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 811-4367
Columbia Funds Series Trust I
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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)
James R. Bordewick, Jr., Esq.
Columbia Management Advisors, LLC
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-426-3750
Date of fiscal year end: June 30, 2006
Date of reporting period: June 30, 2006
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. (Section) 3507.
Item 1. Reports to Stockholders
[GRAPHIC] Columbia Management\(R)\
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Columbia Small Cap Value Fund I
Annual Report - June 30, 2006
NOT FDIC-INSURED May Lose Value
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No Bank Guarantee
President's Message - Columbia Small Cap Value Fund I
Table of contents
Performance Information 1
Understanding Your Expenses 2
Economic Update 3
Portfolio Manager's Report 4
Fund Profile 6
Investment Portfolio 7
Statement of Assets and
Liabilities 15
Statement of Operations 17
Statement of Changes in Net
Assets 18
Financial Highlights 20
Notes to Financial Statements 24
Report of Independent
Registered Public Accounting
Firm 31
Unaudited Information 32
Trustees 33
Officers 36
Columbia Funds 38
Important Information
about This Report 41
The views expressed in the President's Message and Portfolio Manager's Report
reflect the current views of the respective parties. These views are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict so actual outcomes and results may
differ significantly from the views expressed. These views are subject to
change at any time based upon economic, market or other conditions and the
respective parties disclaim any responsibility to update such views. These
views may not be relied on as investment advice and, because investment
decisions for a Columbia Fund are based on numerous factors, may not be
relied on as an indication of trading intent on behalf of any particular
Columbia Fund. References to specific company securities should not be
construed as a recommendation or investment advice.
[PHOTO] Christopher L. Wilson
Dear Shareholder:
We appreciate your continued confidence in the Columbia
Funds. Many of the product changes we have told you about
in the prior 18 months have been fully completed. The
results have been as we expected -- a more streamlined
product offering with lower expense ratios for the
majority of our funds. When coupled with the improvements
in our investment process, we believe Columbia Management
is well positioned to provide you with an array of
products to meet your investment needs.
We have also made improvements to our servicing platform. Website enhancements
and improved account access at www.columbiafunds.com and a recently upgraded
automated phone system available at 800.345.6611 provide you with everything
you need to manage your relationship with Columbia 24 hours a day, 7 days a
week. The new phone system is equipped with an advanced speech recognition
system that allows callers to interact with the system using natural spoken
commands.
After secure login, you can buy, sell or exchange funds either on-line or over
the phone. (Buying shares requires that a link has been established between
your bank account and Columbia Funds account). Up to-date performance and
pricing information is also available on-line or over the phone. We will
continue to look for ways to expand capabilities for you in the future.
So, as you read the enclosed portfolio manager commentary on your fund and what
has driven its performance results, be assured that we will not rest on the
recent success of our product and service enhancements. We will continue to
seek ways to provide you with better financial solutions and consistent,
high-quality results. We value your relationship with us and will work hard to
earn your continued trust.
Sincerely,
/s/ Christopher L. Wilson
Christopher L. Wilson
President, Columbia Funds
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 $10,000 investment
07/01/96 - 06/30/06 ($)
sales charge: without with
Class A 30,204 28,467
Class B 27,990 27,990
Class C 28,027 28,027
Class Z 31,010 n/a
Growth of a $10,000 investment 07/01/96 - 06/30/06
[CHART]
Class A shares Class A shares Russell 2000
without sales charge with sales charge Value Index
---------------------- ---------------------- --------
7/1/1996 $10,000 $9,425 $10,000
7/31/1996 9,316 8,780 9,468
8/31/1996 9,728 9,168 9,879
9/30/1996 10,226 9,638 10,149
10/31/1996 10,056 9,478 10,266
11/30/1996 10,656 10,044 10,819
12/31/1996 10,726 10,109 11,170
1/31/1997 10,835 10,212 11,342
2/28/1997 10,609 9,999 11,450
3/31/1997 10,124 9,542 11,143
4/30/1997 10,273 9,682 11,307
5/31/1997 11,234 10,588 12,207
6/30/1997 11,953 11,266 12,825
7/31/1997 12,664 11,936 13,363
8/31/1997 12,837 12,098 13,576
9/30/1997 13,689 12,902 14,479
10/31/1997 13,243 12,481 14,085
11/30/1997 13,247 12,485 14,240
12/31/1997 13,286 12,522 14,722
1/31/1998 13,199 12,440 14,456
2/28/1998 14,284 13,462 15,331
3/31/1998 15,106 14,238 15,953
4/30/1998 15,306 14,426 16,031
5/31/1998 14,325 13,501 15,464
6/30/1998 14,217 13,400 15,377
7/31/1998 12,895 12,154 14,173
8/31/1998 10,277 9,686 11,954
9/30/1998 10,506 9,901 12,629
10/31/1998 11,311 10,661 13,004
11/30/1998 12,188 11,487 13,356
12/31/1998 12,466 11,749 13,776
1/31/1999 12,170 11,471 13,463
2/28/1999 10,928 10,299 12,544
3/31/1999 10,732 10,115 12,441
4/30/1999 11,547 10,883 13,577
5/31/1999 11,945 11,258 13,993
6/30/1999 12,614 11,889 14,500
7/31/1999 12,560 11,838 14,156
8/31/1999 11,782 11,105 13,638
9/30/1999 11,716 11,043 13,365
10/31/1999 11,795 11,117 13,098
11/30/1999 12,156 11,457 13,166
12/31/1999 12,979 12,232 13,570
1/31/2000 12,290 11,583 13,215
2/29/2000 12,859 12,119 14,022
3/31/2000 13,220 12,460 14,088
4/30/2000 13,299 12,534 14,171
5/31/2000 12,963 12,217 13,954
6/30/2000 13,528 12,750 14,362
7/31/2000 13,632 12,848 14,840
8/31/2000 14,742 13,894 15,504
9/30/2000 14,854 14,000 15,415
10/31/2000 14,866 14,011 15,360
11/30/2000 13,748 12,957 15,046
12/31/2000 15,440 14,552 16,662
1/31/2001 15,397 14,512 17,122
2/28/2001 14,921 14,063 17,098
3/31/2001 14,602 13,762 16,825
4/30/2001 15,563 14,668 17,604
5/31/2001 16,099 15,174 18,056
6/30/2001 16,217 15,285 18,782
7/31/2001 16,212 15,280 18,361
8/31/2001 15,919 15,003 18,297
9/30/2001 14,042 13,234 16,277
10/31/2001 14,370 13,544 16,702
11/30/2001 15,369 14,485 17,903
12/31/2001 16,502 15,553 18,998
1/31/2002 16,608 15,653 19,251
2/28/2002 16,888 15,917 19,368
3/31/2002 18,116 17,074 20,817
4/30/2002 18,484 17,421 21,550
5/31/2002 17,853 16,827 20,837
6/30/2002 17,261 16,268 20,376
7/31/2002 15,155 14,283 17,348
8/31/2002 15,431 14,543 17,272
9/30/2002 14,378 13,552 16,039
10/31/2002 14,666 13,823 16,279
11/30/2002 15,801 14,892 17,578
12/31/2002 15,354 14,471 16,828
1/31/2003 14,902 14,046 16,353
2/28/2003 14,138 13,325 15,804
3/31/2003 14,165 13,350 15,973
4/30/2003 15,257 14,380 17,490
5/31/2003 16,522 15,572 19,276
6/30/2003 16,887 15,916 19,602
7/31/2003 17,780 16,758 20,580
8/31/2003 18,593 17,524 21,362
9/30/2003 18,405 17,347 21,116
10/31/2003 19,907 18,762 22,837
11/30/2003 20,697 19,507 23,714
12/31/2003 21,407 20,176 24,573
1/31/2004 22,178 20,902 25,423
2/29/2004 22,544 21,247 25,916
3/31/2004 22,992 21,670 26,274
4/30/2004 22,043 20,775 24,915
5/31/2004 22,182 20,906 25,217
6/30/2004 23,401 22,056 26,498
7/31/2004 22,325 21,041 25,279
8/31/2004 22,220 20,942 25,527
9/30/2004 23,131 21,801 26,537
10/31/2004 23,460 22,111 26,949
11/30/2004 25,585 24,114 29,339
12/31/2004 26,289 24,777 30,040
1/31/2005 25,355 23,897 28,878
2/28/2005 25,921 24,430 29,452
3/31/2005 25,480 24,015 28,846
4/30/2005 23,974 22,596 27,357
5/31/2005 24,945 23,511 29,026
6/30/2005 25,975 24,482 30,309
7/31/2005 27,459 25,880 32,034
8/31/2005 27,061 25,505 31,297
9/30/2005 27,410 25,834 31,244
10/31/2005 26,886 25,340 30,459
11/30/2005 27,940 26,333 31,696
12/31/2005 27,675 26,083 31,452
1/31/2006 29,974 28,251 34,053
2/28/2006 29,842 28,126 34,050
3/31/2006 31,212 29,418 35,698
4/30/2006 31,659 29,838 35,794
5/30/2006 30,129 28,397 34,312
6/30/2006 30,204 28,467 34,738
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, they 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 06/30/06 (%)
Share class A B C Z
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Inception 07/25/86 11/09/92 01/15/96 07/31/95
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Sales charge without with without with without with without
1-year 16.25 9.56 15.36 10.36 15.37 14.37 16.51
5-year 13.24 11.91 12.39 12.14 12.40 12.40 13.56
10-year 11.69 11.03 10.84 10.84 10.86 10.86 11.98
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.
The table does not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
1
Understanding Your Expenses - Columbia Small Cap Value Fund I
Shareholder expense example
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 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 is
calculated using the fund's actual operating expenses. 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.
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 $8,600 at the end of the period, the result would be 8.6.
2. In the section of the table below titled "Expenses paid during the period,"
locate the amount for your share class. You will find this number in the
column labeled "actual." Multiply this number by the result from step 1.
Your answer is an estimate of the expenses you paid on your account during
the period.
01/01/06 - 06/30/06
Account value Account value Fund's
at the at the Expenses paid annualized
beginning of the end of the during the expense
period ($) period ($) period ($) ratio (%)
Actual Hypothetical Actual Hypothetical Actual Hypothetical Actual
Class A 1,000.00 1,000.00 1,091.10 1,018.35 6.74 6.51 1.30
Class B 1,000.00 1,000.00 1,086.98 1,014.63 10.61 10.24 2.05
Class C 1,000.00 1,000.00 1,087.03 1,014.63 10.61 10.24 2.05
Class Z 1,000.00 1,000.00 1,092.38 1,019.59 5.45 5.26 1.05
Expenses paid during the period are equal to the annualized expense ratio for
the share class, 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 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 transaction costs, such as sales charges or redemption or exchange fees.
Therefore, the hypothetical examples provided will not help you determine the
relative total costs of owning different funds. If these transaction costs were
included, your costs would have been higher.
Compare with other funds
Since all mutual funds are required to include the same hypothetical
calculations about expenses in shareholder reports, you can use this
information to compare the ongoing cost of investing in the fund with other
funds. To do so, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds. As you compare
hypothetical examples of other funds, it is important to note that hypothetical
examples are meant to highlight the continuing cost of investing in a fund and
do not reflect any transaction costs, such as sales charges or redemption or
exchange fees.
2
Economic Update - Columbia Small Cap Value Fund I
Summary
For the 12-month period ended June 30, 2006
.. Despite volatility, the broad stock market, as measured by the S&P 500
Index, returned 8.63%. Small-cap stocks did better than large- and mid-cap
stocks, as measured by the Russell 2000 Index.
[GRAPHIC] +8.63%
S&P Index
[GRAPHIC] +14.58%
Russell Index
.. Investment-grade bonds delivered negative returns, 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 Only Index.
[GRAPHIC] -0.81%
Lehman Index
[GRAPHIC] +4.65%
Merrill Lynch Index
The US economy grew at a solid but uneven pace during the 12-month period that
began July 1, 2005 and ended June 30, 2006. Gross domestic product (GDP)
expanded at an estimated annualized rate of approximately 3.5% as job growth
provided support for consumer spending. Rising profits freed up cash for
business spending, which picked up during the period. Personal income rose.
Yet, these overall measures masked a host of challenges, which led to
considerable volatility during the 12-month period. Late last summer,
hurricanes Katrina and Rita devastated the Gulf Coast, disrupting the flow of
energy products and leaving millions of Americans without homes or jobs.
Consumer confidence plummeted in the wake of the storms. The impact on the
labor market was actually less than anticipated. However, economic growth fell
to a mere 1.7% in the fourth quarter.
The economy regained considerable momentum early in 2006. GDP growth rebounded
to 5.6%. Job growth resumed at a healthy pace, and consumer confidence
rebounded. Yet, the once strong housing market has shown signs of slowing.
Inflation edged higher as record-high energy prices took a bigger bite out of
household budgets. Consumer spending growth edged lower in the final months of
the period, and economic growth declined to 2.5% for the last quarter of the
reporting period.
Eight 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 5.25% in eight 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 the Fed, under new chairman Ben
Bernanke, continued to raise short-term interest rates through the end of the
period.
Stocks moved higher
Despite bouts of volatility, the S&P 500 Index -- a broad measure of large
company stock market performance -- returned a respectable 8.63% for this
reporting period. Small- and mid-cap stocks did even better. The Russell
2000(R) Index returned 14.58% while the Russell Midcap Index returned 13.66%.
Energy stocks led the US stock market as commodity prices continued to climb.
Foreign stock markets generally did better than the US market. The MSCI EAFE
Index, which tracks stock market performance in industrialized countries
outside the United States, returned 26.56%.
After a solid start, bond market sputters
The US bond market headed downward during the period as interest rates moved
higher across the maturity spectrum. The yield on the 10-year US Treasury note,
a bellwether for the bond market, rose more than one full percentage point and
ended the period at 5.14%. In this environment, the Lehman Brothers Aggregate
Bond Index returned negative 0.81% for the 12-month period. High-yield bonds
led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Only
Index returned 4.65%.
The Russell Midcap Index measures the performance of the 800 smallest companies
in the Russell 1000 Index, which represent approximately 25% of the total
market capitalization of the Russell 1000 Index.
The MSCI EAFE is a free float-market capitalization index that is designed to
measure developed market equity performance, excluding the US and Canada.
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held, large-capitalization US stocks.
The Russell 2000 Index is an unmanaged index that tracks the performance of the
2,000 smallest of the 3,000 largest US companies based on market capitalization.
The Lehman Brothers Aggregate Bond Index is a market value-weighted index that
tracks the performance of fixed-rate, publicly placed, dollar-denominated,
non-convertible investment grade debt issues with at least $250 par amount
outstanding and with at least one year to final maturity.
The Merrill Lynch US High Yield, Cash Pay Only Index tracks the daily price,
pay days, and total return performance of non-investment-grade corporate bonds.
Unlike mutual funds, indices are not investments, do not incur fees or expenses
and are not professionally managed. It is not possible to invest directly in an
index.
3
Portfolio Manager's Report - Columbia Small Cap Value Fund I
Performance data quoted represents past performance and current performance
may be lower or higher. Past performance is no guarantee of future results.
The investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than the original cost. Please visit
www.columbiafunds.com for daily and most recent month-end performance updates.
Summary
.. For the 12-month period ended June 30, 2006, the fund's class A shares
returned 16.25% without sales charge.
.. The fund beat its benchmark, the Russell 2000(R) Value Index, and the
average for its peer group, the Morningstar Small Value Category.
.. Sector allocation, as well as stock selection in the financials, information
technology and consumer staples sectors, helped the fund come out ahead of
its benchmark and peer group.
Net asset value per share
as of 06/30/06 ($)
Class A 48.03
Class B 41.75
Class C 43.60
Class Z 49.79
Distributions declared per share
07/01/05 - 06/30/06 ($)
Class A 1.97
Class B 1.97
Class C 1.97
Class Z 1.98
For the 12-month period ended June 30, 2006, Columbia Small Cap Value Fund I
class A shares returned 16.25% without sales charge. The fund beat the Russell
2000 Value Index, which returned 14.61%, and the Morningstar Small Value
Category average, which was 12.64%. Sector allocation and stock selection were
nearly equal contributors in helping the fund outpace the Russell index. Stock
picking was especially strong in the financials, information technology and
consumer staples sectors, while the fund's energy and information technology
sector weights made a positive contribution relative to the index. Our focus
remained on companies that we believe have strong competitive and financial
positions, good earnings growth prospects and reasonable stock valuations.
Small-cap stocks post another year of gains
Small-cap stocks led the market's rise, as investors' appetite for risk
remained strong and earnings growth solid. An accommodative lending environment
further aided small companies. In the second quarter, mounting uncertainty over
the Federal Reserve's next moves and a tightening of global liquidity led to
increased market volatility. Small-cap stocks suffered in the downturn, but
recovered as inflation fears subsided near the end of the period.
Financials stocks delivered superior returns
The fund's most impressive returns came from financial stocks, particularly
specialty financials, insurers, and real estate investment trusts (REITs) that
we had bought at attractive valuations. Our focus was on companies that we
believed could profit from rising interest rates. In the specialty finance
group, Cash America International, Inc. (0.8% of net assets), a pawn shop
operator in the United States and United Kingdom, stood out. It benefited from
growing demand for its services, higher interest rates and rising gold and
silver prices. Insurers that realized rate increases after the Gulf Coast
hurricanes also did quite well. Among them was Navigators Group, Inc. (0.8% of
net assets), which specializes in insurance for marine boats and offshore
energy rigs. The fund did well to have a below-average stake in REITs, which
lagged other financial industries, and benefited from its focus on
economically-sensitive issues, such as apartments, office parks and industrials.
Energy stocks were strong
Stock selection in the energy sector boosted returns. In addition, the fund had
slightly more exposure to the sector than the index -- which amplified the
impact of its good returns. Winners included Lufkin Industries, Inc. (0.9% of
net assets), Western Gas Resources, Inc. (0.7% of net assets) and Maverick Tube
Corp. (no longer in the portfolio). Lufkin, which makes parts for oil well
equipment, benefited from increased investor attention. Western Gas, an
exploration and production company, and Maverick, which supplies tubular goods
for drillers and pipeline companies, rallied
(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.
The Russell 2000 Value Index measures the performance of those Russell 2000
companies with lower price-to-book ratios and lower forecasted growth values.
Unlike the funds, 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. Morningstar Categories compare the performance of funds with similar
investment objectives and strategies.
4
Columbia Small Cap Value Fund I
(continued)
sharply following buyout offers. In addition, Peabody Energy Corp. (.5% of net
assets), the largest publicly held coal company in the world, had a stellar
year as coal prices climbed and the company's market share grew. Consumer
staples stocks further aided returns, buoyed by investments in specialty food
companies that produced strong gains.
Quality bias hampered health care returns
Stock selection in health care detracted from performance, as the relatively
inexpensive, high-quality stocks the fund owned trailed higher-risk names in
the sector. We had no exposure to biotechnology or to specialty pharmaceutical
stocks. In addition, many of the fund's health care service and facilities
stocks posted disappointing returns. Detractors included Kindred Healthcare,
Inc. (0.6% of net assets), an operator of hospital and nursing facilities,
whose stock price fell amid concerns the government would freeze or reduce
certain hospital payment rates.
Slower economic growth ahead?
Going forward, we expect economic growth to slow and interest rates to creep
higher. How small-cap stocks fare will largely depend on whether investors
remain comfortable with the risk associated with smaller companies as well as
the lending environment for small companies. Access to the capital markets is
an important element in funding growth for small companies. We believe the
fund's quality bias should stand it in good stead if investors gravitate toward
companies with stronger financial conditions in an environment of slower
economic growth.
Stephen Barbaro
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.
Jeremy Javidi
Jeremy Javidi has co-managed the fund since August 2005 and has been with the
advisor or its predecessors or affiliate organizations since 2000.
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.
5
Fund Profile - 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.
Summary
[GRAPHIC] 16.25%
Class A Shares
[GRAPHIC] 14.61%
Russell 2000 Value
Index
Management Style
Equity Style
[GRAPHIC]
Management style is determined by Columbia Management and is based on the
investment strategy and process as outlined in the fund's prospectus.
Top 10 holdings as of 06/30/06 (%)
Precision Castparts Corp. 1.2
Harsco Corp. 1.0
Pediatrix Medical Group, Inc. 0.9
Greif, Inc. 0.9
MPS Group, Inc. 0.9
KHD Humboldt Wedag
International, Ltd. 0.9
Carpenter Technology Corp. 0.9
Genlyte Group, Inc. 0.9
Lufkin Industries, Inc. 0.9
Eagle Materials, Inc. 0.9
Top 5 sectors as of 06/30/06 (%)
Financials 27.6
Industrials 17.7
Information technology 15.0
Consumer discretionary 9.5
Health care 8.6
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.
6
Investment Portfolio - Columbia Small Cap Value Fund I (June 30, 2006)
Common Stocks - 99.6%
Consumer Discretionary - 9.5% Shares Value ($)
Auto Components - 1.0% BorgWarner, Inc. 78,600 5,116,860
Modine Manufacturing Co. 122,143 2,853,261
-------------------------------------- ------- ----------
Auto Components Total 7,970,121
Distributors - 0.4% Building Material Holding Corp. 104,786 2,920,386
-------------------------------------- ------- ----------
Distributors Total 2,920,386
Hotels, Restaurants & Landry's Restaurants, Inc. 130,400 4,231,480
Leisure - 2.2% Lone Star Steakhouse & Saloon, Inc. 174,507 4,577,319
Multimedia Games, Inc. (a) 15,717 159,213
Scientific Games Corp., Class A (a) 177,980 6,339,647
Vail Resorts, Inc. (a) 78,500 2,912,350
-------------------------------------- ------- ----------
Hotels, Restaurants & Leisure Total 18,220,009
Household Durables - 1.7% American Greetings Corp., Class A 286,000 6,008,860
CSS Industries, Inc. 81,400 2,340,250
Furniture Brands International, Inc. 120,600 2,513,304
Kimball International, Inc., Class B 175,234 3,453,862
-------------------------------------- ------- ----------
Household Durables Total 14,316,276
Media - 0.3% 4Kids Entertainment, Inc. (a) 155,000 2,512,550
-------------------------------------- ------- ----------
Media Total 2,512,550
Specialty Retail - 2.3% Borders Group, Inc. 125,980 2,325,591
GameStop Corp., Class A (a) 94,440 3,966,480
Monro Muffler, Inc. 134,366 4,374,957
Payless Shoesource, Inc. (a) 104,580 2,841,438
Rent-A-Center, Inc. (a) 124,180 3,087,115
Zale Corp. (a) 108,880 2,622,919
-------------------------------------- ------- ----------
Specialty Retail Total 19,218,500
Textiles, Apparel & Luxury Delta Apparel, Inc. 97,900 1,678,006
Goods - 1.6% Hampshire Group Ltd. (a) 182,100 3,095,700
Hartmarx Corp. (a) 291,398 1,748,388
Stride Rite Corp. 161,300 2,127,547
Wolverine World Wide, Inc. 190,760 4,450,431
-------------------------------------- ------- ----------
Textiles, Apparel & Luxury Goods Total 13,100,072
Consumer Discretionary Total 78,257,914
Consumer Staples - 3.3%
Food & Staples Retailing - 1.0% BJ's Wholesale Club, Inc. (a) 70,500 1,998,675
Weis Markets, Inc. 158,230 6,519,076
-------------------------------------- ------- ----------
Food & Staples Retailing Total 8,517,751
Food Products - 2.3% Flowers Foods, Inc. 98,159 2,811,274
J&J Snack Foods Corp. 86,734 2,868,293
Lancaster Colony Corp. 75,780 2,991,036
Lance, Inc. 127,100 2,925,842
Maui Land & Pineapple Co., Inc. (a) 54,700 2,067,660
See Accompanying Notes to Financial Statements.
7
Columbia Small Cap Value Fund I (June 30, 2006)
Common Stocks (continued)
Consumer Staples (continued) Shares Value ($)
Food Products (continued) Premium Standard Farms, Inc. 112,686 1,828,894
Ralcorp Holdings, Inc. (a) 75,600 3,215,268
---------------------------------------- ------- ----------
Food Products Total 18,708,267
Consumer Staples Total 27,226,018
Energy - 6.0%
Energy Equipment & Complete Production Services, Inc. (a) 72,204 1,706,903
Services - 2.7% Grey Wolf, Inc. (a) 491,600 3,785,320
Lone Star Technologies, Inc. (a) 30,240 1,633,565
Lufkin Industries, Inc. 126,035 7,490,260
NS Group, Inc. (a) 39,340 2,166,847
Superior Well Services, Inc. (a) 37,500 933,750
Trico Marine Services, Inc. (a) 123,259 4,190,806
---------------------------------------- ------- ----------
Energy Equipment & Services Total 21,907,451
Oil, Gas & Consumable Alpha Natural Resources, Inc. (a) 116,940 2,294,363
Fuels - 3.3% Bois d'Arc Energy, Inc. (a) 115,454 1,901,527
Comstock Resources, Inc. (a) 50,150 1,497,479
Harvest Natural Resources, Inc. (a) 227,600 3,081,704
Nordic American Tanker Shipping 98,227 3,580,374
Peabody Energy Corp. 71,000 3,958,250
Range Resources Corp. 185,380 5,040,482
Western Gas Resources, Inc. 98,728 5,908,871
---------------------------------------- ------- ----------
Oil, Gas & Consumable Fuels Total 27,263,050
Energy Total 49,170,501
Financials - 27.6%
Capital Markets - 0.9% Piper Jaffray Companies, Inc. (a) 75,180 4,601,768
Thomas Weisel Partners Group, Inc. (a) 131,877 2,506,982
---------------------------------------- ------- ----------
Capital Markets Total 7,108,750
Commercial Banks - 11.4% Bancfirst Corp. 59,170 2,647,858
BancTrust Financial Group, Inc. 114,598 2,689,615
Bank of Granite Corp. 164,172 3,419,703
Bryn Mawr Bank Corp. 133,964 2,968,642
Capitol Bancorp Ltd. 142,349 5,544,494
Central Pacific Financial Corp. 54,245 2,099,282
Chemical Financial Corp. 148,489 4,543,763
Chittenden Corp. 146,350 3,783,147
Citizens Banking Corp. 160,430 3,916,096
City Holding Co. 82,700 2,988,778
Columbia Banking System, Inc. 102,950 3,848,271
Community Trust Bancorp, Inc. 118,194 4,128,516
First Citizens BancShares, Inc., Class A 13,080 2,622,540
First Financial Bankshares, Inc. 84,338 3,081,711
First Financial Corp. 109,250 3,278,592
Mass Financial Corp., Class A (a) 283,170 453,072
Merchants Bancshares, Inc. 112,082 2,706,780
See Accompanying Notes to Financial Statements.
8
Columbia Small Cap Value Fund I (June 30, 2006)
Common Stocks (continued)
Financials (continued) Shares Value ($)
Commercial Banks (continued) Mid-State Bancshares 179,810 5,034,680
Northrim BanCorp, Inc. 110,600 2,776,060
S&T Bancorp, Inc. 84,050 2,792,982
Sandy Spring Bancorp, Inc. 68,416 2,467,081
Sterling Bancorp NY 143,420 2,796,690
Susquehanna Bancshares, Inc. 163,000 3,895,700
Taylor Capital Group, Inc. 63,815 2,604,290
TriCo Bancshares 146,273 4,004,955
Trustmark Corp. 82,700 2,561,219
UMB Financial Corp. 150,400 5,014,336
Whitney Holding Corp. 156,620 5,539,649
---------------------------------------------- ------- ----------
Commercial Banks Total 94,208,502
Consumer Finance - 1.4% Advance America Cash Advance Centers, Inc. 283,540 4,973,292
Cash America International, Inc. 216,000 6,912,000
---------------------------------------------- ------- ----------
Consumer Finance Total 11,885,292
Insurance - 7.0% American Physicians Capital, Inc. (a) 77,750 4,088,873
AmerUs Group Co. 55,300 3,237,815
Baldwin & Lyons, Inc., Class B 112,828 2,877,114
CNA Surety Corp. (a) 215,300 3,720,384
Commerce Group, Inc. 123,600 3,651,144
Delphi Financial Group, Inc., Class A 157,703 5,734,081
Harleysville Group, Inc. 128,650 4,080,778
Horace Mann Educators Corp. 188,159 3,189,295
KMG America Corp. (a) 337,076 2,989,864
National Western Life Insurance Co., Class A 10,743 2,574,560
Navigators Group, Inc. (a) 149,316 6,543,027
Phoenix Companies, Inc. 296,200 4,170,496
ProCentury Corp. 253,019 3,468,890
RLI Corp. 77,081 3,713,763
United America Indemnity Ltd., Class A (a) 186,010 3,876,448
---------------------------------------------- ------- ----------
Insurance Total 57,916,532
Real Estate Investment Trusts Alexandria Real Estate Equities, Inc., REIT 20,920 1,855,186
(REITs) - 6.1% Cousins Properties, Inc., REIT 108,680 3,361,472
EastGroup Properties, Inc., REIT 47,650 2,224,302
Equity One, Inc., REIT 139,500 2,915,550
Franklin Street Properties Corp., REIT 174,010 3,424,517
Getty Realty Corp., REIT 122,130 3,473,377
Healthcare Realty Trust, Inc. 116,150 3,699,377
Highland Hospitality Corp., REIT 238,900 3,363,712
Lexington Corporate Properties Trust, REIT 142,425 3,076,380
Mid-America Apartment Communities, Inc., REIT 118,640 6,614,180
PS Business Parks, Inc., REIT 72,400 4,271,600
Strategic Hotel Capital, Inc., REIT 135,100 2,801,974
U-Store-It Trust, REIT 175,650 3,312,759
Universal Health Realty Income Trust, REIT 89,630 2,809,901
Urstadt Biddle Properties, Inc., Class A, REIT 175,830 2,864,271
---------------------------------------------- ------- ----------
Real Estate Investment Trusts (REITs) Total 50,068,558
See Accompanying Notes to Financial Statements.
9
Columbia Small Cap Value Fund I (June 30, 2006)
Common Stocks (continued)
Financials (continued) Shares Value ($)
Thrifts & Mortgage Finance - 0.8% Corus Bankshares, Inc. 155,500 4,070,990
TrustCo Bank Corp. NY 213,810 2,356,186
------------------------------------------------ ------- -----------
Thrifts & Mortgage Finance Total 6,427,176
Financials Total 227,614,810
Health Care - 8.6%
Health Care Equipment & Analogic Corp. 46,730 2,178,085
Supplies - 2.4% DJ Orthopedics, Inc. (a) 61,560 2,267,255
Greatbatch, Inc. (a) 86,734 2,046,922
Haemonetics Corp. (a) 95,660 4,449,147
STERIS Corp. 221,560 5,064,862
Viasys Healthcare, Inc. (a) 76,500 1,958,400
Vital Signs, Inc. 37,170 1,841,030
------------------------------------------------ ------- -----------
Health Care Equipment & Supplies Total 19,805,701
Health Care Providers & Cross Country Healthcare, Inc. (a) 205,040 3,729,678
Services - 4.6% Genesis HealthCare Corp. (a) 104,450 4,947,797
Gentiva Health Services, Inc. (a) 214,900 3,444,847
Hooper Holmes, Inc. 350,800 1,069,940
Kindred Healthcare, Inc. (a) 188,200 4,893,200
Owens & Minor, Inc. 94,600 2,705,560
Pediatrix Medical Group, Inc. (a) 173,000 7,836,900
RehabCare Group, Inc. (a) 18,932 329,038
Res-Care, Inc. (a) 189,170 3,783,400
Symbion, Inc. (a) 120,420 2,499,919
United Surgical Partners International, Inc. (a) 94,600 2,844,622
------------------------------------------------ ------- -----------
Health Care Providers & Services Total 38,084,901
Life Sciences Tools & Bio-Rad Laboratories, Inc., Class A (a) 56,520 3,670,409
Services - 1.3% PAREXEL International Corp. (a) 172,600 4,979,510
Varian, Inc. (a) 46,760 1,941,007
------------------------------------------------ ------- -----------
Life Sciences Tools & Services Total 10,590,926
Pharmaceuticals - 0.3% Alpharma, Inc., Class A 106,460 2,559,298
------------------------------------------------ ------- -----------
Pharmaceuticals Total 2,559,298
Health Care Total 71,040,826
Industrials - 17.7%
Aerospace & Defense - 2.7% AAR Corp. (a) 197,202 4,383,801
Esterline Technologies Corp. (a) 135,400 5,631,286
Moog, Inc., Class A (a) 67,820 2,320,800
Precision Castparts Corp. 161,200 9,633,312
------------------------------------------------ ------- -----------
Aerospace & Defense Total 21,969,199
Airlines - 1.1% JetBlue Airways Corp. (a) 251,900 3,058,066
Republic Airways Holdings, Inc. (a) 139,840 2,380,077
Skywest, Inc. 147,300 3,653,040
------------------------------------------------ ------- -----------
Airlines Total 9,091,183
See Accompanying Notes to Financial Statements.
10
Columbia Small Cap Value Fund I (June 30, 2006)
Common Stocks (continued)
Industrials (continued) Shares Value ($)
Building Products - 1.3% Goodman Global, Inc. (a) 126,532 1,920,756
Lennox International, Inc. 91,640 2,426,627
NCI Building Systems, Inc. (a) 122,880 6,533,529
----------------------------------------- ------- -----------
Building Products Total 10,880,912
Commercial Services & ABM Industries, Inc. 147,000 2,513,700
Supplies - 3.8% Banta Corp. 65,430 3,031,372
Casella Waste Systems, Inc., Class A (a) 308,290 4,035,516
CBIZ, Inc. (a) 186,105 1,379,038
Consolidated Graphics, Inc. (a) 138,000 7,184,280
Healthcare Services Group, Inc. 172,355 3,610,837
Korn/Ferry International (a) 140,750 2,757,292
TeleTech Holdings, Inc. (a) 291,100 3,685,326
United Stationers, Inc. (a) 65,830 3,246,736
----------------------------------------- ------- -----------
Commercial Services & Supplies Total 31,444,097
Construction & Engineering - 2.0% EMCOR Group, Inc. (a) 91,800 4,467,906
KHD Humboldt Wedag International Ltd. (a) 286,470 7,697,449
Washington Group International, Inc. (a) 88,500 4,720,590
----------------------------------------- ------- -----------
Construction & Engineering Total 16,885,945
Electrical Equipment - 1.9% Belden CDT, Inc. 89,850 2,969,543
Genlyte Group, Inc. (a) 105,336 7,629,486
Woodward Governor Co. 155,500 4,744,305
----------------------------------------- ------- -----------
Electrical Equipment Total 15,343,334
Machinery - 2.0% Briggs & Stratton Corp. 49,250 1,532,167
EnPro Industries, Inc. (a) 148,500 4,989,600
Harsco Corp. 105,900 8,255,964
Kadant, Inc. (a) 65,104 1,497,392
----------------------------------------- ------- -----------
Machinery Total 16,275,123
Road & Rail - 1.7% Dollar Thrifty Automotive Group (a) 46,500 2,095,755
Ryder System, Inc. 63,000 3,681,090
Swift Transportation Co., Inc. (a) 60,610 1,924,974
Werner Enterprises, Inc. 294,150 5,962,420
----------------------------------------- ------- -----------
Road & Rail Total 13,664,239
Trading Companies & Kaman Corp. 83,200 1,514,240
Distributors - 1.0% Watsco, Inc. 110,830 6,629,851
----------------------------------------- ------- -----------
Trading Companies & Distributors Total 8,144,091
Transportation Infrastructure - 0.2% Interpool, Inc. 84,890 1,886,256
----------------------------------------- ------- -----------
Transportation Infrastructure Total 1,886,256
Industrials Total 145,584,379
See Accompanying Notes to Financial Statements.
11
Columbia Small Cap Value Fund I (June 30, 2006)
Common Stocks (continued)
Information Technology - 15.0% Shares Value ($)
Communications Equipment - 1.5% Anaren, Inc. (a) 242,750 4,973,948
Black Box Corp. 56,800 2,177,144
Dycom Industries, Inc. (a) 177,700 3,783,233
Tollgrade Communications, Inc. (a) 149,410 1,449,277
--------------------------------------------------- ------- ----------
Communications Equipment Total 12,383,602
Computers & Peripherals - 1.0% Electronics for Imaging, Inc. (a) 169,350 3,536,028
Emulex Corp. (a) 119,460 1,943,614
Imation Corp. 73,700 3,025,385
Mobility Electronics, Inc. (a) 9,272 67,315
--------------------------------------------------- ------- ----------
Computers & Peripherals Total 8,572,342
Electronic Equipment & Agilysys, Inc. 115,479 2,078,622
Instruments - 3.5% Anixter International, Inc. 77,700 3,687,642
Benchmark Electronics, Inc. (a) 174,450 4,207,734
Brightpoint, Inc. (a) 366,714 4,961,640
Coherent, Inc. (a) 73,168 2,467,957
MTS Systems Corp. 103,582 4,092,525
NAM TAI Electronics, Inc. 125,500 2,807,435
Vishay Intertechnology, Inc. (a) 311,500 4,899,895
--------------------------------------------------- ------- ----------
Electronic Equipment & Instruments Total 29,203,450
Internet Software & Digitas, Inc. (a) 118,220 1,373,716
Services - 0.3% Keynote Systems, Inc. (a) 68,250 703,658
--------------------------------------------------- ------- ----------
Internet Software & Services Total 2,077,374
IT Services - 1.8% Acxiom Corp. 207,411 5,185,275
MAXIMUS, Inc. 63,090 1,460,533
MPS Group, Inc. (a) 514,050 7,741,593
--------------------------------------------------- ------- ----------
IT Services Total 14,387,401
Semiconductors & Semiconductor Actel Corp. (a) 151,580 2,175,173
Equipment - 3.7% Advanced Energy Industries, Inc. (a) 142,420 1,885,641
Asyst Technologies, Inc. (a) 267,134 2,011,519
ATMI, Inc. (a) 95,820 2,359,088
Brooks Automation, Inc. (a) 116,265 1,371,927
Cymer, Inc. (a) 47,260 2,195,700
Exar Corp. (a) 177,100 2,350,117
Fairchild Semiconductor International, Inc. (a) 204,500 3,715,765
MEMC Electronic Materials, Inc. (a) 90,480 3,393,000
Standard Microsystems Corp. (a) 158,300 3,455,689
Varian Semiconductor Equipment Associates, Inc. (a) 93,575 3,051,481
Veeco Instruments, Inc. (a) 119,630 2,851,979
--------------------------------------------------- ------- ----------
Semiconductors & Semiconductor Equipment Total 30,817,079
Software - 3.2% Captaris, Inc. (a) 364,400 1,694,460
Intergraph Corp. (a) 70,470 2,219,100
Internet Security Systems, Inc. (a) 166,950 3,147,008
Lawson Software, Inc. (a) 431,650 2,892,055
MSC.Software Corp. (a) 232,500 4,161,750
Sybase, Inc. (a) 149,150 2,893,510
See Accompanying Notes to Financial Statements.
12
Columbia Small Cap Value Fund I (June 30, 2006)
Common Stocks (continued)
Information Technology - (continued) Shares Value ($)
Software (continued) Synchronoss Technologies, Inc. (a) 210,846 1,830,143
Transaction Systems Architects, Inc., Class A (a) 173,800 7,245,722
------------------------------------------------- ------- -----------
Software Total 26,083,748
Information Technology Total 123,524,996
Materials - 7.9%
Chemicals - 1.8% Cytec Industries, Inc. 76,172 4,087,390
H.B. Fuller Co. 122,400 5,332,968
Minerals Technologies, Inc. 62,700 3,260,400
Sensient Technologies Corp. 106,200 2,220,642
------------------------------------------------- ------- -----------
Chemicals Total 14,901,400
Construction Materials - 0.9% Eagle Materials, Inc. 153,200 7,277,000
------------------------------------------------- ------- -----------
Construction Materials Total 7,277,000
Containers & Packaging - 1.3% AptarGroup, Inc. 62,000 3,075,820
Greif, Inc., Class A 103,500 7,758,360
------------------------------------------------- ------- -----------
Containers & Packaging Total 10,834,180
Metals & Mining - 3.1% AMCOL International Corp. 96,500 2,542,775
Carpenter Technology Corp. 66,100 7,634,550
Metal Management, Inc. 132,870 4,068,479
RTI International Metals, Inc. (a) 92,400 5,159,616
Worthington Industries, Inc. 294,060 6,160,557
------------------------------------------------- ------- -----------
Metals & Mining Total 25,565,977
Paper & Forest Products - 0.8% Glatfelter Co. 243,750 3,868,312
Mercer International, Inc. (a) 317,400 2,755,032
------------------------------------------------- ------- -----------
Paper & Forest Products Total 6,623,344
Materials Total 65,201,901
Telecommunication Services - 0.5%
Diversified Telecommunication North Pittsburgh Systems, Inc. 110,613 3,048,494
Services - 0.5% Talk America Holdings, Inc. (a) 217,561 1,346,703
------------------------------------------------- ------- -----------
Diversified Telecommunication Services Total 4,395,197
Telecommunication Services Total 4,395,197
Utilities - 3.5%
Electric Utilities - 1.8% ALLETE, Inc. 63,600 3,011,460
El Paso Electric Co. (a) 175,700 3,542,112
Maine & Maritimes Corp. 35,100 547,560
MGE Energy, Inc. 61,186 1,905,944
Otter Tail Corp. 88,900 2,429,637
Puget Energy, Inc. 151,500 3,254,220
------------------------------------------------- ------- -----------
Electric Utilities Total 14,690,933
See Accompanying Notes to Financial Statements.
13
Columbia Small Cap Value Fund I (June 30, 2006)
Common Stocks (continued)
Utilities - (continued) Shares Value ($)
Gas Utilities - 1.1% Cascade Natural Gas Corp. 122,950 2,593,016
Northwest Natural Gas Co. 87,200 3,229,016
WGL Holdings, Inc. 114,050 3,301,747
--------------------------------------------------- --------- -----------
Gas Utilities Total 9,123,779
Multi-Utilities - 0.6% CH Energy Group, Inc. 104,800 5,030,400
--------------------------------------------------- --------- -----------
Multi-Utilities Total 5,030,400
Utilities Total 28,845,112
Total Common Stocks (Cost of $572,329,527) 820,861,654
Short-Term Obligation - 1.2%
Repurchase agreement with State Street Bank & Trust
Co., dated 06/30/06, due 07/03/06 at 4.40%,
collateralized by a U.S. Treasury Bond maturing
05/15/21, market value of $9,738,225 (repurchase
proceeds $9,547,499) 9,544,000 9,544,000
--------------------------------------------------- --------- -----------
Total Short-Term Obligation (Cost of $9,544,000) 9,544,000
--------------------------------------------------- --------- -----------
Total Investments - 100.8% (Cost of $581,873,527) (b) 830,405,654
--------------------------------------------------- --------- -----------
Other Assets & Liabilities, Net - (0.8)% (6,444,620)
--------------------------------------------------- --------- -----------
Net Assets - 100.0% 823,961,034
Notes to Investment Portfolio:
(a)Non-income producing security.
(b)Cost for federal income tax purposes is
$582,816,540.
At June 30, 2006, the Fund held investments in
the following sectors:
Sector (unaudited) % of Net Assets
------------------ ---------------
Financials 27.6%
Industrials 17.7
Information Technology 15.0
Consumer Discretionary 9.5
Health Care 8.6
Materials 7.9
Energy 6.0
Utilities 3.5
Consumer Staples 3.3
Telecommunication Services 0.5
Short-Term Obligation 1.2
Other Assets & Liabilities, Net (0.8)
-----
100.0%
=====
Acronym Name
------- ----
REIT Real Estate Investment Trust
See Accompanying Notes to Financial Statements.
14
Statement of Assets and Liabilities - Columbia Small Cap Value Fund I (June 30,
2006)
($)
Assets
Investments, at cost 581,873,527
-----------
Investments, at value 830,405,654
Cash 17,642
Receivable for:
Investments sold 2,280,199
Fund shares sold 4,086,562
Interest 1,166
Dividends 874,093
Expense reimbursement due from Investment Advisor 309
Deferred Trustees' compensation plan 37,088
------------------------------------------------- -----------
Total Assets 837,702,713
Liabilities Payable for:
Investments purchased 10,343,527
Fund shares repurchased 2,226,559
Investment advisory fee 520,992
Transfer agent fee 246,297
Pricing and bookkeeping fees 16,277
Trustees' fees 351
Custody fee 2,496
Distribution and service fees 267,605
Interest 596
Chief compliance officer expenses 2,118
Deferred Trustees' fees 37,088
Other liabilities 77,773
------------------------------------------------- -----------
Total Liabilities 13,741,679
------------------------------------------------- -----------
Net Assets 823,961,034
Composition of Net Assets Paid-in capital 551,085,369
Accumulated net investment loss (40,152)
Accumulated net realized gain 24,383,690
Net unrealized appreciation on investments 248,532,127
------------------------------------------------- -----------
Net Assets 823,961,034
See Accompanying Notes to Financial Statements.
15
Columbia Small Cap Value Fund I (June 30, 2006)
($)
Class A Net assets 505,970,894
Shares outstanding 10,534,787
Net asset value per share 48.03(a)
Maximum offering price per share ($48.03/0.9425) 50.96(b)
Class B
Net assets 135,720,822
Shares outstanding 3,250,499
Net asset value and offering price per share 41.75(a)
Class C
Net assets 68,436,194
Shares outstanding 1,569,671
Net asset value and offering price per share 43.60(a)
Class Z
Net assets 113,833,124
Shares outstanding 2,286,107
Net asset value, offering and redemption price per share 49.79
(a)Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b)On sales of $50,000 or more the offering price is reduced.
See Accompanying Notes to Financial Statements.
16
Statement of Operations - Columbia Small Cap Value Fund I
(For the Year Ended June 30, 2006)
($)
Investment Income Dividends 10,793,831
Interest 89,120
-------------------------------------------------------------- -----------
Total Investment Income 10,882,951
Expenses Investment advisory fee 6,073,062
Distribution fee:
Class B 1,243,998
Class C 484,828
Service fee:
Class A 1,131,363
Class B 414,666
Class C 161,609
Transfer agent fee 1,395,219
Pricing and bookkeeping fees 155,791
Trustees' fees 36,050
Custody fee 38,528
Chief compliance officer expenses (See Note 4) 9,805
Non-recurring costs (See Note 9) 9,626
Other expenses 338,101
-------------------------------------------------------------- -----------
Total Operating Expenses 11,492,646
Interest 694
-------------------------------------------------------------- -----------
Total Expenses 11,493,340
Fees waived by Transfer Agent (65,185)
Non-recurring costs assumed by Investment Advisor (See Note 9) (9,626)
Custody earnings credit (1,257)
-------------------------------------------------------------- -----------
Net Expenses 11,417,272
-------------------------------------------------------------- -----------
Net Investment Loss (534,321)
Net Realized and Unrealized Gain Net realized gain on Investments 54,258,359
(Loss) on Investments -------------------------------------------------------------- -----------
Net change in unrealized appreciation on investments 59,593,003
-------------------------------------------------------------- -----------
Net Gain 113,851,362
-------------------------------------------------------------- -----------
Net Increase in Net Assets from Operations 113,317,041
See Accompanying Notes to Financial Statements.
17
Statement of Changes in Net Assets - Columbia Small Cap Value Fund I
Increase (Decrease) in Net Assets: Year Ended June 30, 2006 ($) 2005 ($)
Operations Net investment income (loss) (534,321) 138,077
Net realized gain on investments and foreign
currency transactions 54,258,359 23,627,936
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations 59,593,003 44,908,271
------------------------------------------------ ------------ -----------
Net Increase from Operations 113,317,041 68,674,284
Distributions Declared to From net investment income:
Shareholders: Class Z (9,783) --
From net realized gains:
Class A (18,633,849) (27,843,539)
Class B (8,087,430) (17,698,720)
Class C (2,943,512) (3,941,261)
Class Z (3,712,285) (6,429,930)
------------------------------------------------ ------------ -----------
Total Distributions Declared to Shareholders (33,386,859) (55,913,450)
Share Transactions Class A:
Subscriptions 148,116,847 145,533,028
Distributions reinvested 17,012,510 25,655,362
Redemptions (102,785,037) (75,814,920)
------------------------------------------------ ------------ -----------
Net Increase (Decrease) 62,344,320 95,373,470
Class B:
Subscriptions 9,128,787 21,022,513
Distributions reinvested 7,381,432 15,894,102
Redemptions (79,809,664) (68,587,715)
------------------------------------------------ ------------ -----------
Net Increase (Decrease) (63,299,445) (31,671,100)
Class C:
Subscriptions 15,588,747 22,434,664
Distributions reinvested 2,234,417 3,099,402
Redemptions (12,955,090) (7,734,365)
------------------------------------------------ ------------ -----------
Net Increase (Decrease) 4,868,074 17,799,701
Class Z:
Subscriptions 38,864,032 48,136,242
Distributions reinvested 1,332,573 2,278,715
Redemptions (20,272,687) (34,331,058)
------------------------------------------------ ------------ -----------
Net Increase (Decrease) 19,923,918 16,083,899
Net Increase from Share Transactions 23,836,867 97,585,970
------------------------------------------------ ------------ -----------
Total Increase in Net Assets 103,767,049 110,346,804
Net Assets Beginning of period 720,193,985 609,847,181
End of period 823,961,034 720,193,985
Accumulated net investment loss at end of period (40,152) (21,011)
------------------------------------------------ ------------ -----------
See Accompanying Notes to Financial Statements.
18
Statement of Changes in Net Assets - Columbia Small Cap Value Fund I
Increase (Decrease) in Net Assets: Year Ended June 30, 2006 2005
Changes in Shares Class A:
Subscriptions 3,179,444 3,468,955
Issued for distributions reinvested 376,550 605,222
Redemptions (2,218,318) (1,810,292)
------------------------------------ ---------- ----------
Net Increase (Decrease) 1,337,676 2,263,885
Class B:
Subscriptions 224,900 565,332
Issued for distributions reinvested 187,156 423,844
Redemptions (1,968,547) (1,851,257)
------------------------------------ ---------- ----------
Net Increase (Decrease) (1,556,491) (862,081)
Class C:
Subscriptions 368,134 578,975
Issued for distributions reinvested 54,246 79,309
Redemptions (304,141) (200,290)
------------------------------------ ---------- ----------
Net Increase (Decrease) 118,239 457,994
Class Z:
Subscriptions 803,211 1,105,995
Issued for distributions reinvested 28,486 52,121
Redemptions (420,691) (792,561)
------------------------------------ ---------- ----------
Net Increase (Decrease) 411,006 365,555
See Accompanying Notes to Financial Statements.
19
Financial Highlights - Columbia Small Cap Value Fund I
Selected data for a share outstanding throughout each period is as follows:
Class A Shares
Year Ended June 30,
-------------------------------------------------------------
2006 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) 0.06 0.11 0.08 0.02 (0.20)
Net realized and unrealized gain (loss) on investments and
foreign currency 6.82 4.46 11.88 (1.54) 2.42
-------- -------- -------- -------- --------
Total from Investment Operations 6.88 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 $ 48.03 $ 43.12 $ 42.17 $ 31.39 $ 37.54
======== ======== ======== ======== ========
Total return (b) 16.25%(c)(d) 10.99% 38.58%(d) (2.16)%(d) 6.43%
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (e) 1.28% 1.32% 1.42% 1.54% 1.57%
Interest expense --%(f) -- -- --%(f) --
Net investment income (loss) (e) 0.13% 0.28% 0.22% 0.07% (0.55)%
Waiver/reimbursement .01% -- 0.01% 0.12% --
Portfolio turnover rate 32% 31% 46% 118% 77%
Net assets, end of period (000's) $505,971 $396,568 $292,365 $181,377 $142,551
(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)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.
(d)Had the Investment Advisor and/or Transfer Agent not waived or reimbursed a
portion of expenses, total return would have been reduced.
(e)The benefits derived from custody credits had an impact of less than 0.01%.
(f)Rounds to less than 0.01%.
See Accompanying Notes to Financial Statements.
20
Columbia Small Cap Value Fund I
Selected data for a share outstanding throughout each period is as follows:
Class B Shares
Year Ended June 30,
--------------------------------------------------------------
2006 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) (0.26) (0.18) (0.18) (0.19) (0.44)
Net realized and unrealized gain (loss) on investments and
foreign currency 5.98 3.96 10.64 (1.50) 2.23
-------- -------- -------- -------- --------
Total from Investment Operations 5.72 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 $ 41.75 $ 38.00 $ 37.60 $ 28.18 $ 34.50
======== ======== ======== ======== ========
Total return (b) 15.36%(c)(d) 10.18% 37.58%(d) (2.93)%(d) 5.65%
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (e) 2.03% 2.07% 2.17% 2.30% 2.32%
Interest expense --%(f) -- -- --%(f) --
Net investment loss (e) (0.64)% (0.47)% (0.53)% (0.71)% (1.30)%
Waiver/reimbursement .01% -- 0.01% 0.09% --
Portfolio turnover rate 32% 31% 46% 118% 77%
Net assets, end of period (000's) $135,721 $182,648 $213,159 $188,270 $231,602
(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)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.
(d)Had the Investment Advisor and/or Transfer Agent not waived or reimbursed a
portion of expenses, total return would have been reduced.
(e)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(f)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:
Class C Shares
Year Ended June 30,
---------------------------------------------------------
2006 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) (0.26) (0.18) (0.19) (0.19) (0.45)
Net realized and unrealized gain (loss) on investments and
foreign currency 6.23 4.11 11.04 (1.53) 2.30
------- ------- ------- ------- -------
Total from Investment Operations 5.97 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 $ 43.60 $ 39.60 $ 39.05 $ 29.24 $ 35.59
======= ======= ======= ======= =======
Total return (b) 15.37%(c)(d) 10.19% 37.56%(d) (2.92)%(d) 5.66%
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (e) 2.03% 2.07% 2.17% 2.30% 2.32%
Interest expenses --%(f) -- -- --%(f) --
Net investment loss (e) (0.62)% (0.47)% (0.53)% (0.71)% (1.30)%
Waiver/reimbursement .01% -- 0.01% 0.10% --
Portfolio turnover rate 32% 31% 46% 118% 77%
Net assets, end of period (000's) $68,436 $57,471 $38,798 $25,186 $26,726
(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)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.
(d)Had the Investment Advisor and/or Transfer Agent not waived or reimbursed a
portion of expenses, total return would have been reduced.
(e)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(f)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:
Class Z Shares
Year Ended June 30,
--------------------------------------------------------
2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 44.54 $ 43.41 $ 32.24 $ 38.28 $38.09
Income from Investment Operations:
Net investment income (loss) (a) 0.18 0.23 0.21 0.24 (0.12)
Net realized and unrealized gain (loss) on investments and
foreign currency 7.05 4.62 12.19 (1.65) 2.48
-------- ------- ------- ------- ------
Total from Investment Operations 7.23 4.85 12.40 (1.41) 2.36
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)
Return of capital -- -- -- (0.12) --
-------- ------- ------- ------- ------
Total Distributions Declared to Shareholders (1.98) (3.72) (1.23) (4.63) (2.17)
Net Asset Value, End of Period $ 49.79 $ 44.54 $ 43.41 $ 32.24 $38.28
======== ======= ======= ======= ======
Total return (b) 16.51%(c)(d) 11.34% 38.94%(d) (1.79)%(d) 6.71%
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (e) 1.03% 1.07% 1.17% 1.25% 1.32%
Interest expense --%(f) -- -- --%(f) --
Net investment income (loss) (e) 0.37% 0.53% 0.52% 0.82% (0.30)%
Waiver/reimbursement .01% -- 0.01% 0.38% --
Portfolio turnover rate 32% 31% 46% 118% 77%
Net assets, end of period (000's) $113,833 $83,508 $65,526 $12,558 $ 278
(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)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.
(d)Had the Investment Advisor and/or Transfer Agent not waived or reimbursed a
portion of expenses, total return would have been reduced.
(e)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(f)Rounds to less than 0.01%.
See Accompanying Notes to Financial Statements.
23
Notes to Financial Statements - Columbia Small Cap Value Fund I (June 30, 2006)
Note 1. Organization
Columbia Small Cap Value Fund I (the "Fund"), a series of Columbia Funds Series
Trust I (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, Columbia
Small Cap Value Fund was renamed Columbia Small Cap Value Fund I. Effective
March 24, 2006, the Fund was re-domiciled into Columbia Funds Series Trust I.
Prior to March 24, 2006, the Fund was a series of Columbia Funds Trust VI.
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 in accounts aggregating $1 million to $50 million at the
time of purchase are subject to a 1.00% contingent deferred sales charge
("CDSC") if the shares are sold within twelve months of the time of the
purchase. Class B shares are subject to a maximum CDSC of 5.00% based upon the
holding period after purchase. Class B shares will convert to Class A shares in
a certain number of years after purchase. 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.
24
Columbia Small Cap Value Fund I (June 30, 2006)
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 from Real Estate Investment Trusts
(REITs) in excess of income are recorded as a reduction of the cost of the
related investments and/or realized gain. If the Fund no longer owns the
applicable securities, any distributions received in excess of income are
recorded as realized gains.
Foreign Currency Transactions
The values of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. Net realized and
unrealized gains (losses) on foreign currency transactions include gains
(losses) arising from the fluctuation in exchange rates between trade and
settlement dates on securities transactions, gains (losses) arising from the
disposition of foreign currency and currency gains (losses) between the accrual
and payment dates on dividends, interest income and foreign withholding taxes.
For financial statement purposes, the Fund does not distinguish that portion of
gains (losses) on investments which is due to changes in foreign exchange rates
from that which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains (losses)
on investments.
Determination of Class Net Asset Values
All income, expenses (other than class-specific expenses, as shown on the
Statement of Operations), and realized and unrealized gains (losses), are
allocated to each class of the Fund on a daily basis, based on the relative net
assets of each class, for purposes of determining the net asset value of each
class.
Federal Income Tax Status
The Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its taxable income, if any, for its tax year, and as such
will not be subject to federal income taxes. In addition, the Fund intends to
distribute in each calendar year substantially all of its net investment
income, capital gains and certain other amounts, if any, such that the Fund
should not be subject to federal excise tax. Therefore, no federal income or
excise tax provision is recorded.
Distributions to Shareholders
Distributions to shareholders are recorded on ex-date. Net realized capital
gains, if any, are distributed at least annually.
Note 3. Federal Tax Information
The timing and character of income and capital gain distributions are
determined in accordance with income tax regulations, which may differ from
GAAP. Reclassifications are made to the Fund's capital accounts for permanent
tax differences to reflect income and gains available for distribution (or
available capital loss carryforwards) under income tax regulations.
For the year ended June 30, 2006, permanent book and tax basis differences
resulting primarily from differing treatments for net operating losses and
distribution reclassifications were identified and reclassified among the
components of the Fund's net assets as follows:
Accumulated
Undistributed Net Realized Paid-In
Net Investment Loss Gain Capital
$524,963 $(524,963) $--
Net investment income and net realized gains (losses), as disclosed on the
Statement of Operations, and net assets were not affected by this
reclassification.
25
Columbia Small Cap Value Fund I (June 30, 2006)
The tax character of distributions paid during the years ended June 30, 2006
and June 30, 2005 was as follows:
June 30, 2006 June 30, 2005
Distributions paid from:
Ordinary Income* $ 3,561,544 $23,936,007
Long-Term Capital Gains 29,825,315 31,977,443
*For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
As of June 30, 2006 the components of distributable earnings on a tax basis
were as follows:
Undistributed Undistributed Net Unrealized
Ordinary Long-term Appreciation
Income Capital Gains (Depreciation)*
$4,687,568 $28,039,810 $247,589,114
*The differences between book-basis and tax-basis net unrealized
appreciation/depreciation are primarily due to the deferral of losses from
wash sales.
Unrealized appreciation and depreciation at June 30, 2006, based on cost of
investments for federal income tax purposes, was:
Unrealized appreciation $261,311,935
Unrealized depreciation (13,722,821)
Net unrealized appreciation $247,589,114
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 Expiration Capital Loss Carryforward
2007 $1,233,446
2009 2,466,892
2012 3,700,337
----------
$7,400,675
----------
Capital loss carryforwards of $1,233,446 were utilized during the year ended
June 30, 2006.
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement 109 (the "Interpretation"). This
Interpretation is effective for fiscal years beginning after December 15, 2006
and is to be applied to tax positions upon initial adoption. This
Interpretation prescribes a minimum recognition threshold and measurement
method for the financial statement recognition of tax positions taken or
expected to be taken in a tax return and also requires certain expanded
disclosures. Management has recently begun to evaluate the application of this
Interpretation to the Fund and has not at this time quantified the impact, if
any, resulting from the adoption of this Interpretation on the Fund's financial
statements.
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 year ended June 30, 2006, the Fund's effective investment advisory fee
rate was 0.78% of the Fund's average daily net assets.
Pricing and Bookkeeping Fees
Columbia is responsible for providing pricing and bookkeeping services to the
Fund under a pricing and bookkeeping agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State
Street Corporation ("State Street"). As a result, Columbia pays State Street
the total fees collected under the pricing and bookkeeping agreement.
26
Columbia Small Cap Value Fund I (June 30, 2006)
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, exclusive of out-of-pocket expenses and
charges, 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 year ended June 30, 2006, the effective pricing and
bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was
0.020% of the Fund's average daily net assets.
Transfer Agent Fee
Columbia Management Services, Inc. (the "Transfer Agent"), an affiliate of
Columbia and an indirect, wholly-owned subsidiary of BOA, provides shareholder
services to the Fund. On August 22, 2005, Columbia Funds Services, Inc. was
renamed Columbia Management Services, Inc. The Transfer Agent has contracted
with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent.
The Transfer Agent is entitled to receive a fee for its services, paid monthly,
at the annual rate of $17.00 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, 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 April 1, 2006, the Transfer Agent received a fee, paid monthly, at the
annual rate of $15.23 per open account and prior to November 1, 2005, the
annual rate was $28.00. The Transfer Agent also received reimbursement 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 year ended June 30, 2006, the Fund's effective transfer agent fee rate,
inclusive of out-of-pocket expenses and net of fee waivers, was 0.18%.
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 year ended June 30, 2006, the
Distributor has retained net underwriting discounts of $98,620 on sales of the
Fund's Class A shares and received net CDSC of $308, $183,704 and $12,635 on
Class A, Class B and Class C share redemptions, respectively.
The Fund has adopted a Rule 12b-1 plan (the "Plan") which requires the payment
of a monthly service fee to the Distributor at the annual rate of 0.25% of the
average daily net assets of the Fund attributable to Class A, Class B and Class
C shares. The Plan also requires the payment of a monthly distribution fee to
the Distributor at the annual rate of 0.75% of the average daily net assets
attributable to Class B and Class C shares only.
The CDSC and the distribution fees received from the Plan are used principally
as repayment to the Distributor for amounts paid by the Distributor to dealers
who sold such shares.
Custody Credits
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. These credits are recorded as a reduction of
total expenses on the Statement of Operations. The Fund could have invested a
portion of the assets utilized in connection with the expense offset
arrangement in an income-producing asset if it had not entered into such an
agreement.
Fees Paid to Officers and Trustees
With the exception of one officer, all officers of the Fund are employees of
Columbia or its affiliates and receive no compensation from the Fund. The Board
of Trustees has
27
Columbia Small Cap Value Fund I (June 30, 2006)
appointed a Chief Compliance Officer to the Fund in accordance with federal
securities regulations. The Fund, along with other affiliated funds, will pay
its pro-rata share of the expenses associated with the Chief Compliance Officer
position. The Fund's fee for the Office of 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 year ended June 30, 2006, the Fund paid $2,658 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 year ended June 30, 2006, the cost of purchases and proceeds from sales
of securities, excluding short-term obligations, were $248,330,023 and
$255,289,629, respectively.
Note 6. Line of Credit
The Fund and other affiliated funds participate in a $350,000,000 committed
unsecured revolving line of credit provided by State Street Bank and Trust
Company. Borrowings are used for temporary or emergency purposes to facilitate
portfolio liquidity. Interest is charged to each participating fund based on
its borrowings at a rate per annum equal to the Federal Funds rate plus 0.50%.
In addition, a commitment fee of 0.10% per annum is accrued and apportioned
among the participating funds based on their pro-rata portion of the unutilized
line of credit. The commitment fee is included in "Other expenses" on the
Statement of Operations. For the year ended June 30, 2006, the Fund did not
borrow under this arrangement.
Note 7. Shares of Beneficial Interest
As of June 30, 2006, the Fund had a shareholder that held 9.8% of the shares
outstanding whose shares were beneficially owned by participant accounts over
which Bank of America and/or its affiliates had either sole or joint investment
discretion.
As of June 30, 2006, 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
2 11.96%
Note 8. Other
During the year ended June 30, 2006, the Fund purchased shares of a security
due to a trading error. This position was subsequently sold at a loss of
$9,718. 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 agreed, among other
things, to: pay $70 million in disgorgement and $70 million in civil money
penalties; cease
28
Columbia Small Cap Value Fund I (June 30, 2006)
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 management fees for certain Columbia Funds (including
the former Nations Funds) and other mutual funds 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
approved by the SEC. The independent distribution consultant has been in
consultation with the staff of the SEC and has submitted a proposed plan of
distribution. The SEC has not yet approved a final 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.
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 March 1, 2006, for reasons stated in the
court's memoranda dated November 3, 2005, the U.S. District Court for the
District of Maryland granted in part and denied in part the defendants' motions
to dismiss. The court dismissed all of the class action claims pending against
the Columbia Funds Trusts and the Columbia Acorn Trusts. As to Columbia and the
Distributor, 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 were dismissed. The claims under Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and claims under Section 36(b) of the ICA
along with related claims under Section 48(a) of the ICA were not dismissed.
On March 21, 2005, a purported class action was filed 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.
On April 4, 2006, the plaintiffs and the Columbia defendants named in the MDL,
including the Columbia Funds, entered into a term sheet containing the
principal terms of a stipulation of settlement that would settle all
Columbia-related claims in the MDL described above, including the CDSC Lawsuit.
On April 6, 2006, the U.S. District Court for the District of Maryland stayed
all actions with respect to those Columbia-related claims.
The MDL is ongoing. Accordingly, an estimate of the financial impact of this
litigation on any fund, if any, cannot currently be made.
29
Columbia Small Cap Value Fund I (June 30, 2006)
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 year ended June 30, 2006, Columbia has assumed $9,626 of legal,
consulting services and Trustees' fees incurred by the Fund in connection with
these matters.
30
Report of Independent Registered Public Accounting Firm
To the Trustees of Columbia Funds Series Trust I and the Shareholders of
Columbia Small Cap Value Fund I
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Columbia Small Cap Value Fund I
(the "Fund") (a series of Columbia Funds Series Trust I, formerly a series of
Columbia Funds Trust VI) at June 30, 2006, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 2006 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 25, 2006
31
Unaudited Information - Columbia Small Cap Value Fund I
Federal Income Tax Information
For the fiscal year ended June 30, 2006, the Fund designates long-term capital
gains of $47,477,793.
100% of the ordinary income distributed by the Fund, for the year ended June
30, 2006, qualifies for the corporate dividends received deduction.
For non-corporate shareholders 100%, or the maximum amount allowable under the
Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the
Fund for the period July 1, 2005 to June 30, 2006 may represent qualified
dividend income. Final information will be provided in your 2006 1099-Div Form.
32
Trustees - Columbia Small Cap Value Fund I
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Funds in the Columbia
Funds Complex, the year each was first elected or appointed to office, their
principal business occupations during at least the last five years, the number
of portfolios overseen by each Trustee/Director and other directorships they
hold are shown below. Each officer listed below serves as an officer of each
Fund in the Columbia Funds Complex.
Principal occupation(s) during past five years, Number
Name, address and age, Position with funds, of portfolios in Columbia Funds Complex overseen by
Year first elected or appointed to office/1/ trustee/director, Other directorships held
Disinterested Trustees
Douglas A. Hacker (Born 1955) Executive Vice President-Strategy of United Airlines
c/o Columbia Management Advisors, LLC (airline) from December, 2002 to April, 2006;
One Financial Center (formerly President of UAL Loyalty Services (airline)
Boston, MA 02111 from September, 2001 to December, 2002; Executive Vice
Trustee (since 1996) President and Chief Financial Officer of United
Airlines from July, 1999 to September, 2001; Senior
Vice President-Finance from March, 1993 to July,
1999). Oversees 83, Nash Finch Company (food
distributor)
Janet Langford Kelly (Born 1957) Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP
c/o Columbia Management Advisors, LLC (law firm) since March, 2005; Adjunct Professor of
One Financial Center Law, Northwestern University, since September, 2004
Boston, MA 02111 (formerly Chief Administrative Officer and Senior Vice
Trustee (since 1996) President, Kmart Holding Corporation (consumer goods),
from September, 2003 to March, 2004; Executive Vice
President-Corporate Development and Administration,
General Counsel and Secretary, Kellogg Company (food
manufacturer), from September, 1999 to August, 2003;
Senior Vice President, Secretary and General Counsel,
Sara Lee Corporation (branded, packaged,
consumer-products manufacturer) from January, 1995 to
September, 1999). Oversees 83, UAL Corporation
(airline)
Richard W. Lowry (Born 1936) Private Investor since August, 1987 (formerly Chairman
c/o Columbia Management Advisors, LLC and Chief Executive Officer, U.S. Plywood Corporation
One Financial Center (building products manufacturer until 1987)). Oversees
Boston, MA 02111 85/2/, None
Trustee (since 1995)
/1/In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for the
oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson who
had been a director on the Columbia Board and trustee on the CMG Funds
Board, was appointed to serve as trustee of the Liberty Board. The date
shown is the earliest date on which a trustee/director was elected or
appointed to the board of a Fund in the Columbia Funds Complex.
/2/Messrs. Lowry and Neuhauser also serve as directors/trustees of the Liberty
All-Star Funds, currently consisting of 2 funds, which are advised by an
affiliate of the Advisor.
33
Columbia Small Cap Value Fund I
Principal occupation(s) during past five years, Number
Name, address and age, Position with funds, of portfolios in Columbia Funds Complex overseen by
Year first elected or appointed to office/1/ trustee/director, Other directorships held
Disinterested Trustees
Charles R. Nelson (Born 1943) Professor of Economics, University of Washington,
c/o Columbia Management Advisors, LLC since January, 1976; Ford and Louisa Van Voorhis
One Financial Center Professor of Political Economy, University of
Boston, MA 02111 Washington, since September, 1993 (formerly Director,
Trustee (since 1981) Institute for Economic Research, University of
Washington from September, 2001 to June, 2003);
Adjunct Professor of Statistics, University of
Washington, since September, 1980; Associate Editor,
Journal of Money Credit and Banking, since September,
1993; consultant on econometric and statistical
matters. Oversees 83, None
John J. Neuhauser (Born 1942) University Professor, Boston College since November,
c/o Columbia Management Advisors, LLC 2005; Academic Vice President and Dean of Faculties
One Financial Center from August, 1999 to October, 2005, Boston College.
Boston, MA 02111 Oversees 85/2/, None
Trustee (since 1985)
Patrick J. Simpson (Born 1944) Partner, Perkins Coie LLP (law firm). Oversees 83, None
c/o Columbia Management Advisors, LLC
One Financial Center
Boston, MA 02111
Trustee (since 2000)
Thomas E. Stitzel (Born 1936) Business Consultant since 1999; Chartered Financial
c/o Columbia Management Advisors, LLC Analyst. Oversees 83, None
One Financial Center
Boston, MA 02111
Trustee (since 1998)
Thomas C. Theobald (Born 1937) Partner and Senior Advisor, Chicago Growth Partners
c/o Columbia Management Advisors, LLC (private equity investing) since September, 2004
One Financial Center (formerly Managing Director, William Blair Capital
Boston, MA 02111 Partners (private equity investing) from September,
Trustee and Chairman of the Board/4/ 1994 to September, 2004). Oversees 83/3/, Anixter
(since 1996) International (network support equipment distributor);
Ventas, Inc. (real estate investment trust); Jones
Lang LaSalle (real estate management services) and
Ambac Financial Group (financial guaranty insurance)
/3/Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003.
34
Columbia Small Cap Value Fund I
Principal occupation(s) during past five years, Number
Name, address and age, Position with funds, of portfolios in Columbia Funds Complex overseen by
Year first elected or appointed to office/1/ trustee/director, Other directorships held
Disinterested Trustees
Anne-Lee Verville (Born 1945) Retired since 1997 (formerly General Manager, Global
c/o Columbia Management Advisors, LLC Education Industry, IBM Corporation (computer and
One Financial Center technology) from 1994 to 1997). Oversees 83, Chairman
Boston, MA 02111 of the Board of Directors, Enesco Group, Inc.
Trustee (since 1998) (producer of giftware and home and garden decor
products)
Interested Trustee
William E. Mayer (Born 1940) Partner, Park Avenue Equity Partners (private equity)
c/o Columbia Management Advisors, LLC since February, 1999 (formerly Partner, Development
One Financial Center Capital LLC from November, 1996 to February, 1999).
Boston, MA 02111 Oversees 83/4/, Lee Enterprises (print media), WR
Trustee (since 1994) Hambrecht + Co. (financial service provider); Reader's
Digest (publishing); OPENFIELD Solutions (retail
industry technology provider)
/4/Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co.
The Statement of Additional Information Includes additional information about
the Trustees of the Funds and is available, without charge, upon request by
calling 800-426-3750.
35
Officers - Columbia Small Cap Value Fund I
Name, address and age, Position with Columbia
Funds, Year first elected or appointed to office Principal occupation(s) during past five years
Christopher L. Wilson (Born 1957) Head of Mutual Funds since August, 2004 and Managing
One Financial Center Director of the Advisor since September, 2005;
Boston, MA 02111 President and Chief Executive Officer, CDC IXIS Asset
President (since 2004) Management Services, Inc. (investment management) from
September, 1998 to August, 2004.
James R. Bordewick, Jr. (Born 1959) Associate General Counsel, Bank of America since
One Financial Center April, 2005; Senior Vice President and Associate
Boston, MA 02111 General Counsel, MFS Investment Management (investment
Senior Vice President, Secretary and management) prior to April, 2005.
Chief Legal Officer (since 2006)
J. Kevin Connaughton (Born 1964) Managing Director of the Advisor since February, 1998.
One Financial Center
Boston, MA 02111
Senior Vice President,
Chief Financial Officer and Treasurer
(since 2000)
Mary Joan Hoene (Born 1949) Senior Vice President and Chief Compliance Officer of
100 Federal Street various funds in the Fund Complex; Partner, Carter,
Boston, MA 02110 Ledyard & Milburn LLP (law firm) from January, 2001 to
Senior Vice President and August, 2004.
Chief Compliance Officer
(since 2004)
Michael G. Clarke (Born 1969) Director of Fund Administration since January, 2006;
One Financial Center Managing Director of Columbia Management Advisors, LLC
Boston, MA 02111 September, 2004 to December, 2005; Vice President Fund
Chief Accounting Officer and Administration June, 2002 to September, 2004. Vice
Assistant Treasurer President Product Strategy and Development from
(since 2004) February, 2001 to June, 2002.
Jeffrey R. Coleman (Born 1969) Director of Fund Administration since January, 2006;
One Financial Center Fund Controller from October 2004 to January 2006;
Boston, MA 02111 Vice President of CDC IXIS Asset Management Services,
Deputy Treasurer (since 2006) Inc. (investment management) from August, 2000 to
September, 2004.
Joseph F. DiMaria (Born 1968) Director of Fund Administration since January, 2006;
One Financial Center Head of Tax/Compliance and Assistant Treasurer from
Boston, MA 02111 November, 2004 to December, 2005; Director of Trustee
Deputy Treasurer (since 2006) Administration (Sarbanes-Oxley) from May, 2003 to
October, 2004; Senior Audit Manager,
PricewaterhouseCoopers (independent registered public
accounting firm) from July, 2000 to April, 2003.
36
Columbia Small Cap Value Fund I
Name, address and age, Position with Columbia
Funds, Year first elected or appointed to office Principal occupation(s) during past five years
Ty S. Edwards (Born 1966) Director of Fund Administration since January, 2006;
One Financial Center Vice President of the Advisor from July, 2002 to
Boston, MA 02111 December, 2005; Assistant Vice president and Director,
Deputy Treasurer (since 2006) State Street Corporation (financial services) prior to
2002.
Barry S. Vallan (Born 1969) Vice President-Fund Treasury of the Advisor since
One Financial Center October, 2004; Vice President-Trustee Reporting from
Boston, MA 02111 April, 2002 to October, 2004; Management Consultant,
Controller (since 2006) PricewaterhouseCoopers (independent registered public
accounting firm) prior to October, 2002.
37
Columbia Funds
--------------------------------------------------------------
Growth funds Columbia Acorn Fund
Columbia Acorn Select
Columbia Acorn USA
Columbia Growth Stock Fund
Columbia Large Cap Growth Fund
Columbia Marsico 21st Century Fund
Columbia Marsico Focused Equities Fund
Columbia Marsico Growth Fund
Columbia Marsico Mid Cap Growth Fund
Columbia Mid Cap Growth Fund
Columbia Small Cap Growth Fund I
Columbia Small Cap Growth Fund II
Columbia Small Company Equity Fund
--------------------------------------------------------------
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 Fund
--------------------------------------------------------------
Asset Allocation/Hybrid Columbia Asset Allocation Fund
funds 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 Masters Global Equity
Portfolio
Columbia Masters Heritage Portfolio
Columbia Masters International Equity
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
--------------------------------------------------------------
Tax-Managed fund Columbia Tax-Managed Growth Fund
--------------------------------------------------------------
Specialty funds Columbia Convertible Securities Fund
Columbia Real Estate Equity Fund
Columbia Technology Fund
Columbia Utilities Fund
38
-----------------------------------------------------------------
Global/International funds Columbia Acorn International
Columbia Acorn International Select
Columbia Global Value Fund
Columbia Greater China Fund
Columbia International Stock Fund
Columbia International Value Fund
Columbia Marsico International
Opportunities Fund
Columbia Multi-Advisor International
Equity Fund
Columbia World Equity Fund
-----------------------------------------------------------------
Taxable Bond funds Columbia Conservative High Yield Fund
Columbia Core Bond Fund
Columbia Federal Securities Fund
Columbia High Income Fund
Columbia High Yield Opportunity Fund
Columbia Income Fund
Columbia Intermediate Bond Fund
Columbia Intermediate Core Bond Fund
Columbia Short Term Bond Fund
Columbia Strategic Income Fund
Columbia Total Return Bond Fund
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 Tax-Exempt Fund
Columbia New Jersey Intermediate
Municipal Bond Fund
Columbia New York 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
39
---------------------------------------------------------
Money Market funds Columbia California Tax-Exempt
Reserves
Columbia Cash Reserves
Columbia Connecticut Municipal
Reserves
Columbia Government Plus Reserves
Columbia Government 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. 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.
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
1-800-345-6611
Distributor
Columbia Management
Distributors, Inc.
One Financial Center
Boston MA 02111
Investment Advisor
Columbia Management Advisors, LLC
100 Federal Street
Boston MA 02110
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
125 High Street
Boston, MA 02110
The fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call shareholder services at 1-800-345-6611
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 records 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 1-800-368-0346. 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, D.C. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Columbia Management is the primary investment management division of Bank of
America Corporation. Columbia Management entities furnish investment management
services and advise institutional and mutual fund portfolios. Columbia 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
Columbia Small Cap Value Fund I
Annual Report - June 30, 2006
[GRAPHIC] Columbia Management\(R)\
(C)2006 Columbia Management Distributors, Inc.
One Financial Center, Boston, MA 02111-2621
800-345-6611 www.columbiafunds.com
SHC-42/112007-0606 (08/06) 06/27737
[GRAPHIC] Columbia Management\(R)\
--------------
Columbia High Yield Municipal Fund
Annual Report - June 30, 2006
NOT FDIC-INSURED May Lose Value
-----------------
No Bank Guarantee
President's Message
Columbia High Yield Municipal Fund
Table of contents
Performance Information 1
Understanding Your Expenses 2
Economic Update 3
Portfolio Manager's Report 4
Fund Profile 5
Investment Portfolio 6
Statement of Assets and
Liabilities 37
Statement of Operations 39
Statement of Changes in Net
Assets 40
Financial Highlights 42
Notes to Financial Statements 46
Report of Independent
Registered Public Accounting
Firm 54
Unaudited Information 55
Trustees 56
Officers 59
Columbia Funds 60
Important Information About
This Report 63
The views expressed in the President's Message and Portfolio Manager's Report
reflect the current views of the respective parties. These views are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict so actual outcomes and results may
differ significantly from the views expressed. These views are subject to
change at any time based upon economic, market or other conditions and the
respective parties disclaim any responsibility to update such views. These
views may not be relied on as investment advice and, because investment
decisions for a Columbia Fund are based on numerous factors, may not be
relied on as an indication of trading intent on behalf of any particular
Columbia Fund. References to specific company securities should not be
construed as a recommendation or investment advice.
[PHOTO] Christopher L. Wilson
Dear Shareholder:
We appreciate your continued confidence in the Columbia Funds. Many of the
product changes we have told you about in the prior 18 months have been fully
completed. The results have been as we expected -- a more streamlined product
offering with lower expense ratios for the majority of our funds. When coupled
with the improvements in our investment process, we believe Columbia Management
is well positioned to provide you with an array of products to meet your
investment needs.
We have also made improvements to our servicing platform. Website enhancements
and improved account access at www.columbiafunds.com and a recently upgraded
automated phone system available at 800.345.6611 provide you with everything
you need to manage your relationship with Columbia 24 hours a day, 7 days a
week. The new phone system is equipped with an advanced speech recognition
system that allows callers to interact with the system using natural spoken
commands.
After secure login, you can buy, sell or exchange funds either on-line or over
the phone. (Buying shares requires that a link has been established between
your bank account and Columbia Funds account). Up-to-date performance and
pricing information is also available on-line or over the phone. We will
continue to look for ways to expand capabilities for you in the future.
So, as you read the enclosed portfolio manager commentary on your fund and what
has driven its performance results, be assured that we will not rest on the
recent success of our product and service enhancements. We will continue to
seek ways to provide you with better financial solutions and consistent,
high-quality results. We value your relationship with us and will work hard to
earn your continued trust.
Sincerely,
/s/ Christopher L. Wilson
Christopher L. Wilson
President, Columbia Funds
Performance Information - Columbia High Yield Municipal Fund
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than the original cost. Please visit
www.columbiafunds.com for daily and most recent month-end performance updates.
Performance of a $10,000 investment
07/01/96 - 06/30/06 ($)
sales charge: without with
Class A 16,971 16,163
Class B 16,472 16,472
Class C 16,569 16,569
Class Z 17,216 n/a
Growth of a $10,000 investment 07/01/96 - 06/30/06
[CHART]
Class A shares Class A shares Lehman Brothers
without sales charge with sales charge Municipal Bond Index
-------------------- ----------------- --------------------
7/1/1996 $10,000 $ 9,525 $10,000
7/31/1996 10,050 9,573 10,090
8/31/1996 10,074 9,596 10,088
9/30/1996 10,212 9,727 10,229
10/31/1996 10,325 9,835 10,345
11/30/1996 10,491 9,992 10,534
12/31/1996 10,511 10,011 10,490
1/31/1997 10,537 10,036 10,510
2/28/1997 10,621 10,117 10,606
3/31/1997 10,528 10,028 10,465
4/30/1997 10,607 10,103 10,553
5/31/1997 10,771 10,259 10,713
6/30/1997 10,889 10,371 10,827
7/31/1997 11,147 10,617 11,127
8/31/1997 11,096 10,569 11,023
9/30/1997 11,206 10,674 11,154
10/31/1997 11,278 10,742 11,225
11/30/1997 11,357 10,817 11,291
12/31/1997 11,515 10,968 11,456
1/31/1998 11,625 11,073 11,574
2/28/1998 11,644 11,091 11,578
3/31/1998 11,649 11,095 11,588
4/30/1998 11,623 11,071 11,536
5/31/1998 11,774 11,215 11,718
6/30/1998 11,796 11,236 11,764
7/31/1998 11,829 11,268 11,793
8/31/1998 11,973 11,404 11,976
9/30/1998 12,064 11,491 12,126
10/31/1998 12,047 11,474 12,126
11/30/1998 12,089 11,515 12,168
12/31/1998 12,123 11,547 12,199
1/31/1999 12,227 11,646 12,344
2/28/1999 12,195 11,616 12,290
3/31/1999 12,231 11,650 12,307
4/30/1999 12,275 11,692 12,338
5/31/1999 12,299 11,715 12,266
6/30/1999 12,172 11,594 12,089
7/31/1999 12,208 11,628 12,133
8/31/1999 12,087 11,513 12,036
9/30/1999 12,069 11,495 12,041
10/31/1999 11,905 11,339 11,911
11/30/1999 11,982 11,413 12,037
12/31/1999 11,862 11,299 11,947
1/31/2000 11,767 11,208 11,894
2/29/2000 11,863 11,299 12,032
3/31/2000 12,023 11,452 12,294
4/30/2000 12,001 11,431 12,222
5/31/2000 11,937 11,370 12,158
6/30/2000 12,149 11,572 12,480
7/31/2000 12,290 11,706 12,654
8/31/2000 12,453 11,862 12,849
9/30/2000 12,410 11,820 12,782
10/31/2000 12,480 11,887 12,921
11/30/2000 12,512 11,917 13,019
12/31/2000 12,685 12,083 13,341
1/31/2001 12,755 12,149 13,473
2/28/2001 12,764 12,158 13,516
3/31/2001 12,848 12,238 13,638
4/30/2001 12,716 12,112 13,491
5/31/2001 12,836 12,226 13,636
6/30/2001 12,945 12,330 13,728
7/31/2001 13,170 12,544 13,931
8/31/2001 13,514 12,872 14,161
9/30/2001 13,365 12,730 14,113
10/31/2001 13,499 12,857 14,280
11/30/2001 13,420 12,783 14,161
12/31/2001 13,329 12,696 14,026
1/31/2002 13,476 12,836 14,269
2/28/2002 13,612 12,965 14,440
3/31/2002 13,406 12,769 14,157
4/30/2002 13,661 13,012 14,433
5/31/2002 13,709 13,058 14,521
6/30/2002 13,842 13,184 14,675
7/31/2002 13,951 13,288 14,864
8/31/2002 14,061 13,393 15,043
9/30/2002 14,222 13,546 15,372
10/31/2002 13,946 13,283 15,117
11/30/2002 14,008 13,343 15,053
12/31/2002 14,171 13,498 15,371
1/31/2003 14,137 13,465 15,333
2/28/2003 14,333 13,653 15,547
3/31/2003 14,338 13,657 15,556
4/30/2003 14,484 13,796 15,659
5/31/2003 14,758 14,057 16,026
6/30/2003 14,755 14,054 15,958
7/31/2003 14,395 13,711 15,400
8/31/2003 14,494 13,806 15,515
9/30/2003 14,788 14,086 15,971
10/31/2003 14,806 14,103 15,892
11/30/2003 15,010 14,297 16,057
12/31/2003 15,122 14,403 16,190
1/31/2004 15,179 14,458 16,282
2/29/2004 15,399 14,668 16,527
3/31/2004 15,322 14,594 16,469
4/30/2004 15,083 14,367 16,078
5/31/2004 15,020 14,306 16,021
6/30/2004 15,066 14,351 16,078
7/31/2004 15,267 14,541 16,290
8/31/2004 15,482 14,747 16,616
9/30/2004 15,573 14,834 16,704
10/31/2004 15,692 14,946 16,848
11/30/2004 15,701 14,955 16,710
12/31/2004 15,889 15,135 16,914
1/31/2005 16,023 15,262 17,071
2/28/2005 16,044 15,282 17,015
3/31/2005 15,978 15,219 16,907
4/30/2005 16,198 15,429 17,175
5/31/2005 16,318 15,543 17,297
6/30/2005 16,423 15,643 17,404
7/31/2005 16,457 15,676 17,325
8/31/2005 16,592 15,804 17,500
9/30/2005 16,524 15,739 17,383
10/31/2005 16,471 15,689 17,277
11/30/2005 16,565 15,778 17,360
12/31/2005 16,732 15,938 17,509
1/31/2006 16,781 15,984 17,557
2/28/2006 16,949 16,144 17,674
3/31/2006 16,906 16,103 17,552
4/30/2006 16,912 16,108 17,547
5/31/2006 17,006 16,198 17,626
6/30/2006 16,971 16,163 17,557
The chart above shows the growth in value of a hypothetical $10,000 investment
in Class A Shares of Columbia High Yield Municipal Fund during the stated time
period, and does not reflect the deduction of taxes that a share holder would
pay on fund distributions or the redemption of fund shares. The Lehman Brothers
Municipal Bond Index is an unmanaged index considered representative of the
broad market for investment-grade, tax exempt bonds with a maturity of at least
one year. 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 06/30/06 (%)
Share class A B C Z
----------------------------------------------------------------------------------------
Inception 07/31/00 07/15/02 07/15/02 03/05/84
----------------------------------------------------------------------------------------
Sales charge without with without with without with without
1- year 3.39 -1.54 2.62 -2.32 2.77 1.78 3.59
5- year 5.57 4.54 4.94 4.61 5.06 5.06 5.82
10- year 5.43 4.92 5.12 5.12 5.18 5.18 5.58
The "with sales charge" returns include the maximum initial sales charge of
4.75% for class A shares, maximum contingent deferred sales charge of 5.00% for
class B shares and 1.00% for class C shares for the first year only. The
"without sales charge" returns do not include the effect of sales charges. If
they had, returns would be lower.
All results shown assume reinvestment of distributions. Class Z shares are sold
at net asset value with no Rule 12b-1 fees. Class Z shares have limited
eligibility and the investment minimum requirement may vary. Please see 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.
The table does not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
Class A is a newer class of shares. Its performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to its inception. These returns have not been restated to reflect
any differences in expenses (such as Rule 12b-1 fees) between class Z shares
and the newer class of shares. If differences in expenses had been reflected,
the returns shown for periods prior to the inception of the newer class of
shares would have been lower. Class Z shares were initially offered on March 5,
1984, and class A shares were initially offered on July 31, 2000.
Class B and class C are newer classes of shares. Their performance information
includes returns of the fund's class A shares from July 31, 2000 (class A's
inception) to July 15, 2002 (inception of newer classes of shares). Their
performance information prior to July 31, 2000 includes returns of the fund's
class Z shares (the oldest existing fund class). These returns have not been
restated to reflect any differences in expenses (such as Rule 12b-1 fees)
between class A or class Z shares and the newer classes of shares. If
differences in expenses had been reflected, the returns shown for periods prior
to the inception of the newer classes of shares would have been lower. Class Z
shares were initially offered on March 5, 1984, class A shares were initially
offered on July 31, 2000, and class B and class C shares were initially offered
on July 15, 2002.
1
Understanding Your Expenses - Columbia High Yield Municipal Fund
Shareholder expense example
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 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 is
calculated using the fund's actual operating expenses. 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.
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 $8,600 at the end of the period, the result would be 8.6.
2. In the section of the table below titled "Expenses paid during the period,"
locate the amount for your share class. You will find this number in the
column labeled "actual." Multiply this number by the result from step 1.
Your answer is an estimate of the expenses you paid on your account during
the period.
01/01/06 - 06/30/06
Account value Account value Fund's
at the at the Expenses paid annualized
beginning of the end of the during the expense
period ($) period ($) period ($) ratio (%)
Actual Hypothetical Actual Hypothetical Actual Hypothetical Actual
Class A 1,000.00 1,000.00 1,014.78 1,020.53 4.30 4.31 .86
Class B 1,000.00 1,000.00 1,011.01 1,016.81 8.03 8.05 1.61
Class C 1,000.00 1,000.00 1,011.75 1,017.55 7.28 7.30 1.46
Class Z 1,000.00 1,000.00 1,015.77 1,021.52 3.30 3.31 .66
Expenses paid during the period are equal to the annualized expense ratio for
the share class, multiplied by the average account value over the period, then
multiplied by the number of days in the fund's most recent fiscal half-year and
divided by 365.
Had the distributor and transfer agent not waived a portion of expenses, total
return would have been reduced.
It is important to note that the expense amounts shown in the table are meant
to highlight only continuing costs of investing in the fund and do not reflect
any transaction costs, such as sales charges or redemption or exchange fees.
Therefore, the hypothetical examples provided will not help you determine the
relative total costs of owning different funds. If these transaction costs were
included, your costs would have been higher.
Compare with other funds
Since all mutual funds are required to include the same hypothetical
calculations about expenses in shareholder reports, you can use this
information to compare the ongoing cost of investing in the fund with other
funds. To do so, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds. As you compare
hypothetical examples of other funds, it is important to note that hypothetical
examples are meant to highlight the continuing cost of investing in a fund and
do not reflect any transaction costs, such as sales charges or redemption or
exchange fees.
2
Economic Update - Columbia High Yield Municipal Fund
The US economy grew at a solid but uneven pace during the 12-month period that
began July 1, 2005 and ended June 30, 2006. Gross domestic product (GDP)
expanded at an estimated annualized rate of approximately 3.5% as job growth
provided support for consumer spending. Rising profits freed up cash for
business spending, which picked up during the period. Personal income rose.
Yet, these overall measures masked a host of challenges, which led to
considerable volatility during the 12-month period. Late last summer,
hurricanes Katrina and Rita devastated the Gulf Coast, disrupting the flow of
energy products and leaving millions of Americans without homes or jobs.
Consumer confidence plummeted in the wake of the storms. The impact on the
labor market was actually less than anticipated. However, economic growth fell
to a mere 1.7% in the fourth quarter.
The economy regained considerable momentum early in 2006. GDP growth rebounded
to 5.6%. Job growth resumed at a healthy pace, and consumer confidence
rebounded. Yet, the once strong housing market has shown signs of slowing.
Inflation edged higher as record-high energy prices took a bigger bite out of
household budgets. Consumer spending growth edged lower in the final months of
the period, and economic growth declined to 2.5% for the last quarter of the
reporting period.
Eight 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 5.25% in eight 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 the Fed, under new chairman Ben
Bernanke, continued to raise short-term interest rates through the end of the
period.
After a solid start, bond market sputters
The US bond market headed downward during the period as interest rates moved
higher across the maturity spectrum. The yield on the 10-year US Treasury note,
a bellwether for the bond market, rose more than one full percentage point and
ended the period at 5.14%. In this environment, the Lehman Brothers Aggregate
Bond Index returned negative 0.81% for the 12-month period. High-yield bonds
led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Only
Index returned 4.65%.
Stocks moved higher
Despite bouts of volatility, the S&P 500 Index -- a broad measure of large
company stock market performance -- returned a respectable 8.63% for this
reporting period. Small- and mid-cap stocks did even better. The Russell 2000
Index returned 14.58% while the Russell Midcap Index returned 13.66%. Energy
stocks led the US stock market as commodity prices continued to climb. Foreign
stock markets generally did better than the US market. The MSCI EAFE Index,
which tracks stock market performance in industrialized countries outside the
United States, returned 26.56%.
The Russell Midcap Index measures the performance of the 800 smallest companies
in the Russell 1000 Index, which represent approximately 25% of the total
market capitalization of the Russell 1000 Index.
The Lehman Brothers Aggregate Bond Index is a market value-weighted index that
tracks the daily price, coupon, pay-downs, and total return performance of
fixed-rate, publicly placed, dollar denominated 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 Only Index tracks the performance of
non-investment-grade corporate bonds.
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held, large-capitalization US stocks.
The Russell 2000 Index measures the performance of the 2,000 smallest companies
in the Russell 3000 Index, which represents approximately 8% of the total
market capitalization of the Russell 3000 Index.
The MSCI EAFE index is a free float-adjusted market capitalization Index that
is designed to measure developed market equity performance, excluding the US
and Canada.
Unlike mutual funds, 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.
Summary
For the 12-month period ended June 30, 2006
.. Investment-grade bonds delivered negative returns, 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 Only Index.
[GRAPHIC] -0.81%
Lehman Index
[GRAPHIC] +4.65%
Merrill Lynch Index
.. Despite volatility, the broad stock market, as measured by the S&P 500
Index, returned 8.63%. Small-cap stocks did better than large- and mid-cap
stocks, as measured by the Russell 2000 Index.
[GRAPHIC] +8.63%
S&P Index
[GRAPHIC] +14.58%
Russell Index
3
Portfolio Manager's Report - Columbia High Yield Municipal Fund
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than the original cost. Please visit
www.columbiafunds.com for daily and most recent month-end performance updates.
Summary
.. For the 12-month period ended June 30, 2006, the fund's class A shares
returned 3.39% without sales charge.
.. In general, high-yield bonds held up better than investment-grade bonds as
the bond market came under pressure from rising interest rates.
.. Airline bonds were among the fund's best performers. However, we believe the
fund had less exposure than competing funds to the airline industry, which
accounted for much of the small difference in return between the fund and
the average return of its peers.
Net asset value per share as of
06/30/06 ($)
Class A 11.25
Class B 11.25
Class C 11.25
Class Z 11.25
Distributions declared per share
07/01/05 - 06/30/06 ($)
Class A 0.52
Class B 0.43
Class C 0.45
Class Z 0.54
A portion of the fund's income may be subject to the alternative minimum tax.
The fund may at times purchase tax-exempt securities at a discount. Some or
all of this discount may be included in the fund's ordinary income, and is
taxable when distributed.
SEC yields as of 06/30/06 (%)
Class A 4.28
Class B 3.71
Class C 3.86
Class Z 4.70
The 30-day SEC yields reflect the portfolio earning power net of expenses,
expressed as an annualized percentage of public offering price per share at
the end of the period.
Taxable-equivalent SEC yields
as of 06/30/06 (%)
Class A 6.58
Class B 5.71
Class C 5.94
Class Z 7.23
Taxable-equivalent SEC yields are based on the combined maximum effective
35.0% federal income tax rate. This tax rate does not reflect the phase out
of exemption or the reduction of otherwise allowable deductions that occur
when adjusted gross income exceeds certain levels.
For the 12-month period ended June 30, 2006, class A shares of Columbia High
Yield Municipal Fund returned 3.39% without sales charge. The fund did better
than its benchmark, the Lehman Brothers Municipal Bond Index, which returned
0.89% for the same period. The fund's performance was just short of the 3.79%
average return of its peer group, the Lipper High Yield Municipal Debt Funds
Category. Selected bonds enjoyed strong returns because of improved credit
ratings and certain airline bonds helped bolster the fund's performance.
However, we believe that the fund had less exposure than competing funds to the
airline industry, which detracted slightly from performance relative to its
peer group, as did its overall focus on higher quality high-yield bonds.
A positive environment for high-yield municipals
Positive economic growth improved the credit outlook for many high-yield
issuers during the period and aided the overall performance of high-yield
municipal bonds. As a result, the difference between yields on lower and higher
quality debt narrowed. Strong demand from investors searching for added yield
also aided performance.
Gains from airline and assisted living facility bonds
Airline bonds were among the top contributors to the fund's performance.
Airline issues rallied as improved operating results attracted investors. US
Airways bonds, issued by the Charlotte, North Carolina Airport Authority (.40%
of net assets), did especially well after emerging from bankruptcy protection.
However, we believe that the fund had less exposure to airlines than the
average fund in its peer group, which detracted from relative performance. The
airline industry's municipal bonds enjoyed gains of between 15% and 50% while
the bond market, in general, declined.
Elsewhere in the portfolio, the price of bonds issued by a Roseville, MN (.20%
of net assets) assisted living facility increased approximately 18% due to
credit improvement. And several of the fund's positions were either refunded or
called at par. One such holding was Attic Angel, a bond that was refunded --
the issuer issued new bonds paying a lower interest rate and pledged the
proceeds of the new bonds as security for the older bonds. In the process, the
older bond's price rose as it went from non-rated to a AAA rating.
Issue-specific disappointments
Bonds issued by Northwest Parkway (.40% of net assets) for the construction of
a toll road northwest of Denver were a disappointment. These bonds lost ground
when the issuer tried unsuccessfully to refund, or restructure, its debt to
help with cash flow weakness. In addition, Northwest Airlines bonds (no longer
in the portfolio) declined in reaction to news that the airline had challenged
the lease agreement at its Minneapolis hub. Lower-coupon bonds, which tend to
be longer duration, also underperformed. Duration is a measure of a bond's
sensitivity to changing interest rates; longer duration bonds tend to be more
sensitive to interest rate moves.
Looking ahead
At the end of the period, with signs of a slowing economy and expectations that
the Fed could be close to ending its short-term interest rate hikes, the fund
had a slightly longer duration than its peers and a tilt toward higher quality
high-yield bonds. We believe that longer-term bonds could do well in an
environment of slower growth and stabilized rates. However, we don't expect a
significant rally until there are clear signs that inflation is headed lower.
We believe that higher quality bonds could do well if the yield difference
between higher and lower quality bonds widens. In our estimation, yield spreads
may not narrow much further; however, there is also no indication that they are
likely to widen in the near term.
Maureen G. Newman
Maureen G. Newman has managed the Columbia High Yield Municipal Fund since
November 1998 and has been with the advisor or its predecessors or affiliate
organizations since 1996.
Tax-exempt investing offers current tax-exempt income, but it also involves
special risks. The value of the fund will be affected by interest rate changes
and the creditworthiness of issues held in the fund. When interest rates go up,
bond prices generally drop and vice versa. Interest income from certain
tax-exempt bonds may be subject to certain state and local taxes and, if
applicable, the alternative minimum tax. Capital gains are not exempt from
income taxes.
Investments in high-yield or "junk" bonds offer the potential for higher income
than investments in investment-grade bonds, but they also have a higher degree
of risk. Changes in economic conditions or other circumstances may adversely
affect a high-yield bond issuer's ability to make timely principal and interest
payments.
Lipper Inc., a widely respected data provider in the industry, calculates an
average total return (assuming reinvestment of distributions) for mutual funds
with investment objectives similar to those of the Fund. Lipper makes no
adjustment for the effect of sales loads.
4
Fund Profile - Columbia High Yield Municipal Fund
Quality breakdown as of 06/30/06 (%)
AAA 28.4
AA 6.2
A 11.9
BBB 19.6
BB 3.3
B 1.5
CCC 0.4
Non-rated 26.8
Cash equivalent 1.9
Maturity breakdown as of 06/30/06 (%)
0-1 years 0.8
1-3 years 4.4
3-5 years 2.8
5-7 years 4.1
7-10 years 5.1
10-15 years 19.6
15-20 years 16.6
20-25 years 12.8
25 years and over 31.9
Cash equivalent 1.9
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than the original cost. Please visit
www.columbiafunds.com for daily and most recent month-end performance updates.
Summary
1-year return as of 06/30/06
[GRAPHIC] +3.39%
Class A Shares
[GRAPHIC] +0.89%
Lehman Brothers
Municipal Bond Index
Management Style
[GRAPHIC]
Management style is determined by Columbia Management and is based on the
investment strategy and process as outlined in the fund's prospectus.
Quality and maturity breakdowns are calculated as a percentage of total
investments. Ratings shown in the quality breakdown represent the rating
assigned to a particular bond by one of the following nationally-recognized
rating agencies: Standard & Poor's, a division of The McGraw-Hill Companies,
Inc, Moody's Investors Service, Inc. or Fitch Ratings Ltd. Ratings are relative
and subjective and are not absolute standards of quality. The fund's credit
quality does not remove market risk.
5
Investment Portfolio- Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds - 95.7%
Education - 4.3% Par ($) Value ($)
Education - 2.4%
CA Statewide Communities San Francisco Art Institute, Series 2002,
Development Authority 7.375% 04/01/32 750,000 762,623
FL Broward County Educational Nova Southeastern University, Series 2004,
Facilities Authority 5.625% 04/01/34 925,000 949,623
OH University of Cincinnati Series 2003 C, Insured: FGIC
5.000% 06/01/21 1,000,000 1,030,010
PA Higher Education Facilities Philadelphia University, Series 2004 A,
Authority 5.125% 06/01/25 1,100,000 1,103,861
VT Education & Health Buildings Vermont Law School Project, Series 2003 A,
Agency 5.500% 01/01/33 500,000 501,520
WV Higher Education Policy Series 2004 B, Insured: FGIC
Commission 5.000% 04/01/34 11,000,000 11,161,590
WV University Series 2000 A, Insured: AMBAC
(a) 04/01/19 1,250,000 677,575
(a) 04/01/25 2,750,000 1,087,267
-------------------------------------------------- ---------- ----------
Education Total 17,274,069
Prep School - 0.7%
CA Statewide Communities Crossroads School of Arts & Sciences, Series 1998,
Development Authority 6.000% 08/01/28 (b) 975,000 1,003,333
KY Louisville & Jefferson County Sisters of Mercy, Series 2006,
Metropolitan Government 5.000% 10/01/35 1,500,000 1,477,890
MA Health & Educational Facilities Learning Center for Deaf Children, Series 1999 C,
Authority 6.100% 07/01/19 1,000,000 1,011,610
MI Summit Academy North Series 2005,
5.500% 11/01/35 750,000 683,453
NH Business Finance Authority Proctor Academy, Series 1998 A,
5.400% 06/01/17 835,000 852,719
-------------------------------------------------- ---------- ----------
Prep School Total 5,029,005
Student Loan - 1.2%
CT Higher Education Supplemental Family Education Loan Program, Series 2005 A, AMT,
Loan Authority Insured: MBIA
4.375% 11/15/21 1,400,000 1,344,588
NE Nebhelp, Inc. Series 1993 A-6, AMT, Insured: MBIA
6.450% 06/01/18 4,000,000 4,035,240
NM Educational Assistance Series 1996 A-2, AMT,
Foundation 6.650% 11/01/25 1,915,000 1,926,854
See Accompanying Notes to Financial Statements.
6
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Education (continued) Par ($) Value ($)
Student Loan (continued)
OH Student Loan Funding Corp. Series 1992 B, AMT,
6.750% 01/01/07 1,075,000 1,076,279
--------------------------------------------------- --------- ----------
Student Loan Total 8,382,961
Education Total 30,686,035
Health Care - 22.7%
Continuing Care Retirement - 7.6%
CA La Verne Brethren Hillcrest Homes, Series 2003 B,
6.625% 02/15/25 685,000 736,327
CO Health Facilities Authority Covenant Retirement Communities, Inc., Series 2005,
5.000% 12/01/35 2,900,000 2,796,035
CT Development Authority Elim Park Baptist, Inc., Series 2003,
5.850% 12/01/33 660,000 685,113
FL Capital Projects Finance Glenridge on Palmer Ranch, Series 2002 A,
Authority 8.000% 06/01/32 1,250,000 1,374,337
FL Lee County Industrial Shell Point Village Project, Series 1999 A,
Development Authority 5.500% 11/15/29 1,200,000 1,201,020
FL Orange County Health Facilities Orlando Lutheran, Series 2005,
Authority 5.700% 07/01/26 1,000,000 985,860
FL Palm Beach County Health Abbey Delray South, Series 2003,
Facilities Authority 5.350% 10/01/14 1,250,000 1,284,037
GA Fulton County Canterbury Court Project, Series 2004 A,
6.125% 02/15/34 1,000,000 1,029,460
GA Savannah Economic Marshes of Skidaway, Series 2003 A:
Development Authority 7.400% 01/01/24 500,000 538,080
7.400% 01/01/34 1,000,000 1,044,620
IL Finance Authority Washington & Jane Smith Community, Series 2005 A,
6.250% 11/15/35 2,750,000 2,825,295
IL Health Facilities Authority Lutheran Senior Ministries, Series 2001,
7.375% 08/15/31 1,300,000 1,407,133
Washington & Jane Smith Community, Series 2003 A,
7.000% 11/15/32 1,000,000 1,067,830
IN Health & Educational Facilities Baptist Homes of Indiana Inc., Series 2005,
Financing Authority 5.250% 11/15/35 2,750,000 2,697,750
MA Boston Industrial Development Springhouse, Inc., Series 1998,
Financing Authority 5.875% 07/01/20 385,000 387,503
See Accompanying Notes to Financial Statements.
7
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Health Care (continued) Par ($) Value ($)
Continuing Care Retirement (continued)
MA Development Finance Agency Berkshire Retirement Community, Inc., Series 1999,
5.625% 07/01/29 1,250,000 1,251,887
Loomis Communities:
Series 1999 A,
5.625% 07/01/15 650,000 662,071
Series 2002 A,
6.900% 03/01/32 220,000 237,681
MD Westminster Economic Carroll Lutheran Village, Inc., Series 2004 A,
Development Authority 6.250% 05/01/34 1,750,000 1,789,970
NC Medical Care Commission United Methodist Retirement Homes, Inc., Series 2005 C,
5.500% 10/01/32 1,000,000 1,010,050
NH Higher Educational & Health Rivermead at Peterborough, Series 1998:
Facilities Authority 5.625% 07/01/18 500,000 501,145
5.750% 07/01/28 1,665,000 1,666,682
NJ Economic Development Lions Gate, Series 2005 A:
Authority 5.750% 01/01/25 400,000 405,704
5.875% 01/01/37 1,330,000 1,349,032
Seabrook Village, Inc., Series 2000 A,
8.250% 11/15/30 1,625,000 1,792,066
PA Bucks County Industrial Ann's Choice, Inc., Series 2005 A,
Development Authority 6.250% 01/01/35 1,750,000 1,778,962
PA Chartiers Valley Industrial & Asbury Health Center, Series 1999,
Commercial Development Authority 6.375% 12/01/24 750,000 769,733
Friendship Village of South Hills, Series 2003 A,
5.750% 08/15/20 1,000,000 1,010,910
PA Delaware County Authority Dunwoody Village, Series 2003 A,
5.375% 04/01/17 750,000 779,077
PA Montgomery County Industrial Whitemarsh Continuing Care Retirement Community,
Development Authority Series 2005:
6.125% 02/01/28 1,400,000 1,462,398
6.250% 02/01/35 1,350,000 1,414,543
TN Johnson City Health & Appalachian Christian Village, Series 2004 A,
Educational Facilities Authority 6.250% 02/15/32 250,000 255,473
TN Metropolitan Government Blakeford at Green Hills, Series 1998,
Nashville & Davidson County 5.650% 07/01/24 1,825,000 1,808,210
TN Shelby County, Health Germantown Village, Series 2003 A,
Educational & Housing Facilities 7.250% 12/01/34 675,000 713,597
Board Trezevant Manor, Series 2006 A,
5.750% 09/01/37 2,300,000 2,262,878
See Accompanying Notes to Financial Statements.
8
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Health Care (continued) Par ($) Value ($)
Continuing Care Retirement (continued)
TX Abilene Health Facilities
Development Corp. Sears Methodist Retirement Center:
Series 1998 A,
5.900% 11/15/25 1,350,000 1,356,804
Series 2003 A,
7.000% 11/15/33 800,000 853,768
TX Houston Health Facilities Buckingham Senior Living Community, Inc.,
Development Corp. Series 2004 A,
7.125% 02/15/34 1,000,000 1,091,570
TX Tarrant County Cultural Northwest Senior Housing-Edgemere, Series 2006 A,
Education Facilities 6.000% 11/15/36 1,000,000 1,032,990
VA James City County Economic Williamsburg Landing, Inc., Series 2005 A,
Development Authority 5.500% 09/01/34 750,000 758,835
VA Virginia Beach Development Westminster-Canterbury of Hampton, Series 2005,
Authority 5.375% 11/01/32 700,000 702,478
WI Health & Educational Facilities Clement Manor, Series 1998,
Authority 5.750% 08/15/24 2,200,000 2,202,310
Eastcastle Place, Inc., Series 2004,
6.125% 12/01/34 500,000 502,935
Three Pillars Senior Living Communities:
Series 2003,
5.600% 08/15/23 790,000 799,749
Series 2004 A,
5.500% 08/15/34 870,000 858,177
United Lutheran Program for the Aging, Series 1998,
5.700% 03/01/28 750,000 743,453
------------------------------------------------------- --------- ----------
Continuing Care Retirement Total 53,885,538
Health Services - 0.6%
CO Health Facilities Authority National Jewish Medical & Research Center, Series 1998,
5.375% 01/01/23 1,080,000 1,072,418
MA Development Finance Agency Boston Biomedical Research Institute, Series 1999:
5.650% 02/01/19 370,000 381,670
5.750% 02/01/29 550,000 565,785
MA Health & Educational Facilities Civic Investments, Inc., Series 2002 A,
Authority 9.000% 12/15/15 1,500,000 1,839,360
MN Minneapolis & St. Paul Housing Healthpartners Project, Series 2003,
Redevelopment Authority 5.875% 12/01/29 400,000 421,200
------------------------------------------------------- --------- ----------
Health Services Total 4,280,433
Hospitals - 11.7%
AR Washington County Washington Regional Medical Center:
Series 2005 A,
5.000% 02/01/35 1,000,000 983,370
Series 2005 B,
5.000% 02/01/30 250,000 246,920
See Accompanying Notes to Financial Statements.
9
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Health Care (continued) Par ($) Value ($)
Hospitals (continued)
AZ Health Facilities Authority Phoenix Memorial Hospital, Series 1991,
8.125% 06/01/12 (c) 1,849,099 4,623
CA ABAG Finance Authority for San Diego Hospital Association, Series 2003 C,
Nonprofit Corps. 5.375% 03/01/21 500,000 518,135
CA Health Facilities Financing Catholic Healthcare West, Series 2004 G,
Authority 5.250% 07/01/23 500,000 514,305
Stanford Hospital & Clinics Projects, Series 2003 A,
5.000% 11/15/23 1,500,000 1,518,465
CA Statewide Communities Huntington Memorial Hospital, Series 2005,
Development Authority 5.000% 07/01/35 2,500,000 2,503,600
Kaiser Permanente, Series 2004 I,
3.450% 04/01/35 1,750,000 1,672,702
CA Turlock Emanuel Medical Center, Inc., Series 2004,
5.375% 10/15/34 2,000,000 2,026,800
CA Whittier Presbyterian Intercommunity Hospital, Series 2002,
5.750% 06/01/31 1,000,000 1,044,920
CO Health Facilities Authority Parkview Medical Center, Inc., Series 2001,
6.600% 09/01/25 300,000 323,457
Vail Valley Medical Center, Series 2004,
5.000% 01/15/20 1,000,000 1,010,990
CT Health & Educational Facilities Hospital For Special Care, Series 1997 B,
Authority 5.500% 07/01/27 730,000 745,067
FL Hillsborough County Industrial Tampa General Hospital Project, Series 2003 B,
Development Authority 5.250% 10/01/34 1,000,000 1,022,480
FL Miami Health Facilities Authority Catholic Health East, Series 2003 B,
5.125% 11/15/24 1,000,000 1,008,980
FL Orange County Health Facilities Orlando Regional Healthcare System, Series 1999 E,
Authority 6.000% 10/01/26 855,000 895,442
FL South Lake County Hospital South Lake Hospital, Inc., Series 2003:
District 6.375% 10/01/28 750,000 809,183
6.375% 10/01/34 500,000 537,980
FL West Orange Healthcare District Series 2001 A,
5.650% 02/01/22 1,450,000 1,500,083
IL Health Facilities Authority Thorek Hospital & Medical Center, Series 1998,
5.375% 08/15/28 500,000 503,550
IL Southwestern Development Anderson Hospital, Series 1999:
Authority 5.500% 08/15/20 500,000 508,910
5.625% 08/15/29 250,000 253,365
IN Health & Educational Facility Clarian Health Partners, Series 2006 A,
Financing Authority 5.000% 02/15/39 1,875,000 1,851,112
Jackson County Schneck Memorial Series 2006 A,
5.250% 02/15/30 1,000,000 1,021,920
See Accompanying Notes to Financial Statements.
10
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Health Care (continued) Par ($) Value ($)
Hospitals (continued)
IN Health Facility Financing Community Foundation of Northwest Indiana, Inc.,
Authority Series 2004 A,
6.000% 03/01/34 850,000 885,513
LA Public Facilities Authority Touro Infirmary, Series 1999 A:
5.500% 08/15/19 510,000 500,993
5.625% 08/15/29 240,000 232,594
MA Health & Educational Facilities Jordan Hospital:
Authority Series 1998 D,
5.250% 10/01/18 600,000 599,034
Series 2003 E,
6.750% 10/01/33 750,000 804,443
Milford-Whitinsville Regional Hospital:
Series 1998 C,
5.750% 07/15/13 610,000 622,584
Series 2002 D,
6.350% 07/15/32 1,715,000 1,787,733
MD Health & Higher Educational Adventist Healthcare, Series 2003 A:
Facilities Authority 5.000% 01/01/16 400,000 403,736
5.750% 01/01/25 600,000 627,102
MI Dickinson County Dickinson County Healthcare System, Series 1999,
5.800% 11/01/24 1,000,000 1,016,070
MI Hospital Finance Authority Henry Ford Health, Series 2006 A,
5.000% 11/15/21 1,000,000 1,018,840
McLaren Health Care Corp., Series 2005 C,
5.000% 08/01/35 2,500,000 2,510,775
Oakwood Obligated Group, Series 2003,
5.500% 11/01/18 1,600,000 1,687,888
MN St. Paul Housing & HealthEast, Inc., Series 2005,
Redevelopment Authority 5.150% 11/15/20 750,000 762,015
MN Washington County Housing & HealthEast, Inc., Series 1998,
Redevelopment Authority 5.250% 11/15/12 1,100,000 1,118,601
MO Health & Educational Facilities Lake Regional Health Systems Project, Series 2003,
Authority 5.700% 02/15/34 1,000,000 1,035,080
MO Saline County Industrial John Fitzgibbon Memorial Hospital, Series 2005,
Development Authority 5.625% 12/01/35 2,750,000 2,708,667
MT Facilities Finance Authority Montana's Children's Home and Hospital, Series 2005 B,
4.750% 01/01/24 750,000 737,745
NC Medical Care Commission Stanly Memorial Hospital, Series 1999,
6.375% 10/01/29 1,000,000 1,052,000
NH Higher Educational & Health Catholic Medical Center, Series 2002 A,
Facilities Authority 6.125% 07/01/32 50,000 52,925
See Accompanying Notes to Financial Statements.
11
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Health Care (continued) Par ($) Value ($)
Hospitals (continued)
Littleton Hospital Association, Inc.:
Series 1998 A:
5.900% 05/01/18 500,000 510,205
6.000% 05/01/28 1,000,000 1,022,100
Series 1998 B,
5.900% 05/01/28 675,000 687,609
The Memorial Hospital at North Conway
5.250% 06/01/21 1,000,000 1,000,870
NJ Health Care Facilities Financing Capital Health Systems, Inc., Series 2003 A,
Authority 5.750% 07/01/23 1,250,000 1,308,200
Children's Specialized Hospital, Series 2005 A,
5.000% 07/01/24 745,000 725,168
NM Farmington San Juan Medical Center Project, Series 2004 A,
5.000% 06/01/23 500,000 500,175
NV Henderson St. Rose Dominican Hospital: Series 1998 A,
5.375% 07/01/26 610,000 618,644
Series 1998,
5.125% 07/01/28 540,000 541,642
NY Dormitory Authority Memorial Sloan-Kettering Cancer Center,
Series 2003, Insured: MBIA
(a) 07/01/25 3,600,000 1,483,524
(a) 07/01/26 4,400,000 1,723,788
Mount Sinai Hospital, NYU Medical Center:
Series 2000 C,
5.500% 07/01/26 2,275,000 2,303,096
Series 2000,
5.500% 07/01/26 225,000 227,779
North Shore - Long Island Jewish Medical Center,
Series 2003,
5.500% 05/01/33 400,000 416,764
NY Monroe County Industrial Highland Hospital, Series 2005,
Development Agency 5.000% 08/01/25 1,115,000 1,087,370
OH Highland County Joint Township Series 1999,
Hospital District 6.750% 12/01/29 1,845,000 1,867,583
OH Lakewood Hospital Lakewood Hospital Association, Series 2003,
Improvement District 5.500% 02/15/15 1,250,000 1,306,875
OH Miami County Hospital Facilities Upper Valley Medical Center, Inc.:
Authority 5.250% 05/15/17 1,000,000 1,033,890
Series 1996 A:
6.250% 05/15/16 500,000 510,425
6.375% 05/15/26 1,015,000 1,036,203
Series 1996 C,
6.250% 05/15/13 285,000 290,942
See Accompanying Notes to Financial Statements.
12
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Health Care (continued) Par ($) Value ($)
Hospitals (continued)
OH Sandusky County Memorial Hospital, Series 1998,
5.150% 01/01/10 250,000 250,318
OK Development Finance Authority Duncan Regional Hospital, Series 2003 A,
5.125% 12/01/23 2,000,000 2,003,760
OK Stillwater Medical Center Series 2003,
Authority 5.625% 05/15/23 1,000,000 1,063,410
Series 2005,
5.000% 05/15/17 1,155,000 1,162,854
PA Allegheny County Hospital Ohio Valley General Hospital, Series 1998 A,
Development Authority 5.450% 01/01/28 1,550,000 1,562,059
SC Jobs Economic Development Bon Secours-St. Francis Medical Center,
Authority Series 2002 A,
5.500% 11/15/23 2,250,000 2,334,352
SD Health & Educational Facilities Sioux Valley Hospital & Health System, Series 2004 A,
Authority 5.250% 11/01/34 1,100,000 1,119,459
TN Johnson City Health & Mountain States Health Alliance, Series 2006 A,
Educational Facilities Board 5.500% 07/01/36 750,000 770,910
TN Knox County Health, East Tennessee Hospital, Series 2003 B,
Educational & Housing Facilities 5.750% 07/01/33
Authority 150,000 155,414
TX Tyler Health Facilities Mother Frances Hospital, Series 2001,
Development Corp. 6.000% 07/01/31 750,000 780,210
VA Augusta County Industrial Augusta Health Care, Inc., Series 2003,
Development Authority 5.250% 09/01/19 2,000,000 2,086,960
WA Health Care Facilities Authority Kadlec Medical Center, Series 2001, Insured: RAD
5.875% 12/01/21 600,000 635,166
WA Skagit County Public Hospital Series 2003,
District No. 1 6.000% 12/01/23 1,000,000 1,053,140
WI Health & Educational Facilities Aurora Health Care, Inc., Series 2003,
Authority 6.400% 04/15/33 700,000 760,060
Fort Healthcare, Inc., Series 2004,
6.100% 05/01/34 1,965,000 2,115,558
Wheaton Franciscan Services, Series 2002,
5.750% 08/15/30 1,050,000 1,102,332
----------------------------------------------------- --------- ----------
Hospitals Total 82,349,511
Intermediate Care Facilities - 0.7%
IL Development Finance Authority Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 1,430,000 1,435,362
IN Health Facilities Financing Hoosier Care, Inc., Series 1999 A,
Authority 7.125% 06/01/34 1,185,000 1,189,444
See Accompanying Notes to Financial Statements.
13
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Health Care (continued) Par ($) Value ($)
Intermediate Care Facilities (continued)
LA Public Facilities Authority Progressive Healthcare Providers, Inc., Series 1998,
6.375% 10/01/28 2,000,000 1,949,480
---------------------------------------------------- --------- -----------
Intermediate Care Facilities Total 4,574,286
Nursing Homes - 2.1%
AK Juneau St. Ann's Care Center, Inc., Series 1999,
6.875% 12/01/25 1,705,000 1,683,500
CO Health Facilities Authority Evangelical Lutheran Good Samaritan Foundation,
Series 2005,
5.000% 06/01/35 750,000 733,477
Volunteers of America Care Facilities:
Series 1998 A,
5.750% 07/01/20 700,000 703,136
Series 1999 A:
5.750% 07/01/10 670,000 676,794
6.000% 07/01/29 520,000 514,992
DE Economic Development Churchman Village Project, Series 1991 A,
Authority 10.000% 03/01/21 635,000 641,693
IA Finance Authority Care Initiatives:
Series 1996,
9.250% 07/01/25 475,000 564,666
Series 1998 B:
5.500% 07/01/08 305,000 306,473
5.750% 07/01/18 600,000 598,494
5.750% 07/01/28 1,475,000 1,392,208
MA Development Finance Agency Alliance Health Care Facilities, Series 1999 A,
7.100% 07/01/32 2,200,000 2,221,978
MA Industrial Finance Agency GF/Massachusetts, Inc., Series 1994 A,
8.300% 07/01/23 855,000 833,052
MN Carlton Inter-Faith Social Services, Inc.,
Series 2000, 7.500% 04/01/19 250,000 262,160
MN Sartell Foundation for Health Care:
Series 1999 A,
6.625% 09/01/29 2,000,000 2,037,000
Series 2001 A,
8.000% 09/01/30 1,000,000 1,091,960
PA Chester County Industrial Pennsylvania Nursing Home, Series 2002,
Development Authority 8.500% 05/01/32 385,000 393,763
PA Delaware County Industrial Care Institute-Main Line LLC, Series 2005,
Development Authority 9.000% 08/01/31 50,000 38,938
PA Lackawanna County Industrial Greenridge Nursing Center, Series 1990,
Development Authority 10.500% 12/01/10 (d) 80,000 77,580
PA Luzerne County Industrial Millville Nursing Center, Series 1990,
Development Authority 10.500% 12/01/12 (d) 145,000 140,589
---------------------------------------------------- --------- -----------
Nursing Homes Total 14,912,453
Health Care Total 160,002,221
See Accompanying Notes to Financial Statements.
14
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Housing - 15.5%
Assisted Living/Senior - 2.2%
DE Kent County Heritage at Dover, Series 1999, AMT,
7.625% 01/01/30 2,355,000 2,106,029
GA Columbus Housing Authority The Gardens at Calvary Project, Series 1999,
7.000% 11/15/29 2,000,000 1,885,280
IL Development Finance Authority Care Institute, Inc., Series 1995,
8.250% 06/01/25 1,805,000 1,862,923
MN Roseville Care Institute, Inc., Series 1993,
7.750% 11/01/23 1,270,000 1,063,523
NC Medical Care Commission DePaul Community Facilities:
Series 1998,
6.125% 01/01/28 500,000 458,800
Series 1999,
7.625% 11/01/29 1,910,000 1,986,725
NY Huntington Housing Authority Gurwin Jewish Senior Center, Series 1999 A:
5.875% 05/01/19 1,900,000 1,930,514
6.000% 05/01/29 625,000 636,719
NY Mount Vernon Industrial Series 1999,
Development Agency 6.200% 06/01/29 1,000,000 1,014,720
NY Suffolk County Industrial Gurwin-Jewish Phase II, Series 2004,
Development Agency 6.700% 05/01/39 500,000 533,570
OR Clackamas County Hospital Robison Jewish Home, Series 2005,
Facility Authority 5.250% 10/01/27 700,000 679,840
TX Bell County Health Facility Care Institute, Inc., Series 1994,
Development Corp. 9.000% 11/01/24 905,000 925,317
-------------------------------------------------- --------- ----------
Assisted Living/Senior Total 15,083,960
Multi-Family - 6.3%
CA Statewide Communities Series 2005 , AMT, Insured: GNMA
Development Authority 5.050% 01/20/41 5,000,000 4,969,900
CO Health Facilities Authority Birchwood Manor Project, Series 1991 A,
Guarantor: GNMA
7.250% 04/01/11 330,000 330,782
CT Housing Finance Authority 5.000% 11/15/21(e) 1,145,000 1,162,061
DC Housing Finance Agency FDS Residential II LP, Series 2004, AMT,
Insured: FHA
4.850% 06/01/35 1,460,000 1,409,338
DE Wilmington Electra Arms Senior Association Project,
Series 1998, AMT,
6.250% 06/01/28 895,000 853,687
FL Broward County Housing Finance Chaves Lake Apartment Project, Series 2000 A, AMT,
Authority 7.500% 07/01/40 1,250,000 1,283,125
See Accompanying Notes to Financial Statements.
15
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Housing (continued) Par ($) Value ($)
Multi-Family (continued)
FL Capital Trust Agency Atlantic Housing Foundation, Inc., Series 2005 C,
5.875% 01/01/28 1,500,000 1,472,190
FL Clay County Housing Finance Madison Commons Apartments, Series 2000 A, AMT,
Authority 7.450% 07/01/40 1,220,000 1,250,585
MA Housing Finance Agency Series 2004 A, AMT, Insured: FSA
5.250% 07/01/25 5,000,000 5,102,700
Series 2005 A, AMT,
5.200% 06/01/36 1,500,000 1,500,120
Series 2005 E, AMT,
5.000% 12/01/28 750,000 743,978
ME Housing Authority Series 2005 A-2, AMT,
4.950% 11/15/27 2,500,000 2,462,250
MN Minneapolis Student Housing Riverton Community Housing, Inc., Series 2006 A,
5.700% 08/01/40 1,600,000 1,533,312
MN Washington County Housing & Cottages of Aspen, Series 1992, AMT,
Redevelopment Authority 9.250% 06/01/22 435,000 444,500
MN White Bear Lake Birch Lake Townhomes, Series 1989 A,
9.750% 07/15/19 750,000 712,500
NC Medical Care Commission ARC Projects, Series 2004 A,
5.800% 10/01/34 1,550,000 1,619,797
NJ Housing & Mortgage Finance Series 2005 A, AMT, Insured: FGIC
Agency 4.950% 11/01/37 2,685,000 2,626,252
NM Mortgage Finance Authority Series 2005 E, AMT, Insured: FHA
4.800% 09/01/40 1,200,000 1,136,028
NY New York City Housing Series 2005 F-1,
Development Corp. 4.650% 11/01/25 2,750,000 2,735,947
OH Montgomery County Series 2005, AMT, Insured: FHLMC
4.950% 11/01/35 750,000 736,260
OR Housing & Community Services Series 2005 A, AMT, Insured: FHA
Department 4.850% 07/01/35 1,755,000 1,694,084
PA Pittsburgh Urban Series 2006 A, AMT,
Redevelopment Authority 5.000% 10/01/36 1,750,000 1,729,682
Resolution Trust Corp. Pass-Through Certificates, Series 1993 A,
8.500% 12/01/16 (f) 455,481 441,571
TN Franklin Industrial Development Landings Apartment, Series 1996 B,
Board 8.750% 04/01/27 1,500,000 1,516,215
See Accompanying Notes to Financial Statements.
16
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Housing (continued) Par ($) Value ($)
Multi-Family (continued)
TX El Paso County Housing Finance American Village Communities:
Corp. Series 2000 C,
8.000% 12/01/32 575,000 585,873
Series 2000 D,
10.000% 12/01/32 680,000 695,518
WA Seattle Housing Authority High Rise Rehabilitation Phase I LP, Series 2005, AMT,
Insured: FSA
5.000% 11/01/25 1,000,000 995,030
WA Tacoma Housing Authority Redwood, Series 2005, AMT, Guarantor: GNMA
5.050% 11/20/37 3,000,000 2,976,480
------------------------------------------------------ --------- ----------
Multi-Family Total 44,719,765
Single-Family - 7.0%
AK Development Finance Authority Series 2005 D, AMT, Guarantor: GNMA
4.750% 07/01/35 740,000 705,301
CO Housing & Finance Authority Series 1995 D-1, AMT,
7.375% 06/01/26 50,000 51,375
Series 1997 A-2, AMT,
7.250% 05/01/27 45,000 45,876
CT Housing Finance Authority Series 2005 D-2, AMT,
4.850% 11/15/36 5,000,000 4,847,500
FL Housing Finance Corp. Series 2006 1, AMT,
4.850% 07/01/37 2,000,000 1,937,660
FL Lee County Housing Finance Series 2006 A,
Authority 5.000% 03/01/39 2,000,000 1,979,520
MA Housing Finance Agency Series 2006 122, AMT,
4.875% 12/01/37 4,000,000 3,841,480
ME Housing Authority Series 2005 D-2, AMT,
4.800% 11/15/36 2,000,000 1,923,540
MN Housing Finance Agency Series 2006I, AMT,
5.000% 07/01/21 (e) 1,350,000 1,355,063
MN Minneapolis St. Paul Housing Series 2006, AMT,
Finance Board 5.000% 12/01/38 2,750,000 2,705,202
MO Housing Development Series 2006 C1
Commission 5.000% 09/01/37 2,500,000 2,461,000
MT Board of Housing Series 2005 A, AMT,
5.000% 06/01/36 1,000,000 992,590
NC Housing Finance Agency Series 2006 23-A, AMT,
4.800% 01/01/37 2,500,000 2,395,775
ND Housing Finance Agency Series 2006 A, AMT,
4.850% 07/01/21 2,000,000 2,001,800
See Accompanying Notes to Financial Statements.
17
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Housing (continued) Par ($) Value ($)
Single-Family (continued)
NJ Housing & Mortgage Finance Series 2005 M, AMT,
Agency 5.000% 10/01/36 1,870,000 1,877,985
OH Housing Finance Agency Series 2006,
4.900% 09/01/36 1,000,000 977,890
OK Housing Finance Agency Series 2006 C, AMT
5.000% 09/01/26 2,000,000 1,992,320
Series 2006, AMT,
4.850% 09/01/37 2,435,000 2,340,303
PA Housing Finance Agency Series 2005 90-A, AMT,
4.700% 10/01/25 1,490,000 1,451,573
RI Housing & Mortgage Finance Series 2005, AMT,
Corp. 4.750% 10/01/30 4,000,000 3,860,080
TX Affordable Housing Corp. Series 2005 A, AMT,
5.100% 09/01/39 3,300,000 3,326,961
UT Utah Housing Corp. Series 2006, AMT:
4.850% 07/01/26 1,000,000 980,160
4.950% 07/01/37 2,000,000 1,955,960
VA Housing Development Authority Series 2005 A, AMT,
5.000% 01/01/31 1,500,000 1,495,800
WI Housing & Economic Series 2005 C, AMT,
Development Authority 4.875% 03/01/36 1,970,000 1,901,582
------------------------------------- --------- -----------
Single-Family Total 49,404,296
Housing Total 109,208,021
Industrials - 5.1%
Food Products - 0.4%
MI Strategic Fund Imperial Holly Corp.:
Series 1998 A,
6.250% 11/01/15 1,000,000 1,017,430
Series 1998 C, AMT,
6.550% 11/01/25 1,500,000 1,475,070
OH Toledo Lucas County Port Cargill, Inc. Project, Series 2004 A,
Authority 4.800% 03/01/22 500,000 489,935
------------------------------------- --------- -----------
Food Products Total 2,982,435
Forest Products & Paper - 1.5%
AL Camden Industrial Development Weyerhaeuser Co., Series 2003 B, AMT,
Board 6.375% 12/01/24 275,000 297,212
AL Courtland Industrial International Paper Co.:
Development Board Series 2003 B, AMT,
6.250% 08/01/25 2,000,000 2,152,460
See Accompanying Notes to Financial Statements.
18
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Industrials (continued) Par ($) Value ($)
Forest Products & Paper (continued)
Series 2005 A,
5.200% 06/01/25 1,000,000 998,280
AL Phenix City Industrial Meadwestvaco Corp., Series 2002 A, AMT,
Development Board 6.350% 05/15/35 1,000,000 1,065,410
AR Camden Environmental International Paper Co., Series 2004 A, AMT,
Improvement Authority 5.000% 11/01/18 250,000 245,472
GA Rockdale County Development Visy Paper, Inc., Series 1993, AMT,
Authority 7.500% 01/01/26 2,800,000 2,810,528
MS Lowndes County Weyerhaeuser Co.:
Series 1992 A,
6.800% 04/01/22 1,995,000 2,351,088
Series 1992 B,
6.700% 04/01/22 230,000 268,672
VA Bedford County Industrial Nekoosa Packaging Corp., Series 1998, AMT,
Development Authority 5.600% 12/01/25 400,000 393,392
---------------------------------------------------- ---------- ----------
Forest Products & Paper Total 10,582,514
Manufacturing - 0.4%
IL Will-Kankakee Regional Flanders Corp., Series 1997, AMT,
Development Authority 6.500% 12/15/17 740,000 742,915
KS Wichita Airport Authority Cessna Citation Service Center, Series 2002 A, AMT,
6.250% 06/15/32 1,875,000 1,978,369
---------------------------------------------------- ---------- ----------
Manufacturing Total 2,721,284
Metals & Mining - 0.3%
NV Department of Business & Wheeling-Pittsburgh Steel Corp., Series 1999 A, AMT,
Industry 8.000% 09/01/14 415,000 424,944
VA Greensville County Industrial Wheeling-Pittsburgh Steel Corp., Series 1999 A, AMT,
Development Authority 7.000% 04/01/14 2,100,000 2,049,579
---------------------------------------------------- ---------- ----------
Metals & Mining Total 2,474,523
Oil & Gas - 2.5%
NJ Middlesex County Pollution Amerada Hess Corp., Series 2004,
Control Authority 6.050% 09/15/34 285,000 305,842
NV Clark County Industrial Southwest Gas Corp.: Series 2003 E, AMT,
Development Authority 5.800% 03/01/38 1,750,000 1,846,705
Series 2005 A, AMT, Insured: AMBAC
4.850% 10/01/35 10,000,000 9,665,600
TX Gulf Coast Industrial Citgo Petroleum, Series 1998, AMT,
Development Authority 8.000% 04/01/28 875,000 981,812
TX Texas City Industrial Arco Pipe Line Co., Series 1990,
Development Corp. 7.375% 10/01/20 2,000,000 2,490,340
VI Virgin Islands Public Finance Hovensa LLC: Series 2003, AMT,
Authority 6.125% 07/01/22 875,000 954,511
Series 2004, AMT,
5.875% 07/01/22 1,000,000 1,079,000
See Accompanying Notes to Financial Statements.
19
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Industrials (continued) Par ($) Value ($)
Oil & Gas (continued)
VI Virgin Islands Hovensa LLC, Series 2002, AMT,
6.500% 07/01/21 125,000 139,631
--------------------------------------------------- --------- ----------
Oil & Gas Total 17,463,441
Industrials Total 36,224,197
Other - 10.1%
Other - 0.7%
NJ Economic Development Motor Vehicle Commission, Series 2003 A,
Authority Insured: MBIA
(a) 07/01/14 2,500,000 1,727,825
NY Convention Center Operating Yale Building Project, Series 2003,
Corp. (a) 06/01/08 2,100,000 1,946,469
PR Commonwealth of Puerto Rico Series 2006 B,
Government Development Bank 5.000% 12/01/15 1,250,000 1,286,088
--------------------------------------------------- --------- ----------
Other Total 4,960,382
Pool/Bond Bank - 0.4%
OH Cleveland-Cuyahoga County Port Series 2004 E,
Authority 5.600% 05/15/25 530,000 539,174
Series 2005 B,
5.125% 05/15/25 750,000 747,705
OH Summit County Port Authority Seville Project, Series 2005 A,
5.100% 05/15/25 495,000 488,946
SD Economic Development Finance Davis Family Sodak, Series 2004 4-A, AMT,
Authority 6.000% 04/01/29 1,400,000 1,422,372
--------------------------------------------------- --------- ----------
Pool/Bond Bank Total 3,198,197
Refunded/Escrowed(g) - 6.5%
CA ABAG Finance Authority for Eskaton Gold River Lodge, Series 1998,
Nonprofit Corps. Pre-refunded 11/15/08:
6.375% 11/15/15 580,000 608,983
6.375% 11/15/28 550,000 589,754
CA Golden State Tobacco Series 2003 B, Pre-refunded 06/01/13,
Securitization Corp. 5.500% 06/01/43 1,250,000 1,354,687
CA Orange County Community Ladera Ranch, Series 1999 A, Pre-refunded 08/15/09,
Facilities District 6.500% 08/15/21 1,000,000 1,090,330
CA Statewide Communities Eskaton Village-Grass Valley, Series 2000,
Development Authority Pre-refunded 11/15/10,
8.250% 11/15/31 1,710,000 1,993,621
CO Adams County Series 1991 B:
Escrowed to Maturity,
11.250% 09/01/11 220,000 291,881
Pre-refunded 09/01/09,
11.250% 09/01/11 (h) 325,000 393,068
Pre-refunded 09/01/10,
11.250% 09/01/11 360,000 456,610
See Accompanying Notes to Financial Statements.
20
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Other (continued) Par ($) Value ($)
Refunded/Escrowed(g) (continued)
CO Department of Transportation Series 2001, Pre-refunded 12/15/08, Insured: MBIA
6.818% 12/15/08 (i) 5,000,000 5,754,830
CO E-470 Public Highway Authority Series 2000 B, Pre-refunded 09/01/10, Insured: MBIA
(a) 09/01/35 17,500,000 2,246,650
CT Development Authority New Haven Residuals LP, Series 1996, AMT,
Escrowed to Maturity,
8.250% 12/01/06 195,000 198,418
FL Northern Palm Beach County Series 1999, Pre-refunded 08/01/09, Insured: MBIA
Improvement District 5.900% 08/01/19 500,000 533,245
6.000% 08/01/29 750,000 801,937
FL Orange County Health Facilities Orlando Lutheran Towers, Inc., Series 1996,
Authority Pre-refunded 07/01/06,
8.625% 07/01/20 1,500,000 1,545,180
Orlando Regional Healthcare System:
Series 1999 E, Pre-refunded 10/01/09,
6.000% 10/01/26 20,000 21,358
Series 2002, Pre-refunded 12/01/12,
5.750% 12/01/32 350,000 381,118
FL Tampa Bay Water Utility Series 1991 I, Pre-refunded 10/01/11, Insured: FGIC
Systems 7.298% 10/01/23(i) 7,500,000 8,714,175
GA Forsyth County Hospital Georgia Baptist Health Care System, Series 1998,
Authority Escrowed to Maturity,
6.000% 10/01/08 480,000 490,776
GA Municipal Electric Authority Series 1991 V:
Escrowed to Maturity,
6.600% 01/01/18 690,000 813,386
Pre-refunded 01/01/13,
6.600% 01/01/18 75,000 86,712
IL Development Finance Authority Latin School of Chicago, Series 1998,
Pre-refunded 08/01/08,
5.650% 08/01/28 1,725,000 1,780,562
IL University of Illinois Series 2001 A, Pre-refunded 08/15/11, Insured: AMBAC
5.500% 08/15/16 1,425,000 1,525,477
MA Development Finance Agency Western New England College, Series 2002,
Pre-refunded 12/01/12,
6.125% 12/01/32 300,000 335,616
NC Eastern Municipal Power Series 1991 A, Escrowed to Maturity,
Agency 6.500% 01/01/18 3,320,000 3,977,327
NC Lincoln County Lincoln County Hospital, Series 1991, Escrowed to
Maturity,
9.000% 05/01/07 45,000 46,825
See Accompanying Notes to Financial Statements.
21
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Other (continued) Par ($) Value ($)
Refunded/Escrowed(g) (continued)
NH Higher Educational & Health Catholic Medical Center, Series 2002 A,
Facilities Authority, Pre-refunded 7/01/12,
6.125% 07/01/32 350,000 388,346
NJ Economic Development Winchester Gardens, Series 1996 A,
Authority Pre-refunded 11/01/06,
8.625% 11/01/25 2,000,000 2,070,260
NM Red River Sports Facility Red River Ski Area, Series 1998,
6.450% 06/01/07 50,000 50,036
NV Henderson St. Rose Dominican Hospital, Series 1998 A,
Pre-refunded 07/01/08,
5.375% 07/01/26 180,000 185,643
NY New York Series 1995 B, Escrowed to Maturity,
7.250% 08/15/07 140,000 145,348
PA Lancaster Industrial Garden Spot Village, Series 2000 A,
Development Authority Pre-refunded 05/01/10,
7.625% 05/01/31 825,000 936,664
PA Philadelphia Authority for Doubletree Project, Series 1997 A,
Industrial Development Pre-refunded 02/01/07,
6.500% 10/01/27 2,000,000 2,069,100
TN Shelby County Health, Open Arms Development Centers:
Educational & Housing Facilities Series 1992 A, Pre-refunded 08/01/07,
Board 9.750% 08/01/19 270,000 297,748
Series 1992 C, Pre-refunded 08/01/12,
9.750% 08/01/19 270,000 297,748
WI Health & Educational Facilities Attic Angel Obligated Group, Series 1998,
Authority Pre-refunded 11/17/08,
5.750% 11/15/27 2,125,000 2,252,627
WV Hospital Finance Authority Charleston Area Medical Center, Series 2000 A,
Pre-refunded 09/01/10,
6.750% 09/01/30 925,000 1,029,691
---------------------------------------------- ---------- ----------
Refunded/Escrowed Total 45,755,737
Tobacco - 2.5%
CA Golden State Tobacco Series 2003 A-1:
Securitization Corp. 6.250% 06/01/33 2,850,000 3,080,280
6.750% 06/01/39 200,000 223,846
IA Tobacco Settlement Authority Series 2005 C,
5.625% 06/01/46 3,000,000 3,057,780
LA Tobacco Settlement Financing Series 2001 B,
Corp. 5.875% 05/15/39 1,000,000 1,045,970
NJ Tobacco Settlement Financing Series 2003,
Corp. 6.750% 06/01/39 2,000,000 2,232,200
NY Nassau County Tobacco Series 2006,
Settlement Corp. (a) 06/01/60 25,000,000 812,000
See Accompanying Notes to Financial Statements.
22
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Other (continued) Par ($) Value ($)
Tobacco (continued)
NY TSASC, Inc. Series 2006 1,
5.125% 06/01/42 3,250,000 3,174,243
PR Commonwealth of Puerto Rico Series 2005 B,
Children's Trust Fund (a) 05/15/55 25,000,000 850,750
SC Tobacco Settlement Financing Series 2001 B,
Corp. 6.375% 05/15/28 1,000,000 1,066,630
VA Tobacco Settlement Financing Series 2005,
Corp. 5.625% 06/01/37 2,000,000 2,058,520
----------------------------------------- ---------- ----------
Tobacco Total 17,602,219
Other Total 71,516,535
Other Revenue - 2.7%
Hotels - 1.0%
NJ Middlesex County Improvement Heldrich Associates LLC:
Authority Series 2005 B,
6.250% 01/01/37 4,250,000 4,289,482
Series 2005 C,
8.750% 01/01/37 1,250,000 1,228,800
TX San Antonio Convention Hotel Hotel Investments LP, Series 2005 A, AMT,
Finance Corp. Insured: AMBAC
5.000% 07/15/34 1,500,000 1,495,470
----------------------------------------- ---------- ----------
Hotels Total 7,013,752
Recreation - 1.0%
CA Agua Caliente Band Cahuilla Series 2003,
Indians 6.000% 07/01/18 1,000,000 1,078,790
CA Cabazon Band Mission Indians Series 2004:
8.375% 10/01/15 520,000 524,405
8.750% 10/01/19 1,800,000 1,822,338
CT Mashantucket Western Pequot Series 1999 B,
Tribe (a) 09/01/15 2,000,000 1,212,840
CT Mohegan Tribe Gaming Authority Series 2001,
6.250% 01/01/31 475,000 500,626
OR Cow Creek Band Umpqua Tribe Series 2006 C
of Indians, 5.625% 10/01/26 1,700,000 1,681,810
----------------------------------------- ---------- ----------
Recreation Total 6,820,809
Retail - 0.7%
LA Beauregard Parish Office Max, Series 2002,
6.800% 02/01/27 1,750,000 1,892,048
See Accompanying Notes to Financial Statements.
23
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Other Revenue (continued) Par ($) Value ($)
Retail (continued)
NY New York City Industrial IAC/Interactive Corp., Series 2005,
Development Agency 5.000% 09/01/35 2,750,000 2,745,627
OH Lake County North Madison Properties, Series 1993,
8.819% 09/01/11 415,000 420,341
--------------------------------------------------- --------- ----------
Retail Total 5,058,016
Other Revenue Total 18,892,577
Resource Recovery - 1.6%
Disposal - 0.8%
FL Lee County Solid Waste Systems Series 2006 A, AMT, Insured: AMBAC
5.000% 10/01/17 2,010,000 2,079,988
OH Solid Waste Republic Services, Series 2004, AMT,
4.250% 04/01/33 2,000,000 1,910,640
UT Carbon County Laidlaw Environmental, Series 1997 A, AMT,
7.450% 07/01/17 1,500,000 1,566,600
--------------------------------------------------- --------- ----------
Disposal Total 5,557,228
Resource Recovery - 0.8%
MA Development Finance Agency Ogden Haverhill Associates, Series 1999 A, AMT,
6.700% 12/01/14 750,000 806,423
MA Industrial Finance Agency Ogden Haverhill Associates, Series 1998 A, AMT:
5.500% 12/01/13 500,000 517,185
5.600% 12/01/19 1,000,000 1,026,150
NY Niagara County Industrial American REF-Fuel Co., LLC, Series 2001 A, AMT,
Development Agency 5.450% 11/15/26 1,000,000 1,047,210
PA Delaware County Industrial American REF-Fuel Co., Series 1997 A,
Development Authority 6.200% 07/01/19 2,225,000 2,315,179
--------------------------------------------------- --------- ----------
Resource Recovery Total 5,712,147
Resource Recovery Total 11,269,375
Tax-Backed - 15.4%
Local Appropriated - 1.8%
CA Compton Civic Center & Capital Improvements, Series 1997 A,
5.500% 09/01/15 1,500,000 1,548,420
CA Southeast Resource Recovery Series 2003 B, AMT, Insured: AMBAC
Facilities Authority 5.375% 12/01/18 2,000,000 2,088,760
MN Andover Economic Andover Community Center, Series 2004,
Development Authority 5.200% 02/01/34 750,000 764,558
MO St. Louis Industrial St. Louis Convention Center, Series 2000,
Development Authority Insured: AMBAC
(a) 07/15/18 3,000,000 1,702,590
See Accompanying Notes to Financial Statements.
24
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Tax-Backed (continued) Par ($) Value ($)
Local Appropriated (continued)
SC Berkeley County School District Series 2003,
5.000% 12/01/28 2,000,000 1,994,580
SC Dorchester County School Series 2004,
District No. 2 5.250% 12/01/29 1,000,000 1,020,480
SC Lancaster Educational Lancaster County School District, Series 2004,
Assistance Program 5.000% 12/01/26 1,350,000 1,346,692
SC Laurens County School District Series 2005,
No. 55 5.250% 12/01/30 1,400,000 1,418,732
SC Newberry County School District Series 2005,
5.000% 12/01/30 750,000 737,610
---------------------------------------------- --------- ----------
Local Appropriated Total 12,622,422
Local General Obligations - 3.9%
CA East Side Union High School Series 2003 B, Insured: MBIA
District 5.100% 02/01/20 1,320,000 1,409,509
CA Empire Union School District Series 1987-1 A, Insured: AMBAC
(a) 10/01/21 1,665,000 790,958
CA Los Angeles Community College Series 2003 B, Insured: FSA
District 5.000% 08/01/19 2,000,000 2,072,300
CA Los Angeles Unified School Series 1997 E, Insured: MBIA
District 5.125% 01/01/27 3,800,000 3,914,798
Series 2002 E, Insured: MBIA
5.750% 07/01/16 800,000 901,824
CA Modesto High School District Series 2002 A, Insured: FGIC
(a) 08/01/19 2,650,000 1,413,643
CA Pasadena Community College Series 2003 A, Insured: FGIC
District 5.000% 06/01/19 1,290,000 1,335,692
CA William S. Hart Union High Series 2003 A, Insured: MBIA
School District 5.000% 09/01/19 1,625,000 1,684,296
CO Northwest Metropolitan District Series 2005,
No. 3 6.250% 12/01/35 1,000,000 1,038,520
CO Red Sky Ranch Metropolitan Series 2003,
District 6.050% 12/01/33 1,000,000 1,022,580
IL Hoffman Estates Park District Series 2004,
5.250% 12/01/23 1,000,000 1,028,100
LA Greystone Midwest Jr. Lien Livingston Parish, Series 2005,
7.148% 08/01/36 (j) 3,581,328 3,199,999
NJ Bergen County Improvement Series 2005,
Authority 5.000% 11/15/24 1,800,000 1,897,740
See Accompanying Notes to Financial Statements.
25
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Tax-Backed (continued) Par ($) Value ($)
Local General Obligations (continued)
NY New York City Series 1995 B,
7.250% 08/15/07 860,000 891,192
Series 2003 J,
5.500% 06/01/18 1,500,000 1,595,610
OH Dublin City School District Series 2003, Insured: FSA
5.000% 12/01/20 2,450,000 2,535,824
TX Dallas County Flood Control Series 2002,
District 7.250% 04/01/32 1,000,000 1,049,980
------------------------------------------------ --------- ----------
Local General Obligations Total 27,782,565
Special Non-Property Tax - 1.8%
IL Bolingbrook Sales Tax Revenue, Series 2005,
(a) 01/01/24 1,500,000 1,382,520
KS Wyandotte County Series 2005,
5.000% 12/01/20 625,000 634,356
MO St. Louis County Industrial Kiel Center Arena, Series 1992, AMT,
Development Authority 7.875% 12/01/24 3,000,000 3,015,030
NJ Economic Development Cigarette Tax, Series 2004:
Authority 5.500% 06/15/31 315,000 324,416
5.750% 06/15/29 1,000,000 1,052,810
NY Thruway Authority Series 2003 A, Insured: MBIA
5.000% 03/15/20 3,500,000 3,612,420
PR Commonwealth of Puerto Rico Series 2003 AA, Insured: MBIA
Highway & Transportation Authority 5.500% 07/01/19 2,320,000 2,563,368
------------------------------------------------ --------- ----------
Special Non-Property Tax Total 12,584,920
Special Property Tax - 4.9%
CA Carson Improvement Bond Act Series 1992,
1915 7.375% 09/02/22 130,000 130,693
CA Huntington Beach Community Grand Coast Resort, Series 2001-1,
Facilities District 6.450% 09/01/31 1,250,000 1,328,650
CA Irvine Improvement Bond Act No. 00-18-GRP 3, Series 2003,
1915 5.550% 09/02/26 500,000 508,760
CA Lincoln Community Facilities Series 2004:
District No. 2003-1 5.750% 09/01/20 500,000 520,760
5.900% 09/01/24 500,000 524,315
CA Oakdale Public Financing Central City Redevelopment Project, Series 2004,
Authority 5.375% 06/01/33 2,000,000 2,036,680
CA Oceanside Community Downtown Redevelopment Project, Series 2003,
Development Commission 5.700% 09/01/25 500,000 519,275
See Accompanying Notes to Financial Statements.
26
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Tax-Backed (continued) Par ($) Value ($)
Special Property Tax (continued)
CA Orange County Community Ladera Ranch, Series 2003 A,
Facilities District 5.550% 08/15/33 1,000,000 1,012,420
CA Orange County Improvement Phase IV, No. 01-1-B, Series 2003,
Bond Act 1915 5.750% 09/02/33 1,000,000 1,015,180
CA Redwood City Community Series 2003 B,
Facilities District No. 1 6.000% 09/01/33 700,000 716,163
CA Temecula Valley Unified School Series 2003,
District No. 1 6.125% 09/01/33 600,000 612,426
FL Brandy Creek Community Series 2003 A,
Development District 6.350% 05/01/34 975,000 1,013,873
FL Celebration Community Series 2003 A,
Development District 6.400% 05/01/34 980,000 1,022,130
FL Colonial Country Club Series 2003,
Community Development District 6.400% 05/01/33 725,000 762,627
FL Double Branch Community Series 2002 A,
Development District 6.700% 05/01/34 685,000 755,123
Series 2003 B,
5.375% 05/01/08 210,000 210,187
FL Islands at Doral Southwest Series 2003,
Community Development District 6.375% 05/01/35 760,000 791,000
FL Lexington Oaks Community Series 1998 A,
Development District 6.125% 05/01/19 250,000 251,310
Series 2000 A,
7.200% 05/01/30 655,000 674,879
Series 2002 A,
6.700% 05/01/33 250,000 261,873
FL Middle Village Community Series 2004 A,
Development District 6.000% 05/01/35 2,000,000 2,055,620
FL Orlando Conroy Road Interchange, Series 1998 A:
5.500% 05/01/10 230,000 232,742
5.800% 05/01/26 600,000 607,098
FL Seven Oaks Community Series 2004 A,
Development District 5.875% 05/01/35 495,000 501,064
Series 2004 B,
5.000% 05/01/09 595,000 593,245
FL Stoneybrook Community Series 1998 A,
Development District 6.100% 05/01/19 700,000 703,752
Series 1998 B,
5.700% 05/01/08 25,000 25,023
See Accompanying Notes to Financial Statements.
27
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Tax-Backed (continued) Par ($) Value ($)
Special Property Tax (continued)
FL West Villages Improvement Series 2006,
District 5.500% 05/01/37 1,750,000 1,748,267
FL Westchester Community Series 2003,
Development District No.1 6.125% 05/01/35 800,000 832,448
FL Westridge Community Series 2005,
Development District 5.800% 05/01/37 2,750,000 2,707,870
GA Atlanta Series 2005 B,
5.600% 01/01/30 1,000,000 1,014,430
IL Chicago Pilsen Redevelopment, Series 2004 B,
6.750% 06/01/22 1,225,000 1,254,216
IL Du Page County Special Service 5.625% 03/01/36
Area No 31 750,000 740,445
IL Lincolnshire Special Services Sedgebrook Project, Series 2004,
Area No. 1 6.250% 03/01/34 750,000 772,515
IL Plano Special Service Area No.4 Series 2005 5-B,
6.000% 03/01/35 3,000,000 2,885,040
IN City of Portage Series 2006,
5.000% 07/15/23 700,000 683,900
MI Pontiac Tax Increment Finance Development Area No. 3, Series 2002,
Authority 6.375% 06/01/31 1,000,000 1,061,030
MO Fenton Tax Increment Revenue, Series 2006,
4.500% 04/01/21 500,000 492,025
MO Riverside L-385 Levee Project, Series 2004,
5.250% 05/01/20 1,275,000 1,285,672
----------------------------------------------------- --------- ----------
Special Property Tax Total 34,864,726
State Appropriated - 0.8%
CA Public Works Board Department of Mental Health, Coalinga State Hospital,
Series 2004 A,
5.500% 06/01/19 1,000,000 1,073,540
LA Military Department Custody Receipts, Series 2004,
4.850% 05/01/24 1,500,000 1,437,495
NY Triborough Bridge & Tunnel Javits Convention Center Project, Series 1990 E,
Authority 7.250% 01/01/10 1,260,000 1,339,065
PR Commonwealth of Puerto Rico Series 2004 A,
Public Finance Corp. 5.750% 08/01/27 1,465,000 1,549,106
----------------------------------------------------- --------- ----------
State Appropriated Total 5,399,206
See Accompanying Notes to Financial Statements.
28
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Tax-Backed (continued) Par ($) Value ($)
State General Obligations - 2.2%
CA State Series 2003:
5.250% 02/01/18 2,000,000 2,134,200
5.250% 02/01/20 2,000,000 2,136,440
5.250% 02/01/23 800,000 852,168
MA Massachusetts Bay Series 1992 B, Insured: MBIA
Transportation Authority 6.200% 03/01/16 5,825,000 6,565,124
PR Commonwealth of Puerto Rico Insured: FSA,
Aqueduct & Sewer Authority 5.500% 07/01/18 2,440,000 2,673,874
Series 2004 A,
5.000% 07/01/30 1,390,000 1,425,473
---------------------------------------------------- --------- -----------
State General Obligations Total 15,787,279
Tax-Backed Total 109,041,118
Transportation - 6.0%
Air Transportation - 2.6%
CA Los Angeles Regional Airports American Airlines, Inc., Series 2000 C, AMT,
Improvement Corp. 7.500% 12/01/24 400,000 440,680
FL Capital Trust Agency Air Cargo-Orlando, Series 2003, AMT,
6.750% 01/01/32 650,000 688,402
IN Indianapolis Airport Authority FedEx Corp., Series 2004, AMT,
5.100% 01/15/17 1,000,000 1,020,250
MA Port Authority Delta Air Lines, Inc., Series 2001 A, AMT,
Insured: AMBAC
5.500% 01/01/16(k) 2,935,000 3,053,603
NC Charlotte/Douglas International US Airways, Inc.:
Airport Series 1998, AMT,
5.600% 07/01/27 1,500,000 1,474,395
Series 2000, AMT,
7.750% 02/01/28 1,250,000 1,328,563
NJ Economic Development Continental Airlines, Inc.:
Authority Series 1999, AMT:
6.250% 09/15/19 1,000,000 1,027,920
6.250% 09/15/29 500,000 512,635
Series 2003, AMT,
9.000% 06/01/33 1,000,000 1,138,710
NY New York City Industrial American Airlines, Inc, Series 2005, AMT,
Development Agency 7.750% 08/01/31 1,000,000 1,156,040
Terminal One Group Association LP, Series 2005, AMT,
5.500% 01/01/21 1,250,000 1,307,400
PA Philadelphia Authority for Aero Philadelphia, Series 1999, AMT:
Industrial Development 5.250% 01/01/09 225,000 225,153
5.500% 01/01/24 1,000,000 992,050
See Accompanying Notes to Financial Statements.
29
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Transportation (continued) Par ($) Value ($)
Air Transportation (continued)
TX Dallas-Fort Worth International American Airlines, Inc., Series 2000 A, AMT,
Airport 9.000% 05/01/29 2,250,000 2,595,825
TX Houston Industrial Development United Parcel Service, Series 2002, AMT,
Corp. 6.000% 03/01/23 1,005,000 1,035,843
-------------------------------------------- --------- ----------
Air Transportation Total 17,997,469
Airports - 1.1%
CA Burbank Glendale Pasadena Series 2005 B, AMT, Insured: AMBAC
Airport Authority 5.000% 07/01/23 1,500,000 1,522,815
DC Metropolitan Washington Series 2003 A, AMT, Insured: FGIC
Airports Authority 5.000% 10/01/33 1,500,000 1,503,510
GA Augusta Airport Series 2005,
5.150% 01/01/35 600,000 591,354
NC Charlotte Douglas International Series 1999, AMT, Insured: MBIA
Airport 7.867% 04/20/19 (h)(i) 4,000,000 4,463,760
-------------------------------------------- --------- ----------
Airports Total 8,081,439
Ports - 0.8%
WA Port of Seattle Series 2000 A, AMT, Insured: MBIA
7.789% 08/01/07 (i) 1,250,000 1,396,225
Series 2000 B, AMT, Insured: MBIA
7.789% 08/01/08 (i) 3,750,000 4,273,763
-------------------------------------------- --------- ----------
Ports Total 5,669,988
Toll Facilities - 1.2%
CO E-470 Public Highway Authority Series 2000 B, Insured: MBIA
(a) 09/01/18 4,000,000 2,243,120
CO Northwest Parkway Public Series 2001 D,
Highway Authority 7.125% 06/15/41 2,750,000 2,515,287
NY Thruway Authority Second General Highway & Bridge Trust Fund,
Series 2005 B, Insured: AMBAC
5.500% 04/01/20 2,310,000 2,564,885
PR Commonwealth of Puerto Rico Series 2003 AA, Insured: MBIA
Highway & Transportation Authority 5.500% 07/01/18 1,225,000 1,348,407
-------------------------------------------- --------- ----------
Toll Facilities Total 8,671,699
Transportation - 0.3%
NV Department of Business & Las Vegas Monorail, Series 2000,
Industry 7.375% 01/01/40 1,750,000 1,788,640
-------------------------------------------- --------- ----------
Transportation Total 1,788,640
Transportation Total 42,209,235
See Accompanying Notes to Financial Statements.
30
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Utilities - 12.3% Par ($) Value ($)
Independent Power Producers - 1.1%
NY Port Authority of New York & KIAC Partners, Series 1996 IV, AMT:
New Jersey 6.750% 10/01/11 3,000,000 3,049,200
6.750% 10/01/19 120,000 121,717
PA Carbon City Industrial Panther Creek Partners, Series 2000, AMT,
Development Authority 6.650% 05/01/10 725,000 763,353
PA Economic Development Colver Project, Series 2005 G, AMT,
Financing Authority 5.125% 12/01/15 825,000 802,189
Northampton Generating: Series 1994 A, AMT,
6.500% 01/01/13 3,000,000 2,951,880
Series 1994 B, AMT,
6.750% 01/01/07 10,000 10,086
---------------------------------------------------- --------- ---------
Independent Power Producers Total 7,698,425
Investor Owned - 6.8%
AZ Maricopa County Pollution Southern California Edison Co.,
Control Corp. Series 2000 A, 2.900% 06/01/35 1,000,000 958,620
CA Chula Vista Industrial San Diego Gas & Electric Co.,
Development Authority Series 1996 B, AMT, 5.500% 12/01/21 1,275,000 1,346,910
FL Polk County Industrial Tampa Electric Co., Series 1996, AMT,
Development Authority 5.850% 12/01/30 1,500,000 1,525,980
IL Development Finance Authority Peoples Gas Light & Coke Co., Series 2003 E, AMT,
Insured: AMBAC
4.875% 11/01/38 2,500,000 2,500,675
IN Petersburg Indianapolis Power & Light Co.:
Series 1991,
5.750% 08/01/21 1,000,000 1,053,630
Series 1995,
6.625% 12/01/24 255,000 260,034
LA Calcasieu Parish Industrial Entergy Gulf States, Inc., Series 1999,
Development Board 5.450% 07/01/10 500,000 505,165
LA West Feliciana Parish Entergy Gulf States, Inc., Series 1999 B,
6.600% 09/01/28 250,000 250,820
MS Business Finance Corp. Systems Energy Resources, Inc. Project, Series 1999,
5.900% 05/01/22 1,500,000 1,508,745
MT Forsyth Northwestern Corp., Series 2006, Insured: AMBAC
4.650% 08/01/23 3,000,000 2,965,050
Portland General, Series 1998 A,
5.200% 05/01/33 375,000 384,169
NC Wake County Industrial Carolina Power & Light Co., Series 2002, 2,000,000 2,085,800
Facilities & Pollution Control 5.375% 02/01/17
Financing Authority
See Accompanying Notes to Financial Statements.
31
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Utilities (continued) Par ($) Value ($)
Investor Owned (continued)
NH Business Finance Authority Pubilc Servie Co. of NH, Series 2006 B, Insured: MBIA
4.750% 05/01/21 7,250,000 7,165,900
NM Farmington Tucson Electric Power Co., Series 1997 A,
6.950% 10/01/20 2,000,000 2,088,540
NV Clark County Industrial Nevada Power Co.:
Development Authority Series 1995 B, AMT,
5.900% 10/01/30 2,135,000 2,134,552
Series 1997 A, AMT,
5.900% 11/01/32 750,000 747,052
Southern California Edison Co., Series 2000 A, AMT,
3.250% 06/01/31 1,000,000 962,310
NY Energy & Research Brooklyn Union Gas Co., Series 2005 A, AMT,
Development Authority Insured: FGIC
4.700% 02/01/24 6,250,000 6,119,375
PA Economic Development Reliant Energy, Inc., Series 2001 A, AMT,
Financing Authority 6.750% 12/01/36 800,000 855,720
SC Berkeley County Pollution South Carolina Generating Co. Project, Series 2003,
Control Facilities Authority 4.875% 10/01/14 1,500,000 1,518,705
TX Brazos River Authority TXU Energy Co., LLC:
Series 1994, AMT,
5.400% 05/01/29 1,500,000 1,531,875
Series 2001 C, AMT,
5.750% 05/01/36 515,000 540,791
Series 2003 C, AMT,
6.750% 10/01/38 1,180,000 1,318,331
VA Pittsylvania County Industrial Virginia Electric & Power Co., Series 1994 A, AMT:
Development Authority 7.450% 01/01/09 2,100,000 2,133,054
7.500% 01/01/14 500,000 508,165
WY Campbell County Black Hills Power, Inc., Series 2004,
5.350% 10/01/24 3,250,000 3,327,285
WY Converse County PacifiCorp, Series 1988,
3.900% 01/01/14 1,500,000 1,419,945
----------------------------------------------------- --------- ----------
Investor Owned Total 47,717,198
Joint Power Authority - 0.4%
NC Eastern Municipal Power Series 1991 A,
Agency 6.500% 01/01/18 1,680,000 1,920,593
Series 2003 C,
5.375% 01/01/17 1,000,000 1,043,130
----------------------------------------------------- --------- ----------
Joint Power Authority Total 2,963,723
See Accompanying Notes to Financial Statements.
32
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Bonds (continued)
Utilities (continued) Par ($) Value ($)
Municipal Electric - 2.8%
GA Municipal Electric Authority Series 1991 V,
6.600% 01/01/18 3,300,000 3,798,927
MN Western Municipal Power Series 2003 B, Insured: MBIA
Agency 5.000% 01/01/15 500,000 527,985
NY Long Island Power Authority Electric Systems Revenue, Series 2003 A,
5.000% 06/01/09 2,000,000 2,056,020
Series 1998, Insured: AMBAC
5.000% 04/01/10 2,000,000 2,074,940
PR Electric Power Authority Series 1998 NN,
5.500% 07/01/20 1,005,000 1,086,807
TX Lower Colorado River Authority Series 1999 A, Insured: AMBAC
5.500% 05/15/21 10,000,000 10,456,200
---------------------------------------------------- ---------- -----------
Municipal Electric Total 20,000,879
Water & Sewer - 1.2%
AZ Gilbert Water Resources Wastewater Systems & Utilities Revenue, Series
Municipal Property Corp. 2004,
4.900% 04/01/19 1,000,000 993,370
CA Department of Water Resources Central Valley Project, Series 2002 X, Insured: FGIC
5.500% 12/01/17 1,300,000 1,440,920
FL Key West Sewer Revenue, Series 2003, Insured: FGIC
5.250% 10/01/18 1,000,000 1,058,370
MS V Lakes Utility District Series 1994, 8.250% 07/15/24 (l) 400,000 314,968
NH Industrial Development Pennichuck Water Works, Inc., Series 1988, AMT,
Authority 7.500% 07/01/18 410,000 457,769
PA Dauphin County Industrial Dauphin Water Supply Co., Series 1992 A, AMT,
Development Authority 6.900% 06/01/24 3,200,000 3,870,304
---------------------------------------------------- ---------- -----------
Water & Sewer Total 8,135,701
Utilities Total 86,515,926
Total Municipal Bonds (cost of $661,236,971) 675,565,240
See Accompanying Notes to Financial Statements.
33
Columbia High Yield Municipal Fund (June 30, 2006)
Municipal Preferred Stocks - 1.2%
Housing - 1.2% Par ($) Value ($)
Multi-Family - 1.2%
Charter Mac Equity Issuer Trust AMT,
6.300% 04/30/19 (f) 1,000,000 1,067,540
Series 1999, AMT,
6.625% 06/30/09 (f) 2,000,000 2,104,160
Series 2000, AMT,
7.600% 11/30/10 (f) 1,500,000 1,653,345
GMAC Municipal Mortgage Trust AMT:
5.600% 10/31/39 (f) 1,000,000 1,024,670
5.700% 10/31/40 (f) 1,500,000 1,494,810
MuniMae Trust AMT,
5.800% 06/30/49 (f) 1,000,000 1,003,690
----------------------------------------------------- --------- ---------
Multi-Family Total 8,348,215
Housing Total 8,348,215
Total Municipal Preferred Stocks (cost of $8,000,000) 8,348,215
Investment Company - 0.0% Shares
Dreyfus Tax-Exempt Cash Management Fund 23,812 23,812
----------------------------------------------------- --------- ---------
Total Investment Company (cost of $23,813) 23,812
Short-Term Obligations - 1.9% Par ($)
Variable Rate Demand Notes (m) - 1.9%
FL Orange County School Board Series 2000 B, Insured: AMBAC,
SPA: SunTrust Bank N.A.
3.990% 08/01/25 700,000 700,000
IA Finance Authority Village Court Associates, Series 1985 A,
4.020% 11/01/15 600,000 600,000
IA Woodbury County Educational Siouxland Medical Educational Foundation, Inc.,
Facility Series 1996, LOC: U.S. Bank N.A.
4.020% 11/01/16 1,500,000 1,500,000
IL Health Facilities Authority OSF Healthcare Systems, Series 2002,
LOC: Fifth Third Bank
3.990% 11/15/27 2,200,000 2,200,000
IN Health Facility Financing Fayette Memorial Hospital Association, Inc.,
Authority Series 2002 A, LOC: U.S. Bank N.A.
4.090% 10/01/32 1,670,000 1,670,000
MN Brooklyn Center BCC Associates LLC, Series 2001, LOC: U.S. Bank N.A.
4.090% 12/01/14 300,000 300,000
MN Center City Health Care Hazelden Foundation Project,
Facilities Series 2005, LOC: Bank of New York
4.040% 11/01/35 600,000 600,000
MN Higher Education Facilities St. Olaf College:
Authority Series 2000 5-H,
4.040% 10/01/30 200,000 200,000
Series 2002, LOC: Harris Trust & Savings Bank
4.040% 10/01/32 900,000 900,000
SD County of Lawrence Homestake Mining Co.,
Series 1997 B, LOC: Chase Manhattan Bank
3.960% 07/01/32 400,000 400,000
See Accompanying Notes to Financial Statements.
34
Columbia High Yield Municipal Fund (June 30, 2006)
Short-Term Obligations (continued) Par ($) Value ($)
Variable Rate Demand Notes (m) (continued)
SD Health & Educational Facilities Rapid City Regional Hospital, Series 2003,
Authority Insured: MBIA, SPA: U.S. Bank N.A.
4.040% 09/01/27 300,000 300,000
TX Bell County Health Facilities Series 2000 B-1, SPA: Morgan Guaranty Trust
Development Corp. 4.030% 08/15/29 1,000,000 1,000,000
TX Harris County Health Facilities YMCA-Greater Houston Area, Series 2002, LOC:
Development Corp. JPMorgan Chase Bank
4.030% 07/01/37 1,300,000 1,300,000
WI Health & Educational Facilities ProHealth Care, Inc., Series 2001 B,
Authority 4.040% 08/15/30 500,000 500,000
WY Lincoln County Pollution Control ExxonMobil Corp., Series 1984 C,
Revenue 3.970% 11/01/14 600,000 600,000
WY Uinta County Chevron Corp.: Series 1992,
3.980% 12/01/22 400,000 400,000
Series 1997,
3.980% 04/01/10 300,000 300,000
-------------------------------------------------- --------- -----------
Variable Rate Demand Notes Total 13,470,000
-------------------------------------------------- --------- -----------
Total Short-Term Obligations (cost of $13,470,000) 13,470,000
-------------------------------------------------- --------- -----------
Total Investments - 98.8% (cost of $682,730,784) (n) 697,407,267
-------------------------------------------------- --------- -----------
Other Assets & Liabilities, Net - 1.2% 8,560,442
-------------------------------------------------- --------- -----------
Net Assets - 100.0% 705,967,709
Notes to Investment Portfolio:
(a)Zero coupon bond.
(b)Denotes a restricted security, which is subject
to restrictions on resale under federal
securities laws or in transactions exempt from
registration. At June 30, 2006, the value of this
security represents 0.1% of net assets.
Acquisition Acquisition
Security Date Cost
-------- ----------- -----------
CA Statewide Communities Development Authority
Crossroads School of Arts & Sciences, Series 1998,
6.000% 08/01/28 08/21/98 $275,000
6.000% 08/01/28 08/31/98 700,000
--------
$975,000
========
(c)The issuer has filed for bankruptcy protection
under Chapter 11, and is in default of certain
debt covenants. Income is not being accrued. At
June 30, 2006, the value of these securities
amounted to $4,623, which represents 0.0% of net
assets.
(d)The issuer is in default of certain debt
covenants. Income is being fully accrued. At
June 30, 2006, the value of these securities
amounted to $218,169, which represent 0.0% of net
assets.
(e)Security purchased on a delayed delivery basis.
(f)Security exempt from registration pursuant to
Rule 144A under the Securities Act of 1933. These
securities may be resold in transactions exempt
from registration, normally to qualified
institutional buyers. At June 30, 2006, these
securities, which did not include any illiquid
securities except for the following, amounted to
$8,789,786, which represents 1.3% of net assets.
Acquisition Acquisition
Security Date Par Cost Value
- -------- ----------- --- ----------- -----
Resolution Trust Corp. Pass-Through Certificates, Series
1993 A, 11/12/93 $455,481 $463,388 $441,571
(g)The Fund has been informed that each issuer has
placed direct obligations of the U.S. Government
in an irrevocable trust, solely for the payment
of principal and interest.
(h)The security or a portion of the security is
pledged as collateral for open futures contracts.
At June 30, 2006, the total market value of
securities pledged amounted to $4,856,828.
See Accompanying Notes to Financial Statements.
35
Columbia High Yield Municipal Fund (June 30, 2006)
(i)The interest rate shown on floating rate or
variable rate securities reflects the rate at
June 30, 2006.
(j)Represents fair value as determined in good faith
under procedures approved by the Board of
Trustees.
(k)The issuer has filed for bankruptcy protection
under Chapter 11. Income is being accrued. At
June 30, 2006, the value of these securities
amounted to $3,053,603, which represents 0.4% of
net assets.
(l)The issuer is in default of certain debt
covenants. Income is being accrued. At June 30,
2006, the value of these securities amounted to
$314,968, which represents 0.0% of net assets.
(m)Variable rate demand notes. These securities are
payable upon demand and are secured by letters of
credit or other credit support agreements from
banks. The interest rates change periodically and
the interest rates shown reflect the rates at
June 30, 2006.
(n)Cost for federal income tax purposes is
$682,462,869.
At June 30, 2006, the Fund held the following
open short futures contract:
Number of Aggregate Expiration Unrealized
Type Contracts Value Face Value Date Appreciation
- ---- --------- ----- ---------- ---------- ------------
10-Year U.S. Treasury Notes 81 $ 8,493,609 $ 8,506,002 Sep-2006 $ 12,393
U.S. Treasury Bonds 139 14,825,219 15,022,408 Sep-2006 197,189
--------
$209,582
========
At June 30, 2006, the Trust held the following
interest rate swap contract:
Effective Expiration Receive Fixed Variable Net Unrealized
Notional Amount Date Date Counterparty (Pay) Rate Rate Depreciation
- --------------- --------- ---------- ------------ ------- ----- -------- --------------
32,000,000 08/08/06 08/08/16 JPMorgan Chase Bank (Pay) 4.158% BMA Index $(25,646)
At June 30, 2006, the composition of the Fund by
Revenue Source is as follows:
Revenue Source % of Net Assets
-------------- ---------------
Health Care 22.7%
Housing 16.7
Tax-Backed 15.4
Utilities 12.3
Other 10.1
Transportation 6.0
Industrials 5.1
Education 4.3
Other Revenue 2.7
Resource Recovery 1.6
Investment Company 0.0*
Short-Term Obligations 1.9
Other Assets & Liabilities, Net 1.2
-----
100.0%
=====
* Rounds to less than 0.1%.
Acronym Name
------- ----
ABAG Association of Bay Area Governments
AMBAC Ambac Assurance Corp.
AMT Alternative Minimum Tax
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FHLMC Federal Home Loan Mortgage Corp.
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
LOC Letter of Credit
MBIA MBIA Insurance Corp.
SPA Stand-by Purchase Agreement
RAD Radian Asset Assurance
See Accompanying Notes to Financial Statements.
36
Statement of Assets and Liabilities - Columbia High Yield Municipal Fund
(June 30, 2006)
($)
Assets Investments, at cost 682,730,784
-----------
Investments, at value 697,407,267
Cash 890,173
Receivable for:
Investments sold 3,927,505
Fund shares sold 1,761,669
Interest 10,062,615
Deferred Trustees' compensation plan 27,261
-------------------------------------------------- -----------
Total Assets 714,076,490
Liabilities Net unrealized depreciation on swap contract 25,646
Payable for:
Investments purchased 2,031,067
Investments purchased on a delayed delivery basis 2,495,000
Fund shares repurchased 894,628
Futures variation margin 145,297
Distributions 2,035,171
Investment advisory fee 231,845
Administration fee 62,318
Transfer agent fee 24,554
Pricing and bookkeeping fees 16,045
Trustees' fees 722
Custody fee 1,267
Reports to shareholders 51,213
Distribution and service fees 39,582
Chief compliance officer expenses and fees 1,910
Deferred Trustees' fees 27,261
Other liabilities 25,255
-------------------------------------------------- -----------
Total Liabilities 8,108,781
-------------------------------------------------- -----------
Net Assets 705,967,709
Composition of Net Assets Paid-in capital 714,501,069
Undistributed net investment income 882,536
Accumulated net realized loss (24,276,315)
Net unrealized appreciation (depreciation) on:
Investments 14,676,483
Swap contracts (25,646)
Futures contracts 209,582
-------------------------------------------------- -----------
Net Assets 705,967,709
See Accompanying Notes to Financial Statements.
37
Columbia High Yield Municipal Fund (June 30, 2006)
($)
Class A Net assets 90,151,190
Shares outstanding 8,012,380
Net asset value per share 11.25(a)
Maximum sales charge 4.75%
Maximum offering price per share ($11.25/0.9525) 11.81(b)
Class B
Net assets 24,734,885
Shares outstanding 2,198,413
Net asset value and offering price per share 11.25(a)
Class C
Net assets 14,726,900
Shares outstanding 1,308,902
Net asset value and offering price per share 11.25(a)
Class Z
Net assets 576,354,734
Shares outstanding 51,225,280
Net asset value, offering and redemption price per share 11.25
(a)Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b)On sales of $50,000 or more the offering price is reduced.
See Accompanying Notes to Financial Statements.
38
Statement of Operations - Columbia High Yield Municipal Fund
(For the Year Ended June 30, 2006)
($)
Investment Income Interest 35,401,503
-------------------------------------------------------------- -----------
Total Investment Income 35,401,503
Expenses Investment advisory fee 2,670,751
Administration fee 723,938
Distribution fee:
Class B 215,849
Class C 107,746
Service fee:
Class A 182,157
Class B 57,560
Class C 28,714
Transfer agent fee 196,256
Pricing and bookkeeping fees 214,981
Trustees' fees 32,751
Custody fee 28,696
Chief compliance officer expenses and fees (See Note 4) 8,734
Non-recurring costs (See Note 8) 8,045
Other expenses 371,702
-------------------------------------------------------------- -----------
Total Operating Expenses 4,847,880
Interest 880
-------------------------------------------------------------- -----------
Total Expenses 4,848,760
Fees waived by Transfer Agent (9,921)
Fees waived by Distributor - Class C (21,603)
Non-recurring costs assumed by Investment Advisor (See Note 8) (8,045)
Custody earnings credit (8,374)
-------------------------------------------------------------- -----------
Net Expenses 4,800,817
-------------------------------------------------------------- -----------
Net Investment Income 30,600,686
Net Realized and Unrealized Gain Net realized gain (loss) on:
(Loss) Investments (2,060,733)
Swap contracts 469,953
Futures contracts 5,087,623
-------------------------------------------------------------- -----------
Net realized gain 3,496,843
Net change in unrealized appreciation (depreciation) on:
Investments (13,357,220)
Swap contracts (25,646)
Futures contracts 1,707,947
-------------------------------------------------------------- -----------
Net change in unrealized appreciation (depreciation) (11,674,919)
-------------------------------------------------------------- -----------
Net Loss (8,178,076)
-------------------------------------------------------------- -----------
Net Increase in Net Assets from Operations 22,422,610
See Accompanying Notes to Financial Statements.
39
Statement of Changes in Net Assets - Columbia High Yield Municipal Fund
Increase (Decrease) in Net Assets: Year Ended June 30, 2006 ($) 2005 ($)
Operations Net investment income 30,600,686 25,057,062
Net realized gain (loss) 3,496,843 (11,520,139)
Net change in unrealized appreciation
(depreciation) (11,674,919) 30,397,298
--------------------------------------------- ----------- -----------
Net Increase from Operations 22,422,610 43,934,221
Distributions Declared to From net investment income:
Shareholders: Class A (4,168,380) (4,039,490)
Class B (1,101,520) (1,451,136)
Class C (570,348) (514,762)
Class Z (24,606,938) (18,981,629)
--------------------------------------------- ----------- -----------
Total Distributions Declared to Shareholders (30,447,186) (24,987,017)
Share Transactions Class A:
Subscriptions 15,831,789 24,413,595
Distributions reinvested 2,137,160 2,014,069
Redemptions (18,177,700) (15,795,139)
--------------------------------------------- ----------- -----------
Net Increase (Decrease) (208,751) 10,632,525
Class B:
Subscriptions 1,461,157 3,883,850
Distributions reinvested 524,223 690,077
Redemptions (9,736,528) (12,256,354)
--------------------------------------------- ----------- -----------
Net Increase (Decrease) (7,751,148) (7,682,427)
Class C:
Subscriptions 3,732,352 4,326,866
Distributions reinvested 285,872 231,237
Redemptions (2,707,932) (1,890,906)
--------------------------------------------- ----------- -----------
Net Increase (Decrease) 1,310,292 2,667,197
Class Z:
Subscriptions 206,749,621 155,603,726
Distributions reinvested 5,519,835 6,059,174
Redemptions (77,459,070) (69,107,309)
--------------------------------------------- ----------- -----------
Net Increase (Decrease) 134,810,386 92,555,591
Net Increase from Share Transactions 128,160,779 98,172,886
--------------------------------------------- ----------- -----------
Total Increase in Net Assets 120,136,203 117,120,090
Net Assets Beginning of period 585,831,506 468,711,416
End of period 705,967,709 585,831,506
Undistributed net investment income at end of
period 882,536 844,636
--------------------------------------------- ----------- -----------
See Accompanying Notes to Financial Statements.
40
Columbia High Yield Municipal Fund
Increase (Decrease) in Net Assets: Year Ended June 30, 2006 2005
Changes in Shares Class A:
Subscriptions 1,396,582 2,168,016
Issued for distributions reinvested 188,737 178,946
Redemptions (1,604,445) (1,405,266)
------------------------------------ ---------- ----------
Net Increase (Decrease) (19,126) 941,696
Class B:
Subscriptions 129,061 345,103
Issued for distributions reinvested 46,291 61,363
Redemptions (859,027) (1,090,001)
------------------------------------ ---------- ----------
Net Increase (Decrease) (683,675) (683,535)
Class C:
Subscriptions 329,479 384,643
Issued for distributions reinvested 25,249 20,544
Redemptions (239,309) (167,685)
------------------------------------ ---------- ----------
Net Increase (Decrease) 115,419 237,502
Class Z:
Subscriptions 18,245,990 13,801,567
Issued for distributions reinvested 487,413 538,636
Redemptions (6,839,796) (6,145,800)
------------------------------------ ---------- ----------
Net Increase (Decrease) 11,893,607 8,194,403
See Accompanying Notes to Financial Statements.
41
Financial Highlights - Columbia High Yield Municipal Fund
Selected data for a share outstanding throughout each period is as follows:
Class A Shares
Year Ended June 30,
---------------------------------------------
2006 2005 2004 2003 2002
- -------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.39 $ 10.96 $ 11.25 $ 11.26 $11.13
Income from Investment Operations:
Net investment income (b) 0.52 0.54 0.56 0.60 0.61(c)
Net realized and unrealized gain (loss) (0.14) 0.43 (0.33) 0.11 0.15(c)
------- ------- ------- ------- ------
Total from Investment Operations 0.38 0.97 0.23 0.71 0.76
Less Distributions Declared to Shareholders:
From net investment income (0.52) (0.54) (0.52) (0.72) (0.63)
Net Asset Value, End of Period $ 11.25 $ 11.39 $ 10.96 $ 11.25 $11.26
Total return (d) 3.39%(e) 9.00% 2.10% 6.58% 6.93%
Ratios to Average Net Assets/Supplemental Data:
Expenses (g) 0.85% 0.87% 0.89% 1.07% 1.13%
Net investment income (g) 4.60% 4.79% 5.04% 5.39% 5.41%(c)
Waiver/reimbursement --%(i) -- -- -- --
Portfolio turnover rate 13% 7% 10% 17% 16%(j)
Net assets, end of period (000's) $90,151 $91,470 $77,738 $78,335 $ 42
(a)Class A shares were initially offered on July 31, 2000. Per share data and
total return reflect activity from that date.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Effective July 1, 2001, the Fund adopted the provisions of the AICPA Audit
and Accounting Guide for Investment Companies and began amortizing premium
and accreting discount on all debt securities. The effect of this change for
the year ended June 30, 2002 was to increase the ratio of net investment
income to average net assets from 5.37% to 5.41%. The impact to the net
investment income and the net realized and unrealized gain was less than
$0.01.
(d)Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e)Had the Transfer Agent not waived a portion of expenses, total return would
have been reduced.
(f)Not annualized.
(g)The benefits derived from custody credits had an impact of less than 0.01%.
(h)Annualized.
(i)Rounds to less than 0.1%.
(j)Portfolio turnover rate disclosed is for the SR&F High-Yield Municipals
Portfolio.
See Accompanying Notes to Financial Statements.
42
Columbia High Yield Municipal Fund
Selected data for a share outstanding throughout each period is as follows:
Class B Shares
Period
Ended
Year Ended June 30, June 30,
---------------------------- 2003 (a)
2006 2005 2004 --------
- ------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.39 $ 10.96 $ 11.25 $ 11.31
Income from Investment Operations:
Net investment income (b) 0.43 0.46 0.48 0.51
Net realized and unrealized gain (loss) (0.14) 0.42 (0.33) 0.05
------- ------- ------- -------
Total from Investment Operations 0.29 0.88 0.15 0.56
Less Distributions Declared to Shareholders:
From net investment income (0.43) (0.45) (0.44) (0.62)
Net Asset Value, End of Period $ 11.25 $ 11.39 $ 10.96 $ 11.25
Total return (c) 2.62%(d) 8.19% 1.33% 5.14%(e)
Ratios to Average Net Assets/Supplemental Data:
Expenses (f) 1.60% 1.62% 1.64% 1.81%(g)
Net investment income (f) 3.85% 4.04% 4.29% 4.70%(g)
Waiver/reimbursement --%(h) -- -- --
Portfolio turnover rate 13% 7% 10% 17%
Net assets, end of period (000's) $24,735 $32,824 $39,097 $51,292
(a)Class B shares were initially offered on July 15, 2002. Per share data and
total return reflect activity from that date.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(d)Had the Transfer Agent not waived a portion of expenses, total return would
have been reduced.
(e)Not annualized.
(f)The benefits derived from custody credits had an impact of less than 0.01%.
(g)Annualized.
(h)Rounds to less than 0.1%.
See Accompanying Notes to Financial Statements.
43
Columbia High Yield Municipal Fund
Selected data for a share outstanding throughout each period is as follows:
Class C Shares
Period
Ended
Year Ended June 30, June 30,
------------------------- 2003 (a)
2006 2005 2004 --------
- ---------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.39 $ 10.96 $ 11.25 $11.31
Income from Investment Operations:
Net investment income (b) 0.45 0.47 0.49 0.51
Net realized and unrealized gain (loss) (0.14) 0.43 (0.32) 0.07
------- ------- ------- ------
Total from Investment Operations 0.31 0.90 0.17 0.58
Less Distributions Declared to Shareholders:
From net investment income (0.45) (0.47) (0.46) (0.64)
Net Asset Value, End of Period $ 11.25 $ 11.39 $ 10.96 $11.25
Total return (c)(d) 2.77% 8.35% 1.48% 5.29%(e)
Ratios to Average Net Assets/Supplemental Data:
Expenses (f) 1.45% 1.47% 1.49% 1.67%(g)
Net investment income (f) 3.99% 4.19% 4.44% 4.75%(g)
Waiver/reimbursement 0.15% 0.15% 0.15% 0.15%(g)
Portfolio turnover rate 13% 7% 10% 17%
Net assets, end of period (000's) $14,727 $13,593 $10,482 $9,110
(a)Class C shares were initially offered on July 15, 2002. Per share data and
total return reflect activity from that date.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(d)Had the Distributor and/or Transfer Agent not waived a portion of expenses,
total return would have been reduced.
(e)Not annualized.
(f)The benefits derived from custody credits had an impact of less than 0.01%.
(g)Annualized.
See Accompanying Notes to Financial Statements.
44
Columbia High Yield Municipal Fund
Selected data for a share outstanding throughout each period is as follows:
Class Z Shares
Year Ended June 30,
---------------------------------------------------
2006 2005 2004 2003 (a) 2002
- -------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.39 $ 10.96 $ 11.25 $ 11.26 $ 11.12
Income from Investment Operations:
Net investment income (b) 0.54 0.56 0.58 0.63 0.64(c)
Net realized and unrealized gain (loss) (0.14) 0.43 (0.32) 0.11 0.15(c)
-------- -------- -------- -------- --------
Total from Investment Operations 0.40 0.99 0.26 0.74 0.79
Less Distributions Declared to Shareholders:
From net investment income (0.54) (0.56) (0.55) (0.75) (0.65)
Net Asset Value, End of Period $ 11.25 $ 11.39 $ 10.96 $ 11.25 $ 11.26
Total return (d) 3.59%(e) 9.22% 2.33% 6.82% 7.30%
Ratios to Average Net Assets/Supplemental Data:
Expenses (f) 0.65% 0.67% 0.69% 0.86% 0.88%
Net investment income (f) 4.80% 4.99% 5.24% 5.59% 5.66%(c)
Waiver/reimbursement --%(g) -- -- -- --
Portfolio turnover rate 13% 7% 10% 17% 16%(h)
Net assets, end of period (000's) $576,355 $447,945 $341,394 $244,784 $213,271
(a)On July 15, 2002, the existing Fund Class S shares were redesignated Class Z
shares.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Effective July 1, 2001, the Fund adopted the provisions of the AICPA Audit
and Accounting Guide for Investment Companies and began amortizing premium
and accreting discount on all debt securities. The effect of this change for
the year ended June 30, 2002 was to increase the ratio of net investment
income to average net assets from 5.62% to 5.66%. The impact to the net
investment income and the net realized and unrealized gain was less than
$0.01. Per share data and ratios for periods prior to June 30, 2002 have not
been restated to reflect this change in presentation.
(d) Total return at net asset value assuming all distributions reinvested.
(e)Had the Transfer Agent not waived a portion of expenses, total return would
have been reduced.
(f)The benefits derived from custody credits had an impact of less than 0.01%.
(g)Rounds to less than 0.1%.
(h)Portfolio turnover rate disclosed is for the SR&F High-Yield Municipals
Portfolio.
See Accompanying Notes to Financial Statements.
45
Notes to Financial Statements - Columbia High Yield Municipal Fund (June 30,
2006)
Note 1. Organization
Columbia High Yield Municipal Fund (the "Fund"), a series of Columbia Funds
Series Trust I, formerly Columbia Funds Trust IX (the "Trust"), is a
diversified portfolio. The Trust is a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
Investment Goal
The Fund seeks a high level of total return consisting of current income exempt
from federal income tax and opportunities for capital appreciation.
Fund Shares
The Fund may issue an unlimited number of shares and offers four classes of
shares: Class A, Class B, Class C and Class Z. Each share class has its own
sales charge and expense structure.
Class A shares are subject to a maximum front-end sales charge of 4.75% based
on the amount of initial investment. Class A shares purchased without an
initial sales charge in accounts aggregating up to $50 million at the time of
purchase are subject to a 1.00% contingent deferred sales charge ("CDSC") if
the shares are sold within twelve months of the time of the purchase. Class B
shares are subject to a maximum CDSC of 5.00% based upon the holding period
after purchase. Class B shares will convert to Class A shares in a certain
number of years after purchase. Class C shares are subject to a 1.00% CDSC on
shares sold within one year after purchase. Class Z shares are offered
continuously at net asset value. There are certain restrictions on the purchase
of Class Z shares, as described in the Fund's prospectus.
Note 2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP") requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
Security Valuation
Debt securities generally are valued by pricing services approved by the Fund's
Board of Trustees, based upon market transactions for normal,
institutional-size trading units of similar securities. The services may use
various pricing techniques which take into account appropriate factors such as
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other data, as well as broker quotes. Debt securities for which quotations
are readily available are valued at an over-the-counter or exchange bid
quotation. Certain debt securities, which tend to be more thinly traded and of
lesser quality, are priced based on fundamental analysis of the financial
condition of the issuer and the estimated value of any collateral. Valuations
developed through pricing techniques may vary from the actual amounts realized
upon sale of the securities, and the potential variation may be greater for
those securities valued using fundamental analysis.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Investments in other open-end investment companies are valued at net asset
value.
Futures contracts are valued at the settlement price established each day by
the board of trade or exchange on which they are traded.
Investments for which market quotations are not readily available, or 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.
46
Columbia High Yield Municipal Fund (June 30, 2006)
Futures Contracts
The Fund may invest in futures contracts to hedge against the effects of
changes in the value of portfolio securities due to anticipated changes in
interest rates and/or market conditions, for duration management, or when the
transactions are economically appropriate to the reduction of risk inherent in
the management of the Fund. The use of futures contracts involves certain
risks, which include: (1) imperfect correlation between the price movement of
the instruments and the underlying securities, (2) inability to close out
positions due to differing trading hours, or the temporary absence of a liquid
market, for either the instrument or the underlying securities, or (3) an
inaccurate prediction by Columbia Management Advisors, LLC of the future
direction of interest rates. Any of these risks may involve amounts exceeding
the variation margin recorded in the Fund's Statement of Assets and Liabilities
at any given time.
Upon entering into a futures contract, the Fund deposits cash or securities
with the broker in an amount sufficient to meet the initial margin requirement.
Subsequent payments are made or received by the Fund equal to the daily change
in the contract value and are recorded as variation margin receivable or
payable and offset in unrealized gains or losses. The Fund recognizes a
realized gain or loss when the contract is closed or expires.
Restricted Securities
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from registration. In
some cases, the issuer of restricted securities has agreed to register such
securities for resale at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Board of Trustees. The Fund will not
incur any registration costs upon such resale.
Swap Contracts
The Fund may engage in swap transactions such as interest rate, total return,
index or currency swaps, consistent with its investment objective and policies
to obtain a desired return at a lower cost than if the Fund had invested
directly in the asset that yielded the desired return. Swaps involve the
exchange by a Fund with another party of their respective commitments to pay or
receive interest or total return throughout the lives of the agreements. The
interest to be paid or received on swaps is included in net realized
gain/(loss) on investments. Unrealized gains are reported as an asset and
unrealized losses are reported as a liability on the Statements of assets and
liabilities. A realized gain or loss is recorded upon termination of swap
agreements and is equal to the difference between the Fund's basis in the swap
and the proceeds from (or cost of) the closing transaction. Swap agreements are
stated at fair value. Notional principal amounts are used to express the extent
of involvement in these transactions, but the amounts potentially subject to
credit risk are much smaller.
If there is a default by the counterparty to a swap contract, a Fund will be
limited to contractual remedies pursuant to the agreements related to the
transaction. There is no assurance that the swap contract counterparties will
be able to meet their obligations pursuant to the swap contracts or that, in
the event of default, a Fund will succeed in pursuing contractual remedies. A
Fund thus assumes the risk that it may be delayed in or prevented from
obtaining payments owed to it pursuant to the swap contracts.
The use of derivative instruments involves, to varying degrees, elements of
market risk in excess of the amount recognized in the Statements of assets and
liabilities.
Delayed Delivery Securities
The Fund may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. This may increase the
risk if the other party to the transaction fails to deliver and causes the Fund
to subsequently invest at less advantageous prices. The Fund identifies cash or
liquid portfolio securities in its records in an amount equal to the delayed
delivery commitment.
47
Columbia High Yield Municipal Fund (June 30, 2006)
Income Recognition
Interest income is recorded on the accrual basis. Original issue discount is
accreted to interest income over the life of the security with a corresponding
increase in the cost basis. Premium and discount are amortized and accreted,
respectively, on debt securities. Dividend income is recorded on the ex-date.
Determination of Class Net Asset Values
All income, expenses (other than class-specific expenses, as shown on the
Statement of Operations) and realized and unrealized gains (losses) are
allocated to each class of the Fund on a daily basis for purposes of
determining the net asset value of each class. Income and expenses are
allocated to each class based on the settled shares method, while realized and
unrealized gains (losses) are allocated based on the relative net assets of
each class.
Federal Income Tax Status
The Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its tax-exempt or taxable income, if any, for its tax
year, and as such will not be subject to federal income taxes. In addition, the
Fund intends to distribute in each calendar year substantially all of its net
investment income, capital gains and certain other amounts, if any, such that
the Fund should not be subject to federal excise tax. Therefore, no federal
income or excise tax provision is recorded.
Distributions to Shareholders
Dividends from net investment income are declared daily and paid monthly. Net
realized capital gains, if any, are distributed at least annually.
Note 3. Federal Tax Information
The timing and character of income and capital gain distributions are
determined in accordance with income tax regulations, which may differ from
GAAP. Reclassifications are made to the Fund's capital accounts for permanent
tax differences to reflect income and gains available for distribution (or
available capital loss carryforwards) under income tax regulations.
For the year ended June 30, 2006, permanent book and tax basis differences
resulting primarily from differing treatments for discount accretion/premium
amortization on debt securities, capital loss carry forwards expired and market
discount reclassifications were identified and reclassified among the
components of the Fund's net assets as follows:
Accumulated Accumulated
Net Investment Net Realized
Income Loss Paid-In Capital
$(115,600) $6,049,573 $(5,933,973)
Net investment income and net realized gains (losses), as disclosed on the
Statement of Operations, and net assets were not affected by this
reclassification.
The tax character of distributions paid during the years ended June 30, 2006
and June 30, 2005 was as follows:
June 30, 2006 June 30, 2005
Distributions paid from:
Tax-Exempt Income $30,364,551 $24,945,098
Ordinary Income* 82,635 41,919
Long-Term Capital Gains -- --
*For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
As of June 30, 2006 the components of distributable earnings on a tax basis
were as follows:
Undistributed Undistributed Undistributed Net Unrealized
Tax-Exempt Ordinary Long-term Appreciation
Income Income Capital Gains (Depreciation)*
$2,890,064 $-- $-- $14,944,398
*The differences between book-basis and tax-basis net unrealized
appreciation/depreciation are primarily due to discount accretion/premium
amortization on debt securities.
Unrealized appreciation and depreciation at June 30, 2006, based on cost of
investments for federal income tax purposes, was:
Unrealized appreciation $22,738,895
Unrealized depreciation (7,794,497)
Net unrealized appreciation $14,944,398
48
Columbia High Yield Municipal Fund (June 30, 2006)
The following capital loss carryforwards, determined as of June 30, 2006, 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 Expiration Capital Loss Carryforward
2007 1,931,613
2008 2,738,332
2009 1,928,565
2010 1,780,434
2011 697,947
2012 1,587,432
2013 5,621,572
2014 466,991
Total $16,752,886
Of the capital loss carryforwards attributable to the Fund, $6,846,435
($1,931,613 will expire on June 30, 2007, $2,738,332 will expire on June 30,
2008, $1,081,414 will expire on June 30, 2009 and $1,095,076 will expire on
June 30, 2010) was obtained in the merger with Liberty High Yield Municipal
Fund. Utilization of these losses could be subject to limitations imposed by
the Internal Revenue Code.
Capital loss carryforwards of $5,933,974 expired during the year ended June 30,
2006. Any capital loss carryforwards acquired as part of a merger that are
permanently lost due to provisions under Internal Revenue Code are included as
being expired. Expired capital loss carryforwards are recorded as a reduction
of paid-in capital.
Under current tax rules, certain currency (and capital) losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. As of June 30, 2006, post-October capital losses of
$1,689,518 attributed to security transactions were deferred to July 1, 2006.
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement 109 (the "Interpretation"). This
Interpretation is effective for fiscal years beginning after December 15, 2006
and is to be applied to tax positions upon initial adoption. This
Interpretation prescribes a minimum recognition threshold and measurement
method for the financial statement recognition of tax positions taken or
expected to be taken in a tax return and also requires certain expanded
disclosures. Management has recently begun to evaluate the application of this
Interpretation to the Fund and has not at this time quantified the impact, if
any, resulting from the adoption of this Interpretation on the Fund's financial
statements.
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. 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 $100 million 0.450%
$100 million to $200 million 0.425%
Over $200 million 0.400%
For the year ended June 30, 2006, the Fund's effective investment advisory fee
rate was 0.41% of the Fund's average daily net assets.
Administration Fee
Columbia provides administrative and other services to the Fund for a monthly
administration fee based on the Fund's average daily net assets at the
following annual rates:
Average Daily Net Assets Annual Fee Rate
First $100 million 0.150%
$100 million to $200 million 0.125%
Over $200 million 0.100%
For the year ended June 30, 2006, the Fund's effective administration fee rate
was 0.11% of the Fund's average daily net assets.
49
Columbia High Yield Municipal Fund (June 30, 2006)
Pricing and Bookkeeping Fees
Columbia is responsible for providing pricing and bookkeeping services to the
Fund under a pricing and bookkeeping agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State
Street Corporation ("State Street"). As a result, Columbia pays State Street
the total fees collected under the pricing and bookkeeping agreement.
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, exclusive of out-of-pocket expenses and
charges, 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 year ended June 30, 2006, the effective pricing and
bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was
0.033% of the Fund's average daily net assets.
Transfer Agent Fee
Columbia Management Services, Inc. (the "Transfer Agent"), an affiliate of
Columbia and an indirect, wholly-owned subsidiary of BOA, provides shareholder
services to the Fund. On August 22, 2005, Columbia Funds Services, Inc. was
renamed Columbia Management Services, Inc. The Transfer Agent has contracted
with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent.
The Transfer Agent is entitled to receive a fee for its services, paid monthly,
at the annual rate of $17.00 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, 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 April 1, 2006, the Transfer Agent received a fee, paid monthly, at the
annual rate of $15.23 per open account and prior to November 1, 2005, the
annual rate was $34.00. The Transfer Agent also received reimbursement for
certain out-of-pocket expenses. For the period September 1, 2005 through
October 31, 2005, the Transfer Agent voluntarily waived fees of $9,921 for the
Fund.
For the year ended June 30, 2006, the Fund's effective transfer agent fee rate,
inclusive of out-of-pocket expenses and net of fee waivers, was 0.03%.
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 year ended June 30, 2006, the
Distributor has retained net underwriting discounts of $13,298 on sales of the
Fund's Class A shares and received net CDSC of $65,002 and $1,561 on Class B
and Class C share redemptions, respectively.
The Fund has adopted a Rule 12b-1 plan (the "Plan") which requires the payment
of a monthly service fee to the Distributor. The service fee is equal to 0.20%
annually of the average daily net assets attributable to Class A, Class B and
Class C shares. The Plan also requires the payment of a monthly distribution
fee to the Distributor at the annual rate of 0.75% of the average daily net
assets attributable to Class B and Class C shares only. The Distributor has
voluntarily agreed to waive a portion of the Class C share distribution fee so
that it will not exceed 0.60% annually.
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.
50
Columbia High Yield Municipal Fund (June 30, 2006)
Custody Credits
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. These credits are recorded as a reduction of
total expenses on the Statement of Operations. The Fund could have invested a
portion of the assets utilized in connection with the expense offset
arrangement in an income-producing asset if it had not entered into such an
agreement.
Fees Paid to Officers and Trustees
With the exception of one officer, all officers of the Fund are employees of
Columbia or its affiliates and receive no compensation from the Fund. The Board
of Trustees 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 position. The Fund's fee for the Office of 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 year ended June 30, 2006, the Fund paid $2,514 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 year ended June 30, 2006, the cost of purchases and proceeds from sales
of securities, excluding short-term obligations, were $250,162,734 and
$83,260,600, respectively.
Note 6. Line of Credit
The Fund and other affiliated funds participate in a $350,000,000 committed
unsecured revolving line of credit provided by State Street Bank and Trust
Company. Borrowings are used for temporary or emergency purposes to facilitate
portfolio liquidity. Interest is charged to each participating fund based on
its borrowings at a rate per annum equal to the Federal Funds rate plus 0.50%.
In addition, a commitment fee of 0.10% per annum is accrued and apportioned
among the participating funds based on their pro-rata portion of the unutilized
line of credit. The commitment fee is included in "Other expenses" on the
Statement of Operations. For the year ended June 30, 2006, the Fund did not
borrow under this arrangement.
Note 7. Shares of Beneficial Interest
As of June 30, 2006, the Fund had a shareholder that held 59.30% of the shares
outstanding whose shares were beneficially owned by participant accounts over
which Bank of America and/or its affiliates had either sole or joint investment
discretion.
Note 8. Disclosure of Significant Risks and Contingencies
Municipal Bond Tax Status
The Fund purchases municipal securities whose interest, in the opinion of the
issuer, is free from federal income tax. There is no assurance that the
Internal Revenue Service (IRS) will agree with this opinion. In the event the
IRS determines that the issuer does not comply with relevant tax requirements,
interest payments from a security could become federally taxable, possibly
retroactively to the date the security was issued.
Concentration of Credit Risk
The Fund holds investments that are insured by private insurers who guarantee
the payment of principal and interest in the event of default or that are
supported by a letter of credit. Each of the Fund's insurers is rated Aaa by
Moody's Investors Services, Inc., except for Radian Asset Assurance, Inc. which
is rated Aa3. At June 30, 2006, private insurers who insured greater than 5% of
the total investments of the Fund were as follows:
Insurer % of Total Investment
MBIA Insurance Corp. 8.9%
Ambac Assurance Corp. 5.9
Financial Guaranty Insurance Co. 5.2
Geographic Concentration
The Fund has greater than 5% of its total investments at June 30, 2006 invested
in debt obligations issued by the states of California, Florida, Massachusetts,
New York and Texas and their respective political subdivisions, agencies and
public authorities. The Fund is more susceptible to economic
51
Columbia High Yield Municipal Fund (June 30, 2006)
and political factors adversely affecting issuers of the states' municipal
securities than are municipal bond funds that are not concentrated to the same
extent in these issuers.
High-Yield Securities
Investing in high-yield securities may involve greater credit risk and
considerations not typically associated with investing in U.S. government bonds
and other higher quality fixed income securities. These securities are
non-investment grade securities, often referred to as "junk" bonds. Economic
downturns may disrupt the high yield market and impair the ability of issuers
to repay principal and interest. Also, an increase in interest rates would
likely have an adverse impact on the value of such obligations. Moreover,
high-yield securities may be less liquid to the extent that there is no
established secondary market.
Industry Focus
The 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 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 management fees for certain
Columbia Funds (including the former Nations Funds) and other mutual funds
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
approved by the SEC. The independent distribution consultant has been in
consultation with the staff of the SEC and has submitted a proposed plan of
distribution. The SEC has not yet approved a final 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.
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
52
Columbia High Yield Municipal Fund (June 30, 2006)
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 March 1, 2006, for reasons stated in the
court's memoranda dated November 3, 2005, the U.S. District Court for the
District of Maryland granted in part and denied in part the defendants' motions
to dismiss. The court dismissed all of the class action claims pending against
the Columbia Funds Trusts and the Columbia Acorn Trusts. As to Columbia and the
Distributor, 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 were dismissed. The claims under Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and claims under Section 36(b) of the ICA
along with related claims under Section 48(a) of the ICA were not dismissed.
On March 21, 2005, a purported class action was filed 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.
On April 4, 2006 the plaintiffs and the Columbia defendants named in the MDL,
including the Columbia Funds, entered into a term sheet containing the
principal terms of a stipulation of settlement that would settle all
Columbia-related claims in the MDL described above, including the CDSC Lawsuit.
On April 6, 2006, the U.S. District Court for the District of Maryland stayed
all actions with respect to these Columbia-related claims.
The MDL is ongoing. Accordingly, an estimate of the financial impact of this
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 year ended June 30, 2006, Columbia has assumed $8,045 of legal,
consulting services and Trustees' fees incurred by the Fund in connection with
these matters.
53
Report of Independent Registered Public Accounting Firm
To the Trustees of Columbia Funds Series Trust I and the Shareholders of
Columbia High Yield Municipal Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Columbia High Yield Municipal Fund
(the "Fund") (a series of Columbia Funds Series Trust I, formerly Columbia
Funds Trust IX) at June 30, 2006, the results of its operations for the year
then ended and, the changes in its net assets and the financial highlights for
the years ended June 30, 2006 and 2005, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at June 30, 2006 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion. The financial highlights of the Fund for the three years in the
period ended June 30, 2003 were audited by other independent accountants whose
report dated August 19, 2003 expressed an unqualified opinion on those
statements.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 25, 2006
54
Unaudited Information - Columbia High Yield Municipal Fund
Federal Income Tax Information
100% of the distributions from net investment income will be treated as exempt
income for federal income tax purposes.
As of June 30, 2006, 18.51% of distributions from net investment income is
subject to alternative minimum tax.
55
Trustees - Columbia High Yield Municipal Fund
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Funds in the Columbia
Funds Complex, the year each was first elected or appointed to office, their
principal business occupations during at least the last five years, the number
of portfolios overseen by each Trustee/Director and other directorships they
hold are shown below. Each officer listed below serves as an officer of each
Fund in the Columbia Funds Complex.
Principal occupation(s) during past five years, Number
Name, address and age, Position with funds, of portfolios in Columbia Funds Complex overseen by
Year first elected or appointed to office/1/ trustee/director, Other directorships held
Disinterested Trustees
Douglas A. Hacker (Born 1955) Executive Vice President-Strategy of United Airlines
c/o Columbia Management Advisors, LLC (airline) from December, 2002 to April, 2006;
One Financial Center (formerly President of UAL Loyalty Services (airline)
Boston, MA 02111 from September, 2001 to December, 2002; Executive Vice
Trustee (since 1996) President and Chief Financial Officer of United
Airlines from July, 1999 to September, 2001; Senior
Vice President-Finance from March, 1993 to July,
1999). Oversees 83, Nash Finch Company (food
distributor)
Janet Langford Kelly (Born 1957) Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP
c/o Columbia Management Advisors, LLC (law firm) since March, 2005; Adjunct Professor of
One Financial Center Law, Northwestern University, since September, 2004
Boston, MA 02111 (formerly Chief Administrative Officer and Senior Vice
Trustee (since 1996) President, Kmart Holding Corporation (consumer goods),
from September, 2003 to March, 2004; Executive Vice
President-Corporate Development and Administration,
General Counsel and Secretary, Kellogg Company (food
manufacturer), from September, 1999 to August, 2003;
Senior Vice President, Secretary and General Counsel,
Sara Lee Corporation (branded, packaged,
consumer-products manufacturer) from January, 1995 to
September, 1999). Oversees 83, UAL Corporation
(airline)
Richard W. Lowry (Born 1936) Private Investor since August, 1987 (formerly Chairman
c/o Columbia Management Advisors, LLC and Chief Executive Officer, U.S. Plywood Corporation
One Financial Center (building products manufacturer until 1987)). Oversees
Boston, MA 02111 85/2/, None
Trustee (since 1995)
/1/In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for the
oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson who
had been a director on the Columbia Board and trustee on the CMG Funds
Board, was appointed to serve as trustee of the Liberty Board. The date
shown is the earliest date on which a trustee/director was elected or
appointed to the board of a Fund in the Columbia Funds Complex.
/2/Messrs. Lowry and Neuhauser also serve as directors/trustees of the Liberty
All-Star Funds, currently consisting of 2 funds, which are advised by an
affiliate of the Advisor.
56
Columbia High Yield Municipal Fund
Principal occupation(s) during past five years, Number
Name, address and age, Position with funds, of portfolios in Columbia Funds Complex overseen by
Year first elected or appointed to office/1/ trustee/director, Other directorships held
Disinterested Trustees
Charles R. Nelson (Born 1943) Professor of Economics, University of Washington,
c/o Columbia Management Advisors, LLC since January, 1976; Ford and Louisa Van Voorhis
One Financial Center Professor of Political Economy, University of
Boston, MA 02111 Washington, since September, 1993 (formerly Director,
Trustee (since 1981) Institute for Economic Research, University of
Washington from September, 2001 to June, 2003);
Adjunct Professor of Statistics, University of
Washington, since September, 1980; Associate Editor,
Journal of Money Credit and Banking, since September,
1993; consultant on econometric and statistical
matters. Oversees 83, None
John J. Neuhauser (Born 1942) University Professor, Boston College since November,
c/o Columbia Management Advisors, LLC 2005; Academic Vice President and Dean of Faculties
One Financial Center from August, 1999 to October, 2005, Boston College.
Boston, MA 02111 Oversees 85/2/, None
Trustee (since 1985)
Patrick J. Simpson (Born 1944) Partner, Perkins Coie LLP (law firm). Oversees 83, None
c/o Columbia Management Advisors, LLC
One Financial Center
Boston, MA 02111
Trustee (since 2000)
Thomas E. Stitzel (Born 1936) Business Consultant since 1999; Chartered Financial
c/o Columbia Management Advisors, LLC Analyst. Oversees 83, None
One Financial Center
Boston, MA 02111
Trustee (since 1998)
Thomas C. Theobald (Born 1937) Partner and Senior Advisor, Chicago Growth Partners
c/o Columbia Management Advisors, LLC (private equity investing) since September, 2004
One Financial Center (formerly Managing Director, William Blair Capital
Boston, MA 02111 Partners (private equity investing) from September,
Trustee and Chairman of the Board/4/ 1994 to September, 2004). Oversees 83/3/, Anixter
(since 1996) International (network support equipment distributor);
Ventas, Inc. (real estate investment trust); Jones
Lang LaSalle (real estate management services) and
Ambac Financial Group (financial guaranty insurance)
/3/Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003.
57
Columbia High Yield Municipal Fund
Principal occupation(s) during past five years, Number
Name, address and age, Position with funds, of portfolios in Columbia Funds Complex overseen by
Year first elected or appointed to office/1/ trustee/director, Other directorships held
Disinterested Trustees
Anne-Lee Verville (Born 1945) Retired since 1997 (formerly General Manager, Global
c/o Columbia Management Advisors, LLC Education Industry, IBM Corporation (computer and
One Financial Center technology) from 1994 to 1997). Oversees 83, Chairman
Boston, MA 02111 of the Board of Directors, Enesco Group, Inc.
Trustee (since 1998) (producer of giftware and home and garden decor
products)
Interested Trustee
William E. Mayer (Born 1940) Partner, Park Avenue Equity Partners (private equity)
c/o Columbia Management Advisors, LLC since February, 1999 (formerly Partner, Development
One Financial Center Capital LLC from November, 1996 to February, 1999).
Boston, MA 02111 Oversees 83/4/, Lee Enterprises (print media), WR
Trustee (since 1994) Hambrecht + Co. (financial service provider); Reader's
Digest (publishing); OPENFIELD Solutions (retail
industry technology provider)
/4/Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co.
The Statement of Additional Information Includes additional information about
the Trustees of the Funds and is available, without charge, upon request by
calling 800-426-3750.
58
Officers - Columbia High Yield Municipal Fund
Name, address and age, Position with Columbia
Funds, Year first elected or appointed to office Principal occupation(s) during past five years
Christopher L. Wilson (Born 1957) Head of Mutual Funds since August, 2004 and Managing
One Financial Center Director of the Advisor since September, 2005;
Boston, MA 02111 President and Chief Executive Officer, CDC IXIS Asset
President (since 2004) Management Services, Inc. (investment management) from
September, 1998 to August, 2004.
James R. Bordewick, Jr. (Born 1959) Associate General Counsel, Bank of America since
One Financial Center April, 2005; Senior Vice President and Associate
Boston, MA 02111 General Counsel, MFS Investment Management (investment
Senior Vice President, Secretary and management) prior to April, 2005.
Chief Legal Officer (since 2006)
J. Kevin Connaughton (Born 1964) Managing Director of the Advisor since February, 1998.
One Financial Center
Boston, MA 02111
Senior Vice President,
Chief Financial Officer and Treasurer
(since 2000)
Mary Joan Hoene (Born 1949) Senior Vice President and Chief Compliance Officer of
100 Federal Street various funds in the Fund Complex; Partner, Carter,
Boston, MA 02110 Ledyard & Milburn LLP (law firm) from January, 2001 to
Senior Vice President and August, 2004.
Chief Compliance Officer
(since 2004)
Michael G. Clarke (Born 1969) Director of Fund Administration since January, 2006;
One Financial Center Managing Director of Columbia Management Advisors, LLC
Boston, MA 02111 September, 2004 to December, 2005; Vice President Fund
Chief Accounting Officer and Administration June, 2002 to September, 2004. Vice
Assistant Treasurer President Product Strategy and Development from
(since 2004) February, 2001 to June, 2002.
Jeffrey R. Coleman (Born 1969) Director of Fund Administration since January, 2006;
One Financial Center Fund Controller from October 2004 to January 2006;
Boston, MA 02111 Vice President of CDC IXIS Asset Management Services,
Deputy Treasurer (since 2006) Inc. (investment management) from August, 2000 to
September, 2004.
Joseph F. DiMaria (Born 1968) Director of Fund Administration since January, 2006;
One Financial Center Head of Tax/Compliance and Assistant Treasurer from
Boston, MA 02111 November, 2004 to December, 2005; Director of Trustee
Deputy Treasurer (since 2006) Administration (Sarbanes-Oxley) from May, 2003 to
October, 2004; Senior Audit Manager,
PricewaterhouseCoopers (independent registered public
accounting firm) from July, 2000 to April, 2003.
Ty S. Edwards (Born 1966) Director of Fund Administration since January, 2006;
One Financial Center Vice President of the Advisor from July, 2002 to
Boston, MA 02111 December, 2005; Assistant Vice president and Director,
Deputy Treasurer (since 2006) State Street Corporation (financial services) prior to
2002.
Barry S. Vallan (Born 1969) Vice President-Fund Treasury of the Advisor since
One Financial Center October, 2004; Vice President-Trustee Reporting from
Boston, MA 02111 April, 2002 to October, 2004; Management Consultant,
Controller (since 2006) PricewaterhouseCoopers (independent registered public
accounting firm) prior to October, 2002.
59
Columbia Funds
--------------------------------------------------------------
Growth funds Columbia Acorn Fund
Columbia Acorn Select
Columbia Acorn USA
Columbia Growth Stock Fund
Columbia Large Cap Growth Fund
Columbia Marsico 21st Century Fund
Columbia Marsico Focused Equities Fund
Columbia Marsico Growth Fund
Columbia Marsico Mid Cap Growth Fund
Columbia Mid Cap Growth Fund
Columbia Small Cap Growth Fund I
Columbia Small Cap Growth Fund II
Columbia Small Company Equity Fund
--------------------------------------------------------------
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 Fund
--------------------------------------------------------------
Asset Allocation/Hybrid Columbia Asset Allocation Fund
funds 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 Masters Global Equity
Portfolio
Columbia Masters Heritage Portfolio
Columbia Masters International Equity
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
--------------------------------------------------------------
Tax-Managed fund Columbia Tax-Managed Growth Fund
--------------------------------------------------------------
Specialty funds Columbia Convertible Securities Fund
Columbia Real Estate Equity Fund
Columbia Technology Fund
Columbia Utilities Fund
60
-----------------------------------------------------------------
Global/International funds Columbia Acorn International
Columbia Acorn International Select
Columbia Global Value Fund
Columbia Greater China Fund
Columbia International Stock Fund
Columbia International Value Fund
Columbia Marsico International
Opportunities Fund
Columbia Multi-Advisor International
Equity Fund
Columbia World Equity Fund
-----------------------------------------------------------------
Taxable Bond funds Columbia Conservative High Yield Fund
Columbia Core Bond Fund
Columbia Federal Securities Fund
Columbia High Income Fund
Columbia High Yield Opportunity Fund
Columbia Income Fund
Columbia Intermediate Bond Fund
Columbia Intermediate Core Bond Fund
Columbia Short Term Bond Fund
Columbia Strategic Income Fund
Columbia Total Return Bond Fund
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 Tax-Exempt Fund
Columbia New Jersey Intermediate
Municipal Bond Fund
Columbia New York 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
61
---------------------------------------------------------
Money Market funds Columbia California Tax-Exempt
Reserves
Columbia Cash Reserves
Columbia Connecticut Municipal
Reserves
Columbia Government Plus Reserves
Columbia Government 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. 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.
62
Important Information About This Report
Columbia High Yield Municipal Fund
Transfer Agent
Columbia Management Services, Inc.
P.O. Box 8081
Boston MA 02266-8081
1-800-345-6611
Distributor
Columbia Management
Distributors, Inc.
One Financial Center
Boston MA 02111
Investment Advisor
Columbia Management Advisors, LLC
100 Federal Street
Boston MA 02110
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
125 High Street
Boston, MA 02110
The fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call shareholder services at 1-800-345-6611
and additional reports will be sent to you.
This report has been prepared for shareholders of Columbia High Yield Municipal
Bond Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the fund and with the most
recent copy of the Columbia Funds Performance Update.
A description of the policies and procedures that the fund uses to determine
how to vote proxies and a copy of the fund's voting records 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 1-800-368-0346. 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, D.C. Information on the
operation, of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Columbia Management is the primary investment management division of Bank of
America Corporation. Columbia Management entities furnish investment management
services and advise institutional and mutual fund portfolios. Columbia Funds
are distributed by Columbia Management Distributors, Inc., member of NASD,
SIPC, part of Columbia Management and an affiliate of Bank of America
Corporation.
63
Columbia High Yield Municipal Fund
Annual Report - June 30, 2006
[GRAPHIC] Columbia Management\(R)\
(C)2006 Columbia Management Distributors, Inc.
One Financial Center, Boston, MA 02111-2621
800-345-6611 www.columbiafunds.com
SHC-42/112006-0606 (08/06) 06/27553
Item 2. Code of Ethics.
(a) The registrant has, as of the end of the period covered by this
report, adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were no waivers,
including any implicit waivers, from a provision of the code of ethics
described in 2(a) above that relates to one or more of the items set
forth in paragraph (b) of this item's instructions.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that Douglas A. Hacker,
Thomas E. Stitzel and Anne-Lee Verville, each of whom are members of the
registrant's Board of Trustees and Audit Committee, each qualify as an audit
committee financial expert. Mr. Hacker, Mr. Stitzel and Ms. Verville are each
independent trustees, as defined in paragraph (a)(2) of this item's
instructions and collectively constitute the entire Audit Committee.
Item 4. Principal Accountant Fees and Services.
Fee information below is disclosed for the two series of the registrant whose
reports to stockholders are included in this annual filing.
(a) Audit Fees. Aggregate Audit Fees billed by the principal accountant for
professional services rendered during the fiscal years ended June 30, 2006 and
June 30, 2005 are approximately as follows:
2006 2005
---- ----
$59,500 $53,700
Audit Fees include amounts related to the audit of the registrant's annual
financial statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for those
fiscal years.
(b) Audit-Related Fees. Aggregate Audit-Related Fees billed to the registrant
by the principal accountant for professional services rendered during the
fiscal years ended June 30, 2006 and June 30, 2005 are approximately as follows:
2006 2005
---- ----
$9,400 $7,400
Audit-Related Fees include amounts for assurance and related services by the
principal accountant that are reasonably related to the performance of the
audit of the registrant's financial statements and are not reported in Audit
Fees above. In both fiscal years 2006 and 2005, Audit-Related Fees include
agreed-upon procedures performed for semi-annual shareholder reports. Fiscal
year 2006 also includes Audit-Related Fees for agreed-upon procedures related
to the review of the registrant's anti-money laundering program.
During the fiscal years ended June 30, 2006 and June 30, 2005, there were no
Audit-Related Fees billed by the registrant's principal accountant to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser) and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant for
an engagement that related directly to the operations and financial reporting
of the registrant.
(c) Tax Fees. Aggregate Tax Fees billed by the principal accountant to the
registrant for professional services rendered during the fiscal years ended
June 30, 2006 and June 30, 2005 are approximately as follows:
2006 2005
---- ----
$7,800 $7,400
Tax Fees consist primarily of the review of annual tax returns, the review of
required shareholder distribution calculations and include amounts for
professional services by the principal accountant for tax compliance, tax
advice and tax planning.
During the fiscal years ended June 30, 2006 and June 30, 2005, there were no
Tax Fees billed by the registrant's principal accountant to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser) and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant for
an engagement that related directly to the operations and financial reporting
of the registrant.
(d) All Other Fees. Aggregate All Other Fees billed by the principal accountant
to the registrant for professional services rendered during the fiscal years
ended June 30, 2006 and June 30, 2005 are approximately as follows:
2006 2005
---- ----
$0 $0
All Other Fees include amounts for products and services provided by the
principal accountant, other than the services reported in paragraphs
(a) through (c) above.
Aggregate All Other Fees billed by the registrant's principal accountant to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser) and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant for
an engagement that related directly to the operations and financial reporting
of the registrant during the fiscal years ended June 30, 2006 and June 30, 2005
are approximately as follows:
2006 2005
---- ----
$359,600 $95,500
In both fiscal years 2006 and 2005, All Other Fees include an internal control
review of the registrant's transfer agent. Also included in fiscal year 2006
All Other Fees is an internal control examination of the registrant's
investment advisor.
(e)(1) Audit Committee Pre-Approval Policies and Procedures
The registrant's Audit Committee is required to pre-approve the engagement of
the registrant's independent accountants to provide audit and non-audit
services to the registrant and non-audit services to its investment adviser
(not including any sub-adviser whose role is primarily portfolio management and
is subcontracted with or overseen by another investment adviser) or any entity
controlling, controlled by or under common control with such investment adviser
that provides ongoing services to the registrant ("Adviser Affiliates"), if the
engagement relates directly to the operations and financial reporting of the
registrant.
The Audit Committee has adopted a Policy for Engagement of Independent
Accountants for Audit and Non-Audit Services ("Policy"). The Policy sets forth
the understanding of the Audit Committee regarding the engagement of the
registrant's independent accountants to provide (i) audit and permissible
audit-related, tax and other services to the registrant (collectively "Fund
Services"); (ii) non-audit services to the registrant's investment adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and Adviser
Affiliates, if the engagement relates directly to the operations or financial
reporting of a Fund (collectively "Fund-related Adviser Services"); and
(iii) certain other audit and non-audit services to the registrant's investment
adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and Adviser
Affiliates. Unless a type of service receives general pre-approval under the
Policy, it requires specific pre-approval by the Audit Committee if it is to be
provided by the independent accountants. Pre-approval of non-audit services to
the registrant, the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser) and Adviser Affiliates may be
waived provided that the "de minimis" requirements set forth under paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X are met.
Under the Policy, the Audit Committee may delegate pre-approval authority to
any pre-designated member or members who are Independent Trustees/Directors.
The member(s) to whom such authority is delegated must report, for
informational purposes only, any pre-approval decisions to the Audit Committee
at its next regular meeting. The Audit Committee's responsibilities with
respect to the pre-approval of services performed by the independent
accountants may not be delegated to management.
The Policy requires the Fund Treasurer and/or Director of Board
Administration to submit to the Audit Committee, on an annual basis, a schedule
of the types of services that are subject to general pre-approval. The
schedule(s) provide a description of each type of service that is subject to
general pre-approval and, where possible, will provide estimated fee caps for
each instance of providing each service. The Audit Committees will review and
approve the types of services and review the projected fees for the next fiscal
year and may add to, or subtract from, the list of general pre-approved
services from time to time based on subsequent determinations. That approval
acknowledges that the Audit Committee is in agreement with the specific types
of services that the independent accountants will be permitted to perform.
The Fund Treasurer and/or Director of Board Administration shall report to the
Audit Committee at each of its regular meetings regarding all Fund Services or
Fund-related Adviser Services initiated since the last such report was
rendered, including a general description of the services, actual billed and
projected fees, and the means by which such Fund Services or Fund-related
Adviser Services were pre-approved by the Audit Committee.
*****
(e)(2) The percentage of services described in paragraphs (b) through (d) of
this Item approved pursuant to the "de minimis" exception under paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X during both fiscal years ended
June 30, 2006 and June 30, 2005 was zero.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant for
the fiscal years ended June 30, 2006 and June 30, 2005 are approximately as
follows:
2006 2005
---- ----
$376,800 $110,300
(h) The registrant's Audit Committee of the Board of Directors has considered
whether the provision of non-audit services that were rendered to the
registrant's adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X, is compatible with maintaining the principal
accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments
The registrant's "Schedule I -- Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form
N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have not been any material changes to the procedures by which
shareholders may recommend nominees to the registrant's board of directors,
since those procedures were last disclosed in response to requirements of
Item 7(d)(2)(ii)(G) of Schedule 14A or this Item.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officers, based on their evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing of
this report, 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
attached hereto as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Columbia Funds Series Trust I
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By (Signature and Title) /s/ Christopher L. Wilson
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Christopher L. Wilson, President
Date August 28, 2006
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Christopher L. Wilson
---------------------------------------
Christopher L. Wilson, President
Date August 28, 2006
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By (Signature and Title) /s/ J. Kevin Connaughton
---------------------------------------
J. Kevin Connaughton, Treasurer
Date August 28, 2006
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