Columbia Small Cap Value Fund I
Columbia High Yield Municipal Fund

77E 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") on matters relating
to mutual fund trading. The SEC Order and the NYAG Settlement are referred to
collectively as the "Settlements".

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 released the proposed plan of distribution for public
notice and comment but 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 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 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. 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 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 was removed to federal court in Massachusetts and the federal
Judicial Panel 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.

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 purposes. 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 naming the Columbia Funds as nominal
defendants. 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 to
the United States Court of Appeals for the First Circuit on December 30, 2005;
this appeal is currently pending. The parties have advised the appellate court
that they are engaged in settlement discussions and the court has, accordingly,
deferred the briefing schedule for the appeal. The parties subsequently executed
a settlement term sheet to fully resolve all claims in the litigation. The
parties are finalizing the settlement and expect presently to submit it for
court approval.

This matter is ongoing. Accordingly, no estimate can be made of the financial
impact, if any, of this litigation on any fund.



77Q1 Exhibits
Management Agreement incorporated herein by reference to Accession
Numbers 0000773757-06-000196