UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-6529
Columbia Funds Trust VI
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Vincent Pietropaolo, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
-----------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3698
Date of fiscal year end: June 30, 2006
Date of reporting period: December 31, 2005
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
Item 1. Reports to Stockholders.
Columbia Small Cap Value Fund I
[GRAPHIC]
COLUMBIA SMALL CAP VALUE FUND I
Semiannual Report
December 31, 2005
PRESIDENT'S MESSAGE
--------------------------
Columbia Small Cap Value Fund I
[PHOTO]
Christopher L. Wilson
President, Columbia Funds
Dear Shareholder:
Columbia Management, the asset management division of Bank of America, is in
the final stages of a significant business integration effort. Over the last
year, we have integrated various components of Nations Funds, Galaxy Funds and
Columbia Funds, resulting in a single fund family under the Columbia name that
covers a wide range of markets, sectors and asset classes. Our team of
talented, seasoned investment professionals will continue to strive to achieve
strong results within their investment categories. Our objective is not only to
provide our shareholders with the best products, but also to enhance the
breadth and availability of our services. In addition to expanding the level of
services available to the funds, portfolio managers and shareholders, we have
been able to achieve significant cost savings for the funds by aggregating our
business.
In September, we made major inroads in the initiative to streamline our product
offerings. This included merging several funds and renaming Nations Funds as
Columbia Funds, as well as consolidating the Nations and Columbia web sites.
Over the summer, we completed the service provider consolidation for
shareholder servicing. As we work to complete the remaining product and service
provider consolidations by the end of 2005, we remain committed to building a
mutual fund business that helps you meet, and hopefully exceed, your personal
financial goals. We value the confidence you have placed in us to assist you in
managing your funds during these changing times. As with all businesses within
Bank of America, we understand that your trust must be continually earned and
will remain focused on producing results for you. We will continue to strive
for the highest standards of performance and service excellence.
All of these efforts have been undertaken to enable you, as a shareholder, to
benefit from the execution of a consolidated business plan. We believe a more
streamlined fund family with consistent performance and lower fees will provide
the best opportunity for investment growth. We also believe that providing more
robust services to you through multiple channels (Web, phones, voice response)
will be beneficial to you.
In the pages that follow, you'll find a discussion of the economic environment
during the period followed by a detailed report from the fund manager on key
factors that influenced performance. We encourage you to read the managers'
report carefully and discuss any questions you have with your financial
advisor. As always, we thank you for choosing Columbia Management. We look
forward to helping you keep your financial goals on target in the years to come.
Sincerely,
/s/
Christopher L. Wilson
President, Columbia Funds
Head of Mutual Funds, Columbia Management
Christopher L. Wilson is Head of Mutual Funds for Columbia Management and
responsible for the day-to-day delivery of mutual fund services to the firm's
investors. Working closely with the legal and compliance teams, Chris oversees
all aspects of the mutual fund services operation, including treasury,
investment accounting and shareholder and broker services. As President and CEO
of Columbia Funds (formerly Nations, Galaxy and Columbia Funds), Chris serves
as the primary interface to the Fund Boards. Chris joined Bank of America in
2004.
Table of Contents
Performance Information.... 1
Fund Profile............... 2
Understanding Your Expenses 3
Economic Update............ 4
Portfolio Managers' Report. 5
Financial Statements....... 8
Investment Portfolio..... 9
Statement of Assets and Liabilities.. 17
Statement of Operations.............. 18
Statement of Changes in Net Assets... 19
Financial Highlights................. 21
Notes to Financial Statements........ 25
Board Consideration and Approval of
Investment Advisory Agreements......... 31
Summary of Management Fee Evaluation
by Independent Fee Consultant.......... 34
Results of the Annual Meeting of
Shareholders........................... 38
Columbia Funds......................... 39
Important Information
About This Report...................... 41
The views expressed in the President's Message and Portfolio Managers' Report
reflect the current views of the respective parties. These views are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict so actual outcomes and results may
differ significantly from the views expressed. These views are subject to
change at any time based upon economic, market or other conditions and the
respective parties disclaim any responsibility to update such views. These
views may not be relied on as investment advice and, because investment
decisions for a Columbia Fund are based on numerous factors, may not be relied
on as an indication of trading intent on behalf of any particular Columbia
Fund. References to specific company securities should not be construed as a
recommendation or investment advice.
--------------------------
Not FDIC May Lose Value
Insured -----------------
No Bank Guarantee
- -----------------
PERFORMANCE INFORMATION
----------------------------
Columbia Small Cap Value Fund I
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT PERFORMANCE MAY
BE LOWER OR HIGHER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PLEASE VISIT
WWW.COLUMBIAFUNDS.COM FOR DAILY AND MOST RECENT MONTH-END PERFORMANCE UPDATES.
Performance of a $10,000 investment 01/01/96 - 12/31/05 ($)
sales charge: without with
----------------------------
Class A 30,543 28,786
----------------------------
Class B 28,310 28,310
----------------------------
Class C 27,867 27,867
----------------------------
Class Z 31,365 n/a
Growth of a $10,000 investment 01/01/96 - 12/31/05
[CHART]
Class A Class A
shares without shares with Russell 2000
sales charge sales charge Value Index
--------------- --------------- ------------
1/1/1996 $10,000 $ 9,425 $10,000
1/31/1996 9,875 9,307 10,066
2/29/1996 10,367 9,771 10,224
3/31/1996 10,713 10,097 10,439
4/30/1996 11,280 10,631 10,724
5/31/1996 11,688 11,016 10,995
6/30/1996 11,034 10,399 10,865
7/31/1996 10,279 9,688 10,287
8/31/1996 10,733 10,116 10,734
9/30/1996 11,283 10,634 11,027
10/31/1996 11,095 10,457 11,155
11/30/1996 11,758 11,082 11,755
12/31/1996 11,834 11,154 12,137
1/31/1997 11,955 11,268 12,324
2/28/1997 11,705 11,032 12,441
3/31/1997 11,170 10,528 12,107
4/30/1997 11,334 10,683 12,285
5/31/1997 12,395 11,683 13,263
6/30/1997 13,189 12,430 13,934
7/31/1997 13,973 13,170 14,520
8/31/1997 14,163 13,349 14,751
9/30/1997 15,104 14,235 15,731
10/31/1997 14,611 13,771 15,304
11/30/1997 14,616 13,775 15,472
12/31/1997 14,660 13,817 15,996
1/31/1998 14,563 13,725 15,707
2/28/1998 15,760 14,854 16,657
3/31/1998 16,668 15,709 17,333
4/30/1998 16,888 15,917 17,418
5/31/1998 15,805 14,896 16,802
6/30/1998 15,687 14,785 16,708
7/31/1998 14,228 13,410 15,399
8/31/1998 11,340 10,688 12,988
9/30/1998 11,591 10,925 13,722
10/31/1998 12,480 11,763 14,129
11/30/1998 13,448 12,674 14,512
12/31/1998 13,754 12,963 14,968
1/31/1999 13,428 12,656 14,628
2/28/1999 12,057 11,364 13,629
3/31/1999 11,841 11,160 13,517
4/30/1999 12,740 12,008 14,751
5/31/1999 13,180 12,422 15,204
6/30/1999 13,918 13,117 15,755
7/31/1999 13,858 13,061 15,381
8/31/1999 13,000 12,253 14,818
9/30/1999 12,927 12,184 14,522
10/31/1999 13,014 12,266 14,231
11/30/1999 13,412 12,641 14,305
12/31/1999 14,320 13,497 14,745
1/31/2000 13,560 12,780 14,358
2/29/2000 14,188 13,372 15,236
3/31/2000 14,586 13,747 15,307
4/30/2000 14,674 13,830 15,397
5/31/2000 14,302 13,480 15,162
6/30/2000 14,926 14,068 15,605
7/31/2000 15,041 14,176 16,124
8/31/2000 16,265 15,330 16,845
9/30/2000 16,389 15,447 16,749
10/31/2000 16,402 15,459 16,689
11/30/2000 15,169 14,296 16,348
12/31/2000 17,036 16,056 18,104
1/31/2001 16,988 16,011 18,604
2/28/2001 16,463 15,517 18,578
3/31/2001 16,111 15,185 18,280
4/30/2001 17,171 16,184 19,127
5/31/2001 17,763 16,742 19,618
6/30/2001 17,893 16,864 20,407
7/31/2001 17,888 16,859 19,950
8/31/2001 17,564 16,554 19,880
9/30/2001 15,493 14,602 17,685
10/31/2001 15,856 14,944 18,147
11/30/2001 16,958 15,983 19,452
12/31/2001 18,207 17,161 20,642
1/31/2002 18,324 17,270 20,917
2/28/2002 18,634 17,562 21,044
3/31/2002 19,988 18,839 22,618
4/30/2002 20,394 19,221 23,415
5/31/2002 19,699 18,566 22,640
6/30/2002 19,045 17,950 22,139
7/31/2002 16,721 15,760 18,849
8/31/2002 17,026 16,047 18,766
9/30/2002 15,864 14,952 17,426
10/31/2002 16,182 15,251 17,688
11/30/2002 17,434 16,432 19,099
12/31/2002 16,941 15,967 18,284
1/31/2003 16,443 15,497 17,768
2/28/2003 15,599 14,702 17,171
3/31/2003 15,629 14,730 17,355
4/30/2003 16,834 15,866 19,004
5/31/2003 18,229 17,181 20,944
6/30/2003 18,632 17,561 21,298
7/31/2003 19,618 18,490 22,361
8/31/2003 20,514 19,335 23,210
9/30/2003 20,307 19,140 22,943
10/31/2003 21,964 20,701 24,813
11/30/2003 22,836 21,523 25,766
12/31/2003 23,620 22,261 26,699
1/31/2004 24,470 23,063 27,623
2/29/2004 24,874 23,443 28,158
3/31/2004 25,369 23,910 28,547
4/30/2004 24,321 22,922 27,071
5/31/2004 24,474 23,067 27,399
6/30/2004 25,820 24,335 28,791
7/31/2004 24,632 23,216 27,466
8/31/2004 24,517 23,107 27,735
9/30/2004 25,522 24,054 28,834
10/31/2004 25,884 24,396 29,281
11/30/2004 28,229 26,606 31,878
12/31/2004 29,006 27,338 32,640
1/31/2005 27,976 26,367 31,377
2/28/2005 28,600 26,955 32,001
3/31/2005 28,114 26,497 31,342
4/30/2005 26,452 24,931 29,725
5/31/2005 27,523 25,941 31,538
6/30/2005 28,660 27,012 32,932
7/31/2005 30,297 28,555 34,805
8/31/2005 29,857 28,141 34,005
9/30/2005 30,242 28,504 33,947
10/31/2005 29,665 27,959 33,095
11/30/2005 30,828 29,055 34,439
12/31/2005 30,543 28,786 34,177
The chart above shows the growth in value of a hypothetical $10,000 investment
in Class A shares of Columbia Small Cap Value Fund I during the stated time
period, and does not reflect the deduction of taxes a shareholder would pay on
fund distributions or the redemption of fund shares. The Russell 2000 Value
Index measures the performance of those Russell 2000 Index companies with lower
price-to-book ratios and lower forecasted growth values. Unlike the fund,
indices are not investments, do not incur fees or expenses and are not
professionally managed. It is not possible to invest directly in an index.
Securities in the fund may not match those in an index.
Average annual total return as of 12/31/05 (%)
Share class A B C Z
-----------------------------------------------------------------------
Inception 07/25/86 11/09/92 01/15/96 07/31/95
-----------------------------------------------------------------------
Sales charge without with without with without with without
-----------------------------------------------------------------------
6-month (cumulative) 6.54 0.42 6.13 1.13 6.14 5.14 6.66
-----------------------------------------------------------------------
1-year 5.27 -0.78 4.51 -0.47 4.50 3.50 5.54
-----------------------------------------------------------------------
5-year 12.38 11.05 11.50 11.24 11.52 11.52 12.68
-----------------------------------------------------------------------
10-year 11.81 11.15 10.97 10.97 10.79 10.79 12.11
-----------------------------------------------------------------------
THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF
5.75% FOR CLASS A SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR
CLASS B SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE
"WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF
THEY HAD, RETURNS WOULD BE LOWER. ALL RESULTS SHOWN ASSUME REINVESTMENT OF
DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1
FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM
REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE
FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND
FEES ASSOCIATED WITH EACH CLASS.
PERFORMANCE RESULTS REFLECT ANY VOLUNTARY WAIVERS OR REIMBURSEMENT OF FUND
EXPENSES BY THE ADVISOR OR ITS AFFILIATES. ABSENT THESE WAIVERS OR
REIMBURSEMENT ARRANGEMENTS, PERFORMANCE RESULTS WOULD HAVE BEEN LOWER.
Class C is a newer class of shares. Class C share performance information
includes returns of the fund's class B shares for periods prior to the
inception of class C shares. Class B shares would have substantially similar
annual returns because class B and class C shares generally have similar
expense structures. These returns have not been adjusted to reflect any
difference in expenses (such as 12b-1 fees) between any of the predecessor
shares and the newer classes of shares. Had the expense differential been
reflected, the returns for the periods prior to the inception of the newer
class shares would have been different. Class A shares were initially offered
on July 25, 1986, class B shares were initially offered on November 9, 1992,
class C shares were initially offered on January 15, 1996 and class Z shares
were initially offered on July 31, 1995.
1
FUND PROFILE
-----------------------
Columbia Small Cap
Value Fund I
The information below gives you a snapshot of your fund at the end of the
reporting period. Your fund is actively managed and the composition of its
portfolio will change over time.
Top 10 holdings as of 12/31/05 (%)
Watsco 1.3
---------------------------
Precision Castparts 1.1
---------------------------
Pediatrix Medical Group 1.0
---------------------------
Brightpoint 1.0
---------------------------
Harsco 0.9
---------------------------
MPS Group 0.9
---------------------------
Greif 0.9
---------------------------
Weis Markets 0.9
---------------------------
Consolidated Graphics 0.9
---------------------------
Navigators Group 0.9
---------------------------
Top 5 sectors as of 12/31/05 (%)
Financials 25.5
---------------------------
Industrials 17.5
---------------------------
Information Technology 14.8
---------------------------
Consumer Discretionary 11.0
---------------------------
Health Care 9.5
---------------------------
Portfolio characteristics and holdings are subject to change periodically and
may not be representative of current holdings.
Sector breakdowns and portfolio holdings are calculated as a percentage of net
assets.
Management style is determined by Columbia Management and is based on the
investment strategy and process as outlined in the fund's prospectus.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
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 THIS ORIGINAL COST. PLEASE VISIT
WWW.COLUMBIAFUNDS.COM FOR DAILY AND MOST RECENT MONTH-END PERFORMANCE UPDATES.
Summary
.. For the six-month period ended December 31, 2005, the fund's class A shares
returned 6.54% without sales charge.
.. The fund beat its benchmark, the Russell 2000 Value Index, and the average
for its peer group, the Morningstar Small Value Category.
.. Strong selection among financials, technology and energy stocks helped the
fund come out ahead of both its benchmark and peer group.
[FLOW CHART]
Class A Shares Russell 2000 Value Index
- -------------- ------------------------
6.54% 3.78%
Objective
Seeks long-term growth by investing primarily in smaller capitalization equity
securities
Total Net Assets
$747.4 million
Management Style
[GRAPHIC]
2
UNDERSTANDING YOUR EXPENSES
-----------------------------
Columbia Small Cap Value Fund
I
Estimating your actual expenses
To estimate the expenses that you paid over the period, first you will need
your account balance at the end of the period:
.. For shareholders who receive their account statements from Columbia
Management Services, Inc., your account balance is available online at
www.columbiafunds.com or by calling Shareholder Services at 800.345.6611.
.. For shareholders who receive their account statements from their brokerage
firm, contact your brokerage firm to obtain your account balance.
1.Divide your ending account balance by $1,000. For example, if an account
balance was $8,600 at the end of the period, the result would be 8.6.
2.In the section of the table below titled "Expenses paid during the period,"
locate the amount for your share class. You will find this number in the
column labeled "actual." Multiply this number by the result from step 1. Your
answer is an estimate of the expenses you paid on your account during the
period.
As a fund shareholder, you incur two types of costs. There are transaction
costs, which generally include sales charges on purchases and may include
redemption or exchange fees. There are also ongoing costs, which generally
include investment advisory, 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
$1,000, which is invested at the beginning of the reporting period and held for
the entire period. Expense information is calculated two ways and each method
provides you with different information. The amount listed in the "actual"
column is calculated using the fund's actual operating expenses and total
return for the period. The amount listed in the "hypothetical" column for each
share class assumes that the return each year is 5% before expenses and
includes the fund's actual expense ratio. You should not use the hypothetical
account values and expenses to estimate either your actual account balance at
the end of the period or the expenses you paid during this reporting period.
07/01/05 - 12/31/05
Account value at the Account value at the Expenses paid Fund's annualized
beginning of the period ($) end of the period ($) during the period ($) expense ratio (%)
- -------------------------------------------------------------------------------------------------
Actual Hypothetical Actual Hypothetical Actual Hypothetical
- -------------------------------------------------------------------------------------------------
Class A 1,000.00 1,000.00 1,065.38 1,018.85 6.56 6.41 1.26
- -------------------------------------------------------------------------------------------------
Class B 1,000.00 1,000.00 1,061.30 1,015.07 10.44 10.21 2.01
- -------------------------------------------------------------------------------------------------
Class C 1,000.00 1,000.00 1,061.40 1,015.07 10.44 10.21 2.01
- -------------------------------------------------------------------------------------------------
Class Z 1,000.00 1,000.00 1,066.59 1,020.11 5.26 5.14 1.01
- -------------------------------------------------------------------------------------------------
Expenses paid during the period are equal to the fund's respective class
annualized expense ratio, multiplied by the average account value over the
period, then multiplied by the number of days in the fund's most recent fiscal
half-year and divided by 365.
Had the transfer agent not waived or reimbursed a portion of expenses, total
return would have been reduced.
It is important to note that the expense amounts shown in the table are meant
to highlight only 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 funds are required to include the same hypothetical
calculations about expenses in shareholder reports, you can use this
information to compare the ongoing cost of investing in the fund with other
funds. To do so, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds. As you compare
hypothetical examples of other 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.
3
ECONOMIC UPDATE
-----------------------------
Columbia Small Cap Value Fund
I
The US economy moved ahead at an uneven pace during the six-month period that
began July 1, 2005 and ended December 31, 2005. Gross domestic product (GDP)
expanded at an estimated annualized rate of approximately 2.6% as a weak fourth
quarter reflected a slowdown in spending by consumers, business and government.
Employment data was solid, even in light of Hurricanes Katrina and Rita, which
disrupted the labor market near the end of the summer. During the six-month
period, the economy added an average of 135,000 new jobs each month, even with
a weak September, when only 17,000 net new jobs were added. In fact,
September's job figures, though low compared to other months, came as good news
after original estimates of net job losses as high as 35,000.
Oil prices hit a record price of $69.81 per barrel midway through the period
and sent consumer confidence into a tailspin that continued in the wake of the
twin storms. But confidence moved sharply higher in November and December as
the price of oil retreated somewhat and the job market stabilized.
Manufacturing activity remained strong throughout the period, and business
activity in non-manufacturing industries continued to expand. Manufacturing
capacity utilization also moved to its highest level during the current cycle
of economic expansion.
Despite volatility, stocks moved ahead
The S&P 500 Index -- a broad measure of large company stock market performance
- -- returned 5.77% for this reporting period. However, there was a wide gap
among the various style and market capitalization segments of the market.
Large-cap value stocks returned 5.20%, as measured by the Russell 1000 Value
Index. Mid-cap growth stocks led other sectors, as measured by the Russell
Midcap Growth Index, which gained 10.22%.
Bonds slumped as interest rates moved higher
The US bond market came to a standstill as interest rates moved higher across
all maturity ranges during the six-month reporting period. The yield on the
10-year US Treasury note, a bellwether for the bond market, ended the period at
4.39%. In this environment, the Lehman Brothers Aggregate Bond Index returned
negative 0.08% for the six-month period. High-yield bonds led the fixed income
markets despite a setback as investors appeared to grow more cautious about
risk near the end of the period. The Merrill Lynch US High Yield, Cash Pay
Index returned 1.59%.
Four short-term rate hikes -- and more to come?
The Federal Reserve Board (the Fed) raised the federal funds rate, a key
short-term rate, from 3.25% to 4.25% in four consecutive one-quarter point
increases. In the wake of Hurricanes Katrina and Rita, some market observers
speculated that the Fed might curtail its rate hikes. However, outgoing Fed
chairman Greenspan indicated that inflation was a greater concern than the
sustainability of economic growth, and we believe that the Fed, under new
chairman Ben Bernanke, is likely to continue to raise short-term interest rates
into the first half of 2006.
Summary
For the six-month period ended December 31, 2005
.. Despite volatility, the broad stock market, as measured by the S&P 500
Index, returned 5.77%. Mid-cap growth stocks were the period's best
performers, as measured by the Russell Midcap Growth Index.
[FLOW CHART]
S&P Index Russell Midcap Growth Index
- ------------- ---------------------------
5.77% 10.22%
.. Investment-grade bonds slumped, as measured by the Lehman Brothers Aggregate
Bond Index. High-yield bonds led the fixed income markets, as measured by
the Merrill Lynch US High Yield, Cash Pay Index.
[FLOW CHART]
Lehman Index Merrill Lynch Index
- ------------ -------------------
-0.08% 1.59%
The S&P 500 Index tracks the performance of 500 widely held,
large-capitalization US stocks.
The Russell Midcap Growth Index measures the performance of those Russell
Midcap companies with higher price-to-book ratios and higher forecasted growth
values. The stocks are also members of the Russell 1000 Growth Index.
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 with at least $250 million par
amount outstanding and with at least one year to final maturity.
The Merrill Lynch US High Yield, Cash Pay Index tracks the performance of
non-investment-grade corporate bonds.
The Russell 1000 Value Index measures the performance of those Russell 1000
Index companies with lower price-to-book ratios and lower forecasted growth
values.
Unlike mutual funds, indexes are not investments, do not incur fees or
expenses, and are not professionally managed. It is not possible to invest
directly in an index.
4
PORTFOLIO MANAGERS' REPORT
-----------------------------
Columbia Small Cap Value Fund
I
For the six-month period ended December 31, 2005, Columbia Small Cap Value Fund
I class A shares returned 6.54% without sales charge. The fund beat the Russell
2000 Value Index, which returned 3.78%, and the Morningstar Small Value
Category average, which returned 5.14%./1/ Our focus on companies with strong
competitive and financial positions, good earnings growth prospects and
reasonable valuations aided stock picking, which was particularly strong in the
financials, technology and energy sectors. Sector allocations also helped
returns. The fund's single disappointment was in health care.
Year was favorable for small-cap sector
After stalling in the first half of 2005, small-cap stocks regained their
momentum in the second half. The sector benefited from relatively low interest
rates, a pickup in capital markets activity, such as mergers and acquisitions,
and sustained economic growth. The fund's solid performance was indicative of
these trends. In addition, the fund benefited from having less exposure than
the index to financial stocks and by selecting some of the best-performing
financials for the positions we held. Among the standouts were Navigators
Group, Inc., which insures marine boats and offshore energy rigs, and Argonaut
Group, Inc., a little-known property and casualty insurer in Texas. Both stocks
rallied amid expectations of improved industry pricing following the Gulf Coast
hurricanes. Within banking, the fund benefited from focusing on commercial
lenders, which tend to be less vulnerable to rising interest rates than thrifts
or more retail-oriented banks. The fund also did well by not investing heavily
in real estate investment trusts, which faltered as interest rates rose.
/1/(C)2005 by Morningstar, Inc. All rights reserved. The information contained
herein is the proprietary information of Morningstar, Inc., may not be
copied or redistributed for any purpose and may only be used for
noncommercial, personal purposes. The information contained herein is not
represented or warranted to be accurate, correct, complete or timely.
Morningstar, Inc. shall not be responsible for investment decisions, damages
or other losses resulting from the use of this information. Past performance
is no guarantee of future performance. Morningstar, Inc. has not granted
consent for it to be considered or deemed an "expert" under the Securities
Act of 1933.
Morningstar Categories compare the performance of funds with similar
investment objectives and strategies.
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 THIS ORIGINAL COST. PLEASE VISIT
WWW.COLUMBIAFUNDS.COM FOR DAILY AND MOST RECENT MONTH-END PERFORMANCE UPDATES.
Net asset value per share as of 12/31/05 ($)
Class A 44.02
-------------
Class B 38.41
-------------
Class C 40.11
-------------
Class Z 45.58
Distributions declared per share 07/01/05 - 12/31/05 ($)
Class A 1.97
------------
Class B 1.97
------------
Class C 1.97
------------
Class Z 1.98
Holdings discussed in this report as of 12/31/05 (%)
Navigators Group, Inc. 0.9
---------------------------
Argonaut Group, Inc. 0.4
---------------------------
Brightpoint, Inc. 1.0
---------------------------
MPS Group, Inc. 0.9
---------------------------
Lufkin Industries, Inc. 0.8
The 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
---------------------------------
Columbia Small Cap Value Fund
I
Technology and energy further bolstered returns
The fund's technology holdings also did better than the index's technology
holdings. Winners included Brightpoint, Inc., a leading distributor of cell
phones, and MPS Group, Inc., a technology staffing company. Brightpoint rose
sharply as strong revenues and earnings gains attracted growing investor
attention. MPS benefited from a pickup in industry hiring. The fund also
profited from its overweight in semiconductor chip and semiconductor capital
stocks, which posted sizable gains fueled by dwindling inventories,
accelerating production and improved pricing. Communications equipment stocks
further aided returns, propelled by strong demand from service providers.
The fund's energy position was another source of strong performance. We had
more exposure than the index to energy, which was one of the market's strongest
performers for the year. Strong stock selection also aided return. As record
commodity prices fueled sharp sector gains, we shifted away from exploration
and production companies and toward energy service companies that could benefit
as capital spending increased. Lufkin Industries, Inc., which sells a
diversified line of pumps and components, did particularly well. In addition,
the fund had a bias toward coal producers whose stock valuations seemed
attractive.
Health care returns hindered performance
Within health care, the fund gave up some ground relative to the index because
it did not have as much exposure to biotechnology and specialty pharmaceutical
stocks, which climbed sharply on new product announcements. We avoided both
industries because they did not meet our investment criteria, which emphasizes
earnings growth potential. In that regard, the fund owned less volatile stocks,
which did not fare as well as the higher-risk segments of the sector.
Looking ahead
Going forward, we believe that small-cap stocks have the potential to keep pace
with the overall stock market even though they may no longer have a valuation
advantage over large-cap stocks. We have positioned the fund with a bias toward
technology and capital goods companies and away from sectors that are generally
vulnerable to a slowdown in consumer spending. Within those sectors, we plan to
stay focused on higher quality companies with the potential to grow their
businesses and earnings in any market environment.
About your fund
On October 7, 2005, the Columbia Small Cap Value Fund was renamed Columbia
Small Cap Value Fund I.
6
---------------------------------
Columbia Small Cap Value Fund
I
Stephen Barbaro has managed or co-managed the Columbia Small Cap Value Fund I
since June 2002 and has been with advisor or its predecessors or affiliate
organizations since 1976.
/s/ Stephen Barbaro
Jeremy Javidi has co-managed the fund since August 2005 and has been with the
advisor or its predecessors or affiliate organizations since 2000.
/s/ Jeremy Javidi
Equity investments are affected by stock market fluctuations that occur in
response to economic and business developments.
Investments in small-cap stocks may be subject to greater volatility and price
fluctuations because they may be thinly traded and less liquid than investments
in larger companies.
Value stocks are stocks of companies that may have experienced adverse business
or industry developments or may be subject to special risks that have caused
the stocks to be out of favor and, in the advisor's opinion, undervalued. If
the advisor's assessment of a company's prospects is wrong, the price of the
company's stock may not approach the value the advisor has placed on it.
We believe that small-cap stocks have the potential to keep pace with the
overall stock market even though they may no longer have a valuation advantage
over large-cap stocks.
7
FINANCIAL STATEMENTS
-----------------------------
December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
A guide to understanding your fund's financial statements
---------------------------------------------------------------------------
Investment Portfolio The investment portfolio details all of the fund's holdings and their
market value as of the last day of the reporting period. Portfolio
holdings are organized by type of asset, industry, country or geographic
region (if applicable) to demonstrate areas of concentration and
diversification.
---------------------------------------------------------------------------
Statement of Assets and Liabilities This statement details the fund's assets, liabilities, net assets and
share price for each share class as of the last day of the reporting
period. Net assets are calculated by subtracting all the fund's
liabilities (including any unpaid expenses) from the total of the fund's
investment and non-investment assets. The share price for each class is
calculated by dividing net assets for that class by the number of shares
outstanding in that class as of the last day of the reporting period.
---------------------------------------------------------------------------
Statement of Operations This statement details income earned by the fund and the expenses accrued
by the fund during the reporting period. The Statement of Operations also
shows any net gain or loss the fund realized on the sales of its holdings
during the period, as well as any unrealized gains or losses recognized
over the period. The total of these results represents the fund's net
increase or decrease in net assets from operations.
---------------------------------------------------------------------------
Statement of Changes in Net Assets This statement demonstrates how the fund's net assets were affected by its
operating results, distributions to shareholders and shareholder
transactions (e.g., subscriptions, redemptions and dividend reinvestments)
during the reporting period. The Statement of Changes in Net Assets also
details changes in the number of shares outstanding.
---------------------------------------------------------------------------
Notes to Financial Statements These notes disclose the organizational background of the fund, its
significant accounting policies (including those surrounding security
valuation, income recognition and distributions to shareholders), federal
tax information, fees and compensation paid to affiliates and significant
risks and contingencies.
---------------------------------------------------------------------------
Financial Highlights The financial highlights demonstrate how the fund's net asset value per
share was affected by the fund's operating results. The financial
highlights table also discloses the classes' performance and certain key
ratios (e.g., class expenses and net investment income as a percentage of
average net assets).
8
INVESTMENT PORTFOLIO
-----------------------------
December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
Common Stocks - 99.7%
CONSUMER DISCRETIONARY - 11.0% Shares Value ($)
- --------------------------------------- ------------------------------------- ------- ----------
Auto Components - 1.1% BorgWarner, Inc. 77,600 4,704,888
Modine Manufacturing Co. 120,743 3,935,014
Auto Components Total 8,639,902
------------------------------------- ------- ----------
Distributors - 0.5% Building Material Holding Corp. 51,743 3,529,390
Distributors Total 3,529,390
------------------------------------- ------- ----------
Hotels, Restaurants & Leisure - 3.1% Bob Evans Farms, Inc. 73,250 1,689,145
Dave & Buster's, Inc. (a) 157,200 2,768,292
Landry's Restaurants, Inc. 129,000 3,445,590
Lone Star Steakhouse & Saloon, Inc. 172,607 4,097,690
Marcus Corp. 81,200 1,908,200
Scientific Games Corp., Class A (a) 234,500 6,397,160
Vail Resorts, Inc. (a) 77,600 2,563,128
Hotels, Restaurants & Leisure Total 22,869,205
------------------------------------- ------- ----------
Household Durables - 1.4% American Greetings Corp., Class A 282,800 6,213,116
CSS Industries, Inc. 80,500 2,473,765
Kimball International, Inc., Class B 173,334 1,842,540
Household Durables Total 10,529,421
------------------------------------- ------- ----------
Media - 1.2% 4Kids Entertainment, Inc. (a) 153,300 2,405,277
Journal Communications, Inc., Class A 141,260 1,970,577
Media General, Inc., Class A 29,700 1,505,790
Reader's Digest Association, Inc. 107,100 1,630,062
Scholastic Corp. (a) 47,150 1,344,247
Media Total 8,855,953
------------------------------------- ------- ----------
Specialty Retail - 1.9% GameStop Corp., Class A (a) 186,600 5,937,612
Monro Muffler, Inc. 132,966 4,031,529
Movie Gallery, Inc. 117,778 660,735
Pier 1 Imports, Inc. 126,900 1,107,837
Zale Corp. (a) 88,160 2,217,224
Specialty Retail Total 13,954,937
------------------------------------- ------- ----------
Textiles, Apparel & Luxury Goods - 1.8% Delta Apparel, Inc. 96,900 1,506,795
Hampshire Group Ltd. (a) 180,100 4,286,740
Hartmarx Corp. (a) 212,720 1,661,343
Stride Rite Corp. 159,600 2,164,176
Wolverine World Wide, Inc. 188,960 4,244,042
Textiles, Apparel & Luxury Goods Total 13,863,096
----------
CONSUMER DISCRETIONARY TOTAL 82,241,904
CONSUMER STAPLES - 3.0%
- --------------------------------------- ------------------------------------- ------- ----------
Food & Staples Retailing - 1.2% BJ's Wholesale Club, Inc. (a) 69,800 2,063,288
Weis Markets, Inc. 156,430 6,732,747
Food & Staples Retailing Total 8,796,035
------------------------------------- ------- ----------
Food Products - 1.8% Flowers Foods, Inc. 198,009 5,457,128
J & J Snack Foods Corp. 42,867 2,546,729
Lancaster Colony Corp. 46,420 1,719,861
Lance, Inc. 125,700 2,341,791
Maui Land & Pineapple Co., Inc. (a) 54,100 1,835,613
Food Products Total 13,901,122
----------
CONSUMER STAPLES TOTAL 22,697,157
See Accompanying Notes to Financial Statements.
9
- --------------------------------------------------------------------------------
December 31, 2005 (Unaudited) Columbia Small Cap
Value Fund I
Common Stocks - (continued)
ENERGY - 6.5% Shares Value ($)
- ---------------------------------- ---------------------------------------- ------- ----------
Energy Equipment & Services - 2.8% Dresser-Rand Group, Inc. (a) 31,103 752,071
Grey Wolf, Inc. (a) 486,000 3,756,780
Lone Star Technologies, Inc. (a) 29,940 1,546,700
Lufkin Industries, Inc. 126,341 6,300,626
Maverick Tube Corp. (a) 61,090 2,435,048
NS Group, Inc. (a) 38,940 1,628,081
Superior Well Services, Inc. (a) 37,000 879,120
Trico Marine Services, Inc. (a) 121,859 3,168,334
Energy Equipment & Services Total 20,466,760
---------------------------------------- ------- ----------
Oil, Gas & Consumable Fuels - 3.7% Alpha Natural Resources, Inc. (a) 115,740 2,223,365
Bill Barrett Corp. (a) 39,422 1,522,083
Bois d'Arc Energy, Inc. (a) 114,154 1,810,483
Comstock Resources, Inc. (a) 49,550 1,511,771
Harvest Natural Resources, Inc. (a) 224,900 1,997,112
InterOil Corp. (a) 65,500 1,755,400
Peabody Energy Corp. 54,177 4,465,268
Range Resources Corp. 237,950 6,267,603
Western Gas Resources, Inc. 130,800 6,159,372
Oil, Gas & Consumable Fuels Total 27,712,457
----------
ENERGY TOTAL 48,179,217
FINANCIALS - 25.5%
- ---------------------------------- ---------------------------------------- ------- ----------
Capital Markets - 0.4% Piper Jaffray Companies, Inc. (a) 74,280 3,000,912
Capital Markets Total 3,000,912
---------------------------------------- ------- ----------
Commercial Banks - 11.1% BancFirst Corp. 29,285 2,313,515
BancorpSouth, Inc. 156,190 3,447,113
BancTrust Financial Group, Inc. 113,298 2,277,290
Bank of Granite Corp. 123,501 2,288,474
Bryn Mawr Bank Corp. 134,964 2,896,327
Capitol Bancorp Ltd. 127,349 4,767,947
Chemical Financial Corp. 127,439 4,047,463
Chittenden Corp. 154,640 4,300,538
Citizens Banking Corp. 68,310 1,895,603
City Holding Co. 63,750 2,291,813
Columbia Banking System, Inc. 101,950 2,910,672
Community Trust Bancorp, Inc. 100,994 3,105,565
Corus Bankshares, Inc. 76,700 4,315,909
First Citizens BancShares, Inc., Class A 17,700 3,087,234
First Financial Bankshares, Inc. 83,197 2,916,887
First Financial Corp. 95,000 2,565,000
Greater Bay Bancorp 105,914 2,713,517
Hancock Holding Co. 68,303 2,582,536
Merchants Bancshares, Inc. 93,432 2,246,358
Mid-State Bancshares 164,760 4,407,330
Northrim BanCorp, Inc. 85,300 2,000,285
Signature Bank (a) 17,118 480,502
Sterling Bancshares, Inc. 249,038 3,845,147
TriCo Bancshares 166,923 3,904,329
TrustCo Bank Corp. NY 211,510 2,626,954
UMB Financial Corp. 74,600 4,767,686
Whitney Holding Corp. 154,920 4,269,595
Commercial Banks Total 83,271,589
See Accompanying Notes to Financial Statements.
10
- --------------------------------------------------------------------------------
December 31, 2005 (Unaudited) Columbia Small Cap
Value Fund I
Common Stocks - (continued)
FINANCIALS - (continued) Shares Value ($)
- --------------------------------------- ---------------------------------------------- ------- -----------
Consumer Finance - 1.1% Advance America Cash Advance Centers, Inc. 261,318 3,240,343
Cash America International, Inc. 214,100 4,964,979
Consumer Finance Total 8,205,322
---------------------------------------------- ------- -----------
Insurance - 6.5% AmerUs Group Co. 63,000 3,570,210
Argonaut Group, Inc. (a) 92,467 3,030,143
Baldwin & Lyons, Inc., Class B 111,169 2,701,407
CNA Surety Corp. (a) 212,700 3,099,039
Commerce Group, Inc. 32,700 1,873,056
Delphi Financial Group, Inc., Class A 104,102 4,789,733
Harleysville Group, Inc. 133,704 3,543,156
Horace Mann Educators Corp. 154,259 2,924,751
KMG America Corp. (a) 62,252 571,473
National Western Life Insurance Co., Class A 969 200,496
Navigators Group, Inc. (a) 147,616 6,437,534
Phoenix Companies, Inc. 292,800 3,993,792
ProCentury Corp. 249,819 2,685,554
Quanta Capital Holdings Ltd. (a) 301,020 1,535,202
RLI Corp. 76,381 3,809,120
United America Indemnity Ltd., Class A (a) 184,010 3,378,424
Insurance Total 48,143,090
---------------------------------------------- ------- -----------
Real Estate - 6.4% Alexandria Real Estate Equities, Inc., REIT 36,770 2,959,985
Bedford Property Investors, Inc., REIT 115,437 2,532,688
BioMed Realty Trust, Inc., REIT 45,089 1,100,172
Brandywine Realty Trust, REIT 113,300 3,162,203
Cousins Properties, Inc., REIT 93,280 2,639,824
EastGroup Properties, Inc., REIT 106,500 4,809,540
Equity One, Inc., REIT 137,900 3,188,248
Franklin Street Properties Corp., REIT 152,060 3,185,657
Getty Realty Corp., REIT 111,580 2,933,438
Healthcare Realty Trust, Inc. 80,850 2,689,879
Lexington Corporate Properties Trust, REIT 103,321 2,200,737
Mid-America Apartment Communities, Inc., REIT 117,440 5,695,840
PS Business Parks, Inc., REIT 121,100 5,958,120
Universal Health Realty Income Trust, REIT 79,830 2,501,872
Urstadt Biddle Properties, Inc., Class A, REIT 157,480 2,552,751
Real Estate Total 48,110,954
-----------
FINANCIALS TOTAL 190,731,867
HEALTH CARE - 9.5%
- --------------------------------------- ---------------------------------------------- ------- -----------
Health Care Equipment & Supplies - 4.3% Analogic Corp. 46,130 2,207,321
Bio-Rad Laboratories, Inc., Class A (a) 55,820 3,652,861
DJ Orthopedics, Inc. (a) 60,660 1,673,003
Greatbatch, Inc. (a) 86,134 2,240,345
Haemonetics Corp. (a) 94,660 4,625,088
Invacare Corp. 87,996 2,770,994
STERIS Corp. 218,960 5,478,379
Sybron Dental Specialties, Inc. (a) 112,370 4,473,450
Varian, Inc. (a) 46,360 1,844,664
Viasys Healthcare, Inc. (a) 75,600 1,942,920
Vital Signs, Inc. 36,870 1,578,773
Health Care Equipment & Supplies Total 32,487,798
See Accompanying Notes to Financial Statements.
11
- --------------------------------------------------------------------------------
December 31, 2005 (Unaudited) Columbia Small Cap
Value Fund I
Common Stocks - (continued)
HEALTH CARE - (continued) Shares Value ($)
- --------------------------------------- ------------------------------------------------ ------- ----------
Health Care Providers & Services - 5.2% Cross Country Healthcare, Inc. (a) 202,640 3,602,939
Genesis HealthCare Corp. (a) 103,450 3,777,994
Gentiva Health Services, Inc. (a) 212,700 3,135,198
Hooper Holmes, Inc. 346,700 884,085
Kindred Healthcare, Inc. (a) 186,400 4,801,664
Owens & Minor, Inc. 93,600 2,576,808
PAREXEL International Corp. (a) 170,700 3,458,382
Pediatrix Medical Group, Inc. (a) 85,600 7,581,592
Res-Care, Inc. (a) 186,970 3,247,669
Symbion, Inc. (a) 119,120 2,739,760
United Surgical Partners International, Inc. (a) 93,500 3,006,025
Health Care Providers & Services Total 38,812,116
----------
HEALTH CARE TOTAL 71,299,914
INDUSTRIALS - 17.5%
- --------------------------------------- ------------------------------------------------ ------- ----------
Aerospace & Defense - 2.8% AAR Corp. (a) 194,902 4,667,903
Esterline Technologies Corp. (a) 134,100 4,987,179
Kaman Corp., Class A 82,200 1,618,518
Moog, Inc., Class A (a) 46,220 1,311,723
Precision Castparts Corp. 159,500 8,263,695
Aerospace & Defense Total 20,849,018
------------------------------------------------ ------- ----------
Air Freight & Logistics - 0.4% Ryder System, Inc. 62,200 2,551,444
Air Freight & Logistics Total 2,551,444
------------------------------------------------ ------- ----------
Airlines - 1.1% JetBlue Airways Corp. (a) 130,350 2,004,783
MAIR Holdings, Inc. (a) 71,812 338,235
Republic Airways Holdings, Inc. (a) 113,750 1,729,000
Skywest, Inc. 146,000 3,921,560
Airlines Total 7,993,578
------------------------------------------------ ------- ----------
Building Products - 1.0% Lennox International, Inc. 90,740 2,558,868
NCI Building Systems, Inc. (a) 121,680 5,168,966
Building Products Total 7,727,834
------------------------------------------------ ------- ----------
Commercial Services & Supplies - 4.4% ABM Industries, Inc. 145,400 2,842,570
Casella Waste Systems, Inc., Class A (a) 305,390 3,905,938
CBIZ, Inc. (a) 184,005 1,107,710
Consolidated Graphics, Inc. (a) 136,500 6,461,910
Healthcare Services Group, Inc. 170,455 3,530,123
Korn/Ferry International (a) 121,400 2,268,966
Nam Tai Electronics, Inc. 60,450 1,360,125
NCO Group, Inc. (a) 128,250 2,169,990
Sourcecorp, Inc. (a) 93,000 2,230,140
TeleTech Holdings, Inc. (a) 287,800 3,467,990
United Stationers, Inc. (a) 65,130 3,158,805
Commercial Services & Supplies Total 32,504,267
------------------------------------------------ ------- ----------
Construction & Engineering - 1.9% EMCOR Group, Inc. (a) 45,500 3,072,615
KHD Humboldt Wedag International Ltd. (a) 283,170 6,272,215
Washington Group International, Inc. (a) 87,500 4,634,875
Construction & Engineering Total 13,979,705
See Accompanying Notes to Financial Statements.
12
- --------------------------------------------------------------------------------
December 31, 2005 (Unaudited) Columbia Small Cap
Value Fund I
Common Stocks - (continued)
INDUSTRIALS - (continued) Shares Value ($)
- ----------------------------------------- ----------------------------------------- ------- -----------
Electrical Equipment - 1.3% Genlyte Group, Inc. (a) 104,136 5,578,566
Woodward Governor Co. 51,200 4,403,712
Electrical Equipment Total 9,982,278
----------------------------------------- ------- -----------
Machinery - 1.9% Briggs & Stratton Corp. 48,650 1,887,133
EnPro Industries, Inc. (a) 147,000 3,961,650
Harsco Corp. 104,800 7,075,048
Kadant, Inc. (a) 64,504 1,193,324
Machinery Total 14,117,155
----------------------------------------- ------- -----------
Road & Rail - 1.1% Dollar Thrifty Automotive Group, Inc. (a) 46,000 1,659,220
Swift Transportation Co., Inc. (a) 54,692 1,110,248
Werner Enterprises, Inc. 290,950 5,731,715
Road & Rail Total 8,501,183
----------------------------------------- ------- -----------
Trading Companies & Distributors - 1.6% Hughes Supply, Inc. 72,462 2,597,763
Watsco, Inc. 161,300 9,647,353
Trading Companies & Distributors Total 12,245,116
-----------
INDUSTRIALS TOTAL 130,451,578
INFORMATION TECHNOLOGY - 14.8%
- ----------------------------------------- ----------------------------------------- ------- -----------
Communications Equipment - 1.9% Anaren, Inc. (a) 240,150 3,753,544
Belden CDT, Inc. 88,850 2,170,606
Black Box Corp. 56,200 2,662,756
Dycom Industries, Inc. (a) 175,800 3,867,600
Tollgrade Communications, Inc. (a) 147,810 1,615,563
Communications Equipment Total 14,070,069
----------------------------------------- ------- -----------
Computers & Peripherals - 1.6% Electronics for Imaging, Inc. (a) 143,800 3,826,518
Hutchinson Technology, Inc. (a) 77,910 2,216,540
Imation Corp. 72,800 3,353,896
Intergraph Corp. (a) 54,500 2,714,645
Computers & Peripherals Total 12,111,599
----------------------------------------- ------- -----------
Electronic Equipment & Instruments - 3.2% Agilysys, Inc. 114,079 2,078,519
Anixter International, Inc. 76,800 3,004,416
Benchmark Electronics, Inc. (a) 115,000 3,867,450
Brightpoint, Inc. (a) 268,150 7,435,800
MTS Systems Corp. 103,082 3,570,760
Vishay Intertechnology, Inc. (a) 308,500 4,244,960
Electronic Equipment & Instruments Total 24,201,905
----------------------------------------- ------- -----------
Internet Software & Services - 0.3% Digitas, Inc. (a) 116,920 1,463,838
Keynote Systems, Inc. (a) 67,550 868,018
Internet Software & Services Total 2,331,856
----------------------------------------- ------- -----------
IT Services - 1.9% Acxiom Corp. 205,011 4,715,253
MAXIMUS, Inc. 62,290 2,285,420
MPS Group, Inc. (a) 508,250 6,947,778
IT Services Total 13,948,451
See Accompanying Notes to Financial Statements.
13
- --------------------------------------------------------------------------------
December 31, 2005 (Unaudited) Columbia Small Cap
Value Fund I
Common Stocks - (continued)
INFORMATION TECHNOLOGY - (continued) Shares Value ($)
- ----------------------------------------------- --------------------------------------------------- ------- -----------
Semiconductors & Semiconductor Equipment - 2.8% Advanced Energy Industries, Inc. (a) 119,880 1,418,180
Asyst Technologies, Inc. (a) 37,783 216,119
ATMI, Inc. (a) 94,820 2,652,115
Brooks Automation, Inc. (a) 121,100 1,517,383
Exar Corp. (a) 175,500 2,197,260
Fairchild Semiconductor International, Inc. (a) 202,100 3,417,511
MEMC Electronic Materials, Inc. (a) 110,150 2,442,026
Sigmatel, Inc. (a) 73,080 957,348
Standard Microsystems Corp. (a) 156,400 4,487,116
Varian Semiconductor Equipment Associates, Inc. (a) 30,100 1,322,293
Semiconductors & Semiconductor Equipment Total 20,627,351
--------------------------------------------------- ------- -----------
Software - 3.1% Captaris, Inc. (a) 360,200 1,329,138
Internet Security Systems, Inc. (a) 165,050 3,457,797
Lawson Software, Inc. (a) 426,950 3,138,082
MSC.Software Corp. (a) 229,800 3,906,600
Phoenix Technologies Ltd. (a) 247,110 1,546,909
PLATO Learning, Inc. (a) 143,391 1,138,525
SeaChange International, Inc. (a) 72,200 570,380
Sybase, Inc. (a) 147,450 3,223,257
Transaction Systems Architects, Inc., Class A (a) 171,700 4,943,243
Software Total 23,253,931
-----------
INFORMATION TECHNOLOGY TOTAL 110,545,162
MATERIALS - 7.9%
- ----------------------------------------------- --------------------------------------------------- ------- -----------
Chemicals - 2.6% Cytec Industries, Inc. 82,100 3,910,423
H.B. Fuller Co. 121,300 3,890,091
Minerals Technologies, Inc. 61,900 3,459,591
Schulman (A.), Inc. 162,844 3,504,403
Sensient Technologies Corp. 105,100 1,881,290
Stepan Co. 87,800 2,360,942
Chemicals Total 19,006,740
--------------------------------------------------- ------- -----------
Construction Materials - 0.8% Eagle Materials, Inc. 50,500 6,179,180
Construction Materials Total 6,179,180
--------------------------------------------------- ------- -----------
Containers & Packaging - 1.3% AptarGroup, Inc. 61,300 3,199,860
Greif, Inc., Class A 102,300 6,780,444
Containers & Packaging Total 9,980,304
--------------------------------------------------- ------- -----------
Metals & Mining - 2.4% AMCOL International Corp. 95,500 1,959,660
Carpenter Technology Corp. 65,400 4,608,738
Metal Management, Inc. 131,770 3,064,970
RTI International Metals, Inc. (a) 91,500 3,472,425
Worthington Industries, Inc. 242,630 4,660,922
Metals & Mining Total 17,766,715
--------------------------------------------------- ------- -----------
Paper & Forest Products - 0.8% Glatfelter Co. 241,050 3,420,500
Mercer International, Inc. (a) 313,900 2,467,254
Paper & Forest Products Total 5,887,754
-----------
MATERIALS TOTAL 58,820,693
See Accompanying Notes to Financial Statements.
14
- --------------------------------------------------------------------------------
December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
Common Stocks - (continued)
TELECOMMUNICATION SERVICES - 0.4% Shares Value ($)
- --------------------------------------------- -------------------------------------------------- --------- -----------
Diversified Telecommunication Services - 0.4% North Pittsburgh Systems, Inc. 109,713 2,070,285
Talk America Holdings, Inc. (a) 109,921 948,618
Diversified Telecommunication Services Total 3,018,903
-----------
TELECOMMUNICATION SERVICES TOTAL 3,018,903
UTILITIES - 3.6%
- --------------------------------------------- -------------------------------------------------- --------- -----------
Electric Utilities - 2.3% ALLETE, Inc. 63,000 2,772,000
Central Vermont Public Service Corp. 153,500 2,764,535
El Paso Electric Co. (a) 173,700 3,654,648
Maine & Maritimes Corp. (a) 34,700 537,156
MGE Energy, Inc. 60,586 2,054,471
Otter Tail Corp. 88,000 2,550,240
Puget Energy, Inc. 149,800 3,058,916
Electric Utilities Total 17,391,966
-------------------------------------------------- --------- -----------
Gas Utilities - 0.6% Cascade Natural Gas Corp. 66,000 1,287,660
Northwest Natural Gas Co. 50,000 1,709,000
WGL Holdings, Inc. 53,200 1,599,192
Gas Utilities Total 4,595,852
-------------------------------------------------- --------- -----------
Multi-Utilities - 0.7% CH Energy Group, Inc. 103,500 4,750,650
Multi-Utilities Total 4,750,650
-----------
UTILITIES TOTAL 26,738,468
Total Common Stocks
(cost of $541,809,322) 744,724,863
Short-Term Obligation - 0.4% Par ($)
- --------------------------------------------- -------------------------------------------------- --------- -----------
Repurchase agreement with State Street Bank &
Trust Co., dated 12/30/05, due 01/03/06 at 3.380%,
collateralized by a U.S. Treasury Note maturing
08/15/08, market value of $3,302,700 (repurchase
proceeds $3,236,215) 3,235,000 3,235,000
Total Short-Term Obligation
(cost of $3,235,000) 3,235,000
Total Investments - 100.1%
(cost of $545,044,322) (b) 747,959,863
Other Assets & Liabilities, Net - (0.1)% (516,895)
Net Assets - 100.0% 747,442,968
NOTES TO INVESTMENT PORTFOLIO:
(a)Non-income producing security.
(b)Cost for federal income tax purposes is
$545,044,322.
See Accompanying Notes to Financial Statements.
15
- --------------------------------------------------------------------------------
December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
At December 31, 2005, the Fund held
investment in the following sectors:
SECTOR % OF NET ASSETS
-----------------------------------------------
Financials 25.5%
Industrials 17.5
Information Technology 14.8
Consumer Discretionary 11.0
Health Care 9.5
Materials 7.9
Energy 6.5
Utilities 3.6
Consumer Staples 3.0
Telecommunication Services 0.4
Short-Term Obligation 0.4
Other Assets & Liabilities, Net (0.1)
-----
100.0%
-----
ACRONYM NAME
------------------------------------
REIT Real Estate Investment Trust
See Accompanying Notes to Financial Statements.
16
STATEMENT OF ASSETS AND LIABILITIES
-----------------------
December 31, 2005 (Unaudited) Columbia Small Cap
Value Fund I
($)
- ------------------------- -------------------------------------------------------- -----------
Assets Investments, at cost 545,044,322
-----------
Investments, at value 747,959,863
Cash 34
Receivable for:
Investments sold 75,018
Fund shares sold 1,089,479
Interest 608
Dividends 964,127
Reimbursement due from Investment Advisor 309
Deferred Trustees' compensation plan 34,043
-----------
Total Assets 750,123,481
-------------------------------------------------------- -----------
Liabilities Payable for:
Investments purchased 533,845
Fund shares repurchased 1,219,246
Investment advisory fee 518,468
Transfer agent fee 13,729
Pricing and bookkeeping fees 31,412
Chief compliance officer expenses 3,718
Custody fee 15,925
Distribution and service fees 289,264
Deferred Trustees' fees 34,043
Other liabilities 20,863
-----------
Total Liabilities 2,680,513
Net Assets 747,442,968
-------------------------------------------------------- -----------
Composition of Net Assets Paid-in capital 541,840,382
Undistributed net investment income 49,175
Accumulated net realized gain 2,637,870
Net unrealized appreciation on investments 202,915,541
-----------
Net Assets 747,442,968
-------------------------------------------------------- -----------
Class A Net assets 434,671,090
Shares outstanding 9,874,249
Net asset value per share 44.02(a)
Maximum offering price per share ($44.02/0.9425) 46.71(b)
-------------------------------------------------------- -----------
Class B Net assets 161,145,737
Shares outstanding 4,195,312
Net asset value and offering price per share 38.41(a)
-------------------------------------------------------- -----------
Class C Net assets 62,880,994
Shares outstanding 1,567,720
Net asset value and offering price per share 40.11(a)
-------------------------------------------------------- -----------
Class Z Net assets 88,745,147
Shares outstanding 1,946,887
Net asset value, offering and redemption price per share 45.58
(a)Redemption price per share is equal to net
asset value less any applicable contingent
deferred sales charge.
(b)On sales of $50,000 or more the offering
price is reduced.
See Accompanying Notes to Financial Statements.
17
STATEMENT OF OPERATIONS
-----------------------------
For the Six Months Ended December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
($)
- --------------------------------------- ----------------------------------------------------------------------- ----------
Investment Income Dividends 5,543,225
Interest 38,445
----------
Total Investment Income 5,581,670
----------------------------------------------------------------------- ----------
Expenses Investment advisory fee 2,937,123
Distribution fee:
Class B 660,097
Class C 231,560
Service fee:
Class A 529,783
Class B 220,032
Class C 77,187
Transfer agent fee 625,428
Pricing and bookkeeping fees 91,371
Trustees' fees 9,083
Custody fee 31,602
Chief compliance officer expenses (See Note 4) 5,399
Non-recurring fees (See Note 9) 5,650
Other expenses 150,703
----------
Total Expenses 5,575,018
Non-recurring costs assumed by Investment Advisor (See Note 9) (5,650)
Fees and expenses waived or reimbursed by Transfer Agent (65,185)
Custody earnings credit (612)
----------
Net Expenses 5,503,571
----------
Net Investment Income 78,099
----------------------------------------------------------------------- ----------
Net Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
on Investments Investments 31,989,187
Net realized loss on investments purchased/sold in error (See Note 8) --
----------
Net realized gain 31,989,187
Net change in unrealized appreciation on investments 13,976,417
----------
Net Gain 45,965,604
----------
Net Increase in Net Assets from Operations 46,043,703
See Accompanying Notes to Financial Statements.
18
STATEMENT OF CHANGES IN NET ASSETS
-----------------------
Columbia Small Cap
Value Fund I
(Unaudited)
Six Months Year
Ended Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2005 ($) 2005 ($)
- -------------------------------------- ---------------------------------------------------- ------------ -----------
Operations Net investment income 78,099 138,077
Net realized gain on investments and foreign
currency transactions 31,989,187 23,627,936
Net change in unrealized appreciation (depreciation)
on investments and foreign currency translations 13,976,417 44,908,271
------------ -----------
Net Increase from Operations 46,043,703 68,674,284
---------------------------------------------------- ------------ -----------
Distributions Declared to Shareholders From net investment income:
Class Z (7,913) --
From net realized gains:
Class A (18,635,085) (27,843,539)
Class B (8,087,806) (17,698,720)
Class C (2,943,510) (3,941,261)
Class Z (3,712,286) (6,429,930)
------------ -----------
Total Distributions Declared to Shareholders (33,386,600) (55,913,450)
---------------------------------------------------- ------------ -----------
Share Transactions Class A:
Subscriptions 59,962,359 145,533,028
Distributions reinvested 17,013,851 25,655,362
Redemptions (46,571,042) (75,814,920)
------------ -----------
Net Increase 30,405,168 95,373,470
Class B:
Subscriptions 4,577,336 21,022,513
Distributions reinvested 7,381,161 15,894,102
Redemptions (35,887,719) (68,587,715)
------------ -----------
Net Decrease (23,929,222) (31,671,100)
Class C:
Subscriptions 7,346,940 22,434,664
Distributions reinvested 2,234,371 3,099,402
Redemptions (4,796,998) (7,734,365)
------------ -----------
Net Increase 4,784,313 17,799,701
Class Z:
Subscriptions 10,895,220 48,136,242
Distributions reinvested 1,331,264 2,278,715
Redemptions (8,894,863) (34,331,058)
------------ -----------
Net Increase 3,331,621 16,083,899
Net Increase from Share Transactions 14,591,880 97,585,970
------------ -----------
Total Increase in Net Assets 27,248,983 110,346,804
---------------------------------------------------- ------------ -----------
Net Assets Beginning of period 720,193,985 609,847,181
End of period 747,442,968 720,193,985
Undistributed net investment income or accumulated
net investment loss at end of period 49,175 (21,011)
See Accompanying Notes to Financial Statements.
19
- --------------------------------------------------------------------------------
Columbia Small Cap
Value Fund I
(Unaudited)
Six Months Year
Ended Ended
December 31, June 30,
2005 2005
- ----------------- ------------------------------------- ------------ ----------
Changes in Shares Class A:
Subscriptions 1,341,282 3,468,955
Issued for distributions reinvested 376,579 605,222
Redemptions (1,040,723) (1,810,292)
------------ ----------
Net Increase 677,138 2,263,885
Class B:
Subscriptions 115,970 565,332
Issued for distributions reinvested 187,149 423,844
Redemptions (914,797) (1,851,257)
------------ ----------
Net Decrease (611,678) (862,081)
Class C:
Subscriptions 178,998 578,975
Issued for distributions reinvested 54,245 79,309
Redemptions (116,955) (200,290)
------------ ----------
Net Increase 116,288 457,994
Class Z:
Subscriptions 235,283 1,105,995
Issued for distributions reinvested 28,458 52,121
Redemptions (191,955) (792,561)
------------ ----------
Net Increase 71,786 365,555
See Accompanying Notes to Financial Statements.
20
FINANCIAL HIGHLIGHTS
-----------------------------
Columbia Small Cap Value Fund
I
Selected data for a share outstanding throughout each period is as follows:
(Unaudited)
Six Months
Ended
December 31, Year Ended June 30,
2005 ---------------------------------------------------------------
Class A Shares ------------ 2005 2004 2003 2002
- ------------------------------------------ ------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 43.12 $ 42.17 $ 31.39 $ 37.54 $ 37.49
- --------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (loss) (a) 0.05 0.11 0.08 0.02 (0.20)
Net realized and unrealized gain (loss)
on investments and foreign currency 2.82 4.46 11.88 (1.54) 2.42
------------ -------- -------- -------- --------
Total from Investment Operations 2.87 4.57 11.96 (1.52) 2.22
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to
Shareholders:
From net realized gains (1.97) (3.62) (1.18) (4.51) (2.17)
Return of capital -- -- -- (0.12) --
------------ -------- -------- -------- --------
Total Distributions Declared to
Shareholders (1.97) (3.62) (1.18) (4.63) (2.17)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 44.02 $ 43.12 $ 42.17 $ 31.39 $ 37.54
Total return (b) 6.54%(c)(d)(e) 10.99% 38.58%(d) (2.16)%(d) 6.43%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net
Assets/Supplemental Data:
Operating expenses (f) 1.26%(g) 1.32% 1.42% 1.54% 1.57%
Interest expense -- -- -- --%(h) --
Net investment income (loss) (f) 0.23%(g) 0.28% 0.22% 0.07% (0.55)%
Waiver/reimbursement 0.02%(g) -- 0.01% 0.12% --
Portfolio turnover rate 15%(c) 31% 46% 118% 77%
Net assets, end of period (000's) $434,671 $396,568 $292,365 $181,377 $142,551
- --------------------------------------------------------------------------------------------------------------------------------
-
Class A Shares 2001
- ---------------------------------------------------
Net Asset Value, Beginning of Period $ 32.56
- ---------------------------------------------------
Income from Investment Operations:
Net investment income (loss) (a) (0.06)
Net realized and unrealized gain (loss)
on investments and foreign currency 6.38
--------
Total from Investment Operations 6.32
- ---------------------------------------------------
Less Distributions Declared to
Shareholders:
From net realized gains (1.39)
Return of capital --
--------
Total Distributions Declared to
Shareholders (1.39)
- ---------------------------------------------------
Net Asset Value, End of Period $ 37.49
Total return (b) 19.86%
- ---------------------------------------------------
Ratios to Average Net
Assets/Supplemental Data:
Operating expenses (f) 1.58%
Interest expense --
Net investment income (loss) (f) (0.18)%
Waiver/reimbursement --
Portfolio turnover rate 29%
Net assets, end of period (000's) $137,042
- ---------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c)Not annualized.
(d)Had the Investment Advisor and/or Transfer Agent not waived or reimbursed a
portion of expenses, total return would have been reduced.
(e)Total return includes a voluntary reimbursement by the Investment Advisor
for a realized investment loss due to a trading error. This reimbursement
had an impact of less than 0.01% on the Fund's total return.
(f)The benefits derived from custody credits had an impact of less than 0.01%.
(g)Annualized.
(h)Rounds to less than 0.01%.
See Accompanying Notes to Financial Statements.
21
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
I
Selected data for a share outstanding throughout each period is as follows:
(Unaudited)
Six Months
Ended
December 31, Year Ended June 30,
2005 ----------------------------------------------------------------
Class B Shares ------------ 2005 2004 2003 2002
- ------------------------------------------ -------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 38.00 $ 37.60 $ 28.18 $ 34.50 $ 34.88
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment loss (a) (0.11) (0.18) (0.18) (0.19) (0.44)
Net realized and unrealized gain (loss)
on investments and foreign currency 2.49 3.96 10.64 (1.50) 2.23
------------ -------- -------- -------- --------
Total from Investment Operations 2.38 3.78 10.46 (1.69) 1.79
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to
Shareholders:
From net realized gains (1.97) (3.38) (1.04) (4.51) (2.17)
Return of capital -- -- -- (0.12) --
------------ -------- -------- -------- --------
Total Distributions Declared to
Shareholders (1.97) (3.38) (1.04) (4.63) (2.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 38.41 $ 38.00 $ 37.60 $ 28.18 $ 34.50
Total return (b) 6.13%(c)(d)(e) 10.18% 37.58%(d) (2.93)%(d) 5.65%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net
Assets/Supplemental Data:
Operating expenses (f) 2.01%(g) 2.07% 2.17% 2.30% 2.32%
Interest expense -- -- -- --%(h) --
Net investment loss (f) (0.52)%(g) (0.47)% (0.53)% (0.71)% (1.30)%
Waiver/reimbursement 0.02%(g) -- 0.01% 0.09% --
Portfolio turnover rate 15%(c) 31% 46% 118% 77%
Net assets, end of period (000's) $161,146 $182,648 $213,159 $188,270 $231,602
- ---------------------------------------------------------------------------------------------------------------------------------
-
Class B Shares 2001
- ---------------------------------------------------
Net Asset Value, Beginning of Period $ 30.64
- ---------------------------------------------------
Income from Investment Operations:
Net investment loss (a) (0.31)
Net realized and unrealized gain (loss)
on investments and foreign currency 5.94
--------
Total from Investment Operations 5.63
- ---------------------------------------------------
Less Distributions Declared to
Shareholders:
From net realized gains (1.39)
Return of capital --
--------
Total Distributions Declared to
Shareholders (1.39)
- ---------------------------------------------------
Net Asset Value, End of Period $ 34.88
Total return (b) 18.83%
- ---------------------------------------------------
Ratios to Average Net
Assets/Supplemental Data:
Operating expenses (f) 2.33%
Interest expense --
Net investment loss (f) (0.93)%
Waiver/reimbursement --
Portfolio turnover rate 29%
Net assets, end of period (000's) $240,252
- ---------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(c)Not annualized.
(d)Had the Investment Advisor and/or Transfer Agent not waived or reimbursed a
portion of expenses, total return would have been reduced.
(e)Total return includes a voluntary reimbursement by the Investment Advisor
for a realized investment loss due to a trading error. This reimbursement
had an impact of less than 0.01% on the Fund's total return.
(f)The benefits derived from custody credits had an impact of less than 0.01%.
(g)Annualized.
(h)Rounds to less than 0.01%.
See Accompanying Notes to Financial Statements.
22
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
I
Selected data for a share outstanding throughout each period is as follows:
(Unaudited)
Six Months
Ended
December 31, Year Ended June 30,
2005 --------------------------------------------------------
Class C Shares ------------ 2005 2004 2003 2002
- ------------------------------------------------- -----------------------------------------------------------
Net Asset Value, Beginning of Period $ 39.60 $ 39.05 $ 29.24 $ 35.59 $ 35.91
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment loss (a) (0.11) (0.18) (0.19) (0.19) (0.45)
Net realized and unrealized gain (loss) on
investments and foreign currency 2.59 4.11 11.04 (1.53) 2.30
------------ ------- ------- ------- -------
Total from Investment Operations 2.48 3.93 10.85 (1.72) 1.85
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net realized gains (1.97) (3.38) (1.04) (4.51) (2.17)
Return of capital -- -- -- (0.12) --
------------ ------- ------- ------- -------
Total Distributions Declared to Shareholders (1.97) (3.38) (1.04) (4.63) (2.17)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 40.11 $ 39.60 $ 39.05 $ 29.24 $ 35.59
Total return (b) 6.14%(c)(d)(e) 10.19% 37.56%(d) (2.92)%(d) 5.66%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (f) 2.01%(g) 2.07% 2.17% 2.30% 2.32%
Interest expenses -- -- -- --%(h) --
Net investment loss (f) (0.52)%(g) (0.47)% (0.53)% (0.71)% (1.30)%
Waiver/reimbursement 0.02%(g) -- 0.01% 0.10% --
Portfolio turnover rate 15%(c) 31% 46% 118% 77%
Net assets, end of period (000's) $62,881 $57,471 $38,798 $25,186 $26,726
- -------------------------------------------------------------------------------------------------------------------------------
----
Class C Shares 2001
- -------------------------------------------------------------
Net Asset Value, Beginning of Period $ 31.50
- -------------------------------------------------------------
Income from Investment Operations:
Net investment loss (a) (0.31)
Net realized and unrealized gain (loss) on
investments and foreign currency 6.11
-------
Total from Investment Operations 5.80
- -------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net realized gains (1.39)
Return of capital --
-------
Total Distributions Declared to Shareholders (1.39)
- -------------------------------------------------------------
Net Asset Value, End of Period $ 35.91
Total return (b) 18.85%
- -------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (f) 2.33%
Interest expenses --
Net investment loss (f) (0.93)%
Waiver/reimbursement --
Portfolio turnover rate 29%
Net assets, end of period (000's) $27,886
- -------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(c)Not annualized.
(d)Had the Investment Advisor and/or Transfer Agent not waived or reimbursed a
portion of expenses, total return would have been reduced.
(e)Total return includes a voluntary reimbursement by the Investment Advisor
for a realized investment loss due to a trading error. This reimbursement
had an impact of less than 0.01% on the Fund's total return.
(f)The benefits derived from custody credits had an impact of less than 0.01%.
(g)Annualized.
(h)Rounds to less than 0.01%.
See Accompanying Notes to Financial Statements.
23
See Accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
I
Selected data for a share outstanding throughout each period is as follows:
(Unaudited)
Six Months
Ended
December 31, Year Ended June 30,
2005 ---------------------------------------------------------
Class Z Shares ------------ 2005 2004 2003 2002 2001
- ------------------------------------------ --------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 44.54 $ 43.41 $ 32.24 $ 38.28 $38.09 $33.01
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (loss) (a) 0.11 0.23 0.21 0.24 (0.12) 0.02
Net realized and unrealized gain (loss)
on investments and foreign currency 2.91 4.62 12.19 (1.65) 2.48 6.45
------------ ------- ------- ------- ------ ------
Total from Investment Operations 3.02 4.85 12.40 (1.41) 2.36 6.47
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to
Shareholders:
From net investment income (0.01) -- -- -- -- --
From net realized gains (1.97) (3.72) (1.23) (4.51) (2.17) (1.39)
Return of capital -- -- -- (0.12) -- --
------------ ------- ------- ------- ------ ------
Total Distributions Declared to
Shareholders (1.98) (3.72) (1.23) (4.63) (2.17) (1.39)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 45.58 $ 44.54 $ 43.41 $ 32.24 $38.28 $38.09
Total return (b) 6.66%(c)(d)(e) 11.34% 38.94%(d) (1.79)%(d) 6.71% 20.05%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net
Assets/Supplemental Data:
Operating expenses (f) 1.01%(g) 1.07% 1.17% 1.25% 1.32% 1.33%
Interest expense -- -- -- --%(h) -- --
Net investment income (loss) (f) 0.48%(g) 0.53% 0.52% 0.82% (0.30)% 0.07%
Waiver/reimbursement 0.02%(g) -- 0.01% 0.38% -- --
Portfolio turnover rate 15%(c) 31% 46% 118% 77% 29%
Net assets, end of period (000's) $88,745 $83,508 $65,526 $12,558 $ 278 $ 21
- ---------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested.
(c)Not annualized.
(d)Had the Investment Advisor and/or Transfer Agent not waived or reimbursed a
portion of expenses, total return would have been reduced.
(e)Total return includes a voluntary reimbursement by the Investment Advisor
for a realized investment loss due to a trading error. This reimbursement
had an impact of less than 0.01% on the Fund's total return.
(f)The benefits derived from custody credits had an impact of less than 0.01%.
(g)Annualized.
(h)Rounds to less than 0.01%.
See Accompanying Notes to Financial Statements.
24
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
Note 1. Organization
Columbia Small Cap Value Fund I (the "Fund"), a series of Columbia Funds Trust
VI (the "Trust"), is a diversified portfolio. The Trust is a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company. On October 7, 2005, the Columbia
Small Cap Value Fund was renamed Columbia Small Cap Value Fund I.
Investment Goal
The Fund seeks long-term growth by investing primarily in smaller
capitalization equity securities.
Fund Shares
The Fund may issue an unlimited number of shares and offers four classes of
shares: Class A, Class B, Class C and Class Z. Each share class has its own
sales charge and expense structure.
Class A shares are subject to a maximum front-end sales charge of 5.75% based
on the amount of initial investment. Class A shares purchased without an
initial sales charge are subject to a 1.00% contingent deferred sales charge
("CDSC") on shares sold within eighteen months on an original purchase of $1
million to $25 million. Class B shares are subject to a maximum CDSC of 5.00%
based upon the holding period after purchase. Class B shares will convert to
Class A shares in a certain number of years after purchase, depending on the
program under which shares were purchased. Class C shares are subject to a
1.00% CDSC on shares sold within one year after purchase. Class Z shares are
offered continuously at net asset value. There are certain restrictions on the
purchase of Class Z shares, as described in the Fund's prospectus.
Note 2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP") requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
Security Valuation
Equity securities are valued at the last sale price on the principal exchange
on which they trade, except for securities traded on the NASDAQ, which are
valued at the NASDAQ official close price. Unlisted securities or listed
securities for which there were no sales during the day are valued at the
closing bid price on such exchanges or over-the-counter markets.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Investments for which market quotations are not readily available, or that have
quotations which management believes are not appropriate, are valued at fair
value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of Trustees. If a
security is valued at a "fair value", such value is likely to be different from
the last quoted market price for the security.
Security Transactions
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
Repurchase Agreements
The Fund may engage in repurchase agreement transactions with institutions that
the Fund's investment advisor has determined are creditworthy. The Fund,
through its custodian, receives delivery of underlying securities
collateralizing a repurchase agreement. Collateral is at least equal, at all
times, to the value of the repurchase obligation including interest. A
repurchase agreement transaction involves certain risks in the event of default
or insolvency of the counterparty. These risks include possible delays or
restrictions upon the Fund's ability to dispose of the underlying securities
and a possible decline in the value of the underlying securities during the
period while the Fund seeks to assert its rights.
25
- --------------------------------------------------------------------------------
December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
Income Recognition
Interest income is recorded on the accrual basis. Corporate actions and
dividend income are recorded on the ex-date except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware
of such, net of non-reclaimable tax withholdings. Awards from class action
litigation are recorded as a reduction of cost if the Fund still owns the
applicable securities on the payment date. If the Fund no longer owns the
applicable securities, the proceeds are recorded as realized gains.
The Fund estimates components of distributions from real estate investment
trusts (REITs). Distributions received in excess of income are recorded as a
reduction of the cost of the related investments. If the Fund no longer owns
the applicable securities, any distributions received in excess of income are
recorded as realized gains.
Foreign Currency Transactions
The values of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. Net realized and
unrealized gains (losses) on foreign currency transactions include gains
(losses) arising from the fluctuation in exchange rates between trade and
settlement dates on securities transactions, gains (losses) arising from the
disposition of foreign currency and currency gains (losses) between the accrual
and payment dates on dividends, interest income and foreign withholding taxes.
For financial statement purposes, the Fund does not distinguish that portion of
gains (losses) on investments which is due to changes in foreign exchange rates
from that which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains (losses)
on investments.
Determination of Class Net Asset Values
All income, expenses (other than class-specific expenses, as shown on the
Statement of Operations), and realized and unrealized gains (losses), are
allocated to each class of the Fund on a daily basis, based on the relative net
assets of each class, for purposes of determining the net asset value of each
class.
Federal Income Tax Status
The Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its taxable income, if any, for its tax year, and as such
will not be subject to federal income taxes. In addition, the Fund intends to
distribute in each calendar year substantially all of its net investment
income, capital gains and certain other amounts, if any, such that the Fund
should not be subject to federal excise tax. Therefore, no federal income or
excise tax provision is recorded.
Distributions to Shareholders
Distributions to shareholders are recorded on ex-date. Net realized capital
gains, if any, are distributed at least annually.
Note 3. Federal Tax Information
The tax character of distributions paid during the year ended June 30, 2005 was
as follows:
Distributions paid from:
Ordinary income* $23,936,007
------------------------------------
Long-term capital gains 31,977,443
------------------------------------
*For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
Unrealized appreciation and depreciation at December 31, 2005, based on cost of
investments for federal income tax purposes, was:
Unrealized appreciation $224,067,939
Unrealized depreciation (21,152,398)
------------
Net unrealized appreciation $202,915,541
------------------------------------------
The following capital loss carryforwards, determined as of June 30, 2005, may
be available to reduce taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code:
Year of Capital Loss
Expiration Carryforward
-----------------------
2006 $1,233,446
2007 1,233,446
2009 2,466,892
2012 3,700,337
------------
$8,634,121
-----------------------
26
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December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
Note 4. Fees and Compensation Paid to Affiliates
Investment Advisory Fee
Columbia Management Advisors, LLC ("Columbia"), an indirect wholly owned
subsidiary of Bank of America Corporation ("BOA"), is the investment advisor to
the Fund and provides administrative and other services to the Fund. Prior to
September 30, 2005, Columbia Management Advisors, Inc. was investment advisor
to the Fund under the same fee structure. On September 30, 2005, Columbia
Management Advisors, Inc. merged into Banc of America Capital Management, LLC.
At that time, the investment advisor was then renamed Columbia Management
Advisors, LLC. Columbia receives a monthly investment advisory fee based on the
Fund's average daily net assets at the following annual rates:
Average Daily Net Assets Annual Fee Rate
----------------------------------------
First $500 million 0.80%
----------------------------------------
$500 to $1 billion 0.75%
----------------------------------------
Over $1 billion 0.70%
----------------------------------------
For the six months ended December 31, 2005, the Fund's annualized effective
investment advisory fee rate was 0.78%.
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, the total fees payable under
the pricing and bookkeeping agreement are paid to State Street.
Under its pricing and bookkeeping agreement with the Fund, Columbia receives an
annual fee of $38,000 paid monthly plus an additional monthly fee based on the
level of average daily net assets for the month; provided that during any
12-month period, the aggregate fee shall not exceed $140,000.
Prior to November 1, 2005, Columbia received from the Fund an annual fee of
$10,000 paid monthly, and in any month that the Fund's average daily net assets
exceeded $50 million, an additional monthly fee, calculated by taking into
account the fees payable to State Street under the Outsourcing Agreement.
The Fund also reimburses Columbia and State Street for out-of pocket expenses
and charges, including fees payable to third parties for pricing the Fund's
portfolio securities and direct internal costs incurred by Columbia in
connection with providing fund accounting oversight and monitoring and certain
other services. For the six months ended December 31, 2005, the annualized
effective pricing and bookkeeping fee rate for the Fund, inclusive of
out-of-pocket expenses, was 0.024% of the Fund's average daily net assets.
Transfer Agent Fee
Columbia Management Services, Inc. (formerly Columbia Funds Services, Inc.)
(the "Transfer Agent"), an affiliate of Columbia and a wholly owned subsidiary
of BOA, provides shareholder services to the Fund and has contracted with
Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. For
such services, the Transfer Agent receives a fee, paid monthly, at the annual
rate of $15.23 per open account plus sub-transfer agent fees (exclusive of BFDS
fees) calculated based on assets held in omnibus accounts and intended to
recover the cost of payments to third parties for services to those accounts.
The Transfer Agent may also retain as additional compensation for its services
revenues for fees for wire, telephone and redemption orders, IRA trustee agent
fees and account transcript fees due the Transfer Agent from shareholders of
the Fund and credits (net of bank charges) earned with respect to balances in
accounts the Transfer Agent maintains in connection with its services to the
Fund. The Transfer Agent also receives reimbursement for certain out-of-pocket
expenses.
Prior to November 1, 2005, the Transfer Agent received a fee, paid monthly at
the annual rate of $28.00 per open account and was reimbursed for certain
out-of-pocket expenses. For the period September 1, 2005 through October 31,
2005, the Transfer Agent voluntarily waived fees of $65,185 for the Fund.
For the six months ended December 31, 2005, the Fund's annualized effective
transfer agent fee rate, inclusive of out-of-pocket expenses and net of fee
waivers, was 0.15% of the Fund's average daily net assets.
27
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December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
Underwriting Discounts, Service and Distribution Fees
Columbia Management Distributors, Inc. (the "Distributor"), an affiliate of
Columbia and a wholly owned subsidiary of BOA, is the principal underwriter of
the Fund. On August 22, 2005, Columbia Funds Distributor, Inc. was renamed
Columbia Management Distributors, Inc. For the six months ended December 31,
2005, the Distributor has retained net underwriting discounts of $45,400 on
sales of the Fund's Class A shares and received net CDSC of $123, $88,946 and
$2,167 on Class A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan (the "Plan") which allows the payment of a
monthly service fee to the Distributor at the annual rate of 0.25% of the
average daily net assets of the Fund attributable to Class A, Class B and Class
C shares. The Plan also requires the payment of a monthly distribution fee to
the Distributor at the annual rate of 0.75% of the average daily net assets
attributable to Class B and Class C shares only.
The CDSC and the distribution fees received from the Plan are used principally
as repayment to the Distributor for amounts paid by the Distributor to dealers
who sold such shares.
Fee Waivers
Columbia has voluntarily agreed to reimburse the Fund for certain expenses so
that total expenses (exclusive of distribution and service fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any) will not
exceed 1.25% annually of the Fund's average daily net assets. Columbia, at its
discretion, may revise or discontinue this arrangement any time.
Custody Credits
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. These credits are recorded as a reduction of
total expenses on the Statement of Operations. The Fund could have invested a
portion of the assets utilized in connection with the expense offset
arrangement in an income-producing asset if it had not entered into such an
agreement.
Fees Paid to Officers and Trustees
All the officers of the Fund, with the exception of the Fund's Chief Compliance
Officer, are employees of Columbia or its affiliates and receive no
compensation from the Fund. The Board of Trustees has 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. The Fund's
expenses for the Chief Compliance Officer will not exceed $15,000 per year.
The Fund's Trustees may participate in a deferred compensation plan which may
be terminated at any time. Obligations of the plan will be paid solely out of
the Fund's assets.
Other
Columbia provides certain services to the Fund related to Sarbanes-Oxley
compliance. For the six months ended December 31, 2005, the Fund paid $2,214 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
Note 5. Purchases and Sales of Securities
For the six months ended December 31, 2005, the cost of purchases and proceeds
from sales of securities, excluding short-term obligations, were $113,663,546
and $129,941,591, respectively.
Note 6. Line of Credit
The Fund and other affiliated funds participate in a $350,000,000 committed
unsecured revolving line of credit provided by State Street Bank and Trust
Company. Borrowings are used for temporary or emergency purposes to facilitate
portfolio liquidity. Interest is charged to each participating fund based on
its borrowings at a rate per annum equal to the Federal Funds rate plus 0.50%.
In addition, a commitment fee of 0.10% per annum is accrued and apportioned
among the participating funds based on their pro-rata portion of the unutilized
line of credit. The commitment fee is included in "Other expenses" on the
Statement of Operations. For the six months ended December 31, 2005, the Fund
did not borrow under this arrangement.
28
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December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
Note 7. Shares of Beneficial Interest
As of December 31, 2005, the Fund had shareholders whose shares were
beneficially owned by participant accounts over which Bank of America and/or
its affiliates had either sole or joint investment discretion. Subscription and
redemption activity of these accounts may have a significant effect on the
operations of the Fund. The number of such accounts and the percentage of
shares of beneficial interest outstanding held therein are as follows:
Number of % of Shares
Shareholders Outstanding Held
-----------------------------
1 88.2%
-----------------------------
As of December 31, 2005, the Fund had shareholders that held greater than 5% of
the shares outstanding. Subscription and redemption activity of these accounts
may have a significant effect on the operations of the Fund. The number of such
accounts and the percentage of shares of beneficial interest outstanding held
therein are as follows:
Number of % of Shares
Shareholders Outstanding Held
-----------------------------
1 6.2%
-----------------------------
Note 8. Other
During the six months ended December 31, 2005, the Fund realized a loss due to
a trading error. This loss of $9,718 to the Fund has been reimbursed by
Columbia.
Note 9. Disclosure of Significant Risks and Contingencies
Industry Focus
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
Legal Proceedings
On February 9, 2005, Columbia Management Advisors, Inc. (which has since merged
into Banc of America Capital Management, LLC (now named Columbia Management
Advisors, LLC)) ("Columbia") and Columbia Funds Distributor, Inc. (which has
been renamed Columbia Management Distributors, Inc.) (the "Distributor")
(collectively, the "Columbia Group") entered into an Assurance of
Discontinuance with the New York Attorney General ("NYAG") (the "NYAG
Settlement") and consented to the entry of a cease-and-desist order by the
Securities and Exchange Commission ("SEC") (the "SEC Order"). The SEC Order and
the NYAG Settlement are referred to collectively as the "Settlements". The
Settlements contain substantially the same terms and conditions as outlined in
the agreements in principle which Columbia Group entered into with the SEC and
NYAG in March 2004.
Under the terms of the SEC Order, the Columbia Group has agreed among other
things, to: pay $70 million in disgorgement and $70 million in civil money
penalties; cease and desist from violations of the antifraud provisions and
certain other provisions of the federal securities laws; maintain certain
compliance and ethics oversight structures; retain an independent consultant to
review the Columbia Group's applicable supervisory, compliance, control and
other policies and procedures; and retain an independent distribution
consultant (see below). The Columbia Funds have also voluntarily undertaken to
implement certain governance measures designed to maintain the independence of
their boards of trustees. The NYAG Settlement also, among other things,
requires Columbia and its affiliates to reduce certain Columbia Funds
(including the former Nations Funds) and other mutual funds management fees
collectively by $32 million per year for five years, for a projected total of
$160 million in management fee reductions.
Pursuant to the procedures set forth in the SEC order, the $140 million in
settlement amounts described above will be distributed in accordance with a
distribution plan developed by an independent distribution consultant and
agreed to by the staff of the SEC. The independent distribution consultant has
been in consultation with the Staff, and he has submitted a draft proposed plan
of distribution, but has not yet submitted a final proposed plan of
distribution.
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.
29
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December 31, 2005 (Unaudited)
Columbia Small Cap Value Fund
I
A copy of the SEC Order is available on the SEC website at http://www.sec.gov.
A copy of the NYAG Settlement is available as part of the Bank of America
Corporation Form 8-K filing on February 10, 2005.
In connection with the events described in detail above, various parties have
filed suit against certain funds, the Trustees of the Columbia Funds,
FleetBoston Financial Corporation and its affiliated entities and/or Bank of
America and its affiliated entities.
On February 20, 2004, the Judicial Panel on Multidistrict Litigation
transferred these cases and cases against several other mutual fund companies
based on similar allegations to the United States District Court in Maryland
for consolidated or coordinated pretrial proceedings (the "MDL"). Subsequently,
additional related cases were transferred to the MDL. On September 29, 2004,
the plaintiffs in the MDL filed amended and consolidated complaints. One of
these amended complaints is a putative class action that includes claims under
the federal securities laws and state common law, and that names Columbia, the
Distributor, the Trustees of the Columbia Funds, Bank of America Corporation
and others as defendants. Another of the amended complaints is a derivative
action purportedly on behalf of the Columbia Funds that asserts claims under
federal securities laws and state common law.
On February 25, 2005, Columbia and other defendants filed motions to dismiss
the claims in the pending cases. On November 3, 2005, the U.S. District Court
for the District of Maryland dismissed the claims under the Securities Act of
1933, the claims under Sections 34(b) and 36(a) of the Investment Company Act
of 1940 (ICA) and the state law claims against Columbia and others. The claims
under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Section 36(b) of the ICA were not dismissed.
On March 21, 2005 purported class action plaintiffs filed suit in Massachusetts
state court alleging that the conduct, including market timing, entitles Class
B shareholders in certain Columbia funds to an exemption from contingent
deferred sales charges upon early redemption ("the CDSC Lawsuit"). The CDSC
Lawsuit has been removed to federal court in Massachusetts and the federal
Judicial Panel has transferred the CDSC Lawsuit to the MDL.
The MDL is ongoing. Accordingly, an estimate of the financial impact of the
litigation on any fund, if any, cannot currently be made.
In 2004, certain Columbia funds, the Trustees of the Columbia Funds, advisers
and affiliated entities were named as defendants in certain purported
shareholder class and derivative actions making claims, including claims under
the Investment Company and the Investment Advisers Acts of 1940 and state law.
The suits allege, inter alia, that the fees and expenses paid by the funds are
excessive and that the advisers and their affiliates inappropriately used fund
assets to distribute the funds and for other improper purpose. On March 2,
2005, the actions were consolidated in the Massachusetts federal court as In re
Columbia Entities Litigation. The plaintiffs filed a consolidated amended
complaint on June 9, 2005. On November 30, 2005, the judge dismissed all claims
by plaintiffs and ordered that the case be closed. The plaintiffs filed a
notice of appeal on December 30, 2005 and this appeal is pending.
For the six months ended December 31, 2005, Columbia has assumed $5,650 of
legal, consulting services and Trustee's fees incurred by the Fund in
connection with these matters.
30
BOARD CONSIDERATION AND APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
-------------------------------
Columbia Small Cap Value Fund I
The Advisory Fees and Expenses Committee of the Board of Trustees meets one or
more times annually, usually in late summer, to review the advisory agreements
(collectively, the "Agreements") of the funds for which the Trustees serve as
trustees or directors (each a "fund") and determine whether to recommend that
the full Board approve the continuation of the Agreements for an additional
one-year period. After the Committee has made its recommendation, the full
Board, including the Independent Trustees, determines whether to approve the
continuation of the Agreements. In addition, the Board, including the
Independent Trustees, considers matters bearing on the Agreements at most of
its other meetings throughout the year and meets regularly with the heads of
each investment area within Columbia. The Trustees also meet with selected fund
portfolio managers at various times throughout the year.
The Trustees receive and review all materials that they, their legal counsel or
Columbia, the funds' investment adviser, believe to be reasonably necessary for
the Trustees to evaluate the Agreements and determine whether to approve the
continuation of the Agreements. Those materials generally include, among other
items, (i) information on the investment performance of each fund relative to
the performance of peer groups of mutual funds and the fund's performance
benchmarks, (ii) information on each fund's advisory fees and other expenses,
including information comparing the fund's expenses to those of peer groups of
mutual funds and information about any applicable expense caps and fee
"breakpoints," (iii) sales and redemption data, (iv) information about the
profitability of the Agreements to Columbia, and potential "fall-out" or
ancillary benefits that Columbia and its affiliates may receive as a result of
their relationships with the funds and (v) information obtained through
Columbia's response to a questionnaire prepared at the request of the Trustees
by counsel to the funds and independent legal counsel to the Independent
Trustees. The Trustees also consider other information such as (vi) Columbia's
financial results and financial condition, (vii) each fund's investment
objective and strategies and the size, education and experience of Columbia's
investment staffs and their use of technology, external research and trading
cost measurement tools, (viii) the allocation of the funds' brokerage, if any,
including allocations to brokers affiliated with Columbia and the use of "soft"
commission dollars to pay fund expenses and to pay for research products and
services, (ix) Columbia's resources devoted to, and its record of compliance
with, the funds' investment policies and restrictions, policies on personal
securities transactions and other compliance policies, (x) Columbia's response
to various legal and regulatory proceedings since 2003 and (xi) the economic
outlook generally and for the mutual fund industry in particular. In addition,
the Trustees confer with their independent fee consultant and review materials
relating to the Agreements that the independent fee consultant provides.
Throughout the process, the Trustees have the opportunity to ask questions of
and request additional materials from Columbia and to consult independent legal
counsel to the Independent Trustees.
The Board of Trustees most recently approved the continuation of the Agreements
at its October, 2005 meeting, following meetings of the Advisory Fees and
Expenses Committee held in August, September, and October, 2005. In considering
whether to approve the continuation of the Agreements, the Trustees, including
the Independent Trustees, did not identify any single factor as determinative,
and each weighed various factors as he or she deemed appropriate. The Trustees
considered the following matters in connection with their approval of the
continuation of the Agreements:
The nature, extent and quality of the services provided to the funds under the
Agreements. The Trustees considered the nature, extent and quality of the
services provided by Columbia and its affiliates to the funds and the resources
dedicated to the funds by Columbia and its affiliates. Among other things, the
Trustees considered (i) Columbia's ability, including its resources,
compensation programs for personnel involved in fund management, reputation and
other attributes, to attract and retain highly qualified research, advisory and
supervisory investment professionals; (ii) the portfolio management services
provided by those investment professionals; and (iii) the trade execution
services provided on behalf of the funds. For each fund, the Trustees also
considered the benefits to shareholders of investing in a mutual fund that is
part of a family of funds offering exposure to a variety of asset classes and
investment disciplines and providing for a variety of fund and shareholder
services. After reviewing those and related factors, the Trustees concluded,
within the context of their overall conclusions regarding each of the
Agreements, that the nature, extent and quality of services provided supported
the continuation of the Agreements.
31
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Columbia Small Cap Value Fund I
Investment performance of the funds and Columbia. The Trustees reviewed
information about the performance of each fund over various time periods,
including information prepared by an independent third party that compared the
performance of each fund to the performance of peer groups of mutual funds and
performance benchmarks. The Trustees also reviewed a description of the third
party's methodology for identifying each fund's peer group for purposes of
performance and expense comparisons. The Trustees also considered additional
information that the Advisory Fees and Expenses Committee requested from
Columbia relating to funds that presented relatively weaker performance and/or
relatively higher expenses.
In the case of each fund that had performance that lagged that of a relevant
peer group for certain (although not necessarily all) periods, the Trustees
concluded that other factors relevant to performance were sufficient, in light
of other considerations, to warrant continuation of the fund's Agreements.
Those factors varied from fund to fund, but included one or more of the
following: (i) that the fund's performance, although lagging in certain recent
periods, was stronger over the longer term; (ii) that the underperformance was
attributable, to a significant extent, to investment decisions that were
reasonable and consistent with the fund's investment strategy and policies and
that the fund was performing as expected, given market conditions and the
fund's investment strategy; (iii) that the fund's performance was competitive
when compared to other relevant performance benchmarks or peer groups; (iv)
that Columbia had taken or was taking steps designed to help improve the fund's
investment performance, including, but not limited to, replacing portfolio
managers or modifying investment strategies; (v) that the fund's advisory fee
had recently been, or was proposed to be, reduced, with the goal of helping the
fund's net return to shareholders become more competitive; and (vi) that other
fund expenses, such as transfer agency or fund accounting fees, have recently
been reduced, with the goal of helping the fund's net return to shareholders
become more competitive. The Trustees also considered Columbia's performance
and reputation generally, the funds' performance as a fund family generally,
and Columbia's historical responsiveness to Trustee concerns about performance
and Columbia's willingness to take steps intended to improve performance. After
reviewing those and related factors, the Trustees concluded, within the context
of their overall conclusions regarding each of the Agreements, that the
performance of each fund and Columbia was sufficient, in light of other
considerations, to warrant the continuation of the Agreements.
The costs of the services provided and profits realized by Columbia and its
affiliates from their relationships with the funds. The Trustees considered the
fees charged to the funds for advisory services as well as the total expense
levels of the funds. That information included comparisons (provided both by
management and by an independent third party) of the funds' advisory fees and
total expense levels to those of their peer groups and information about the
advisory fees charged by Columbia to comparable accounts. In considering the
fees charged to comparable accounts, the Trustees took into account, among
other things, management's representations about the differences between
managing mutual funds as compared to other types of accounts, including the
additional resources required to effectively manage mutual funds and distribute
mutual fund shares. In evaluating each fund's advisory fees, the Trustees also
took into account the demands, complexity and quality of the investment
management of the fund. The Trustees considered reductions in advisory fee
rates, implementation of advisory fee breakpoints, institution of advisory fee
waivers, and reductions of expense caps, which benefited a number of the funds.
Furthermore, the Trustees considered the projected impact on expenses resulting
from the overall cost reductions that management anticipated would result from
the shift to a common group of service providers for transfer agency, fund
accounting and custody services for mutual funds advised by Bank of America
affiliates. The Trustees also noted management's stated justification for the
fees charged to the funds, which included information about the performance of
the funds, the services provided to the funds and management's view as to why
it was appropriate that some funds bear advisory fees or total expenses greater
than their peer group medians.
The Trustees also considered the compensation directly or indirectly received
by Columbia and its affiliates from their relationships with the funds. The
Trustees reviewed information provided by management as to the profitability to
Columbia and its affiliates of their relationships with the funds, and
information about the allocation of expenses used to calculate profitability.
When reviewing profitability, the Trustees also considered court cases in which
32
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Columbia Small Cap Value Fund I
adviser profitability was an issue in whole or in part, the performance of the
relevant funds, the expense levels of the funds, and whether Columbia had
implemented breakpoints and/or expense caps with respect to the funds.
After reviewing those and related factors, the Trustees concluded, within the
context of their overall conclusions regarding each of the Agreements, that the
advisory fees charged to each of the funds were fair and reasonable, and that
the costs of the advisory services generally, and the related profitability to
Columbia and its affiliates of their relationships with the funds, supported
the continuation of the Agreements.
Economies of Scale. The Trustees considered the existence of any economies of
scale in the provision of services by Columbia to each fund and whether those
economies were shared with the fund through breakpoints in the investment
advisory fees or other means, such as expense waivers. The Trustees noted that
many of the funds benefited from breakpoints, expense caps, or both. In
considering those issues, the Trustees also took note of the costs of the
services provided (both on an absolute and a relative basis) and the
profitability to Columbia and its affiliates of their relationships with the
funds, as discussed above.
After reviewing those and related factors, the Trustees concluded, within the
context of their overall conclusions regarding each of the Agreements, that the
extent to which economies of scale were shared with the funds supported the
continuation of the Agreements.
Other Factors. The Trustees also considered other factors, which included but
were not limited to the following:
.. the extent to which each fund had operated in accordance with its investment
objective and its record of compliance with its investment restrictions, and
the compliance programs of the funds and Columbia. They also considered the
compliance-related resources that Columbia and its affiliates were providing
to the funds.
.. the nature, quality, cost and extent of administrative and shareholder
services performed by Columbia and its affiliates, both under the Agreements
and under separate agreements for the provision of transfer agency and
administrative services.
.. so-called "fall-out benefits" to Columbia, such as the engagement of its
affiliates to provide distribution, brokerage and transfer agency services
to the funds, and the benefits of research made available to Columbia by
reason of brokerage commissions generated by the funds' securities
transactions, as well as possible conflicts of interest associated with
those fall-out and other benefits, and the reporting, disclosure and other
processes in place to disclose and monitor those possible conflicts of
interest.
.. the draft report provided by the independent fee consultant, which included
information about and analysis of the funds' fees, expenses and performance.
Based on their evaluation of all factors that they deemed to be material,
including those factors described above, and assisted by the advice of
independent counsel and the independent fee consultant, the Trustees, including
the Independent Trustees, approved the continuance of each of the
Agreements through October 31, 2006.
33
SUMMARY OF MANAGEMENT FEE EVALUATION BY INDEPENDENT FEE CONSULTANT
-------------------------------
Columbia Small Cap Value Fund I
Prepared Pursuant to the February 9, 2005
Assurance of Discontinuance
between the Office of
Attorney General of New York State and
Columbia Management Advisors, Inc. and
Columbia Funds Distributor, Inc.
October 11, 2005
I. Overview
Columbia Management Advisors, Inc. ("CMA") and Columbia Funds Distributors,
Inc. ("CFD") (CFD together with CMA referred to herein as Columbia Management
Group or "CMG/1/"), entered into an agreement with the New York Attorney
General's Office in the form of an Assurance of Discontinuance (the "AOD"). The
AOD stipulated that CMA would be permitted to manage or advise the Columbia
Funds only if the Independent Members (as such term is defined in the AOD) of
the Columbia Funds' Board of Trustees/Directors (collectively the "Trustees")
appointed a Senior Officer or an Independent Fee Consultant ("IFC") who, among
other things, is to manage the process by which management fees are negotiated.
On May 15, 2005, the Independent Members of the Board appointed me as the IFC
for the Columbia Funds. This report is the annual written evaluation of the
Columbia Funds for 2005 that I have prepared in my capacity as IFC, as required
by the AOD.
A. Duties of the Independent Fee Consultant
As part of the AOD, the Independent Members of the Columbia Funds' Board of
Trustees/Directors agreed to retain an independent fee consultant who was to
participate in the management fee negotiation process. The IFC is charged with
"... duties and responsibilities [that] include managing the process by which
proposed management fees (including, but not limited to, advisory fees) to be
charged the Columbia Fund[s] are negotiated so that they are negotiated in a
manner which is at arms length and reasonable and consistent with this
Assurance of Discontinuance." However, the IFC does not replace the Trustees in
their role of negotiating management and other fees with CMG and its
affiliates. In particular, the AOD states that "Columbia Advisors may manage or
advise a Columbia Fund only if the reasonableness of the proposed management
fees is determined by the Board of Trustees of the Columbia Fund using ... an
annual independent written evaluation prepared by or under the direction of the
.... Independent Fee Consultant...." This report, pursuant to the AOD,
constitutes the "annual ndependent written evaluation prepared by or under the
direction of the... Independent Fee Consultant."
The AOD requires the IFC report to consider at least the following:
a)Management fees (including any components thereof ) charged by other mutual
fund companies for like services;
b)Management fees (including any components thereof ) charged to institutional
and other clients of CMA for like services;
c)Costs to CMA and its affiliates of supplying services pursuant to the
management fee agreements, excluding any intra-corporate profit;
d)Profit margins of CMA and its affiliates from supplying such services;
e)Possible economies of scale as the CMA fund grows larger; and
f)The nature and quality of CMA services, including Columbia Funds' performance.
This report is designed to assist the Board in evaluating the 2005 contract
renewal for Columbia Funds. In addition, this report points out areas where the
Board may deem additional information and analysis to be appropriate over time.
B. Sources of Information Used in My Evaluation
I have requested data from CMG and various third party industry data sources or
independent research companies that work in the mutual fund arena. The
following list generally describes the types of information I requested.
1.I collected data on performance, management fees, and expense ratios of both
Columbia Funds and comparable non- Columbia Funds. The sources of this
information were CMG, Lipper Inc. ("Lipper")
/1/Prior to the date of this report, CMA merged into an affiliated entity, Banc
of America Capital Management, LLC ("BACAP"), and BACAP then changed its
name to Columbia Management Advisors, LLC which carries on the business of
CMA, and CFD changed its name to Columbia Management Distributors, Inc.
34
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Columbia Small Cap Value Fund I
and Morningstar Inc. ("Morningstar"). While Lipper and Morningstar each
selected a different group of peer funds it deemed appropriate against which
to measure the relative performance and fees of Columbia Funds, I conducted
an independent review of the appropriateness of each peer group.
2.I reviewed data on CMG's expense and profitability that I obtained from CMA
directly.
3.I have reviewed data on the organizational structure of CMG in general.
4.I collected information on profitability from Strategic Insight Mutual Fund
Research and Consulting, LLC ("Strategic Insight"). I used this third-party
independent research as an additional method to gauge the accuracy of the
data collected in (2) above.
5.I conducted interviews with various CMG staff, including members of the
senior management team, legal staff, heads of affiliates, portfolio managers,
and financial personnel.
6.I reviewed current 2005 Section 15(c) material provided to the Board and
material presented to the Board in the 2004 fee and performance evaluation.
7.I have reviewed various academic research papers, industry publications, and
other available literature dealing with mutual fund operations,
profitability, and other issues. In addition, I have reviewed SEC releases
and studies of mutual fund expenses.
8.I have reviewed documents pertaining to recent mutual fund litigation in
general and publicly available information about litigation where CMG has
been involved.
In addition, I have engaged NERA Economic Consulting ("NERA") and independent
consultant Dr. John Rea to assist me in data management and analysis. Both NERA
and Dr. Rea have extensive experience in the mutual fund industry through
consulting, government positions, or industry trade groups that provide unique
insights and special knowledge pertaining to my independent analysis of fees,
performance, and profitability. I have also retained Shearman & Sterling LLP as
outside counsel to advise me in connection with my review.
C. Qualifications and Independence
I am the Walter H. Carpenter Chair and Professor of Finance at Babson College.
Before this I was the Chief Economist of the U.S. Securities and Exchange
Commission. I have no material relationship with Bank of America or CMG aside
from acting as IFC, and am aware of no relationship with any of their
affiliates.
[Resume omitted]
II. EVALUATION OF THE GENERAL PROCESS USED TO NEGOTIATE THE ADVISORY CONTRACT
A. General Considerations
My analysis considered all factors and information I reviewed on the finances
and operations of Columbia Funds. I gave each factor an appropriate weight in
my overall findings, and no single factor was in itself the sole criterion for
a finding or conclusion. My objective was to assess all of the information
provided and conduct a robust evaluation of Columbia Funds' operations, fees,
and performance.
My analysis and thought processes will and, I believe, should, differ in
certain ways from the processes used by Trustees in their evaluation of the
management agreements. In particular, because of my technical and quantitative
background, I may use techniques and data that Trustees have not previously
felt would be useful. I view this supplemental analysis as appropriate because
my role is to assist Trustees in their decisions, and to the extent that I
bring new ideas or analysis to the evaluation, I believe this improves the
process by which management fees for the Columbia Funds may be negotiated in
accordance with the AOD.
Finally, as part of my role as IFC, I have, from time to time, sent to Trustees
additional papers and reports produced by third parties that I felt had bearing
on the fee negotiation process. I viewed these materials as educational in
nature and felt they would aid Trustees in placing their work in context.
B. CMG Management Interviews
As a starting point of my analysis, I have met with members of CMG staff to
gain an understanding of the organizational structure and personnel involved in
running the Columbia fund family.
I have had general discussions and have received information about the
management structure of CMG. My conversations with management have been
informative. In addition, I have participated in Board meetings where Trustees
and management have discussed issues relating to management agreements and
performance of Columbia Funds.When I felt it
35
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Columbia Small Cap Value Fund I
was appropriate, I added my opinions on particular matters, such as fund
performance or fee levels, to the discussion.
C. Trustees' Fee and Performance Evaluation Process
After making initial requests for information, members of the Trustees of the
Columbia Funds met in advance of the October Section 15(c) contract approval
meeting to review certain fee, performance and other data for the Columbia
Funds and to ask questions and make requests of management. Trustees have
developed a process to evaluate the fee and expense levels and performance of
Columbia Funds. This process is used to highlight those funds that have been
performing poorly, may have had higher management fees or expense ratios, or
both.
The process involves providing instructions to Lipper to prepare specific data
analyses tailored to the Trustees review framework. These instructions include
highlighting funds that hit one or more fee performance "screens." The six
screens the Trustees use are as follows:
a.5th Lipper quintile in actual management fee;
b.5th Lipper quintile in total expense ratio;
c.Three or more 5th Lipper quintile rankings in the 1-, 3-, 5- or 10-year
performance rankings;
d.Sum of the Lipper Quintile Rank (1-year performance) and the Lipper Quintile
Rank (actual management fee) totals a number equal to or higher than 8;
e.Sum of the Lipper Quintile Rank (1-year performance) and the Lipper Quintile
Rank (total expense ratio) totals a number equal to or higher than 8; and
f.Sum of the Lipper Quintile Rank (3-year performance) and the Lipper Quintile
Rank (total expense ratio) totals a number equal to or higher than 8.
If a fund hits one or more of these screens, it is highlighted for additional
review by the Trustees. This method is only used as an aid for Trustees to
highlight funds and is not the sole test of whether the Board will determine to
take particular actions concerning fees or performance. Funds that have not
been flagged by this screen also may be singled out for fee and performance
reasons, and the Trustees may determine not to take action with respect to the
fees or performance of funds that have been flagged by the screen. These
screens contribute to the basis for discussions on Trustees' views on the
Columbia Funds.
III. FINDINGS
My findings based on my work as IFC are as follows:
1.The Trustees have the relevant information necessary to form an opinion on
the reasonableness of fees and evaluate the performance of the Columbia
Funds. The process the Trustees used in preparing to reach their
determination has been open and informative. In my view, the 2005 process by
which the management fees of the Columbia Funds have been negotiated thus far
has been, to the extent practicable, at arm's length and reasonable and
consistent with the AOD.
2.Columbia Funds demonstrated a range of performance relative to their peers. I
find that across the fund complex, 54.26 percent of Columbia Funds have
performance higher than the median of their respective Lipper performance
universe, and 42.55 percent of Columbia Funds have performance higher than
the median of their respective Lipper performance group. In addition, Lipper
performance universe and group comparison showed that Columbia Funds were
distributed roughly evenly across these quintiles. The Trustees have worked
with management to address issues of funds that have demonstrated consistent
or significant underperformance.
3.Columbia Funds demonstrate a range of management fees and expense ratios
relative to their peers. I find that across the fund complex, 58.51 percent
of Columbia Funds have expenses below the median of their Lipper expense
universe, and 53.19 percent of Columbia Funds have expenses below the median
of their Lipper expense group. In addition, Lipper expense universe and group
comparisons show that Columbia Funds are distributed roughly evenly across
these quintiles. The Trustees have taken steps to limit shareholder expenses
for certain funds having management fees significantly above their peers,
often though the use of fee waivers to which CMG has agreed. Consolidation of
various funds and fund families managed by CMG has resulted in substantial
savings in non-advisory expenses.
4.Profitability to CMG of the individual funds ranges widely, but the overall
profitability to CMG of its
36
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Columbia Small Cap Value Fund I
relationship with the Columbia Funds appears to fall within a reasonable
range. The method of cost allocation to funds is addressed in the material
provided by CMG to the Trustees, but additional information may be necessary
to make a judgment on fund level profitability. My review of profitability
and cost allocation is ongoing, and I plan to continue to develop my views
with regard to fund level profitability.
5.Columbia Funds have instituted fee schedules with breakpoints designed to
enable investors to benefit from fund economies of scale, although 71% of the
funds have not yet reached their first breakpoint. My analysis of the
appropriateness of the breakpoint levels, which I expect will take into
account the cost and profitability of the individual funds, is ongoing.
My work is ongoing and my views may develop over time in light of new
information and analysis.
Respectfully submitted,
Erik R. Sirri
37
RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS
-----------------------------
Columbia Small Cap Value Fund
I
On September 16, 2005, the Annual Meeting of Shareholders of the Trust was held
to conduct a vote for or against the approval of the following items listed on
the Fund's Proxy Statement for said Meeting. On June 28, 2005, the record date
for the meeting, the Trust had 119,805,082 shares outstanding. The votes cast
were as follows:
Proposal 1:
Election of Trustees: For Withheld
------------------------------------------
Douglas A. Hacker 80,263,195 1,219,479
Janet Langford Kelly 80,297,707 1,184,967
Richard W. Lowery 80,283,606 1,199,068
Charles R. Nelson 80,326,952 1,155,722
John J. Neuhauser 80,300,678 1,181,996
Patrick J. Simpson 80,303,297 1,179,377
Thomas E. Stitzel 80,277,501 1,205,173
Thomas C. Theobald 80,299,350 1,183,324
Ann-Lee Verville 80,298,718 1,183,956
Richard L. Woolworth 80,296,982 1,185,692
William E. Mayer 71,566,272 9,916,402
The meeting was adjourned and reconvened to October 7, 2005 with respect to the
following proposal. On June 28, 2005, the record date for the meeting, the Fund
had 17,298,586 shares outstanding. The votes cast were as follows:
Proposal 2:
Broker
Amend fundamental investment restrictions: For Withheld Abstain Non-Votes
- -------------------------------------------------------------------------------------------------
Borrow money, pledging assets, and issuing senior securities 6,211,495 185,218 203,858 2,577,232
Making loans 6,206,598 189,274 204,699 2,577,232
Diversification of Investments 6,237,158 155,257 208,156 2,577,232
Investments in real estate 6,233,900 163,614 203,057 2,577,232
Underwriting of securities 6,209,438 181,257 209,876 2,577,232
Concentrating investments in an industry 6,216,316 181,829 202,426 2,577,232
Buying and selling puts and calls 6,172,055 209,985 218,531 2,577,232
38
COLUMBIA FUNDS
-----------------------------
Columbia Small Cap Value Fund
I
- ------------------------------ ---------------------------------------------------------------------------
Growth Funds Columbia Acorn Fund
Columbia Acorn Select
Columbia Acorn USA
Columbia Growth Stock Fund
Columbia Large Cap Growth Fund
Columbia Marsico 21st Century Fund
Columbia Marsico Focused Equities Fund
Columbia Marsico Growth Fund
Columbia Marsico Mid Cap Growth Fund
Columbia Mid Cap Growth Fund
Columbia Small Cap Growth Fund I
Columbia Small Cap Growth Fund II
Columbia Small Company Equity Fund
Columbia Tax-Managed Growth Fund
---------------------------------------------------------------------------
Core Funds Columbia Common Stock Fund
Columbia Large Cap Core Fund
Columbia Small Cap Core Fund
Columbia Young Investor Fund
---------------------------------------------------------------------------
Value Funds Columbia Disciplined Value Fund
Columbia Dividend Income Fund
Columbia Large Cap Value Fund
Columbia Mid Cap Value Fund
Columbia Small Cap Value Fund I
Columbia Small Cap Value Fund II
Columbia Strategic Investor
---------------------------------------------------------------------------
Asset Allocation/Hybrid Funds Columbia Asset Allocation Fund
Columbia Asset Allocation Fund II
Columbia Balanced Fund
Columbia Liberty Fund
Columbia LifeGoal(TM) Balanced Growth Portfolio
Columbia LifeGoal(TM) Growth Portfolio
Columbia LifeGoal(TM) Income Portfolio
Columbia LifeGoal(TM) Income and Growth Portfolio
Columbia Thermostat Fund
---------------------------------------------------------------------------
Index Funds Columbia Large Cap Enhanced Core Fund
Columbia Large Cap Index Fund
Columbia Mid Cap Index Fund
Columbia Small Cap Index Fund
---------------------------------------------------------------------------
Specialty Funds Columbia Convertible Securities Fund
Columbia Real Estate Equity Fund
Columbia Technology Fund
Columbia Utilities Fund
---------------------------------------------------------------------------
Global/International Funds Columbia Acorn International
Columbia Acorn International Select
Columbia Global Value Fund
Columbia Greater China Fund
Columbia International Stock Fund
Columbia International Value Fund
Columbia Marsico International Opportunities Fund
Columbia Multi-Advisor International Equity Fund
Columbia World Equity Fund
39
-------------------------------
Columbia Small Cap Value Fund I
- ---------------------- ---------------------------------------------------------------------------
Taxable Bond Funds Columbia Conservative High Yield Fund
Columbia Core Bond Fund
Columbia Federal Securities Fund
Columbia High Income Fund
Columbia High Yield Opportunity Fund
Columbia Income Fund
Columbia Intermediate Bond Fund
Columbia Intermediate Core Bond Fund
Columbia Short Term Bond Fund
Columbia Strategic Income Fund
Columbia Total Return Bond
Columbia U.S. Treasury Index Fund
---------------------------------------------------------------------------
Tax-Exempt Bond Funds Columbia California Tax-Exempt Fund
Columbia California Intermediate Municipal Bond Fund
Columbia Connecticut Tax-Exempt Fund
Columbia Connecticut Intermediate Municipal Bond Fund
Columbia Florida Intermediate Municipal Bond Fund
Columbia Georgia Intermediate Municipal Bond Fund
Columbia High Yield Municipal Fund
Columbia Intermediate Municipal Bond Fund
Columbia Massachusetts Intermediate Municipal Bond Fund
Columbia Massachusetts Tax-Exempt Fund
Columbia Maryland Intermediate Municipal Bond Fund
Columbia Municipal Income Fund
Columbia North Carolina Intermediate Municipal Bond Fund
Columbia New York Intermediate Municipal Bond Fund
Columbia New York Tax-Exempt Fund
Columbia New Jersey Intermediate Municipal Bond Fund
Columbia Oregon Intermediate Municipal Bond Fund
Columbia Rhode Island Intermediate Municipal Bond Fund
Columbia South Carolina Intermediate Municipal Bond Fund
Columbia Short Term Municipal Bond Fund
Columbia Tax-Exempt Fund
Columbia Tax-Exempt Insured Fund
Columbia Texas Intermediate Municipal Bond Fund
Columbia Virginia Intermediate Municipal Bond Fund
---------------------------------------------------------------------------
Money Market Funds Columbia Cash Reserves
Columbia California Tax-Exempt Reserves
Columbia Connecticut Municipal Reserves
Columbia Government Reserves
Columbia Government Plus Reserves
Columbia Massachusetts Municipal Reserves
Columbia Money Market Reserves
Columbia Municipal Reserves
Columbia New York Tax-Exempt Reserves
Columbia Prime Reserves
Columbia Tax-Exempt Reserves
Columbia Treasury Reserves
For complete product information on any
Columbia fund, visit our website at
www.columbiafunds.com.
Columbia Management is the primary
investment management division of Bank of
America Corporation. Columbia Management
entities furnish investment management
services and advise institutional and mutual
fund portfolios.
40
IMPORTANT INFORMATION ABOUT THIS REPORT
-----------------------------
Columbia Small Cap Value Fund
I
Transfer Agent
Columbia Management Services, Inc.
P.O. Box 8081
Boston MA 02266-8081
800-345-6611
Distributor
Columbia Management Distributors, Inc.
One Financial Center
Boston MA 02111
Investment Advisor
Columbia Management Advisors, LLC
100 Federal Street
Boston MA 02110
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 Small Cap Value Fund
I. 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 and a copy of the fund's voting record are available (i) at
www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's
website at www.sec.gov, and (iii) without charge, upon request, by calling
800-368-0346. Information regarding how the fund voted proxies relating to
portfolio securities during the 12-month period ended June 30 is available from
the SEC's website. Information regarding how the fund voted proxies relating to
portfolio securities is also available from the fund's website.
The fund files a complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q
is available on the SEC's website at www.sec.gov and may be reviewed and copied
at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Columbia Management is the primary investment management division of Bank of
America Corporation. Columbia Management entities furnish investment management
services and advise institutional and mutual fund portfolios. Columbia Funds
are distributed by Columbia Management Distributors, Inc., member of NASD,
SIPC, part of Columbia Management and an affiliate of Bank of America
Corporation.
41
[GRAPHIC APPEARS HERE] Help your fund reduce printing and postage
costs! Elect to get your shareholder reports by
electronic delivery. With Columbia's
eDelivery program, you receive an e-mail
message when your shareholder report
becomes available online. If your fund account
is registered with Columbia Funds, you can
sign up quickly and easily on our website at
www.columbiafunds.com.
Please note -- if you own your fund shares
through a financial institution, contact the
institution to see if it offers electronic delivery.
If you own your fund shares through a
retirement plan, electronic delivery may not be
available to you.
Columbia Small Cap Value Fund I Semiannual Report, December 31, 2005
Columbia Management(R)
(C) 2006 Columbia Management Distributors, Inc.
One Financial Center, Boston, MA 02111-2621
800.345.6611 www.columbiafunds.com
SHC-44/105206-1205 (02/06) 05/9871
Item 2. Code of Ethics.
Not applicable at this time.
Item 3. Audit Committee Financial Expert.
Not applicable at this time.
Item 4. Principal Accountant Fees and Services.
Not applicable at this time.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments
The registrant's "Schedule I - Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form
N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have not been any material changes to the procedures by which
shareholders may recommend nominees to the registrant's board of directors,
since those procedures were last disclosed in response to the requirements of
Item 7(d)(2)(ii)(G) of Schedule 14A or this Item.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officers, based on their evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing of
this report, have concluded that such controls and procedures are
adequately designed to ensure that information required to be disclosed
by the registrant in Form N-CSR is accumulated and communicated to the
registrant's management, including the principal executive officer and
principal financial officer, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not
applicable at this time.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Columbia Funds Trust VI
- -------------------------------------------------------------
By (Signature and Title) /S/ Christopher L. Wilson
--------------------------------
Christopher L. Wilson, President
Date February 28, 2006
- -------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /S/ Christopher L. Wilson
--------------------------------
Christopher L. Wilson, President
Date February 28, 2006
- -----------------------------------------------------------
By (Signature and Title) /S/ J. Kevin Connaughton
--------------------------------
J. Kevin Connaughton, Treasurer
Date February 28, 2006
- -----------------------------------------------------------