<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 811-4552
---------------------------------------------
Columbia Funds Trust VIII
- -------------------------------------------------------------------------------
(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, NA 02111
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3698
----------------------------
Date of fiscal year end: 3/31/05
--------------------------
Date of reporting period: 9/30/04
-------------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609. The OMB has reviewed this collection of
information under the clearance requirements of 44 U.S.C. Section 3507.
<Page>
FORM N-CSR ITEMS - PERIOD ENDED 9/30/04
COLUMBIA FUNDS TRUST VIII
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
[GRAPHIC]
COLUMBIA INCOME FUND
SEMIANNUAL REPORT
SEPTEMBER 30, 2004
[COLUMBIAFUNDS(R) LOGO]
A MEMBER OF COLUMBIA MANAGEMENT GROUP
<Page>
TABLE OF CONTENTS
<Table>
Fund Profile 1
Performance Information 2
Understanding Your Expenses 3
Economic Update 4
Portfolio Managers' Report 5
Investment Portfolio 7
Statement of Assets and Liabilities 19
Statement of Operations 20
Statement of Changes in Net Assets 21
Notes to Financial Statements 23
Financial Highlights 29
Important Information About This Report 33
</Table>
Economic and market conditions change frequently. There is no assurance that the
trends described in this report will continue or commence.
NOT FDIC MAY LOSE VALUE
INSURED -------------------
NO BANK GUARANTEE
PRESIDENT'S MESSAGE
COLUMBIA INCOME FUND
DEAR SHAREHOLDER:
Your fund's legal and management team here at Columbia Funds have been working
hard to strengthen our mutual fund services operation and to ensure that all
operations and processes comply with legal and regulatory standards. In the
coming months, we will continue to monitor the oversight enhancements recently
put in place by your fund's Board of Trustees and make every effort to protect
the interests of all our shareholders in everything we do.
In our last report, we announced that your fund's advisor, Columbia Management
Advisors, Inc., and your fund's distributor, Columbia Funds Distributor, Inc.,
had reached an agreement with the Securities and Exchange Commission and the New
York Attorney General to settle charges involving market timing in some of our
mutual funds. We want to reassure you that the settlement and all associated
legal fees will be paid by Columbia Management, not by the affected funds or
their shareholders.
Recently the Securities and Exchange Commission has adopted new rules regarding
mutual fund governance. We think it is important for you to know that Columbia
Management complied with the majority of these rules well before they were
adopted. Your fund's Board of Trustees has taken the following important steps
to strengthen its capacity to oversee your fund and to comply with SEC rules.
- - THE BOARD OF TRUSTEES APPOINTED MARY JOAN HOENE AS CHIEF COMPLIANCE OFFICER
OF COLUMBIA FUNDS. IN THIS ROLE, MS. HOENE WILL REPORT DIRECTLY TO THE BOARD
OF TRUSTEES AND WILL WORK WITH THE BOARD OF TRUSTEES AS WELL AS THE SENIOR
LEADERSHIP OF COLUMBIA MANAGEMENT, THE INVESTMENT MANAGEMENT ARM OF BANK OF
AMERICA, AND WITH BANK OF AMERICA'S PRINCIPAL COMPLIANCE EXECUTIVES. SHE WILL
FOCUS ON THE OVERALL COMPLIANCE PROGRAM OF THE FUNDS AND THE RESPONSIBILITY
AND PERFORMANCE OF THE FUND'S SERVICE PROVIDERS.
PRIOR TO HER APPOINTMENT, MS. HOENE WAS A PARTNER IN THE LAW FIRM OF CARTER,
LEDYARD & MILBURN, LLP. PREVIOUSLY SHE ALSO SERVED AS ASSOCIATE DIRECTOR AND
DEPUTY DIRECTOR FOR THE SECURITIES AND EXCHANGE COMMISSION DIVISION OF
INVESTMENT MANAGEMENT. AS AN ACTIVE ADVISOR, MS. HOENE HAS HELPED SEVERAL
FUND BOARDS DEVELOP INDEPENDENT BOARD PRACTICES. THE BOARD IS PLEASED TO HAVE
MS. HOENE, WITH HER BROAD AND EXTENSIVE EXPERIENCE, IN THIS IMPORTANT NEW
POSITION.
- - THE BOARD OF TRUSTEES HAS ESTABLISHED OPERATIONAL GUIDELINES THAT RESULT IN
STRONGER, MORE VIGILANT TRUSTEESHIP ACROSS THE ENTIRE COLUMBIA MANAGEMENT
ORGANIZATION. BOARD COMMITTEES HAVE BEEN ESTABLISHED TO OVERSEE PRODUCTS BY
FUND CATEGORY, ALLOWING FOR GREATER SPECIALIZATION AMONG BOARD TRUSTEES.
SHAREHOLDERS WILL ELECT BOARD MEMBERS EVERY FIVE YEARS, BEGINNING IN 2005.
- - IN ADDITION TO ENHANCEMENTS TO OVERSIGHT WITHIN COLUMBIA MANAGEMENT, OUR
PARENT COMPANY -- BANK OF AMERICA -- HAS ALSO INCREASED THE ROLE THAT SUCH
PROFESSIONALS PLAY WITHIN THE BROADER ORGANIZATION. A CHIEF COMPLIANCE
OFFICER HAS BEEN NAMED TO REPORT DIRECTLY TO KEN LEWIS, BANK OF AMERICA'S
CHIEF EXECUTIVE OFFICER. BANK OF AMERICA HAS ALSO ADOPTED A CORPORATE CODE OF
ETHICS COMMITTEE, AN INTERNAL COMPLIANCE CONTROLS COMMITTEE AND A REGULATORY
IMPLEMENTATION GROUP TO ENSURE FULL ALIGNMENT AND EXECUTION OF REMEDIAL
ACTIONS AND BEST PRACTICES ACROSS THE COMPANY.
In the pages that follow, you'll find a discussion of the economic environment
during the period, followed by a detailed report from the fund's manager on key
factors that influenced performance. This report is rich in information, and you
should discuss it with your financial advisor if you have questions.
We are committed to providing quality products and services to our shareholders,
strengthening your confidence in us, and working hard to help you achieve
financial success. It is a privilege to play a role in your financial future,
and we value your business. Thank you for choosing Columbia Management.
Sincerely,
/s/ Christopher Wilson
Christopher Wilson
HEAD OF MUTUAL FUNDS, COLUMBIA MANAGEMENT
Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible
for the day-to-day delivery of mutual fund services to the firm's investors.
With the exception of distribution, Chris oversees all aspects of the mutual
fund services operation, including treasury, investment accounting and
shareholder and broker services. Chris serves as Columbia Management's chief
liaison to the mutual fund boards of trustees.
Chris joined Bank of America in August 2004.
<Page>
FUND PROFILE
COLUMBIA INCOME FUND
The information below gives you a snapshot of your fund at the end of the
reporting period. Your fund is actively managed and the composition of its
portfolio will change over time.
PORTFOLIO STRUCTURE AS OF 09/30/04 (%)
<Table>
Corporate fixed-income
bonds & notes 93.3
Government agencies & obligations 2.2
Asset-backed securities 1.2
Mortgage-backed securities 0.4
Cash equivalents, net other
assets & liabilities 2.9
</Table>
QUALITY BREAKDOWN AS OF 09/30/04 (%)
<Table>
AAA 4.9
AA 9.6
A 28.4
BBB 31.0
BB 17.2
B & lower 8.9
</Table>
MATURITY BREAKDOWN AS OF 09/30/04 (%)
[CHART]
<Table>
0-1 YEAR 8.2%
1-5 YEARS 35.9%
5-10 YEARS 40.0%
10-20 YEARS 6.1%
OVER 20 YEARS 9.8%
</Table>
Portfolio structure is calculated as a percentage of net assets. Quality and
maturity breakdowns are calculated as a percentage of total investments. Ratings
shown in the quality breakdown represent the highest rating assigned to a
particular bond by one of the following nationally-recognized rating agencies:
Standard & Poor's Corporation, Moody's Investors Service, Inc. or Fitch Ratings
Ltd.
(C) 2004 Morningstar, Inc. All Rights Reserved. The information contained
herein: (1) is proprietary to Morningstar and/or its content providers; (2) may
not be copied or distributed; and (3) is not warranted to be accurate, complete
or timely. Neither Morningstar nor its content providers are responsible for any
damages or losses arising from any use of this information. Past performance is
no guarantee of future results.
The Morningstar Style Box(TM) reveals a fund's investment strategy. For equity
funds the vertical axis shows the market capitalization of the stocks owned and
the horizontal axis shows investment style (value, blend or growth). For
fixed-income funds the vertical axis shows the average credit quality of the
bonds owned, and the horizontal axis shows interest rate sensitivity as measured
by a bond's duration (short, intermediate or long). All of these numbers are
drawn from the data most recently provided by the fund and entered into
Morningstar's database as of month-end. Although the data are gathered from
reliable sources, Morningstar cannot guarantee completeness and accuracy. As of
09/30/2004.
[SIDENOTE]
SUMMARY
- - FOR THE SIX-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES
RETURNED 1.07% WITHOUT SALES CHARGE.
- - THE FUND OUTPERFORMED ITS BENCHMARKS, THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CREDIT BOND INDEX AND THE LEHMAN BROTHERS INTERMEDIATE CREDIT BOND
INDEX, AND ITS PEER GROUP, THE LIPPER CORPORATE DEBT FUNDS BBB RATED
CATEGORY.
- - THE FUND'S FOCUS ON CORPORATE BONDS AND ITS SUBSTANTIAL ALLOCATION TO
HIGH-YIELD ISSUES ACCOUNTED FOR ITS STRONG PERFORMANCE.
[CHART]
<Table>
CLASS A SHARES 1.07%
LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CREDIT BOND INDEX 0.11%
</Table>
OBJECTIVE
Seeks total return by investing for a high level of current income and
opportunities for capital appreciation
TOTAL NET ASSETS
$575.5 million
MORNINGSTAR STYLE BOX
[GRAPHIC]
1
<Page>
PERFORMANCE INFORMATION
COLUMBIA INCOME FUND
VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04
[CHART]
<Table>
<Caption>
CLASS A SHARES CLASS A SHARES LEHMAN BROTHERS INTERMEDIATE LEHMAN BROTHERS INTERMEDIATE
WITHOUT SALES CHARGE WITH SALES CHARGE GOVERNMENT/CREDIT BOND INDEX CREDIT BOND INDEX
10/1/1994 $ 10,000 $ 9,525 $ 10,000 $ 10,000
10/31/1994 $ 9,988 $ 9,514 $ 9,999 $ 9,985
11/30/1994 $ 9,931 $ 9,459 $ 9,954 $ 9,936
12/31/1994 $ 9,975 $ 9,501 $ 9,989 $ 9,984
1/31/1995 $ 10,140 $ 9,659 $ 10,158 $ 10,175
2/28/1995 $ 10,412 $ 9,918 $ 10,368 $ 10,447
3/31/1995 $ 10,502 $ 10,003 $ 10,427 $ 10,516
4/30/1995 $ 10,668 $ 10,161 $ 10,555 $ 10,678
5/31/1995 $ 11,086 $ 10,559 $ 10,874 $ 11,086
6/30/1995 $ 11,187 $ 10,655 $ 10,947 $ 11,176
7/31/1995 $ 11,190 $ 10,658 $ 10,948 $ 11,162
8/31/1995 $ 11,320 $ 10,782 $ 11,048 $ 11,301
9/30/1995 $ 11,444 $ 10,901 $ 11,127 $ 11,406
10/31/1995 $ 11,584 $ 11,034 $ 11,251 $ 11,540
11/30/1995 $ 11,769 $ 11,210 $ 11,398 $ 11,733
12/31/1995 $ 11,947 $ 11,380 $ 11,518 $ 11,882
1/31/1996 $ 12,066 $ 11,493 $ 11,617 $ 11,993
2/29/1996 $ 11,882 $ 11,317 $ 11,481 $ 11,801
3/31/1996 $ 11,774 $ 11,214 $ 11,422 $ 11,716
4/30/1996 $ 11,711 $ 11,155 $ 11,382 $ 11,649
5/31/1996 $ 11,698 $ 11,143 $ 11,373 $ 11,630
6/30/1996 $ 11,831 $ 11,269 $ 11,494 $ 11,773
7/31/1996 $ 11,855 $ 11,292 $ 11,528 $ 11,803
8/31/1996 $ 11,870 $ 11,306 $ 11,537 $ 11,797
9/30/1996 $ 12,090 $ 11,516 $ 11,698 $ 12,002
10/31/1996 $ 12,353 $ 11,766 $ 11,905 $ 12,267
11/30/1996 $ 12,612 $ 12,013 $ 12,062 $ 12,476
12/31/1996 $ 12,526 $ 11,931 $ 11,985 $ 12,354
1/31/1997 $ 12,590 $ 11,992 $ 12,032 $ 12,404
2/28/1997 $ 12,686 $ 12,083 $ 12,054 $ 12,439
3/31/1997 $ 12,520 $ 11,925 $ 11,971 $ 12,304
4/30/1997 $ 12,661 $ 12,060 $ 12,111 $ 12,467
5/31/1997 $ 12,858 $ 12,247 $ 12,212 $ 12,593
6/30/1997 $ 13,052 $ 12,432 $ 12,323 $ 12,732
7/31/1997 $ 13,459 $ 12,820 $ 12,573 $ 13,069
8/31/1997 $ 13,299 $ 12,667 $ 12,510 $ 12,954
9/30/1997 $ 13,493 $ 12,852 $ 12,655 $ 13,135
10/31/1997 $ 13,531 $ 12,888 $ 12,796 $ 13,258
11/30/1997 $ 13,593 $ 12,947 $ 12,824 $ 13,288
12/31/1997 $ 13,728 $ 13,075 $ 12,927 $ 13,389
1/31/1998 $ 13,880 $ 13,221 $ 13,096 $ 13,567
2/28/1998 $ 13,913 $ 13,252 $ 13,085 $ 13,568
3/31/1998 $ 13,994 $ 13,329 $ 13,127 $ 13,616
4/30/1998 $ 14,071 $ 13,403 $ 13,193 $ 13,694
5/31/1998 $ 14,153 $ 13,480 $ 13,289 $ 13,811
6/30/1998 $ 14,189 $ 13,515 $ 13,374 $ 13,887
7/31/1998 $ 14,245 $ 13,568 $ 13,421 $ 13,923
8/31/1998 $ 13,940 $ 13,278 $ 13,632 $ 14,022
9/30/1998 $ 14,234 $ 13,558 $ 13,974 $ 14,442
10/31/1998 $ 13,939 $ 13,277 $ 13,960 $ 14,326
11/30/1998 $ 14,192 $ 13,517 $ 13,959 $ 14,438
12/31/1998 $ 14,275 $ 13,597 $ 14,015 $ 14,500
1/31/1999 $ 14,395 $ 13,711 $ 14,092 $ 14,616
2/28/1999 $ 14,178 $ 13,504 $ 13,884 $ 14,367
3/31/1999 $ 14,338 $ 13,657 $ 13,989 $ 14,501
4/30/1999 $ 14,466 $ 13,779 $ 14,032 $ 14,558
5/31/1999 $ 14,315 $ 13,635 $ 13,924 $ 14,396
6/30/1999 $ 14,262 $ 13,585 $ 13,934 $ 14,383
7/31/1999 $ 14,217 $ 13,541 $ 13,921 $ 14,337
8/31/1999 $ 14,187 $ 13,513 $ 13,932 $ 14,327
9/30/1999 $ 14,330 $ 13,649 $ 14,062 $ 14,485
10/31/1999 $ 14,370 $ 13,688 $ 14,098 $ 14,540
11/30/1999 $ 14,456 $ 13,770 $ 14,115 $ 14,574
12/31/1999 $ 14,452 $ 13,766 $ 14,069 $ 14,523
1/31/2000 $ 14,487 $ 13,799 $ 14,017 $ 14,461
2/29/2000 $ 14,646 $ 13,950 $ 14,132 $ 14,580
3/31/2000 $ 14,812 $ 14,108 $ 14,279 $ 14,703
4/30/2000 $ 14,652 $ 13,956 $ 14,246 $ 14,618
5/31/2000 $ 14,581 $ 13,889 $ 14,269 $ 14,611
6/30/2000 $ 14,968 $ 14,257 $ 14,520 $ 14,915
7/31/2000 $ 15,165 $ 14,445 $ 14,630 $ 15,052
8/31/2000 $ 15,397 $ 14,666 $ 14,803 $ 15,245
9/30/2000 $ 15,459 $ 14,725 $ 14,937 $ 15,393
10/31/2000 $ 15,388 $ 14,657 $ 15,006 $ 15,406
11/30/2000 $ 15,531 $ 14,793 $ 15,210 $ 15,590
12/31/2000 $ 15,865 $ 15,111 $ 15,490 $ 15,895
1/31/2001 $ 16,231 $ 15,460 $ 15,744 $ 16,231
2/28/2001 $ 16,454 $ 15,672 $ 15,892 $ 16,390
3/31/2001 $ 16,529 $ 15,744 $ 16,014 $ 16,526
4/30/2001 $ 16,514 $ 15,730 $ 15,973 $ 16,494
5/31/2001 $ 16,694 $ 15,902 $ 16,062 $ 16,620
6/30/2001 $ 16,743 $ 15,948 $ 16,122 $ 16,693
7/31/2001 $ 17,108 $ 16,295 $ 16,457 $ 17,083
8/31/2001 $ 17,317 $ 16,494 $ 16,622 $ 17,278
9/30/2001 $ 16,998 $ 16,191 $ 16,864 $ 17,385
10/31/2001 $ 17,267 $ 16,446 $ 17,144 $ 17,695
11/30/2001 $ 17,286 $ 16,464 $ 16,973 $ 17,559
12/31/2001 $ 17,192 $ 16,376 $ 16,879 $ 17,446
1/31/2002 $ 17,325 $ 16,502 $ 16,967 $ 17,556
2/28/2002 $ 17,385 $ 16,559 $ 17,101 $ 17,690
3/31/2002 $ 17,298 $ 16,477 $ 16,841 $ 17,417
4/30/2002 $ 17,649 $ 16,811 $ 17,119 $ 17,659
5/31/2002 $ 17,757 $ 16,914 $ 17,290 $ 17,899
6/30/2002 $ 17,670 $ 16,831 $ 17,439 $ 17,969
7/31/2002 $ 17,564 $ 16,730 $ 17,645 $ 18,028
8/31/2002 $ 17,817 $ 16,971 $ 17,908 $ 18,376
9/30/2002 $ 18,015 $ 17,159 $ 18,228 $ 18,722
10/31/2002 $ 17,644 $ 16,806 $ 18,157 $ 18,572
11/30/2002 $ 18,025 $ 17,169 $ 18,141 $ 18,726
12/31/2002 $ 18,427 $ 17,551 $ 18,536 $ 19,215
1/31/2003 $ 18,541 $ 17,660 $ 18,536 $ 19,269
2/28/2003 $ 18,864 $ 17,968 $ 18,798 $ 19,608
3/31/2003 $ 18,873 $ 17,977 $ 18,816 $ 19,649
4/30/2003 $ 19,347 $ 18,428 $ 18,959 $ 19,918
5/31/2003 $ 19,861 $ 18,918 $ 19,341 $ 20,426
6/30/2003 $ 20,002 $ 19,052 $ 19,327 $ 20,436
7/31/2003 $ 19,392 $ 18,471 $ 18,801 $ 19,809
8/31/2003 $ 19,456 $ 18,532 $ 18,846 $ 19,869
9/30/2003 $ 20,063 $ 19,110 $ 19,323 $ 20,461
10/31/2003 $ 20,122 $ 19,166 $ 19,142 $ 20,278
11/30/2003 $ 20,276 $ 19,313 $ 19,168 $ 20,339
12/31/2003 $ 20,554 $ 19,578 $ 19,335 $ 20,541
1/31/2004 $ 20,793 $ 19,805 $ 19,463 $ 20,705
2/29/2004 $ 20,930 $ 19,936 $ 19,661 $ 20,935
3/31/2004 $ 21,104 $ 20,101 $ 19,815 $ 21,119
4/30/2004 $ 20,677 $ 19,695 $ 19,345 $ 20,581
5/31/2004 $ 20,452 $ 19,480 $ 19,258 $ 20,451
6/30/2004 $ 20,581 $ 19,603 $ 19,316 $ 20,524
7/31/2004 $ 20,815 $ 19,827 $ 19,478 $ 20,734
8/31/2004 $ 21,198 $ 20,191 $ 19,803 $ 21,136
9/30/2004 $ 21,310 $ 20,302 $ 19,849 $ 21,213
</Table>
The graph and table do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. The Lehman
Brothers Intermediate Government/Credit Bond Index is an unmanaged index that
tracks the performance of intermediate term US government and corporate bonds.
The Lehman Brothers Intermediate Credit Bond Index is the intermediate component
of the U.S. Credit Index. The U.S. Credit Index includes publicly issued US
corporate and foreign debentures and secured notes that meet specified maturity,
liquidity, and quality requirements. Unlike the fund, indices are not
investments, do not incur fees or expenses and are not professionally managed.
It is not possible to invest directly in an index. Securities in the fund may
not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 09/30/04 (%)
<Table>
<Caption>
SHARE CLASS A B C Z
- ----------------------------------------------------------------------------------------------
INCEPTION 07/31/00 07/15/02 07/15/02 03/05/86
- ----------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
- ----------------------------------------------------------------------------------------------
6-month (cumulative) 1.07 -3.74 0.69 -4.24 0.77 -0.22 1.27
1-year 6.30 1.24 5.51 0.51 5.67 4.67 6.71
5-year 8.27 7.23 7.91 7.61 7.98 7.98 8.58
10-year 7.86 7.34 7.68 7.68 7.71 7.71 8.01
</Table>
THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF
4.75% FOR CLASS A SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR
CLASS B SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE
"WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF
THEY HAD, RETURNS WOULD BE LOWER.
ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD
AT NET ASSET VALUE WITH NO RULE 12b-1 FEES. PERFORMANCE FOR DIFFERENT SHARE
CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH
EACH CLASS.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Class A, class B and class C are newer classes of shares. Class A performance
information includes returns of the fund's class Z shares (the oldest existing
fund class) for periods prior to its inception. Class B and class C performance
information includes returns of the fund's class A shares for the period from
July 31, 2000 through July 15, 2002 and for periods prior thereto, the fund's
class Z shares (the oldest existing fund class). These returns have not been
restated to reflect any differences in expenses (such as Rule 12b-1 fees)
between class Z shares and the newer classes of shares. If differences in
expenses had been reflected, the returns shown for periods prior to the
inception of the newer classes of shares would have been lower, since the newer
classes of shares are subject to a Rule 12b-1 fee. Class A shares were initially
offered on July 31, 2000, class B and class C shares were initially offered on
July 15, 2002, and class Z shares were initially offered on March 5, 1986.
[SIDENOTE]
PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($)
<Table>
<Caption>
SALES CHARGE: WITHOUT WITH
- ----------------------------------------
Class A 21,310 20,302
Class B 20,955 20,955
Class C 21,024 21,024
Class Z 21,612 n/a
</Table>
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than the original cost. Please visit
www.columbiafunds.com for daily and most recent month-end performance updates.
2
<Page>
UNDERSTANDING YOUR EXPENSES
COLUMBIA INCOME FUND
As a fund shareholder, you incur two types of costs. There are transaction
costs, which generally include sales charges on purchases and may include
redemption or exchange fees. There are also continuing costs, which generally
include investment advisory and/or Rule 12b-1 fees, and other fund expenses. The
information on this page is intended to help you understand your ongoing costs
of investing in the fund and to compare this cost with the continuing costs of
investing in other mutual funds.
ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS
To illustrate these ongoing costs, we have provided an example and calculated
the expenses paid by investors in each share class during the reporting period.
The information in the following table is based on an initial investment of
$1,000, which is invested at the beginning of the reporting period and held for
the entire period. Expense information is calculated two ways and each method
provides you with different information. The amount listed in the "actual"
column is calculated using the fund's actual operating expenses and total return
for the period. The amount listed in the "hypothetical" column for each share
class assumes that the return each year is 5% before expenses and includes the
fund's actual expense ratio. You should not use the hypothetical account values
and expenses to estimate either your actual account balance at the end of the
period or the expenses you paid during this reporting period.
APRIL 1, 2004 - SEPTEMBER 30, 2004
<Table>
<Caption>
ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED
BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%)
- -----------------------------------------------------------------------------------------------------------------------
ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL
- -----------------------------------------------------------------------------------------------------------------------
Class A 1,000.00 1,000.00 1,011.53 1,020.05 5.04 5.06 1.00
Class B 1,000.00 1,000.00 1,007.77 1,016.29 8.81 8.85 1.75
Class C 1,000.00 1,000.00 1,008.57 1,017.05 8.06 8.09 1.60
Class Z 1,000.00 1,000.00 1,013.19 1,021.31 3.79 3.80 0.75
</Table>
Expenses paid during the period are equal to the fund's annualized expense
ratio, multiplied by the average account value over the period, then multiplied
by the number of days in the fund's most recent fiscal half-year and divided by
365.
Had the distributor not waived a portion of class C shares' expenses, class C
shares' total return would have been reduced.
It is important to note that the expense amounts shown in the table are meant to
highlight only continuing costs of investing in the fund and do not reflect any
transactional costs, such as sales charges, redemption or exchange fees.
Therefore, the hypothetical examples provided will not help you determine the
relative total costs of owning different funds. If these transactional costs
were included, your costs would have been higher.
COMPARE WITH OTHER FUNDS
Since all mutual fund companies are required to include the same hypothetical
calculations about expenses in shareholder reports, you can use this information
to compare the ongoing cost of investing in the fund with other funds. To do so,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical
examples of other fund companies, it is important to note that hypothetical
examples are meant to highlight the continuing cost of investing in a fund and
do not reflect any transactional costs, such as sales charges or redemption or
exchange fees.
[SIDENOTE]
ESTIMATING YOUR ACTUAL EXPENSES
To estimate the expenses that you paid over the period, first you will need your
account balance at the end of the period:
- - FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM COLUMBIA FUNDS
SERVICES, INC., YOUR ACCOUNT BALANCE IS AVAILABLE ONLINE AT
www.columbiafunds.com OR BY CALLING SHAREHOLDER SERVICES AT 800.345.6611
- - FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM THEIR BROKERAGE
FIRM, CONTACT YOUR BROKERAGE FIRM TO OBTAIN YOUR ACCOUNT BALANCE
1. DIVIDE YOUR ENDING ACCOUNT BALANCE BY $1,000. FOR EXAMPLE, IF AN ACCOUNT
BALANCE WAS $8,600 AT THE END OF THE PERIOD, THE RESULT WOULD BE 8.6
2. IN THE SECTION OF THE TABLE BELOW TITLED "EXPENSES PAID DURING THE PERIOD,"
LOCATE THE AMOUNT FOR YOUR SHARE CLASS. YOU WILL FIND THIS NUMBER IS IN THE
COLUMN LABELED "ACTUAL." MULTIPLY THIS NUMBER BY THE RESULT FROM STEP 1. YOUR
ANSWER IS AN ESTIMATE OF THE EXPENSES YOU PAID ON YOUR ACCOUNT DURING THE
PERIOD
3
<Page>
ECONOMIC UPDATE
COLUMBIA INCOME FUND
During the six-month period that began April 1, 2004, and ended September 30,
2004, the US economy continued to grow at a healthy pace, despite uncertainty
about job growth, rising energy prices and a slowdown in consumer spending. The
economy encountered a soft patch in the spring, as the rate of growth slowed
from 4.5% to 3.3%, but data for the summer months suggested that it picked up
again in the third quarter.
Job growth dominated the economic news. More than one million jobs were created
between March and June, and consumer confidence soared to its highest level in
two years. However, job growth fell below expectations in July and August and
consumer confidence fell. According to the Labor Department's payroll survey,
the job market has not fully recovered from the losses incurred during the
economic downturn of 2000-2001, and that has left consumers cautious about the
months ahead.
Consumer spending held up in the first half of the period, as last year's tax
rebates and tax cuts continued to work their way into household budgets. Even
when consumer spending declined during the summer, housing activity remained
strong. Also, the business sector stepped into the gap created by sagging
consumer spending. Industrial production rose; factories utilized more of their
capacity; and spending on technology, capital equipment and construction picked
up.
BONDS EKE OUT A POSITIVE RETURN
Early in the period, the US bond market was beset with volatility. Bond prices
fell and yields rose when job growth picked up in the spring and investors began
to anticipate higher short-term interest rates. However, a shaky stock market,
higher energy prices and some mixed economic data gave the bond market a boost
in the last thee months of the period. The 10-year Treasury yield ended the
period at 4.1%, very close to where it started. In this environment, the Lehman
Brothers Aggregate Bond Index returned 0.68%.
High-yield bonds, which can be less sensitive to changing interest rates, gained
3.72%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. A
relatively strong economy improved credit quality and the sector's high yields
attracted investors seeking income. Municipal and mortgage bonds rose more than
1.4% for the period, outperforming Treasury bonds.(1)
STOCKS STAND STILL
Despite solid profit growth and a growing economy, the stock market failed to
advance during the reporting period. The S&P 500 Index returned negative 0.18%.
Leadership passed from small-cap stocks to mid- and large-cap stocks, and value
stocks continued to lead growth stocks. However, in the final month of the
period small- and mid-cap growth stocks bested their value counterparts. Energy
and real estate investment trusts were the best-performing sectors.
HIGHER SHORT TERM INTEREST RATES
After a year of the lowest short-term interest rates in recent history, the
Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term
rate, from 1.00% to 1.75% in three equal steps during the period. The Fed
indicated that it would continue to raise short-term interest rates at a
"measured pace," in an attempt to balance economic growth against inflationary
pressures. Because the Fed's moves were widely anticipated, these rate increases
have had little, if any, impact on the financial markets since they commenced.
(1) Lehman Brothers Municipal Bond Index; Merrill Lynch Mortgage Master Index.
[SIDENOTE]
SUMMARY:
FOR THE SIX-MONTH PERIOD ENDED SEPTEMBER 30, 2004
- - INVESTMENT-GRADE BONDS EKED OUT MODEST GAINS. THE LEHMAN BROTHERS AGGREGATE
BOND INDEX RETURNED 0.68%. HIGH-YIELD BONDS, WHICH CAN BE LESS SENSITIVE TO
CHANGING INTEREST RATES, LED THE FIXED INCOME MARKETS. THE MERRILL LYNCH US
HIGH YIELD, CASH PAY INDEX RETURNED 3.72%
[CHART]
<Table>
MERRILL LYNCH INDEX 3.72%
LEHMAN INDEX 0.68%
</Table>
- - STOCK PRICES WERE DOWN, AS MEASURED BY THE S&P 500 INDEX AND THE BROADER
RUSSELL 3000 INDEX. THE MARKET RETREATED AS A HOST OF UNCERTAINTIES UNSETTLED
INVESTORS.
[CHART]
<Table>
S&P 500 INDEX -0.18%
RUSSELL 3000 INDEX -0.60%
</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 the performance of fixed-rate, publicly placed, dollar-denominated,
non-convertible investment-grade debt issues.
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held, large capitalization US stocks.
The Russell 3000 Index is an unmanaged index that tracks the performance of the
3,000 largest US companies based on total market capitalization.
4
<Page>
PORTFOLIO MANAGERS' REPORT
COLUMBIA INCOME FUND
For the six-month period ended September 30, 2004, Columbia Income Fund's class
A shares returned 1.07% without sales charge. The fund performed better than its
benchmarks, the Lehman Brothers Intermediate Government/Credit Bond Index and
the Lehman Brothers Intermediate Credit Bond Index, which returned 0.11% and
0.45%, respectively, for the same period. The fund's peer group, the Lipper
Corporate Debt Funds BBB Rated Category, averaged 0.63% for the six-month
period.(1) We believe the fund's substantial corporate bond allocation, relative
to its peers and the index, helped performance. High-yield issues provided the
single largest performance tailwind over the six month period.
STRONG ECONOMY BOOSTS CORPORATE SECURITIES
A strong US economy fueled higher corporate profits and strengthened balance
sheets. Both investment grade issues and lower quality, high-yield bonds
benefited from these trends. They outperformed other fixed-income alternatives.
Our decision to maintain a steady duration in the portfolio helped returns over
the period. Duration is a measure, expressed in years, of interest-rate
sensitivity. While it is similar to maturity, it is a more accurate measure of a
fund's exposure to changing interest rates--or yields--because it takes into
consideration the full stream of future principal and interest payments as well
as the length of time it will take to collect them. When bond yields rise, a
longer duration can hurt both relative and absolute performance. However,
long-term yields remained relatively unchanged over the period, and our decision
not to shorten duration was rewarded.
ENERGY AND UTILITY BONDS BOOSTED RETURNS
Surging energy prices resulted in higher profit margins in the oil refining
sector. Bonds of Premcor Refining Group and Amerada Hess benefited. In addition,
higher oil prices also helped Russian oil producer Gazprom International SA and
Mexican refiner Pemex Project Funding Master Trust. The fund owned these
dollar-denominated foreign issues as part of a diversification strategy designed
to reduce exposure to the US economy. Electric utility bonds also did well. As
business conditions improved, utility companies were able to replace high cost
debt with less expensive borrowings. Bonds of California-based Edison Mission
Energy prospered in an improved business environment. Hutchison Whampoa
International, a conglomerate with worldwide utility holdings listed on the Hong
Kong exchange, also did well, aided by an improving world economy and China's
powerful economic growth. Our decision to minimize the portfolio's allocation to
higher-quality foreign government debt also helped performance. The market
rewarded lower quality issues during the period.
AIRLINE AND AUTO ISSUES HURT THE FUND'S RETURN
Bonds backed by commercial aircraft suffered during the period as airline
operating costs rose. However, we decided to retain these issues because they
are backed by the underlying value of the airplanes owned by these companies.
Also, airline bonds have historically tended to perform well in a rising rate
environment. We reduced the fund's exposure to the auto sector as the production
cycle for these companies slowed and the price of manufacturing materials rose.
We trimmed the fund's position in Dura Operating Corp., a manufacturer of auto
seat
(1) Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
[SIDENOTE]
NET ASSET VALUE PER SHARE AS OF 09/30/04 ($)
<Table>
Class A 10.06
Class B 10.06
Class C 10.06
Class Z 10.06
</Table>
DISTRIBUTIONS DECLARED PER SHARE 04/01/04 - 09/30/04 ($)
<Table>
Class A 0.25
Class B 0.22
Class C 0.22
Class Z 0.27
</Table>
30-DAY SEC YIELDS AS OF 09/30/04 (%)
<Table>
Class A 3.87
Class B 3.37
Class C 3.52
Class Z 4.38
</Table>
The 30-day SEC yields reflect the portfolio's earning power net of expenses,
expressed as an annualized percentage of the public offering price at the end of
the period.
HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%)
<Table>
Premcor Refining Group, Inc. 0.7
Amerada Hess Corp. 0.8
Gazprom International SA 0.8
Pemex Project Funding Master Trust 0.5
Edison Mission Energy 0.5
Hutchinson Whampoa International Ltd. 1.0
Dura Operating Corp. 0.1
</Table>
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
5
<Page>
tracks and cables. We also lightened the fund's exposure to health care bonds
because we believe they are generally fully valued relative to the business
prospects of their issuers.
POSITIONED FOR ECONOMIC GROWTH
We have positioned the portfolio for a period of continued steady economic
growth, which we believe would aid the performance of investment-grade and
high-yield corporate sectors of the bond market, despite the recent run-up in
prices. While these bonds are expensive by historical standards, we believe the
business prospects driving their strong performance remain in place and have the
potential to continue to fuel returns going forward.
Kevin Cronk has co-managed the Columbia Income Fund since March 2003 and has
been with the advisor and its predecessors or affiliate organizations since
1999.
/s/ Kevin Cronk
Thomas LaPointe has co-managed the fund since March 2003 and has been with the
advisor and its predecessors or affiliate organizations since 1999.
/s/ Thomas LaPointe
Mark E. Newlin is the lead manager for the fund. He has co-managed the fund
since May 2004 and has been with the advisor and its predecessors or affiliate
organizations since 2003.
/s/ Mark E. Newlin
Steven P. Luetger has co-managed the fund since May 2004 and has been with the
advisor and its predecessors or affiliate organizations since 1978.
/s/ Steven P. Luetger
Investing in high yield bonds involves greater credit and other risks not
associated with investing in higher-quality bonds. Bond investing also involves
interest rate risk, which means that bond prices may change as interest rates
increase or decrease. Foreign investments involve market, political, accounting
and currency risks not associated with other investments.
[SIDENOTE]
WE BELIEVE THE BUSINESS PROSPECTS DRIVING STRONG PERFORMANCE IN CORPORATE BONDS
REMAIN IN PLACE AND SHOULD CONTINUE TO FUEL RETURNS GOING FORWARD.
6
<Page>
INVESTMENT PORTFOLIO
SEPTEMBER 30, 2004 (UNAUDITED) COLUMBIA INCOME FUND
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - 93.3%
BASIC MATERIALS - 5.0%
CHEMICALS - 3.2%
Dow Chemical Co. 5.750% 11/15/09 4,500,000 4,805,955
Eastman Chemical Co. 3.250% 06/15/08 1,150,000 1,125,448
6.300% 11/15/18 4,500,000 4,817,205
Equistar Chemicals LP 10.625% 05/01/11 2,000,000 2,280,000
Huntsman International Holdings LLC 12/31/09 (a) 2,000,000 1,060,000
Lyondell Chemical Co. 9.625% 05/01/07 2,000,000 2,170,000
NOVA Chemicals Corp. 6.500% 01/15/12 2,000,000 2,044,460
Chemicals Total 18,303,068
FOREST PRODUCTS & PAPER - 1.8%
Cascades, Inc. 7.250% 02/15/13 3,500,000 3,657,500
MeadWestvaco Corp. 8.200% 01/15/30 3,820,000 4,544,234
Norske Skog Canada Ltd. 7.375% 03/01/14 2,000,000 2,080,000
Forest Products & Paper Total 10,281,734
------------
BASIC MATERIALS TOTAL 28,584,802
COMMUNICATIONS - 10.4%
MEDIA - 6.7%
Charter Communications Holdings II LLC 10.250% 09/15/10 1,000,000 1,017,500
Comcast Corp. 5.850% 01/15/10 4,000,000 4,252,400
6.500% 01/15/15 2,000,000 2,155,000
CSC Holdings, Inc. 6.750% 04/15/12 (b) 500,000 502,500
7.625% 04/01/11 1,500,000 1,575,000
Dex Media West LLC 9.875% 08/15/13 1,953,000 2,294,775
EchoStar DBS Corp. 6.375% 10/01/11 1,500,000 1,515,000
Liberty Media Corp. 3.380% 09/17/06 (c) 4,000,000 4,047,200
News America Holdings, Inc. 9.250% 02/01/13 2,000,000 2,569,300
Sinclair Broadcast Group, Inc. 8.750% 12/15/11 2,000,000 2,180,000
TV Azteca SA de CV 10.500% 02/15/07 2,000,000 2,040,000
Viacom, Inc. 7.750% 06/01/05 6,500,000 6,719,830
</Table>
See Accompanying Notes to Financial Statements.
7
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
COMMUNICATIONS - (CONTINUED)
MEDIA - (CONTINUED)
Videotron Ltee 6.875% 01/15/14 220,000 225,500
Walt Disney Co. 5.500% 12/29/06 7,000,000 7,324,730
Media Total 38,418,735
TELECOMMUNICATIONS - 3.7%
Insight Midwest LP 9.750% 10/01/09 3,000,000 3,150,000
Nextel Communications, Inc. 7.375% 08/01/15 4,000,000 4,290,000
Qwest Corp. 9.125% 03/15/12 (b) 500,000 551,250
Qwest Services Corp. 13.500% 12/15/10 (b) 1,500,000 1,756,875
Rogers Cantel, Inc. 9.750% 06/01/16 2,000,000 2,240,000
Sprint Capital Corp. 6.125% 11/15/08 2,500,000 2,699,950
Telefonos de Mexico SA de CV 4.500% 11/19/08 3,250,000 3,248,245
Verizon Global Funding Corp. 7.750% 12/01/30 3,000,000 3,592,950
Telecommunications Total 21,529,270
------------
COMMUNICATIONS TOTAL 59,948,005
CONSUMER CYCLICAL - 11.8%
AIRLINES - 2.1%
Air 2 US 8.027% 10/01/19 (b) 1,599,207 1,327,341
American Airlines, Inc. 7.024% 10/15/09 3,029,000 2,975,993
9.710% 01/02/07 1,380,933 1,242,840
Continental Airlines, Inc. 7.461% 04/01/15 3,012,150 2,771,178
Delta Air Lines, Inc. 7.779% 11/18/05 2,000,000 800,000
Southwest Airlines Co. 5.496% 11/01/06 3,000,000 3,118,020
Airlines Total 12,235,372
APPAREL - 0.4%
Phillips-Van Heusen Corp. 7.250% 02/15/11 2,000,000 2,070,000
Apparel Total 2,070,000
AUTO MANUFACTURERS - 1.0%
DaimlerChrysler NA Holding Corp. 6.400% 05/15/06 4,000,000 4,214,440
Navistar International Corp. 7.500% 06/15/11 1,500,000 1,582,500
Auto Manufacturers Total 5,796,940
</Table>
See Accompanying Notes to Financial Statements.
8
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
CONSUMER CYCLICAL - (CONTINUED)
AUTO PARTS & EQUIPMENT - 0.3%
Dana Corp. 9.000% 08/15/11 1,100,000 1,325,500
Dura Operating Corp. 9.000% 05/01/09 420,000 374,850
Auto Parts & Equipment Total 1,700,350
ENTERTAINMENT - 1.0%
Mohegan Tribal Gaming Authority 7.125% 08/15/14 (b) 1,500,000 1,575,000
Seneca Gaming Corp. 7.250% 05/01/12 (b) 1,000,000 1,032,500
Six Flags, Inc. 9.500% 02/01/09 2,000,000 1,960,000
Steinway Musical Instruments, Inc. 8.750% 04/15/11 1,000,000 1,090,000
Entertainment Total 5,657,500
HOME BUILDERS - 1.2%
D.R. Horton, Inc. 9.750% 09/15/10 1,500,000 1,796,250
K. Hovnanian Enterprises, Inc. 7.750% 05/15/13 2,000,000 2,150,000
Standard-Pacific Corp. 9.250% 04/15/12 2,500,000 2,893,750
Home Builders Total 6,840,000
LEISURE TIME - 0.4%
Hard Rock Hotel, Inc. 8.875% 06/01/13 1,200,000 1,278,000
K2, Inc. 7.375% 07/01/14 (b) 1,250,000 1,317,575
Leisure Time Total 2,595,575
LODGING - 3.7%
Harrah's Operating Co., Inc. 7.125% 06/01/07 3,750,000 4,046,887
7.875% 12/15/05 500,000 526,250
Hyatt Equities LLC 6.875% 06/15/07 (b) 2,000,000 2,117,940
La Quinta Corp. 7.620% 09/13/05 2,200,000 2,271,500
Marriott International, Inc. 6.875% 11/15/05 5,000,000 5,199,050
MGM Mirage 8.375% 02/01/11 1,000,000 1,102,500
Park Place Entertainment Corp. 9.375% 02/15/07 2,500,000 2,775,000
Starwood Hotels & Resorts Worldwide, Inc. 7.875% 05/01/12 500,000 568,125
Station Casinos, Inc. 6.000% 04/01/12 1,000,000 1,022,500
6.875% 03/01/16 1,500,000 1,541,250
Lodging Total 21,171,002
</Table>
See Accompanying Notes to Financial Statements.
9
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
CONSUMER CYCLICAL - (CONTINUED)
OFFICE FURNISHINGS - 0.1%
Tempur-Pedic, Inc. 10.250% 08/15/10 426,000 484,575
Office Furnishings Total 484,575
RETAIL - 1.6%
Ferrellgas LP 8.750% 06/15/12 1,160,000 1,278,900
Kohl's Corp. 6.700% 02/01/06 3,000,000 3,144,090
May Department Stores Co. 6.700% 07/15/34 (b) 1,575,000 1,624,345
Office Depot, Inc. 6.250% 08/15/13 1,655,000 1,773,200
Saks, Inc. 7.000% 12/01/13 1,500,000 1,533,750
Retail Total 9,354,285
------------
CONSUMER CYCLICAL TOTAL 67,905,599
CONSUMER NON-CYCLICAL - 10.6%
BEVERAGES - 1.5%
Bottling Group LLC 2.450% 10/16/06 7,000,000 6,917,260
Constellation Brands, Inc. 8.125% 01/15/12 1,683,000 1,855,507
Beverages Total 8,772,767
BIOTECHNOLOGY - 0.4%
Bio-Rad Laboratories, Inc. 7.500% 08/15/13 2,000,000 2,145,000
Biotechnology Total 2,145,000
COMMERCIAL SERVICES - 1.3%
Erac USA Finance Co. 8.000% 01/15/11 (b) 3,000,000 3,535,260
9.125% 12/15/04 (b) 2,000,000 2,024,800
NationsRent, Inc. 9.500% 10/15/10 2,000,000 2,150,000
Commercial Services Total 7,710,060
COSMETICS/PERSONAL CARE - 0.4%
Procter & Gamble Co. 5.500% 02/01/34 2,000,000 2,002,480
Cosmetics/personal Care Total 2,002,480
FOOD - 1.1%
Cadbury-Schweppes PLC 5.125% 10/01/13 (b) 1,750,000 1,776,898
Delhaize America, Inc. 8.125% 04/15/11 1,000,000 1,148,140
Dole Food Co., Inc. 8.625% 05/01/09 2,000,000 2,185,000
Stater Brothers Holdings, Inc. 8.125% 06/15/12 (b) 1,000,000 1,045,000
Food Total 6,155,038
</Table>
See Accompanying Notes to Financial Statements.
10
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
CONSUMER NON-CYCLICAL - (CONTINUED)
HEALTHCARE PRODUCTS - 0.4%
MedQuest, Inc. 11.875% 08/15/12 2,000,000 2,280,000
Healthcare Products Total 2,280,000
HEALTHCARE SERVICES - 2.2%
Coventry Health Care, Inc. 8.125% 02/15/12 800,000 888,000
HCA, Inc. 6.950% 05/01/12 1,500,000 1,618,575
7.125% 06/01/06 3,250,000 3,427,743
7.875% 02/01/11 2,167,000 2,454,344
Tenet Healthcare Corp. 7.375% 02/01/13 1,000,000 937,500
9.875% 07/01/14 (b) 3,150,000 3,291,750
Healthcare Services Total 12,617,912
PHARMACEUTICALS - 3.3%
AmerisourceBergen Corp. 8.125% 09/01/08 3,000,000 3,315,000
Bristol-Myers Squibb Co. 4.750% 10/01/06 6,000,000 6,193,620
GlaxoSmithKline Capital PLC 2.375% 04/16/07 5,000,000 4,912,150
Medco Health Solutions, Inc. 7.250% 08/15/13 1,000,000 1,104,280
Wyeth 6.450% 02/01/24 1,075,000 1,101,133
6.500% 02/01/34 2,500,000 2,552,400
Pharmaceuticals Total 19,178,583
------------
CONSUMER NON-CYCLICAL TOTAL 60,861,840
DIVERSIFIED - 1.2%
HOLDING COMPANIES - 1.2%
Hutchison Whampoa International Ltd. 6.250% 01/24/14 (b) 5,500,000 5,607,635
Stena AB 7.500% 11/01/13 1,200,000 1,229,280
Holding Companies Total 6,836,915
------------
DIVERSIFIED TOTAL 6,836,915
ENERGY - 8.3%
OIL & GAS - 7.9%
Amerada Hess Corp. 7.300% 08/15/31 4,250,000 4,615,330
Chesapeake Energy Corp. 7.500% 06/15/14 2,210,000 2,419,950
Coastal Corp. 7.750% 06/15/10 2,000,000 1,990,000
ConocoPhillips 9.375% 02/15/11 2,000,000 2,548,640
Devon Financing Corp. 7.875% 09/30/31 2,600,000 3,174,756
</Table>
See Accompanying Notes to Financial Statements.
11
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
ENERGY - (CONTINUED)
OIL & GAS - (CONTINUED)
Gazprom International SA 7.201% 02/01/20 (b) 4,700,000 4,758,750
Murphy Oil Corp. 6.375% 05/01/12 2,250,000 2,484,495
Nexen, Inc. 7.875% 03/15/32 3,500,000 4,327,470
Noble Drilling Corp. 7.500% 03/15/19 3,500,000 4,106,200
Pemex Project Funding Master Trust 7.875% 02/01/09 2,000,000 2,232,000
9.125% 10/13/10 750,000 891,375
Petrobras International Finance Co. 9.750% 07/06/11 1,500,000 1,740,000
Premcor Refining Group, Inc. 7.500% 06/15/15 4,000,000 4,300,000
Pride International, Inc. 7.375% 07/15/14 (b) 1,500,000 1,642,500
Ras Laffan Liquefied Natural Gas Co., Ltd. 3.437% 09/15/09 (b) 4,122,000 4,080,326
Oil & Gas Total 45,311,792
PIPELINES - 0.4%
Williams Companies, Inc. 8.125% 03/15/12 2,000,000 2,300,000
Pipelines Total 2,300,000
------------
ENERGY TOTAL 47,611,792
FINANCIALS - 27.9%
BANKS - 6.6%
Bank One Corp. 6.500% 02/01/06 7,060,000 7,409,117
Barclays Bank PLC 7.375% 06/15/49 (b)(d) 4,000,000 4,589,040
Credit Suisse First Boston USA, Inc. 7.900% 05/01/07 (b)(d) 3,500,000 3,895,045
HSBC Capital Funding LP 9.547% 12/31/49 (b)(d) 4,500,000 5,599,800
North Fork Bancorporation, Inc. 5.875% 08/15/12 4,000,000 4,275,520
Popular North America Capital Trust I 6.564% 09/15/34 700,000 711,329
Popular North America, Inc. 6.125% 10/15/06 6,000,000 6,291,960
Rabobank Capital Funding II 5.260% 12/31/49 (b)(d) 5,100,000 5,141,106
Banks Total 37,912,917
DIVERSIFIED FINANCIAL SERVICES - 12.4%
Bear Stearns Companies, Inc. 4.000% 01/31/08 6,000,000 6,071,100
</Table>
See Accompanying Notes to Financial Statements.
12
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
FINANCIALS - (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES - (CONTINUED)
Capital One Bank 5.125% 02/15/14 3,350,000 3,328,594
Citigroup, Inc. 5.750% 05/10/06 7,000,000 7,318,500
Countrywide Home Loans, Inc. 5.500% 08/01/06 4,000,000 4,168,280
E*Trade Financial Corp. 8.000% 06/15/11 (b) 1,500,000 1,560,000
Ford Motor Credit Co. 5.800% 01/12/09 2,350,000 2,429,947
6.875% 02/01/06 4,000,000 4,186,720
7.000% 10/01/13 2,000,000 2,114,440
Fund American Companies, Inc. 5.875% 05/15/13 2,500,000 2,559,775
General Motors Acceptance Corp. 6.125% 01/22/08 2,500,000 2,631,225
7.250% 03/02/11 2,000,000 2,149,780
Household Finance Corp. 4.625% 01/15/08 3,000,000 3,098,370
International Lease Finance Corp. 6.375% 03/15/09 5,000,000 5,461,000
Jefferies Group, Inc. 7.750% 03/15/12 2,750,000 3,148,750
LaBranche & Co., Inc. 11.000% 05/15/12 (b) 2,000,000 2,060,000
Merrill Lynch & Co., Inc. 3.700% 04/21/08 4,000,000 4,008,760
Morgan Stanley 4.750% 04/01/14 1,000,000 965,080
PF Export Receivables Master Trust 3.748% 06/01/13 (b) 1,710,187 1,663,140
Spear Leeds & Kellogg LP 8.250% 08/15/05 (b) 4,000,000 4,198,120
Textron Financial Corp. 2.750% 06/01/06 5,000,000 4,989,050
UFJ Finance Aruba AEC 6.750% 07/15/13 2,675,000 2,977,676
Diversified Financial Services Total 71,088,307
INSURANCE - 3.7%
Allstate Corp. 7.875% 05/01/05 7,000,000 7,220,990
Florida Windstorm Underwriting Association 7.125% 02/25/19 (b) 2,000,000 2,348,260
Hartford Financial Services Group, Inc. 4.700% 09/01/07 3,800,000 3,925,666
Prudential Insurance Co. of America 7.650% 07/01/07 (b) 4,850,000 5,382,724
Travelers Property Casualty Corp. 3.750% 03/15/08 2,250,000 2,249,820
Insurance Total 21,127,460
</Table>
See Accompanying Notes to Financial Statements.
13
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
FINANCIALS - (CONTINUED)
INVESTMENT COMPANIES - 0.5%
Credit Suisse First Boston USA, Inc. 7.125% 07/15/32 2,500,000 2,942,150
Investment Companies Total 2,942,150
REAL ESTATE - 1.5%
Forest City Enterprises, Inc. 7.625% 06/01/15 1,000,000 1,037,500
Prudential Property 6.625% 04/01/09 (b) 3,000,000 3,307,080
7.125% 07/01/07 (b) 4,000,000 4,371,760
Real Estate Total 8,716,340
REAL ESTATE INVESTMENT TRUSTS - 2.8%
Host Marriott LP 9.500% 01/15/07 1,000,000 1,105,000
iStar Financial, Inc. 8.750% 08/15/08 3,209,000 3,655,982
La Quinta Properties, Inc. 7.000% 08/15/12 (b) 500,000 528,750
Spieker Properties LP 6.875% 02/01/05 6,750,000 6,838,020
Thornburg Mortgage, Inc. 8.000% 05/15/13 2,000,000 2,080,000
Ventas Realty LP 9.000% 05/01/12 2,000,000 2,280,000
Real Estate Investment Trusts Total 16,487,752
SAVINGS & LOANS - 0.4%
Western Financial Bank 9.625% 05/15/12 2,000,000 2,260,000
Savings & Loans Total 2,260,000
------------
FINANCIALS TOTAL 160,534,926
INDUSTRIALS - 5.7%
AEROSPACE & DEFENSE - 1.5%
Raytheon Co. 4.850% 01/15/11 1,000,000 1,018,090
5.500% 11/15/12 5,000,000 5,225,300
Sequa Corp. 8.875% 04/01/08 1,000,000 1,085,000
Systems 2001 Asset Trust 6.664% 09/15/13 (b) 1,220,655 1,351,680
Aerospace & Defense Total 8,680,070
ELECTRONICS - 0.4%
Thomas & Betts Corp. 7.250% 06/01/13 2,000,000 2,166,000
Electronics Total 2,166,000
</Table>
See Accompanying Notes to Financial Statements.
14
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
INDUSTRIALS - (CONTINUED)
ENVIRONMENTAL CONTROL - 0.3%
Allied Waste North America, Inc. 7.625% 01/01/06 500,000 522,500
7.875% 04/15/13 400,000 421,000
8.500% 12/01/08 250,000 270,625
8.875% 04/01/08 500,000 542,500
Environmental Control Total 1,756,625
MACHINERY DIVERSIFIED - 0.3%
Briggs & Stratton Corp. 8.875% 03/15/11 1,400,000 1,667,750
Machinery Diversified Total 1,667,750
METAL FABRICATE HARDWARE - 0.2%
Valmont Industries, Inc. 6.875% 05/01/14 (b) 1,000,000 1,030,000
Metal Fabricate Hardware Total 1,030,000
MISCELLANEOUS MANUFACTURING - 0.6%
SPX Corp. 7.500% 01/01/13 2,000,000 2,035,000
Trinity Industries, Inc. 6.500% 03/15/14 1,550,000 1,526,750
Miscellaneous Manufacturing Total 3,561,750
PACKAGING & CONTAINERS - 0.6%
Owens-Brockway Glass Container, Inc. 8.875% 02/15/09 3,000,000 3,262,500
Packaging & Containers Total 3,262,500
TRANSPORTATION - 1.8%
Burlington Northern Railroad Co. 9.250% 10/01/06 2,035,000 2,267,275
FedEx Corp. 2.650% 04/01/07 5,000,000 4,922,700
9.650% 06/15/12 1,000,000 1,303,470
Ship Finance International Ltd. 8.500% 12/15/13 2,000,000 1,970,000
Transportation Total 10,463,445
------------
INDUSTRIALS TOTAL 32,588,140
TECHNOLOGY - 1.0%
COMPUTERS - 1.0%
Hewlett-Packard Co. 3.625% 03/15/08 2,000,000 2,005,120
IBM Canada Credit Services Co. 3.750% 11/30/07 (b) 4,000,000 4,026,560
Computers Total 6,031,680
------------
TECHNOLOGY TOTAL 6,031,680
</Table>
See Accompanying Notes to Financial Statements.
15
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
UTILITIES - 11.4%
ELECTRIC - 10.5%
AES Corp. 8.750% 06/15/08 986,000 1,069,810
Alabama Power Co. 5.490% 11/01/05 1,000,000 1,030,820
Calpine Corp. 8.500% 07/15/10 (b) 2,500,000 1,909,375
CenterPoint Energy Houston Electric LLC 6.950% 03/15/33 1,750,000 2,004,222
Consumers Energy Co. 6.000% 02/15/14 2,000,000 2,152,360
Dominion Resources, Inc. 8.125% 06/15/10 4,000,000 4,730,680
Edison Mission Energy 9.875% 04/15/11 2,500,000 2,912,500
FirstEnergy Corp. 5.500% 11/15/06 2,000,000 2,081,680
6.450% 11/15/11 2,250,000 2,454,142
FPL Energy American Wind LLC 6.639% 06/20/23 (b) 2,422,500 2,513,756
MidAmerican Energy Holdings Co. 5.875% 10/01/12 8,000,000 8,443,520
MSW Energy Holdings LLC 8.500% 09/01/10 2,000,000 2,205,000
Nevada Power Co. 9.000% 08/15/13 2,000,000 2,305,000
Northern States Power Co. 8.000% 08/28/12 1,750,000 2,137,397
Oncor Electric Delivery Co. 7.250% 01/15/33 3,000,000 3,515,940
Orion Power Holdings, Inc. 12.000% 05/01/10 1,000,000 1,252,500
Pacific Gas & Electric Co. 6.050% 03/01/34 3,125,000 3,154,531
PSE&G Energy Holdings LLC 8.625% 02/15/08 2,000,000 2,205,000
PSEG Power LLC 5.500% 12/01/15 3,560,000 3,553,450
7.750% 04/15/11 2,000,000 2,322,240
South Point Energy Center LLC 8.400% 05/30/12 (b) 644,444 554,222
Southern Power Co. 6.250% 07/15/12 3,870,000 4,211,644
Tenaska Alabama II Partners LP 6.125% 03/30/23 (b) 1,949,102 2,039,463
Electric Total 60,759,252
</Table>
See Accompanying Notes to Financial Statements.
16
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
UTILITIES - (CONTINUED)
WATER - 0.9%
United Utilities PLC 6.250% 08/15/05 4,988,000 5,136,543
Water Total 5,136,543
------------
UTILITIES TOTAL 65,895,795
TOTAL CORPORATE FIXED-INCOME BONDS & NOTES
(COST OF $516,810,080) 536,799,494
GOVERNMENT OBLIGATIONS - 2.2%
FOREIGN GOVERNMENT BONDS - 1.3%
State of Qatar 9.750% 06/15/30 (b) 2,750,000 3,850,000
United Mexican States 6.750% 09/27/34 4,000,000 3,836,000
------------
FOREIGN GOVERNMENT BONDS TOTAL 7,686,000
U.S. GOVERNMENT OBLIGATIONS - 0.9%
U.S. Treasury Bond 5.375% 02/15/31 390,000 417,787
U.S. Treasury Note 3.375% 11/15/08 2,000,000 2,014,140
4.250% 08/15/14 2,580,000 2,607,010
------------
U.S. GOVERNMENT OBLIGATIONS TOTAL 5,038,937
TOTAL GOVERNMENT AGENCIES & OBLIGATIONS
(COST OF $11,629,209) 12,724,937
ASSET-BACKED SECURITIES - 1.2%
Archstone-Smith Trust 6.875% 02/15/08 1,000,000 1,073,370
Providian Gateway Master Trust 3.350% 09/15/11 (b) 5,500,000 5,487,969
TOTAL ASSET-BACKED SECURITIES
(COST OF $6,497,460) 6,561,339
</Table>
See Accompanying Notes to Financial Statements.
17
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- ------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 0.4%
Federal National Mortgage Association 9.000% 07/01/19 - 06/01/20 89,530 98,687
Government National Mortgage Association 4.954% 04/16/31 (e) 2,265,000 2,265,000
10.000% 10/15/17 - 01/15/19 5,783 6,490
10.500% 01/15/16 - 05/15/20 45,112 51,049
11.500% 05/15/13 10,552 12,041
12.500% 11/15/10 - 12/15/13 31,165 35,601
13.000% 04/15/11 139 160
14.000% 08/15/11 2,666 3,104
TOTAL MORTGAGE-BACKED SECURITIES
(COST OF $2,458,175) 2,472,132
SHORT-TERM OBLIGATION - 1.8%
Repurchase agreement with State Street Bank &
Trust Co., dated 09/30/04, due 10/01/04 at 1.580%,
collateralized by a U.S. Treasury Bond maturing
02/15/15, market value $10,625,794
(repurchase proceeds $10,417,457) 10,417,000 10,417,000
TOTAL SHORT-TERM OBLIGATION
(COST OF $10,417,000) 10,417,000
TOTAL INVESTMENTS - 98.9%
(COST OF $547,811,924) (f) 568,974,902
OTHER ASSETS & LIABILITIES, NET - 1.1% 6,498,824
NET ASSETS - 100.0% 575,473,726
</Table>
NOTES TO INVESTMENT PORTFOLIO:
(a) Zero coupon bond.
(b) Security exempt from registration pursuant to Rule 144A under the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, these securities amounted to $106,976,095, which represents 18.6% of
net assets.
(c) Floating rate note. The interest rate shown reflects the rate as of
September 30, 2004.
(d) Variable rate security. The interest rate shown reflects the rate as of
September 30, 2004.
(e) Security purchased on a delayed delivery basis.
(f) Cost for federal income tax purposes is $551,483,844.
See Accompanying Notes to Financial Statements.
18
<Page>
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2004 (UNAUDITED) COLUMBIA INCOME FUND
<Table>
<Caption>
($)
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at cost 547,811,924
------------
Investments, at value 568,974,902
Cash 1,081,198
Receivable for:
Investments sold 5,914,551
Fund shares sold 939,373
Interest 9,124,823
Deferred Trustees' compensation plan 13,759
-------------
Total Assets 586,048,606
LIABILITIES Payable for:
Investments purchased 6,810,650
Investments purchased on a delayed delivery basis 2,265,000
Fund shares repurchased 662,262
Distributions 290,089
Investment advisory fee 223,400
Administration fee 60,301
Transfer agent fee 141,278
Pricing and bookkeeping fees 16,284
Trustees' fees 76
Custody fee 5,963
Distribution and service fees 48,561
Deferred Trustees' fees 13,759
Other liabilities 37,257
-------------
Total Liabilities 10,574,880
NET ASSETS 575,473,726
COMPOSITION OF NET ASSETS Paid-in capital 578,624,711
Overdistributed net investment income (3,516,179)
Accumulated net realized loss (20,797,784)
Net unrealized appreciation on investments 21,162,978
-------------
NET ASSETS 575,473,726
CLASS A Net assets 94,915,454
Shares outstanding 9,431,819
Net asset value per share 10.06(a)
Maximum offering price per share ($10.06/0.9525) 10.56(b)
CLASS B Net assets 26,340,897
Shares outstanding 2,617,513
Net asset value and offering price per share 10.06(a)
CLASS C Net assets 10,173,892
Shares outstanding 1,010,988
Net asset value and offering price per share 10.06(a)
CLASS Z Net assets 444,043,483
Shares outstanding 44,125,308
Net asset value, offering and redemption price per share 10.06
</Table>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See Accompanying Notes to Financial Statements.
19
<Page>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2004 (UNAUDITED) COLUMBIA INCOME FUND
<Table>
<Caption>
($)
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest (net of foreign taxes withheld of $2,628) 15,843,630
EXPENSES Investment advisory fee 1,308,257
Administration fee 353,514
Distribution fee:
Class B 102,115
Class C 35,861
Service fee:
Class A 113,741
Class B 34,039
Class C 11,951
Transfer agent fee 177,220
Pricing and bookkeeping fees 85,358
Trustees' fees 6,920
Custody fee 16,311
Non-recurring costs (See Note 7) 21,392
Other expenses 103,208
----------
Total Expenses 2,369,887
Fees waived by Distributor - Class C (7,177)
Custody earnings credit (2,866)
Non-recurring costs assumed by Investment Advisor (See Note 7) (21,392)
----------
Net Expenses 2,338,452
----------
Net Investment Income 13,505,178
NET REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain on investments 2,820,021
ON INVESTMENTS Net change in unrealized
appreciation/depreciation on investments (9,580,832)
----------
Net Loss (6,760,811)
----------
Net Increase in Net Assets from Operations 6,744,367
</Table>
See Accompanying Notes to Financial Statements.
20
<Page>
STATEMENT OF CHANGES IN NET ASSETS
COLUMBIA INCOME FUND
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, JUNE 30,
INCREASE (DECREASE) IN NET ASSETS: 2004 ($) 2004 (a)(b)($) 2003 (c)(d)($)
- ----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS Net investment income 13,505,178 20,854,179 25,995,513
Net realized gain on investments
and foreign currency transactions 2,820,021 9,142,243 3,427,610
Net change in unrealized
appreciation/depreciation on
investments (9,580,832) (2,136,105) 33,226,182
---------------------------------------------
Net Increase from Operations 6,744,367 27,860,317 62,649,305
DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income:
Class A (2,313,249) (3,767,366) (4,851,795)
Class B (590,309) (1,104,196) (1,525,173)
Class C (214,272) (260,133) (220,682)
Class Z (11,435,055) (18,030,708) (21,848,537)
---------------------------------------------
Total Distributions Declared to
Shareholders (14,552,885) (23,162,403) (28,446,187)
SHARE TRANSACTIONS Class A:
Subscriptions 10,330,538 11,896,879 13,307,884
Proceeds received in connection
with merger -- -- 92,697,100
Distributions reinvested 1,432,131 2,226,081 2,836,832
Redemptions (7,624,051) (12,719,120) (24,933,740)
---------------------------------------------
Net Increase 4,138,618 1,403,840 83,908,076
Class B:
Subscriptions 1,919,114 5,143,365 7,355,762
Proceeds received in connection
with merger -- -- 32,521,573
Distributions reinvested 372,109 676,743 951,704
Redemptions (5,002,736) (8,955,692) (10,486,433)
---------------------------------------------
Net Increase (Decrease) (2,711,513) (3,135,584) 30,342,606
Class C:
Subscriptions 2,157,940 4,978,358 2,990,400
Proceeds received in connection
with merger -- -- 3,795,846
Distributions reinvested 123,476 145,525 132,549
Redemptions (1,168,362) (1,569,954) (1,717,380)
---------------------------------------------
Net Increase 1,113,054 3,553,929 5,201,415
Class Z:
Subscriptions 64,763,302 87,808,248 140,602,354
Distributions reinvested 10,882,609 17,198,335 20,689,189
Redemptions (51,078,345) (111,003,329) (86,620,640)
---------------------------------------------
Net Increase (Decrease) 24,567,566 (5,996,746) 74,670,903
Net Increase (Decrease) from
Share Transactions 27,107,725 (4,174,561) 194,123,000
---------------------------------------------
Total Increase in Net Assets 19,299,207 523,353 228,326,118
NET ASSETS Beginning of period 556,174,519 555,651,166 327,325,048
End of period 575,473,726 556,174,519 555,651,166
Overdistributed net investment
income at end of period (3,516,179) (2,468,472) (1,216,871)
</Table>
(a) On October 13, 2003, the Liberty Income Fund was renamed Columbia Income
Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Class B and Class C shares commenced operations on July 15, 2002.
(d) Effective July 15, 2002, Stein Roe Income Fund Class S shares were
redesignated Liberty Income Fund Class Z shares.
See Accompanying Notes to Financial Statements.
21
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, JUNE 30,
INCREASE (DECREASE) IN NET ASSETS: 2004 2004 (a)(b) 2003 (c)(d)
- ----------------------------------------------------------------------------------------------------------------------------------
CHANGES IN SHARES Class A:
Subscriptions 1,041,233 1,180,862 1,404,563
Issued in connection with merger -- -- 9,788,501
Issued for distributions reinvested 144,160 222,302 295,360
Redemptions (769,389) (1,274,508) (2,622,883)
---------------------------------------------
Net Increase 416,004 128,656 8,865,541
Class B:
Subscriptions 193,418 511,389 772,472
Issued in connection with merger -- -- 3,434,168
Issued for distributions reinvested 37,467 67,614 99,099
Redemptions (505,917) (896,625) (1,095,572)
---------------------------------------------
Net Increase (Decrease) (275,032) (317,622) 3,210,167
Class C:
Subscriptions 217,281 495,828 311,006
Issued in connection with merger -- -- 400,829
Issued for distributions reinvested 12,430 14,500 13,770
Redemptions (118,277) (157,399) (178,980)
---------------------------------------------
Net Increase 111,434 352,929 546,625
Class Z:
Subscriptions 6,513,742 8,734,872 14,613,670
Issued for distributions reinvested 1,095,467 1,717,623 2,140,928
Redemptions (5,150,626) (11,147,023) (9,059,989)
---------------------------------------------
Net Increase (Decrease) 2,458,583 (694,528) 7,694,609
</Table>
(a) On October 13, 2003, the Liberty Income Fund was renamed Columbia Income
Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Class B and Class C shares commenced operations on July 15, 2002.
(d) Effective July 15, 2002, Stein Roe Income Fund Class S shares were
redesignated Liberty Income Fund Class Z shares.
See Accompanying Notes to Financial Statements.
22
<Page>
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 (UNAUDITED) COLUMBIA INCOME FUND
NOTE 1. ORGANIZATION
Columbia Income Fund (the "Fund"), a series of Columbia Funds Trust VIII (the
"Trust"), is a diversified portfolio. The Trust is a Massachusetts business
trust registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
INVESTMENT GOAL
The Fund seeks total return by investing for a high level of current income and
opportunities for capital appreciation.
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 4.75% based on
the amount of initial investment. Class A shares purchased without an initial
sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on
shares sold within eighteen months on an original purchase of $1 million to $25
million. Class B shares are subject to a maximum CDSC of 5.00% based upon the
holding period after purchase. Class B shares will convert to Class A shares in
a certain number of years after purchase, depending on the program under which
shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold
within one year after purchase. Class Z shares are offered continuously at net
asset value. There are certain restrictions on the purchase of Class Z shares,
as described in the Fund's prospectus.
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
Debt securities generally are valued by a pricing service approved by the Fund's
Board of Trustees, based upon market transactions for normal, institutional-size
trading units of similar securities. The services may use various pricing
techniques which take into account appropriate factors such as yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other data, as
well as broker quotes. Debt securities for which quotations are readily
available are valued at an over-the-counter or exchange bid quotation. Certain
debt securities, which tend to be more thinly traded and of lesser quality, are
priced based on fundamental analysis of the financial condition of the issuer
and the estimated value of any collateral. Valuations developed through pricing
techniques may vary from the actual amounts realized upon sale of the
securities, and the potential variation may be greater for those securities
valued using fundamental analysis.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Foreign securities are generally valued at the last sale price on the foreign
exchange or market on which they trade. If any foreign share prices are not
readily available as a result of limited share activity, the securities are
valued at the last sale price of the local shares in the principal market in
which such securities are normally traded.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange ("NYSE"). The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
generally determined at 2:00 p.m. Eastern (U.S.) time. Occasionally, events
affecting the values of such foreign securities and such exchange rates may
occur between the times at which they are determined and the close of the
customary trading session of the NYSE, which would not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
values of such foreign securities occur and it is determined that market
quotations are not reliable, then these foreign securities will be valued at
their fair
23
<Page>
value using procedures approved by the Board of Trustees.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value under
procedures approved by the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions with institutions that
the Fund's investment advisor has determined are creditworthy. The Fund, through
its custodian, receives delivery of underlying securities collateralizing a
repurchase agreement. Collateral is at least equal, at all times, to the value
of the repurchase obligation including interest. A repurchase agreement
transaction involves certain risks in the event of default or insolvency of the
counterparty. These risks include possible delays or restrictions upon the
Fund's ability to dispose of the underlying securities and a possible decline in
the value of the underlying securities during the period while the Fund seeks to
assert its rights.
DELAYED DELIVERY SECURITIES
The Fund may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. This may increase the
risk if the other party to the transaction fails to deliver and causes the Fund
to subsequently invest at less advantageous prices. The Fund identifies cash or
liquid portfolio securities as segregated with the custodian in an amount equal
to the delayed delivery commitment.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Premium and discount are
amortized and accreted, respectively, on all debt securities.
FOREIGN CURRENCY TRANSACTIONS
The values of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. Net realized and
unrealized gains (losses) on foreign currency transactions include gains
(losses) arising from the fluctuation in exchange rates between trade and
settlement dates on securities transactions, gains (losses) arising from the
disposition of foreign currency and currency gains (losses) between the accrual
and payment dates on dividends, interest income and foreign withholding taxes.
For financial statement purposes, the Fund does not distinguish that portion of
gains (losses) on investments which is due to changes in foreign exchange rates
from that which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains (losses) on
investments.
DETERMINATION OF CLASS NET ASSET VALUES
All income, expenses (other than class-specific expenses, as shown on the
Statement of Operations) and realized and unrealized gains (losses) are
allocated to each class of the Fund on a daily basis 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 intends to
distribute in each calendar year substantially all of its net investment income,
capital gains and certain other amounts, if any, such that the Fund should not
be subject to federal excise tax. Therefore, no federal income or excise tax
provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly. Net
realized capital gains, if any, are distributed at least annually.
24
<Page>
NOTE 3. FEDERAL TAX INFORMATION
The tax character of distributions paid during the period ended March 31, 2004
and the year June 30, 2003 was as follows:
<Table>
<Caption>
MARCH 31, 2004 JUNE 30, 2003
- ------------------------------------------------------------------------
Distributions paid from:
Ordinary Income* $ 23,162,403 $ 28,446,187
</Table>
* For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
Unrealized appreciation and depreciation at September 30, 2004, based on cost of
investments for federal income tax purposes, was:
<Table>
Unrealized appreciation $ 24,110,237
Unrealized depreciation (6,619,179)
-------------
Net unrealized appreciation $ 17,491,058
</Table>
The following capital loss carryforwards, determined as of March 31, 2004, may
be available to reduce taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code:
<Table>
<Caption>
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
2008 $ 10,505,238
2009 8,620,038
2010 1,393,345
2011 2,985,140
-------------
$ 23,503,761
</Table>
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the
Fund. Columbia, the transfer agent and the distributor, are each indirect wholly
owned subsidiaries of Bank of America Corporation ("BOA").
INVESTMENT ADVISORY FEE
Columbia receives a monthly investment advisory fee based on the Fund's average
daily net assets at the following annual rates:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL FEE RATE
- ----------------------------------------------------------
First $100 million 0.500%
Next $900 million 0.475%
Over $1 billion 0.450%
</Table>
For the six months ended September 30, 2004, the Fund's annualized effective
investment advisory fee rate was 0.48%.
ADMINISTRATION FEE
Columbia provides administrative and other services to the Fund for a monthly
administration fee based on the Fund's average daily net assets at the following
annual rates:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL FEE RATE
- ----------------------------------------------------------
First $100 million 0.150%
Next $900 million 0.125%
Over $1 billion 0.100%
</Table>
For the six months ended September 30, 2004 the Fund's annualized effective
administration fee rate was 0.13%.
PRICING AND BOOKKEEPING FEES
Columbia is responsible for providing pricing and bookkeeping services to the
Fund under a pricing and bookkeeping agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Corporation ("State Street"). As a result, Columbia pays the total fees
collected to State Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, Columbia receives
from the Fund an annual flat fee of $10,000 paid monthly, and in any month that
the Fund's average daily net assets exceed $50 million, an additional monthly
fee. The additional fee rate is calculated by taking into account the fees
payable to State Street under the Outsourcing Agreement. This rate is applied to
the average daily net assets of the Fund for that month. The Fund also pays
additional fees for pricing services based on the number of securities held by
the Fund.
25
<Page>
For the six months ended September 30, 2004, the annualized effective pricing
and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was
0.031%.
TRANSFER AGENT FEE
Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia,
provides shareholder services to the Fund. For such services, the Transfer Agent
receives a fee, paid monthly, at the annual rate of $34.00 per open account. The
Transfer Agent also receives reimbursement for certain out-of-pocket expenses.
Columbia has voluntarily agreed to reimburse the Fund for a portion of the
transfer agent expenses so that transfer agent expenses (exclusive of
out-of-pocket expenses) would not exceed 0.23% annually of the Fund's average
daily net assets. Columbia, at its discretion, may revise or discontinue this
arrangement any time.
For the six months ended September 30, 2004, the Fund's annualized effective
transfer agent fee rate, inclusive of out-of-pocket expenses, was 0.06%.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia,
is the principal underwriter of the Fund. For the six months ended September 30,
2004, the Distributor has retained net underwriting discounts of $7,476 on sales
of the Fund's Class A shares and received CDSC fees of $124, $46,975 and $1,256
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 rate of 0.75% of the average daily net assets
attributable to Class B and Class C shares only. The Distributor has voluntarily
agreed to waive a portion of the Class C share distribution fee so that it will
not exceed 0.60% annually of Class C average daily net assets.
The CDSC and the fees received from the Plan are used principally as repayment
to the Distributor for amounts paid by the Distributor to dealers who sold such
shares.
CUSTODY CREDITS
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. The Fund could have invested a portion of the
assets utilized in connection with the expense offset arrangement in an
income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
The Fund pays no compensation to its officers, all of whom are employees of
Columbia or its affiliates. Effective August 23, 2004, the Board of Trustees
appointed a Chief Compliance Officer to the Fund in accordance with federal
securities regulations. The Fund, along with other affiliated funds, will pay
its pro-rata share of the expenses associated with the Chief Compliance Officer
role. The Fund's fee will not exceed $15,000 per year.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
OTHER
Columbia provides certain services to the Fund related to Sarbanes-Oxley
compliance. For the six months ended September 30, 2004, the Fund paid $1,041 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
NOTE 5. PORTFOLIO INFORMATION
For the six months ended September 30, 2004, the cost of purchases and proceeds
from sales of securities, excluding short-term obligations, were $150,209,327
and $110,997,127, respectively, of which $22,804,639 and $23,014,365,
respectively, were U.S. Government securities.
NOTE 6. LINE OF CREDIT
The Fund and other affiliated funds participate in a $350,000,000 credit
facility, which is used for temporary or emergency purposes to facilitate
portfolio liquidity. Interest is charged to the Fund based on its borrowings. In
addition, the Fund has
26
<Page>
agreed to pay commitment fees on its pro-rata portion of the unutilized line of
credit. The commitment fee is included in "Other expenses" on the Statement of
Operations. For the six months ended September 30, 2004, the Fund did not borrow
under this arrangement.
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
HIGH-YIELD SECURITIES
Investing in high-yield securities may involve greater credit risk and
considerations not typically associated with investing in U.S. Government bonds
and other higher quality fixed income securities. These securities are
non-investment grade securities, often referred to as "junk bonds." Economic
downturns may disrupt the high yield market and impair the ability of issuers to
repay principal and interest. Also, an increase in interest rates would likely
have an adverse impact on the value of such obligations. Moreover, high-yield
securities may be less liquid due to the extent that there is no established
retail secondary market and because of a decline in the value of such
securities.
INDUSTRY FOCUS
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
LEGAL PROCEEDINGS
Columbia, the Distributor, and certain of their affiliates (collectively, "The
Columbia Group") have received information requests and subpoenas from various
regulatory and law enforcement authorities in connection with their
investigations of late trading and market timing in mutual funds as well as
other industry wide issues. The Columbia Group has not uncovered any instances
where Columbia or the Distributor were knowingly involved in late trading of
mutual fund shares.
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and the Distributor, alleging that they had
violated certain provisions of the federal securities laws in connection with
trading activity in mutual fund shares. Also on February 24, 2004, the New York
Attorney General ("NYAG") filed a civil complaint in New York Supreme Court,
County of New York against Columbia and the Distributor alleging that Columbia
and the Distributor had violated certain New York anti-fraud statutes. If either
Columbia or the Distributor is unsuccessful in its defense of these proceedings,
it could be barred from serving as an investment advisor or distributor for any
investment company registered under the Investment Company Act of 1940, as
amended (a "registered investment company"). Such results could prevent
Columbia, the Distributor or any company that is an affiliated person of
Columbia and the Distributor from serving as an investment advisor or
distributor for any registered investment company, including your fund. Your
fund has been informed by Columbia and the Distributor that, if these results
occur, they will seek exemptive relief from the SEC to permit them to continue
to serve as your fund's investment advisor and distributor. There is no
assurance that such exemptive relief will be granted. On March 15, 2004,
Columbia and the Distributor entered into agreements in principle with the SEC
Division of Enforcement and NYAG in settlement of the charges. Under the
agreements, Columbia and the Distributor agreed, among other things, to the
following conditions: payment of $70 million in disgorgement; payment of $70
million in civil penalties; an order requiring Columbia and the Distributor to
cease and desist from violations of the antifraud provisions and other
provisions of the federal securities laws; governance changes designed to
maintain the independence of the mutual fund boards of trustees and ensure
compliance with securities laws and their fiduciary duties; and retention of an
independent consultant to review Columbia's and the Distributor's compliance
policies and procedures. The agreement requires the final approval of the SEC.
In a separate agreement with the NYAG, the Columbia Group and its affiliate Banc
of America Capital Management, LLC have agreed to collectively reduce mutual
fund fees by $160 million over a five-year period.
As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of fund
shares, which could increase transaction costs or operating expenses, or have
other adverse consequences for the funds.
In connection with the events described in detail above, various parties have
filed suit against certain
27
<Page>
funds, their Boards and/or FleetBoston (and affiliated entities). More than 300
cases (including those filed against entities unaffiliated with the funds, their
Boards and/or FleetBoston and its affiliated entities) have been consolidated in
a multi-district proceeding and transferred to the Federal District Court in
Maryland. Recently, certain Columbia funds and affiliated entities have been
named as defendants in several derivative actions under various sections of the
Investment Company Act of 1940, as amended, alleging, among other things, that
the fees and expenses paid by those funds are excessive. The funds and the other
defendants to these actions, including Columbia and various of its affiliates,
certain other mutual funds advised by Columbia and its affiliates, and various
directors of such funds, have denied these allegations and are contesting the
plaintiffs' claims. These suits and certain regulatory investigations are
ongoing, however, based on currently available information, Columbia believes
that these lawsuits are without merit, that the likelihood they will have a
material adverse impact on any fund is remote, and that the lawsuits are not
likely to materially affect its ability to provide investment management
services to its clients, including the funds.
For the six months ended September 30, 2004, Columbia has assumed $21,392 of
legal, consulting services and Trustees' fees incurred by the Fund in connection
with these matters.
NOTE 8. NAME CHANGE
Effective October 13, 2003, the Liberty Income Fund was renamed Columbia Income
Fund. Also on this date, the Liberty-Stein Roe Funds Income Trust was renamed
Columbia Funds Trust VIII.
NOTE 9. COMPARABILITY OF FINANCIAL STATEMENTS
The fiscal year end of the Fund was changed from June 30 to March 31.
NOTE 10. BUSINESS COMBINATIONS AND MERGERS
FUND MERGERS
As of the end of business on July 12, 2002, the Stein Roe Income Fund acquired
all the net assets of Liberty Income Fund pursuant to a plan of reorganization
approved by Liberty Income Fund shareholders on June 28, 2002. All assets of
Liberty Income Fund were transferred to the Stein Roe Income Fund in a tax-free
exchange and shareholders of Liberty Income Fund received shares of the Stein
Roe Income Fund in exchange for their shares as follows:
<Table>
<Caption>
STEIN ROE
INCOME FUND LIBERTY INCOME FUND UNREALIZED
SHARES ISSUED NET ASSETS RECEIVED DEPRECIATION(1)
- --------------------------------------------------------------
13,623,498 $ 129,014,519 $ (883,393)
</Table>
(1) Unrealized depreciation is included in the Net Assets Received amount shown
above.
<Table>
<Caption>
NET ASSETS NET ASSETS
OF THE STEIN ROE NET ASSETS OF OF THE STEIN ROE
INCOME FUND LIBERTY INCOME FUND INCOME FUND
PRIOR TO IMMEDIATELY PRIOR TO IMMEDIATELY AFTER
COMBINATION COMBINATION COMBINATION
- ---------------------------------------------------------------
$ 327,547,213 $ 129,014,519 $ 456,561,732
</Table>
Effective July 15, 2002, Stein Roe Income Fund was renamed Liberty Income Fund
(currently known as Columbia Income Fund) and began offering Class B and Class C
shares. The Class S shares were subsequently redesignated as Class Z shares.
CHANGE IN FUND STRUCTURE
Prior to July 13, 2002, the Fund invested substantially all of its assets in the
SR&F Income Portfolio (the "Portfolio"), as part of a master/feeder structure.
The Portfolio allocated income, expenses, realized and unrealized gains (losses)
to its investors on a daily basis, based on methods in compliance with the
Internal Revenue Service. Prior to the reorganization described above, the
Fund's pro-rata share of the Portfolio was distributed to the Fund based on
allocation methods in compliance with the Internal Revenue Service.
28
<Page>
FINANCIAL HIGHLIGHTS
COLUMBIA INCOME FUND
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD PERIOD
ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, YEAR ENDED JUNE 30, JUNE 30,
CLASS A SHARES 2004 2004(a)(b) 2003(c) 2002(c) 2001(c)(d)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.21 $ 10.10 $ 9.44 $ 9.54 $ 9.21
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (e) 0.24 0.39 0.45 0.60(f) 0.61
Net realized and unrealized gain (loss)
on investments and foreign currency (0.14) 0.15 0.75 (0.08)(f) 0.32
---------- ---------- ---------- ---------- ----------
Total from Investment Operations 0.10 0.54 1.20 0.52 0.93
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.25) (0.43) (0.54) (0.62) (0.60)
Return of capital -- -- -- --(g) --
---------- ---------- ---------- ---------- ----------
Total Distributions Declared
to Shareholders (0.25) (0.43) (0.54) (0.62) (0.60)
NET ASSET VALUE, END OF PERIOD $ 10.06 $ 10.21 $ 10.10 $ 9.44 $ 9.54
Total return (h) 1.07%(i) 5.50%(i)(j) 13.18%(j) 5.53% 10.41%(i)
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (k) 1.00%(l) 1.14%(l) 1.23% 1.10% 1.12%(l)
Interest expense -- --%(l)(m) -- -- --
Expenses (k) 1.00%(l) 1.14%(l) 1.23% 1.10% 1.12%(l)
Net investment income (k) 4.81%(l) 5.20%(l) 5.12% 6.32%(f) 7.08%(l)
Waiver/reimbursement -- 0.03%(l) 0.05% -- --
Portfolio turnover rate 21%(i) 93%(i) 96% 136%(n) 128%(n)
Net assets, end of period (000's) $ 94,915 $ 92,053 $ 89,740 $ 204 $ 1
</Table>
(a) On October 13, 2003, the Liberty Income Fund was renamed Columbia Income
Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Per share data and ratios reflect income and expenses assuming inclusion of
the Fund's proportionate share of income and expenses of the SR&F Income
Portfolio, prior to the portfolio liquidation.
(d) Class A shares were initially offered on July 31, 2000. Per share data and
total return reflect activity from that date.
(e) Per share data was calculated using average shares outstanding during the
period.
(f) Effective July 1, 2001, the SR&F Income Portfolio adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium and accreting discount on all debt securities. The effect
of this change for the year ended June 30, 2002, was to decrease net
investment income per share by $0.01, decrease net realized and unrealized
loss per share by $0.01 and decrease the ratio of net investment income to
average net assets from 6.40% to 6.32%. Per share data and ratios for the
period prior to June 30, 2002 have not been restated to reflect this change
in presentation.
(g) Rounds to less than $0.01 per share.
(h) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(i) Not annualized.
(j) Had the Investment Advisor not reimbursed a portion of expenses, total
return would have been reduced.
(k) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(l) Annualized.
(m) Rounds to less than 0.01%.
(n) Portfolio turnover disclosed is for the SR&F Income Portfolio.
29
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD PERIOD
ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, JUNE 30,
CLASS B SHARES 2004 2004(a)(b) 2003(c)(d)
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.21 $ 10.10 $ 9.47
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (e) 0.20 0.33 0.40
Net realized and unrealized gain (loss) on
investments and foreign currency (0.13) 0.15 0.68
---------- ---------- ----------
Total from Investment Operations 0.07 0.48 1.08
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.22) (0.37) (0.45)
NET ASSET VALUE, END OF PERIOD $ 10.06 $ 10.21 $ 10.10
Total return (f) (g) 0.69% 4.91%(h) 11.78%(h)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (i) (j) 1.75% 1.89% 1.99%
Interest expense -- --%(j)(k) --
Expenses (i) (j) 1.75% 1.89% 1.99%
Net investment income (i) (j) 4.06% 4.46% 4.39%
Waiver/reimbursement -- 0.03%(j) 0.11%(j)
Portfolio turnover rate 21%(g) 93%(g) 96%
Net assets, end of period (000's) $ 26,341 $ 29,534 $ 32,430
</Table>
(a) On October 13, 2003, the Liberty Income Fund was renamed Columbia Income
Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Class B shares were initially offered on July 15, 2002. Per share data and
total return reflect activity from that date.
(d) Per share data and ratios reflect income and expenses assuming inclusion of
the Fund's proportionate share of income and expenses of the SR&F Income
Portfolio, prior to the portfolio liquidation.
(e) Per share data was calculated using average shares outstanding during the
period.
(f) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(g) Not annualized.
(h) Had the Investment Advisor not reimbursed a portion of expenses, total
return would have been reduced.
(i) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(j) Annualized.
(k) Rounds to less than 0.01%.
30
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD PERIOD
ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, JUNE 30,
CLASS C SHARES 2004 2004(a)(b) 2003(c)(d)
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.21 $ 10.10 $ 9.47
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (e) 0.21 0.34 0.42
Net realized and unrealized gain (loss) on
investments and foreign currency (0.14) 0.15 0.68
---------- ---------- ----------
Total from Investment Operations 0.07 0.49 1.10
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.22) (0.38) (0.47)
NET ASSET VALUE, END OF PERIOD $ 10.06 $ 10.21 $ 10.10
Total return (f) (g) (h) 0.77% 5.03% 11.94%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (i) (j) 1.60% 1.74% 1.84%
Interest expense -- --%(j)(k) --
Expenses (i) (j) 1.60% 1.74% 1.84%
Net investment income (i) (j) 4.21% 4.52% 4.51%
Waiver/reimbursement (j) 0.15% 0.18% 0.23%
Portfolio turnover rate 21%(h) 93%(h) 96%
Net assets, end of period (000's) $ 10,174 $ 9,185 $ 5,522
</Table>
(a) On October 13, 2003, the Liberty Income Fund was renamed Columbia Income
Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Class C shares were initially offered on July 15, 2002. Per share data and
total return reflect activity from that date.
(d) Per share data and ratios reflect income and expenses assuming inclusion of
the Fund's proportionate share of income and expenses of the SR&F Income
Portfolio, prior to the portfolio liquidation.
(e) Per share data was calculated using average shares outstanding during the
period.
(f) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(g) Had the Investment Advisor/Distributor not reimbursed a portion of expenses,
total return would have been reduced.
(h) Not annualized.
(i) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(j) Annualized.
(k) Rounds to less than 0.01%.
31
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
SEPTEMBER 30, MARCH 31, YEAR ENDED JUNE 30,
CLASS Z SHARES 2004 2004(a)(b) 2003(c)(d) 2002(d) 2001(d) 2000(d) 1999(d)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.21 $ 10.10 $ 9.44 $ 9.54 $ 9.15 $ 9.41 $ 10.03
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (e) 0.25 0.41 0.53 0.63(f) 0.69 0.70 0.67
Net realized and unrealized
gain (loss) on investments
and foreign currency (0.13) 0.16 0.71 (0.09)(f) 0.39 (0.26) (0.62)
--------- --------- --------- --------- --------- --------- ---------
Total from Investment
Operations 0.12 0.57 1.24 0.54 1.08 0.44 0.05
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment income (0.27) (0.46) (0.58) (0.64) (0.69) (0.70) (0.67)
Return of capital -- -- -- --(g) -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total Distributions
Declared to Shareholders (0.27) (0.46) (0.58) (0.64) (0.69) (0.70) (0.67)
NET ASSET VALUE, END OF
PERIOD $ 10.06 $ 10.21 $ 10.10 $ 9.44 $ 9.54 $ 9.15 $ 9.41
Total return (h) 1.27%(i) 5.80%(i)(j) 13.61% 5.80% 12.20% 4.92% 0.52%
RATIOS TO AVERAGE NET
ASSETS/ SUPPLEMENTAL DATA:
Operating expenses (k) 0.75%(l) 0.82%(l) 0.84% 0.85% 0.86% 0.86% 0.84%
Interest expense -- --%(l)(m) -- -- -- -- --
Expenses (k) 0.75%(l) 0.82%(l) 0.84% 0.85% 0.86% 0.86% 0.84%
Net investment income (k) 5.06%(l) 5.46%(l) 5.51% 6.57%(f) 7.32% 7.58% 6.91%
Waiver/reimbursement -- 0.02%(l) -- -- -- -- --
Portfolio turnover rate 21%(i) 93%(i) 96% 136%(n) 128%(n) 205%(n) 203%(n)
Net assets, end of
period (000's) $ 444,043 $ 425,402 $ 427,959 $ 327,121 $ 266,091 $ 227,090 $ 294,640
</Table>
(a) On October 13, 2003, the Liberty Income Fund was renamed Columbia Income
Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Effective July 15, 2002, the Stein Roe Income Fund's Class S shares were
redesignated Liberty Income Fund Class Z shares.
(d) Per share data and ratios reflect income and expenses assuming inclusion of
the Fund's proportionate share of income and expenses of the SR&F Income
Portfolio, prior to the portfolio liquidation.
(e) Per share data was calculated using average shares outstanding during the
period.
(f) Effective July 1, 2001, the SR&F Income Portfolio adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium and accreting discount on all debt securities. The effect
of this change for the year ended June 30, 2002, was to decrease net
investment income per share by $0.01, decrease net realized and unrealized
loss per share by $0.01 and decrease the ratio of net investment income to
average net assets from 6.65% to 6.57%. Per share data and ratios for
periods prior to June 30, 2002 have not been restated to reflect this change
in presentation.
(g) Rounds to less than $0.01 per share.
(h) Total return at net asset value assuming all distributions reinvested.
(i) Not annualized.
(j) Had the Investment Advisor not reimbursed a portion of expenses, total
return would have been reduced.
(k) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(l) Annualized.
(m) Rounds to less than 0.01%.
(n) Portfolio turnover disclosed is for the SR&F Income Portfolio.
32
<Page>
IMPORTANT INFORMATION ABOUT THIS REPORT
COLUMBIA INCOME FUND
TRANSFER AGENT
Columbia Funds Services, Inc.
P.O. Box 8081
Boston MA 02266-8081
800.345.6611
DISTRIBUTOR
Columbia Funds Distributor, Inc.
One Financial Center
Boston MA 02111
INVESTMENT ADVISOR
Columbia Management Advisors, Inc.
100 Federal Street
Boston MA 02110
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 Income Fund. This
report may also be used as sales literature when preceded or accompanied by the
current prospectus which provides details of sales charges, investment
objectives and operating policies of the fund and with the most recent copy of
the Columbia Funds Performance Update.
A description of the policies and procedures that the fund uses to determine how
to vote proxies relating to their portfolio securities and a copy of the fund's
voting record are available (i) at www.columbiamanagement.com; (ii) on the
Securities and Exchange Commission's website at www.sec.gov and (iii) without
charge, upon request, by calling 800-368-0346.
33
<Page>
[GRAPHIC]
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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 INCOME FUND SEMIANNUAL REPORT, SEPTEMBER 30, 2004 PRSRT STD
U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
[COLUMBIAFUNDS(R) LOGO]
A MEMBER OF COLUMBIA MANAGEMENT GROUP
(C)2004 COLUMBIA FUNDS DISTRIBUTOR, INC.
ONE FINANCIAL CENTER, BOSTON, MA 02111-2621
800.345.6611 www.columbiafunds.com
751-03/973S-0904 (11/04) 04/3392
<Page>
[GRAPHIC]
COLUMBIA INTERMEDIATE BOND FUND
SEMIANNUAL REPORT
SEPTEMBER 30, 2004
[COLUMBIAFUNDS(R) LOGO]
A MEMBER OF COLUMBIA MANAGEMENT GROUP
<Page>
TABLE OF CONTENTS
<Table>
Fund Profile 1
Performance Information 2
Understanding Your Expenses 3
Economic Update 4
Portfolio Managers' Report 5
Investment Portfolio 7
Statement of Assets and Liabilities 18
Statement of Operations 19
Statement of Changes in Net Assets 20
Notes to Financial Statements 22
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
PRESIDENT'S MESSAGE
COLUMBIA INTERMEDIATE BOND FUND
DEAR SHAREHOLDER:
Your fund's legal and management team here at Columbia Funds have been working
hard to strengthen our mutual fund services operation and to ensure that all
operations and processes comply with legal and regulatory standards. In the
coming months, we will continue to monitor the oversight enhancements recently
put in place by your fund's Board of Trustees and make every effort to protect
the interests of all our shareholders in everything we do.
In our last report, we announced that your fund's advisor, Columbia Management
Advisors, Inc., and your fund's distributor, Columbia Funds Distributor, Inc.,
had reached an agreement with the Securities and Exchange Commission and the
New York Attorney General to settle charges involving market timing in some of
our mutual funds. We want to reassure you that the settlement and all associated
legal fees will be paid by Columbia Management, not by the affected funds or
their shareholders.
Recently the Securities and Exchange Commission has adopted new rules regarding
mutual fund governance. We think it is important for you to know that Columbia
Management complied with the majority of these rules well before they were
adopted. Your fund's Board of Trustees has taken the following important steps
to strengthen its capacity to oversee your fund and to comply with SEC rules.
- - THE BOARD OF TRUSTEES APPOINTED MARY JOAN HOENE AS CHIEF COMPLIANCE OFFICER
OF COLUMBIA FUNDS. IN THIS ROLE, MS. HOENE WILL REPORT DIRECTLY TO THE BOARD
OF TRUSTEES AND WILL WORK WITH THE BOARD OF TRUSTEES AS WELL AS THE SENIOR
LEADERSHIP OF COLUMBIA MANAGEMENT, THE INVESTMENT MANAGEMENT ARM OF BANK OF
AMERICA, AND WITH BANK OF AMERICA'S PRINCIPAL COMPLIANCE EXECUTIVES. SHE WILL
FOCUS ON THE OVERALL COMPLIANCE PROGRAM OF THE FUNDS AND THE RESPONSIBILITY
AND PERFORMANCE OF THE FUND'S SERVICE PROVIDERS.
PRIOR TO HER APPOINTMENT, MS. HOENE WAS A PARTNER IN THE LAW FIRM OF CARTER,
LEDYARD & MILBURN, LLP. PREVIOUSLY SHE ALSO SERVED AS ASSOCIATE DIRECTOR AND
DEPUTY DIRECTOR FOR THE SECURITIES AND EXCHANGE COMMISSION DIVISION OF
INVESTMENT MANAGEMENT. AS AN ACTIVE ADVISOR, MS. HOENE HAS HELPED SEVERAL
FUND BOARDS DEVELOP INDEPENDENT BOARD PRACTICES. THE BOARD IS PLEASED TO HAVE
MS. HOENE, WITH HER BROAD AND EXTENSIVE EXPERIENCE, IN THIS IMPORTANT NEW
POSITION.
- - THE BOARD OF TRUSTEES HAS ESTABLISHED OPERATIONAL GUIDELINES THAT RESULT IN
STRONGER, MORE VIGILANT TRUSTEESHIP ACROSS THE ENTIRE COLUMBIA MANAGEMENT
ORGANIZATION. BOARD COMMITTEES HAVE BEEN ESTABLISHED TO OVERSEE PRODUCTS BY
FUND CATEGORY, ALLOWING FOR GREATER SPECIALIZATION AMONG BOARD TRUSTEES.
SHAREHOLDERS WILL ELECT BOARD MEMBERS EVERY FIVE YEARS, BEGINNING IN 2005.
- - IN ADDITION TO ENHANCEMENTS TO OVERSIGHT WITHIN COLUMBIA MANAGEMENT, OUR
PARENT COMPANY -- BANK OF AMERICA -- HAS ALSO INCREASED THE ROLE THAT SUCH
PROFESSIONALS PLAY WITHIN THE BROADER ORGANIZATION. A CHIEF COMPLIANCE
OFFICER HAS BEEN NAMED TO REPORT DIRECTLY TO KEN LEWIS, BANK OF AMERICA'S
CHIEF EXECUTIVE OFFICER. BANK OF AMERICA HAS ALSO ADOPTED A CORPORATE CODE OF
ETHICS COMMITTEE, AN INTERNAL COMPLIANCE CONTROLS COMMITTEE AND A REGULATORY
IMPLEMENTATION GROUP TO ENSURE FULL ALIGNMENT AND EXECUTION OF REMEDIAL
ACTIONS AND BEST PRACTICES ACROSS THE COMPANY.
In the pages that follow, you'll find a discussion of the economic environment
during the period, followed by a detailed report from the fund's manager on key
factors that influenced performance. This report is rich in information, and you
should discuss it with your financial advisor if you have questions.
We are committed to providing quality products and services to our shareholders,
strengthening your confidence in us, and working hard to help you achieve
financial success. It is a privilege to play a role in your financial future,
and we value your business. Thank you for choosing Columbia Management.
Sincerely,
/s/ Christopher Wilson
Christopher Wilson
HEAD OF MUTUAL FUNDS, COLUMBIA MANAGEMENT
Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible
for the day-to-day delivery of mutual fund services to the firm's investors.
With the exception of distribution, Chris oversees all aspects of the mutual
fund services operation, including treasury, investment accounting and
shareholder and broker services. Chris serves as Columbia Management's chief
liaison to the mutual fund boards of trustees.
Chris joined Bank of America in August 2004.
<Page>
FUND PROFILE
COLUMBIA INTERMEDIATE BOND 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.
PORTFOLIO STRUCTURE AS OF 09/30/04 (%)
<Table>
Corporate fixed-income bonds & notes 61.8
Mortgage-backed securities 16.5
Asset-backed securities 8.9
Government agencies & obligations 6.3
Collateralized mortgage obligations 3.8
Cash equivalents, net other
assets & liabilities 2.7
</Table>
QUALITY BREAKDOWNS AS OF 09/30/04 (%)
<Table>
AAA 37.6
AA 6.2
A 23.5
BBB 21.4
BB & lower 11.2
Non-Rated 0.1
</Table>
[CHART]
MATURITY BREAKDOWN AS OF 09/30/04 (%)
<Table>
0-1 Year 5.4
1-5 Years 51.7
5-10 Years 30.7
10-20 Years 4.7
Over 20 Years 7.5
</Table>
Portfolio structure is calculated as a percentage of net assets. Quality and
maturity breakdowns are calculated as a percentage of total investments.
Ratings shown in the quality breakdown represent the highest rating assigned
to a particular bond by one of the following nationally-recognized rating
agencies: Standard & Poor's Corporation, Moody's Investors Service, Inc. or
Fitch Ratings Ltd.
(C)2004 Morningstar, Inc. All Rights Reserved. The information contained
herein: (1) is proprietary to Morningstar and/or its content providers; (2)
may not be copied or distributed; and (3) is not warranted to be accurate,
complete or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this
information. Past performance is no guarantee of future results.
The Morningstar Style Box(TM)reveals a fund's investment strategy. For equity
funds the vertical axis shows the market capitalization of the stocks owned
and the horizontal axis shows investment style (value, blend or growth). For
fixed-income funds the vertical axis shows the average credit quality of the
bonds owned, and the horizontal axis shows interest rate sensitivity as
measured by a bond's duration (short, intermediate or long). All of these
numbers are drawn from the data most recently provided by the fund and
entered into Morningstar's database as of month-end. Although the data are
gathered from reliable sources, Morningstar cannot guarantee completeness and
accuracy. As of 09/30/2004.
[SIDENOTE]
SUMMARY
- - FOR THE SIX-MONTH PERIOD ENDED SEPTEMBER 30, 2004, THE FUND'S CLASS A SHARES
RETURNED 0.71% WITHOUT SALES CHARGE.
- - THE FUND OUTPERFORMED ITS BENCHMARK, THE LEHMAN BROTHERS AGGREGATE BOND
INDEX, AND THE AVERAGE RETURN OF ITS PEER GROUP, THE LIPPER INTERMEDIATE
INVESTMENT GRADE DEBT CATEGORY.
- - THE FUND'S SIGNIFICANT COMMITMENT TO LOWER QUALITY, BBB-RATED INVESTMENT
GRADE BONDS AND HIGH-YIELD CORPORATE BONDS DROVE PERFORMANCE IN A MARKET THAT
REWARDED RISK-TAKERS. ALLOCATIONS TO STRONG-PERFORMING MORTGAGE AND
ASSET-BACKED SECTORS ALSO HELPED PERFORMANCE, AS DID REDUCED EXPOSURE TO
GOVERNMENT SECURITIES.
[CHART]
<Table>
CLASS A SHARES 0.71%
LEHMAN BROTHERS AGGREGATE BOND INDEX 0.68%
</Table>
OBJECTIVE
Seeks total return by investing for a high level of current income and
opportunities for capital appreciation
TOTAL NET ASSETS
$1,072.0 million
MORNINGSTAR STYLE BOX
[GRAPHIC]
1
<Page>
PERFORMANCE INFORMATION
COLUMBIA INTERMEDIATE BOND FUND
[CHART]
VALUE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04
<Table>
<Caption>
CLASS A SHARES CLASS A SHARES LEHMAN BROTHERS AGGREGATE
WITHOUT SALES CHARGE WITH SALES CHARGE BOND INDEX
10/1/1994 $ 10,000 $ 9,525 $ 10,000
10/31/1994 $ 9,985 $ 9,511 $ 9,991
11/30/1994 $ 9,922 $ 9,451 $ 9,969
12/31/1994 $ 9,972 $ 9,498 $ 10,038
1/31/1995 $ 10,119 $ 9,639 $ 10,237
2/28/1995 $ 10,325 $ 9,834 $ 10,480
3/31/1995 $ 10,389 $ 9,895 $ 10,544
4/30/1995 $ 10,537 $ 10,037 $ 10,692
5/31/1995 $ 10,850 $ 10,335 $ 11,106
6/30/1995 $ 10,934 $ 10,414 $ 11,187
7/31/1995 $ 10,932 $ 10,412 $ 11,162
8/31/1995 $ 11,082 $ 10,556 $ 11,297
9/30/1995 $ 11,181 $ 10,650 $ 11,407
10/31/1995 $ 11,307 $ 10,770 $ 11,555
11/30/1995 $ 11,486 $ 10,941 $ 11,728
12/31/1995 $ 11,654 $ 11,100 $ 11,892
1/31/1996 $ 11,770 $ 11,211 $ 11,971
2/29/1996 $ 11,584 $ 11,034 $ 11,763
3/31/1996 $ 11,504 $ 10,958 $ 11,680
4/30/1996 $ 11,435 $ 10,892 $ 11,615
5/31/1996 $ 11,435 $ 10,892 $ 11,592
6/30/1996 $ 11,568 $ 11,019 $ 11,747
7/31/1996 $ 11,621 $ 11,069 $ 11,779
8/31/1996 $ 11,618 $ 11,066 $ 11,759
9/30/1996 $ 11,807 $ 11,246 $ 11,963
10/31/1996 $ 12,042 $ 11,470 $ 12,229
11/30/1996 $ 12,275 $ 11,691 $ 12,438
12/31/1996 $ 12,181 $ 11,603 $ 12,322
1/31/1997 $ 12,254 $ 11,672 $ 12,360
2/28/1997 $ 12,294 $ 11,710 $ 12,391
3/31/1997 $ 12,153 $ 11,576 $ 12,254
4/30/1997 $ 12,339 $ 11,753 $ 12,438
5/31/1997 $ 12,471 $ 11,879 $ 12,556
6/30/1997 $ 12,646 $ 12,045 $ 12,705
7/31/1997 $ 13,005 $ 12,387 $ 13,048
8/31/1997 $ 12,870 $ 12,259 $ 12,937
9/30/1997 $ 13,051 $ 12,431 $ 13,128
10/31/1997 $ 13,179 $ 12,553 $ 13,318
11/30/1997 $ 13,231 $ 12,602 $ 13,379
12/31/1997 $ 13,317 $ 12,684 $ 13,514
1/31/1998 $ 13,491 $ 12,850 $ 13,687
2/28/1998 $ 13,517 $ 12,875 $ 13,676
3/31/1998 $ 13,590 $ 12,944 $ 13,723
4/30/1998 $ 13,660 $ 13,011 $ 13,794
5/31/1998 $ 13,779 $ 13,125 $ 13,925
6/30/1998 $ 13,851 $ 13,193 $ 14,044
7/31/1998 $ 13,883 $ 13,223 $ 14,073
8/31/1998 $ 13,816 $ 13,160 $ 14,302
9/30/1998 $ 14,106 $ 13,436 $ 14,637
10/31/1998 $ 13,882 $ 13,223 $ 14,560
11/30/1998 $ 14,096 $ 13,426 $ 14,643
12/31/1998 $ 14,172 $ 13,499 $ 14,686
1/31/1999 $ 14,319 $ 13,639 $ 14,791
2/28/1999 $ 14,134 $ 13,463 $ 14,532
3/31/1999 $ 14,294 $ 13,615 $ 14,612
4/30/1999 $ 14,356 $ 13,674 $ 14,659
5/31/1999 $ 14,258 $ 13,581 $ 14,530
6/30/1999 $ 14,211 $ 13,536 $ 14,483
7/31/1999 $ 14,212 $ 13,537 $ 14,421
8/31/1999 $ 14,208 $ 13,533 $ 14,414
9/30/1999 $ 14,352 $ 13,670 $ 14,581
10/31/1999 $ 14,369 $ 13,686 $ 14,635
11/30/1999 $ 14,400 $ 13,716 $ 14,633
12/31/1999 $ 14,352 $ 13,670 $ 14,563
1/31/2000 $ 14,382 $ 13,699 $ 14,515
2/29/2000 $ 14,530 $ 13,840 $ 14,691
3/31/2000 $ 14,677 $ 13,979 $ 14,885
4/30/2000 $ 14,587 $ 13,894 $ 14,841
5/31/2000 $ 14,505 $ 13,816 $ 14,834
6/30/2000 $ 14,868 $ 14,162 $ 15,142
7/31/2000 $ 15,030 $ 14,316 $ 15,280
8/31/2000 $ 15,266 $ 14,541 $ 15,502
9/30/2000 $ 15,411 $ 14,679 $ 15,600
10/31/2000 $ 15,433 $ 14,700 $ 15,702
11/30/2000 $ 15,595 $ 14,854 $ 15,960
12/31/2000 $ 15,874 $ 15,120 $ 16,257
1/31/2001 $ 16,256 $ 15,484 $ 16,523
2/28/2001 $ 16,451 $ 15,670 $ 16,667
3/31/2001 $ 16,562 $ 15,775 $ 16,751
4/30/2001 $ 16,519 $ 15,734 $ 16,680
5/31/2001 $ 16,722 $ 15,927 $ 16,780
6/30/2001 $ 16,732 $ 15,937 $ 16,844
7/31/2001 $ 17,122 $ 16,308 $ 17,221
8/31/2001 $ 17,343 $ 16,519 $ 17,419
9/30/2001 $ 17,162 $ 16,347 $ 17,623
10/31/2001 $ 17,404 $ 16,577 $ 17,992
11/30/2001 $ 17,395 $ 16,569 $ 17,743
12/31/2001 $ 17,308 $ 16,486 $ 17,630
1/31/2002 $ 17,442 $ 16,613 $ 17,772
2/28/2002 $ 17,536 $ 16,703 $ 17,945
3/31/2002 $ 17,413 $ 16,586 $ 17,647
4/30/2002 $ 17,568 $ 16,734 $ 17,989
5/31/2002 $ 17,739 $ 16,896 $ 18,142
6/30/2002 $ 17,584 $ 16,749 $ 18,298
7/31/2002 $ 17,449 $ 16,620 $ 18,520
8/31/2002 $ 17,719 $ 16,878 $ 18,833
9/30/2002 $ 17,803 $ 16,957 $ 19,138
10/31/2002 $ 17,580 $ 16,745 $ 19,050
11/30/2002 $ 17,849 $ 17,001 $ 19,044
12/31/2002 $ 18,242 $ 17,375 $ 19,438
1/31/2003 $ 18,326 $ 17,455 $ 19,456
2/28/2003 $ 18,593 $ 17,710 $ 19,724
3/31/2003 $ 18,653 $ 17,767 $ 19,708
4/30/2003 $ 18,985 $ 18,083 $ 19,872
5/31/2003 $ 19,444 $ 18,521 $ 20,242
6/30/2003 $ 19,526 $ 18,598 $ 20,201
7/31/2003 $ 19,049 $ 18,145 $ 19,522
8/31/2003 $ 19,105 $ 18,197 $ 19,651
9/30/2003 $ 19,653 $ 18,719 $ 20,172
10/31/2003 $ 19,621 $ 18,689 $ 19,984
11/30/2003 $ 19,720 $ 18,783 $ 20,032
12/31/2003 $ 19,927 $ 18,980 $ 20,237
1/31/2004 $ 20,134 $ 19,177 $ 20,399
2/29/2004 $ 20,277 $ 19,314 $ 20,619
3/31/2004 $ 20,421 $ 19,451 $ 20,774
4/30/2004 $ 19,992 $ 19,042 $ 20,233
5/31/2004 $ 19,828 $ 18,886 $ 20,152
6/30/2004 $ 19,929 $ 18,982 $ 20,267
7/31/2004 $ 20,120 $ 19,165 $ 20,468
8/31/2004 $ 20,491 $ 19,517 $ 20,859
9/30/2004 $ 20,551 $ 19,568 $ 20,918
</Table>
The graph and table do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. The Lehman
Brothers Aggregate Bond Index is a market value-weighted index that tracks the
daily price, coupon, pay-downs and total return performance of fixed-rate,
publicly placed, dollar-denominated and non-convertible investment grade debt
issues with at least $250 million par amount outstanding and with at least one
year to final maturity. Unlike the fund, indices are not investments, do not
incur fees or expenses and are not professionally managed. It is not possible to
invest directly in an index. Securities in the fund may not match those in an
index.
AVERAGE ANNUAL TOTAL RETURN AS OF 09/30/04 (%)
<Table>
<Caption>
SHARE CLASS A B C Z
- -----------------------------------------------------------------------------------------------
INCEPTION 07/31/00 02/01/02 02/01/02 12/05/78
- -----------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
- -----------------------------------------------------------------------------------------------
6-month (Cumulative) 0.71 -4.05 0.33 -4.59 0.41 -0.58 0.83
1-year 4.66 -0.36 3.88 -1.12 4.03 3.03 4.92
5-year 7.45 6.41 7.03 6.72 7.11 7.11 7.69
10-year 7.47 6.94 7.26 7.26 7.30 7.30 7.59
</Table>
THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF
4.75% FOR CLASS A SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR
CLASS B SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE
"WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF
THEY HAD, RETURNS WOULD BE LOWER.
ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD
AT NET ASSET VALUE WITH NO RULE 12b-1 FEES. PERFORMANCE FOR DIFFERENT SHARE
CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH
EACH CLASS.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Class A, class B and class C are newer classes of shares. Class A performance
information includes returns of the fund's class Z shares (the oldest existing
fund class) for periods prior to its inception. Class B and class C performance
information includes returns of the fund's class A shares for the period from
July 31, 2000 through February 1, 2002 and for periods prior thereto, the fund's
class Z shares (the oldest existing fund class). These returns have not been
restated to reflect any differences in expenses (such as Rule 12b-1 fees)
between class Z shares and the newer classes of shares. If differences in
expenses had been reflected, the returns shown for periods prior to the
inception of the newer classes of shares would have been lower, since the newer
classes of shares are subject to a Rule 12b-1 fee. Class A shares were initially
offered on July 31, 2000, class B and class C shares were initially offered on
February 1, 2002, and class Z shares were initially offered on December 5,
1978.
[SIDENOTE]
PERFORMANCE OF A $10,000 INVESTMENT 10/01/94 - 09/30/04 ($)
<Table>
<Caption>
SALES CHARGE: WITHOUT WITH
- --------------------------------------------
Class A 20,551 19,568
Class B 20,147 20,147
Class C 20,227 20,227
Class Z 20,780 N/A
</Table>
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than the original cost. Please visit
www.columbiafunds.com for daily and most recent month-end performance updates.
2
<Page>
UNDERSTANDING YOUR EXPENSES
COLUMBIA INTERMEDIATE BOND FUND
As a fund shareholder, you incur two types of costs. There are transaction
costs, which generally include sales charges on purchases and may include
redemption or exchange fees. There are also continuing costs, which generally
include investment advisory and/or Rule 12b-1 fees, and other fund expenses. The
information on this page is intended to help you understand your ongoing costs
of investing in the fund and to compare this cost with the continuing costs of
investing in other mutual funds.
ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS
To illustrate these ongoing costs, we have provided an example and calculated
the expenses paid by investors in each share class during the reporting period.
The information in the following table is based on an initial investment of
$1,000, which is invested at the beginning of the reporting period and held for
the entire period. Expense information is calculated two ways and each method
provides you with different information. The amount listed in the "actual"
column is calculated using the fund's actual operating expenses and total return
for the period. The amount listed in the "hypothetical" column for each share
class assumes that the return each year is 5% before expenses and includes the
fund's actual expense ratio. You should not use the hypothetical account values
and expenses to estimate either your actual account balance at the end of the
period or the expenses you paid during this reporting period.
APRIL 1, 2004 - SEPTEMBER 30, 2004
<Table>
<Caption>
ACCOUNT VALUE AT THE ACCOUNT VALUE AT THE EXPENSES PAID FUND'S ANNUALIZED
BEGINNING OF THE PERIOD ($) END OF THE PERIOD ($) DURING THE PERIOD ($) EXPENSE RATIO (%)
- ---------------------------------------------------------------------------------------------------------------
ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL
- ---------------------------------------------------------------------------------------------------------------
Class A 1,000.00 1,000.00 1,007.47 1,020.41 4.68 4.71 0.93
Class B 1,000.00 1,000.00 1,003.71 1,016.65 8.44 8.49 1.68
Class C 1,000.00 1,000.00 1,004.46 1,017.40 7.69 7.74 1.53
Class Z 1,000.00 1,000.00 1,008.72 1,021.66 3.42 3.45 0.68
</Table>
Expenses paid during the period are equal to the fund's annualized expense
ratio, multiplied by the average account value over the period, then multiplied
by the number of days in the fund's most recent fiscal half-year and divided by
365.
Had the distributor not waived a portion of class A and class C shares'
expenses, class A and class C shares' total return would have been reduced.
It is important to note that the expense amounts shown in the table are meant to
highlight only continuing costs of investing in the fund and do not reflect any
transactional costs, such as sales charges, redemption or exchange fees.
Therefore, the hypothetical examples provided will not help you determine the
relative total costs of owning different funds. If these transactional costs
were included, your costs would have been higher.
COMPARE WITH OTHER FUNDS
Since all mutual fund companies are required to include the same hypothetical
calculations about expenses in shareholder reports, you can use this information
to compare the ongoing cost of investing in the fund with other funds. To do so,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical
examples of other fund companies, it is important to note that hypothetical
examples are meant to highlight the continuing cost of investing in a fund and
do not reflect any transactional costs, such as sales charges or redemption or
exchange fees.
[SIDENOTE]
ESTIMATING YOUR ACTUAL EXPENSES
To estimate the expenses that you paid over the period, first you will need your
account balance at the end of the period:
- - FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM COLUMBIA FUNDS
SERVICES, INC., YOUR ACCOUNT BALANCE IS AVAILABLE ONLINE AT
www.columbiafunds.com OR BY CALLING SHAREHOLDER SERVICES AT 800.345.6611
- - FOR SHAREHOLDERS WHO RECEIVE THEIR ACCOUNT STATEMENTS FROM THEIR BROKERAGE
FIRM, CONTACT YOUR BROKERAGE FIRM TO OBTAIN YOUR ACCOUNT BALANCE
1. DIVIDE YOUR ENDING ACCOUNT BALANCE BY $1,000. FOR EXAMPLE, IF AN ACCOUNT
BALANCE WAS $8,600 AT THE END OF THE PERIOD, THE RESULT WOULD BE 8.6
2. IN THE SECTION OF THE TABLE BELOW TITLED "EXPENSES PAID DURING THE PERIOD,"
LOCATE THE AMOUNT FOR YOUR SHARE CLASS. YOU WILL FIND THIS NUMBER IS IN THE
COLUMN LABELED "ACTUAL." MULTIPLY THIS NUMBER BY THE RESULT FROM STEP 1. YOUR
ANSWER IS AN ESTIMATE OF THE EXPENSES YOU PAID ON YOUR ACCOUNT DURING THE
PERIOD
3
<Page>
ECONOMIC UPDATE
COLUMBIA INTERMEDIATE BOND FUND
During the six-month period that began April 1, 2004, and ended September 30,
2004, the US economy continued to grow at a healthy pace, despite uncertainty
about job growth, rising energy prices and a slowdown in consumer spending. The
economy encountered a soft patch in the spring, as the rate of growth slowed
from 4.5% to 3.3%, but data for the summer months suggested that it picked up
again in the third quarter.
Job growth dominated the economic news. More than one million jobs were created
between March and June, and consumer confidence soared to its highest level in
two years. However, job growth fell below expectations in July and August and
consumer confidence fell. According to the Labor Department's payroll survey,
the job market has not fully recovered from the losses incurred during the
economic downturn of 2000-2001, and that has left consumers cautious about the
months ahead.
Consumer spending held up in the first half of the period, as last year's tax
rebates and tax cuts continued to work their way into household budgets. Even
when consumer spending declined during the summer, housing activity remained
strong. Also, the business sector stepped into the gap created by sagging
consumer spending. Industrial production rose; factories utilized more of their
capacity; and spending on technology, capital equipment and construction picked
up.
BONDS EKE OUT A POSITIVE RETURN
Early in the period, the US bond market was beset with volatility. Bond prices
fell and yields rose when job growth picked up in the spring and investors began
to anticipate higher short-term interest rates. However, a shaky stock market,
higher energy prices and some mixed economic data gave the bond market a boost
in the last thee months of the period. The 10-year Treasury yield ended the
period at 4.1%, very close to where it started. In this environment, the Lehman
Brothers Aggregate Bond Index returned 0.68%.
High-yield bonds, which can be less sensitive to changing interest rates, gained
3.72%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. A
relatively strong economy improved credit quality and the sector's high yields
attracted investors seeking income. Municipal and mortgage bonds rose more than
1.4% for the period, outperforming Treasury bonds.(1)
STOCKS STAND STILL
Despite solid profit growth and a growing economy, the stock market failed to
advance during the reporting period. The S&P 500 Index returned negative 0.18%.
Leadership passed from small-cap stocks to mid- and large-cap stocks, and value
stocks continued to lead growth stocks. However, in the final month of the
period small- and mid-cap growth stocks bested their value counterparts. Energy
and real estate investment trusts were the best-performing sectors.
HIGHER SHORT TERM INTEREST RATES
After a year of the lowest short-term interest rates in recent history, the
Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term
rate, from 1.00% to 1.75% in three equal steps during the period. The Fed
indicated that it would continue to raise short-term interest rates at a
"measured pace," in an attempt to balance economic growth against inflationary
pressures. Because the Fed's moves were widely anticipated, these rate increases
have had little, if any, impact on the financial markets since they commenced.
(1) Lehman Brothers Municipal Bond Index; Merrill Lynch Mortgage Master Index.
[SIDENOTE]
SUMMARY FOR THE SIX-MONTH PERIOD ENDED SEPTEMBER 30, 2004
- - INVESTMENT-GRADE BONDS EKED OUT MODEST GAINS. THE LEHMAN BROTHERS AGGREGATE
BOND INDEX RETURNED 0.68%. HIGH-YIELD BONDS, WHICH CAN BE LESS SENSITIVE TO
CHANGING INTEREST RATES, LED THE FIXED INCOME MARKETS. THE MERRILL LYNCH US
HIGH YIELD, CASH PAY INDEX RETURNED 3.72%
[CHART]
<Table>
MERRILL LYNCH INDEX 3.72%
LEHMAN INDEX 0.68%
</Table>
- - STOCK PRICES WERE DOWN, AS MEASURED BY THE S&P 500 Index and the broader
Russell 3000 Index. The market retreated as a host of uncertainties unsettled
investors.
[CHART]
<Table>
S&P 500 INDEX -0.18%
RUSSELL 3000 INDEX -0.60%
</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 the performance of fixed-rate, publicly placed, dollar-denominated,
non-convertible investment-grade debt issues.
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held, large capitalization US stocks.
The Russell 3000 Index is an unmanaged index that tracks the performance of the
3,000 largest US companies based on total market capitalization.
4
<Page>
PORTFOLIO MANAGERS' REPORT
COLUMBIA INTERMEDIATE BOND FUND
For the six-month period ended September 30, 2004, class A shares of Columbia
Intermediate Bond Fund returned 0.71% without sales charge. The fund
outperformed its benchmark, the Lehman Brothers Aggregate Bond Index, which
posted a total return of 0.68% for the same period. The fund also beat its peer
group, the Lipper Intermediate Investment Grade Debt Category average, which was
0.41% for the period.(1) We believe that the fund's substantial position in
BBB-rated investment-grade corporate bonds, relative to its peer group and
benchmark, helped performance. High-yield issues, mortgages and asset-backed
securities also contributed to returns.
CORPORATE ISSUES BENEFITED FROM STEADY ECONOMIC GROWTH
The corporate sector continued to gain steam against the backdrop of a growing
US economy. As a result, yield-driven sectors of the bond market, including
investment-grade corporate and high-yield bonds, outperformed other fixed-income
alternatives. The portfolio's holdings are concentrated in investment grade
corporate bonds, which aided the fund's strong relative performance. The fund's
11% allocation in high-yield bonds also helped performance.
OIL AND UTILITIES ISSUES ENHANCED RESULTS
Surging commodity prices resulted in generous profit margins for oil refining
companies. Bonds of Chesapeake Energy and several dollar-denominated foreign
issues, including Russian oil producer Gazprom International and Mexican refiner
Pemex Project Funding Master Trust, benefited from this positive trend. The fund
owned these investment-grade holdings as part of a diversification strategy
designed to reduce exposure to the highly leveraged US economy.
Utility bonds also did well. The sector continues to enjoy easier access to
capital, which allowed companies to replace expensive debt with lower cost
borrowings. Faced with a changing regulatory environment, utility companies in
California enjoyed strong growth. Bonds of California-based Edison Mission
Energy prospered in this business environment. Hutchison Whampoa International,
a conglomerate with worldwide utility holdings listed on the Hong Kong exchange,
also performed well during the period, aided by an improving world economy and
China's powerful economic growth.
AUTO AND AIRLINE BONDS DETRACTED FROM RETURN
Bonds backed by commercial aircraft suffered during the period as airline
operating costs rose. However, we decided to retain these issues because the
bonds are backed by the underlying value of the airplanes owned by these
companies. Also, airline bonds have historically tended to perform well in a
rising interest rate environment.
We reduced the fund's exposure to the auto sector as the production cycle slowed
and the price of materials used in the manufacturing
(1) Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
[SIDENOTE]
NET ASSET VALUE PER SHARE AS OF 09/30/04 ($)
<Table>
Class A 9.12
Class B 9.12
Class C 9.12
Class Z 9.12
</Table>
DISTRIBUTIONS DECLARED PER SHARE 04/01/04 - 09/30/04 ($)
<Table>
Class A 0.21
Class B 0.18
Class C 0.18
Class Z 0.22
</Table>
SEC YIELDS AS OF 09/30/04 (%)
<Table>
Class A 3.71
Class B 3.14
Class C 3.29
Class Z 4.14
</Table>
The 30-day SEC yields reflect the portfolio's earning power net of expenses,
expressed as an annualized percentage of the public offering price at the end of
the period.
HOLDINGS DISCUSSED IN THIS REPORT AS OF 09/30/04 (%)
<Table>
Chesapeake Energy Corp. 0.2
Gazprom International SA 0.9
Pemex Project Funding Master Trust 0.6
Edison Mission Energy 0.1
Hutchison Whampoa International Ltd. 1.0
</Table>
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
5
<Page>
process rose. We also lightened holdings in the health care sector based on our
concerns that these issues may be overvalued.
MORTGAGES AND ASSET-BACKED SECURITIES AIDED PERFORMANCE
With over 15% of the portfolio allocated to mortgage bonds and 9% in
asset-backed securities, shareholders benefited from strength in both market
segments during the period. The fund's return was also helped by our decision to
allocate only a small portion of assets to government securities, which were the
period's weakest performers.
POSITIONED FOR A GROWING ECONOMY
Although corporate bonds are expensive by historical standards, we believe that
the yield-oriented sectors of the bond market have additional return potential
if the economy remains strong. The fund's substantial allocations in BBB-rated
investment-grade and high-yield corporate issues reflects that view. The fund
also continues to hold a smaller commitment to mortgages and asset-backed
securities on the expectation that these sectors have the potential to continue
to outperform government securities. However, we believe that investment-grade
corporate bonds are likely to continue to drive the portfolio's returns.
Thomas LaPointe has co-managed the Columbia Intermediate Bond Fund since March
2003 and has been with the advisor and its predecessors or affiliate
organizations since 1999.
/s/ Thomas LaPointe
Mark E. Newlin is the lead manager for the fund. He has co-managed the fund
since May 2004 and has been with the advisor and its predecessors or affiliate
organizations since 2003.
/s/ Mark E. Newlin
Steven P. Luetger has co-managed the fund since May 2004 and has been with the
advisor and its predecessors or affiliate organizations since 1978.
/s/ Steven P. Luetger
Investing in high-yield bonds involves greater credit and other risks not
associated with investing in higher-quality bonds. Bond investing also involves
interest rate risk, which means that bond prices may change as interest rates
increase or decrease. Foreign investments involve market, political, accounting
and currency risks not associated with other investments.
[SIDENOTE]
WE BELIEVE THAT THE FUND'S SUBSTANTIAL ALLOCATIONS IN BBB-RATED INVESTMENT-GRADE
AND HIGH-YIELD CORPORATE ISSUES HAVE THE POTENTIAL TO CONTINUE TO DO WELL IF THE
ECONOMY REMAINS STRONG.
6
<Page>
INVESTMENT PORTFOLIO
SEPTEMBER 30, 2004 (UNAUDITED) COLUMBIA INTERMEDIATE BOND FUND
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - 61.8%
BASIC MATERIALS - 3.7%
CHEMICALS - 1.8%
Dow Chemical Co. 5.750% 11/15/09 6,000,000 6,407,940
Eastman Chemical Co. 3.250% 06/15/08 2,750,000 2,691,288
6.300% 11/15/18 6,000,000 6,422,940
Lyondell Chemical Co. 9.625% 05/01/07 2,000,000 2,170,000
NOVA Chemicals Corp. 6.500% 01/15/12 2,000,000 2,044,460
Chemicals Total 19,736,628
FOREST PRODUCTS & PAPER - 1.4%
Cascades, Inc. 7.250% 02/15/13 6,000,000 6,270,000
Georgia-Pacific Corp. 7.500% 05/15/06 3,000,000 3,172,500
Meadwestvaco Corp. 8.200% 01/15/30 4,000,000 4,758,360
Norske Skog Canada Ltd. 7.375% 03/01/14 1,000,000 1,040,000
Forest Products & Paper Total 15,240,860
MINING - 0.5%
Alcoa, Inc. 6.000% 01/15/12 5,000,000 5,470,000
Mining Total 5,470,000
--------------
BASIC MATERIALS TOTAL 40,447,488
COMMUNICATIONS - 5.4%
MEDIA - 3.6%
Comcast Cable Communications Holdings, Inc. 8.375% 03/15/13 8,500,000 10,272,590
CSC Holdings, Inc. 6.750% 04/15/12 (a) 500,000 502,500
7.625% 04/01/11 1,500,000 1,575,000
7.875% 02/15/18 1,250,000 1,296,875
EchoStar DBS Corp. 6.375% 10/01/11 1,500,000 1,515,000
Liberty Media Corp. 3.380% 09/17/06 (b) 11,000,000 11,129,800
Viacom, Inc. 7.700% 07/30/10 6,500,000 7,544,745
7.750% 06/01/05 5,000,000 5,169,100
Media Total 39,005,610
TELECOMMUNICATIONS - 1.8%
MCI, Inc. 5.908% 05/01/07 238,000 235,917
6.688% 05/01/09 238,000 229,075
7.735% 05/01/14 204,000 192,780
Nextel Communications, Inc. 7.375% 08/01/15 2,000,000 2,145,000
Qwest Corp. 9.125% 03/15/12 (a) 1,500,000 1,653,750
</Table>
See Accompanying Notes to Financial Statements.
7
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
COMMUNICATIONS - (CONTINUED)
TELECOMMUNICATIONS - (CONTINUED)
Rogers Cantel, Inc. 9.750% 06/01/16 2,000,000 2,240,000
Sprint Capital Corp. 6.125% 11/15/08 3,800,000 4,103,924
8.750% 03/15/32 1,500,000 1,903,815
Telefonos de Mexico SA de CV 4.500% 11/19/08 6,000,000 5,996,760
Telecommunications Total 18,701,021
--------------
COMMUNICATIONS TOTAL 57,706,631
CONSUMER CYCLICAL - 7.7%
AIRLINES - 2.9%
Air 2 US 8.027% 10/01/19 (a) 4,454,933 3,697,594
American Airlines, Inc. 7.024% 10/15/09 7,000,000 6,877,500
Continental Airlines, Inc. 6.940% 10/15/13 1,423,333 1,330,816
7.461% 04/01/15 3,993,134 3,673,684
Delta Air Lines, Inc. 7.779% 11/18/05 3,000,000 1,200,000
Southwest Airlines Co. 5.496% 11/01/06 7,000,000 7,275,380
United Airlines, Inc. 7.186% 04/01/11 (c) 3,926,307 3,317,729
7.783% 01/01/14 (c) 2,843,628 2,367,320
9.200% 03/22/08 (d) 2,399,897 959,959
Airlines Total 30,699,982
APPAREL - 0.1%
Phillips-Van Heusen Corp. 7.250% 02/15/11 1,000,000 1,035,000
Apparel Total 1,035,000
AUTO MANUFACTURERS - 1.0%
DaimlerChrysler NA Holding Corp. 6.400% 05/15/06 8,000,000 8,428,880
Navistar International Corp. 7.500% 06/15/11 2,000,000 2,110,000
Auto Manufacturers Total 10,538,880
AUTO PARTS & EQUIPMENT - 0.4%
Dana Corp. 9.000% 08/15/11 3,200,000 3,856,000
Auto Parts & Equipment Total 3,856,000
ENTERTAINMENT - 0.3%
Mohegan Tribal Gaming Authority 7.125% 08/15/14 (a) 1,500,000 1,575,000
Seneca Gaming Corp. 7.250% 05/01/12 (a) 1,000,000 1,032,500
Steinway Musical Instruments, Inc. 8.750% 04/15/11 1,000,000 1,090,000
Entertainment Total 3,697,500
</Table>
See Accompanying Notes to Financial Statements.
8
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
CONSUMER CYCLICAL - (CONTINUED)
HOME BUILDERS - 0.3%
D.R. Horton, Inc. 9.750% 09/15/10 1,000,000 1,197,500
Standard-Pacific Corp. 9.250% 04/15/12 2,000,000 2,315,000
Home Builders Total 3,512,500
LEISURE TIME - 0.1%
K2, Inc. 7.375% 07/01/14 (a) 1,250,000 1,317,575
Leisure Time Total 1,317,575
LODGING - 1.2%
Caesars Entertainment, Inc. 8.125% 05/15/11 2,500,000 2,875,000
Hyatt Equities LLC 6.875% 06/15/07 (a) 5,000,000 5,294,850
MGM Mirage 8.375% 02/01/11 1,500,000 1,653,750
Station Casinos, Inc. 6.000% 04/01/12 1,000,000 1,022,500
6.875% 03/01/16 1,500,000 1,541,250
Lodging Total 12,387,350
OFFICE FURNISHINGS - 0.0%
Tempur-Pedic, Inc. 10.250% 08/15/10 317,000 360,588
Office Furnishings Total 360,588
RETAIL - 0.6%
Ferrellgas LP 6.750% 05/01/14 1,500,000 1,530,000
May Department Stores Co. 6.700% 07/15/34 (a) 3,200,000 3,300,256
Saks, Inc. 7.000% 12/01/13 1,594,000 1,629,865
Retail Total 6,460,121
TEXTILES - 0.8%
Cintas Corp. 5.125% 06/01/07 5,315,000 5,563,317
6.000% 06/01/12 3,250,000 3,546,887
Textiles Total 9,110,204
--------------
CONSUMER CYCLICAL TOTAL 82,975,700
CONSUMER NON-CYCLICAL - 3.7%
BEVERAGES - 0.2%
Constellation Brands, Inc. 8.125% 01/15/12 1,545,000 1,703,363
Beverages Total 1,703,363
BIOTECHNOLOGY - 0.2%
Bio-Rad Laboratories, Inc. 7.500% 08/15/13 2,000,000 2,145,000
Biotechnology Total 2,145,000
</Table>
See Accompanying Notes to Financial Statements.
9
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
CONSUMER NON-CYCLICAL - (CONTINUED)
FOOD - 0.9%
Cadbury-Schweppes PLC 3.875% 10/01/08 (a) 7,000,000 7,002,590
Delhaize America, Inc. 8.125% 04/15/11 1,000,000 1,148,140
Stater Brothers Holdings, Inc. 8.125% 06/15/12 (a) 1,000,000 1,045,000
Food Total 9,195,730
HEALTHCARE SERVICES - 1.7%
HCA, Inc. 6.950% 05/01/12 3,000,000 3,237,150
7.125% 06/01/06 5,000,000 5,273,450
7.875% 02/01/11 5,015,000 5,679,989
Tenet Healthcare Corp. 9.875% 07/01/14 (a) 4,250,000 4,441,250
Healthcare Services Total 18,631,839
PHARMACEUTICALS - 0.7%
Wyeth 6.450% 02/01/24 2,400,000 2,458,344
6.500% 02/01/34 5,000,000 5,104,800
Pharmaceuticals Total 7,563,144
-------------
CONSUMER NON-CYCLICAL TOTAL 39,239,076
DIVERSIFIED - 1.1%
HOLDING COMPANIES - 1.1%
Hutchison Whampoa International Ltd. 6.250% 01/24/14 (a) 10,500,000 10,705,485
Stena AB 7.500% 11/01/13 1,200,000 1,229,280
Holding Companies Total 11,934,765
-------------
DIVERSIFIED TOTAL 11,934,765
ENERGY - 5.4%
OIL & GAS - 5.0%
Amerada Hess Corp. 7.300% 08/15/31 7,500,000 8,144,700
Chesapeake Energy Corp. 7.500% 06/15/14 2,160,000 2,365,200
Coastal Corp. 7.750% 06/15/10 1,500,000 1,492,500
Gazprom International SA 7.201% 02/01/20 (a) 9,000,000 9,112,500
Nexen, Inc. 7.875% 03/15/32 5,250,000 6,491,205
Noble Drilling Corp. 7.500% 03/15/19 4,245,000 4,980,234
Pemex Project Funding Master Trust 7.875% 02/01/09 6,000,000 6,696,000
Petrobras International Finance Co. 9.750% 07/06/11 3,500,000 4,060,000
Pride International, Inc. 7.375% 07/15/14 (a) 1,500,000 1,642,500
</Table>
See Accompanying Notes to Financial Statements.
10
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
ENERGY - (CONTINUED)
OIL & GAS - (CONTINUED)
Ras Laffan Liquefied Natural Gas Co., Ltd. 3.437% 09/15/09 (a) 8,244,000 8,160,653
Oil & Gas Total 53,145,492
PIPELINES - 0.4%
Southern Natural Gas Co. 8.875% 03/15/10 2,000,000 2,250,000
Williams Companies, Inc. 8.125% 03/15/12 2,000,000 2,300,000
Pipelines Total 4,550,000
-------------
ENERGY TOTAL 57,695,492
FINANCIALS - 23.9%
BANKS - 4.8%
Bank One Corp. 6.000% 08/01/08 (e) 11,888,000 12,856,516
Barclays Bank PLC 7.375% 06/15/49 (a)(f) 5,000,000 5,736,300
HSBC Capital Funding LP 9.547% 12/31/49 (a)(f) 10,500,000 13,066,200
Popular North America Capital Trust I 6.564% 09/15/34 1,300,000 1,321,039
Popular North America, Inc. 6.125% 10/15/06 8,250,000 8,651,445
Rabobank Capital Funding II 5.260% 12/31/49 (a)(f) 9,500,000 9,576,570
Banks Total 51,208,070
DIVERSIFIED FINANCIAL SERVICES - 12.5%
Bear Stearns Companies, Inc. 4.000% 01/31/08 10,000,000 10,118,500
Capital One Bank 5.125% 02/15/14 6,650,000 6,607,506
Citicorp 8.040% 12/15/19 (a) 12,075,000 14,586,962
Countrywide Home Loans, Inc. 5.500% 08/01/06 7,500,000 7,815,525
Ford Motor Credit Co. 5.800% 01/12/09 4,650,000 4,808,193
7.000% 10/01/13 5,500,000 5,814,710
7.375% 02/01/11 1,600,000 1,741,184
Fund American Companies, Inc. 5.875% 05/15/13 4,250,000 4,351,618
General Electric Capital Corp. 5.375% 03/15/07 10,000,000 10,526,100
General Motors Acceptance Corp. 6.125% 01/22/08 3,500,000 3,683,715
6.150% 04/05/07 5,000,000 5,250,700
Household Finance Corp. 5.875% 02/01/09 8,200,000 8,822,790
International Lease Finance Corp. 6.375% 03/15/09 9,000,000 9,829,800
Jefferies Group, Inc. 7.750% 03/15/12 7,250,000 8,301,250
John Deere Capital Corp. 7.000% 03/15/12 9,000,000 10,408,860
</Table>
See Accompanying Notes to Financial Statements.
11
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
FINANCIALS - (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES - (CONTINUED)
LaBranche & Co., Inc. 11.000% 05/15/12 (a) 2,000,000 2,060,000
Morgan Stanley 6.100% 04/15/06 10,000,000 10,486,300
PF Export Receivables Master Trust 3.748% 06/01/13 (a) 3,176,063 3,088,689
UFJ Finance Aruba AEC 6.750% 07/15/13 5,150,000 5,732,723
Diversified Financial Services Total 134,035,125
INSURANCE - 2.4%
Florida Windstorm Underwriting Association 7.125% 02/25/19 (a) 4,425,000 5,195,525
Hartford Financial Services Group, Inc. 4.700% 09/01/07 4,000,000 4,132,280
Prudential Insurance Co. of America 7.650% 07/01/07 (a) 10,105,000 11,214,933
Travelers Property Casualty Corp. 3.750% 03/15/08 4,750,000 4,749,620
Insurance Total 25,292,358
INVESTMENT COMPANIES - 0.9%
Credit Suisse First Boston USA, Inc. 4.625% 01/15/08 2,000,000 2,072,020
5.875% 08/01/06 7,750,000 8,142,615
Investment Companies Total 10,214,635
REAL ESTATE - 1.7%
EOP Operating LP 8.375% 03/15/06 11,000,000 11,822,140
Forest City Enterprises, Inc. 7.625% 06/01/15 1,000,000 1,037,500
Prudential Property 7.125% 07/01/07 (a) 5,300,000 5,792,582
Real Estate Total 18,652,222
REAL ESTATE INVESTMENT TRUSTS - 0.8%
iStar Financial, Inc. 8.750% 08/15/08 4,800,000 5,468,592
La Quinta Properties, Inc. 7.000% 08/15/12 (a) 500,000 528,750
Thornburg Mortgage, Inc. 8.000% 05/15/13 2,500,000 2,600,000
Real Estate Investment Trusts Total 8,597,342
SAVINGS & LOANS - 0.8%
Washington Mutual Bank 6.875% 06/15/11 5,200,000 5,877,300
Western Financial Bank 9.625% 05/15/12 2,000,000 2,260,000
Savings & Loans Total 8,137,300
-------------
FINANCIALS TOTAL 256,137,052
</Table>
See Accompanying Notes to Financial Statements.
12
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
INDUSTRIALS - 2.5%
AEROSPACE & DEFENSE - 1.0%
Raytheon Co. 8.300% 03/01/10 7,000,000 8,344,000
Systems 2001 Asset Trust 6.664% 09/15/13 (a) 2,266,930 2,510,262
Aerospace & Defense Total 10,854,262
ELECTRONICS - 0.2%
Thomas & Betts Corp. 7.250% 06/01/13 2,000,000 2,166,000
Electronics Total 2,166,000
ENVIRONMENTAL CONTROL - 0.6%
Allied Waste North America, Inc. 8.875% 04/01/08 5,500,000 5,967,500
Environmental Control Total 5,967,500
MACHINERY DIVERSIFIED - 0.2%
Briggs & Stratton Corp. 8.875% 03/15/11 1,375,000 1,637,969
Machinery Diversified Total 1,637,969
METAL FABRICATE HARDWARE - 0.0%
Valmont Industries, Inc. 6.875% 05/01/14 (a) 500,000 515,000
Metal Fabricate Hardware Total 515,000
MISCELLANEOUS MANUFACTURING - 0.3%
SPX Corp. 7.500% 01/01/13 2,000,000 2,035,000
Trinity Industries, Inc. 6.500% 03/15/14 1,550,000 1,526,750
Miscellaneous Manufacturing Total 3,561,750
PACKAGING & CONTAINERS - 0.1%
Owens-Brockway Glass Container, Inc. 8.875% 02/15/09 1,000,000 1,087,500
Packaging & Containers Total 1,087,500
TRANSPORTATION - 0.1%
FedEx Corp. 7.530% 09/23/06 737,948 787,700
Transportation Total 787,700
-------------
INDUSTRIALS TOTAL 26,577,681
TECHNOLOGY - 0.6%
COMPUTERS - 0.6%
IBM Canada Credit Services Co. 3.750% 11/30/07 (a) 6,000,000 6,039,840
Computers Total 6,039,840
-------------
TECHNOLOGY TOTAL 6,039,840
</Table>
See Accompanying Notes to Financial Statements.
13
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - (CONTINUED)
UTILITIES - 7.8%
ELECTRIC - 7.8%
Calpine Corp. 8.500% 07/15/10 (a) 2,500,000 1,909,375
Edison Mission Energy 9.875% 04/15/11 1,100,000 1,281,500
FirstEnergy Corp. 5.500% 11/15/06 5,000,000 5,204,200
6.450% 11/15/11 4,500,000 4,908,285
FPL Energy American Wind LLC 6.639% 06/20/23 (a) 4,436,500 4,603,623
Kansas City Power & Light Co. 6.000% 03/15/07 10,000,000 10,527,300
MidAmerican Energy Co. 6.375% 06/15/06 244,000 257,888
MidAmerican Energy Holdings Co. 3.500% 05/15/08 5,310,000 5,224,084
4.625% 10/01/07 5,000,000 5,098,200
5.875% 10/01/12 7,000,000 7,388,080
MSW Energy Holdings LLC 8.500% 09/01/10 2,000,000 2,205,000
Nevada Power Co. 9.000% 08/15/13 2,000,000 2,305,000
Niagara Mohawk Power Corp. 8.875% 05/15/07 5,500,000 6,242,720
Northern States Power Co. 8.000% 08/28/12 3,750,000 4,580,137
Oglethorpe Power Corp. 6.974% 06/30/11 2,661,465 2,848,912
Pacific Gas & Electric Co. 6.050% 03/01/34 6,250,000 6,309,063
PSE&G Energy Holdings LLC 8.625% 02/15/08 2,000,000 2,205,000
South Point Energy Center LLC 8.400% 05/30/12 (a) 1,611,111 1,385,556
Southern Power Co. 6.250% 07/15/12 4,790,000 5,212,861
Tenaska Alabama II Partners LP 6.125% 03/30/23 (a) 3,410,929 3,569,060
Electric Total 83,265,844
------------
UTILITIES TOTAL 83,265,844
TOTAL CORPORATE FIXED-INCOME BONDS & NOTES
(COST OF $638,271,854) 662,019,569
</Table>
See Accompanying Notes to Financial Statements.
14
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES - 16.5%
Federal Home Loan Mortgage Corp. 4.500% 09/01/18 - 05/01/34 40,451,589 39,952,018
5.000% 04/01/34 9,877,445 9,792,082
6.500% 08/01/32 - 01/01/34 10,507,218 11,032,227
12.000% 07/01/20 359,722 404,876
Federal National Mortgage Association 4.500% 07/01/18 - 02/01/19 56,059,155 56,027,281
5.000% 12/25/15 - 06/01/18 39,060,977 39,740,448
5.500% 12/01/17 7,198,624 7,456,213
6.000% 04/01/09 - 03/01/24 3,512,805 3,685,757
6.500% 10/01/28 - 12/01/31 3,706,387 3,892,968
Government National Mortgage Association 4.750% 07/20/25 (b) 182,899 185,705
4.954% 04/16/31 (g) 4,300,000 4,300,000
8.000% 01/15/08 - 07/15/08 347,397 370,422
9.000% 06/15/16 - 10/15/16 29,387 33,023
TOTAL MORTGAGE-BACKED SECURITIES
(COST OF $172,877,586) 176,873,020
ASSET-BACKED SECURITIES - 8.9%
Bank One Issuance Trust 3.590% 05/17/10 5,000,000 5,053,600
4.160% 01/15/08 10,000,000 10,117,500
California Infrastructure 6.420% 12/26/09 10,000,000 10,836,000
Capital Auto Receivables Asset Trust 2.000% 11/15/07 5,600,000 5,541,610
Capital One Multi-Asset Execution Trust 3.650% 07/15/11 16,000,000 16,049,600
Cigno CBO Ltd. 6.460% 11/15/08 (a) 3,710,145 3,817,971
Citibank Credit Card Issuance Trust 2.500% 04/07/08 11,290,000 11,233,098
Diversified REIT Trust 6.780% 03/18/11 (a)(f) 5,000,000 5,460,059
Honda Auto Receivables Owner Trust 1.680% 11/21/06 10,000,000 9,965,400
MBNA Master Credit Card Trust 7.350% 07/16/07 10,000,000 10,190,000
Providian Gateway Master Trust 3.350% 09/15/11 (a) 7,500,000 7,483,594
TOTAL ASSET-BACKED SECURITIES
(COST OF $96,649,643) 95,748,432
</Table>
See Accompanying Notes to Financial Statements.
15
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCIES & OBLIGATIONS - 6.3%
FOREIGN GOVERNMENT BONDS - 1.4%
State of Qatar 9.750% 06/15/30 (a) 5,000,000 7,000,000
United Mexican States 6.750% 09/27/34 8,000,000 7,672,000
FOREIGN GOVERNMENT BONDS TOTAL 14,672,000
U.S. GOVERNMENT AGENCIES & OBLIGATIONS - 4.9%
Federal National Mortgage Association 5.000% 07/25/15 13,500,000 13,714,391
9.250% 03/25/18 260,388 285,552
U.S. Treasury Bond 5.375% 02/15/31 27,095,000 29,025,518
U.S. Treasury Note 4.000% 02/15/14 4,700,000 4,663,650
4.250% 08/15/14 5,100,000 5,153,392
U.S. GOVERNMENT AGENCIES & OBLIGATIONS TOTAL 52,842,503
TOTAL GOVERNMENT AGENCIES & OBLIGATIONS
(COST OF $64,168,493) 67,514,503
COLLATERALIZED MORTGAGE OBLIGATIONS - 3.8%
American Mortgage Trust 8.445% 09/27/22 34,093 30,684
First Union National Bank 5.585% 02/12/34 5,535,809 5,833,082
First Union National Bank 6.141% 02/12/34 8,000,000 8,766,320
GSMPS Mortgage Loan Trust 7.750% 09/19/27 (a) 1,843,969 2,011,350
LB-UBS Commercial Mortgage Trust 6.510% 12/15/26 5,000,000 5,573,350
Nomura Asset Securities Corp. 7.120% 04/13/39 6,255,000 6,612,223
Structured Asset Securities Corp. 1.980% 02/25/28 (h) 8,723,025 790,742
Wachovia Bank Commercial Mortgage Trust 3.990% 06/15/35 11,930,000 11,430,491
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(COST OF $39,574,694) 41,048,242
</Table>
See Accompanying Notes to Financial Statements.
16
<Page>
<Table>
<Caption>
PAR ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 2.0%
Repurchase agreement with State Street Bank &
Trust Co., dated 09/30/04, due 10/01/04 at 1.580%,
collateralized by U.S. Treasury Bonds with various
maturities to 11/15/21, market value $21,766,999
(repurchase proceeds $21,330,936) 21,330,000 21,330,000
TOTAL SHORT-TERM OBLIGATION
(COST OF $21,330,000) 21,330,000
TOTAL INVESTMENTS - 99.3%
(COST OF $1,032,872,270) (i) 1,064,533,766
OTHER ASSETS & LIABILITIES, NET - 0.7% 7,505,060
NET ASSETS - 100.0% 1,072,038,826
</Table>
NOTES TO INVESTMENT PORTFOLIO:
(a) Security exempt from registration pursuant to Rule 144A under the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
September 30, 2004, these securities amounted to $177,636,204, which
represents 16.6% of net assets.
(b) Floating rate note. The interest rate shown reflects the rate as of
September 30, 2004.
(c) The issuer has filed for bankruptcy protection under Chapter 11, and is in
default of certain debt covenants, however income is being accrued. As of
September 30, 2004, the value of these securities amounted to $5,685,049,
which represents 0.5% of net assets.
(d) The issuer has filed for bankruptcy protection under Chapter 11, and is in
default of certain debt covenants. Income is not being accrued. As of
September 30, 2004, the value of this security represents 0.1% of net
assets.
(e) A portion of the security with a market value of $1,943,402 pledged as
collateral for open futures contracts.
(f) Variable rate security. The interest rate shown reflects the rate as of
September 30, 2004.
(g) Security purchased on a delayed delivery basis.
(h) Accrued interest accumulates in the value of this security and is payable
at redemption.
(i) Cost for federal income tax purposes is $1,036,408,177.
As of September 30, 2004, the Fund held the following open short futures
contracts:
<Table>
<Caption>
AGGREGATE FACE EXPIRATION UNREALIZED
TYPE VALUE VALUE DATE DEPRECIATION
-----------------------------------------------------------------------------------------------
5-Year U.S. Treasury Notes $ 23,257,500 $ 23,238,298 Dec-2004 $ (19,202)
10-Year U.S. Treasury Notes 14,866,500 14,830,712 Dec-2004 (35,788)
--------------
$ (54,990)
--------------
</Table>
See Accompanying Notes to Financial Statements.
17
<Page>
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2004 (UNAUDITED) COLUMBIA INTERMEDIATE BOND FUND
<Table>
<Caption>
($)
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at cost 1,032,872,270
-------------
Investments, at value 1,064,533,766
Cash 1,080,839
Receivable for:
Investments sold 11,722,876
Fund shares sold 2,848,617
Interest 11,395,887
Futures variation margin 20,625
Deferred Trustees' compensation plan 11,886
-------------
Total Assets 1,091,614,496
LIABILITIES Payable for:
Investments purchased 12,020,064
Investments purchased on a delayed delivery basis 4,300,000
Fund shares repurchased 1,851,780
Distributions 598,572
Investment advisory fee 304,753
Administration fee 130,834
Transfer agent fee 142,417
Pricing and bookkeeping fees 21,239
Custody fee 4,400
Distribution and service fees 173,094
Deferred Trustees' fees 11,886
Other liabilities 16,631
-------------
Total Liabilities 19,575,670
NET ASSETS 1,072,038,826
COMPOSITION OF NET ASSETS Paid-in capital 1,052,942,015
Overdistributed net investment income (4,819,018)
Accumulated net realized loss (7,690,677)
Net unrealized appreciation (depreciation) on:
Investments 31,661,496
Futures contracts (54,990)
NET ASSETS 1,072,038,826
CLASS A Net assets 159,050,844
Shares outstanding 17,436,520
Net asset value per share 9.12(a)
Maximum offering price per share ($9.12/0.9525) 9.57(b)
CLASS B Net assets 97,278,897
Shares outstanding 10,664,828
Net asset value and offering price per share 9.12(a)
CLASS C Net assets 49,990,349
Shares outstanding 5,480,640
Net asset value and offering price per share 9.12(a)
CLASS Z Net assets 765,718,736
Shares outstanding 83,945,163
Net asset value, offering and redemption price
per share 9.12
</Table>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See Accompanying Notes to Financial Statements.
18
<Page>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2004 (UNAUDITED)
COLUMBIA INTERMEDIATE BOND FUND
<Table>
<Caption>
($)
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest (net of foreign taxes withheld of $4,851) 28,181,862
EXPENSES Investment advisory fee 1,859,098
Administration fee 804,206
Distribution fee:
Class A 75,409
Class B 370,623
Class C 197,293
Service fee:
Class A 188,426
Class B 123,542
Class C 65,782
Transfer agent fee 599,147
Pricing and bookkeeping fees 149,069
Trustees' fees 9,364
Custody fee 25,723
Non-recurring costs (See Note 7) 42,852
Other expenses 199,650
-------------
Total Operating Expenses 4,710,184
Fees waived by Distributor:
Class A (75,409)
Class C (39,416)
Custody earnings credit (2,322)
Non-recurring costs assumed by Investment Advisor (See Note 7) (42,852)
-------------
Net Expenses 4,550,185
-------------
Net Investment Income 23,631,677
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES CONTRACTS Net realized gain on:
Investments 310,439
Futures contracts 910,116
-------------
Net realized gain 1,220,555
Net change in unrealized appreciation/depreciation on:
Investments (19,140,694)
Futures contracts 948,817
-------------
Net change in unrealized appreciation/depreciation (18,191,877)
-------------
Net Loss (16,971,322)
-------------
Net Increase in Net Assets from Operations 6,660,355
</Table>
See Accompanying Notes to Financial Statements.
19
<Page>
STATEMENT OF CHANGES IN NET ASSETS
COLUMBIA INTERMEDIATE BOND FUND
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, JUNE 30,
INCREASE (DECREASE) IN NET ASSETS: 2004($) 2004(a)(b)($) 2003(C)($)
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS Net investment income 23,631,677 33,070,574 47,471,086
Net realized gain (loss) on
investments and futures contracts 1,220,555 12,432,924 (1,842,521)
Net change in unrealized
appreciation/depreciation on
investments and futures contracts (18,191,877) 951,538 50,393,482
-------------------------------------------
Net Increase from Operations 6,660,355 46,455,036 96,022,047
DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income:
Class A (3,517,738) (4,074,020) (3,487,025)
Class B (1,936,995) (3,054,628) (3,467,410)
Class C (1,072,145) (1,672,747) (1,549,430)
Class Z (18,928,639) (26,871,410) (40,839,542)
-------------------------------------------
Total Distributions
Declared to Shareholders (25,455,517) (35,672,805) (49,343,407)
SHARE TRANSACTIONS Class A:
Subscriptions 37,567,238 82,402,961 93,406,890
Distributions reinvested 3,181,978 3,517,373 2,883,981
Redemptions (26,053,667) (33,954,472) (40,046,836)
-------------------------------------------
Net Increase 14,695,549 51,965,862 56,244,035
Class B:
Subscriptions 5,214,857 18,062,576 83,003,613
Distributions reinvested 1,398,839 2,126,834 2,442,195
Redemptions (12,261,704) (20,373,050) (15,335,796)
-------------------------------------------
Net Increase (Decrease) (5,648,008) (183,640) 70,110,012
Class C:
Subscriptions 4,223,279 20,227,688 48,689,817
Distributions reinvested 689,117 1,011,442 974,767
Redemptions (12,821,953) (14,503,875) (11,862,809)
-------------------------------------------
Net Increase (Decrease) (7,909,557) 6,735,255 37,801,775
Class Z:
Subscriptions 133,850,678 234,474,636 269,095,613
Distributions reinvested 16,427,484 23,876,353 35,988,674
Redemptions (164,481,435) (190,223,570) (351,929,592)
-------------------------------------------
Net Increase (Decrease) (14,203,273) 68,127,419 (46,845,305)
Net Increase (Decrease) from
Share Transactions (13,065,289) 126,644,896 117,310,517
-------------------------------------------
Total Increase (Decrease)
in Net Assets (31,860,451) 137,427,127 163,989,157
NET ASSETS Beginning of period 1,103,899,277 966,472,150 802,482,993
End of period 1,072,038,826 1,103,899,277 966,472,150
Overdistributed net investment
income at end of period (4,819,018) (2,995,178) (2,007,917)
</Table>
(a) On October 13, 2003, the Liberty Intermediate Bond Fund was renamed
Columbia Intermediate Bond Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Effective July 29, 2002, Stein Roe Intermediate Bond Fund Class S shares
were redesignated Liberty Intermediate Bond Fund Class Z shares.
See Accompanying Notes to Financial Statements.
20
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, JUNE 30,
2004 2004(a)(b) 2003 (c)
- ---------------------------------------------------------------------------------------------------------------------------------
CHANGES IN SHARES Class A:
Subscriptions 4,158,528 9,023,912 10,637,329
Issued for distributions
reinvested 352,673 385,364 325,300
Redemptions (2,897,536) (3,713,540) (4,558,154)
------------- ------------ -----------
Net Increase 1,613,665 5,695,736 6,404,475
Class B:
Subscriptions 578,436 1,985,472 9,478,046
Issued for distributions
reinvested 155,071 233,459 275,656
Redemptions (1,361,228) (2,239,392) (1,735,505)
------------- ------------ -----------
Net Increase (Decrease) (627,721) (20,461) 8,018,197
Class C:
Subscriptions 467,533 2,219,854 5,533,514
Issued for distributions
reinvested 76,394 110,951 109,962
Redemptions (1,427,540) (1,594,157) (1,350,773)
------------- ------------ -----------
Net Increase (Decrease) (883,613) 736,648 4,292,703
Class Z:
Subscriptions 14,831,610 25,666,393 30,633,958
Issued for distributions
reinvested 1,821,276 2,620,156 4,081,323
Redemptions (18,285,723) (20,891,749) (40,109,913)
------------- ------------ -----------
Net Increase (Decrease) (1,632,837) 7,394,800 (5,394,632)
</Table>
(a) On October 13, 2003, the Liberty Intermediate Bond Fund was renamed
Columbia Intermediate Bond Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Effective July 29, 2002, Stein Roe Intermediate Bond Fund Class S shares
were redesignated Liberty Intermediate Bond Fund Class Z shares.
See Accompanying Notes to Financial Statements.
21
<Page>
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 (UNAUDITED) COLUMBIA INTERMEDIATE BOND FUND
NOTE 1. ORGANIZATION
Columbia Intermediate Bond Fund (the "Fund"), a series of Columbia Funds Trust
VIII (the "Trust"), is a diversified portfolio. The Trust is a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company.
INVESTMENT GOAL
The Fund seeks total return by investing for a high level of current income and
opportunities for capital appreciation.
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 4.75% based on
the amount of initial investment. Class A shares purchased without an initial
sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on
shares sold within eighteen months on an original purchase of $1 million to $25
million. Class B shares are subject to a maximum CDSC of 5.00% based upon the
holding period after purchase. Class B shares will convert to Class A shares in
a certain number of years after purchase, depending on the program under which
shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold
within one year after purchase. Class Z shares are offered continuously at net
asset value. There are certain restrictions on the purchase of Class Z shares,
as described in the Fund's prospectus.
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
Debt securities generally are valued by a pricing service approved by the Fund's
Board of Trustees, based upon market transactions for normal, institutional-size
trading units of similar securities. The services may use various pricing
techniques which take into account appropriate factors such as yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other data, as
well as broker quotes. Debt securities for which quotations are readily
available are valued at an over-the-counter or exchange bid quotation. Certain
debt securities, which tend to be more thinly traded and of lesser quality, are
priced based on fundamental analysis of the financial condition of the issuer
and the estimated value of any collateral. Valuations developed through pricing
techniques may vary from the actual amounts realized upon sale of the
securities, and the potential variation may be greater for those securities
valued using fundamental analysis.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
FUTURES CONTRACTS
The Fund may invest in municipal and U.S. Treasury futures contracts. The Fund
will invest in these instruments to hedge against the effects of changes in the
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, for
22
<Page>
duration management, or when the transactions are economically appropriate to
the reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts involves certain risks, which include:
(1) imperfect correlation between the price movement of the instruments and the
underlying securities, (2) inability to close out positions due to differing
trading hours, or the temporary absence of a liquid market, for either the
instrument or the underlying securities, or (3) an inaccurate prediction by
Columbia Management Advisors, Inc. of the future direction of interest rates.
Any of these risks may involve amounts exceeding the variation margin recorded
in the Fund's Statement of Assets and Liabilities at any given time.
Upon entering into a futures contract, the Fund deposits cash or securities with
the broker in an amount sufficient to meet the initial margin requirement.
Subsequent payments are made or received by the Fund equal to the daily change
in the contract value and are recorded as variation margin payable or receivable
and offset in unrealized gains or losses. The Fund also identifies portfolio
securities as segregated with the custodian in a separate account in an amount
equal to the futures contract. The Fund recognizes a realized gain or loss when
the contract is closed or expires.
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.
DELAYED DELIVERY SECURITIES
The Fund may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. This may increase the
risk if the other party to the transaction fails to deliver and causes the Fund
to subsequently invest at less advantageous prices. The Fund identifies cash or
liquid portfolio securities as segregated with the custodian in an amount equal
to the delayed delivery commitment.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Premium and discount are
amortized and accreted, respectively, on all debt securities.
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 intends to
distribute in each calendar year substantially all of its net investment income,
capital gains and certain other amounts, if any, such that the Fund should not
be subject to federal excise tax. Therefore, no federal income or excise tax
provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income are declared daily and paid monthly.
Net realized capital gains, if any, are distributed at least annually.
NOTE 3. FEDERAL TAX INFORMATION
The tax character of distributions paid during the period ended March 31, 2004
and the year ended June 30, 2003 was as follows:
<Table>
<Caption>
MARCH 31, JUNE 30,
2004 2003
- -----------------------------------------------------------
Distributions paid from:
Ordinary Income* $ 35,672,805 $ 49,343,407
</Table>
* For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
23
<Page>
Unrealized appreciation and depreciation at September 30, 2004, based on cost of
investments for federal income tax purposes was:
<Table>
Unrealized appreciation $ 41,970,676
Unrealized depreciation (13,845,087)
--------------
Net unrealized appreciation $ 28,125,589
</Table>
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the
Fund. Columbia, the transfer agent and the distributor, are each indirect wholly
owned subsidiaries of Bank of America Corporation ("BOA").
INVESTMENT ADVISORY FEE
Columbia receives a monthly investment advisory fee based on the Fund's average
daily net assets at the following annual rates:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL FEE RATE
- ------------------------------------------------------------
First $1 billion 0.35%
Over $1 billion 0.30%
</Table>
For the six months ended September 30, 2004, the Fund's annualized effective
investment advisory fee rate was 0.35%.
ADMINISTRATION FEE
Columbia provides administrative and other services to the Fund for a monthly
administration fee at the annual rate of 0.15% of the Fund's average daily net
assets.
PRICING AND BOOKKEEPING FEES
Columbia is responsible for providing pricing and bookkeeping services to the
Fund under a pricing and bookkeeping agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Corporation ("State Street"). As a result, Columbia pays the total fees
collected to State Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, Columbia receives
from the Fund an annual flat fee of $10,000 paid monthly, and in any month that
the Fund's average daily net assets exceed $50 million, an additional monthly
fee. The additional fee rate is calculated by taking into account the fees
payable to State Street under the Outsourcing Agreement. This rate is applied to
the average daily net assets of the Fund for that month. The Fund also pays
additional fees for pricing services based on the number of securities held by
the Fund.
For the six months ended September 30, 2004, the annualized effective pricing
and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was
0.028%.
TRANSFER AGENT FEE
Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia,
provides shareholder services to the Fund. For such services, the Transfer Agent
receives a fee, paid monthly, at the annual rate of $34.00 per open account. The
Transfer Agent also receives reimbursement for certain out-of-pocket expenses.
For the six months ended September 30, 2004, the Fund's annualized effective
transfer agent fee rate, inclusive of out-of-pocket expenses, was 0.11%.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia,
is the principal underwriter of the Fund. For the six months ended September 30,
2004, the Distributor has retained net underwriting discounts of $18,733 on
sales of the Fund's Class A shares and received CDSC fees of $932, $186,317 and
$7,689 on Class A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a
monthly service fee to the Distributor at the annual rate of 0.25% of the
average daily net assets attributable to Class A, Class B and Class C shares of
the Fund. The Plan also requires the payment of a monthly distribution fee to
the Distributor at the annual rates of 0.10%, 0.75% and 0.75% of the average
daily net assets attributable to Class A, Class B and Class C shares,
respectively. The Distributor has voluntarily agreed to waive the Class A share
distribution fee and a portion of the Class C share distribution fee so that it
will not exceed 0.60% annually of Class C average daily net assets.
The CDSC and the fees received from the Plan are used principally as repayment
to the Distributor for amounts paid by the Distributor to dealers who sold such
shares.
24
<Page>
CUSTODY CREDITS
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. The Fund could have invested a portion of the
assets utilized in connection with the expense offset arrangement in an
income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
The Fund pays no compensation to its officers, all of whom are employees of
Columbia or its affiliates. Effective August 23, 2004, the Board of Trustees
appointed a Chief Compliance Officer to the Fund in accordance with federal
securities regulations. The Fund, along with other affiliated funds, will pay
its pro-rata share of the expenses associated with the Chief Compliance Officer
role. The Fund's fee will not exceed $15,000 per year.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
OTHER
Columbia provides certain services to the Fund related to Sarbanes-Oxley
compliance. For the six months ended September 30, 2004, the Fund paid $1,395 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
NOTE 5. PORTFOLIO INFORMATION
For the six months ended September 30, 2004, the cost of purchases and proceeds
from sales of securities, excluding short-term obligations, were $252,956,673
and $249,129,088, respectively, of which $97,249,163 and $81,391,062,
respectively, were U.S. Government securities.
NOTE 6. LINE OF CREDIT
The Fund and other affiliated funds participate in a $350,000,000 credit
facility, which is used for temporary or emergency purposes to facilitate
portfolio liquidity. Interest is charged to the Fund based on its borrowings. In
addition, the Fund has agreed to pay commitment fees on its pro-rata portion of
the unutilized line of credit. The commitment fee is included in "Other
expenses" on the Statement of Operations. For the six months ended September 30,
2004, the Fund did not borrow under this arrangement.
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
HIGH-YIELD SECURITIES
Investing in high-yield securities may involve greater credit risk and
considerations not typically associated with investing in U.S. Government bonds
and other higher quality fixed income securities. These securities are
non-investment grade securities, often referred to as "junk bonds." Economic
downturns may disrupt the high yield market and impair the ability of issuers to
repay principal and interest. Also, an increase in interest rates would likely
have an adverse impact on the value of such obligations. Moreover, high-yield
securities may be less liquid due to the extent that there is no established
retail secondary market and because of a decline in the value of such
securities.
INDUSTRY FOCUS
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
LEGAL PROCEEDINGS
Columbia, the Distributor, and certain of their affiliates (collectively, "The
Columbia Group") have received information requests and subpoenas from various
regulatory and law enforcement authorities in connection with their
investigations of late trading and market timing in mutual funds as well as
other industry wide issues. The Columbia Group has not uncovered any instances
where Columbia or the Distributor were knowingly involved in late trading of
mutual fund shares.
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and the Distributor, alleging that they had
violated certain provisions of the federal securities laws in connection with
trading activity in mutual fund shares. Also on February 24, 2004, the New York
Attorney General ("NYAG") filed a civil complaint in New York Supreme Court,
County of New York against Columbia and the Distributor alleging that Columbia
and the Distributor had violated certain New York anti-fraud statutes. If either
Columbia or the Distributor is unsuccessful in its defense of these proceedings,
it could be barred from serving as an investment advisor or distributor for any
investment
25
<Page>
company registered under the Investment Company Act of 1940, as amended (a
"registered investment company"). Such results could prevent Columbia, the
Distributor or any company that is an affiliated person of Columbia and the
Distributor from serving as an investment advisor or distributor for any
registered investment company, including your fund. Your fund has been informed
by Columbia and the Distributor that, if these results occur, they will seek
exemptive relief from the SEC to permit them to continue to serve as your fund's
investment advisor and distributor. There is no assurance that such exemptive
relief will be granted. On March 15, 2004, Columbia and the Distributor entered
into agreements in principle with the SEC Division of Enforcement and NYAG in
settlement of the charges. Under the agreements, Columbia and the Distributor
agreed, among other things, to the following conditions: payment of $70 million
in disgorgement; payment of $70 million in civil penalties; an order requiring
Columbia and the Distributor to cease and desist from violations of the
antifraud provisions and other provisions of the federal securities laws;
governance changes designed to maintain the independence of the mutual fund
boards of trustees and ensure compliance with securities laws and their
fiduciary duties; and retention of an independent consultant to review
Columbia's and the Distributor's compliance policies and procedures. The
agreement requires the final approval of the SEC. In a separate agreement with
the NYAG, the Columbia Group and its affiliate Banc of America Capital
Management, LLC have agreed to collectively reduce mutual fund fees by $160
million over a five-year period.
As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of fund
shares, which could increase transaction costs or operating expenses, or have
other adverse consequences for the funds.
In connection with the events described in detail above, various parties have
filed suit against certain funds, their Boards and/or FleetBoston (and
affiliated entities). More than 300 cases (including those filed against
entities unaffiliated with the funds, their Boards and/or FleetBoston and its
affiliated entities) have been consolidated in a multi-district proceeding and
transferred to the Federal District Court in Maryland. Recently, certain
Columbia funds and affiliated entities have been named as defendants in several
derivative actions under various sections of the Investment Company Act of 1940,
as amended, alleging, among other things, that the fees and expenses paid by
those funds are excessive. The funds and the other defendants to these actions,
including Columbia and various of its affiliates, certain other mutual funds
advised by Columbia and its affiliates, and various directors of such funds,
have denied these allegations and are contesting the plaintiffs' claims. These
suits and certain regulatory investigations are ongoing, however, based on
currently available information, Columbia believes that these lawsuits are
without merit, that the likelihood they will have a material adverse impact on
any fund is remote, and that the lawsuits are not likely to materially affect
its ability to provide investment management services to its clients, including
the funds.
For the six months ended September 30, 2004, Columbia has assumed $42,852 of
legal, consulting services and Trustees' fees incurred by the Fund in connection
with these matters.
NOTE 8. NAME CHANGE
Effective October 13, 2003, the Liberty Intermediate Bond Fund was renamed
Columbia Intermediate Bond Fund. Also on this date, the Liberty-Stein Roe Funds
Income Trust was renamed Columbia Funds Trust VIII.
NOTE 9. COMPARABILITY OF FINANCIAL STATEMENTS
The fiscal year end of the Fund was changed from June 30 to March 31.
NOTE 10. BUSINESS COMBINATIONS AND MERGERS
CHANGE IN FUND STRUCTURE
Effective July 29, 2002, Stein Roe Intermediate Bond Fund's Class S shares were
redesignated Liberty Intermediate Bond Fund (currently known as Columbia
Intermediate Bond Fund) Class Z shares.
Prior to September 13, 2002, the Fund invested substantially all of its assets
in the Portfolio as part of a master/feeder structure. As of the close of
business on September 12, 2002, the Portfolio distributed all of its net assets
to the Fund in exchange for the Fund's interest in the Portfolio in complete
liquidation of the Portfolio. The Portfolio allocated income, expenses, realized
and unrealized gains (losses) to its investors on a daily basis, based on
methods approved by the Internal Revenue Service.
26
<Page>
FINANCIAL HIGHLIGHTS
COLUMBIA INTERMEDIATE BOND FUND
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<Table>
<Caption>
(UNAUDITED) PERIOD PERIOD
SIX MONTHS ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, YEAR ENDED JUNE 30, JUNE 30,
CLASS A SHARES 2004 2004(a)(b) 2003(c) 2002(c) 2001(c)(d)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.27 $ 9.18 $ 8.73 $ 8.84 $ 8.46
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (e) 0.20 0.30 0.45 0.53(f) 0.56
Net realized and unrealized gain (loss)
on investments and futures contracts (0.14) 0.11 0.48 (0.08)(f) 0.36
---------- ---------- ---------- ---------- ----------
Total from Investment Operations 0.06 0.41 0.93 0.45 0.92
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.21) (0.32) (0.48) (0.56) (0.54)
Return of capital -- -- -- --(g) --
---------- ---------- ---------- ---------- ----------
Total Distributions Declared
to Shareholders (0.21) (0.32) (0.48) (0.56) (0.54)
NET ASSET VALUE, END OF PERIOD $ 9.12 $ 9.27 $ 9.18 $ 8.73 $ 8.84
Total return (h) 0.71%(i)(j) 4.59%(i)(j) 11.03%(i) 5.10%(i) 11.19%(j)
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (k) 0.93%(l) 0.99%(l) 1.05% 1.04% 0.96%(l)
Interest expense -- -- --%(m) -- --
Expenses (k) 0.93%(l) 0.99%(l) 1.05% 1.04% 0.96%(l)
Net investment income (k) 4.33%(l) 4.31%(l) 5.13% 5.94%(f) 6.90%(l)
Waiver/reimbursement 0.10%(l) 0.10%(l) 0.10% 0.10% --
Portfolio turnover rate 24%(j) 96%(j) 114% 179%(n) 254%(n)
Net assets, end of period (000's) $ 159,051 $ 146,709 $ 92,993 $ 32,493 $ 12,279
</Table>
(a) On October 13, 2003, the Liberty Intermediate Bond Fund was renamed Columbia
Intermediate Bond Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Per share data and ratios reflect income and expenses assuming inclusion of
the Fund's proportionate share of income and expenses of the SR&F
Intermediate Bond Portfolio, prior to the portfolio liquidation.
(d) Class A shares were initially offered on July 31, 2000. Per share data and
total return reflect activity from that date.
(e) Per share data was calculated using average shares outstanding during the
period.
(f) Effective July 1, 2001, the SR&F Intermediate Bond Portfolio adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium and accreting discount on all debt securities.
The effect of this change for the year ended June 30, 2002, was to decrease
net investment income per share by $0.01, decrease net realized and
unrealized loss per share by $0.01 and decrease the ratio of net investment
income to average net assets from 6.10% to 5.94%. Per share data and ratios
for the period prior to June 30, 2002 have not been restated to reflect this
change in presentation.
(g) Rounds to less than $0.01 per share.
(h) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(i) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(j) Not annualized.
(k) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(l) Annualized.
(m) Rounds to less than 0.01%.
(n) Portfolio turnover disclosed is for the SR&F Intermediate Bond
Portfolio.
27
<Page>
<Table>
<Caption>
(UNAUDITED) PERIOD YEAR PERIOD
SIX MONTHS ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, JUNE 30, JUNE 30,
CLASS B SHARES 2004 2004(a)(b) 2003(c) 2002(c)(d)
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.27 $ 9.18 $ 8.73 $ 8.89
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (e) 0.16 0.25 0.39 0.18(f)
Net realized and unrealized gain (loss) on
investments and futures contracts (0.13) 0.11 0.47 (0.13)(f)
---------- ---------- ---------- ----------
Total from Investment Operations 0.03 0.36 0.86 0.05
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.18) (0.27) (0.41) (0.21)
Return of capital -- -- -- --(g)
---------- ---------- ---------- ----------
Total Distributions Declared to Shareholders (0.18) (0.27) (0.41) (0.21)
NET ASSET VALUE, END OF PERIOD $ 9.12 $ 9.27 $ 9.18 $ 8.73
Total return (h) 0.33%(i) 4.00%(i) 10.21% 0.51%(i)
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Operating expenses (j) 1.68%(k) 1.74%(k) 1.80% 1.83%(k)
Interest expense -- -- --%(l) --
Expenses (j) 1.68%(k) 1.74%(k) 1.80% 1.83%(k)
Net investment income (j) 3.58%(k) 3.58%(k) 4.38% 5.04%(f)(k)
Portfolio turnover rate 24%(i) 96%(i) 114% 179%(m)
Net assets, end of period (000's) $ 97,279 $ 104,700 $ 103,880 $ 28,758
</Table>
(a) On October 13, 2003, the Liberty Intermediate Bond Fund was renamed Columbia
Intermediate Bond Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Per share data and ratios reflect income and expenses assuming inclusion of
the Fund's proportionate share of income and expenses of the SR&F
Intermediate Bond Portfolio, prior to the portfolio liquidation.
(d) Class B shares were initially offered on February 1, 2002. Per share data
and total return reflect activity from that date.
(e) Per share data was calculated using average shares outstanding during the
period.
(f) Effective July 1, 2001, the SR&F Intermediate Bond Portfolio adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium and accreting discount on all debt securities.
The effect of this change for the year ended June 30, 2002, was to decrease
net investment income per share by $0.01, decrease net realized and
unrealized loss per share by $0.01 and decrease the ratio of net investment
income to average net assets from 5.19% to 5.04%.
(g) Rounds to less than $0.01 per share.
(h) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(i) Not annualized.
(j) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(k) Annualized.
(l) Rounds to less than 0.01%.
(m) Portfolio turnover disclosed is for the SR&F Intermediate Bond Portfolio.
28
<Page>
<Table>
<Caption>
(UNAUDITED) PERIOD YEAR PERIOD
SIX MONTHS ENDED ENDED ENDED ENDED
SEPTEMBER 30, MARCH 31, JUNE 30, JUNE 30,
CLASS C SHARES 2004 2004(a)(b) 2003(c) 2002(c)(d)
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.27 $ 9.18 $ 8.73 $ 8.89
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (e) 0.17 0.26 0.40 0.19(f)
Net realized and unrealized gain (loss) on
investments and futures contracts (0.14) 0.11 0.48 (0.14)(f)
---------- ---------- ---------- ----------
Total from Investment Operations 0.03 0.37 0.88 0.05
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.18) (0.28) (0.43) (0.21)
Return of capital -- -- -- --(g)
---------- ---------- ---------- ----------
Total Distributions Declared to Shareholders (0.18) (0.28) (0.43) (0.21)
NET ASSET VALUE, END OF PERIOD $ 9.12 $ 9.27 $ 9.18 $ 8.73
Total return (h) (i) 0.41%(j) 4.12%(j) 10.37% 0.58%(j)
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Operating expenses (k) 1.53%(l) 1.59%(l) 1.65% 1.68%(l)
Interest expense -- -- --%(m) --
Expenses (k) 1.53%(l) 1.59%(l) 1.65% 1.68%(l)
Net investment income (k) 3.73%(l) 3.72%(l) 4.50% 5.19%(f)(l)
Waiver/reimbursement 0.15%(l) 0.15%(l) 0.15% 0.15%(l)
Portfolio turnover rate 24%(j) 96%(j) 114% 179%(n)
Net assets, end of period (000's) $ 49,990 $ 59,009 $ 51,676 $ 11,651
</Table>
(a) On October 13, 2003, the Liberty Intermediate Bond Fund was renamed Columbia
Intermediate Bond Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Per share data and ratios reflect income and expenses assuming inclusion of
the Fund's proportionate share of income and expenses of the SR&F
Intermediate Bond Portfolio, prior to the portfolio liquidation.
(d) Class C shares were initially offered on February 1, 2002. Per share data
and total return reflect activity from that date.
(e) Per share data was calculated using average shares outstanding during the
period.
(f) Effective July 1, 2001, the SR&F Intermediate Bond Portfolio adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium and accreting discount on all debt securities.
The effect of this change for the year ended June 30, 2002, was to decrease
net investment income per share by $0.01, decrease net realized and
unrealized loss per share by $0.01 and decrease the ratio of net investment
income to average net assets from 5.34% to 5.19%.
(g) Rounds to less than $0.01 per share.
(h) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(i) Had the Distributor not reimbursed a portion of expenses, total return would
have been reduced.
(j) Not annualized.
(k) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(l) Annualized.
(m) Rounds to less than 0.01%.
(n) Portfolio turnover disclosed is for the SR&F Intermediate Bond Portfolio.
29
<Page>
<Table>
<Caption>
(UNAUDITED) PERIOD
SIX MONTHS ENDED ENDED
SEPTEMBER 30, MARCH 31, YEAR ENDED JUNE 30,
CLASS Z SHARES 2004 2004(a)(b) 2003(c)(d) 2002(c) 2001(c) 2000(c) 1999(c)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.27 $ 9.18 $ 8.73 $ 8.84 $ 8.41 $ 8.63 $ 8.97
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (e) 0.21 0.31 0.49 0.55(f) 0.62 0.60 0.56
Net realized and
unrealized gain (loss)
on investments and
futures contracts (0.14) 0.12 0.46 (0.08)(f) 0.43 (0.22) (0.33)
--------- --------- --------- --------- --------- --------- --------
Total from Investment
Operations 0.07 0.43 0.95 0.47 1.05 0.38 0.23
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income (0.22) (0.34) (0.50) (0.58) (0.62) (0.60) (0.57)
Return of capital -- -- -- --(g) -- -- --
--------- --------- --------- --------- --------- --------- --------
Total Distributions
Declared to
Shareholders (0.22) (0.34) (0.50) (0.58) (0.62) (0.60) (0.57)
NET ASSET VALUE,
END OF PERIOD $ 9.12 $ 9.27 $ 9.18 $ 8.73 $ 8.84 $ 8.41 $ 8.63
Total return (h) 0.83%(i) 4.78%(i) 11.30% 5.36% 12.86% 4.62% 2.60%
RATIOS TO AVERAGE
NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (j) 0.68%(k) 0.74%(k) 0.80% 0.79% 0.72% 0.72% 0.72%
Interest expense -- -- --%(l) -- -- -- --
Expenses (j) 0.68%(k) 0.74%(k) 0.80% 0.79% 0.72% 0.72% 0.72%
Net investment income (j) 4.58%(k) 4.58%(k) 5.51% 6.22%(f) 7.14% 7.16% 6.31%
Portfolio turnover rate 24%(i) 96%(i) 114% 179%(m) 254%(m) 356%(m) 253%(m)
Net assets, end of
period (000's) $ 765,719 $ 793,477 $ 717,923 $ 729,580 $ 514,068 $ 406,216 $ 431,123
</Table>
(a) On October 13, 2003, the Liberty Intermediate Bond Fund was renamed Columbia
Intermediate Bond Fund.
(b) The Fund changed its fiscal year end from June 30 to March 31.
(c) Per share data and ratios reflect income and expenses assuming inclusion of
the Fund's proportionate share of income and expenses of the SR&F
Intermediate Bond Portfolio, prior to the portfolio liquidation.
(d) Effective July 29, 2002, the Stein Roe Intermediate Bond Fund's Class S
shares were redesignated Liberty Intermediate Bond Fund Class Z shares.
(e) Per share data was calculated using average shares outstanding during the
period.
(f) Effective July 1, 2001, the SR&F Intermediate Bond Portfolio adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium and accreting discount on all debt securities.
The effect of this change for the year ended June 30, 2002, was to decrease
net investment income per share by $0.02, decrease net realized and
unrealized loss per share by $0.02 and decrease the ratio of net investment
income to average net assets from 6.38% to 6.22%. Per share data and ratios
for periods prior to June 30, 2002 have not been restated to reflect this
change in presentation.
(g) Rounds to less than $0.01 per share.
(h) Total return at net asset value assuming all distributions reinvested.
(i) Not annualized.
(j) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(k) Annualized.
(l) Rounds to less than 0.01%.
(m) Portfolio turnover disclosed is for the SR&F Intermediate Bond Portfolio.
30
<Page>
IMPORTANT INFORMATION ABOUT THIS REPORT
COLUMBIA INTERMEDIATE BOND FUND
TRANSFER AGENT
Columbia Funds Services, Inc.
P.O. Box 8081
Boston MA 02266-8081
800.345.6611
DISTRIBUTOR
Columbia Funds Distributor, Inc.
One Financial Center
Boston MA 02111
INVESTMENT ADVISOR
Columbia Management Advisors, Inc.
100 Federal Street
Boston MA 02110
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 Intermediate Bond
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the fund and with the most
recent copy of the Columbia Funds Performance Update.
A description of the policies and procedures that the fund uses to determine how
to vote proxies relating to their portfolio securities and a copy of the fund's
voting record are available (i) at www.columbiamanagement.com; (ii) on the
Securities and Exchange Commission's website at www.sec.gov and (iii) without
charge, upon request, by calling 800-368-0346.
31
<Page>
COLUMBIA FUNDS
COLUMBIA INTERMEDIATE BOND FUND
<Table>
LARGE GROWTH Columbia Common Stock*
Columbia Growth*
Columbia Growth Stock
Columbia Large Cap Growth
Columbia Tax-Managed Growth
Columbia Tax-Managed Growth II
Columbia Young Investor
LARGE VALUE Columbia Disciplined Value
Columbia Growth & Income
Columbia Large Cap Core
Columbia Tax-Managed Value
MIDCAP GROWTH Columbia Acorn Select
Columbia Mid Cap Growth
Columbia Tax-Managed Aggressive Growth**
MIDCAP VALUE Columbia Dividend Income
Columbia Mid Cap
Columbia Strategic Investor
SMALL GROWTH Columbia Acorn
Columbia Acorn USA
Columbia Small Company Equity
SMALL VALUE Columbia Small Cap
Columbia Small Cap Value
BALANCED Columbia Asset Allocation
Columbia Balanced
Columbia Liberty Fund
SPECIALTY Columbia Real Estate Equity
Columbia Technology
Columbia Utilities
TAXABLE FIXED-INCOME Columbia Contrarian Income*
Columbia Corporate Bond*
Columbia Federal Securities
Columbia Fixed Income Securities
Columbia High Yield
Columbia High Yield Opportunities
Columbia Income
Columbia Intermediate Bond
Columbia Intermediate Government Income
Columbia Quality Plus Bond
Columbia Short Term Bond
Columbia Strategic Income
TAX EXEMPT Columbia High Yield Municipal
Columbia Intermediate Tax-Exempt Bond
Columbia Managed Municipals
Columbia National Municipal Bond
Columbia Tax-Exempt
Columbia Tax-Exempt Insured
</Table>
32
<Page>
<Table>
SINGLE STATE TAX EXEMPT Columbia California Tax-Exempt
Columbia Connecticut Intermediate Municipal Bond
Columbia Connecticut Tax-Exempt
Columbia Florida Intermediate Municipal Bond
Columbia Massachusetts Intermediate Municipal Bond
Columbia Massachusetts Tax-Exempt
Columbia New Jersey Intermediate Municipal Bond
Columbia New York Intermediate Municipal Bond
Columbia New York Tax-Exempt
Columbia Oregon Municipal Bond
Columbia Pennsylvania Intermediate Municipal Bond
Columbia Rhode Island Intermediate Municipal Bond
MONEY MARKET Columbia Money Market
Columbia Municipal Money Market
INTERNATIONAL/GLOBAL Columbia Acorn International
Columbia Acorn International Select
Columbia Europe**
Columbia Global Equity
Columbia International Equity*
Columbia International Stock
Columbia Newport Asia Pacific**
Columbia Newport Greater China
Columbia Newport Tiger
INDEX Columbia Large Company Index
Columbia Small Company Index
Columbia U.S. Treasury Index
</Table>
* The fund will be closed to new investments after the close of business on
November 10, 2004. The fund's trustees have approved the merger, which will
take effect on or about February 26, 2005, pending shareholder approval.
** The fund will be closed to new investments after the close of business on
November 10, 2004. The fund's trustees have approved the liquidation, which
will take effect on December 10, 2004.
Please consider the investment objectives, risks, charges and expenses of a
mutual fund carefully before investing. Contact us at 800-345-6611 for a
prospectus which contains this and other important information about the fund.
Read it carefully before you invest.
For complete product information on any Columbia fund, visit our website at
www.columbiafunds.com.
Columbia Management Group and Columbia Management refer collectively to the
various investment advisory and distributor subsidiaries of Columbia Management
Group, including Columbia Management Advisors, Inc., the registered investment
advisor, and Columbia Funds Distributor, Inc.
33
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[GRAPHIC]
Help your fund reduce printing and postage costs! Elect to get your shareholder
reports by electronic delivery. With Columbia's eDelivery program, you receive
an e-mail message when your shareholder report becomes available online. If your
fund account is registered with Columbia Funds, you can sign up quickly and
easily on our website at www.columbiafunds.com.
Please note -- if you own your fund shares through a financial institution,
contact the institution to see if it offers electronic delivery. If you own your
fund shares through a retirement plan, electronic delivery may not be available
to you.
<Table>
COLUMBIA INTERMEDIATE BOND FUND SEMIANNUAL REPORT, SEPTEMBER 30, 2004 PRSRT STD
U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
</Table>
[COLUMBIAFUNDS(R) LOGO]
A MEMBER OF COLUMBIA MANAGEMENT GROUP
(C)2004 COLUMBIA FUNDS DISTRIBUTOR, INC.
ONE FINANCIAL CENTER, BOSTON, MA 02111-2621
800.345.6611 www.columbiafunds.com
713-03/967S-0904 (11/04) 04/3390
<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
The registrant's "Schedule I - Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form
N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have not been any material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of directors, since those
procedures were last disclosed in response to the requirements of Item
7(d)(2)(ii)(G) of Schedule 14A or this Item.
<Page>
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officers, based on their evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing of this
report, have concluded that such controls and procedures are adequately
designed to ensure that information required to be disclosed by the
registrant in Form N-CSR is accumulated and communicated to the
registrant's management, including the principal executive officer and
principal financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's last fiscal half-year
(the registrant's second fiscal half-year in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not
applicable at this time.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
<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 Funds Trust VIII
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By (Signature and Title) /s/ Christopher L. Wilson
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Christopher L. Wilson, President
Date November 24, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Christopher L. Wilson
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Christopher L. Wilson, President
Date November 24, 2004
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By (Signature and Title) /s/ J. Kevin Connaughton
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J. Kevin Connaughton, Treasurer
Date November 24, 2004
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