-year 22.62 18.33 22.19 18.94 22.01 21.01 23.05
Life 8.10 7.17 7.74 7.55 7.58 7.58 8.47
</Table>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
<Table>
<Caption>
SHARE CLASS A B C Z
----------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
----------------------------------------------------------------------------------------
6-month (cumulative) 8.46 4.66 8.27 5.02 8.18 7.18 8.65
1-year 21.72 17.46 21.30 18.05 21.12 20.12 22.15
Life 7.80 6.83 7.44 7.14 7.28 7.28 8.16
</Table>
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 3.50% sales charge for class A shares; the
appropriate class B shares early withdrawal charge (EWC) for the holding period
after purchase as follows: first year -- 3.25%, second year -- 3.00%, third year
- -- 2.00%, fourth year -- 1.50%, fifth year -- 1.00%, thereafter -- 0%; and the
class C shares EWC of 1% for the first year only. Performance for different
share classes will vary based on differences in sales charges and fees
associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
[SIDENOTE]
PERFORMANCE OF A $10,000 INVESTMENT 01/13/00 - 02/29/04 ($)
<Table>
<Caption>
SALES CHARGE: WITHOUT WITH
--------------------------------
Class A 13,791 13,308
Class B 13,501 13,501
Class C 13,519 13,519
Class Z 13,986 n/a
</Table>
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
2
<Page>
ECONOMIC UPDATE
COLUMBIA FLOATING RATE ADVANTAGE FUND
The US economy moved strongly early in the six-month reporting period that began
September 1, 2003 and ended February 29, 2004. However, the pace of growth
slowed as the period wore on, and downbeat news from consumers and the jobs
front put a damper on expectations for 2004.
A combination of factors accounted for the economy's stronger growth in the
first half of this reporting period. A sizeable tax package, which was
implemented in 2003, gave disposable income a boost. Income taxes fell across
all tax brackets. And, many taxpayers received tax rebate checks late last
summer, which helped prop up consumer spending throughout this reporting period.
But early in 2004, consumer confidence slipped. Unemployment claims rose and the
number of new jobs added to the labor market was substantially lower than
economists had expected--given the overall growth of the economy. Even the
housing market, which has been hot for years, showed signs of weakness.
Home-buying activity slowed, and sales fell late in the period.
The business sector contributed to the economy's growth as industrial production
rose over the past six months. Business spending--especially on
technology-related items--showed strength as corporate profits rose sharply.
However, orders for durable goods declined in January, interrupting five
consecutive months of gains. Computer and electronic equipment orders rose, but
transportation equipment orders fell sharply.
BONDS DELIVER RESPECTABLE GAINS
A growing economy continued to boost investor enthusiasm for high-yield bonds,
which continued to lead the fixed-income markets. The Merrill Lynch US High
Yield, Cash Pay Index returned 10.32%. And as interest rates moved lower, other
segments of the bond market delivered respectable gains. The yield on the
benchmark 10-year US Treasury bond edged downward from 4.46% to 3.97% during the
period. The Lehman Brothers Aggregate Bond Index, a broad measure of
investment-grade bond performance, returned 4.92%. However, money market fund
yields remained below 1%, as the Fed kept short-term interest rates at their
historical lows.
US STOCKS HEADED HIGHER
The US stock market gained ground, but its rate of return slowed in the final
month of the period as disappointing economic data gave investors pause. The S&P
500 Index returned 14.59% for this six-month period as all sectors of the market
benefited from rising corporate profits. Defensive sectors, such as energy,
materials, industrials and consumer staples were the strongest performers, as
investors started to hedge their bets on the economy. Technology, which led the
stock market rally in its early stage last year, pulled back during the period.
INTERNATIONAL STOCK MARKETS REPORTED STRONG RETURNS
A rebound in economic growth and a declining dollar helped international stock
markets to returns that were generally stronger than in the United States. The
MSCI EAFE Index, a broad measure of performance of 21 developed equity markets
in Europe, Australasia (which includes Australia and New Zealand) and the Far
East, returned 25.22%. European stock markets responded to improving economic
data and relatively low interest rates. A strong euro gave returns to American
investors an additional boost. Japan's economy continued to report steady but
modest growth. Yet its stock market cooled after a run-up in the six months
prior to this reporting period. Many emerging stock markets did even better.
Although the Chinese economy cooled somewhat in 2003, its stock market soared.
The MSCI China Index returned 43.07%.
[SIDENOTE]
SUMMARY FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 29, 2004
- - PERFORMANCE IN THE FIXED-INCOME UNIVERSE WAS LED BY HIGH-YIELD BONDS. AS
MEASURED BY THE MERRILL LYNCH US HIGH YIELD, CASH PAY INDEX, THIS SECTOR
POSTED A RETURN MORE THAN FIVE PERCENTAGE POINTS HIGHER THAN THE RETURN FOR
INVESTMENT-GRADE BONDS, AS MEASURED BY THE LEHMAN BROTHERS AGGREGATE BOND
INDEX.
<Table>
<Caption>
MERRILL LYNCH INDEX LEHMAN INDEX
10.32% 4.92%
</Table>
- - THE US STOCK MARKET ROSE AS THE ECONOMY STRENGTHENED AND CORPORATE PROFITS
INCREASED. BOTH THE RUSSELL 3000 INDEX, WHICH TRACKS APPROXIMATELY 98% OF THE
US STOCK MARKET, AND THE S&P 500 Index posted double-digit returns this
period.
<Table>
<Caption>
RUSSELL 3000 INDEX S&P 500 INDEX
15.06% 14.59%
</Table>
The Merrill Lynch US High Yield Cash Pay Index is an unmanaged index that tracks
the performance of non-investment-grade corporate bonds.
The Lehman Brothers Aggregate Bond Index is a market value-weighted index that
tracks fixed-rate, publicly placed, dollar-denominated, and non-convertible
investment grade debt issues.
The Russell 3000 Index is an unmanaged index that tracks the performance of the
3,000 largest US companies based on total market capitalizations.
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held, large capitalization US stocks.
3
<Page>
PORTFOLIO MANAGERS' REPORT
COLUMBIA FLOATING RATE ADVANTAGE FUND
For the six-month period ended February 29, 2004, class A shares of Columbia
Floating Rate Advantage Fund returned 9.72% without sales charge. That was
higher than the return of the fund's benchmark, the CSFB Leveraged Loan Plus
Index, which was 4.68% for the period. The fund also outperformed the Lipper
Loan Participation Funds Category average, which was 6.18%.(1) The fund's
emphasis on recovering industries, such as wireless and cable television, aided
its strong return, which was boosted by the use of leverage. A recovering
economy and lower default rates also played a role in the fund's strong showing
for the period.
ECONOMIC RECOVERY HELPED BANK LOAN MARKET MOVE HIGHER
Although we did not witness tremendous movement in interest rates, a
strengthening economy and a rising stock market helped all credit sensitive debt
markets, including the bank loan market. Lower quality credits performed
especially well, continuing a trend that has been in place since late 2002.
In particular, the fund was aided by its overweight position in the wireless and
cable television industries, both of which outperformed the market. As new money
came into the fund, we added to our positions in Charter Communications, Century
Cable Holdings, and Nextel Finance. Other standout performers for the fund
included Cricket Communications, Mission Energy Holdings, and steel company
Ispat Inland.
SIGNS OF A HEALTHY MARKETPLACE
The fund did not experience any major defaults. Many lower rated companies have
improved their financial condition via their newfound access to the high yield
bond market.
Floating-rate obligations also benefited from the technical dynamics of the bank
loan market. Even though the yield advantage of new issues (versus the London
Interbank Rate, or LIBOR) has come down dramatically, net new issuance has been
quite low. Meanwhile, the demand for bank loans from mutual funds and other
financial institutions has been extremely strong. Lower supply and higher demand
resulted in price appreciation for bank loans on the secondary market.
Because the overall environment was favorable throughout the period, we took
advantage of our ability to use leverage to improve performance, in keeping with
the fund's goals and guidelines. A fully leveraged position was not always
possible because of the effects of new money coming into the fund and the need
for quarterly tender offers.
(1) Lipper, Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment objectives
as the fund.
[SIDENOTE]
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
<Table>
Class A 11.98
Class B 11.98
Class C 11.98
Class Z 11.98
</Table>
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
<Table>
Class A 0.32
Class B 0.30
Class C 0.29
Class Z 0.34
</Table>
SEC YIELD AS OF 02/29/04 (%)
<Table>
Class A 4.74
Class B 4.57
Class C 4.40
Class Z 5.25
</Table>
The 30-day SEC yields reflect the fund's earning power net of expenses,
expressed as an annualized percentage of the public offering price at the end of
the period. If the advisor or its affiliates had not waived certain fund
expenses, the SEC yields would have been lower.
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
<Table>
Century Cable Holdings 2.3
Mission Energy Holdings 2.3
Charter Communications 2.0
Cricket Communications 2.0
Nextel Finance 1.8
Ispat Inland 1.6
</Table>
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
4
<Page>
A STABLE RATE ENVIRONMENT
We anticipate that short-term interest rates will remain stable over the next
six months. Ordinarily, continued economic strength would translate into higher
short-term interest rates, precisely the scenario for which floating rate
securities provide protection. However, we do not expect the Federal Reserve to
raise short-term interest rates in the absence of strong job creation. Yet, we
are optimistic that we have the potential to achieve competitive returns even in
a stable rate environment.
[PHOTO OF BRIAN GOOD]
Brian Good has co-managed Columbia Floating Rate Advantage Fund since its
inception in January 2000 and has been with the advisor and its predecessors
since April 1998.
/s/ Brian Good
[PHOTO OF JIM FELLOWS]
Jim Fellows has co-managed Columbia Floating Rate Advantage Fund since its
inception in January 2000 and has been with the advisor and its predecessors
since April 1998.
/s/ Jim Fellows
Just like any other investment, floating rate loan investments present financial
risks. Defaults on the loans in the portfolio could reduce the fund's net asset
value (NAV) and its distributions, as could nonpayment of scheduled interest and
principal. Prepayment of principal by a borrower could mean that the fund
managers have to replace the loan with a lower-yielding security, which could
affect the valuation of the portfolio's holdings.
The fund is a continuously offered, closed-end management investment company and
provides limited liquidity through a quarterly tender offer for between 5% and
25% of outstanding shares. Each quarter, the fund's trustees must approve the
actual tender amount. Please read the prospectus carefully for more details.
The use of leverage for investment purposes creates opportunities for greater
total returns, but at the same time involves certain risks, such as greater
volatility of the NAV of the fund's shares and the nonpayment of dividends.
The fund may invest a high percentage of assets in a limited number of loans, so
the default of any individual holding can have a greater impact on the fund's
NAV than could a default in a more diversified portfolio.
Unlike floating rate loans, some fixed-income investments may be covered by FDIC
insurance or other guarantees relating to timely payment of principal and
interest. Some may also provide tax benefits.
[SIDENOTE]
IMPORTANT INFORMATION
Effective 11:59 p.m. on April 15, 2004, Highland Capital Management, L.P.
("Highland") replaced Columbia Management Advisors, Inc. as investment adviser
to Columbia Floating Rate Advantage Fund. Highland did so pursuant to an interim
investment advisory agreement (the "Interim Agreement"), which has been approved
by the Board of Trustees of the fund, pending shareholder approval of a
longer-term agreement with Highland.
Also effective 11:59 p.m. on April 15, 2004, pursuant to the Interim Agreement,
Mark Okada and Joe Dougherty assumed primary responsibility for the day-to-day
management of Columbia Floating Rate Advantage Fund. Mr. Okada and Mr. Dougherty
are supported by a team of industry-focused investment professionals in
analyzing and executing investment ideas. Mr. Okada has been affiliated with
Highland since it was founded in 1993 and Mr. Dougherty has been affiliated with
Highland since 1998.
In connection with the change of investment advisor for Columbia Floating Rate
Advantage Fund from Columbia to Highland, PFPC Distributors, Inc. replaced
Columbia Funds Distributor, Inc. as distributor and principal underwriter to the
funds, effective April 16, 2004.
5
<Page>
FINANCIAL STATEMENTS
FEBRUARY 29, 2004 COLUMBIA FLOATING RATE ADVANTAGE 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. 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 charged to the
fund. 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). The Statement of
Changes in Net Assets also reconciles changes in the number of shares
outstanding.
STATEMENT OF CASH FLOWS
The statement of cash flows reports net cash provided or used by operating,
investing and financing activities and the net effect of those flows on cash and
cash equivalents during the period.
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 certain key fund ratios (e.g., fund expenses and net investment
income as a percentage of average net assets).
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 risk and contingencies.
6
<Page>
INVESTMENT PORTFOLIO
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA FLOATING RATE ADVANTAGE FUND
VARIABLE RATE SENIOR
LOAN INTERESTS (a) - 97.4%
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.9%
Decrane Aircraft Holdings, Inc. Floating Rate Loan 06/30/08 2,000,000 2,025,000
Vought Aircraft Industries, Inc. Term Loan B 06/30/07 216,435 217,147
Term Loan C 06/30/08 1,334,577 1,339,016
Term Loan X 12/31/06 847,637 855,048
AEROSPACE/DEFENSE TOTAL 4,436,211
AUTO PARTS - 3.7%
142466 Ontario Ltd. Term Loan B 08/10/07 2,352,928 2,372,105
Accuride Corp. Term Loan C 01/21/07 989,583 1,002,777
Federal-Mogul Corp. (b) Supplemental Revolver 02/06/05 1,438,927 1,431,722
Term Loan B 02/24/05 5,000,000 4,535,381
Term Loan C 02/06/05 573,404 576,984
Shiloh Industries, Inc. Term Loan B 01/14/09 3,500,000 3,549,839
TRW Automotive Acquisitions Corp. Term Loan D1 02/28/11 2,782,609 2,834,721
United Components, Inc. Tranche C 06/30/10 990,000 1,003,658
AUTO PARTS TOTAL 17,307,187
BROADCASTING - 2.1%
Comcorp Broadcasting, Inc. Term Loan A2 03/31/04 1,813,479 1,804,412
Gray Television, Inc. Incremental Term Loan 12/31/10 2,085,000 2,108,764
PanAmSat Corp. Tranche B1 09/30/10 1,076,923 1,094,416
Spanish Broadcasting Systems, Inc. Term Loan 10/30/09 4,375,000 4,432,392
White Knight Broadcasting, Inc. Term Loan A2 03/31/04 186,521 185,588
BROADCASTING TOTAL 9,625,572
BUILDING PRODUCTS - 0.5%
St. Mary's Cement, Inc. Term Loan B 12/04/09 1,000,000 1,011,268
Tapco International Corp. Term Loan B 06/23/07 850,101 854,389
Term Loan C 06/23/08 607,914 610,980
BUILDING PRODUCTS TOTAL 2,476,637
BUSINESS SERVICES - 1.2%
NATG Holdings LLC (c) Credit Linked Certificate of Deposit 01/23/05 131,418 131,352
Term Loan A 01/23/09 127,805 102,254
Term Loan B1 01/23/10 86,523 69,224
Term Loan B2 01/23/10 22,158 22,160
Pacer International, Inc. Term Loan 06/10/10 827,451 836,554
</Table>
See notes to investment portfolio.
7
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
BUSINESS SERVICES - (CONTINUED)
Per-Se Technologies, Inc. Term Loan B 09/11/08 2,193,750 2,240,806
Relizon Co. Term Loan B 02/20/11 2,000,000 2,012,500
BUSINESS SERVICES TOTAL 5,414,850
CABLE - 9.4%
Bresnan Communications LLC Term Loan B 12/31/07 3,500,000 3,581,871
Century Cable Holdings LLC Discretionary Term Loan 12/31/09 1,000,000 949,688
Term Loan 06/30/09 10,500,000 10,069,059
Charter Communications Operating LLC Term Loan A 09/18/07 8,506,250 8,239,904
Term Loan B 03/18/08 1,261,600 1,230,236
CSC Holdings, Inc. (b) Revolver 06/30/06 1,956,250 1,917,145
Insight Midwest Holdings LLC Term Loan 12/31/09 3,000,000 3,024,440
Term Loan B 12/31/09 2,500,000 2,517,055
Olympus Cable Holdings LLC Term Loan A 06/30/10 6,000,000 5,681,250
UPC Financing Partnership Term Loan C2 03/31/09 7,000,000 6,976,174
CABLE TOTAL 44,186,822
CASINOS/GAMBLING - 2.8%
Aladdin Gaming LLC (d) Term Loan A 02/25/05 4,000,000 3,620,000
Term Loan B 08/26/06 1,250,000 1,131,250
Alliance Gaming Corp. Term Loan B 09/04/09 3,650,000 3,692,269
Ameristar Casinos, Inc. Term Loan B 12/20/06 869,782 875,136
Marina District Finance Co., Inc. Term Loan A 12/31/07 3,636,545 3,675,473
CASINOS/GAMBLING TOTAL 12,994,128
CHEMICALS - 4.8%
Huntsman Co. LLC Term Loan A 03/31/07 5,372,299 5,234,930
Term Loan B 03/31/07 4,067,415 3,960,049
Huntsman International LLC Term Loan B 06/30/07 4,534,834 4,579,546
Term Loan C 06/30/08 4,495,708 4,543,553
Kraton Polymers LLC Term Loan 12/23/10 2,333,333 2,375,748
Messer Griesheim Industries, Inc. Term Loan B 04/27/09 526,219 530,956
Term Loan C 04/27/10 757,385 764,202
Nalco Co. Term Loan B 11/04/10 400,000 404,500
Noveon, Inc. (b) Term Loan B 12/31/09 338,213 342,026
CHEMICALS TOTAL 22,735,510
</Table>
See notes to investment portfolio.
8
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
COAL - 0.2%
Headwaters, Inc. Term Loan B 08/30/07 899,575 919,120
COAL TOTAL 919,120
CONSUMER SERVICES - 1.2%
Alderwoods Group, Inc. Note 7 Year 01/02/09 528,100 591,472
Knowledge Learning Corp. Term Loan B 05/15/10 5,000,000 5,025,011
CONSUMER SERVICES TOTAL 5,616,483
CONSUMER SPECIALTIES - 1.9%
Jarden Corp. Term Loan B 04/24/08 1,246,875 1,259,142
Johnson Diversey, Inc. Term Loan B 11/03/09 2,148,080 2,174,511
Rayovac Corp. Term Loan B 09/30/09 1,621,451 1,633,964
Reddy Ice Group, Inc. Term Loan 08/15/09 748,125 756,384
Sola International, Inc. Term Loan 12/11/09 1,250,000 1,268,750
United Industries Corp. Term Loan B 01/20/06 2,026,671 2,041,857
CONSUMER SPECIALTIES TOTAL 9,134,608
CONTAINER/PACKAGING - 1.2%
Graphic Packaging International, Inc. Term Loan B 08/09/10 3,980,000 4,044,016
Port Townsend Paper Corp. Term Loan B 03/16/07 1,847,750 1,792,453
CONTAINERS/PACKAGING TOTAL 5,836,469
DIVERSIFIED COMMERCIAL SERVICES - 1.1%
Transcore Holdings, Inc. Term Loan B 01/05/08 1,136,981 1,152,171
Term Loan C 01/05/08 3,990,000 4,039,875
DIVERSIFIED COMMERCIAL SERVICES TOTAL 5,192,046
DIVERSIFIED MANUFACTURING - 3.7%
Amsted Industries, Inc. Term Loan 10/15/10 2,985,000 3,016,198
Enersys, Inc. Term Loan B 11/09/08 2,447,535 2,471,988
Jason, Inc. Term Loan B 06/30/07 1,266,300 1,253,684
Polymer Group, Inc. (b) Term Loan 12/31/06 5,535,448 5,615,020
Polypore, Inc. Term Loan B 12/31/06 979,695 986,905
Term Loan C 12/31/07 963,845 973,104
Roper Industries, Inc. Term Loan 12/29/08 3,000,000 3,039,375
DIVERSIFIED MANUFACTURING TOTAL 17,356,274
</Table>
See notes to investment portfolio.
9
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
ELECTRIC UTILITIES - 7.3%
Calpine Corp. Second Lien 07/16/07 6,666,500 6,362,341
CenterPoint Energy, Inc. Term Loan 10/07/06 4,986,487 5,113,286
Infrasource, Inc. Term Loan 09/30/10 4,987,500 4,985,583
Mission Energy Holdings Co. Term Loan 12/11/06 1,750,000 1,777,718
Term Loan A 07/02/06 2,467,532 2,393,590
Term Loan B 07/02/06 7,032,468 6,821,733
Northwestern Corp. Term Loan 12/01/06 2,475,000 2,489,806
NRG Energy, Inc. Credit Linked Certificate of Deposit 06/23/10 416,667 431,175
Term Loan 06/23/10 744,167 774,201
TNP Enterprises, Inc. Term Loan 12/31/06 2,985,000 3,028,164
ELECTRIC UTILITIES TOTAL 34,177,597
ELECTRONIC COMPONENTS - 0.9%
Viasystems, Inc. Term Loan B 09/30/08 4,289,989 4,334,553
ELECTRONIC COMPONENTS TOTAL 4,334,553
ENGINEERING & CONSTRUCTION - 3.0%
Great Lakes Dredge & Dock Corp. Term Loan B 12/22/10 3,500,000 3,536,482
URS Corp. Term Loan B 08/22/08 760,637 765,132
Washington Group International Credit Linked Certificate of Deposit 10/03/07 9,600,000 9,786,000
ENGINEERING & CONSTRUCTION TOTAL 14,087,614
ENVIRONMENTAL SERVICES - 3.9%
Allied Waste North America, Inc. Term Loan B 01/15/10 1,163,415 1,183,315
Tranche A 01/15/10 3,574,343 3,632,744
Tranche C 01/15/10 8,558,000 8,709,814
Environmental Systems Products Holdings Second Lien 12/12/10 4,500,000 4,556,677
ENVIRONMENTAL SERVICES TOTAL 18,082,550
FARMING/AGRICULTURE - 0.6%
AGCO Corp. Term Loan 01/31/06 3,000,000 3,037,501
FARMING/AGRICULTURE TOTAL 3,037,501
FINANCE COMPANIES - 0.2%
Finova Group, Inc. Term Loan 05/15/09 1,490,000 804,600
FINANCE COMPANIES TOTAL 804,600
FOOD CHAINS - 1.5%
AFC Enterprises, Inc. Term Loan A 09/23/08 927,119 908,617
</Table>
See notes to investment portfolio.
10
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
FOOD CHAINS - (CONTINUED)
Buffets, Inc. Synthetic Letter of Credit 06/28/09 466,700 469,622
Term Loan 06/28/09 3,400,000 3,413,577
Domino's, Inc. Term Loan 06/25/10 2,176,647 2,212,071
FOOD CHAINS TOTAL 7,003,887
FOOD MANUFACTURER - 5.3%
Atkins Nutritionals, Inc. First Lien 10/29/09 2,000,000 2,007,565
Second Lien 10/29/09 1,000,000 1,015,091
Burns Philp, Inc. Term Loan 02/26/09 2,153,725 2,204,511
Commonwealth Brands, Inc. Term Loan 08/28/07 1,224,240 1,239,653
Constellation Brands, Inc. Term Loan B 11/30/08 916,667 929,926
Dr. Pepper Bottling Company of Texas Term Loan B 12/19/10 986,301 1,001,712
DS Waters Enterprises LP Term Loan 11/07/09 1,000,000 1,015,841
Interstate Brands Corp. Term Loan B 07/19/07 950,316 954,124
Term Loan C 07/19/07 2,940,113 2,941,502
Tranche A 07/19/06 906,250 906,253
Merisant Co. Term Loan B 01/11/10 798,000 806,510
Michael Foods, Inc. Floater Term Loan 11/21/11 3,000,000 3,077,929
Term Loan 11/21/10 4,987,500 5,075,475
Pinnacle Foods Holding Corp. (b) Delayed Draw Term Loan 11/25/10 1,585,321 1,589,605
FOOD MANUFACTURER TOTAL 24,765,697
HEALTHCARE SERVICES - 4.4%
Ameripath, Inc. Term Loan 03/27/10 2,500,000 2,507,804
Colgate Medical Ltd. Term Loan B 12/30/08 1,750,000 1,764,283
Concentra Operating Corp. Term Loan 06/30/09 2,321,335 2,347,821
dj Orthopedics LLC Term Loan 05/15/09 750,000 758,925
Fresenius Medical Care, Inc. Term Loan C 02/21/10 1,293,500 1,310,932
Medco Health Solutions, Inc. Term Loan 06/30/10 3,391,500 3,445,125
Medex, Inc. Term Loan 05/30/09 1,990,000 2,011,700
Pacificare Health Systems, Inc. Term Loan 06/03/08 995,000 1,006,796
PerkinElmer, Inc. Term Loan B 12/26/08 1,487,778 1,506,232
</Table>
See notes to investment portfolio.
11
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
HEALTHCARE SERVICES - (CONTINUED)
Quintiles Transnational Corp. Term Loan B 09/25/09 1,246,875 1,273,428
Team Health, Inc. Term Loan B 10/31/08 2,855,694 2,856,187
HEALTHCARE SERVICES TOTAL 20,789,233
HOSPITAL MANAGEMENT - 0.4%
Community Health Systems, Inc. Tranche B Term Loan 07/16/10 490,038 498,858
Vanguard Health Systems Incremental Term Loan 01/03/10 1,584,000 1,603,387
HOSPITAL MANAGEMENT TOTAL 2,102,245
HOTELS/RESORTS - 0.9%
Wyndham International, Inc. Term Loan I 06/30/06 4,212,138 4,111,384
HOTELS/RESORTS TOTAL 4,111,384
INDUSTRIAL MACHINERY/COMPONENTS - 1.3%
Dresser, Inc. Term Loan B 04/10/09 1,732,209 1,752,058
Terex Corp. Incremental Term Loan 12/31/09 989,962 992,045
Term Loan 07/03/09 3,115,300 3,122,440
INDUSTRIAL MACHINERY/COMPONENTS TOTAL 5,866,543
INSURANCE BROKERS/SERVICES - 0.6%
Conseco, Inc. Term Loan A1 09/10/09 2,307,692 2,322,792
Term Loan B1 09/10/10 692,308 696,895
INSURANCE BROKERS/SERVICES TOTAL 3,019,687
METALS/MINING - 0.4%
Stillwater Mining Co. Term Loan B 12/31/07 1,902,988 1,927,072
METALS/MINING TOTAL 1,927,072
MOVIES/ENTERTAINMENT - 2.3%
GT Brands LLC Term Loan 09/30/07 2,144,886 2,089,571
Loews Cineplex Entertainment Term Loan 02/29/08 2,790,555 2,799,324
Regal Cinemas, Inc. Term Loan D 06/30/09 2,191,935 2,222,438
Six Flags Theme Parks, Inc. Term Loan B 06/30/09 1,750,000 1,772,976
Vivendi Universal Entertainment LLP Term Loan B 06/30/08 2,000,000 2,015,925
MOVIES/ENTERTAINMENT TOTAL 10,900,234
OFFICE SUPPLIES - 0.8%
Xerox Corp. Term Loan 09/30/08 3,500,000 3,540,631
OFFICE SUPPLIES TOTAL 3,540,631
</Table>
See notes to investment portfolio.
12
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
OIL REFINING/MARKETING - 2.8%
ALON USA Term Loan 12/12/08 1,500,000 1,540,266
CITGO Petroleum Corp. Term Loan 02/27/06 1,500,000 1,569,017
Magellan Midstream Holdings LP Tranche A 06/17/08 719,229 729,118
Magellan Midstream Partners LP Tranche C 08/06/08 1,500,000 1,516,917
Tesoro Petroleum Corp. Fixed Asset Term Loan 04/15/08 1,989,975 2,055,207
Western Refining Co. LP Term Loan B 08/28/08 3,920,000 4,001,761
Williams Production RMT Co. Term Loan C 05/30/07 1,865,625 1,881,951
OIL REFINING/MARKETING TOTAL 13,294,237
PAPER - 1.6%
Appleton Papers, Inc. Tranche D Term Loan 11/08/06 3,934,241 3,966,215
RLC Industries Co. Term Loan B 02/26/10 3,500,000 3,539,356
PAPER TOTAL 7,505,571
PHARMACEUTICALS - 0.9%
aaiPharma, Inc. Term Loan 12/01/09 1,442,156 1,460,170
Medpointe, Inc. Term Loan B 09/30/08 2,768,038 2,785,390
PHARMACEUTICALS TOTAL 4,245,560
PRINTING/PUBLISHING - 4.0%
Dex Media East LLC Term Loan A 11/08/08 6,325,770 6,398,555
Dex Media West LLC Term Loan A 09/09/09 6,783,642 6,869,334
Readers Digest Association, Inc. Term Loan A 05/21/07 863,941 867,568
Term Loan B 05/20/08 2,767,396 2,790,061
TV Guide, Inc. (b) Term Loan A 02/28/05 1,015,288 984,824
Weekly Reader Corp. Term Loan B 11/17/06 957,731 959,228
PRINTING/PUBLISHING TOTAL 18,869,570
RAIL/SHIPPING - 1.1%
American Commercial Lines LLC Term Loan A 06/30/05 673,286 604,300
Term Loan B 06/30/06 845,881 757,134
Term Loan C 06/30/07 1,496,141 1,339,171
Helm Holding Corp. Term Loan B 10/18/06 2,409,758 2,394,705
RAIL/SHIPPING TOTAL 5,095,310
</Table>
See notes to investment portfolio.
13
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 0.8%
AIMCO Properties LP Term Loan 05/30/08 2,000,000 2,021,257
Central Parking Corp. Term Loan B 03/31/10 1,717,586 1,737,114
REAL ESTATE INVESTMENT TRUSTS TOTAL 3,758,371
RETAIL STORES - 0.5%
Alimentation Couche-Tard, Inc. Term Loan 12/17/10 1,000,000 1,008,138
CH Operating LLC Term Loan 06/21/07 1,344,828 1,344,890
RETAIL STORES TOTAL 2,353,028
SEMICONDUCTORS - 0.9%
AMI Semiconductor, Inc. Term Loan 09/26/08 997,500 1,008,724
Semiconductors Components Industries LLC Term Loan E 08/04/07 3,064,619 3,078,216
SEMICONDUCTORS TOTAL 4,086,940
STEEL/IRON ORE - 2.4%
International Steel Group, Inc. Term Loan B 05/01/07 667,145 670,060
Ispat Inland LP Term Loan B 07/16/05 3,928,798 3,761,977
Term Loan C 07/16/06 3,928,798 3,761,977
The Techs Industries, Inc. Term Loan 01/14/10 3,000,000 3,014,589
STEEL/IRON ORE TOTAL 11,208,603
TELECOMMUNICATIONS-INFRASTRUCTURE/
EQUIPMENT - 0.2%
Spectrasite Communications, Inc. Term Loan B 12/31/07 1,119,885 1,134,618
TELECOMMUNICATIONS-
INFRASTRUCTURE/EQUIPMENT TOTAL 1,134,618
TELECOMMUNICATIONS-WIRELESS - 7.9%
Cricket Communications, Inc. (d) Vendor Term Loan 06/30/07 11,500,000 9,430,000
Dobson Celluar Systems, Inc. (b) Revolver 03/31/10 5,865,300 5,921,930
Nextel Finance Co., Inc. Term Loan A 12/31/07 3,914,474 3,892,106
Term Loan E 12/15/10 4,580,000 4,636,660
Nextel Partners Term Loan B 11/30/10 6,000,000 6,093,047
Rural Cellular Corp. Incremental Term Loan 10/03/09 636,479 640,844
Term Loan B 10/03/08 1,180,494 1,189,396
Term Loan C 04/03/09 1,180,494 1,189,396
Western Wireless Corp. Term Loan B 09/30/08 4,321,637 4,346,161
TELECOMMUNICATIONS-WIRELESS TOTAL 37,339,540
</Table>
See notes to investment portfolio.
14
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES - 1.4%
Alaska Communications Systems
Holdings, Inc. Term Loan 02/14/09 1,750,000 1,763,169
Valor Telecommunications Enterprises LLC Term Loan A 06/30/07 2,372,702 2,380,147
Term Loan B 06/30/08 2,342,806 2,360,410
TELECOMMUNICATIONS SERVICES TOTAL 6,503,726
TEXTILES - 1.0%
Levi Strauss & Co. Term Loan A 09/29/09 1,246,875 1,296,834
Springs Industries, Inc. Term Loan A 03/05/07 766,616 769,235
St. John's Knits International, Inc. Term Loan B 07/31/07 2,634,567 2,644,517
TEXTILES TOTAL 4,710,586
TRANSPORTATION - 3.4%
Comcar Industries, Inc. Term Loan B 01/15/10 3,000,000 3,013,520
Laidlaw Investments Ltd. Term Loan B 06/19/09 3,298,000 3,403,820
Motor Coach Industries International, Inc. Term Loan 06/16/05 2,714,486 2,329,933
TTI, Inc. Term Loan B 03/31/07 5,693,711 5,715,207
United Airlines, Inc. Term Loan B 07/01/04 1,486,779 1,497,266
TRANSPORTATION TOTAL 15,959,746
TOTAL VARIABLE
RATE SENIOR LOAN INTERESTS
(COST OF $445,443,073) 457,848,351
SENIOR NOTES - 0.1%
DIVERSIFIED MANUFACTURING - 0.1%
Superior Telecom, Inc. Sr. Secured Note 11/10/08 417,064 418,032
DIVERSIFIED MANUFACTURING TOTAL 418,032
TOTAL SENIOR NOTES
(COST OF $417,064) 418,032
COMMON STOCKS (e) - 0.6%
<Caption>
SHARES
- ------------------------------------------ -------------------------------------------------------------------------
BUSINESS SERVICES - 0.0%
HQ Global Workplaces, Inc. (c) 729 -
NATG Holdings LLC (c) 40,800 72,216
BUSINESS SERVICES TOTAL 72,216
DIVERSIFIED MANUFACTURING - 0.2%
Superior Telecom, Inc. 47,459 735,615
DIVERSIFIED MANUFACTURING TOTAL 735,615
</Table>
See notes to investment portfolio.
15
<Page>
<Table>
<Caption>
SHARES VALUE ($)
- ------------------------------------------ -------------------------------------------------------------------------
HEALTHCARE SERVICES - 0.2%
Sun Healthcare Group, Inc. 92,617 1,106,773
HEALTHCARE SERVICES TOTAL 1,106,773
MOVIES/ENTERTAINMENT - 0.2%
AMF Bowling Worldwide, Inc. 29,759 743,975
MOVIES/ENTERTAINMENT TOTAL 743,975
TOTAL COMMON STOCKS (COST OF $2,708,317) 2,658,579
PREFERRED STOCKS (c) - 0.1%
BUSINESS SERVICES - 0.1%
HQ Global Workplaces, Inc. (c) 1,214 688,338
BUSINESS SERVICES TOTAL 688,338
DIVERSIFIED MANUFACTURING - 0.0%
Superior Telecom, Inc. (c) 14,382 14,382
DIVERSIFIED MANUFACTURING TOTAL 14,382
TOTAL PREFERRED STOCKS (COST OF $0) 702,720
<Caption>
PAR ($)
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 5.5%
Repurchase agreement with State Street Bank &
Trust Co., dated 02/27/04 due 03/01/04 at
0.930%, collateralized by a U.S. Treasury
Note maturing 08/15/04, market value of
$26,235,754 (repurchase proceeds
$25,719,993) (cost of $25,718,000) 25,718,000 25,718,000
TOTAL INVESTMENTS - 103.7%
(COST OF $474,286,454)(f) 487,345,682
OTHER ASSETS & LIABILITIES, NET - (3.7)% (17,395,256)
NET ASSETS 100.0% $ 469,950,426
</Table>
NOTES TO INVESTMENT PORTFOLIO:
(a) Senior Loans in which the Fund invests generally pay interest at rates which
are periodically redetermined by reference to a base lending rate plus a
premium. These base lending rates are generally (i) the prime rate offered
by one or more major United States banks, (ii) the lending rate offered by
one or more European banks such as the London Inter-Bank Offered Rate
("LIBOR") and (iii) the certificate of deposit rate. Senior loans are
generally considered to be restricted in that the Fund ordinarily is
contractually obligated to receive approval from the Agent Bank and/or
borrower prior to the disposition of a Senior Loan.
(b) Unfunded commitment exists for this loan, see note 8.
(c) Represents fair value as determined in good faith under the direction of the
Board of Trustees.
(d) These securities are in default of certain debt covenants. Income is not
being accrued.
(e) Non-income producing.
(f) Cost for federal income tax purposes is $474,374,002.
See notes to financial statements.
16
<Page>
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA FLOATING RATE ADVANTAGE FUND
<Table>
<Caption>
($)
- ------------------------------------------ -----------------------------------------------------------------------------------
ASSETS Investments, at cost 474,286,454
Investments, at value 487,345,682
Cash 280
Receivable for:
Fund shares sold 8,964,993
Interest and fees 2,725,249
Expense reimbursement due from Investment Advisor 50,395
Deferred Trustees' compensation plan 4,040
Other assets 166,754
---------------
Total Assets 499,257,393
LIABILITIES Deferred facility fees 500,166
Payable for:
Distributions 616,993
Investment advisory fee 194,166
Administration fee 87,917
Transfer agent fee 18,836
Pricing and bookkeeping fees 32,252
Trustees' fees 300
Custody fee 49
Distribution and service fees 219,932
Interest expense 132,316
Deferred Trustees' fees 4,040
Notes payable 27,500,000
---------------
Total Liabilities 29,306,967
NET ASSETS 469,950,426
COMPOSITION OF NET ASSETS Paid-in capital 470,597,785
Overdistributed net investment income (113,450)
Accumulated net realized loss (13,593,137)
Net unrealized appreciation on investments 13,059,228
---------------
NET ASSETS 469,950,426
CLASS A Net assets 151,330,777
Shares outstanding 12,629,282
Net asset value and redemption price per share 11.98(a)
Maximum offering price per share ($11.98/0.9650) 12.41(b)
CLASS B Net assets 105,222,119
Shares outstanding 8,780,249
Net asset value and offering price per share 11.98(a)
CLASS C Net assets 189,375,595
Shares outstanding 15,804,115
Net asset value and offering price per share 11.98(a)
CLASS Z Net assets 24,021,935
Shares outstanding 2,004,702
Net asset value, offering and redemption price per share 11.98
</Table>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $100,000 or more the offering price is reduced.
See notes to financial statements.
17
<Page>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA FLOATING RATE ADVANTAGE FUND
<Table>
<Caption>
($)
- ------------------------------------------ -----------------------------------------------------------------------------------
INVESTMENT INCOME Interest 12,178,049
Facility and other fees 777,072
---------------
Total Investment Income 12,955,121
EXPENSES Investment advisory fee 1,040,739
Administration fee 464,162
Distribution fee:
Class A 56,775
Class B 206,476
Class C 389,551
Service fee:
Class A 141,939
Class B 114,709
Class C 162,313
Transfer agent fee 259,640
Pricing and bookkeeping fees 109,060
Trustees' fees 7,297
Custody fee 10,226
Other expenses 132,354
---------------
Total Operating Expenses 3,095,241
Fees and expenses waived or reimbursed by Investment Advisor (259,429)
Custody earnings credit (222)
---------------
Net Operating Expenses 2,835,590
Interest expense 685,655
Commitment fee 289,263
---------------
Net Expenses 3,810,508
---------------
Net Investment Income 9,144,613
NET REALIZED AND UNREALIZED GAIN (LOSS) ON Net realized loss on investments (453,676)
INVESTMENTS Net change in unrealized appreciation/depreciation on investments 22,205,848
---------------
Net Gain 21,752,172
---------------
Net Increase in Net Assets from Operations 30,896,785
</Table>
See notes to financial statements.
18
<Page>
STATEMENT OF CHANGES IN NET ASSETS
COLUMBIA FLOATING RATE ADVANTAGE FUND
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, AUGUST 31,
INCREASE (DECREASE) IN NET ASSETS: 2004 2003
- ------------------------------------------ --------------------------------------------------------------------------------------
OPERATIONS Net investment income 9,144,613 14,268,045
Net realized loss on investments (453,676) (4,458,140)
Net change in unrealized appreciation/depreciation
on investments 22,205,848 16,553,299
----------------------------------
Net Increase from Operations 30,896,785 26,363,204
DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income:
Class A (3,163,143) (4,987,877)
Class B (2,388,748) (4,852,868)
Class C (3,251,405) (4,288,202)
Class Z (395,555) (60,225)
----------------------------------
Total Distributions Declared to Shareholders (9,198,851) (14,189,172)
SHARE TRANSACTIONS Class A:
Subscriptions 70,701,875 26,844,332
Distributions reinvested 1,855,550 3,108,790
Redemptions (13,521,426) (18,545,181)
----------------------------------
Net Increase 59,035,999 11,407,941
Class B:
Subscriptions 27,770,423 15,460,982
Distributions reinvested 1,318,578 2,841,144
Redemptions (6,142,712) (14,388,694)
----------------------------------
Net Increase 22,946,289 3,913,432
Class C:
Subscriptions 106,838,483 31,262,179
Distributions reinvested 2,048,640 2,853,491
Redemptions (7,962,954) (19,111,456)
----------------------------------
Net Increase 100,924,169 15,004,214
Class Z:
Subscriptions 19,742,551 4,975,535
Distributions reinvested 114,178 2,309
Redemptions (1,804,935) (23,102)
----------------------------------
Net Increase 18,051,794 4,954,742
Net Increase from Share Transactions 200,958,251 35,280,329
----------------------------------
Total Increase in Net Assets 222,656,185 47,454,361
NET ASSETS Beginning of period 247,294,241 199,839,880
End of period (including overdistributed net
investment income of $(113,450) and $(59,212),
respectively) 469,950,426 247,294,241
CHANGES IN SHARES Class A:
Subscriptions 6,036,219 2,421,540
Issued for distributions reinvested 157,863 294,027
Redemptions (1,153,889) (1,778,375)
----------------------------------
Net Increase 5,040,193 937,192
Class B:
Subscriptions 2,382,221 1,412,670
Issued for distributions reinvested 112,268 268,398
Redemptions (520,565) (1,376,098)
----------------------------------
Net Increase 1,973,924 304,970
Class C:
Subscriptions 9,122,973 2,837,998
Issued for distributions reinvested 173,957 269,627
Redemptions (672,711) (1,823,827)
----------------------------------
Net Increase 8,624,219 1,283,798
Class Z:
Subscriptions 1,685,723 449,963
Issued for distributions reinvested 9,638 210
Redemptions (152,092) (2,073)
----------------------------------
Net Increase 1,543,269 448,100
</Table>
See notes to financial statements.
19
<Page>
STATEMENT OF CASH FLOWS
COLUMBIA FLOATING RATE ADVANTAGE FUND
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS ENDED
INCREASE (DECREASE) IN CASH FEBRUARY 29, 2004 ($)
- ------------------------------------------ --------------------------------------------------------------------------------------
CASH FLOWS USED FOR OPERATING AND
INVESTING ACTIVITIES: Net investment Income 9,144,613
ADJUSTMENTS TO RECONCILE NET INVESTMENT Purchase of investment securities (373,163,929)
INCOME TO NET CASH PROVIDED BY Proceeds from disposition of investment securities 215,153,878
OPERATING ACTIVITIES: Purchase of short-term portfolio investments, net (5,955,000)
Increase in interest and fees receivable (995,552)
Increase in receivable for expense reimbursement (50,395)
Decrease in receivable for investments sold 1,094,378
Increase in other assets (163,543)
Increase in deferred facility fees 176,530
Increase in payable for accrued expenses 112,312
Net amortization of premium (discount) (1,265,788)
Decrease in payable for investments purchased (60,571)
Decrease in payable for expense reimbursement (37,094)
Decrease in other liabilities (108,672)
---------------
Net cash used for operating activities (156,118,833)
CASH FLOWS USED FROM FINANCING ACTIVITIES: Decrease in notes payable (32,000,000)
Increase in interest payable 58,878
Proceeds from shares sold 221,207,841
Payment of shares redeemed (29,432,027)
Distributions paid in cash (3,716,072)
---------------
Net cash flows provided by financing activities 156,118,620
---------------
Net decrease in cash (213)
CASH: Cash at beginning of the period 493
---------------
Cash at end of period 280
</Table>
See notes to financial statements.
20
<Page>
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA FLOATING RATE ADVANTAGE FUND
NOTE 1. ORGANIZATION
Columbia Floating Rate Advantage Fund (the "Fund") is a Massachusetts business
trust registered under the Investment Company Act of 1940, as amended, as a
non-diversified, closed-end management investment company.
INVESTMENT GOAL
The Fund seeks to provide a high level of current income consistent with
preservation 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 3.50% based on
the amount of initial investment. Class A shares purchased without an initial
sales charge are subject to a 1.00% early withdrawal charge on shares sold
within eighteen months on an original purchase of $1 million to $25 million.
Class B shares are subject to a maximum early withdrawal charge of 3.25% based
upon the holding period after purchase. Class B shares will convert to Class A
shares eight years after purchase. Class C shares are subject to a 1.00% early
withdrawal charge on shares sold within one year after purchase. Class Z shares
are offered continuously at net asset value. There are certain restrictions on
the purchase of Class Z shares, as described in the Fund's prospectus.
Effective October 13, 2003, the Fund changed its name from Liberty Floating Rate
Advantage Fund to Columbia Floating Rate Advantage Fund.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
SECURITY VALUATION
The value of the Portfolio is determined in accordance with guidelines
established and periodically reviewed by the Board of Trustees. Senior loans are
generally valued using market prices or quotations provided by banks, dealers or
pricing services with respect to secondary market transactions. The prices
provided by these principal market makers may differ from the value that would
be realized if the loans were sold and the difference could be material to the
financial statements. In the absence of actual market values, the senior loans
will be valued at fair value, which is intended to approximate market value,
pursuant to procedures approved by the Board of Trustees. In determining fair
value, the following factors, among others, will be considered on an on-going
basis: (i) the creditworthiness of the Borrower; (ii) the current interest rate,
the interest rate redetermination period and maturity of such senior loan
interests; and (iii) recent prices in the market for instruments similar
quality, rate and interest rate redeterminiation period and maturity. Because of
uncertainty inherent in the valuation process, the estimated value of a senior
loan may differ significantly from the value that would have been used had there
been market activity for that senior loan interest.
Equity securities are valued at the last sale price at the close of the
principal exchange on which they trade. 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.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
21
<Page>
REPURCHASE AGREEMENTS
The 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 and includes accretion of
discounts, amortization of premiums and paydown gains and losses. Facility fees
received are treated as market discounts. Unamortized facility fees are
reflected as deferred fees on the Statement of Assets and Liabilities.
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, for purposes of
determining the net asset value of each class. Income and expenses are allocated
to each class based on the settled shares method, while realized and unrealized
gains (losses) are allocated based on the relative net assets 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 is treated as
a partnership for federal income tax purposes and all of its income is allocated
to its owners based on methods in compliance with the Internal Revenue Service.
Therefore, no federal income tax provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly. Net
realized capital gains, if any, are distributed at least annually.
STATEMENT OF CASH FLOWS
The Fund is required to disclose a Statement of Cash Flows due to its average
debt outstanding during the period. Information on financial transactions which
have been settled through the receipt or disbursement of cash is presented in
the Statement of Cash Flows. The cash amount shown in the Statement of Cash
Flows is the amount included within the Fund's Statement of Assets and
Liabilities and includes cash on hand at its custodian bank and does not include
any short-term investments.
NOTE 3. FEDERAL TAX INFORMATION
The tax character of distributions paid during the year ended August 31, 2003
was as follows:
<Table>
Ordinary Income $ 14,189,172
</Table>
Unrealized appreciation and depreciation at February 29, 2004, based on cost of
investments for federal income tax purposes was:
<Table>
Unrealized appreciation $ 14,979,545
Unrealized depreciation (2,007,865)
-------------
Net unrealized appreciation $ 12,971,680
</Table>
The following capital loss carryforwards, determined as of August 31, 2003, are
available to reduce taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code:
<Table>
<Caption>
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
- ------------------------------------------------------
2009 $ 22,035
2010 819,190
2011 4,813,376
------------
$ 5,654,601
</Table>
Under current tax rules, certain currency and capital losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. As determined on August 31, 2003, post-October capital
losses of $7,474,622 attributed to security transactions were deferred to
September 1, 2003.
22
<Page>
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
INVESTMENT ADVISORY FEE
Effective April 15, 2004, Highland Capital Management, L.P. ("Highland") is the
investment advisor to the Fund. Prior to April 15, 2004, Columbia Management
Advisors, Inc. ("Columbia") was the investment advisor to the Fund. Columbia was
an indirect, wholly owned subsidiary of FleetBoston Financial Corporation
("FleetBoston"), however, effective April 1, 2004, FleetBoston was acquired by
Bank of America Corporation ("BOA"), see Note 11.
For the period ended February 29, 2004, Columbia received a monthly investment
advisory fee based on the Portfolio's average daily managed net assets at the
following annual rates:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS FEE RATE
- ------------------------------------------------
First $1 billion 0.45%
Next $1 billion 0.40%
Over $2 billion 0.35%
</Table>
Prior to November 1, 2003, Columbia was entitled to receive a monthly investment
advisory fee at the annual rate of 0.45% of the Fund's average daily managed net
assets.
For the six months ended February 29, 2004, the Fund's annualized effective
investment advisory fee rate was 0.45%.
ADMINISTRATION FEES
Columbia provides accounting and other services to the Fund for a monthly
administration fee at the annual rate of 0.20% of the Fund's average daily
managed 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"). Columbia pays the total fees collected to State
Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, Columbia receives
from the Fund an annual flat fee of $10,000 paid monthly, and in any month that
the Fund's average daily net assets exceed $50 million, an additional monthly
fee. The additional fee rate is calculated by taking into account the fees
payable to State Street under the Outsourcing Agreement. This rate is applied to
the average daily net assets of the Fund for that month. The Fund also pays
additional fees for pricing services. For the six months ended February 29,
2004, the Fund's annualized effective pricing and bookkeeping fee rate was
0.062%.
TRANSFER AGENT FEE
Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds
Services, Inc., an indirect, wholly owned subsidiary of BOA, provides
shareholder services to the Fund. For such services, the Transfer Agent receives
a fee, paid monthly, at the annual rate of $34.00 per open account. The Transfer
Agent also receives reimbursement for certain out-of-pocket expenses.
Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly
transfer agent fee, in addition to reimbursement for certain out-of-pocket
expenses, at the annual rate of 0.06% of the Fund's average daily net assets
plus flat-rate charges based on the number of shareholder accounts and
transactions.
For the six months ended February 29, 2004, the Fund's annualized effective
transfer agent fee rate, exclusive of out-of-pocket fees, was 0.11%.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Columbia Funds Distributor, Inc. (the "Distributor"), an indirect, wholly owned
subsidiary of BOA, is the principal underwriter of the Fund. Prior to October
13, 2003, Columbia Funds Distributor, Inc. was known as Liberty Funds
Distributor, Inc. For the six months ended February 29, 2004, the Distributor
has retained net underwriting discounts of $51,693 on sales of the Fund's Class
A shares and received early withdrawal charges ("EWC") of $65, $86,565 and
$19,824 on Class A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a
monthly service fee to the Distributor at the annual rate of 0.25% of the
average daily net assets attributable to Class A, Class B and Class C shares of
the Fund. The Plan also requires the payment of a monthly distribution fee to
the Distributor at the annual rates of 0.10%, 0.45% and 0.60% of the average
daily net assets attributable to Class A, Class B and Class C shares,
respectively.
23
<Page>
The EWC and the fees received from the Plan are used principally as repayment to
the Distributor for amounts paid by the Distributor to dealers who sold such
shares.
EXPENSE LIMITS
Columbia has voluntarily agreed to reimburse certain expenses to the extent that
total expenses (exclusive of investment advisory fees, administration fees,
distribution and service fees, brokerage commissions, interest, facility fees,
taxes and extraordinary expenses, if any) exceed 0.15% annually of the Fund's
average daily net assets. This arrangement may be revised or discontinued by
Columbia at any time.
CUSTODY CREDITS
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. The Fund could have invested a portion of the
assets utilized in connection with the expense offset arrangement in an
income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
The Fund pays no compensation to its officers, all of whom are employees of
Columbia or its affiliates.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 5. PORTFOLIO INFORMATION
For the six months ended February 29, 2004, the cost of purchases and proceeds
from sales of securities, excluding short-term obligations, were $373,163,929
and $215,153,878, respectively.
NOTE 6. TENDER OF SHARES
The Board of Trustees has adopted a policy of making tender offers on a
quarterly basis. The Board has designated the 15th day of February, May, August
and November of each year, or the next business day if the 15th is not a
business day, as the Repurchase Request Deadline. Tender offers are made for a
portion of the Fund's outstanding shares at the net asset value of the shares as
of the Repurchase Pricing Date. The tender amount, which is determined by the
Board of Trustees, will be at least 5% and no more than 25% of the total number
of shares outstanding on the Repurchase Request Deadline. The Fund may
repurchase an additional amount of shares up to 2% of the shares outstanding on
the Repurchase Request Deadline if the shareholders' offer for repurchase
exceeds the Repurchase Offer Amount. For the six months ended February 29, 2004,
there were two tender offers in November and February. For each tender, the Fund
offered to repurchase 10% and 25%, respectively, of its shares, and 3.08% and
4.59%, respectively, of shares outstanding were tendered.
NOTE 7. SENIOR LOAN PARTICIPATION COMMITMENTS
The Fund invests primarily in participations and assignments, or acts as a party
to the primary lending syndicate of a Variable Rate Senior Loan interest to
United States corporations, partnerships, and other entities. If the lead lender
in a typical lending syndicate becomes insolvent, enters FDIC receivership or,
if not FDIC insured enters into bankruptcy, the Fund may incur certain costs and
delays in receiving payment or may suffer a loss of principal and/or interest.
When the Fund purchases a participation of a senior loan interest, the Fund
typically enters into a contractual agreement with the lender or other third
party selling the participation, not with the borrower directly. As such, the
Fund assumes the credit risk of the Borrower, Selling Participant or other
persons interpositioned between the Fund and the Borrower. The ability of
Borrowers to meet their obligations may be affected by economic developments in
a specific industry.
At February 29, 2004, the following sets forth the selling participants with
respect to interests in senior loans purchased by the Fund on a participation
basis.
<Table>
<Caption>
PRINCIPAL
SELLING PARTICIPANT AMOUNT VALUE
- ------------------------------------------------------------
Citibank:
CSC Holdings, Inc.,
Revolver $ 1,956,250 $ 1,917,145
</Table>
24
<Page>
NOTE 8. UNFUNDED LOAN COMMITMENTS
As of February 29, 2004, the Fund had unfunded loan commitments of $11,016,506,
which could be extended at the option of the Borrower, pursuant to the following
loan agreements:
<Table>
<Caption>
UNFUNDED
BORROWER COMMITMENT
- ---------------------------------------------------------
CSC Holdings, Inc. $ 1,043,750
Dobson Cellular Systems, Inc. 1,250,000
Federal Mogul Corp. 136,530
Noveon, Inc. 625,000
Pinnacle Foods Holding Corp. 5,614,679
Polymer Group, Inc. 1,345,169
TV Guide, Inc. 1,001,378
------------
$ 11,016,506
</Table>
NOTE 9. LOAN AGREEMENT
At February 29, 2004, the Fund had one term loan outstanding with Citicorp North
America, Inc., totaling $27,500,000, due September 16, 2004. The Fund may borrow
up to $150,000,000. The average daily loan balance was $115,489,011 at a
weighted average interest rate of 1.12%. The Fund is required to maintain
certain asset coverage with respect to the loan.
NOTE 10. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
INDUSTRY FOCUS
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
LEGAL PROCEEDINGS
Columbia, the Distributor, and certain of their affiliates (collectively, "The
Columbia Group") have received information requests and subpoenas from various
regulatory and law enforcement authorities in connection with their
investigations of late trading and market timing in mutual funds. The Columbia
Group has not uncovered any instances where Columbia or the Distributor were
knowingly involved in late trading of mutual fund shares.
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and the Distributor, alleging that they had
violated certain provisions of the federal securities laws in connection with
trading activity in mutual fund shares. Also on February 24, 2004, the New York
Attorney General ("NYAG") filed a civil complaint in New York Supreme Court,
County of New York against Columbia and the Distributor alleging that Columbia
and the Distributor had violated certain New York anti-fraud statutes. If either
Columbia or the Distributor is unsuccessful in its defense of these proceedings,
it could be barred from serving as an investment adviser or distributor for any
investment company registered under the Investment Company Act of 1940, as
amended (a "registered investment company"). Such results could prevent
Columbia, the Distributor or any company that is an affiliated person of
Columbia and the Distributor from serving as an investment adviser or
distributor for any registered investment company, including your fund. Your
fund has been informed by Columbia and the Distributor that, if these results
occur, they will seek exemptive relief from the SEC to permit them to continue
to serve as your fund's investment adviser and distributor. There is no
assurance that such exemptive relief will be granted. On March 15, 2004,
Columbia and the Distributor entered into agreements in principle with the SEC
Division of Enforcement and NYAG in settlement of the charges. Under the
agreements, Columbia and the Distributor agreed, inter alia, to the following
conditions: payment of $70 million in disgorgement; payment of $70 million in
civil penalties; an order requiring Columbia and the Distributor to cease and
desist from violations of the antifraud provisions and other provisions of the
federal securities laws; governance changes designed to maintain the
independence of the mutual fund boards of trustees and ensure compliance with
securities laws and their fiduciary duties; and retention of an independent
consultant to review Columbia's and the Distributor's compliance policies and
procedures. The agreement requires the final approval of the SEC. In a separate
agreement with the NYAG, the Columbia Group has agreed to reduce mutual fund
fees by $80 million over a five-year period.
As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of fund
shares, which could increase transaction costs or operating expenses, or have
other adverse consequences for the funds.
25
<Page>
NOTE 11. SUBSEQUENT EVENT
On April 1, 2004, FleetBoston, including the Fund's investment advisor and
distributor, was acquired by BOA.
Effective 11:59 p.m. on April 15, 2004, Highland replaced Columbia as investment
advisor to the Fund. Highland did so pursuant to an interim investment advisory
agreement, which has been approved by the Board of Trustees of the Fund, pending
shareholder approval of a longer-term agreement with Highland. The change in
investment advisor will not impact the Fund's investment strategy. In connection
with the change of investment advisor for the Fund, PFPC Distributors, Inc.
replaced Columbia Funds Distributor, Inc. as distributor and principal
underwriter of the Fund, effective April 16, 2004.
26
<Page>
FINANCIAL HIGHLIGHTS
COLUMBIA FLOATING RATE ADVANTAGE FUND
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<Table>
<Caption>
(UNAUDITED) PERIOD
SIX MONTHS ENDED ENDED
FEBRUARY 29, YEAR ENDED AUGUST 31, AUGUST 31,
CLASS A SHARES 2004 2003 2002 2001 2000(a)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.22 $ 10.48 $ 11.74 $ 12.09 $ 12.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.32(b) 0.81(b) 0.83(b)(c) 1.10(b) 0.64
Net realized and unrealized gain (loss)
on investments 0.76 0.74 (1.26)(c) (0.32) 0.07
---------------- --------- --------- --------- ----------
Total from Investment Operations 1.08 1.55 (0.43) 0.78 0.71
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.32) (0.81) (0.83) (1.13) (0.62)
From net realized gains -- -- -- --(d) --
---------------- --------- --------- --------- ----------
Total Distributions Declared
to Shareholders (0.32) (0.81) (0.83) (1.13) (0.62)
NET ASSET VALUE, END OF PERIOD $ 11.98 $ 11.22 $ 10.48 $ 11.74 $ 12.09
Total return (e)(f) 9.72%(g) 15.55% (3.88)% 6.71% 6.04%(g)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (h) 1.35%(i) 1.38% 1.38% 1.37% 1.01%(i)
Interest and commitment fees expenses 0.56%(i) 0.73% 0.99% 2.04% 1.91%(i)
Net expenses (h) 1.91%(i) 2.11% 2.37% 3.41% 2.92%(i)
Net investment income (h) 5.49%(i) 7.67% 7.25%(c) 9.24% 9.49%(i)
Waiver/reimbursement 0.15%(i) 0.36% 0.32% 0.32% 1.41%(i)
Portfolio turnover rate 52%(g) 90% 98% 65% 8%(g)
Net assets, end of period (000's) $ 151,331 $ 85,166 $ 69,733 $ 108,399 $ 54,402
</Table>
(a) The Fund commenced investment operations on January 13, 2000.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Effective September 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began amortizing
and accreting premium and discount on all debt securities. The effect of
this change for the year ended August 31, 2002, to the net investment
income and net realized and unrealized loss per share was less than $0.01.
The impact to the ratio of net investment income to average net assets was
less than 0.01%. Per share data and ratios for periods prior to August 31,
2002 have not been restated to reflect this change in presentation.
(d) Rounds to less than $0.01.
(e) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or early withdrawal charge.
(f) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(g) Not annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(i) Annualized.
27
<Page>
<Table>
<Caption>
(UNAUDITED) PERIOD
SIX MONTHS ENDED ENDED
FEBRUARY 29, YEAR ENDED AUGUST 31, AUGUST 31,
CLASS B SHARES 2004 2003 2002 2001 2000(a)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.22 $ 10.48 $ 11.74 $ 12.07 $ 12.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.30(b) 0.78(b) 0.78(b)(c) 1.05(b) 0.62
Net realized and unrealized gain (loss)
on investments 0.76 0.73 (1.25)(c) (0.30) 0.05
---------------- --------- --------- --------- ----------
Total from Investment Operations 1.06 1.51 (0.47) 0.75 0.67
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.30) (0.77) (0.79) (1.08) (0.60)
From net realized gains -- -- -- --(d) --
---------------- --------- --------- --------- ----------
Total Distributions Declared
to Shareholders (0.30) (0.77) (0.79) (1.08) (0.60)
NET ASSET VALUE, END OF PERIOD $ 11.98 $ 11.22 $ 10.48 $ 11.74 $ 12.07
Total return (e)(f) 9.53%(g) 15.16% (4.22)% 6.52% 5.69%(g)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (h) 1.70%(i) 1.73% 1.73% 1.72% 1.36%(i)
Interest and commitment fees expenses 0.56%(i) 0.73% 0.99% 2.04% 1.91%(i)
Net expenses (h) 2.26%(i) 2.46% 2.72% 3.76% 3.27%(i)
Net investment income (h) 5.19%(i) 7.34% 6.90%(c) 8.89% 9.14%(i)
Waiver/reimbursement 0.15%(i) 0.36% 0.32% 0.32% 1.41%(i)
Portfolio turnover rate 52%(g) 90% 98% 65% 8%(g)
Net assets, end of period (000's) $ 105,222 $ 76,379 $ 68,157 $ 80,609 $ 19,964
</Table>
(a) The Fund commenced investment operations on January 13, 2000.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Effective September 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began amortizing
and accreting premium and discount on all debt securities. The effect of
this change for the year ended August 31, 2002, to the net investment
income and net realized and unrealized loss per share was less than $0.01.
The impact to the ratio of net investment income to average net assets was
less than 0.01%. Per share data and ratios for periods prior to August 31,
2002 have not been restated to reflect this change in presentation.
(d) Rounds to less than $0.01.
(e) Total return at net asset value assuming all distributions reinvested and
no early withdrawal charge.
(f) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(g) Not annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(i) Annualized.
28
<Page>
<Table>
<Caption>
(UNAUDITED) PERIOD
SIX MONTHS ENDED ENDED
FEBRUARY 29, YEAR ENDED AUGUST 31, AUGUST 31,
CLASS C SHARES 2004 2003 2002 2001 2000(a)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.22 $ 10.48 $ 11.74 $ 12.07 $ 12.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.29(b) 0.76(b) 0.76(b)(c) 1.03(b) 0.61
Net realized and unrealized gain (loss)
on investments 0.76 0.74 (1.25)(c) (0.30) 0.05
---------------- --------- --------- --------- ----------
Total from Investment Operations 1.05 1.50 (0.49) 0.73 0.66
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.29) (0.76) (0.77) (1.06) (0.59)
From net realized gains -- -- -- --(d) --
---------------- --------- --------- --------- ----------
Total Distributions Declared
to Shareholders (0.29) (0.76) (0.77) (1.06) (0.59)
NET ASSET VALUE, END OF PERIOD $ 11.98 $ 11.22 $ 10.48 $ 11.74 $ 12.07
Total return (e)(f) 9.44%(g) 14.99% (4.36)% 6.35% 5.62%(g)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Operating expenses (h) 1.85%(i) 1.88% 1.88% 1.87% 1.51%(i)
Interest and commitment fees expenses 0.56%(i) 0.73% 0.99% 2.04% 1.91%(i)
Net expenses (h) 2.41%(i) 2.61% 2.87% 3.91% 3.42%(i)
Net investment income (h) 4.94%(i) 7.14% 6.75%(c) 8.74% 8.99%(i)
Waiver/reimbursement 0.15%(i) 0.36% 0.32% 0.32% 1.41%(i)
Portfolio turnover rate 52%(g) 90% 98% 65% 8%(g)
Net assets, end of period (000's) $ 189,376 $ 80,572 $ 61,811 $ 64,074 $ 13,013
</Table>
(a) The Fund commenced investment operations on January 13, 2000.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Effective September 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began amortizing
and accreting premium and discount on all debt securities. The effect of
this change for the year ended August 31, 2002, to the net investment
income and net realized and unrealized loss per share was less than $0.01.
The impact to the ratio of net investment income to average net assets was
less than 0.01%. Per share data and ratios for periods prior to August 31,
2002 have not been restated to reflect this change in presentation.
(d) Rounds to less than $0.01.
(e) Total return at net asset value assuming all distributions reinvested and
no early withdrawal charge.
(f) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(g) Not annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(i) Annualized.
29
<Page>
<Table>
<Caption>
(UNAUDITED) PERIOD
SIX MONTHS ENDED ENDED
FEBRUARY 29, YEAR ENDED AUGUST 31, AUGUST 31,
CLASS Z SHARES 2004 2003 2002 2001 2000(a)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.22 $ 10.48 $ 11.74 $ 12.08 $ 12.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.34(b) 0.78(b) 0.86(b)(c) 1.14(b) 0.67
Net realized and unrealized gain (loss)
on investments 0.76 0.81 (1.25)(c) (0.31) 0.05
---------------- --------- --------- --------- ----------
Total from Investment Operations 1.10 1.59 (0.39) 0.83 0.72
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.34) (0.85) (0.87) (1.17) (0.64)
From net realized gains -- -- -- --(d) --
---------------- --------- --------- --------- ----------
Total Distributions Declared
to Shareholders (0.34) (0.85) (0.87) (1.17) (0.64)
NET ASSET VALUE, END OF PERIOD $ 11.98 $ 11.22 $ 10.48 $ 11.74 $ 12.08
Total return (e)(f) 9.91%(g) 15.95% (3.53)% 7.17% 6.11%(g)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Operating expenses (h) 1.00%(i) 1.03% 1.03% 1.02% 0.66%(i)
Interest and commitment fees expenses 0.56%(i) 0.73% 0.99% 2.04% 1.91%(i)
Net expenses (h) 1.56%(i) 1.76% 2.02% 3.06% 2.57%(i)
Net investment income (h) 5.83%(i) 7.21% 7.60%(c) 9.59% 9.84%(i)
Waiver/reimbursement 0.15%(i) 0.36% 0.32% 0.32% 1.41%(i)
Portfolio turnover rate 52%(g) 90% 98% 65% 8%(g)
Net assets, end of period (000's) $ 24,022 $ 5,178 $ 140 $ 2,850 $ 2,656
</Table>
(a) The Fund commenced investment operations on January 13, 2000.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Effective September 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began amortizing
and accreting premium and discount on all debt securities. The effect of
this change for the year ended August 31, 2002, to the net investment
income and net realized and unrealized loss per share was less than $0.01.
The impact to the ratio of net investment income to average net assets was
less than 0.01%. Per share data and ratios for periods prior to August 31,
2002 have not been restated to reflect this change in presentation.
(d) Rounds to less than $0.01.
(e) Total return at net asset value assuming all distributions reinvested.
(f) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(g) Not annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(i) Annualized.
30
<Page>
IMPORTANT INFORMATION ABOUT THIS REPORT
COLUMBIA FLOATING RATE ADVANTAGE FUND
TRANSFER AGENT
Columbia Funds Services, Inc.
P.O. Box 8081
Boston MA 02266-8081
800.345.6611
DISTRIBUTOR
Columbia Funds Distributor, Inc.
One Financial Center
Boston MA 02111
INVESTMENT ADVISOR
Columbia Management Advisors, Inc.
100 Federal Street
Boston MA 02111
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 Floating Rate
Advantage Fund. This report may also be used as sales literature when preceded
or accompanied by the current prospectus which provides details of sales
charges, investment objectives and operating policies of the fund and with the
most recent copy of the Columbia Funds Performance Update.
A description of the policies and procedures that the fund uses to determine how
to vote proxies relating to its portfolio securities is available (i) without
charge, upon request, by calling 800-345-6611 and (ii) on the Securities and
Exchange Commission's website at http://www.sec.gov.
31
<Page>
COLUMBIA FUNDS
COLUMBIA FLOATING RATE ADVANTAGE FUND
LARGE GROWTH
Columbia Common Stock
Columbia Growth
Columbia Growth Stock
Columbia Large Cap Growth
Columbia Tax-Managed Growth
Columbia Tax-Managed Growth II
Columbia Young Investor
LARGE VALUE
Columbia Disciplined Value
Columbia Growth & Income
Columbia Large Cap Core
Columbia Tax-Managed Value
MIDCAP GROWTH
Columbia Acorn Select
Columbia Mid Cap Growth
Columbia Tax-Managed Aggressive Growth
MIDCAP VALUE
Columbia Dividend Income
Columbia Mid Cap
Columbia Strategic Investor
SMALL GROWTH
Columbia Acorn
Columbia Acorn USA
Columbia Small Company Equity
SMALL VALUE
Columbia Small Cap
Columbia Small-Cap Value
BALANCED
Columbia Asset Allocation
Columbia Balanced
Columbia Liberty Fund
SPECIALTY
Columbia Real Estate Equity
Columbia Technology
Columbia Utilities
TAXABLE FIXED-INCOME
Columbia Contrarian Income
Columbia Corporate Bond
Columbia Federal Securities
Columbia Fixed Income Securities
Columbia High Yield
Columbia High Yield Opportunities
Columbia Income
Columbia Intermediate Bond
Columbia Intermediate Government Income
Columbia Quality Plus Bond
Columbia Short Term Bond
Columbia Strategic Income
FLOATING RATE
Columbia Floating Rate
Columbia Floating Rate Advantage
TAX EXEMPT
Columbia High Yield Municipal
Columbia Intermediate Tax-Exempt Bond
Columbia Managed Municipals
Columbia National Municipal Bond
Columbia Tax-Exempt
Columbia Tax-Exempt Insured
32
<Page>
SINGLE STATE TAX EXEMPT
Columbia California Tax-Exempt
Columbia Connecticut Intermediate Municipal Bond
Columbia Connecticut Tax-Exempt
Columbia Florida Intermediate Municipal Bond
Columbia Massachusetts Intermediate Municipal Bond
Columbia Massachusetts Tax-Exempt
Columbia New Jersey Intermediate Municipal Bond
Columbia New York Intermediate Municipal Bond
Columbia New York Tax-Exempt
Columbia Oregon Municipal Bond
Columbia Pennsylvania Intermediate Municipal Bond
Columbia Rhode Island Intermediate Municipal Bond
MONEY MARKET
Columbia Money Market
Columbia Municipal Money Market
INTERNATIONAL/GLOBAL
Columbia Acorn International
Columbia Acorn International Select
Columbia Europe
Columbia Global Equity
Columbia International Stock
Columbia Newport Asia Pacific
Columbia Newport Greater China
Columbia Newport Tiger
INDEX FUNDS
Columbia Large Company Index
Columbia Small Company Index
Columbia U.S. Treasury Index
Please consider the investment objectives, risks, charges and expenses of a
mutual fund carefully before investing. Contact us at 800-345-6611 for a
prospectus which contains this and other important information about the fund.
Read it carefully before you invest.
For complete product information on any Columbia fund, visit our website at
www.columbiafunds.com.
Columbia Management Group and Columbia Management refer collectively to the
various investment advisory subsidiaries of Columbia Management Group, including
Columbia Management Advisors, Inc., the registered investment advisor, and
Columbia Funds Distributor, Inc.
33
<Page>
This page intentionally left blank.
<Page>
[GRAPHIC]
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 FLOATING RATE ADVANTAGE FUND PRSRT STD
SEMIANNUAL REPORT, FEBRUARY 29, 2004 U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
[COLUMBIA FUNDS(R) LOGO]
A MEMBER OF COLUMBIA MANAGMENT GROUP
(C)2004 COLUMBIA FUNDS DISTRIBUTOR, INC.
ONE FINANCIAL CENTER, BOSTON, MA 02111-2621
800.345.6611 www.columbiafunds.com
762-03/319R-0204 (04/04) 04/0804
<Page>
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable at this time.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable at this time.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable at this time.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not filed Schedule 14A subsequent to the effective date of
that Schedule's Item 7(d)(2)(ii)(G). However, it is the registrant's policy
to consider candidates for the Board of Trustees/Directors who are recommend
by shareholders. A Fund shareholder who wishes to nominate a candidate to
the Board may send information regarding prospective candidates to the Fund's
Governance Committee, care of the Fund's Secretary. The information should
include evidence of the shareholder's Fund ownership, a full listing of the
proposed candidate's education, experience, current employment, date of
birth, names and addresses of at least three professional references,
information as to whether the candidate is not an "interested person" under
the 1940 Act and "independent" under NYSE Listing Standards in relation to
the Fund, and such other information as may be helpful to the independent
trustees/directors in evaluating the candidate. All satisfactorily completed
information packages regarding a candidate will be forwarded to an
independent trustee/director for consideration.
ITEM 10. CONTROLS AND PROCEDURES.
<Page>
(a) The registrant's principal executive officer and principal financial
officer, based on his evaluation of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing of this report, has
concluded that such controls and procedures are adequately designed to
ensure that information required to be disclosed by the registrant in Form
N-CSR is accumulated and communicated to the registrant's management,
including the principal executive officer and principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 11. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR:
Not applicable at this time.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable at this time.
(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.
<Page>
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 Floating Rate Advantage Fund
----------------------------------------------------------------
By (Signature and Title) /s/ J. Kevin Connaughton
----------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date May 6, 2004
------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By (Signature and Title) /s/ J. Kevin Connaughton
----------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date May 6, 2004
------------------------------------------------------------------------