-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JxiASzLh+J8Is7Z4eHngNAeL8jOzu1WWgpVnEzKCjEf3AhZKNMz/w35Ktf+6vRIA P0irbSGfwKA/Rlyq1739ng== 0000891804-05-000938.txt : 20050309 0000891804-05-000938.hdr.sgml : 20050309 20050309160928 ACCESSION NUMBER: 0000891804-05-000938 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050309 DATE AS OF CHANGE: 20050309 EFFECTIVENESS DATE: 20050309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA FUNDS TRUST IX CENTRAL INDEX KEY: 0000773757 IRS NUMBER: 363376651 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04367 FILM NUMBER: 05669517 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 8003382550 MAIL ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY STEIN ROE FUNDS MUNICIPAL TRUST DATE OF NAME CHANGE: 19991025 FORMER COMPANY: FORMER CONFORMED NAME: STEINROE MUNICIPAL TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: STEINROE INTERMEDIATE MUNICIPALS INC DATE OF NAME CHANGE: 19880114 N-CSRS 1 file001.txt COLUMBIA FUNDS TRUST IX 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 Trust IX ------------------------------------------------------- (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 ------------------------------------------------------- (Address of principal executive offices) (Zip code) Vincent Pietropaolo, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 ------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-772-3698 Date of fiscal year end: 06/30/05 ----------- Date of reporting period: 12/31/04 ----------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507. ITEM 1. REPORTS TO STOCKHOLDERS. [GRAPHIC OMITTED] Columbia High Yield Municipal Fund Semiannual Report December 31, 2004 Table of Contents Fund Profile............................................................... 1 Performance Information.................................................... 2 Understanding Your Expenses................................................ 3 Economic Update............................................................ 4 Portfolio Manager's Report................................................. 5 Investment Portfolio....................................................... 7 Statement of Assets and Liabilities ....................................... 33 Statement of Operations.................................................... 34 Statement of Changes in Net Assets ........................................ 35 Notes to Financial Statements.............................................. 37 Financial Highlights....................................................... 43 Columbia Funds............................................................. 47 Important Information About This Report.......................................................... 49 Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. Not FDIC May Lose Value Insured No Bank Guarantee PRESIDENT'S MESSAGE Columbia High Yield Municipal Fund Dear Shareholder: In 2004, Columbia Funds became part of the Bank of America family, one of the largest, most respected financial institutions in the United States. As a direct result of this merger, a number of changes are in the works that we believe may offer significant benefits for our shareholders. Plans are underway to combine various Nations Funds and Columbia Funds together to form a single fund family that covers a wide range of markets, sectors and asset classes under the management of talented, seasoned investment professionals. As a result, some funds will be merged in order to eliminate redundancies and fund management teams will be aligned to maximize performance potential. You will receive more detailed information about these proposed mergers, and you will be asked to vote on certain fund changes that may affect you and your account. In this matter, your timely response will help us to implement the changes in 2005. The increased efficiencies we expect from a more streamlined offering of funds may help us reduce fees charged to the funds, because larger funds often benefit from size and scale of operations. For example, significant savings for the combined complex may result from the consolidation of certain vendor agreements. In fact, negotiations are currently underway to consolidate the transfer agency of all of our funds and to consolidate custodial services, each under a single vendor. We have reduced management fees for many funds as part of our settlement agreement with the New York Attorney General. As a result of these changes, we believe we will offer shareholders an even stronger lineup of investment options, with management expenses that continue to be competitive and fair. What will not change as we enter this next phase of consolidation is our commitment to the highest standards of performance and our dedication to superior service. Change for the good has another name: it's called improvement. It helps move us forward, and we believe that it represents progress for all our shareholders in their quest for long-term financial success. In the pages that follow, you'll find a discussion of the economic environment during the period followed by a detailed report from the fund's manager or managers on key factors that influenced performance. We hope that you will read the manager reports carefully and discuss any questions you might have with your financial advisor. As always, we thank you for choosing Columbia Funds. We appreciate your continued confidence. And, we look forward to helping you keep your long-term financial goals on target in the years to come. Sincerely, /s/ Christopher Wilson Christopher Wilson Head of Mutual Funds, Columbia Management Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible for the day-to-day delivery of mutual fund services to the firm's investors. With the exception of distribution, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. Chris serves as Columbia Management's liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. Summary o For the six-month period ended December 31, 2004, the fund's class A shares returned 5.46% without sales charge. o The fund beat the Lehman Brothers Municipal Bond Index, but modestly trailed the average return of its peer group, the Lipper High Yield Municipal Debt Funds Category. o Strong performance from high-yield municipal bonds helped returns. However, we believe the fund fell slightly behind its peer group average because it was not as heavily invested in certain sectors that posted especially strong returns. Class A shares [GRAPHIC] 5.46% Lehman Brothers Municipal Bond Index [GRAPHIC] 5.19% Objective Seeks a high level of total return consisting of current income exempt from ordinary federal income tax and opportunities for capital appreciation Total Net Assets $505.4 million Management Style - --------------------------------------- Fixed Income Maturity Quality Short Interm. Long - --------------------------------------- High - --------------------------------------- Med X X - --------------------------------------- Low FUND PROFILE Columbia High Yield Municipal Fund The information below gives you a snapshot of your fund at the end of the reporting period. Your fund is actively managed and the composition of its portfolio will change over time. Quality breakdown as of 12/31/04 (%) - -------------------------------------------------------------------------------- AAA 21.0 - -------------------------------------------------------------------------------- AA 1.3 - -------------------------------------------------------------------------------- A 15.2 - -------------------------------------------------------------------------------- BBB 23.0 - -------------------------------------------------------------------------------- BB 4.7 - -------------------------------------------------------------------------------- B 0.8 - -------------------------------------------------------------------------------- Non-rated 30.8 - -------------------------------------------------------------------------------- Cash equivalent 3.2 - -------------------------------------------------------------------------------- Maturity breakdown as of 12/31/04 (%) - -------------------------------------------------------------------------------- 0 - 1 years 0.3 - -------------------------------------------------------------------------------- 1 - 3 years 1.8 - -------------------------------------------------------------------------------- 3 - 5 years 6.1 - -------------------------------------------------------------------------------- 5 - 7 years 5.5 - -------------------------------------------------------------------------------- 7 -10 years 5.3 - -------------------------------------------------------------------------------- 10 - 15 years 21.7 - -------------------------------------------------------------------------------- 15 - 20 years 20.5 - -------------------------------------------------------------------------------- 20 - 25 years 15.9 - -------------------------------------------------------------------------------- 25 years and over 19.7 - -------------------------------------------------------------------------------- Cash equivalent 3.2 - -------------------------------------------------------------------------------- Quality and maturity breakdowns are calculated as a percentage of total investments. Ratings shown in the quality breakdown represent the lowest 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. The majority of the bonds that are non-rated are considered by the advisor to be of non-investment grade quality. Management Style is determined by Columbia Management and is based on the investment strategy and process as outlined in the fund's prospectus. 1 Performance of a $10,000 investment 01/01/95 - 12/31/04 ($) - -------------------------------------------------------------------------------- sales charge without with Class A 18,584 17,702 Class B 18,240 18,240 Class C 18,307 18,307 Class Z 18,796 n/a 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 INFORMATION Columbia High Yield Municipal Fund Value of a $10,000 investment 01/01/95 - 12/31/04 [The following table was represented by a Mountain graph in the printed material.] Class A Shares Class A Shares Lehman Brothers Municipal Without Sales Charge With Sales Charge Bond Index 10000 9525 10000 10362 9870 10286 10609 10105 10585 10700 10192 10707 10715 10206 10720 11041 10516 11062 10950 10430 10966 11054 10529 11070 11168 10637 11210 11230 10697 11281 11414 10871 11445 11626 11074 11635 11771 11212 11746 11851 11288 11836 11754 11196 11755 11621 11069 11605 11586 11036 11572 11604 11053 11567 11701 11145 11694 11760 11201 11799 11788 11228 11796 11949 11382 11962 12082 11508 12097 12275 11692 12318 12299 11714 12266 12329 11744 12290 12428 11838 12403 12319 11734 12238 12411 11822 12341 12603 12005 12527 12741 12136 12661 13043 12423 13012 12984 12367 12889 13113 12490 13043 13197 12570 13126 13289 12658 13204 13474 12834 13396 13603 12957 13534 13625 12978 13538 13630 12983 13551 13600 12954 13490 13777 13123 13703 13803 13148 13756 13842 13184 13791 14009 13344 14004 14116 13445 14179 14096 13426 14179 14145 13473 14229 14185 13511 14265 14307 13627 14434 14270 13592 14371 14311 13631 14391 14363 13680 14427 14391 13708 14343 14243 13567 14137 14284 13606 14188 14143 13471 14074 14122 13451 14080 13930 13268 13928 14020 13354 14075 13880 13221 13970 13769 13115 13908 13881 13221 14070 14068 13400 14376 14043 13376 14292 13968 13305 14217 14215 13540 14594 14380 13697 14797 14572 13879 15025 14521 13831 14947 14603 13910 15110 14640 13945 15224 14843 14138 15600 14925 14216 15755 14935 14226 15805 15034 14320 15948 14879 14172 15775 15019 14306 15946 15147 14427 16053 15410 14678 16290 15813 15061 16559 15639 14896 16503 15795 15045 16699 15703 14957 16559 15597 14856 16401 15768 15019 16685 15927 15171 16885 15687 14942 16554 15985 15226 16877 16041 15279 16980 16196 15427 17160 16324 15549 17382 16453 15672 17590 16641 15851 17975 16318 15543 17677 16392 15613 17603 16582 15794 17974 16542 15756 17929 16772 15975 18180 16777 15980 18191 16948 16143 18311 17268 16448 18740 17265 16445 18661 16844 16044 18008 16960 16154 18143 17304 16482 18676 17325 16502 18583 17564 16730 18776 17694 16853 18932 17761 16917 19040 18019 17163 19325 17929 17077 19258 17649 16811 18801 17575 16740 18734 17629 16792 18801 17864 17015 19049 18116 17255 19430 18222 17357 19533 18361 17489 19701 18372 17499 19540 18584 17702 19778 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Lehman Brothers 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 12/31/04 (%)
- ---------------------------------------------------------------------------------------------- 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 - ---------------------------------------------------------------------------------------------- 6-month (cumulative) 5.46 0.42 5.06 0.06 5.14 4.14 5.57 - ---------------------------------------------------------------------------------------------- 1-year 5.06 0.09 4.28 -0.72 4.43 3.43 5.30 - ---------------------------------------------------------------------------------------------- 5-year 6.01 4.99 5.62 5.29 5.69 5.69 6.25 - ---------------------------------------------------------------------------------------------- 10-year 6.39 5.88 6.19 6.19 6.23 6.23 6.51 - ----------------------------------------------------------------------------------------------
The "with sales charge" returns include the maximum initial sales charge of 4.75% for class A shares, maximum contingent deferred sales charge of 5.00% for class B shares and 1.00% for class C shares for the first year only. The "without sales charge" returns do not include the effect of sales charges. If they had, returns would be lower. All results shown assume reinvestment of distributions. Class Z shares are sold at net asset value with no Rule 12b-1 fees. Performance for different share classes will vary based on differences in sales charges and fees associated with each class. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class A 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. 2 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: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 o For shareholders who receive their account statements from their brokerage firm, contact your brokerage firm to obtain your account balance 1. Divide your ending account balance by $1,000. For example, if an account balance was $8,600 at the end of the period, the result would be 8.6 2. In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period UNDERSTANDING YOUR EXPENSES Columbia High Yield Municipal Fund As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also continuing costs, which generally include investment advisory fees, 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 these costs with the ongoing costs of investing in other mutual funds. Analyzing your fund's expenses by share class To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 07/01/04 - 12/31/04
- --------------------------------------------------------------------------------------------------------------- Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) - --------------------------------------------------------------------------------------------------------------- Actual Hypothetical Actual Hypothetical Actual Hypothetical - --------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1,054.60 1,020.82 4.51 4.43 0.87 - --------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1,050.61 1,017.04 8.37 8.24 1.62 - --------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1,051.42 1,017.80 7.60 7.48 1.47 - --------------------------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 1,055.70 1,021.83 3.47 3.41 0.67 - ---------------------------------------------------------------------------------------------------------------
Expenses paid during the period are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the fund's most recent fiscal half-year and divided by 365. Had the distributor not waived a portion of class C 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 ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. Compare with other funds Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other 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 transactional costs, such as sales charges or redemption or exchange fees. 3 Summary For the six-month period ended December 31, 2004 o Investment-grade bonds delivered solid gains. The Lehman Brothers Aggregate Bond Index returned 4.18%. High-yield bonds, which can be less sensitive to changing interest rates, led the fixed income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 9.31%. Lehman Index [GRAPHIC] 4.18% Merrill Lynch Index [GRAPHIC] 9.31% o After a weak start, stock prices bounced back in November, helping the S&P 500 Index to a 7.19% gain for the six month period. Value stocks outperformed growth stocks, as measured by the Russell 1000 Growth and Value indices. S&P 500 Index [GRAPHIC] 7.19% Russell 1000 Value Index [GRAPHIC] 12.08% 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 corporate debt issues. The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that 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 1000 Value Index is an unmanaged index that tracks the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. ECONOMIC UPDATE Columbia High Yield Municipal Fund During the six-month period that began July 1, 2004, and ended December 31, 2004, the US economy grew at a healthy pace, despite rising energy prices and a host of geopolitical uncertainties. The nation's gross domestic product advanced 3.5% in the second half of 2004. For the year, the economy grew 4.4%, its strongest showing in five years. Employment dominated the economic news. Although job growth fell below expectations early in the period, the pace of new job creation picked up and more than two million jobs were created in 2004. In response, consumer confidence soared to its highest level of the year in December, and consumer spending ended the year on a high note. Holiday sales were reported to be the strongest in five years. Within the business sector, industrial production rose; factories utilized more of their capacity and spending on technology, capital equipment and construction picked up. However, business spending for the year fell short of forecasts given the level of profit growth and the maturity of the economic cycle. Bonds delivered solid returns Despite a weak start--and a weak finish--all sectors of the US bond market delivered solid returns for the six-month period. As the Federal Reserve Board (the Fed) began to raise short-term interest rates, the bond market responded favorably. Yields on intermediate and long-term bonds edged lower--and prices rose. However, the 10-year Treasury yield rose sharply in November, before falling again in December, and bonds gave back some of their earlier gains. In this environment, the Lehman Brothers Aggregate Bond Index returned 4.18%. High-yield corporate bonds, which can be less sensitive to changing interest rates, gained 9.31%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. A relatively strong economy helped improve credit quality and the sector's high yields attracted investors seeking income. Mortgage bonds outperformed Treasury bonds. Stocks picked up momentum Stock market performance picked up as economic news improved and uncertainty surrounding the presidential election was resolved. The S&P 500 Index returned 7.19% for the six-month period. The majority of that return was generated in November and December. Small-and mid-cap stocks led the market and value stocks outperformed growth stocks. Energy and utilities stocks were the best-performing sectors for the six-month period. Information technology rebounded strongly in the second half. Short-term rates moved higher After a year of the lowest short-term interest rates in recent history, the Fed raised the federal funds rate, a key short-term rate, from 1.0% to 2.25% in five equal steps between June 30 and December 31.(1) The Fed indicated that it would continue to raise short-term interest rates at a "measured pace," in an attempt to balance economic growth against inflationary pressures. Because the Fed's moves were widely anticipated, these rate increases have had little if any impact on the financial markets except to boost the yields on money market funds. (1) On February 2, the Fed raised the federal funds rate to 2.5%. 4 Net asset value per share as of 12/31/04 ($) - -------------------------------------------------------------------------------- Class A 11.28 - -------------------------------------------------------------------------------- Class B 11.28 - -------------------------------------------------------------------------------- Class C 11.28 - -------------------------------------------------------------------------------- Class Z 11.28 - -------------------------------------------------------------------------------- Distributions declared per share 07/01/04 - 12/31/04 ($) - -------------------------------------------------------------------------------- Class A 0.27 - -------------------------------------------------------------------------------- Class B 0.23 - -------------------------------------------------------------------------------- Class C 0.24 - -------------------------------------------------------------------------------- Class Z 0.28 - -------------------------------------------------------------------------------- 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 12/31/04 (%) - -------------------------------------------------------------------------------- Class A 4.65 - -------------------------------------------------------------------------------- Class B 4.13 - -------------------------------------------------------------------------------- Class C 4.28 - -------------------------------------------------------------------------------- Class Z 5.09 - -------------------------------------------------------------------------------- The 30-day SEC yields reflect the portfolio earning power net of expenses, expressed as an annualized percentage of the public offering price per share at the end of the period. Taxable-equivalent SEC yields as of 12/31/04 (%) - -------------------------------------------------------------------------------- Class A 7.15 - -------------------------------------------------------------------------------- Class B 6.35 - -------------------------------------------------------------------------------- Class C 6.58 - -------------------------------------------------------------------------------- Class Z 7.83 - -------------------------------------------------------------------------------- Taxable-equivalent SEC yields are based on the maximum effective 35.0% federal income tax rate. This tax rate does not reflect the phase out of exemptions or the reduction of otherwise allowable deductions that occur when adjusted gross income exceeds certain levels. PORTFOLIO MANAGER'S REPORT Columbia High Yield Municipal Fund For the six-month period ended December 31, 2004, class A shares of Columbia High Yield Municipal Fund returned 5.46% without sales charge. The fund outpaced the 5.19% return for the Lehman Brothers Municipal Bond Index, which is restricted to investment-grade securities. The fund's performance was slightly behind the 5.63% average return for funds in its peer group, the Lipper High Yield Municipal Debt Funds Category.(1) High-yield municipal bonds did well during the period, benefiting from strong demand as investors reached for yield in a low interest-rate environment. An improving economy boosted the credit quality of many issuers, further bolstering high-yield returns. However, we believe the fund lost a bit of ground relative to its peers by not owning more airline and tobacco bonds. Certain airline bonds, such as American Airlines and Continental Airlines, posted especially strong gains as their financial conditions improved, oil prices declined moderately and investor demand remained strong. The fund's strategy of diversifying across sectors and issuers meant it was not heavily invested in the bonds of either airline. In addition, we believe the fund had a smaller stake in tobacco bonds than other funds in the Lipper(1) peer group. Tobacco bonds rallied as litigation news eased and investors sought out the sector's high yields. Retirement housing and hospital bonds boosted performance Continuing care retirement centers was one of the fund's strongest sectors. Issuers such as Kahala Nui Project in Hawaii did well as their construction projects neared completion. In addition, the bonds of more established projects rallied as business prospects improved for their issuers. Of note were retirement housing bonds issued by Attic Angel in Wisconsin, which benefited from better financial performance. Hospital bonds also aided performance, as demand remained strong. The fund benefited from adding a new stake in bonds issued by Bon Secours Health Systems. We purchased these bonds after financial difficulties arose in some of the System's regional operations, causing their bond prices to fall. However, as it became clear that the System was taking action to address these challenges, the bonds rebounded nicely. Utilities gave an added boost to returns, as investor concerns finally eased following the Enron scandal. Top gainers included Nevada Power, an investor-owned utility that rallied after a favorable ruling on rate increases. Multitrade of Pittsylvania County, an independent power producer, also did well following the announcement that it would be bought out by a large utility. (1) Lipper Inc., a widely respected data provider in the industry, calculates an average total return for mutual funds with similar investment objectives as those of the fund. 5 Holdings discussed in this report as of 12/31/04 (%) - -------------------------------------------------------------------------------- American Airlines 0.1 - -------------------------------------------------------------------------------- Continental Airlines 0.3 - -------------------------------------------------------------------------------- Kahala Nui Project 0.3 - -------------------------------------------------------------------------------- Attic Angel 0.4 - -------------------------------------------------------------------------------- Bon Secours Health Systems 0.9 - -------------------------------------------------------------------------------- Nevada Power 0.4 - -------------------------------------------------------------------------------- Multitrade of Pittsylvania 0.8 - -------------------------------------------------------------------------------- Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. High-yield municipal bonds benefited from strong demand as investors reached for yield in a low interest-rate environment. Columbia High Yield Municipal Fund Lower quality and longer maturity issues added yield One focus during the period was on boosting the fund's yield. We did this by adding to the fund's stake in lower-rated municipal bonds, while trimming some of its triple-A rated issues. We also continued to focus on bonds with 25- to 30-year maturities. We believe these lower quality and longer maturity bonds also offer the possibility of relative outperformance. Continued economic improvement favors high-yield municipals Moderate economic growth and modestly rising interest rates tend to be relatively positive for high-yield municipals. Bonds with high coupons (or stated interest rates) tend to perform better than lower coupon bonds when interest rates rise because so much of their total return comes from income. Going forward, we plan to continue adding lower-rated and non-rated issues in an effort to boost income. [PHOTO] 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. /s/ Maureen G. Newman 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. 6 INVESTMENT PORTFOLIO December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - 94.6% EDUCATION - 3.6% Education - 1.3% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CA California Statewide Communities San Francisco Art Institute, Series 2002, Development Authority 7.375% 04/01/32 (a) 750,000 777,240 ----------------------------------------------------------------------------- FL Broward County Educational Nova Southeastern University, Facility Authority 5.625% 04/01/34 925,000 956,792 ----------------------------------------------------------------------------- MA State Development Finance Agency Western New England College, Series 2002, 6.125% 12/01/32 300,000 316,083 ----------------------------------------------------------------------------- PA State Higher Educational Philadelphia University, Series 2004 A, Facilities Authority 5.125% 06/01/25 1,100,000 1,086,921 ----------------------------------------------------------------------------- OH University of Cincinnati Series 2003 C, Insured: FGIC 5.000% 06/01/21 1,000,000 1,064,220 ----------------------------------------------------------------------------- VT State Education & Health Vermont Law School Project, Buildings Agency Series 2003 A, 5.500% 01/01/33 500,000 499,290 ----------------------------------------------------------------------------- WV State University Series 2000 A, Insured: AMBAC: (b) 04/01/19 1,250,000 647,475 (b) 04/01/25 2,750,000 999,295 ----------------------------------------------------------------------------- Education Total 6,347,316 Prep School - 0.9% - ------------------------------------------ ----------------------------------------------------------------------------- CA California Statewide Communities Crossroads School for Arts & Sciences, Development Authority Series 1998, 6.000% 08/01/28 (a) 980,000 1,020,886 ----------------------------------------------------------------------------- IL State Development Finance Authority Latin School of Chicago Project, Series 1998, 5.650% 08/01/28 1,725,000 1,759,586 ----------------------------------------------------------------------------- MA State Health & Educational Learning Center for Deaf Children, Series 1999 C, Facilities Authority 6.100% 07/01/19 1,000,000 1,014,060 ----------------------------------------------------------------------------- NH Business Finance Authority Proctor Academy Project, Series 1998 A, 5.400% 06/01/17 950,000 989,577 ----------------------------------------------------------------------------- Prep School Total 4,784,109 Student Loan - 1.4% - ------------------------------------------ ----------------------------------------------------------------------------- NE Nebhelp, Inc. Series 1993 A-6, AMT, Insured: MBIA 6.450% 06/01/18 4,000,000 4,238,120 ----------------------------------------------------------------------------- NM State Educational Assistance Foundation Series 1996 A-2, AMT, 6.650% 11/01/25 1,915,000 1,917,241 ----------------------------------------------------------------------------- OH Student Loan Funding Corp. Series 1992 B, AMT, 6.750% 01/01/07 1,075,000 1,077,515 ----------------------------------------------------------------------------- Student Loan Total 7,232,876 ---------- EDUCATION TOTAL 18,364,301
See Accompanying Notes to Financial Statements. 7 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - 25.5% Continuing Care Retirement - 8.0% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CA ABAG Finance Authority for Nonprofit Eskaton Gold River Lodge, Series 1998: Corps. 6.375% 11/15/15 (a) 625,000 653,975 6.375% 11/15/28 (a) 550,000 561,088 ----------------------------------------------------------------------------- CA La Verne Brethren Hillcrest Homes, Series 2003 B, 6.625% 02/15/25 685,000 699,097 ----------------------------------------------------------------------------- CA Statewide Community Eskaton Village - Grass Valley, Development Authority Series 2000, 8.250% 11/15/31 (a) 1,730,000 1,906,443 ----------------------------------------------------------------------------- CT State Development Authority The Elim Park Baptist, Inc. Project, Series 2003, 5.850% 12/01/33 660,000 682,559 ----------------------------------------------------------------------------- FL Capital Project Finance Authority Glenridge on Palmer Ranch, Series 2002 A, 8.000% 06/01/32 1,250,000 1,305,538 ----------------------------------------------------------------------------- FL Lee County Industrial Shell Point Village Project, Development Authority Series 1999 A, 5.500% 11/15/29 1,200,000 1,188,684 ----------------------------------------------------------------------------- FL Orange County Health Orlando Lutheran Towers, Inc., Facilities Authority Series 1996, 8.625% 07/01/20 1,500,000 1,575,150 ----------------------------------------------------------------------------- FL Palm Beach County Health Abbey Delray South, Series 2003, Facilities Authority 5.350% 10/01/14 1,250,000 1,287,750 ----------------------------------------------------------------------------- GA Fulton County Residential Canterbury Court Episcopal Home for the Retired, Care Facilities Series 2004 PJ-A, 6.125% 02/15/34 1,000,000 1,014,370 ----------------------------------------------------------------------------- GA Savannah Economic Development Authority Marshes of Skidaway, Series 2003 A, 7.400% 01/01/34 1,000,000 1,017,820 ----------------------------------------------------------------------------- HI State Department of Budget & Finance Kahala Nui Project, Series 2003 A: 7.875% 11/15/23 250,000 268,950 8.000% 11/15/33 1,000,000 1,077,540 ----------------------------------------------------------------------------- IL State Health Facilities Authority Lutheran Senior Ministries, Series 2001, 7.375% 08/15/31 550,000 564,597 Washington and Jane Smith Community, Series 2003 A, 7.000% 11/15/32 1,000,000 1,010,620 ----------------------------------------------------------------------------- MA Boston Industrial Development Springhouse, Inc., Series 1998, Financing Authority 5.875% 07/01/20 385,000 388,796 ----------------------------------------------------------------------------- MA State Development Finance Agency Loomis Community Project: Series 1999 A, 5.625% 07/01/15 650,000 649,434 Series 2002 A, 6.900% 03/01/32 220,000 234,980 ----------------------------------------------------------------------------- MD Westminster Economic Development Carroll Lutheran Village, Series 2004 A, 6.250% 05/01/34 1,750,000 1,802,815 ----------------------------------------------------------------------------- MO State Health & Educational Lutheran Senior Services, Series 1997, Facilities Authority 5.750% 02/01/17 2,000,000 2,081,460
8 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Continuing Care Retirement- (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- NH State Higher Educational & Health Rivermead at Peterborough, Series 1998: Facilities Authority 5.625% 07/01/18 500,000 494,320 5.750% 07/01/28 1,665,000 1,612,836 ----------------------------------------------------------------------------- NJ State Economic Development Authority Seabrook Village, Inc., Series 2000 A, 8.250% 11/15/30 1,125,000 1,233,686 Winchester Gardens, Series 1996 A, 5.800% 11/01/31 750,000 771,210 ----------------------------------------------------------------------------- PA Chartiers Valley Industrial & Commercial Asbury Health Center, Series 1999, Development Authority 6.375% 12/01/24 750,000 765,060 Friendship Village of South Hills, Series 2003 A, 5.750% 08/15/20 1,000,000 1,007,460 ----------------------------------------------------------------------------- PA Delaware County Authority Dunwoody Village, Series 2003 A, 5.375% 04/01/17 750,000 802,223 ----------------------------------------------------------------------------- PA Lancaster Industrial Garden Spot Village Project, Series 2000 A, Development Authority 7.625% 05/01/31 825,000 879,854 ----------------------------------------------------------------------------- TN Johnson City Health & Appalachian Christian Village Project, Series 2004 A, Educational Facilities 6.250% 02/15/32 250,000 250,785 ----------------------------------------------------------------------------- TN Metropolitan Government of Nashville Blakeford at Green Hills, Series 1998, and Davidson County 5.650% 07/01/24 1,825,000 1,749,627 ----------------------------------------------------------------------------- TN Shelby County Health, Germantown Village, Series 2003 A, Educational & Housing Facilities Board 7.250% 12/01/34 675,000 702,445 ----------------------------------------------------------------------------- TX Abilene Health Facilities Sears Methodist Retirement Obligation Group: Development Corp. Series 1998 A, 5.900% 11/15/25 1,350,000 1,304,060 Series 2003 A, 7.000% 11/15/33 800,000 837,384 ----------------------------------------------------------------------------- TX Houston Health Facilities Buckingham Senior Living Community, Series 2004 A, Development Corp. 7.125% 02/15/34 1,000,000 1,048,270 ----------------------------------------------------------------------------- WI State Health & Educational Attic Angel Obligated Group, Series 1998, Facilities Authority 5.750% 11/15/27 2,125,000 1,993,590 Clement Manor, Series 1998, 5.750% 08/15/24 2,200,000 2,171,400 East Castle Place, Inc. Project, Series 2004, 6.125% 12/01/34 500,000 492,970 Lutheran Program for the Aging, Series 1998, 5.700% 03/01/28 750,000 709,327 Three Pillars Senior Living Communities: Series 2003, 5.600% 08/15/23 790,000 805,634 Series 2004 A, 5.500% 08/15/34 870,000 859,534 ----------------------------------------------------------------------------- Continuing Care Retirement Total 40,463,341
See Accompanying Notes to Financial Statements. 9 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Health Services - 0.8% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CO State Health Care Facilities Authority National Jewish Medical & Research Center, Series 1998, 5.375% 01/01/23 1,080,000 1,070,172 ----------------------------------------------------------------------------- MA State Development Finance Agency Boston Biomedical Research Institute, Series 1999: 5.650% 02/01/19 370,000 362,426 5.750% 02/01/29 550,000 558,387 ----------------------------------------------------------------------------- MA State Health & Educational Civic Investments, Inc., Series 2002 A, Facilities Authority 9.000% 12/15/15 1,500,000 1,722,780 ----------------------------------------------------------------------------- MN Minneapolis & St. Paul Housing Healthpartners Project, Series 2003, Redevelopment Authority 5.875% 12/01/29 400,000 417,312 ----------------------------------------------------------------------------- Health Services Total 4,131,077 Hospitals - 12.6% - ------------------------------------------ ----------------------------------------------------------------------------- AZ Health Facilities Authority Phoenix Memorial Hospital, Series 1991, 8.125% 06/01/12 (c) 1,931,719 4,829 ----------------------------------------------------------------------------- CA ABAG Finance Authority for San Diego Hospital Association, Series 2003 C, Nonprofit Corps. 5.375% 03/01/21 500,000 511,955 ----------------------------------------------------------------------------- CA California Statewide Communities Kaiser Permanente, Series 2004 I, Development Authority 3.450% 04/01/35 1,750,000 1,722,718 ----------------------------------------------------------------------------- CA Rancho Mirage Joint Powers Bon Secours-St. Frances Medical Center, Inc., Series 2002 A, Financing Authority 5.625% 07/01/29 2,000,000 2,095,160 ----------------------------------------------------------------------------- CA State Health Facilities Catholic Healthcare West, Series 2004 G, Financing Authority 5.250% 07/01/23 500,000 514,120 Stanford Hospital & Clinics Project, Series 2003 A, 5.000% 11/15/23 1,500,000 1,545,435 ----------------------------------------------------------------------------- CA Turlock Health Facility Emanuel Medical Center, Inc., Series 2004, 5.375% 10/15/34 2,000,000 1,989,820 ----------------------------------------------------------------------------- CA Whittier Health Facilities Presbyterian Intercommunity Hospital, Series 2002, 5.750% 06/01/31 1,000,000 1,057,730 ----------------------------------------------------------------------------- CO La Junta Arkansas Valley Regional Medical Center Project, Series 1999, 6.100% 04/01/24 300,000 313,680 ----------------------------------------------------------------------------- CO State Health Care Facilities Authority Parkview Medical Center, Inc. Project, Series 2001, 6.600% 09/01/25 300,000 329,307 Vail Valley Medical Center Project, Series 2004, 5.000% 01/15/20 1,000,000 1,022,080 ----------------------------------------------------------------------------- FL Hillsborough County Industrial Tampa General Hospital Project, Development Authority Series 2003 B, 5.250% 10/01/34 1,000,000 1,012,230
10 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- FL Miami Health Facilities Authority Catholic Health East, Series 2003 B, 5.125% 11/15/24 1,000,000 1,020,370 ----------------------------------------------------------------------------- FL Orange County Health Orlando Regional Healthcare System: Facilities Authority Series 1999 E, 6.000% 10/01/26 875,000 924,245 Series 2002, 5.750% 12/01/32 350,000 371,693 ----------------------------------------------------------------------------- FL South Lake County Hospital District South Lake Hospital, Inc., Series 2003: 6.375% 10/01/28 750,000 776,325 6.375% 10/01/34 500,000 516,890 ----------------------------------------------------------------------------- FL West Orange Healthcare District Series 2001 A, 5.650% 02/01/22 1,450,000 1,522,674 ----------------------------------------------------------------------------- GA Coffee County Hospital Authority Coffee Regional Medical Center Project, Inc., Series 2004, 5.000% 12/01/26 700,000 699,139 ----------------------------------------------------------------------------- IL Southwestern Illinois Anderson Hospital, Series 1999: Development Authority 5.500% 08/15/20 500,000 507,665 5.625% 08/15/29 250,000 249,485 ----------------------------------------------------------------------------- IL State Health Facilities Authority Thorek Hospital & Medical Center, Series 1998, 5.375% 08/15/28 500,000 496,530 ----------------------------------------------------------------------------- IN Health Facility Financing Authority Community Foundation of Northwest Indiana, Inc., Series 2004 A, 6.000% 03/01/34 850,000 855,346 ----------------------------------------------------------------------------- MA State Health & Educational Jordan Hospital: Facilities Authority Series 1998 D, 5.250% 10/01/18 600,000 578,988 Series 2003 E, 6.750% 10/01/33 750,000 795,097 Milford-Whitinsville Regional Hospital: Series 1998 C, 5.750% 07/15/13 610,000 642,202 Series 2002 D, 6.350% 07/15/32 1,715,000 1,796,926 ----------------------------------------------------------------------------- MD State Health & Higher Educational Adventist HealthCare, Series 2003 A: Facilities Authority 5.000% 01/01/16 400,000 411,980 5.750% 01/01/25 600,000 629,634 ----------------------------------------------------------------------------- MI Dickinson County Health Care System Series 1999, 5.800% 11/01/24 1,000,000 1,003,040 ----------------------------------------------------------------------------- MI Flint Hospital Building Authority Hurley Medical Center, Series 1998 A, 5.375% 07/01/20 465,000 459,704 ----------------------------------------------------------------------------- MI State Hospital Finance Authority Oakwood Obligated Group, Series 2003, 5.500% 11/01/18 1,600,000 1,716,912 ----------------------------------------------------------------------------- MN St. Paul Housing & HealthEast Project, Series 1993 B, Redevelopment Authority 6.625% 11/01/17 230,000 232,047
See Accompanying Notes to Financial Statements. 11 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MN Washington Housing & HealthEast Project, Series 1998, Redevelopment Authority 5.250% 11/15/12 1,100,000 1,099,923 ----------------------------------------------------------------------------- MO State Health & Educational Lake Regional Health System, Series 2003, Facilities Authority 5.700% 02/15/34 1,000,000 1,039,640 ----------------------------------------------------------------------------- NC State Medical Care Commission Stanly Memorial Hospital Project, Series 1999, 6.375% 10/01/29 1,000,000 1,077,170 ----------------------------------------------------------------------------- NH State Higher Educational & Health Catholic Medical Center, Series 2002 A, Facilities Authority 6.125% 07/01/32 400,000 415,160 Littleton Hospital Association, Inc.: Series 1998 A: 5.900% 05/01/18 500,000 488,330 6.000% 05/01/28 1,000,000 964,540 Series 1998 B, 5.900% 05/01/28 675,000 642,850 ----------------------------------------------------------------------------- NJ State Health Care Facilities Capital Health Systems, Financing Authority Series 2003 A, 5.750% 07/01/23 1,250,000 1,336,137 ----------------------------------------------------------------------------- NM Farmington Hospital San Juan Medical Center, Series 2004 A, 5.000% 06/01/23 500,000 501,320 ----------------------------------------------------------------------------- NV Henderson Health Care Facilities Catholic Healthcare West, Series 1998: 5.125% 07/01/28 540,000 538,904 5.375% 07/01/26 790,000 801,060 ----------------------------------------------------------------------------- NY State Dormitory Authority Memorial Sloan-Kettering Cancer Center, Series 2001-1, Insured: MBIA: (b) 07/01/25 3,600,000 1,380,672 (b) 07/01/26 4,400,000 1,583,604 North Shore - Long Island Jewish Medical Center, Series 2003, 5.500% 05/01/33 400,000 416,784 ----------------------------------------------------------------------------- OH Belmont County Health Systems Ohio Valley Medical Center, Inc., Series 1998, 5.700% 01/01/13 700,000 658,364 ----------------------------------------------------------------------------- OH Highland County Joint Township Series 1999, Hospital District 6.750% 12/01/29 1,875,000 1,839,094 ----------------------------------------------------------------------------- OH Lakewood Hospital Improvement District Lakewood Hospital Association, Series 2003, 5.500% 02/15/15 1,250,000 1,347,238 ----------------------------------------------------------------------------- OH Miami County Hospital Facilities Upper Valley Medical Center, Inc.: Authority Series 1996 A, 6.250% 05/15/16 500,000 522,370 Series 1996 C, 6.250% 05/15/13 285,000 298,959 Series 1996 D, 6.375% 05/15/26 1,015,000 1,057,975 ----------------------------------------------------------------------------- OH Sandusky County Memorial Hospital, Series 1998, 5.150% 01/01/10 250,000 255,297
12 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- OK State Development Finance Authority Duncan Regional Hospital, Series 2003 A, 5.125% 12/01/23 2,000,000 2,031,020 ----------------------------------------------------------------------------- OK Stillwater Medical Center Authority Series 2003, 5.625% 05/15/23 1,000,000 1,030,870 ----------------------------------------------------------------------------- PA Allegheny County Hospital Ohio Valley General Hospital, Series 1997, Development Authority 5.450% 01/01/28 1,550,000 1,496,448 ----------------------------------------------------------------------------- SC Jobs Economic Development Bon Secours Health Systems, Series 2002 A, 5.500% 11/15/23 2,250,000 2,331,360 ----------------------------------------------------------------------------- SD State Health & Educational Facilities Sioux Hospitals & Health Systems, Series 2004 A, 5.250% 11/01/34 1,100,000 1,112,298 ----------------------------------------------------------------------------- TN Knox County Health, Educational & East Tennessee Hospital, Series 2003 B, Housing Facilities Authority 5.750% 07/01/33 250,000 259,003 ----------------------------------------------------------------------------- TX Richardson Hospital Authority Richardson Medical Center, Series 1998, 5.625% 12/01/28 450,000 461,961 ----------------------------------------------------------------------------- TX Tyler Health Facilities Development Corp. Mother Frances Hospital, Series 2001, 6.000% 07/01/31 750,000 786,158 ----------------------------------------------------------------------------- VA Augusta County Industrial Augusta Health Care, Inc., Series 2003, Development Authority 5.250% 09/01/19 2,000,000 2,193,540 ----------------------------------------------------------------------------- WA Skagit County Public Hospital Series 2003, District No. 1 6.000% 12/01/23 1,000,000 1,023,560 ----------------------------------------------------------------------------- WA State Health Care Facilities Authority Kadlec Medical Center, Series 2001, Insured: RAD 5.875% 12/01/21 600,000 657,474 ----------------------------------------------------------------------------- WI State Health & Educational Aurora Health Care, Inc., Series 2003, Facilities Authority 6.400% 04/15/33 700,000 743,904 Fort Healthcare, Inc. Project, Series 2004, 6.100% 05/01/34 1,965,000 2,068,457 Wheaton Franciscan Services, Series 2002, 5.750% 08/15/30 1,050,000 1,106,847 ----------------------------------------------------------------------------- Hospitals Total 63,894,247 Intermediate Care Facilities - 1.2% - ------------------------------------------ ----------------------------------------------------------------------------- IL State Development Finance Authority Hoosier Care, Inc., Series 1999 A, 7.125% 06/01/34 1,455,000 1,247,211 ----------------------------------------------------------------------------- IN State Health Facilities Hoosier Care, Inc. Project, Financing Authority Series 1999 A, 7.125% 06/01/34 1,200,000 1,028,628 ----------------------------------------------------------------------------- LA State Public Facilities Authority Progressive Healthcare Providers, Inc., Series 1998, 6.375% 10/01/28 2,000,000 1,694,420 -----------------------------------------------------------------------------
See Accompanying Notes to Financial Statements. 13 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Intermediate Care Facilities - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- PA State Economic Development Financing Northwestern Human Services, Authority Series 1998 A, 5.250% 06/01/14 2,000,000 1,844,860 ----------------------------------------------------------------------------- Intermediate Care Facilities Total 5,815,119 Nursing Homes - 2.9% - ------------------------------------------ ----------------------------------------------------------------------------- AK Juneau St. Ann's Care Center Project, Series 1999, 6.875% 12/01/25 1,750,000 1,768,917 ----------------------------------------------------------------------------- CO State Health Facilities Authority Volunteers of America Care Facilities, Inc.: Series 1998 A, 5.750% 07/01/20 700,000 650,692 Series 1999 A: 5.750% 07/01/10 785,000 781,570 6.000% 07/01/29 520,000 482,248 ----------------------------------------------------------------------------- DE State Economic Development Authority Churchman's Village Project, Series 1991, 10.000% 03/01/21 665,000 670,533 ----------------------------------------------------------------------------- IA State Finance Authority Care Initiatives Project: Series 1996, 9.250% 07/01/25 485,000 589,251 Series 1998 B: 5.500% 07/01/08 395,000 397,236 5.750% 07/01/18 600,000 567,240 5.750% 07/01/28 1,475,000 1,309,815 ----------------------------------------------------------------------------- MA State Development Finance Agency Alliance Health Care Facilities, Series 1999 A, 7.100% 07/01/32 2,225,000 2,220,550 ----------------------------------------------------------------------------- MA State Industrial Finance Agency GF/Mass., Inc., Series 1994, 8.300% 07/01/23 875,000 881,352 ----------------------------------------------------------------------------- MI Cheboygan Economic Development Authority Metro Health Foundation, Inc. Project, Series 1993, 11.000% 11/01/22 (c) 476,050 15,710 ----------------------------------------------------------------------------- MN Carlton Health & Housing Facilities Inter-Faith Social Services, Inc. Project, Series 2000, Authority 7.500% 04/01/19 250,000 263,298 ----------------------------------------------------------------------------- MN Sartell Health Care & Housing Foundation for Healthcare Project, Series 1999 A, Facilities Authority 6.625% 09/01/29 2,000,000 2,048,220 ----------------------------------------------------------------------------- PA Chester County Industrial RHA/PA Nursing Home, Series 2002, Development Authority 8.500% 05/01/32 395,000 386,946 ----------------------------------------------------------------------------- PA Delaware County Authority Main Line & Haverford Nursing, Series 1992, 9.000% 08/01/22 (c) 50,000 44,000 ----------------------------------------------------------------------------- PA Lackawanna County Industrial Greenridge Nursing Center Project, Development Authority Series 1990, 10.500% 12/01/10 (d)(e) 95,000 85,500 ----------------------------------------------------------------------------- PA Luzerne County Industrial Millville Nursing Center Project, Series 1990, Development Authority 10.500% 12/01/12 (d)(e) 160,000 144,000
14 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Nursing Homes - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- TX Kirbyville Health Facilities Heartway III, Series 1997 A, Development Corp. 10.000% 03/20/18 (f) 539,212 172,548 WA Kitsap County Consolidated Martha and Mary Health Services, Series 1996, Housing Authority Insured: GNMA 7.100% 02/20/36 1,000,000 1,170,900 ----------------------------------------------------------------------------- Nursing Homes Total 14,650,526 ----------- HEALTH CARE TOTAL 128,954,310 HOUSING - 4.8% Assisted Living/Senior - 2.6% - ------------------------------------------ ----------------------------------------------------------------------------- DE Kent County Assisted Living Facilities Heritage at Dover Project, Series 1999, AMT, 7.625% 01/01/30 2,415,000 2,177,605 ----------------------------------------------------------------------------- GA Columbus Housing Authority The Gardens at Calvary Project, Series 1999, 7.000% 11/15/29 2,000,000 1,760,840 ----------------------------------------------------------------------------- IL State Development Finance Authority Care Institute, Inc., Series 1995, 8.250% 06/01/25 1,880,000 1,849,920 ----------------------------------------------------------------------------- MN Roseville Elderly Care Facility Care Institute, Inc. Project, Series 1993, 7.750% 11/01/23 (f) 1,270,000 825,500 ----------------------------------------------------------------------------- NC Medical Care Commission Health DePaul Community Facilities Project: Care Facilities Series 1998, 6.125% 01/01/28 500,000 452,795 Series 1999, 7.625% 11/01/29 1,940,000 2,014,651 ----------------------------------------------------------------------------- NY Huntington Housing Authority Gurwin Jewish Senior Center, Series 1999 A: 5.875% 05/01/19 1,900,000 1,833,500 6.000% 05/01/29 625,000 597,200 ----------------------------------------------------------------------------- NY Suffolk County Industrial Gurwin Jewish-Phase II, Series 2004, Development Agency 6.700% 05/01/39 500,000 513,075 ----------------------------------------------------------------------------- TX Bell County Health Facility Care Institute, Inc., Series 1994, Development Corp. 9.000% 11/01/24 930,000 865,365 ----------------------------------------------------------------------------- Assisted Living/Senior Total 12,890,451 Multi-Family - 2.2% - ------------------------------------------ ----------------------------------------------------------------------------- CO State Health Facilities Authority Birchwood Manor Project, Series 1991 A, Insured: GNMA 7.250% 04/01/11 410,000 411,562 ----------------------------------------------------------------------------- DE Wilmington Electra Arms Senior Association Project, Series 1994 A, AMT, 6.250% 06/01/28 930,000 748,157 ----------------------------------------------------------------------------- FL Broward County Housing Finance Authority Chaves Lake Apartment Project, Series 2000 A, AMT, 7.500% 07/01/40 1,250,000 1,250,338 ----------------------------------------------------------------------------- FL Clay County Housing Finance Authority Madison Commons Apartments, Series 2000 A, AMT, 7.450% 07/01/40 1,235,000 1,239,187 ----------------------------------------------------------------------------- IN New Castle Raintree Apartments, Series 1988 B, (b) 03/01/18 30,625,000 76,562
See Accompanying Notes to Financial Statements. 15 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HOUSING - (continued) Multi-Family - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MN Lakeville Series 1989, 9.875% 02/01/20 700,000 700,693 ----------------------------------------------------------------------------- MN Washington County Housing Cottages of Aspen Project, Series 1992, AMT, & Redevelopment Authority 9.250% 06/01/22 450,000 460,076 ----------------------------------------------------------------------------- MN White Bear Lake Series 1989, 9.750% 07/15/19 750,000 752,887 ----------------------------------------------------------------------------- NC Medical Care Commission Arc Project Health Care Housing, Series 2004 A, 5.800% 10/01/34 800,000 806,152 ----------------------------------------------------------------------------- NC Raleigh Cedar Point Apartments, Series 1999 A: 5.100% 11/01/10 (f) 250,000 135,027 5.875% 11/01/24 (f) 200,000 108,004 ----------------------------------------------------------------------------- Pass Through Certificates Series 1993, 8.500% 12/01/16 455,481 445,556 ----------------------------------------------------------------------------- SC State Housing Finance & Westbridge Apartments Project, Series 1990, AMT, Development Authority 9.500% 09/01/20 570,000 457,151 ----------------------------------------------------------------------------- TN Franklin Industrial Development Board Landings Apartment Project, Series 1996 B, 8.750% 04/01/27 1,550,000 1,591,121 ----------------------------------------------------------------------------- TX El Paso County Housing Finance Corp. American Village Communities: Series 2000 C, 8.000% 12/01/32 580,000 597,371 Series 2000 D, 10.000% 12/01/32 685,000 707,454 ----------------------------------------------------------------------------- TX State Affordable Housing Corp. NHT/GTEX LLC Project, Series 2001 C, 10.000% 10/01/31 (f) 1,560,000 54,600 ----------------------------------------------------------------------------- VA Alexandria Redevelopment & Article 1 Associates LLP, Housing Authority Series 1990 A, AMT, 10.000% 01/01/21 500,000 414,705 ----------------------------------------------------------------------------- Multi-Family Total 10,956,603 Single Family - 0.0% - ------------------------------------------ ----------------------------------------------------------------------------- CO Housing and Finance Authority Series 1995 D-1, AMT, 7.375% 06/01/26 125,000 125,768 Series 1997 A-2, AMT, 7.250% 05/01/27 90,000 91,073 ----------------------------------------------------------------------------- Single Family Total 216,841 ----------- HOUSING TOTAL 24,063,895 INDUSTRIAL - 6.2% Food Products - 1.3% - ------------------------------------------ ----------------------------------------------------------------------------- IN Hammond American Maize Products Co. Project, Series 1994 A, AMT, 8.000% 12/01/24 1,760,000 1,835,874 ----------------------------------------------------------------------------- LA Port Lake Charles Continental Grain Co., Series 1993, 7.500% 07/01/13 2,000,000 2,033,920
16 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) INDUSTRIAL - (continued) Food Products - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MI State Strategic Fund Michigan Sugar Co.: Carollton Project, Series 1998 C, AMT, 6.550% 11/01/25 1,500,000 1,410,135 Sebewaing Project, Series 1998 A, 6.250% 11/01/15 1,000,000 1,000,290 ----------------------------------------------------------------------------- OH Toledo Lucas County Port Cargill, Inc. Project, Series 2004 A, Authority Facilities 4.800% 03/01/22 500,000 504,295 ----------------------------------------------------------------------------- Food Products Total 6,784,514 Forest Products - 2.4% - ------------------------------------------ ----------------------------------------------------------------------------- AL Camden Industrial Development Board Weyerhaeuser Company, Series 2003 B, AMT, 6.375% 12/01/24 275,000 297,809 ----------------------------------------------------------------------------- AL Courtland Industrial Development Board International Paper Co., Series 2003 B, AMT, 6.250% 08/01/25 2,000,000 2,126,720 ----------------------------------------------------------------------------- AL Phenix City Industrial Development Board Meadwestvaco, Series 2002 A, AMT, 6.350% 05/15/35 1,000,000 1,073,080 ----------------------------------------------------------------------------- AR Camden Environmental International Paper Co., Series 2004 A, AMT, Improvements Authority 5.000% 11/01/18 250,000 250,755 ----------------------------------------------------------------------------- GA Rockdale County Development Authority Visy Paper, Inc., Series 1993, AMT, 7.500% 01/01/26 2,800,000 2,876,384 ----------------------------------------------------------------------------- LA Beauregard Parish Boise Cascade Project, Series 2002, 6.800% 02/01/27 1,750,000 1,837,308 ----------------------------------------------------------------------------- MI Delta County Economic Development Corp. Mead Westvaco Escambia Project, Series 2002 B, AMT, 6.450% 04/15/23 750,000 804,090 ----------------------------------------------------------------------------- MS Lowndes County Weyerhaeuser Corp., Series 1992 A, 6.700% 04/01/22 230,000 274,222 6.800% 04/01/22 1,995,000 2,401,421 ----------------------------------------------------------------------------- VA Bedford County Industrial Nekoosa Packaging Corp. Project, Series 1998, AMT, Development Authority 5.600% 12/01/25 400,000 396,540 ----------------------------------------------------------------------------- Forest Products Total 12,338,329 Manufacturing - 0.6% - ------------------------------------------ ----------------------------------------------------------------------------- IL Will-Kankakee Regional Flanders Corp. Precisionaire, Series 1997, AMT, Development Authority 6.500% 12/15/17 780,000 790,273 ----------------------------------------------------------------------------- KS Wichita Airport Authority Cessna Citation Service Center, Series 2002 A, AMT, 6.250% 06/15/32 1,875,000 1,986,825 ----------------------------------------------------------------------------- Manufacturing Total 2,777,098 Metals & Mining - 0.3% - ------------------------------------------ ----------------------------------------------------------------------------- NV State Department of Business & Industry Wheeling-Pittsburgh Steel Corp., Series 1999 A, AMT, 8.000% 09/01/14 (g) 444,194 421,500
See Accompanying Notes to Financial Statements. 17 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) INDUSTRIAL - (continued) Metals & Mining - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- VA Greensville County Industrial Wheeling-Pittsburgh Steel Corp., Development Authority Series 1999 A, AMT, 7.000% 04/01/14 930,000 882,458 ----------------------------------------------------------------------------- Metals & Mining Total 1,303,958 Oil & Gas - 1.6% - ------------------------------------------ ----------------------------------------------------------------------------- NJ Middlesex County Pollution Control Amerada Hess Corp., Series 2004, 6.050% 09/15/34 285,000 300,746 ----------------------------------------------------------------------------- NV Clark County Industrial Southwest Gas Corp. Project, Series 2003 E, AMT, Development Authority 5.800% 03/01/38 1,750,000 1,879,798 ----------------------------------------------------------------------------- TX Gulf Coast Industrial Citgo Petroleum Project, Series 1998, AMT, Development Authority 8.000% 04/01/28 875,000 974,767 ----------------------------------------------------------------------------- TX Texas City Industrial Development Corp. Arco Pipe Line Co. Project, Series 1990, 7.375% 10/01/20 2,000,000 2,628,860 ----------------------------------------------------------------------------- VI Virgin Islands Public Finance Authority Hovensa Coker Project, Series 2002, AMT, 6.500% 07/01/21 125,000 136,722 Hovensa Refinery, Series 2003, AMT: 5.875% 07/01/22 1,000,000 1,060,250 6.125% 07/01/22 875,000 938,114 ----------------------------------------------------------------------------- Oil & Gas Total 7,919,257 ----------- INDUSTRIAL TOTAL 31,123,156 OTHER - 8.2% Other - 0.7% - ------------------------------------------ ----------------------------------------------------------------------------- NJ State Economic Development Authority Motor Vehicle Commission, Series 2003 A, Insured: MBIA (b) 07/01/14 2,500,000 1,695,425 ----------------------------------------------------------------------------- NY Convention Center Operating Corp. Yale Building Project, Series 2003, (b) 06/01/08 2,100,000 1,817,361 ----------------------------------------------------------------------------- Other Total 3,512,786 Pool/Bond Bank - 0.4% - ------------------------------------------ ----------------------------------------------------------------------------- OH Cleveland Cuyahoga County Port Authority Myers University Project, Series 2004 E, 5.600% 05/15/25 530,000 533,477 ----------------------------------------------------------------------------- SD Economic Development Finance Authority Davis Family Sodak, Series 2004 4-A, AMT, 6.000% 04/01/29 1,400,000 1,430,730 ----------------------------------------------------------------------------- Pool/Bond Bank Total 1,964,207 Refunded/Escrowed (h) - 5.5% - ------------------------------------------ ----------------------------------------------------------------------------- CO Adams County Series 1991 B, 11.250% 09/01/11 (i) 905,000 1,271,848 ----------------------------------------------------------------------------- CO E-470 Public Highway Authority Series 2000 B, (b) 09/01/35 17,500,000 2,196,425 ----------------------------------------------------------------------------- CO State Department of Transportation Series 2001 832R-B, Insured: MBIA 8.840% 12/15/08 (j) 2,000,000 2,585,120
18 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) OTHER - (continued) Refunded/Escrowed (h) - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CT State Development Authority New Haven Residuals, Series 1996, AMT, 8.250% 12/01/06 335,000 362,812 ----------------------------------------------------------------------------- FL Tampa Bay Utility Systems Series 1999, Insured: FGIC 9.330% 10/01/23 (g)(j) 7,500,000 9,809,700 ----------------------------------------------------------------------------- GA Forsyth County Hospital Authority Baptist Hospital Worth County, Series 1998, 6.000% 10/01/08 620,000 664,876 ----------------------------------------------------------------------------- GA State Municipal Electric Authority Series 1991 V, 6.600% 01/01/18 690,000 858,160 ----------------------------------------------------------------------------- IL University of Illinois Certificate of Utilities Infrastructure Projects, Series 2001 A, Participation Insured: AMBAC 5.500% 08/15/16 1,425,000 1,624,158 ----------------------------------------------------------------------------- NC Eastern Municipal Power Agency Series 1991 A, 6.500% 01/01/18 3,320,000 4,209,328 ----------------------------------------------------------------------------- NC Lincoln County Lincoln County Hospital Project, Series 1991, 9.000% 05/01/07 125,000 135,192 ----------------------------------------------------------------------------- NJ State Economic Development Authority Winchester Gardens, Series 1996 A, 8.625% 11/01/25 2,000,000 2,262,360 ----------------------------------------------------------------------------- TN Shelby County Health Educational Open Arms Care Corp.: & Housing Facilities Board Series 1992 A, 9.750% 08/01/19 280,000 336,958 Series 1992 C, 9.750% 08/01/19 280,000 336,958 ----------------------------------------------------------------------------- WV State Hospital Finance Authority Charleston Medical Center, Series 2000 A, 6.750% 09/01/30 925,000 1,109,241 ----------------------------------------------------------------------------- Refunded/Escrowed Total 27,763,136 Tobacco - 1.6% - ------------------------------------------ ----------------------------------------------------------------------------- CA Golden State Tobacco Securitization Series 2003 A-1: Authority 6.250% 06/01/33 1,725,000 1,726,001 6.750% 06/01/39 1,000,000 1,000,560 Series 2003 B, 5.500% 06/01/43 1,250,000 1,307,300 ----------------------------------------------------------------------------- LA Tobacco Settlement Financing Corp. Series 2001 B, 5.875% 05/15/39 1,000,000 896,900 ----------------------------------------------------------------------------- NJ Tobacco Settlement Financing Corp. Series 2003, 6.750% 06/01/39 2,000,000 1,997,180 ----------------------------------------------------------------------------- SC Tobacco Settlement Revenue Series 2001 B, Management Authority 6.375% 05/15/28 1,000,000 972,130 ----------------------------------------------------------------------------- Tobacco Total 7,900,071 ---------- OTHER TOTAL 41,140,200
See Accompanying Notes to Financial Statements. 19 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) OTHER REVENUE - 2.0% Hotels - 0.4% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- PA Philadelphia Authority for Industrial Doubletree Project, Series 1997 A, Development 6.500% 10/01/27 2,000,000 2,059,620 ----------------------------------------------------------------------------- Hotels Total 2,059,620 Recreation - 1.5% - ------------------------------------------ ----------------------------------------------------------------------------- CA Agua Caliente Band of Cahuilla Indians Series 2003, 6.000% 07/01/18 1,000,000 1,033,930 ----------------------------------------------------------------------------- CA Cabazon Band Mission Indians Series 2004: 8.375% 10/01/15 (g) 550,000 553,927 8.750% 10/01/19 (g) 1,950,000 1,963,553 ----------------------------------------------------------------------------- CT Mashantucket Western Pequot Tribe Series 1999 B, (b) 09/01/15 (g) 2,000,000 1,159,340 ----------------------------------------------------------------------------- CT Mohegan Indians Tribe Gaming Authority Series 2001, 6.250% 01/01/31 (g) 475,000 503,818 ----------------------------------------------------------------------------- FL Capital Trust Agency Seminole Tribe Convention Center, Series 2002 A, 10.000% 10/01/33 (g) 2,050,000 2,403,154 ----------------------------------------------------------------------------- NM Red River Sports Facilities Red River Ski Area Project, Series 1998, 6.450% 06/01/07 155,000 157,395 ----------------------------------------------------------------------------- Recreation Total 7,775,117 Retail - 0.1% - ------------------------------------------ ----------------------------------------------------------------------------- OH Lake County North Madison Properties, Ltd. Project, Series 1993, 8.819% 09/01/11 460,000 461,224 ----------------------------------------------------------------------------- Retail Total 461,224 ---------- OTHER REVENUE TOTAL 10,295,961 RESOURCE RECOVERY - 1.7% Disposal - 0.8% - ------------------------------------------ ----------------------------------------------------------------------------- IL Development Finance Authority Waste Management, Inc., Series 1997, AMT, 5.050% 01/01/10 250,000 262,830 ----------------------------------------------------------------------------- MA State Development Finance Agency Peabody Monofill Associates, Inc. Project, Series 1994, 9.000% 09/01/05 180,000 183,011 ----------------------------------------------------------------------------- OH State Solid Waste Republic Service, Inc. Project, Series 2004, AMT, 4.250% 04/01/33 2,000,000 1,963,140 ----------------------------------------------------------------------------- UT Carbon County Solid Waste Disposal Laidlaw Environmental, Series 1997 A, AMT, 7.450% 07/01/17 1,500,000 1,548,240 ----------------------------------------------------------------------------- Disposal Total 3,957,221
20 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) RESOURCE RECOVERY - (continued) Resource Recovery - 0.9% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MA State Development Finance Agency Ogden Haverhill Project: Series 1998 A, AMT: 5.500% 12/01/13 500,000 508,555 5.600% 12/01/19 1,000,000 1,008,050 Series 1999 A, AMT, 6.700% 12/01/14 750,000 802,530 ----------------------------------------------------------------------------- PA Delaware County Industrial American Ref-Fuel Co., Series 1997 A, Development Authority 6.200% 07/01/19 2,225,000 2,364,730 ----------------------------------------------------------------------------- Resource Recovery Total 4,683,865 ---------- RESOURCE RECOVERY TOTAL 8,641,086 ----------------------------------------------------------------------------- TAX-BACKED - 19.8% Local Appropriated - 2.1% - ------------------------------------------ ----------------------------------------------------------------------------- CA Compton Certificates of Participation Civic Center & Capital Improvements, Series 1997 A, 5.500% 09/01/15 1,500,000 1,575,345 ----------------------------------------------------------------------------- CA Southeast Resource Recovery Series 2003 B, AMT, Facilities Authority Insured: AMBAC 5.375% 12/01/18 2,000,000 2,146,880 ----------------------------------------------------------------------------- MN Andover Economic Development Authority Andover Community Center, Series 2004, 5.200% 02/01/34 750,000 758,243 ----------------------------------------------------------------------------- MO St. Louis Industrial St. Louis Convention Center Hotel, Series 2000, Development Authority Insured: AMBAC (b) 07/15/18 3,000,000 1,609,830 ----------------------------------------------------------------------------- SC Berkeley County School District Securing Assets for Education, Series 2003, 5.000% 12/01/28 2,000,000 2,017,240 ----------------------------------------------------------------------------- SC Dorchester County School District Growth Remedy Opportunity Tax Hike, Series 2004, 5.250% 12/01/29 1,000,000 1,024,030 ----------------------------------------------------------------------------- SC Lancaster Educational Assistance School District Lancaster County Project, Series 2004, Program, Inc. 5.000% 12/01/26 1,350,000 1,353,078 ----------------------------------------------------------------------------- Local Appropriated Total 10,484,646 Local General Obligations - 5.0% - ------------------------------------------ ----------------------------------------------------------------------------- CA East Side Union High School District Series 2003 B, Insured: MBIA 5.100% 02/01/20 1,320,000 1,475,258 ----------------------------------------------------------------------------- CA Empire Union School District Series 1987-1 A, Insured: AMBAC (b) 10/01/21 1,665,000 742,473 ----------------------------------------------------------------------------- CA Los Angeles Community College District Series 2003 B, Insured: FSA 5.000% 08/01/19 2,000,000 2,153,060 ----------------------------------------------------------------------------- CA Los Angeles Unified School District Series 1997 E, Insured: MBIA 5.125% 01/01/27 3,800,000 3,966,972 Series 2002, Insured: MBIA 5.750% 07/01/16 800,000 944,248
See Accompanying Notes to Financial Statements. 21 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Local General Obligations - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CA Modesto High School District Series 2002 A, Insured: FGIC (b) 08/01/19 2,650,000 1,340,184 ----------------------------------------------------------------------------- CA Pasadena Community College District Series 2003 A, Insured: FGIC 5.000% 06/01/19 1,290,000 1,387,098 ----------------------------------------------------------------------------- CA Rocklin Unified School District Election of 2002, Series 2003, Insured: FGIC (b) 08/01/17 3,130,000 1,774,773 ----------------------------------------------------------------------------- CA William S. Hart Union High Series 2003 A, School District Insured: MBIA 5.000% 09/01/19 1,625,000 1,749,995 ----------------------------------------------------------------------------- CO Red Sky Ranch Metropolitan District Series, 2003, 6.050% 12/01/33 1,000,000 1,018,810 ----------------------------------------------------------------------------- IL Hoffman Estates Park District Series 2004, 5.250% 12/01/23 1,000,000 1,056,150 ----------------------------------------------------------------------------- NY New York City Series 1995 B, 7.250% 08/15/07 1,000,000 1,116,230 Series 2003 J, 5.500% 06/01/18 1,500,000 1,641,450 ----------------------------------------------------------------------------- OH Dublin City School District Series 2003, Insured: FSA 5.000% 12/01/20 2,450,000 2,628,360 ----------------------------------------------------------------------------- TX Dallas County Flood Control District Series 2002, 7.250% 04/01/32 (a) 1,000,000 1,045,920 ----------------------------------------------------------------------------- WA Clark County School District No. 037 Vancouver, Series 2001 B, Insured: FGIC (b) 12/01/18 2,500,000 1,324,000 ----------------------------------------------------------------------------- Local General Obligations Total 25,364,981 Special Non-Property Tax - 3.5% - ------------------------------------------ ----------------------------------------------------------------------------- CO State Department of Transportation Series 2001 832R-A, Insured: MBIA 8.840% 06/15/14 (j) 3,000,000 3,878,370 ----------------------------------------------------------------------------- FL Northern Palm Beach County Series 1999, Improvement District Insured: MBIA: 5.900% 08/01/19 500,000 551,645 6.000% 08/01/29 750,000 831,368 ----------------------------------------------------------------------------- MO St. Louis County Industrial Kiel Center Arena, Series 1992, AMT, Development Authority 7.875% 12/01/24 3,000,000 3,028,740 ----------------------------------------------------------------------------- NJ Economic Development Authority Cigarette Tax, Series 2004: 5.500% 06/15/31 315,000 323,401 5.750% 06/15/29 1,000,000 1,048,260 -----------------------------------------------------------------------------
22 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Special Non-Property Tax - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- NY State Thruway Authority Series 2003 A, Insured: MBIA 5.000% 03/15/20 3,500,000 3,732,470 ----------------------------------------------------------------------------- PR Commonwealth of Puerto Rico Highway Series 2003 AA, & Transportation Authority Insured: MBIA: 5.500% 07/01/18 1,225,000 1,433,434 5.500% 07/01/19 2,320,000 2,722,520 ----------------------------------------------------------------------------- Special Non-Property Tax Total 17,550,208 Special Property Tax - 5.6% - ------------------------------------------ ----------------------------------------------------------------------------- CA Carson Improvement Board Act 1915 Series 1992, 7.375% 09/02/22 135,000 135,370 ----------------------------------------------------------------------------- CA Huntington Beach Community Grand Coast Resort, Series 2000-1, Facilities District 6.450% 09/01/31 1,250,000 1,300,250 ----------------------------------------------------------------------------- CA Irvine Improvement Bond Act 1915 No. 00-18-GRP 3, Series 2003, 5.550% 09/02/26 500,000 502,005 ----------------------------------------------------------------------------- CA Lincoln Special Tax Community Facility District No 2003-1, Series 2004, 5.750% 09/01/20 500,000 500,350 5.900% 09/01/24 500,000 504,285 ----------------------------------------------------------------------------- CA Oakdale Public Financing Authority Central City Redevelopment Project, Tax Allocation Series 2004, 5.375% 06/01/33 2,000,000 2,013,860 ----------------------------------------------------------------------------- CA Oceanside Community Downtown Redevelopment Project, Series 2003, Development Commissions 5.700% 09/01/25 500,000 519,345 ----------------------------------------------------------------------------- CA Orange County Community Ladera Ranch: Facilities District Series 1999 A, 6.500% 08/15/21 1,000,000 1,092,540 Series 2003 A, 5.550% 08/15/33 1,000,000 1,014,050 ----------------------------------------------------------------------------- CA Orange County Improvement Bond Act 1915 Phase IV, No. 01-1-B, Series 2003, 5.750% 09/02/33 1,000,000 1,021,100 ----------------------------------------------------------------------------- CA Redwood City Community Facilities Redwood, Series 2003 B, District No.1 6.000% 09/01/33 700,000 723,786 ----------------------------------------------------------------------------- CA Temecula Valley Unified School District Series 2003, 6.125% 09/01/33 600,000 612,084 ----------------------------------------------------------------------------- FL Brandy Creek Community Series 2003 A, Development District 6.350% 05/01/34 1,000,000 1,043,170 ----------------------------------------------------------------------------- FL Celebration Community Series 2003 A, Development District 6.400% 05/01/34 1,000,000 1,044,460 ----------------------------------------------------------------------------- FL Colonial Country Club Community Series 2003, Development District 6.400% 05/01/33 745,000 785,893 ----------------------------------------------------------------------------- FL Concorde Estates Communityt Series 2004 A, Development District 5.850% 05/01/35 1,320,000 1,326,745
See Accompanying Notes to Financial Statements. 23 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Special Property Tax -(continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- FL Double Branch Community Series 2002 A, Development District 6.700% 05/01/34 700,000 755,692 Series 2003 B, 5.375% 05/01/08 1,000,000 1,020,680 ----------------------------------------------------------------------------- FL Heritage Palms Community Series 1999, Development District 6.250% 11/01/07 250,000 252,007 ----------------------------------------------------------------------------- FL Islands at Doral Southwest Community Series 2003, Development District 6.375% 05/01/35 770,000 810,309 ----------------------------------------------------------------------------- FL Lexington Oaks Community Series 1998 A, Development District 6.125% 05/01/19 250,000 254,428 Series 1998 B, 5.500% 05/01/05 25,000 25,062 Series 2000 A: 7.200% 05/01/30 675,000 708,973 6.700% 05/01/33 250,000 265,222 ----------------------------------------------------------------------------- FL Middle Village Community Series 2004 A, Development District 6.000% 05/01/35 2,000,000 2,044,780 ----------------------------------------------------------------------------- FL Orlando Conroy Road Interchange Project, Series 1998 A: 5.500% 05/01/10 325,000 337,058 5.800% 05/01/26 600,000 611,370 ----------------------------------------------------------------------------- FL Seven Oaks Community Special Assessment Revenue: Development District II Series 2004 A, 5.875% 05/01/35 500,000 502,300 Series 2004 B, 5.000% 05/01/09 750,000 753,285 ----------------------------------------------------------------------------- FL Stoneybrook Community Series 1998 A, Development District 6.100% 05/01/19 800,000 814,440 Series 1998 B, 5.700% 05/01/08 25,000 25,489 ----------------------------------------------------------------------------- FL Westchester Community Series 2003, Development District 6.125% 05/01/35 800,000 824,000 ----------------------------------------------------------------------------- IL Chicago Tax Increment Pilsen Redevelopment, Series 2004 B, 6.750% 11/01/11 1,225,000 1,265,143 ----------------------------------------------------------------------------- IL Lincolnshire Special Service Area No.1 Sedgebrook Project, Series 2004, Insured: AMBAC 6.250% 03/01/34 750,000 755,917 ----------------------------------------------------------------------------- MI Pontiac Finance Authority Development Area No. 3, Series 2002, 6.375% 06/01/31 1,000,000 1,022,570 ----------------------------------------------------------------------------- MO Riverside Tax Increment L-385 Levee Project, Series 2004, 5.250% 05/01/20 1,275,000 1,308,673 ----------------------------------------------------------------------------- Special Property Tax Total 28,496,691
24 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) State Appropriated - 0.9% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CA State Public Works Board Coalinga State Hospital, Series 2004 A, 5.500% 06/01/19 1,000,000 1,110,900 ----------------------------------------------------------------------------- LA State Military Department Custody Receipts, Series 2004, 4.850% 05/01/24 1,500,000 1,500,015 ----------------------------------------------------------------------------- NY Triborough Bridge & Tunnel Authority Javits Convention Center Project, Series 1990 E, 7.250% 01/01/10 1,770,000 1,979,727 ----------------------------------------------------------------------------- State Appropriated Total 4,590,642 State General Obligations - 2.7% - ------------------------------------------ ----------------------------------------------------------------------------- CA State Series 2003: 5.250% 02/01/18 2,000,000 2,224,600 5.250% 02/01/20 2,000,000 2,220,960 5.250% 02/01/23 800,000 883,112 ----------------------------------------------------------------------------- MA Massachusetts Bay Series 1992 B, Transportation Authority Insured: MBIA 6.200% 03/01/16 5,825,000 6,968,389 ----------------------------------------------------------------------------- PR Commonwealth of Puerto Rico Series 2004 A, 5.000% 07/01/30 1,200,000 1,289,568 ----------------------------------------------------------------------------- State General Obligations Total 13,586,629 ----------- TAX-BACKED TOTAL 100,073,797 TRANSPORTATION - 6.5% Air Transportation - 2.6% - ------------------------------------------ ----------------------------------------------------------------------------- CA Los Angeles Regional Airports American Airlines, Inc., Series 2002 C, AMT, Improvement Corp. 7.500% 12/01/24 400,000 402,568 ----------------------------------------------------------------------------- FL Capital Trust Agency Air Cargo Orlando Project, Series 2003, AMT, 6.750% 01/01/32 650,000 641,206 ----------------------------------------------------------------------------- IL Chicago O'Hare International Airport United Airlines, Inc., Series 2000 A, AMT, 6.750% 11/01/11 (a)(c) 1,600,000 566,880 ----------------------------------------------------------------------------- IN Indianapolis Airport Authority Federal Express Corp., Series 1994, AMT, 5.100% 01/15/17 1,000,000 1,055,760 ----------------------------------------------------------------------------- MA State Port Authority Delta Airlines, Inc., Series 2001 A, AMT, Insured: AMBAC 5.500% 01/01/16 2,935,000 3,123,045 ----------------------------------------------------------------------------- MN Minneapolis & St. Paul Metropolitan Northwest Airlines: Airports Commission Series 2001 A, AMT, 7.000% 04/01/25 1,800,000 1,649,826 Series 2001 B, AMT, 6.500% 04/01/25 500,000 501,375 Series 2005, AMT, 7.375% 04/01/25 (k) 500,000 480,155
See Accompanying Notes to Financial Statements. 25 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TRANSPORTATION - (continued) Air Transportation - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- NC Charlotte/Douglas International Airport US Airways: Series 1998, AMT, 5.600% 07/01/27 (l) 500,000 228,660 Series 2000, AMT, 7.750% 02/01/28 (l) 1,250,000 614,388 ----------------------------------------------------------------------------- NJ State Economic Development Authority Continental Airlines, Inc., Project: Series 1999, AMT, 6.250% 09/15/29 500,000 405,935 Series 2003, AMT, 9.000% 06/01/33 1,000,000 1,025,190 ----------------------------------------------------------------------------- PA Philadelphia Authority for Aero Philadelphia, Series 1999, AMT: Industrial Development 5.250% 01/01/09 350,000 345,058 5.500% 01/01/24 1,000,000 933,760 ----------------------------------------------------------------------------- TX Houston Industrial Development Corp. United Parcel Service, Series 2002, AMT, 6.000% 03/01/23 1,072,549 1,108,619 ----------------------------------------------------------------------------- Air Transportation Total 13,082,425 Airports - 1.3% - ------------------------------------------ ----------------------------------------------------------------------------- DC Metropolitan Washington Series 2003 A, AMT, Airports Authority Insured: FGIC 5.000% 10/01/33 1,500,000 1,509,390 ----------------------------------------------------------------------------- NC Charlotte Airport Authority Series 1999, AMT, Insured: MBIA 9.920% 04/20/19 (g)(i)(j) 4,000,000 4,936,280 ----------------------------------------------------------------------------- Airports Total 6,445,670 Ports - 1.2% - ------------------------------------------ ----------------------------------------------------------------------------- WA Port of Seattle Series 2000 A, AMT, Insured: MBIA 9.790% 02/01/10 (g)(j) 1,250,000 1,554,212 Series 2000 B, AMT, Insured: MBIA 9.790% 02/01/11 (g)(j) 3,750,000 4,706,250 ----------------------------------------------------------------------------- Ports Total 6,260,462 Toll Facilities - 1.0% - ------------------------------------------ ----------------------------------------------------------------------------- CO E-470 Public Highway Authority Series 2000 B, Insured: MBIA (b) 09/01/18 4,000,000 2,151,600 ----------------------------------------------------------------------------- CO Northwest Parkway Public Series 2001 D, Highway Authority 7.125% 06/15/41 2,750,000 2,983,172 ----------------------------------------------------------------------------- Toll Facilities Total 5,134,772 Transportation - 0.4% - ------------------------------------------ ----------------------------------------------------------------------------- NV State Department of Business & Industry Las Vegas Monorail Project, Series 2000, 7.375% 01/01/40 1,750,000 1,788,273 ----------------------------------------------------------------------------- Transportation Total 1,788,273 ---------- TRANSPORTATION TOTAL 32,711,602
26 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) UTILITY - 16.3% Independent Power Producers - 3.0% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MI Midland County Economic Series 2000 A, AMT, Development Corp. 6.875% 07/23/09 1,650,000 1,718,838 ----------------------------------------------------------------------------- NY Port Authority of New York & New Jersey KIAC Power Project, Series 1996, AMT, 6.750% 10/01/11 1,000,000 1,050,480 ----------------------------------------------------------------------------- PA Carbon County Industrial Panther Creek Partners Project, Development Authority Series 2000, AMT, 6.650% 05/01/10 920,000 996,608 ----------------------------------------------------------------------------- PA State Economic Development Colver Project, Series 1994 D, AMT, Financing Authority 7.150% 12/01/18 1,650,000 1,689,237 Northampton Generating: Series 1994 A, AMT, 6.500% 01/01/13 3,000,000 3,032,580 Series 1994 B, AMT, 6.750% 01/01/07 2,530,000 2,612,503 ----------------------------------------------------------------------------- VA Pittsylvania County Industrial Multitrade of Pittsylvania, Series 1994 A, AMT: Development Authority 7.450% 01/01/09 3,500,000 3,646,790 7.500% 01/01/14 500,000 520,580 ----------------------------------------------------------------------------- Independent Power Producers Total 15,267,616 Investor Owned - 5.7% - ------------------------------------------ ----------------------------------------------------------------------------- AZ Maricopa County Pollution Control Corp. El Paso Electric Co. Project, Series 2002 A, 6.250% 05/01/37 1,000,000 1,021,320 Southern California Edison Co., Series 2000 A, 2.900% 06/01/35 1,000,000 981,220 ----------------------------------------------------------------------------- CA Chula Vista Industrial San Diego Gas & Electric, Series 1996, AMT, Development Authority 5.500% 12/01/21 1,275,000 1,355,019 ----------------------------------------------------------------------------- FL Polk County Industrial Tampa Electric Co. Project, Series 1996, AMT, Development Authority 5.850% 12/01/30 1,500,000 1,535,985 ----------------------------------------------------------------------------- IL State Development Finance Authority Peoples Gas Light & Coke Co., Series 2003 E, AMT, Insured: AMBAC 4.875% 11/01/38 2,500,000 2,561,700 ----------------------------------------------------------------------------- IN Petersburg Indiana Power & Light Co.: Series 1991, 5.750% 08/01/21 1,000,000 1,047,730 Series 1995, 6.625% 12/01/24 255,000 261,531 ----------------------------------------------------------------------------- LA Calcasieu Parish Industrial Entergy Gulf States, Inc., Series 1999, Development Board 5.450% 07/01/10 500,000 511,815 ----------------------------------------------------------------------------- LA West Feliciana Parish Entergy Gulf States, Inc., Series 1999 B, 6.600% 09/01/28 250,000 255,442 ----------------------------------------------------------------------------- MS State Business Finance Corp. Systems Energy Resources, Inc. Project, Series 1999, 5.900% 05/01/22 1,500,000 1,515,795
See Accompanying Notes to Financial Statements. 27 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) UTILITY - (continued) Investor Owned - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MT Forsyth Pollution Control Portland General Electric Co., Series 1998 A, 5.200% 05/01/33 375,000 398,205 ----------------------------------------------------------------------------- NC Wake County Industrial Facilities Carolina Power & Light, Series 2002, & Pollution Control Financing Authority 5.375% 02/01/17 2,000,000 2,151,160 ----------------------------------------------------------------------------- NM Farmington Pollution Control Tucson Electric Power Co., Series 1997 A, 6.950% 10/01/20 2,000,000 2,104,960 ----------------------------------------------------------------------------- NV Clark County Industrial Nevada Power Co., Series 1995 B, AMT, Development Authority 5.900% 10/01/30 2,135,000 2,087,902 ----------------------------------------------------------------------------- NV Clark County Pollution Southern California Edison, Series 2000, AMT, Control Authority 3.250% 06/01/31 1,000,000 994,180 ----------------------------------------------------------------------------- PA Beaver County Industrial Toledo Edison Co. Project, Series 1995, Development Authority 7.625% 05/01/20 2,000,000 2,069,440 ----------------------------------------------------------------------------- PA Economic Developing Financing Authority Reliant Energy Seward, Series 2001 A, AMT, 6.750% 12/01/36 800,000 829,408 ----------------------------------------------------------------------------- SC Berkeley County Pollution Control South Carolina Generating Co. Project, Facilities Authority Series 2003, 4.875% 10/01/14 1,500,000 1,593,180 ----------------------------------------------------------------------------- TX Brazos River Authority Texas Utilities Electric Co., Series 2001 C, AMT, 5.750% 05/01/36 515,000 565,805 Series 2003 C, AMT, 6.750% 10/01/38 1,180,000 1,287,274 ----------------------------------------------------------------------------- WY Campbell County Pollution Control Black Hills Power Project, Inc., Series 2004, 5.350% 10/01/24 2,250,000 2,287,710 ----------------------------------------------------------------------------- WY Converse County Pollution Control PacifiCorp, Series 1988, 3.900% 01/01/14 1,500,000 1,456,395 ----------------------------------------------------------------------------- Investor Owned Total 28,873,176 Joint Power Authority - 1.4% - ------------------------------------------ ----------------------------------------------------------------------------- GA State Municipal Electric Authority Series 1991 V, 6.600% 01/01/18 3,375,000 4,092,559 ----------------------------------------------------------------------------- NC Eastern Municipal Power Agency Series 1991 A, 6.500% 01/01/18 1,680,000 2,035,774 Series 2003 C, 5.375% 01/01/17 1,000,000 1,064,460 ----------------------------------------------------------------------------- Joint Power Authority Total 7,192,793 Municipal Electric - 4.5% - ------------------------------------------ ----------------------------------------------------------------------------- MN Western Municipal Power Agency Series 2003 B, Insured: MBIA 5.000% 01/01/15 500,000 554,360
28 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Bonds - (continued) UTILITY - (continued) Municipal Electric - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- NY Long Island Power Authority Series 1998-8 C, Insured: AMBAC 5.000% 04/01/10 2,000,000 2,197,460 Series 2003 A, 5.000% 06/01/09 2,000,000 2,167,700 ----------------------------------------------------------------------------- PR Electric Power Authority Series 1998 NN, 5.500% 07/01/20 1,005,000 1,145,328 ----------------------------------------------------------------------------- TX Lower Colorado River Authority Series 1999 A, Insured: AMBAC 5.500% 05/15/21 15,000,000 16,462,800 ----------------------------------------------------------------------------- Municipal Electric Total 22,527,648 Water & Sewer - 1.7% - ------------------------------------------ ----------------------------------------------------------------------------- AZ Gilbert Water Resources Municipal Wastewater Systems & Utilities Revenue, Property Corp. Series 2004, 4.900% 04/01/19 1,000,000 999,930 ----------------------------------------------------------------------------- CA State Department of Water Resources Central Valley Project, Series 2002 X, Insured: FGIC 5.500% 12/01/17 1,300,000 1,515,202 ----------------------------------------------------------------------------- FL Key West Sewer Revenue, Series 2003, Insured: FGIC 5.250% 10/01/18 1,000,000 1,105,450 ----------------------------------------------------------------------------- MS Water System V Lakes Utility District, Series 1994, 8.250% 07/15/24 400,000 397,448 ----------------------------------------------------------------------------- NH State Industrial Development Authority Pennichuck Water Works, Inc. Project, Series 1988, AMT, 7.500% 07/01/18 440,000 506,427 ----------------------------------------------------------------------------- PA Dauphin County Industrial Dauphin Water Supply Co., Development Authority Series 1992 A, AMT, 6.900% 06/01/24 3,200,000 4,065,152 ----------------------------------------------------------------------------- Water & Sewer Total 8,589,609 ---------- UTILITY TOTAL 82,450,842 Total Municipal Bonds (cost of $462,559,360) 477,819,150 Municipal Preferred Stocks - 1.4% HOUSING - 1.4% Multi-Family - 1.4% - ------------------------------------------ ----------------------------------------------------------------------------- Charter Municipal Mortgage Acceptance Co. AMT: 6.300% 04/30/19 (g) 1,000,000 1,074,810 6.625% 06/30/09 (g) 2,000,000 2,214,360 7.600% 11/30/10 (g) 1,500,000 1,736,955 ----------------------------------------------------------------------------- GMAC Municipal Mortgage Trust, AMT, 5.600% 10/31/39 (g) 1,000,000 1,004,000
See Accompanying Notes to Financial Statements. 29 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Municipal Preferred Stocks - (continued) HOUSING - (continued) Multi-Family - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MuniMae Series C-2, AMT, 5.800% 09/30/14 (g) 1,000,000 1,003,960 ---------- Total Municipal Preferred Stocks (cost of $6,500,000) 7,034,085 Short-Term Obligations - 3.1% Variable Rate Demand Notes (m) - 3.1% - ------------------------------------------ ----------------------------------------------------------------------------- FL Alachua County Health Oak Hammock University Project, Series 2000 A, Facilities Authority Insured: FGIC 2.220% 10/01/32 1,800,000 1,800,000 ----------------------------------------------------------------------------- IA State Finance Authority Drake University Project: Series 2001, 2.270% 07/01/31 700,000 700,000 Series 2003, 2.220% 07/01/24 200,000 200,000 Village Court Associates, Series 1985 A, 1.990% 11/01/15 600,000 600,000 ----------------------------------------------------------------------------- IA Higher Education Loan Authority Loras College, Series 2000, 2.220% 11/01/30 900,000 900,000 ----------------------------------------------------------------------------- IA Woodbury County Siouxland Medical Education Foundation, Series 1996, 2.040% 11/01/16 1,500,000 1,500,000 ----------------------------------------------------------------------------- IL State Health Facilities Authority OSF Healthcare Systems, Series 2002, 2.170% 11/15/27 2,700,000 2,700,000 ----------------------------------------------------------------------------- MN State Higher Education St. Olaf College, Series 2002 5-M1, Facilities Authority 2.220% 10/01/32 1,600,000 1,600,000 ----------------------------------------------------------------------------- MO State Health & Educational Facilities Washington University, Series 1996 D, 2.150% 09/01/30 1,000,000 1,000,000 ----------------------------------------------------------------------------- ND Ward County Health Care Trinity Health, Series 2002 A, Facilities Authority 2.270% 07/01/29 195,000 195,000 ----------------------------------------------------------------------------- NY New York City Municipal Water Series 1994 G, Finance Authority 2.150% 06/15/24 1,900,000 1,900,000 ----------------------------------------------------------------------------- UT Eagle Mountain Gas & Electric Series 2001, 2.000% 12/15/25 400,000 400,000 ----------------------------------------------------------------------------- WI State Health & Education ProHealth Care, Inc., Riverview Hospital Association, Facilities Authority Series 2001, 2.270% 10/01/30 1,005,000 1,005,000
30 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
Short-Term Obligations - (continued) Variable Rate Demand Notes (m) - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- WY Uinta County Pollution Control Authority Chevron USA, Inc., Project, Series 1993, 2.150% 08/15/20 1,300,000 1,300,000 ---------- Total Short-Term Obligations (cost of $15,800,000) 15,800,000 Total Investments - 99.1% (cost of $484,859,360) (n) 500,653,235 Other Assets & Liabilities, Net - 0.9% 4,784,310 Net Assets - 100.0% 505,437,545
Notes to Investment Portfolio: (a) Denotes a restricted security, which is subject to registration with the SEC or is required to be exempted from such registrations prior to resale. At December 31, 2004, the value of these securities amounted to $6,532,432, which represents 1.3% of net assets. Acquisition Acquisition Security Date Cost - -------- ----------- ----------- CA ABAG Finance Authority for Nonprofit Corps. Eskaton Gold River Lodge, Series 1998: 6.375% 11/15/15 07/30/98 $ 622,221 6.375% 11/15/28 07/30/98 541,298 CA California Statewide Communities Development Authority Crossroads School for Arts & Sciences, Series 1998, 6.000% 08/01/28 08/21/98 980,000 San Francisco Art Institute, Series 2002, 7.375% 04/01/32 07/05/02 750,000 CA Statewide Community Development Authority Eskaton Village - Grass Valley, Series 2000, 8.250% 11/15/31 09/08/00 1,730,000 IL Chicago O'Hare International Airport United Airlines, Inc., Series 2000 A, AMT, 6.750% 11/01/11 06/14/00 1,625,959 TX Dallas County Flood Control District Series 2002, 7.250% 04/01/32 12/13/02 1,000,000 ----------- $7,249,478 ----------- (b) Zero coupon bond. (c) The issuer has filed for bankruptcy protection under Chapter 11 and is in default of certain debt covenants. Income is not being accrued. As of December 31, 2004, the value of these securities amounted to $631,419, which represents 0.1% of net assets. (d) Represents fair value as determined in good faith under procedures approved by the Board of Trustees. (e) The issuer is in default of certain debt covenants. Income is being partially accrued based on the execution of a forbearance agreement with the borrower. As of December 31, 2004, the value of these securities amounted to $229,500, which represents less than 0.1% of net assets. (f) The issuer is in default of certain debt covenants. Income is not being accrued. As of December 31, 2004, the value of these securities amounted to $1,295,679, which represents 0.3% of the net assets. (g) 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 December 31, 2004, these securities amounted to $35,045,819, which represents 6.9% of net assets. See Accompanying Notes to Financial Statements. 31 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund Notes to Investment Portfolio (continued): (h) 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. (i) The security or a portion of the security is pledged as collateral for open futures contracts. At December 31, 2004, the total market value of securities pledged amounted to $1,805,114. (j) Variable rate security. The interest rate shown reflects the rate as of December 31, 2004. (k) Security purchased on a delayed delivery basis. (l) The issuer has filed for bankruptcy protection under Chapter 11. Income is being accrued. As of December 31, 2004, the value of these securities amounted to $843,048, which represents 0.2% 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 as of December 31, 2004. (n) Cost for federal income tax purposes is $484,527,173. At December 31, 2004, the Fund held the following open short futures contracts:
Number of Aggregate Expiration Unrealized Type Contracts Value Face Value Date Depreciation - ------------ --------- ----- ---------- ---------- ------------ 10-Year U.S. Treasury Notes 244 $27,312,750 $26,975,705 Mar-2005 $ (337,045) U.S. Long Bonds 450 50,625,000 49,581,900 Mar-2005 (1,043,100) ------------ $ (1,380,145) ------------
At December 31, 2004, the Fund held investments in the following: Holdings by Revenue % of Source Net Assets - ---------------------------------------------------------------- Health Care 25.5% Tax-Backed 19.8 Utility 16.3 Other 8.2 Transportation 6.5 Industrial 6.2 Housing 6.2 Education 3.6 Other Revenue 2.0 Resource Recovery 1.7 Short-Term Obligations 3.1 Other Assets & Liabilities, Net 0.9 ------ 100.0% ------ Acronym Name - ------- ------ ABAG Association of Bay Area Government AMBAC Ambac Assurance Corp. AMT Alternative Minimum Tax FGIC Financial Guaranty Insurance Co. FSA Financial Security Assurance, Inc. GNMA Government National Mortgage Association MBIA MBIA Insurance Corp. RAD Radian Asset Assurance, Inc. 32 See Accompanying Notes to Financial Statements. STATEMENT OF ASSETS AND LIABILITIES December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
($) - ------------------------------------------ ----------------------------------------------------------------------------- Assets Investments, at cost 484,859,360 ----------- Investments, at value 500,653,235 Cash 41,682 Receivable for: Investments sold 107 Fund shares sold 699,092 Interest 7,626,465 Deferred Trustees' compensation plan 13,575 ----------- Total Assets 509,034,156 ----------------------------------------------------------------------------- Liabilities Payable for: Investments purchased on a delayed delivery basis 480,920 Fund shares repurchased 1,014,521 Futures variation margin 402,313 Distributions 1,281,892 Investment advisory fee 175,022 Administration fee 48,267 Transfer agent fee 47,417 Pricing and bookkeeping fees 11,155 Trustees' fees 752 Custody fee 1,848 Legal fee 41,326 Distribution and service fees 47,778 Deferred Trustees' fees 13,575 Other liabilities 29,825 ----------- Total Liabilities 3,596,611 Net Assets 505,437,545 ----------------------------------------------------------------------------- Composition of Net Assets Paid-in capital 518,709,026 Undistributed net investment income 803,379 Accumulated net realized loss (28,488,590) Net unrealized appreciation (depreciation) on: Investments 15,793,875 Futures contracts (1,380,145) Net Assets 505,437,545 ----------------------------------------------------------------------------- Class A Net assets 86,899,123 Shares outstanding 7,703,777 Net asset value per share 11.28(a) Maximum offering price per share ($11.28/0.9525) 11.84(b) ----------------------------------------------------------------------------- Class B Net assets 36,024,095 Shares outstanding 3,193,671 Net asset value and offering price per share 11.28(a) ----------------------------------------------------------------------------- Class C Net assets 12,932,714 Shares outstanding 1,146,533 Net asset value and offering price per share 11.28(a) ----------------------------------------------------------------------------- Class Z Net assets 369,581,613 Shares outstanding 32,764,845 Net asset value, offering and redemption price per share 11.28
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 33 STATEMENT OF OPERATIONS For the Six Months Ended December 31, 2004 (unaudited) Columbia High Yield Municipal Fund
($) - ------------------------------------------ ----------------------------------------------------------------------------- Investment Income Interest 14,027,714 Dividends 4,283 ----------- Total Investment Income 14,031,997 ----------------------------------------------------------------------------- Expenses Investment advisory fee 1,016,193 Administration fee 282,404 Distribution fee: Class B 142,542 Class C 44,626 Service fee: Class A 80,848 Class B 38,011 Class C 11,877 Transfer agent fee 160,406 Pricing and bookkeeping fees 78,954 Trustees' fees 8,078 Custody fee 12,658 Non-recurring costs (See Note 7) 3,243 Other expenses 81,362 ----------- Total Expenses 1,961,202 Fees waived by Distributor - Class C (8,995) Non-recurring costs assumed by Investment Advisor (See Note 7) (3,243) Custody earnings credit (1,007) ----------- Net Expenses 1,947,957 ----------- Net Investment Income 12,084,040 ----------------------------------------------------------------------------- Net Realized and Unrealized Net realized gain (loss) on: Gain (Loss) on Investments Investments (358,367) and Futures Contracts Futures contracts (4,295,795) ----------- Net realized loss (4,654,162) Net change in unrealized appreciation/depreciation on: Investments 19,042,486 Futures contracts (766,796) ----------- Net change in unrealized appreciation/depreciation 18,275,690 ----------- Net Gain 13,621,528 ----------- Net Increase in Net Assets from Operations 25,705,568
34 See Accompanying Notes to Financial Statements. STATEMENT OF CHANGES IN NET ASSETS Columbia High Yield Municipal Fund
(unaudited) Six Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2004 ($) 2004 ($) - ------------------------------------------ ----------------------------------------------------------------------------- Operations Net investment income 12,084,040 22,553,671 Net realized loss on investments and futures contracts (4,654,162) (2,835,595) Net change in unrealized appreciation/depreciation on investments and futures contracts 18,275,690 (9,901,895) ------------------------- Net Increase from Operations 25,705,568 9,816,181 ----------------------------------------------------------------------------- Distributions Declared to Shareholders From net investment income: Class A (1,956,997) (3,706,340) Class B (779,466) (1,815,192) Class C (251,588) (424,459) Class Z (9,073,072) (15,175,224) Total Distributions Declared to Shareholders (12,061,123) (21,121,215) ----------------------------------------------------------------------------- Share Transactions Class A: Subscriptions 13,078,418 16,363,219 Distributions reinvested 958,176 1,627,683 Redemptions (7,106,504) (16,560,731) ------------------------- Net Increase 6,930,090 1,430,171 Class B: Subscriptions 1,697,627 4,301,221 Distributions reinvested 371,008 790,221 Redemptions (6,225,132) (16,184,713) ------------------------- Net Decrease (4,156,497) (11,093,271) Class C: Subscriptions 2,779,749 5,046,875 Distributions reinvested 110,830 189,787 Redemptions (758,129) (3,607,047) ------------------------- Net Increase 2,132,450 1,629,615 Class Z: Subscriptions 56,347,575 159,946,744 Distributions reinvested 3,107,944 6,658,155 Redemptions (41,279,878) (62,076,415) ------------------------- Net Increase 18,175,641 104,528,484 Net Increase from Share Transactions 23,081,684 96,494,999 ------------------------- Total Increase in Net Assets 36,726,129 85,189,965 ----------------------------------------------------------------------------- Net Assets Beginning of period 468,711,416 383,521,451 End of period (including undistributed net investment income of $803,379 and $780,462, respectively) 505,437,545 468,711,416 -----------------------------------------------------------------------------
See Accompanying Notes to Financial Statements. 35 Columbia High Yield Municipal Fund
(unaudited) Six Months Ended Year Ended December 31, June 30, 2004 2004 - ------------------------------------------ ----------------------------------------------------------------------------- Changes in Shares Class A: Subscriptions 1,165,448 1,465,019 Issued for distributions reinvested 85,643 146,315 Redemptions (637,124) (1,487,321) ------------------------ Net Increase 613,967 124,013 Class B: Subscriptions 151,658 386,742 Issued for distributions reinvested 33,170 71,050 Redemptions (556,780) (1,452,718) ------------------------ Net Decrease (371,952) (994,926) Class C: Subscriptions 248,231 452,312 Issued for distributions reinvested 9,906 17,051 Redemptions (67,585) (323,401) ------------------------ Net Increase 190,552 145,962 Class Z: Subscriptions 5,035,142 14,361,735 Issued for distributions reinvested 277,868 598,631 Redemptions (3,685,435) (5,590,536) ------------------------ Net Increase 1,627,575 9,369,830
36 See Accompanying Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS December 31, 2004 (unaudited) Columbia High Yield Municipal Fund Note 1. Organization Columbia High Yield Municipal Fund (the "Fund"), a series of 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 ordinary 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 are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. Note 2. Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. Security Valuation Debt securities generally are valued by 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 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 quotations which management believes are not appropriate, are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Security Transactions Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. Futures Contracts The Fund may invest in municipal and U.S. Treasury futures contracts. The Fund will invest in these instruments to hedge against the effects of changes in 37 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund 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 and not for trading purposes. The use of futures contracts involves certain risks, which include: (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out positions due to differing trading hours, or the temporary absence of a liquid market, for either the instrument or the underlying securities, or (3) an inaccurate prediction by Columbia Management Advisors, Inc. of the future direction of interest rates. Any of these risks may involve amounts exceeding the variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. Upon entering into a futures contract, the Fund deposits cash or securities with the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin receivable or payable and offset in unrealized gains or losses. The Fund also identifies portfolio securities as segregated with the custodian in a separate account in an amount equal to the futures contract. The Fund recognizes a realized gain or loss when the contract is closed or expires. 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. 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 an amount equal to the delayed delivery commitment. 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 all 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. 38 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund Note 3. Federal Tax Information The tax character of distributions paid during the year ended June 30, 2004 was as follows: - ------------------------------------------------------------------------------- June 30, 2004 - ------------------------------------------------------------------------------- Distributions Paid From: - ------------------------------------------------------------------------------- Tax-Exempt Income $ 21,095,918 - ------------------------------------------------------------------------------- Ordinary Income 25,297 - ------------------------------------------------------------------------------- Long-Term Capital Gains -- - ------------------------------------------------------------------------------- Unrealized appreciation and depreciation at December 31, 2004, based on cost of investments for federal income tax purposes was: Unrealized appreciation $ 27,440,230 Unrealized depreciation (11,314,168) - ------------------------------------------------------------------------------- Net unrealized appreciation $ 16,126,062 The following capital loss carryforwards, determined as of June 30, 2004, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: - -------------------------------------------------------------------------------- Year of Capital Loss Expiration Carryforward - -------------------------------------------------------------------------------- 2005 $ 1,525,965 2006 5,933,974 2007 1,931,613 2008 2,738,332 2009 1,928,565 2010 1,780,434 2011 697,947 2012 1,587,432 - -------------------------------------------------------------------------------- Total $18,124,262 - -------------------------------------------------------------------------------- Of the capital loss carryforwards attributable to the Fund, $8,372,400 ($1,525,965 will expire on June 30, 2005, $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 a merger with Liberty High Yield Municipal Fund. Utilization of these losses could be subject to limitations imposed by the Internal Revenue Code. Note 4. Fees and Compensation Paid to Affiliates Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the Fund. Columbia, the transfer agent and the distributor, are each indirect, wholly owned subsidiaries of Bank of America Corporation ("BOA"). Investment Advisory Fee Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets as follows: - -------------------------------------------------------------------------------- Average Daily Net Assets Annual Fee Rate - -------------------------------------------------------------------------------- First $100 million 0.450% - -------------------------------------------------------------------------------- Next $100 million 0.425% - -------------------------------------------------------------------------------- Over $200 million 0.400% For the six months ended December 31, 2004, the Fund's annualized effective investment advisory fee rate was 0.42%. 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% - -------------------------------------------------------------------------------- Next $100 million 0.125% - -------------------------------------------------------------------------------- Over $200 million 0.100% - -------------------------------------------------------------------------------- For the six months ended December 31, 2004, the Fund's annualized effective administration fee rate was 0.12%. Pricing and Bookkeeping Fees Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). As a result, Columbia pays the total fees received to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an 39 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services based on the number of securities held by the Fund. For the six months ended December 31, 2004, the annualized effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.032%. Transfer Agent Fee Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services to the Fund and has subcontracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. For such services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $34.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. For the six months ended December 31, 2004, the Fund's annualized effective transfer agent fee rate, inclusive of out-of-pocket expenses, was 0.07%. Underwriting Discounts, Service and Distribution Fees Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. For the six months ended December 31, 2004, the Distributor has retained net underwriting discounts of $10,632 on sales of the Fund's Class A shares and received CDSC of $18,600 and $2,471 on Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a monthly service fee to the Distributor. 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 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. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer. The Fund's fee will not exceed $15,000 per year. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. Other Columbia provides certain services to the Fund related to Sarbanes-Oxley compliance. For the six months ended December 31, 2004, the Fund paid $632 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. Note 5. Portfolio Information For the six months ended December 31, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $30,416,177 and $15,468,254, 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 40 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum is accrued and apportioned among the participating funds based on their pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the six months ended December 31, 2004, the Fund did not borrow under this arrangement. Shares of Beneficial Interest As of December 31, 2004, 38.2% of the outstanding shares of the Fund were beneficially owned by participant accounts over which BOA and/or its affiliates had either sole or joint investment discretion. Subscription and redemption activity of this account may have a significant effect on the operations of the Fund. Note 7. Disclosure of Significant Risks and Contingencies 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 AA by Standard & Poor's. At December 31, 2004, private insurers who insured greater than 5% of the total investments of the Fund were as follows: - -------------------------------------------------------------------------------- % of Total Insurer Investment - -------------------------------------------------------------------------------- MBIA Insurance Corp. 10.7 - -------------------------------------------------------------------------------- Ambac Assurance Corp. 6.6 - -------------------------------------------------------------------------------- Geographic Concentration The Fund has greater than 5% of its total investments at December 31, 2004 invested in debt obligations issued by the states of California, Florida, Pennsylvania and Texas and their respective political subdivisions, agencies and public authorities. The Fund is more susceptible to economic 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 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 and 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 SEC (the "SEC Order" and together, the "Settlements"). The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle which Columbia Group entered into with the SEC and NYAG in March 2004. Under the terms of the SEC Order, the Columbia Group has agreed, among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review the Columbia Group's applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The Columbia Funds have also voluntarily undertaken to implement certain governance measures designed to maintain the independence of their boards of trustees. The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, 41 December 31, 2004 (unaudited) Columbia High Yield Municipal Fund LLC to reduce certain Columbia Funds, Nations Funds and other mutual fund management fees collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions. Pursuant to the procedures set forth in the SEC Order, the $140 million in settlement amounts described above will be distributed in accordance with a distribution plan to be developed by an independent distribution consultant, who is acceptable to the SEC staff and the Columbia Funds' independent trustees. The distribution plan must be based on a methodology developed in consultation with the Columbia Group and the Fund's independent trustees and not unacceptable to the staff of the SEC. 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 will be 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, their Boards and/or Bank of America (and affiliated entities). More than 300 cases (including those filed against entities unaffiliated with the funds, their Boards and/or FleetBoston and its affiliated entities) have been consolidated in a multi-district proceeding and transferred to the Federal District Court in Maryland. Recently, certain Columbia funds and affiliated entities have been named as defendants in several direct and derivative actions under various sections of the Investment Company Act of 1940, as amended, alleging, among other things, that the fees and expenses paid by those funds are excessive. On January 11, 2005 a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Fund and Columbia. The lawsuit alleges that defendants violated common law duties to fund shareholders as well as sections of the Investment Company Act of 1940, by failing to ensure that the Fund and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs allege that defendants failed to submit proof of claims in connection with settlements of securities class action lawsuits filed against companies in which the funds held positions. The funds and the other defendants to these actions, including Columbia and various of its affiliates, certain other mutual funds advised by Columbia and its affiliates, and various directors of such funds, have denied these allegations and are contesting the plaintiffs' claims. These proceedings are ongoing, however, based on currently available information, Columbia believes that these lawsuits are without merit, that the likelihood they will have a material adverse impact on any fund is remote, and that the lawsuits are not likely to materially affect its ability to provide investment management services to its clients, including the funds. For the year ended December 31, 2004, Columbia has assumed $3,243 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. 42 FINANCIAL HIGHLIGHTS Columbia High Yield Municipal Fund Selected data for a share outstanding throughout each period is as follows:
(unaudited) Six Months Period Ended Year Ended June 30, Ended December 31, -------------------------------------------- June 30, Class A Shares 2004 2004 2003 2002 2001 (a) - ---------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.96 $ 11.25 $ 11.26 $ 11.13 $ 11.11 - ---------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.27 0.56 0.60 0.61(c) 0.58 Net realized and unrealized gain (loss) on investments and futures contracts 0.32 (0.33) 0.11 0.15(c) 0.01 ----------- ----------- ----------- ----------- ----------- Total from Investment Operations 0.59 0.23 0.71 0.76 0.59 - ---------------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.27) (0.52) (0.72) (0.63) (0.57) - ---------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 11.28 $ 10.96 $ 11.25 $ 11.26 $ 11.13 Total return (d) 5.46%(e) 2.10% 6.58% 6.93% 5.42%(e) - ---------------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (f) 0.87%(g) 0.89% 1.07% 1.13% 1.06%(g) Net investment income (f) 4.86%(g) 5.04% 5.39% 5.41%(c) 5.65%(g) Portfolio turnover rate 3%(e) 10% 17% 16%(h) 16%(h) Net assets, end of period (000's) $ 86,899 $ 77,738 $ 78,335 $ 42 $ 1 - ----------------------------------------------------------------------------------------------------------------------------------
(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. 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 and no initial sales charge or contingent deferred sales charge. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. (h) Portfolio turnover rate disclosed is for the SR&F High-Yield Municipals Portfolio. 43 Columbia High Yield Municipal Fund Selected data for a share outstanding throughout each period is as follows:
(unaudited) Six Months Year Period Ended Ended Ended December 31, June 30, June 30, Class B Shares 2004 2004 2003 (a) - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.96 $ 11.25 $ 11.31 - --------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.23 0.48 0.51 Net realized and unrealized gain (loss) on investments and futures contracts 0.32 (0.33) 0.05 ----------- ----------- ----------- Total from Investment Operations 0.55 0.15 0.56 - --------------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.23) (0.44) (0.62) - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 11.28 $ 10.96 $ 11.25 Total return (c) 5.06%(d) 1.33% 5.14%(d) - --------------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (e) 1.62%(f) 1.64% 1.81%(f) Net investment income (e) 4.11%(f) 4.29% 4.70%(f) Portfolio turnover rate 3%(d) 10% 17% Net assets, end of period (000's) $ 36,024 $ 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) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. 44 Columbia High Yield Municipal Fund Selected data for a share outstanding throughout each period is as follows:
(unaudited) Six Months Year Period Ended Ended Ended December 31, June 30, June 30, Class C Shares 2004 2004 2003 (a) - ------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.96 $ 11.25 $ 11.31 - ------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.24 0.49 0.51 Net realized and unrealized gain (loss) on investments and futures contracts 0.32 (0.32) 0.07 ----------- ----------- ----------- Total from Investment Operations 0.56 0.17 0.58 - ------------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.24) (0.46) (0.64) - ------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 11.28 $ 10.96 $ 11.25 Total return (c)(d) 5.14%(e) 1.48% 5.29%(e) - ------------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (f) 1.47%(g) 1.49% 1.67%(g) Net investment income (f) 4.26%(g) 4.44% 4.75%(g) Waiver/reimbursement 0.15%(g) 0.15% 0.15%(g) Portfolio turnover rate 3%(e) 10% 17% Net assets, end of period (000's) $ 12,933 $ 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 not waived a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. 45 Columbia High Yield Municipal Fund Selected data for a share outstanding throughout each period is as follows:
(unaudited) Six Months Ended Year Ended June 30, December 31, -------------------------------------------------------------------- Class Z Shares 2004 2004 2003 (a) 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.96 $ 11.25 $ 11.26 $ 11.12 $ 11.04 $ 11.71 - ----------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income 0.28(b) 0.58(b) 0.63(b) 0.64(b)(c) 0.65(b) 0.65 Net realized and unrealized gain (loss) on investments and futures contracts 0.32 (0.32) 0.11 0.15(c) 0.08 (0.68) --------- -------- -------- -------- -------- -------- Total from Investment Operations 0.60 0.26 0.74 0.79 0.73 (0.03) - ----------------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.28) (0.55) (0.75) (0.65) (0.65) (0.64) - ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 11.28 $ 10.96 $ 11.25 $ 11.26 $ 11.12 $ 11.04 Total return (d) 5.57%(e) 2.33% 6.82% 7.30% 6.78% (0.16)% - ----------------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (f) 0.67%(g) 0.69% 0.86% 0.88% 0.81% 0.78% Net investment income (f) 5.06%(g) 5.24% 5.59% 5.66%(c) 5.86% 5.82% Portfolio turnover rate 3%(e) 10% 17% 16%(h) 16%(h) 14%(h) Net assets, end of period (000's) $ 369,582 $341,394 $244,784 $213,271 $224,950 $253,787 - -----------------------------------------------------------------------------------------------------------------------------------
(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) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. (h) Portfolio turnover rate disclosed is for the SR&F High-Yield Municipals Portfolio. 46 COLUMBIA FUNDS Columbia High Yield Municipal Fund -------------------------------------------------- Large Growth Columbia Common Stock Columbia Growth Columbia Growth Stock Columbia Large Cap Growth Columbia Tax-Managed Growth Columbia Tax-Managed Growth II* Columbia Young Investor -------------------------------------------------- Large Value Columbia Disciplined Value Columbia Growth & Income Columbia Large Cap Core Columbia Tax-Managed Value* -------------------------------------------------- Midcap Growth Columbia Acorn Select Columbia Mid Cap Growth Columbia Tax-Managed Aggressive Growth -------------------------------------------------- Midcap Value Columbia Dividend Income Columbia Mid Cap* Columbia Strategic Investor -------------------------------------------------- Small Growth Columbia Acorn Columbia Acorn USA Columbia Small Company Equity -------------------------------------------------- Small Value Columbia Small Cap Columbia Small Cap Value -------------------------------------------------- Balanced Columbia Asset Allocation Columbia Balanced Columbia Liberty Fund -------------------------------------------------- Specialty Columbia Real Estate Equity Columbia Technology Columbia Utilities -------------------------------------------------- Taxable Fixed-Income Columbia Contrarian Income Columbia Corporate Bond Columbia Federal Securities Columbia Fixed Income Securities Columbia High Yield Columbia High Yield Opportunities Columbia Income* Columbia Intermediate Bond Columbia Intermediate Government Income* Columbia Quality Plus Bond Columbia Short Term Bond* Columbia Strategic Income -------------------------------------------------- Floating Rate Columbia Floating Rate Columbia Floating Rate Advantage -------------------------------------------------- Tax Exempt Columbia High Yield Municipal Columbia Intermediate Tax-Exempt Bond Columbia Managed Municipals* Columbia National Municipal Bond** Columbia Tax-Exempt Columbia Tax-Exempt Insured 47 Columbia High Yield Municipal Fund -------------------------------------------------- Single State Tax Exempt Columbia California Tax-Exempt Columbia Connecticut Intermediate Municipal Bond Columbia Connecticut Tax-Exempt Columbia Florida Intermediate Municipal Bond* Columbia Massachusetts Intermediate Municipal Bond Columbia Massachusetts Tax-Exempt Columbia New Jersey Intermediate Municipal Bond Columbia New York Intermediate Municipal Bond Columbia New York Tax-Exempt Columbia Oregon Municipal Bond Columbia Pennsylvania Intermediate Municipal Bond* Columbia Rhode Island Intermediate Municipal Bond -------------------------------------------------- Money Market Columbia Money Market Columbia Municipal Money Market -------------------------------------------------- International/Global Columbia Acorn International Columbia Acorn International Select Columbia Europe Columbia Global Equity Columbia International Stock Columbia Newport Asia Pacific Columbia Newport Greater China Columbia Newport Tiger* -------------------------------------------------- Index Funds Columbia Large Company Index* Columbia Small Company Index Columbia U.S. Treasury Index* * The fund will be closed to new investments after the close of business on April 29, 2005. The fund's trustees have approved the merger, which is scheduled to occur during September and October, pending shareholder approval ** The fund will be closed to new investments after the close of business on April 29, 2005. The fund's trustees have approved the liquidation, which is scheduled to occur during September, pending shareholder approval Please consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. Contact us at 800-345-6611 for a prospectus which contains this and other important information about the fund. Read it carefully before you invest. For complete product information on any Columbia fund, visit our website at www.columbiafunds.com. Columbia Management Group and Columbia Management refer collectively to the various investment advisory subsidiaries of Columbia Management Group, including Columbia Management Advisors, Inc., the registered investment advisor, and Columbia Funds Distributor, Inc 48 IMPORTANT INFORMATION ABOUT THIS REPORT Columbia High Yield Municipal Fund Transfer Agent Columbia Funds Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800.345.6611 Distributor Columbia Funds Distributor, Inc. One Financial Center Boston MA 02111 Investment Advisor Columbia Management Advisors, Inc. 100 Federal Street Boston MA 02110 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 125 High Street Boston MA 02110 The funds mail one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia High Yield Municipal 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 funds and with the most recent copy of the Columbia Funds Performance Update. A description of the policies and procedures that the fund uses to determine how to vote proxies and a copy of the fund's voting record are available (i) at www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2004 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. 49 [GRAPHIC] eDelivery Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia High Yield Municipal Fund Semiannual Report, December 31, 2004. PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 Columbia Management(R) (c)2005 Columbia Funds Distributor, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 www.columbiafunds.com 752-03/091U-0105 (02/05) 05/4355 [GRAPHIC OMITTED] Columbia Managed Municipals Fund Semiannual Report December 31, 2004 Table of Contents Fund Profile............................................................... 1 Performance Information.................................................... 2 Understanding Your Expenses................................................ 3 Economic Update............................................................ 4 Portfolio Manager's Report................................................. 5 Investment Portfolio....................................................... 7 Statement of Assets and Liabilities........................................ 23 Statement of Operations.................................................... 24 Statement of Changes in Net Assets......................................... 25 Notes to Financial Statements.............................................. 27 Financial Highlights....................................................... 33 Important Information About This Report.......................................................... 37 Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. Not FDIC May Lose Value Insured No Bank Guarantee PRESIDENT'S MESSAGE Columbia Managed Municipals Fund Dear Shareholder: In 2004, Columbia Funds became part of the Bank of America family, one of the largest, most respected financial institutions in the United States. As a direct result of this merger, a number of changes are in the works that we believe may offer significant benefits for our shareholders. Plans are underway to combine various Nations Funds and Columbia Funds together to form a single fund family that covers a wide range of markets, sectors and asset classes under the management of talented, seasoned investment professionals. As a result, some funds will be merged in order to eliminate redundancies and fund management teams will be aligned to maximize performance potential. You will receive more detailed information about these proposed mergers, and you will be asked to vote on certain fund changes that may affect you and your account. In this matter, your timely response will help us to implement the changes in 2005. The increased efficiencies we expect from a more streamlined offering of funds may help us reduce fees charged to the funds, because larger funds often benefit from size and scale of operations. For example, significant savings for the combined complex may result from the consolidation of certain vendor agreements. In fact, negotiations are currently underway to consolidate the transfer agency of all of our funds and to consolidate custodial services, each under a single vendor. We have reduced management fees for many funds as part of our settlement agreement with the New York Attorney General. As a result of these changes, we believe we will offer shareholders an even stronger lineup of investment options, with management expenses that continue to be competitive and fair. What will not change as we enter this next phase of consolidation is our commitment to the highest standards of performance and our dedication to superior service. Change for the good has another name: it's called improvement. It helps move us forward, and we believe that it represents progress for all our shareholders in their quest for long-term financial success. In the pages that follow, you'll find a discussion of the economic environment during the period followed by a detailed report from the fund's manager or managers on key factors that influenced performance. We hope that you will read the manager reports carefully and discuss any questions you might have with your financial advisor. As always, we thank you for choosing Columbia Funds. We appreciate your continued confidence. And, we look forward to helping you keep your long-term financial goals on target in the years to come. Sincerely, /s/ Christopher Wilson Christopher Wilson Head of Mutual Funds, Columbia Management Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible for the day-to-day delivery of mutual fund services to the firm's investors. With the exception of distribution, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. Chris serves as Columbia Management's liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. Summary o For the six-month period ended December 31, 2004, the fund's class A shares returned 5.46% without sales charge. o The fund's return was higher than the return of its benchmark, as well as the average return of its peer group, the Lipper General Municipal Debt Funds Category. o The fund was positioned to take advantage of declining municipal bond yields, which helped the fund's performance. Class A shares [GRAPHIC] 5.46% Lehman Brothers Municipal Bond Index [GRAPHIC] 5.19% Objective Seeks a high level of total return consistent with prudent risk, consisting of current income exempt from federal income tax and opportunities for capital appreciation Total Net Assets $422.6 million Management Style Fixed Income Maturity Short Interm. Long - -------------------------------------------- Quality - -------------------------------------------- High X - -------------------------------------------- Med - -------------------------------------------- Low - -------------------------------------------- FUND PROFILE Columbia Managed Municipals Fund The information below gives you a snapshot of your fund at the end of the reporting period. Your fund is actively managed and the composition of its portfolio will change over time. Quality breakdown as of 12/31/04 (%) - -------------------------------------------------------------------------------- AAA 65.3 - -------------------------------------------------------------------------------- AA 5.4 - -------------------------------------------------------------------------------- A 13.1 - -------------------------------------------------------------------------------- BBB 8.7 - -------------------------------------------------------------------------------- B 0.4 - -------------------------------------------------------------------------------- CC 0.2 - -------------------------------------------------------------------------------- Non-rated 5.6 - -------------------------------------------------------------------------------- Cash equivalents 1.3 - -------------------------------------------------------------------------------- Top 5 sectors as of 12/31/04 (%) - -------------------------------------------------------------------------------- Refunded/escrowed 12.9 - -------------------------------------------------------------------------------- Local general obligations 12.5 - -------------------------------------------------------------------------------- Joint power authority 10.7 - -------------------------------------------------------------------------------- State general obligations 8.4 - -------------------------------------------------------------------------------- Water & sewer 7.3 - -------------------------------------------------------------------------------- Maturity breakdown as of 12/31/04 (%) - -------------------------------------------------------------------------------- 0 - 1 years 0.1 - -------------------------------------------------------------------------------- 1 - 3 years 0.9 - -------------------------------------------------------------------------------- 3 - 5 years 10.6 - -------------------------------------------------------------------------------- 5 - 7 years 4.4 - -------------------------------------------------------------------------------- 7 - 10 years 17.8 ------------------------------------------------------------------------------- 10 - 15 years 35.7 - -------------------------------------------------------------------------------- 15 - 20 years 19.5 - -------------------------------------------------------------------------------- 20 - 25 years 4.7 - -------------------------------------------------------------------------------- 25 years and over 5.0 - -------------------------------------------------------------------------------- Cash equivalents 1.3 - -------------------------------------------------------------------------------- Sector breakdowns are calculated as a percentage of net assets. Quality and maturity breakdowns are calculated as a percentage of total investments. Ratings shown in the quality breakdown represent the lowest 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. Management style is determined by Columbia Management, and is based on the investment strategy and process as outlined in the fund's prospectus. 1 Performance of a $10,000 investment 01/01/95 - 12/31/04 ($) - -------------------------------------------------------------------------------- sales charge without with Class A 18,810 17,910 Class B 18,509 18,509 Class C 18,629 18,629 Class Z 18,892 n/a 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 INFORMATION Columbia Managed Municipals Fund Value of a $10,000 investment 01/01/95 - 12/31/04 [The following table was represented by a line graph in the printed material.] Class A shares Class A shares Lehman Brothers without sales charge with sales charge Municipal Bond Index 10000 10000 9525 10286 10292 9803 10585 10543 10042 10707 10642 10137 10720 10632 10127 11062 10940 10420 10966 10820 10306 11070 10896 10379 11210 11023 10499 11281 11110 10582 11445 11287 10750 11635 11525 10977 11746 11664 11110 11836 11741 11183 11755 11598 11047 11605 11408 10866 11572 11369 10829 11567 11382 10842 11694 11499 10952 11799 11603 11052 11796 11590 11040 11962 11774 11214 12097 11920 11353 12318 12156 11578 12266 12105 11530 12290 12119 11543 12403 12235 11654 12238 12062 11489 12341 12156 11578 12527 12347 11760 12661 12482 11889 13012 12853 12243 12889 12716 12112 13043 12885 12273 13126 12956 12340 13204 13024 12406 13396 13235 12607 13534 13362 12728 13538 13342 12709 13551 13329 12696 13490 13270 12640 13703 13485 12845 13756 13527 12885 13791 13557 12913 14004 13775 13121 14179 13933 13272 14179 13889 13229 14229 13931 13269 14265 13963 13299 14434 14141 13470 14371 14032 13366 14391 14032 13366 14427 14089 13419 14343 13982 13317 14137 13754 13100 14188 13802 13146 14074 13665 13016 14080 13632 12985 13928 13463 12824 14075 13570 12925 13970 13483 12842 13908 13384 12749 14070 13568 12923 14376 13857 13199 14292 13756 13102 14217 13641 12993 14594 14011 13346 14797 14220 13544 15025 14476 13788 14947 14343 13661 15110 14506 13817 15224 14669 13972 15600 15169 14448 15755 15255 14531 15805 15347 14618 15948 15462 14727 15775 15066 14350 15946 15266 14541 16053 15433 14700 16290 15823 15072 16559 16216 15445 16503 16055 15293 16699 16346 15569 16559 15993 15233 16401 15745 14997 16685 16047 15285 16885 16296 15522 16554 15851 15098 16877 16239 15468 16980 16335 15559 17160 16523 15738 17382 16713 15919 17590 16885 16083 17975 17299 16477 17677 16875 16073 17603 16764 15967 17974 17240 16421 17929 17076 16265 18180 17462 16632 18191 17411 16584 18311 17624 16787 18740 18239 17372 18661 18065 17207 18008 17122 16309 18143 17297 16475 18676 17956 17103 18583 17782 16937 18776 18038 17181 18932 18182 17319 19040 18264 17397 19325 18609 17725 19258 18414 17539 18801 17834 16987 18734 17759 16915 18801 17846 16998 19049 18078 17219 19430 18515 17636 19533 18604 17721 19701 18772 17880 19540 18548 17667 19778 18810 17910 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Lehman Brothers 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 12/31/04 (%)
Share class A B C Z - ------------------------------------------------------------------------------------------ Inception 11/01/02 11/01/02 11/01/02 02/23/77 - ------------------------------------------------------------------------------------------ Sales charge without with without with without with without - ------------------------------------------------------------------------------------------ 6-month (cumulative) 5.46 0.45 5.07 0.07 5.23 4.23 5.57 - ------------------------------------------------------------------------------------------ 1-year 3.53 -1.39 2.75 -2.20 3.06 2.07 3.73 - ------------------------------------------------------------------------------------------ 5-year 6.90 5.85 6.55 6.24 6.69 6.69 6.99 - ------------------------------------------------------------------------------------------ 10-year 6.52 6.00 6.35 6.35 6.42 6.42 6.57 - ------------------------------------------------------------------------------------------
The "with sales charge" returns include the maximum initial sales charge of 4.75% for class A shares, maximum contingent deferred sales charge of 5.00% for class B shares and 1.00% for class C shares for the first year only. The "without sales charge" returns do not include the effect of sales charges. If they had, returns would be lower. All results shown assume reinvestment of distributions. Class Z shares are sold at net asset value with no Rule 12b-1 fees. Performance for different share classes will vary based on differences in sales charges and fees associated with each class. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class A,class B and class C are newer classes of shares. Their performance information includes returns of the fund's class Z shares (the oldest existing fund class) for periods prior to their 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 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 A, class B and class C shares were initially offered on November 1, 2002, and class Z shares were initially offered on February 23, 1977. 2 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: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 o For shareholders who receive their account statements from their brokerage firm, contact your brokerage firm to obtain your account balance 1. Divide your ending account balance by $1,000. For example, if an account balance was $8,600 at the end of the period, the result would be 8.6 2. In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period UNDERSTANDING YOUR EXPENSES Columbia Managed Municipals Fund As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also continuing costs, which generally include investment advisory fees, 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 these costs with the ongoing costs of investing in other mutual funds. Analyzing your fund's expenses by share class To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 07/01/04 - 12/31/04
Account value at the Account value at the Expenses paid Fund's annualized beginning of the period($) end of the period($) during the period($) expense ratio (%) - ------------------------------------------------------------------------------------------------------------- Actual Hypothetical Actual Hypothetical Actual Hypothetical - ------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1,056.11 1,020.57 4.77 4.69 0.92 - ------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1,051.97 1,016.79 8.64 8.49 1.67 - ------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1,053.64 1,018.30 7.09 6.97 1.37 - ------------------------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 1,057.22 1,021.68 3.63 3.57 0.70 - -------------------------------------------------------------------------------------------------------------
Expenses paid during the period are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the fund's most recent fiscal half-year and divided by 365. Had the distributor not waived a portion of class C 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 ongoing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. Compare with other funds Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other 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 transactional costs, such as sales charges or redemption or exchange fees. 3 Summary For the six-month period ended December 31, 2004 o Investment-grade bonds delivered solid gains. The Lehman Brothers Aggregate Bond Index returned 4.18%. High-yield bonds, which can be less sensitive to changing interest rates, led the fixed-income markets. The Merrill Lynch US High Yield, Cash Pay Index returned 9.31%. Lehman Index [GRAPHIC] 4.18% Merrill Lynch Index [GRAPHIC] 9.31% o After a weak start, stock prices bounced back in November, helping the S&P 500 Index to a 7.19% gain for the six-month period. Value stocks outperformed growth stocks, as measured by the Russell 1000 Value index. S&P 500 Index [GRAPHIC] 7.19% Russell 1000 Value Index [GRAPHIC] 12.08% The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated, non-convertible investment-grade debt issues. The Merrill Lynch US High Yield,Cash Pay Index is an unmanaged index that 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 1000 Value Index is an unmanaged index that tracks the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. ECONOMIC UPDATE Columbia Managed Municipals Fund During the six-month period that began July 1, 2004, and ended December 31, 2004, the US economy grew at a healthy pace, despite rising energy prices and a host of geopolitical uncertainties. The nation's gross domestic product advanced 3.5% in the second half of 2004. For the year, the economy grew 4.4%, its strongest showing in five years. Employment dominated the economic news. Although job growth fell below expectations early in the period, the pace of new job creation picked up and more than two million jobs were created in 2004. In response, consumer confidence soared to its highest level of the year in December, and consumer spending ended the year on a high note. Holiday sales were reported to be the strongest in five years. Within the business sector, industrial production rose;factories utilized more of their capacity and spending on technology, capital equipment and construction picked up. However, business spending for the year fell short of forecasts, given the level of profit growth and the maturity of the economic cycle. Bonds delivered solid returns Despite a weak start - and a weak finish - all sectors of the US bond market delivered solid returns for the six-month period. As the Federal Reserve Board (the Fed) began to raise short-term interest rates, the bond market responded favorably. Yields on intermediate and long-term bonds edged lower--and prices rose. However, the 10-year Treasury yield rose sharply in November, before falling again in December, and bonds gave back some of their earlier gains. In this environment, the Lehman Brothers Aggregate Bond Index returned 4.18%. High-yield corporate bonds, which can be less sensitive to changing interest rates, gained 9.31%, as measured by the Merrill Lynch US High Yield, Cash Pay Index. A relatively strong economy helped improve credit quality and the sector's high yields attracted investors seeking income. Mortgage bonds outperformed Treasury bonds. Stocks picked up momentum Stock market performance picked up as economic news improved and uncertainty surrounding the presidential election was resolved. The S&P 500 Index returned 7.19% for the six-month period. The majority of that return was generated in November and December. Small-and mid-cap stocks led the market and value stocks outperformed growth stocks. Energy and utilities stocks were the best-performing sectors for the six-month period. Information technology rebounded strongly in the second half. Short-term rates moved higher After a year of the lowest short-term interest rates in recent history, the Fed raised the federal funds rate, a key short-term rate, from 1.0% to 2.25% in five equal steps between June 30 and December 31.(1) The Fed indicated that it would continue to raise short-term interest rates at a "measured pace," in an attempt to balance economic growth against inflationary pressures. Because the Fed's moves were widely anticipated, these rate increases have had little if any impact on the financial markets except to boost the yields on money market funds. (1) On February 2, 2005, the Fed raised the federal funds rate to 2.5%. 4 Net asset value per share as of 12/31/04 ($) - -------------------------------------------------------------------------------- Class A 9.02 - -------------------------------------------------------------------------------- Class B 9.02 - -------------------------------------------------------------------------------- Class C 9.02 - -------------------------------------------------------------------------------- Class Z 9.02 - -------------------------------------------------------------------------------- Distributions declared per share 07/01/04 - 12/31/04 ($) - -------------------------------------------------------------------------------- Class A 0.19 - -------------------------------------------------------------------------------- Class B 0.16 - -------------------------------------------------------------------------------- Class C 0.17 - -------------------------------------------------------------------------------- Class Z 0.20 - -------------------------------------------------------------------------------- SEC yields as of 12/31/04 (%) - -------------------------------------------------------------------------------- Class A 3.26 - -------------------------------------------------------------------------------- Class B 2.67 - -------------------------------------------------------------------------------- Class C 2.98 - -------------------------------------------------------------------------------- Class Z 3.65 - -------------------------------------------------------------------------------- The 30-day SEC yields reflect the portfolio earning power net of expenses, expressed as an annualized percentage of the public offering price per share at the end of the period. Taxable-equivalent SEC yields as of 12/31/04 (%) - -------------------------------------------------------------------------------- Class A 5.02 - -------------------------------------------------------------------------------- Class B 4.11 - -------------------------------------------------------------------------------- Class C 4.58 - -------------------------------------------------------------------------------- Class Z 5.62 - -------------------------------------------------------------------------------- Taxable-equivalent SEC yields are based on the maximum effective 35.0% federal income tax rate. This tax rate does not reflect the phase out of exemptions or the reduction of otherwise allowable deductions that occur when adjusted gross income exceeds certain levels. PORTFOLIO MANAGER'S REPORT Columbia Managed Municipals Fund For the six-month period ended December 31, 2004, Columbia Managed Municipals Fund class A shares returned 5.46% without sales charge. The fund outperformed its benchmark, the Lehman Brothers Municipal Bond Index, which returned 5.19% for the same period, as well as the 4.71% average return of the Lipper General Municipal Debt Funds Category.(1) The fund's longer duration aided performance. In addition, interest rates on intermediate bonds--where the portfolio is concentrated--declined during the period, and prices rose. Duration measures the fund's sensitivity to a given change in interest rates. Typically, we lower duration when we expect interest rates to rise and lengthen duration when we expect rates to fall. If we are right in our positioning, as we were during the period, the fund benefits. The fund's returns also were helped by its investments in non-callable and zero-coupon bonds. Prices of these securities are highly sensitive to changes in interest rates and they tend to perform well when intermediate and long-term interest rates are steady or declining, which was the case during this reporting period. Federal Reserve Board raises short-term interest rates On the last day of the prior reporting period, the Federal Reserve Board (the Fed) raised its benchmark interest rate from 1.00% to 1.25%--the first such rate increase in four years. The Fed increased short-term interest rates four more times--to 2.25%--during this reporting period. The bond market responded favorably to these interest-rate increases because they indicated the Fed's commitment to managing economic growth to a reasonable pace and keeping inflation under control. As a result, intermediate and longer-term yields declined and bond prices in these maturity ranges rose. We believe that any subsequent Fed rate increases are likely to be gradual. High-yield bonds make positive contribution to fund The fund's investment in high-yield bonds contributed positively to performance. Historically, high-yield bonds have been less sensitive to interest-rate changes than higher-quality bonds, and they have tended to outperform during periods of economic growth. This pattern was repeated during the period. The improving economy also helped the fund's utility holdings during the period. (1) Lipper Inc., a widely respected data provider in the industry, calculates an average total return for mutual funds with similar investment objectives as the fund. 5 We expect to continue to focus on intermediate-maturity bonds with good call protection. We believe these types of bonds offer good risk/reward potential for the fund. Columbia Managed Municipals Fund The fund's airline bonds turned in a mixed performance during the period. The airline industry has faced a variety of financial difficulties. Airlines are under a great deal of pressure to cut costs and restructure debt. While we expect these changes to occur over time, the process has taken longer than anticipated. Gradual recovery with relatively low intermediate-term rates We expect interest rates, particularly intermediate- to longer-term rates, to remain relatively low, because we believe that the economy will continue to recover gradually and inflationary pressures will remain muted. Although the employment picture improved in 2004, hiring has been slow compared to earlier economic recoveries. Therefore, we do not expect to see a level of consumer spending growth that would fuel a stronger economic expansion. However, if the pace of growth is greater than we expect, intermediate to long-term interest rates could move higher in anticipation of inflationary pressures. Given our outlook, we expect to continue to focus on intermediate-maturity bonds with good call protection. We believe these types of bonds offer good risk/reward potential for the fund. However, we may change our outlook if inflationary pressures become stronger or economic growth accelerates. [PHOTO] Kimberly A. Campbell has been the portfolio manager of Columbia Managed Municipals Fund since December 2001. In addition to serving as portfolio manager of the fund, Ms. Campbell was chief trader for municipal investments of Columbia Management Advisors, Inc. or its predecessors since 1995. /s/ Kimberly A. Campbell 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. 6 INVESTMENT PORTFOLIO December 31, 2004 (unaudited) Columbia Managed Municipals Fund Municipal Bonds - 96.5% EDUCATION - 5.0% Education - 4.2%
Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- CA State Educational Facilities Authority Loyola Marymount University, Series 2001 A, Insured: MBIA (a) 10/01/20 1,000,000 474,480 ----------------------------------------------------------------------------- MA State College Building Authority Project Series 1994 A: 7.500% 05/01/11 1,500,000 1,859,925 7.500% 05/01/14 3,500,000 4,484,445 ----------------------------------------------------------------------------- MA State Health & Educational Facilities Mass Institute of Technology, Series 2002 K, Authority 5.500% 07/01/22 1,000,000 1,175,000 ----------------------------------------------------------------------------- OH State Higher Educational Facilities Revenue Case Western Reserve University, Series 1994, 6.250% 10/01/17 4,340,000 5,351,697 ----------------------------------------------------------------------------- VA State College Building Authority Washington and Lee University, Series 2001, 5.375% 01/01/21 2,000,000 2,297,060 ----------------------------------------------------------------------------- WV State University Series 2000 A, Insured: AMBAC (a) 04/01/18 3,800,000 2,081,982 ----------------------------------------------------------------------------- Education Total 17,724,589 Student Loan - 0.8% - ---------------------------------------------- ----------------------------------------------------------------------------- ME State Educational Loan Marketing Corp. Series 1994 B-1, AMT, 6.500% 11/01/09 3,000,000 3,315,360 ----------------------------------------------------------------------------- Student Loan Total 3,315,360 ----------- EDUCATION TOTAL 21,039,949 HEALTH CARE - 7.6% Continuing Care Retirement - 0.5% - ---------------------------------------------- ----------------------------------------------------------------------------- FL Capital Project Finance Authority Glenridge on Palmer Ranch, Series 2002 A, 8.000% 06/01/32 500,000 522,215 ----------------------------------------------------------------------------- HI State Department of Budget & Finance Kahala Nui Project, Series 2003 A, 7.875% 11/15/23 1,000,000 1,075,800 ----------------------------------------------------------------------------- OH Hamilton County Health Care Facilities Twin Towers, Series 1998 A, Revenue 5.125% 10/01/18 500,000 499,815 ----------------------------------------------------------------------------- Continuing Care Retirement Total 2,097,830 Health Services - 0.5% - ---------------------------------------------- ----------------------------------------------------------------------------- MA State Development Finance Agency Boston Biomedical Research Institute, Series 1999, 5.650% 02/01/19 310,000 303,654 ----------------------------------------------------------------------------- WI State Health & Educational Facilities Marshfield Clinic, Series 1999, Authority Insured: RAD 6.250% 02/15/29 1,600,000 1,784,992 ----------------------------------------------------------------------------- Health Services Total 2,088,646
See Accompanying Notes to Financial Statements. 7 December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - 6.1% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- CA ABAG Finance Authority for Nonprofit Corps. San Diego Hospital Association, Series 2003 C, 5.375% 03/01/20 1,320,000 1,360,062 ----------------------------------------------------------------------------- CA State Health Facilities Financing Authority Catholic Healthcare West, Series 2004 G, Revenue 5.250% 07/01/23 500,000 514,120 ----------------------------------------------------------------------------- FL Hillsborough County Industrial Tampa General Hospital Project, Series 2003 A: Development Authority 5.000% 10/01/18 825,000 848,018 5.250% 10/01/24 800,000 813,520 ----------------------------------------------------------------------------- FL West Orange Healthcare District Series 2001 A, 5.650% 02/01/22 1,050,000 1,102,626 ----------------------------------------------------------------------------- IL State Health Facilities Authority Swedish American Hospital, Series 2000, 6.875% 11/15/30 1,000,000 1,106,820 ----------------------------------------------------------------------------- LA State Public Facilities Authority Touro Infirmary, Series 1999 A, 5.625% 08/15/29 1,240,000 1,261,700 ----------------------------------------------------------------------------- MA State Health & Educational Facilities Massachusetts General Hospital, Series 1992 F, Authority Insured: AMBAC 6.250% 07/01/12 5,750,000 6,559,428 South Shore Hospital, Series 1999 F: 5.625% 07/01/19 1,000,000 1,050,640 5.750% 07/01/29 2,500,000 2,590,650 ----------------------------------------------------------------------------- MD State Health & Educational Facilities University of Maryland Medical System, Series 2000, Authority 6.750% 07/01/30 500,000 564,440 ----------------------------------------------------------------------------- MO State Health & Educational Facilities Lake Regional Health Systems, Series 2003, Authority 5.600% 02/15/25 625,000 650,487 ----------------------------------------------------------------------------- MS State University of Mississippi Medical Center, Series 1998 B, Insured: AMBAC 5.500% 12/01/23 1,000,000 1,157,070 ----------------------------------------------------------------------------- NM Farmington Hospital San Juan Regulated Medical Center, Series 2004 A, 5.000% 06/01/23 500,000 501,320 ----------------------------------------------------------------------------- NV Henderson Health Care Facilities Catholic Healthcare West, Series 1999 A, 6.750% 07/01/20 1,000,000 1,099,970 ----------------------------------------------------------------------------- OH Highland County Joint Township Hospital Series 1999, District 6.750% 12/01/29 475,000 465,904 ----------------------------------------------------------------------------- OH Miami County Hospital Facilities Authority Upper Valley Medical Center, Series 1996 C, 6.000% 05/15/06 525,000 547,701 ----------------------------------------------------------------------------- OK State Development Finance Authority Duncan Regional Hospital, Series 2003 A, 5.125% 12/01/23 1,000,000 1,015,510 ----------------------------------------------------------------------------- TN Knox County Health, Educational East Tennessee Hospital, Series 2003 B, & Housing Facilities Authority 5.750% 07/01/33 750,000 777,008 ----------------------------------------------------------------------------- WI State Health & Educational Facilities Aurora Health Care, Series 2003, Authority 6.400% 04/15/33 1,075,000 1,142,424 Wheaton Franciscan Services, Series 2002, 5.750% 08/15/30 900,000 948,726 ----------------------------------------------------------------------------- Hospitals Total 26,078,144
8 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Intermediate Care Facilities - 0.5% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- IN State Health Facilities Financing Authority Hoosier Care, Inc., Series 1999 A, 7.125% 06/01/34 2,395,000 2,052,970 ----------------------------------------------------------------------------- Intermediate Care Facilities Total 2,052,970 ---------- HEALTH CARE TOTAL 32,317,590 HOUSING - 1.5% Assisted Living/Senior - 0.2% - ---------------------------------------------- ----------------------------------------------------------------------------- NY Suffolk County Industrial Development Gurwin Jewish-Phase II, Series 2004, Agency 6.700% 05/01/39 900,000 923,535 ----------------------------------------------------------------------------- Assisted Living/Senior Total 923,535 Multi-Family - 0.9% - ---------------------------------------------- ----------------------------------------------------------------------------- FL Broward County Housing Finance Authority Chaves Lake Apartment Project, Series 2000 A, AMT, 7.500% 07/01/40 1,500,000 1,500,405 ----------------------------------------------------------------------------- FL Clay County Housing Finance Authority Madison Commons Apartments, Series 2000 A, AMT, 7.450% 07/01/40 725,000 727,458 ----------------------------------------------------------------------------- NC Medical Care Commission Revenue Health Care Housing-ARC Projects, Series 2004 A, 5.800% 10/01/34 1,400,000 1,410,766 ----------------------------------------------------------------------------- Multi-Family Total 3,638,629 Single Family - 0.4% - ---------------------------------------------- ----------------------------------------------------------------------------- NM State Mortgage Finance Authority Series 2000 A-2, AMT, Insured: FHA 7.100% 09/01/30 580,000 583,283 ----------------------------------------------------------------------------- NV State Housing Division Series 1991 A-2, AMT, Insured: FHA 7.750% 04/01/22 295,000 295,552 ----------------------------------------------------------------------------- OH Housing Finance Agency Series 1997 A-1, AMT, Insured: GNMA 6.050% 09/01/17 490,000 516,259 ----------------------------------------------------------------------------- RI State Housing & Mortgage Finance Corp. Series 1988, AMT, Insured: FHA 7.550% 10/01/22 515,000 515,587 ----------------------------------------------------------------------------- Single Family Total 1,910,681 ----------- HOUSING TOTAL 6,472,845 INDUSTRIAL - 4.9% Food Products - 2.8% - ---------------------------------------------- ----------------------------------------------------------------------------- GA Cartersville Development Authority Anheuser Busch Companies, Inc., Series 1989 A, AMT, 7.375% 05/01/09 (b) 9,000,000 10,507,410 ----------------------------------------------------------------------------- MI State Strategic Fund Michigan Sugar Co., Carollton Project: Series 1998 B, 6.450% 11/01/25 700,000 650,503 Series 1998 C, AMT, 6.550% 11/01/25 800,000 752,072 ----------------------------------------------------------------------------- Food Products Total 11,909,985
See Accompanying Notes to Financial Statements. 9 December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) INDUSTRIAL - (continued) Forest Products - 1.4% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- FL Escambia County Environmental Series 2003 A, AMT, Improvement Revenue 5.750% 11/01/27 550,000 561,209 ----------------------------------------------------------------------------- WA Port Longview Industrial Development Corp. Weyerhaeuser Corp., Series 1992, AMT, 6.875% 10/01/08 4,750,000 5,279,340 ----------------------------------------------------------------------------- Forest Products Total 5,840,549 Manufacturing - 0.3% - ---------------------------------------------- ----------------------------------------------------------------------------- MO State Development Finance Board Procter & Gamble Co., Series 1999, AMT, 5.200% 03/15/29 1,000,000 1,059,790 ----------------------------------------------------------------------------- Manufacturing Total 1,059,790 Oil & Gas - 0.3% - ---------------------------------------------- ----------------------------------------------------------------------------- NJ Middlesex County Pollution Control Amerada Hess Corp., Series 2004, 6.050% 09/15/34 240,000 253,260 VI Public Finance Authority Hovensa Refinery, Series 2003, AMT, 6.125% 07/01/22 875,000 938,114 ----------------------------------------------------------------------------- Oil & Gas Total 1,191,374 Other Industrial Development Bonds - 0.1% - ---------------------------------------------- ----------------------------------------------------------------------------- MI State Strategic Fund Obligation Ltd. NSF International Project, Series 2004, 5.250% 08/01/26 600,000 615,816 ----------------------------------------------------------------------------- Other Industrial Development Bonds Total 615,816 ---------- INDUSTRIAL TOTAL 20,617,514 OTHER - 13.2% Refunded/Escrowed (c) - 12.9% - ---------------------------------------------- ----------------------------------------------------------------------------- CA Foothill/Eastern Transportation Corridor Series 1995 A, Agency (a) 01/01/18 10,000,000 5,664,600 ----------------------------------------------------------------------------- FL Jacksonville Transportation Authority Series 1985, 9.200% 01/01/15 2,000,000 2,773,340 ----------------------------------------------------------------------------- GA Fulton County Series 1992, Insured: FGIC 6.375% 01/01/14 13,270,000 15,821,954 ----------------------------------------------------------------------------- GA State Municipal Electric Authority Series 1991, Insured: MBIA 6.600% 01/01/18 3,600,000 4,481,856 ----------------------------------------------------------------------------- ID State Health Facilities Authority Revenue Intermountain Health Care Hospitals, Inc., Series 1992, 6.650% 02/15/21 1,200,000 1,558,992 ----------------------------------------------------------------------------- IL Metropolitan Pier & Exposition Authority Series 1996 A, Insured: MBIA (a) 06/15/12 2,655,000 2,020,853 ----------------------------------------------------------------------------- NC Eastern Municipal Power Agency Series 1991 A, 6.500% 01/01/18 4,315,000 5,470,859 ----------------------------------------------------------------------------- NY Triborough Bridge & Tunnel Authority Series 1992 Y, 6.125% 01/01/21 5,500,000 6,814,940
10 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) OTHER - (continued) Refunded/Escrowed (c) - (continued) Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- OH Cleveland-Cuyahoga County Port Authority Oglebay Northern Co. Project, Series 1997-1, AMT, 6.000% 03/01/07 160,000 168,288 ----------------------------------------------------------------------------- OH Hilliard School District Series 1995 A, Insured: FGIC (a) 12/01/12 2,505,000 1,846,486 ----------------------------------------------------------------------------- OH State Water Development Authority Series 1990-1, Insured: AMBAC 6.000% 12/01/16 1,000,000 1,164,570 ----------------------------------------------------------------------------- SC Calhoun County Solid Waste Disposal Eastman Kodak Co., Series 1992, AMT, Facilities 6.750% 05/01/17 3,000,000 3,756,720 ----------------------------------------------------------------------------- TX Houston Water & Sewer System Revenue Series 1998, Insured: FSA (a) 12/01/23 2,515,000 1,004,692 ----------------------------------------------------------------------------- TX State Municipal Power Agency Series 1989, Insured: AMBAC (a) 09/01/08 75,000 68,141 ----------------------------------------------------------------------------- WV State Hospital Finance Authority Charlestown Area Medical Center, Series 2000 A, 6.750% 09/01/30 1,610,000 1,930,680 ----------------------------------------------------------------------------- Refunded/Escrowed Total 54,546,971 Tobacco - 0.3% - ---------------------------------------------- ----------------------------------------------------------------------------- NJ Tobacco Settlement Financing Corp. Series 2003, 6.750% 06/01/39 1,415,000 1,413,005 ----------------------------------------------------------------------------- Tobacco Total 1,413,005 ----------- OTHER TOTAL 55,959,976 OTHER REVENUE - 1.4% Recreation - 1.2% - ---------------------------------------------- ----------------------------------------------------------------------------- CA Agua Caliente Band Cahuilla Indians Series 2003, 6.000% 07/01/18 350,000 361,875 ----------------------------------------------------------------------------- CA Cabazon Band Mission Indians Indio Springs Parkway, Series 2004: 8.375% 10/01/15 (d) 595,000 599,248 8.750% 07/01/19 (d) 2,100,000 2,114,595 ----------------------------------------------------------------------------- FL Capital Trust Agency Seminole Tribe Convention Center, Series 2002 A, 10.000% 10/01/33 (d) 1,500,000 1,758,405 ----------------------------------------------------------------------------- Recreation Total 4,834,123 Retail - 0.2% - ---------------------------------------------- ----------------------------------------------------------------------------- NJ State Economic Development Authority Glimcher Properties L.P. Project, Series 1998, AMT, 6.000% 11/01/28 850,000 848,198 ----------------------------------------------------------------------------- OH Lake County North Madison Properties Ltd. Project, Series 1993, 8.819% 09/01/11 165,000 165,439 ----------------------------------------------------------------------------- Retail Total 1,013,637 ----------- OTHER REVENUE TOTAL 5,847,760
See Accompanying Notes to Financial Statements. 11 December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) RESOURCE RECOVERY - 0.4% Disposal - 0.4% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- IL Development Finance Authority Waste Management, Inc., Series 1997, AMT, 5.050% 01/01/10 500,000 525,660 ----------------------------------------------------------------------------- MI State Strategic Fund United Waste Systems, Inc., Series 1995, AMT, 5.200% 04/01/10 500,000 529,340 ----------------------------------------------------------------------------- NV State Department of Business & Industry Republic Services, Inc. Project, Series 2003, AMT, 5.625% 12/01/26 500,000 543,545 ----------------------------------------------------------------------------- Disposal Total 1,598,545 ----------- RESOURCE RECOVERY TOTAL 1,598,545 TAX-BACKED - 32.7% Local Appropriated - 2.2% - ---------------------------------------------- ----------------------------------------------------------------------------- CA San Bernardino County Series 2002 A, Insured: MBIA 5.000% 07/01/15 2,210,000 2,445,940 ----------------------------------------------------------------------------- IL Chicago Board of Education Series 1992 A, Insured: MBIA 6.000% 01/01/16 5,000,000 5,946,750 ----------------------------------------------------------------------------- IN Crown Point School Building Corp. Series 2000, Insured: MBIA (a)01/15/19 1,665,000 868,497 ----------------------------------------------------------------------------- Local Appropriated Total 9,261,187 Local General Obligations - 12.5% - ---------------------------------------------- ----------------------------------------------------------------------------- AK North Slope Borough Series 1999 A, Insured: MBIA (a) 06/30/10 2,515,000 2,080,433 Series 2000 B, Insured: MBIA (a) 06/30/10 2,000,000 1,654,680 Series 2001 A, Insured: MBIA (a) 06/30/12 5,000,000 3,734,250 ----------------------------------------------------------------------------- CA Golden West School Financing Authority Series 1999 A, Insured: MBIA (a) 08/01/15 1,500,000 952,035 ----------------------------------------------------------------------------- CA Los Angeles Unified School District Series 2002, Insured: MBIA 5.750% 07/01/16 400,000 472,124 ----------------------------------------------------------------------------- CA Yuba City Unified School District Series 2000, Insured: FGIC (a) 09/01/18 1,160,000 618,906 ----------------------------------------------------------------------------- CA West Contra Costa Unified School District Series 2001 B, Insured: MBIA 6.000% 08/01/24 465,000 568,909 ----------------------------------------------------------------------------- IL Champaign County Series 1999, Insured: FGIC 8.250% 01/01/20 1,015,000 1,458,382
12 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Local General Obligations - (continued) Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- IL Chicago Board of Education Series 1996, Insured: MBIA 6.250% 12/01/12 2,500,000 2,976,850 Series 1998 B-1, Insured: FGIC (a) 12/01/21 1,500,000 669,045 ----------------------------------------------------------------------------- IL Chicago Emergency Telephone System Series 1999, Insured: FGIC 5.500% 01/01/23 2,250,000 2,607,525 ----------------------------------------------------------------------------- IL Cook County School District No. 102 Series 2001, Insured: FGIC (a) 12/01/20 3,065,000 1,447,814 ----------------------------------------------------------------------------- IL Will County Community Unit School District Valley View, Series 1999 B, No. 365 Insured: FSA (a) 11/01/18 1,900,000 1,007,342 ----------------------------------------------------------------------------- IL Will County Forest Preservation District Series 1999, Insured: FGIC (a) 12/01/16 1,000,000 590,620 ----------------------------------------------------------------------------- LA New Orleans Series 1991, Insured: AMBAC (a) 09/01/12 6,250,000 4,643,187 ----------------------------------------------------------------------------- MO Springfield School District No. R-12 Series 1991 B, Insured: FGIC 9.500% 03/01/07 600,000 689,412 ----------------------------------------------------------------------------- NE Omaha Omaha Convention Center Arena, Series 2004, 5.250% 04/01/23 1,000,000 1,138,360 ----------------------------------------------------------------------------- OH Adams County Ohio Valley Local School Series 1995, District Insured: MBIA 7.000% 12/01/15 3,000,000 3,761,640 ----------------------------------------------------------------------------- OH Beavercreek Local School District Series 1996, Insured: FGIC 6.600% 12/01/15 2,500,000 3,086,725 ----------------------------------------------------------------------------- OH Crooksville Exempt Village School District Series 1986, 7.375% 12/01/07 25,000 27,932 ----------------------------------------------------------------------------- OH Cuyahoga County Series 1993 A, Insured: MBIA (a) 10/01/12 1,000,000 742,430 ----------------------------------------------------------------------------- OH Dublin City School District Series 1997, Insured: MBIA (a) 12/01/11 900,000 699,840 ----------------------------------------------------------------------------- OH Eastern Local School District Brown & Highland Counties, Series 1995, Insured: FGIC 6.250% 12/01/17 1,160,000 1,429,190 ----------------------------------------------------------------------------- OH Gahanna-Jefferson City School District Series 1993, Insured: AMBAC (a) 12/01/11 795,000 619,035
See Accompanying Notes to Financial Statements. 13 December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Local General Obligations - (continued) Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- OH Hilliard School District Series 2000, Insured: FGIC 5.750% 12/01/24 1,000,000 1,132,000 ----------------------------------------------------------------------------- OH Kings Local School District Series 1995, Insured: FGIC 7.500% 12/01/16 2,110,000 2,736,016 ----------------------------------------------------------------------------- OH Lakota Local School District Series 2001, Insured: FGIC 5.500% 12/01/18 1,460,000 1,705,572 ----------------------------------------------------------------------------- OH Massillion City School District Series 2002, Insured: AMBAC: (a) 12/01/09 900,000 774,270 (a) 12/01/11 1,000,000 778,340 ----------------------------------------------------------------------------- OH Monroe Local School District Series 2002, Insured: AMBAC 5.750% 12/01/19 1,195,000 1,431,168 ----------------------------------------------------------------------------- OH North Fork Local School District Series 2001, Insured: FSA 5.750% 12/01/17 510,000 609,022 ----------------------------------------------------------------------------- OH Pickerington Local School District Series 2001, Insured: FGIC (a) 12/01/16 1,340,000 801,655 ----------------------------------------------------------------------------- OH River Valley School District School Series 2001, Facilities Construction & Improvement Insured: FSA 5.250% 11/01/23 500,000 567,130 ----------------------------------------------------------------------------- OH Shaker Heights City School District Series 1990 A, 7.100% 12/15/10 550,000 631,444 ----------------------------------------------------------------------------- OH Southwest Licking Local School District Series 1999, Insured: FGIC 5.750% 12/01/16 400,000 473,336 ----------------------------------------------------------------------------- OH Tri-County North Local School District Series 1986, 8.125% 12/01/06 75,000 82,064 ----------------------------------------------------------------------------- OH West Chester Township Series 2002, Insured: AMBAC 5.750% 12/01/20 1,000,000 1,197,980 ----------------------------------------------------------------------------- TX Dallas County Flood Control District Series 2002, 7.250% 04/01/32 (e) 1,500,000 1,568,880 ----------------------------------------------------------------------------- WA Clark County School District No. 037 Series 2001 C, Insured: FGIC (a) 12/01/20 1,150,000 545,169 ----------------------------------------------------------------------------- Local General Obligations Total 52,710,712
14 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Special Non-Property Tax - 4.0% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- IL Metropolitan Pier & Exposition Authority Series 1996 A, Insured: MBIA: (a) 06/15/12 2,345,000 1,752,583 (a) 12/15/12 8,850,000 6,483,333 ----------------------------------------------------------------------------- MA Massachusetts Bay Transportation Authority Series 2003 A, 5.250% 07/01/19 1,200,000 1,360,992 ----------------------------------------------------------------------------- MI State Trunk Line Series 2004, Insured: FSA 5.000% 11/01/19 1,000,000 1,112,200 ----------------------------------------------------------------------------- NJ Economic Development Authority Cigarette Tax, Series 2004, 5.500% 06/15/31 150,000 154,000 ----------------------------------------------------------------------------- NY State Local Government Assistance Corp. Series 1993 E, Insured: MBIA 5.000% 04/01/21 1,000,000 1,102,180 ----------------------------------------------------------------------------- OH Hamilton County Sales Tax Revenue Series 2000 B, Insured: AMBAC (a) 12/01/20 2,000,000 963,720 ----------------------------------------------------------------------------- PR Commonwealth of Puerto Rico Highway Series 2003 AA, & Transportation Authority Insured: MBIA 5.500% 07/01/19 1,000,000 1,173,500 ----------------------------------------------------------------------------- PR Public Building Authority Series 2002 C, 5.500% 07/01/15 1,000,000 1,134,930 ----------------------------------------------------------------------------- WA Central Puget Sound Regional Series 1998, Transportation Authority Insured: FGIC 5.250% 02/01/21 1,500,000 1,684,635 ----------------------------------------------------------------------------- Special Non-Property Tax Total 16,922,073 Special Property Tax - 0.7% - ---------------------------------------------- ----------------------------------------------------------------------------- CA Huntington Beach Community Facilities Grand Coast Resort, Series 2001, District 6.450% 09/01/31 500,000 520,100 ----------------------------------------------------------------------------- CA Santa Margarita Water District Series 1999, 6.250% 09/01/29 750,000 774,353 ----------------------------------------------------------------------------- FL Double Branch Community Development Series 2002 A, District 6.700% 05/01/34 400,000 431,824 ----------------------------------------------------------------------------- FL Westchester Community Development Special Assessment, Series 2003, District No. 1 6.000% 05/01/23 560,000 577,108 ----------------------------------------------------------------------------- IL State Sports Facilities Authority Series 2001, Insured: AMBAC (a) 06/15/18 1,000,000 544,440 ----------------------------------------------------------------------------- Special Property Tax Total 2,847,825 State Appropriated - 4.9% - ---------------------------------------------- ----------------------------------------------------------------------------- CA State Public Works Board Coalinga State Hospital, Series 2004 A, 5.500% 06/01/15 1,000,000 1,126,060
See Accompanying Notes to Financial Statements. 15 December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) State Appropriated - (continued) Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- KY State Turnpike Authority Series 1992, Insured: FGIC (a) 01/01/10 7,500,000 6,374,025 ----------------------------------------------------------------------------- NJ State Transportation Trust Fund Authority Series 1999 A: 5.750% 06/15/18 5,000,000 5,857,950 5.750% 06/15/20 1,000,000 1,174,900 Series 2004, Insured: FGIC 5.000% 06/15/22 2,000,000 2,110,980 ----------------------------------------------------------------------------- UT State Building Ownership Authority Series 1998 C, Insured: FSA 5.500% 05/15/19 3,450,000 3,994,927 ----------------------------------------------------------------------------- State Appropriated Total 20,638,842 State General Obligations - 8.4% - ---------------------------------------------- ----------------------------------------------------------------------------- CA State Series 2002, 5.250% 02/01/23 2,000,000 2,207,780 Series 2004, 5.000% 02/01/22 2,000,000 2,099,680 ----------------------------------------------------------------------------- MA Massachusetts Bay Transportation Authority Series 1992 B, Insured: MBIA 6.200% 03/01/16 3,825,000 4,575,809 Series 1994 A: 7.000% 03/01/14 3,150,000 3,899,259 Insured: FSA 7.000% 03/01/19 2,500,000 3,218,825 ----------------------------------------------------------------------------- OH State Series 1992, 6.100% 08/01/12 380,000 448,316 ----------------------------------------------------------------------------- PA State Series 1992-2, Insured: FSA 6.250% 07/01/12 7,200,000 8,569,440 ----------------------------------------------------------------------------- PR Commonwealth of Puerto Rico Series 1998, Insured: MBIA 6.000% 07/01/16 2,000,000 2,419,320 Series 2001 A, Insured: MBIA 5.500% 07/01/16 4,230,000 4,924,989 Series 2004 A, 5.250% 07/01/21 3,000,000 3,227,640 ----------------------------------------------------------------------------- State General Obligations Total 35,591,058 ----------- TAX-BACKED TOTAL 137,971,697 TRANSPORTATION - 6.0% Air Transportation - 1.6% - ---------------------------------------------- ----------------------------------------------------------------------------- IL Chicago O'Hare International Airport United Airlines, Inc., Series 2000 A, AMT, 6.750% 11/01/11 (e)(f) 1,600,000 566,880
16 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) TRANSPORTATION - (continued) Air Transportation - (continued) Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- IN Indianapolis Airport Authority Federal Express Corp. Project, Series 2004, AMT, 5.100% 01/15/17 500,000 527,880 United Airlines, Inc., Series 1995 A, AMT, 6.500% 11/15/31(f) 1,360,000 142,487 ----------------------------------------------------------------------------- KY Kenton County Airport Board Delta Airlines, Inc., Series 1992 A, AMT, 7.500% 02/01/20 1,000,000 845,180 ----------------------------------------------------------------------------- MN Minneapolis & St. Paul Metropolitan Northwest Airlines: Airports Commission Series 2001 A, AMT, 7.000% 04/01/25 1,250,000 1,145,712 Series 2001 B, AMT, 6.500% 04/01/25 500,000 501,375 ----------------------------------------------------------------------------- NC Charlotte/Douglas International Airport US Airways, Inc.: Series 1998, AMT, 5.600% 07/01/27 (g) 1,000,000 457,320 Series 2000, AMT, 7.750% 02/01/28 (g) 1,000,000 491,510 ----------------------------------------------------------------------------- NJ State Economic Development Authority Continental Airlines, Inc., Series 1999, AMT, 6.250% 09/15/29 2,000,000 1,623,740 ----------------------------------------------------------------------------- TN Memphis-Shelby County Airport Authority Federal Express Corp., Series 2002, 5.050% 09/01/12 500,000 533,525 ----------------------------------------------------------------------------- Air Transportation Total 6,835,609 Airports - 0.3% - ---------------------------------------------- ----------------------------------------------------------------------------- MA State Port Authority Revenue Series 1999, AMT, IFRN, Insured: FGIC 9.410% 07/01/29 (h)(d) 1,000,000 1,198,550 ----------------------------------------------------------------------------- Airports Total 1,198,550 Toll Facilities - 2.1% - ---------------------------------------------- ----------------------------------------------------------------------------- CO E-470 Public Highway Authority Series 2000 B, Insured: MBIA (a) 09/01/18 4,600,000 2,474,340 ----------------------------------------------------------------------------- MA State Turnpike Authority Metro Series 1997 C, Highway Systems Revenue Insured: MBIA (a) 01/01/20 2,000,000 1,008,060 ----------------------------------------------------------------------------- NY Triborough Bridge & Tunnel Authority Series 2002 E, Insured: MBIA 5.500% 11/15/20 2,050,000 2,395,446 ----------------------------------------------------------------------------- OH State Turnpike Commission Series 1998 A, Insured: FGIC 5.500% 02/15/17 1,690,000 1,958,017 ----------------------------------------------------------------------------- VA Richmond Metropolitan Authority Series 1998, Insured: FGIC 5.250% 07/15/22 1,100,000 1,251,162 ----------------------------------------------------------------------------- Toll Facilities Total 9,087,025
See Accompanying Notes to Financial Statements. 17 December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) TRANSPORTATION - (continued) Transportation - 2.0% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- GA Metropolitan Atlanta Rapid Transit Series 1992 P, Authority Insured: AMBAC 6.250% 07/01/20 4,000,000 4,851,560 ----------------------------------------------------------------------------- NV State Department of Business & Industry Las Vegas Monorail Project, Series 2000: 7.375% 01/01/30 650,000 667,433 7.375% 01/01/40 500,000 510,935 ----------------------------------------------------------------------------- OH Toledo-Lucas County Port Authority CSX Transportation, Inc., Series 1992, 6.450% 12/15/21 2,000,000 2,264,060 ----------------------------------------------------------------------------- Transportation Total 8,293,988 ----------- TRANSPORTATION TOTAL 25,415,172 UTILITY - 23.8% Independent Power Producers - 0.6% - ---------------------------------------------- ----------------------------------------------------------------------------- NY Suffolk County Industrial Development Nissequogue Cogen Partners, Series 1998, AMT, Agency 5.500% 01/01/23 1,000,000 969,690 ----------------------------------------------------------------------------- PA Carbon County Industrial Development Panther Creek Partners Project, Authority Series 2000, AMT, 6.650% 05/01/10 830,000 899,114 ----------------------------------------------------------------------------- PR Industrial, Tourist, Educational, Medical & AES Project, Series 2000, AMT, Environmental Control Facilities 6.625% 06/01/26 645,000 698,238 ----------------------------------------------------------------------------- Independent Power Producers Total 2,567,042 Investor Owned - 1.9% - ---------------------------------------------- ----------------------------------------------------------------------------- IN Petersburg Series 1995 C, AMT, 5.950% 12/01/29 1,500,000 1,572,675 ----------------------------------------------------------------------------- IN State Development Finance Authority Series 1999, AMT, 5.950% 08/01/30 1,000,000 1,022,510 ----------------------------------------------------------------------------- OH State Air Quality Development Authority Cleveland Electric Illuminating Co., Series 2002 A, 6.000% 12/01/13 500,000 531,465 JMG Funding Ltd. Project, Series 1997, AMT, Insured: AMBAC 5.625% 01/01/23 1,000,000 1,064,480 ----------------------------------------------------------------------------- TX Brazos River Authority Texas Utilities Electric Co. Project: Series 1999 B, AMT, 6.750% 09/01/34 2,455,000 2,844,805 Series 2001 C, AMT, 5.750% 05/01/36 395,000 433,967 ----------------------------------------------------------------------------- WY Lincoln County Environmental Pacificorp Project, Series 1995, AMT, Improvement Revenue 4.125% 11/01/25 500,000 490,225 ----------------------------------------------------------------------------- Investor Owned Total 7,960,127
18 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) UTILITY - (continued) Joint Power Authority -10.7% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- GA State Municipal Electric Authority Series 1991, Insured: MBIA 6.600% 01/01/18 17,700,000 21,725,865 ----------------------------------------------------------------------------- NC Eastern Municipal Power Agency Series 1991 A, 6.500% 01/01/18 2,185,000 2,647,717 Series 1992, Insured: MBIA (a) 01/01/09 2,260,000 2,010,180 Series 1993, Insured: AMBAC 6.000% 01/01/18 7,000,000 8,369,130 ----------------------------------------------------------------------------- WA State Public Power Supply System Nuclear Project No. 2, Series 1992 A, 6.300% 07/01/12 3,500,000 4,149,145 Nuclear Project No. 3, Series 1989 B, (a) 07/01/08 7,000,000 6,322,400 ----------------------------------------------------------------------------- Joint Power Authority Total 45,224,437 Municipal Electric - 3.3% - ---------------------------------------------- ----------------------------------------------------------------------------- OH Cleveland Public Power System Revenue Series 1994 A, Insured: MBIA (a) 11/15/13 2,000,000 1,403,760 ----------------------------------------------------------------------------- PA Westmoreland County Municipal Authority Series 2000 A, Insured: FGIC (a) 08/15/23 1,400,000 565,880 ----------------------------------------------------------------------------- PR Puerto Rico Electric Power Authority Series 2002 KK, Insured: MBIA 5.500% 07/01/16 2,000,000 2,328,600 ----------------------------------------------------------------------------- SD Heartland Consumers Power District Series 1992, Insured: FSA 6.000% 01/01/17 8,000,000 9,546,880 ----------------------------------------------------------------------------- Municipal Electric Total 13,845,120 Water & Sewer - 7.3% - ---------------------------------------------- ----------------------------------------------------------------------------- GA Atlanta Water & Wastewater Revenue Series 1999 A, Insured: FGIC 5.500% 11/01/22 3,225,000 3,751,771 Series 2001 A, Insured: MBIA 5.500% 11/01/27 1,500,000 1,719,570 ----------------------------------------------------------------------------- GA Fulton County Series 1992, Insured: FGIC 6.375% 01/01/14 430,000 507,344 ----------------------------------------------------------------------------- OH Cleveland Waterworks Revenue Series 1993, Insured: MBIA 5.500% 01/01/21 3,000,000 3,470,100 ----------------------------------------------------------------------------- OH Lakewood Water Systems Revenue Series 1995, Insured: AMBAC 5.850% 07/01/20 2,405,000 2,899,733
See Accompanying Notes to Financial Statements. 19 December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Municipal Bonds - (continued) UTILITY - (continued) Water & Sewer - (continued) Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- OH State Water Development Authority Series 1991 B, Insured: FSA 5.500% 06/01/18 1,000,000 1,165,880 ----------------------------------------------------------------------------- OH Warren Waterworks Revenue Series 1997, Insured: FGIC 5.500% 11/01/15 500,000 569,995 ----------------------------------------------------------------------------- PA Allegheny County Sanitation Authority Series 1991 A, Insured: FGIC (a) 06/01/07 2,370,000 2,227,089 ----------------------------------------------------------------------------- PA Dauphin County Industrial Development Dauphin Water Supply Co., Authority Series 1992 A, AMT, 6.900% 06/01/24 3,400,000 4,319,224 ----------------------------------------------------------------------------- TX Houston Water & Sewer System Revenue Series 1998, Insured: FSA (a) 12/01/23 985,000 389,154 Series 1991 C, Insured: AMBAC: (a) 12/01/08 4,000,000 3,578,960 (a) 12/01/09 4,000,000 3,421,920 (a) 12/01/10 3,750,000 3,050,475 ----------------------------------------------------------------------------- Water & Sewer Total 31,071,215 ----------- UTILITY TOTAL 100,667,941 Total Municipal Bonds (cost of $363,953,298) 407,908,989 Municipal Preferred Stocks - 1.1% HOUSING - 1.1% Multi-Family - 1.1% - ---------------------------------------------- ----------------------------------------------------------------------------- Charter Mac Equity Issuer Trust AMT, 6.625% 06/30/09 (d)(h) 2,000,000 2,214,360 MuniMae Equity Trust AMT, 7.750% 06/30/50 (d)(h) 2,000,000 2,342,780 Total Municipal Preferred Stock (cost of $4,000,000) 4,557,140 Investment Company - 0.0% - ---------------------------------------------- ----------------------------------------------------------------------------- Federated Tax-Free Obligations Fund 677 677 ----------- Total Investment Company (cost of $677) 677
20 See Accompanying Notes to Financial Statements. December 31, 2004 (unaudited) Columbia Managed Municipals Fund
Short-Term Obligations - 1.3% VARIABLE RATE DEMAND NOTES (i) - 1.3% Par ($) Value ($) - ---------------------------------------------- ----------------------------------------------------------------------------- FL Alachua County Health Facilities Oak Hammock at University of Florida, Inc., Series 2002 2.220% 10/01/32 300,000 300,000 ----------------------------------------------------------------------------- IN Health Facility Financing Authority Fayette Memorial Hospital Association, Inc., Series 2002 2.270% 10/01/32 1,100,000 1,100,000 ----------------------------------------------------------------------------- MN Brooklyn Center Revenue Brookdale Corp. II Project, Series 2001, 2.270% 12/01/14 800,000 800,000 ----------------------------------------------------------------------------- MN Convention Center Series 2000, 1.840% 12/01/18 1,000,000 1,000,000 ----------------------------------------------------------------------------- MN Mankato Revenue Bethany Lutheran College, Series 2000 B, 2.270% 11/01/15 100,000 100,000 ----------------------------------------------------------------------------- MO State Health & Educational Facilities Bethesda Health Group of St. Louis, Inc., Authority Series 2001 A, 2.270% 08/01/31 100,000 100,000 ----------------------------------------------------------------------------- MS Jackson County Pollution Control Revenue Chevron Corp, Series 1992, 2.150% 12/01/16 500,000 500,000 ----------------------------------------------------------------------------- WI State Health & Educational Facilities ProHealth Care, Inc., Series 2001 B, Authority 2.220% 12/01/16 300,000 300,000 ----------------------------------------------------------------------------- WY Uinta County Pollution Control Revenue Chevron USA, Inc. Project, Series 1993, 2.150% 08/15/20 1,100,000 1,100,000 ----------------------------------------------------------------------------- VARIABLE RATE DEMAND NOTES TOTAL 5,300,000 Total Short-Term Obligations (cost of $5,300,000) 5,300,000 Total Investments - 98.9% (cost of $373,253,975) (j) 417,766,806 Other Assets & Liabilities, Net - 1.1% 4,783,597 Net Assets - 100.0% 422,550,403
See Accompanying Notes to Financial Statements. 21 December 31, 2004 (unaudited) Columbia Managed Municipals Fund Notes to Investment Portfolio: (a) Zero coupon bond. (b) A portion of the security with a market value of $3,385,721 is pledged as collateral for open futures contracts. (c) 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. (d) 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 December 31, 2004, these securities amounted to $10,227,938, which represents 2.4% of net assets. (e) Denotes a restricted security, which is subject to registration with the SEC or is required to be exempted from such registration prior to resale. At December 31, 2004, the value of these securities amounted to $2,135,760, which represents 0.5% of net assets. Acquisition Acquisition Security Date Cost - -------- ----------- ----------- IL Chicago O'Hare International Airport United Airlines, Inc., Series 2000 A, AMT, 6.750% 11/01/11 06/14/00 $ 1,625,959 TX Dallas County Flood Control District Series 2002, 7.250% 04/01/32 12/13/02 1,500,000 ----------- $ 3,125,959 ----------- (f) The issuer has filed for bankruptcy protection under Chapter 11 and is in default of certain debt covenants. Income is not being accrued. As of December 31, 2004, the value of these securities amounted to $709,367, which represents 0.2% of net assets. (g) The issuer has filed for bankruptcy protection under Chapter 11.Income is being accrued. As of December 31, 2004, the value of these securities amounted to $948,830, which represents 0.2% of net assets. (h) Variable rate security. The interest rate shown reflects the rate as of December 31, 2004. (i) 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 as of December 31, 2004. (j) Cost for federal income purposes is $373,006,860. At December 31, 2004, the Fund held the following open short futures contracts:
Number of Aggregate Expiration Unrealized Type Contracts Value Face Value Date Depreciation ---- --------- ----- ---------- ---------- ------------ 10-Year U.S. Treasury Notes 200 $22,387,500 $22,069,124 Mar-2005 $(318,376)
At December 31, 2004, the Fund held investments in the following sectors: Holdings by % of Revenue Source Net Assets ------------------------------------------------------------- Tax-Backed 32.7% Utility 23.8 Other 13.2 Health Care 7.6 Transportation 6.0 Education 5.0 Industrial 4.9 Housing 2.6 Other Revenue 1.4 Resource Recovery 0.4 Investment Company 0.0 Short-Term Obligations 1.3 Other Assets & Liabilities, Net 1.1 ----- 100.0% ----- Acronym Name ------- ---- ABAG Association of Bay Area Government AMBAC Ambac Assurance Corp. AMT Alternative Minimum Tax FGIC Financial Guaranty Insurance Co. FHA Federal Housing Administration FSA Financial Security Assurance, Inc. GNMA Government National Mortgage Association MBIA MBIA Insurance Corp. RAD Radian Asset Assurance, Inc. IFRN Inverse Floating Rate Note 22 See Accompanying Notes to Financial Statements. STATEMENT OF ASSETS AND LIABILITIES December 31, 2004 (unaudited) Columbia Managed Municipals Fund
($) - ---------------------------------------------- ----------------------------------------------------------------------------- Assets Investments, at cost 373,253,975 ----------- Investments, at value 417,766,806 Cash 67,452 Receivable for: Fund shares sold 108,458 Interest 6,123,815 Deferred Trustees' compensation plan 10,719 ----------- Total Assets 424,077,250 ----------------------------------------------------------------------------- Liabilities Payable for: Fund shares repurchased 540,960 Futures variation margin 53,125 Distributions 583,522 Investment advisory fee 136,076 Administration fee 37,069 Transfer agent fee 48,824 Pricing and bookkeeping fees 14,317 Trustees' fees 1,047 Custody fee 3,103 Distribution and service fees 14,297 Deferred Trustees' fees 10,719 Other liabilities 83,788 ----------- Total Liabilities 1,526,847 Net Assets 422,550,403 ----------------------------------------------------------------------------- Composition of Net Assets Paid-in capital 380,798,937 Undistributed net investment income 418,004 Accumulated net realized loss (2,860,993) Net unrealized appreciation (depreciation) on: Investments 44,512,831 Futures contracts (318,376) Net Assets 422,550,403 ----------------------------------------------------------------------------- Class A Net assets 46,613,747 Shares outstanding 5,167,454 Net asset value per share 9.02(a) Maximum offering price per share ($9.02/0.9525) 9.47(b) ----------------------------------------------------------------------------- Class B Net assets 6,167,874 Shares outstanding 683,749 Net asset value and offering price per share 9.02(a) ----------------------------------------------------------------------------- Class C Net assets 2,349,448 Shares outstanding 260,461 Net asset value and offering price per share 9.02(a) ----------------------------------------------------------------------------- Class Z Net assets 367,419,334 Shares outstanding 40,730,981 Net asset value, offering and redemption price per share 9.02
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 23 STATEMENT OF OPERATIONS For the Six Months Ended December 31, 2004 (unaudited) Columbia Managed Municipals Fund
($) - ---------------------------------------------- ----------------------------------------------------------------------------- Investment Income Interest 11,024,052 Dividends 2,493 ----------- Total Investment Income 11,026,545 ----------------------------------------------------------------------------- Expenses Investment advisory fee 898,651 Administration fee 253,019 Distribution fee: Class B 24,407 Class C 7,215 Service fee: Class A 52,318 Class B 7,136 Class C 2,103 Transfer agent fee 154,149 Pricing and bookkeeping fees 72,712 Trustees' fees 9,612 Custody fee 11,646 Non-recurring costs (See Note 7) 2,856 Other expenses 101,820 ----------- Total Expenses 1,597,644 Fees waived by Distributor - Class C (2,895) Non-recurring costs assumed by Investment Advisor (See Note 7) (2,856) Custody earnings credit (412) ----------- Net Expenses 1,591,481 ----------- Net Investment Income 9,435,064 ----------------------------------------------------------------------------- Net Realized and Unrealized Net realized gain (loss) on: Gain (Loss) on Investments Investments 2,343,281 and Futures Contracts Futures contracts (419,118) ----------- Net realized gain 1,924,163 Net change in unrealized appreciation/depreciation on: Investments 12,388,762 Futures contracts (508,636) ----------- Net change in unrealized appreciation/depreciation 11,880,126 ----------- Net Gain 13,804,289 ----------- Net Increase in Net Assets from Operations 23,239,353
24 See Accompanying Notes to Financial Statements. STATEMENT OF CHANGES IN NET ASSETS Columbia Managed Municipals Fund
(unaudited) Six Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2004 ($) 2004 ($) - ---------------------------------------------- ----------------------------------------------------------------------------- Operations Net investment income 9,435,064 20,328,310 Net realized gain (loss) on investments and futures contracts 1,924,163 (1,253,955) Net change in unrealized appreciation/depreciation on investments and futures contracts 11,880,126 (24,204,248) ------------------------- Net Increase (Decrease) from Operations 23,239,353 (5,129,893) ----------------------------------------------------------------------------- Distributions Declared to Shareholders From net investment income: Class A (1,027,962) (2,121,281) Class B (115,983) (269,381) Class C (37,031) (65,540) Class Z (8,429,553) (17,512,057) From net realized gains: Class A -- (857,679) Class B -- (131,968) Class C -- (26,854) Class Z -- (6,747,258) ------------------------- Total Distributions Declared to Shareholders (9,610,529) (27,732,018) ----------------------------------------------------------------------------- Share Transactions Class A: Subscriptions 344,347 2,317,399 Distributions reinvested 612,925 1,867,215 Redemptions (2,952,604) (7,450,680) ------------------------- Net Decrease (1,995,332) (3,266,066) Class B: Subscriptions 181,477 384,216 Distributions reinvested 74,167 271,743 Redemptions (920,414) (2,432,358) ------------------------- Net Decrease (664,770) (1,776,399) Class C: Subscriptions 954,171 773,448 Distributions reinvested 21,672 66,607 Redemptions (591,696) (389,459) ------------------------- Net Increase 384,147 450,596 Class Z: Subscriptions 3,983,591 35,414,788 Distributions reinvested 5,283,692 16,961,581 Redemptions (23,564,319) (86,349,551) ------------------------- Net Decrease (14,297,036) (33,973,182) Net Decrease from Share Transactions (16,572,991) (38,565,051) ----------------------------------------------------------------------------- Total Decrease in Net Assets (2,944,167) (71,426,962) ----------------------------------------------------------------------------- Net Assets Beginning of period 425,494,570 496,921,532 End of period (including undistributed net investment income of $418,004 and $593,469, respectively) 422,550,403 425,494,570 -----------------------------------------------------------------------------
See Accompanying Notes to Financial Statements. 25 Columbia Managed Municipals Fund
(unaudited) Six Months Ended Year Ended December 31, June 30, 2004 2004 - ---------------------------------------------- ----------------------------------------------------------------------------- Changes in Shares Class A: Subscriptions 38,329 257,713 Issued for distributions reinvested 68,334 206,432 Redemptions (329,409) (830,384) ------------------------- Net Decrease (222,746) (366,239) Class B: Subscriptions 20,229 42,983 Issued for distributions reinvested 8,270 30,019 Redemptions (102,564) (270,238) ------------------------- Net Decrease (74,065) (197,236) Class C: Subscriptions 105,875 85,547 Issued for distributions reinvested 2,416 7,364 Redemptions (66,069) (43,146) ------------------------- Net Increase 42,222 49,765 Class Z: Subscriptions 443,524 3,916,866 Issued for distributions reinvested 589,037 1,875,256 Redemptions (2,632,119) (9,573,470) ------------------------- Net Decrease (1,599,558) (3,781,348)
26 See Accompanying Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS December 31, 2004 (unaudited) Columbia Managed Municipals Fund Note 1. Organization Columbia Managed Municipals Fund (the "Fund"), a series of 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 consistent with prudent risk, 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 are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. Note 2. Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. Security Valuation Debt securities generally are valued by 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 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 quotations which management believes are not appropriate, are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Security Transactions Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. Futures Contracts The Fund may invest in municipal and U.S. Treasury futures contracts. The Fund will invest in these 27 December 31, 2004 (unaudited) Columbia Managed Municipals Fund instruments to hedge against the effects of changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions, for duration management, or when the transactions are economically appropriate to the reduction of risk inherent in the management of the Fund and not for trading purposes. The use of futures contracts involves certain risks, which include: (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out positions due to differing trading hours, or the temporary absence of a liquid market, for either the instrument or the underlying securities, or (3) an inaccurate prediction by Columbia Management Advisors, Inc. of the future direction of interest rates. Any of these risks may involve amounts exceeding the variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. Upon entering into a futures contract, the Fund deposits cash or securities with the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin receivable or payable and offset in unrealized gains or losses. The Fund also identifies portfolio securities as segregated with the custodian in a separate account in an amount equal to the futures contract. The Fund recognizes a realized gain or loss when the contract is closed or expires. 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. 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 an amount equal to the delayed delivery commitment. 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 all 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. 28 December 31, 2004 (unaudited) Columbia Managed Municipals Fund Note 3. Federal Tax Information The tax character of distributions paid during the year ended June 30, 2004 was as follows: - ---------------------------------------------------------- June 30, 2004 - ---------------------------------------------------------- Distributions Paid From: - ---------------------------------------------------------- Tax-Exempt Income $19,931,482 - ---------------------------------------------------------- Ordinary Income 40,499 - ---------------------------------------------------------- Long-Term Capital Gains 7,760,037 - ---------------------------------------------------------- Unrealized appreciation and depreciation at December 31, 2004, based on cost of investments for federal income tax purposes was: - ---------------------------------------------------------- Unrealized appreciation $48,288,577 - ---------------------------------------------------------- Unrealized depreciation (3,528,631) - ---------------------------------------------------------- Net unrealized appreciation $44,759,946 - ---------------------------------------------------------- The following capital loss carryforwards, determined as of June 30, 2004, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: - ------------------------------------------ Year of Capital Loss Expiration Carryforward - ------------------------------------------ 2012 $1,522,991 - ------------------------------------------ Note 4. Fees and Compensation Paid to Affiliates Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the Fund. Columbia, the transfer agent and the distributor, are each indirect, wholly owned subsidiaries of Bank of America Corporation ("BOA"). Investment Advisory Fee Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets as follows: - ---------------------------------------------------------- Average Daily Net Assets Annual Fee Rate - ---------------------------------------------------------- First $100 million 0.450% - ---------------------------------------------------------- Next $100 million 0.425% - ---------------------------------------------------------- Next $800 million 0.400% - ---------------------------------------------------------- Over $1 billion 0.375% - ---------------------------------------------------------- For the six months ended December 31, 2004, the Fund's annualized effective investment advisory fee rate was 0.42%. 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% - ---------------------------------------------------------- Next $100 million 0.125% - ---------------------------------------------------------- Next $800 million 0.100% - ---------------------------------------------------------- Over $1 billion 0.075% - ---------------------------------------------------------- For the six months ended December 31, 2004, the Fund's annualized effective administration fee rate was 0.12%. Pricing and Bookkeeping Fees Columbia is responsible for providing pricing and bookkeeping services to the Fund under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). As a result, Columbia pays the total fees received to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000 paid monthly, and in any month that the Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services based on the number of securities held by the Fund. For the six months ended December 31, 2004, the annualized effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.034%. Transfer Agent Fee Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services to the Fund and has subcontracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. For such services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $34.00 29 December 31, 2004 (unaudited) Columbia Managed Municipals Fund per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. For the six months ended December 31, 2004, the Fund's annualized effective transfer agent fee rate, inclusive of out-of-pocket expenses, was 0.07%. Underwriting Discounts, Service and Distribution Fees Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. For the six months ended December 31, 2004, the Distributor has retained net underwriting discounts of $433 on sales of the Fund's Class A shares and received CDSC of $6,910 and $247 on Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan") for its Class A, Class B and Class C shares which requires the payment of a monthly service fee to the Distributor. The service fee is equal to 0.10% annually of the net assets attributable to shares of the Liberty Ohio Tax-Exempt Fund issued prior to December 1, 1994 and 0.25% annually of the net assets attributable to shares issued thereafter. This arrangement results in a service fee between the 0.10% and 0.25% annual rates. For the six months ended December 31, 2004, the annualized effective service fee rates were 0.22%, 0.22% and 0.22% for Class A, Class B and Class C shares, respectively. 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 0.45% annually. For the six months ended December 31, 2004, the annualized effective distribution fee rate for Class C shares was 0.45%, The CDSC and the fees received from the Plan are used principally as repayment to the Distributor for amounts paid by the Distributor to dealers who sold such shares. Custody Credits The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. 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. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer. The Fund's fee will not exceed $15,000 per year. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. Other Columbia provides certain services to the Fund related to Sarbanes-Oxley compliance. For the six months ended December 31, 2004, the Fund paid $595 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. Note 5. Portfolio Information For the six months ended December 31, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $11,231,033 and $28,216,753, respectively. Note 6. Line of Credit The Fund and other affiliated funds participate in a $350,000,000 committed unsecured revolving line of credit provided by State Street Bank and Trust Company. Borrowings are used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at a rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum is accrued and apportioned among the participating funds based on their pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the six months ended December 31, 2004, the Fund did not borrow under this arrangement. 30 December 31, 2004 (unaudited) Columbia Managed Municipals Fund Shares of Beneficial Interest As of December 31, 2004, 5.5% of the outstanding shares of the Fund were beneficially owned by participant accounts over which Charles Schwab & Co., Inc. had either sole or joint investment discretion. Subscription and redemption activity of this account may have a significant effect on the operations of the Fund. Note 7. Disclosure of Significant Risks and Contingencies 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 AA by Standard & Poor's. At December 31, 2004, private insurers who insured greater than 5% of the total investments of the Fund were as follows: - ---------------------------------------------------------- % of Total Insurer Investment - ---------------------------------------------------------- MBIA Insurance Corp. 22.7 - ---------------------------------------------------------- Financial Guaranty Insurance Co. 14.3 - ---------------------------------------------------------- Ambac Assurance Corp. 11.8 - ---------------------------------------------------------- Financial Security Assurance, Inc. 7.5 - ---------------------------------------------------------- Geographic Concentration The Fund has greater than 5% of its total investments at December 31, 2004 invested in debt obligations issued by the states of California, Georgia, Illinois, Massachusetts and Ohio and their respective political subdivisions, agencies and public authorities. The Fund is more susceptible to economic 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 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 and 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 SEC (the "SEC Order" and together, the "Settlements"). The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle which Columbia Group entered into with the SEC and NYAG in March 2004. Under the terms of the SEC Order, the Columbia Group has agreed, among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review the Columbia Group's applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The Columbia Funds have also voluntarily undertaken to implement certain governance measures designed to maintain the independence of their boards of trustees. The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce certain Columbia Funds, Nations Funds and other mutual fund management fees collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions. Pursuant to the procedures set forth in the SEC Order, the $140 million in settlement amounts described above will be distributed in accordance with a distribution plan to be developed by an independent distribution consultant, who is acceptable to the SEC staff and the Columbia Funds' independent trustees. 31 December 31, 2004 (unaudited) Columbia Managed Municipals Fund The distribution plan must be based on a methodology developed in consultation with the Columbia Group and the Fund's independent trustees and not unacceptable to the staff of the SEC. 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 will be 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, their Boards and/or Bank of America (and affiliated entities). More than 300 cases (including those filed against entities unaffiliated with the funds, their Boards and/or FleetBoston and its affiliated entities) have been consolidated in a multi-district proceeding and transferred to the Federal District Court in Maryland. Recently, certain Columbia funds and affiliated entities have been named as defendants in several direct and derivative actions under various sections of the Investment Company Act of 1940, as amended, alleging, among other things, that the fees and expenses paid by those funds are excessive. On January 11, 2005 a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Fund and Columbia. The lawsuit alleges that defendants violated common law duties to fund shareholders as well as sections of the Investment Company Act of 1940, by failing to ensure that the Fund and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs allege that defendants failed to submit proof of claims in connection with settlements of securities class action lawsuits filed against companies in which the funds held positions. The funds and the other defendants to these actions, including Columbia and various of its affiliates, certain other mutual funds advised by Columbia and its affiliates, and various directors of such funds, have denied these allegations and are contesting the plaintiffs' claims. These proceedings are ongoing, however, based on currently available information, Columbia believes that these lawsuits are without merit, that the likelihood they will have a material adverse impact on any fund is remote, and that the lawsuits are not likely to materially affect its ability to provide investment management services to its clients, including the funds. For the year ended December 31, 2004, Columbia has assumed $2,856 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. 32 FINANCIAL HIGHLIGHTS Columbia Managed Municipals Fund Selected data for a share outstanding throughout each period is as follows:
(unaudited) Six Months Year Period Ended Ended Ended December 31, June 30, June 30, Class A Shares 2004 2004 2003 (a) - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 8.74 $ 9.38 $ 9.01 - --------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.19 0.38 0.26 Net realized and unrealized gain (loss) on investments and futures contracts 0.28 (0.49) 0.37 ------------ -------- -------- Total from Investment Operations 0.47 (0.11) 0.63 - --------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.19) (0.38) (0.26) From net realized gains -- (0.15) -- ------------ -------- -------- Total Distributions Declared to Shareholders (0.19) (0.53) (0.26) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.02 $ 8.74 $ 9.38 Total return (c) 5.46%(d) (1.20)% 7.06%(d) - ------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (e) 0.92%(f) 0.94% 0.97%(f) Net investment income (e) 4.21%(f) 4.23% 4.27%(f) Portfolio turnover rate 3%(d) 8% 40% Net assets, end of period (000's) $ 46,614 $ 47,095 $ 53,979 - ---------------------------------------------------------------------------------------------------
(a) Class A shares were initially offered on November 1, 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 initial sales charge or contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. 33 Columbia Managed Municipals Fund Selected data for a share outstanding throughout each period is as follows:
(unaudited) Six Months Year Period Ended Ended Ended December 31, June 30, June 30, Class B Shares 2004 2004 2003 (a) - --------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 8.74 $ 9.38 $ 9.01 - --------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.16 0.31 0.21 Net realized and unrealized gain (loss) on investments and futures contracts 0.28 (0.49) 0.37 ------------ ---------- --------- Total from Investment Operations 0.44 (0.18) 0.58 - --------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.16) (0.31) (0.21) From net realized gains -- -- (0.15) ------------ ---------- --------- Total Distributions Declared to Shareholders (0.16) (0.46) (0.21) - --------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.02 $ 8.74 $ 9.38 Total return (c) 5.07%(d) (1.94)% 6.54%(d) - --------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (e) 1.67%(f) 1.69% 1.72%(f) Net investment income (e) 3.46%(f) 3.48% 3.52%(f) Portfolio turnover rate 3%(d) 8% 40% Net assets, end of period (000's) $ 6,168 $ 6,621 $ 8,956 - ---------------------------------------------------------------------------------------------------------
(a) Class B shares were initially offered on November 1, 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) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. 34 Columbia Managed Municipals Fund Selected data for a share outstanding throughout each period is as follows:
(unaudited) Six Months Year Period Ended Ended Ended December 31, June 30, June 30, Class C Shares 2004 2004 2003 (a) - -------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 8.74 $ 9.38 $ 9.01 - -------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.17 0.34 0.25 Net realized and unrealized gain (loss) on investments and futures contracts 0.28 (0.49) 0.35 ------------ -------- -------- Total from Investment Operations 0.45 (0.15) 0.60 - -------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.17) (0.34) (0.23) From net realized gains -- (0.15) -- ------------ -------- -------- Total Distributions Declared to Shareholders (0.17) (0.49) (0.23) - -------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.02 $ 8.74 $ 9.38 Total return (c)(d) 5.23%(e) (1.65)% 6.75%(e) - -------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (f) 1.37%(g) 1.36% 1.02%(g) Net investment income (f) 3.76%(g) 3.81% 4.20%(g) Waiver/reimbursement 0.30%(g) 0.33% 0.70%(g) Portfolio turnover rate 3%(e) 8% 40% Net assets, end of period (000's) $ 2,349 $ 1,907 $ 1,579 - --------------------------------------------------------------------------------------------------------
(a) Class C shares were initially offered on November 1, 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 not waived a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. 35 Columbia Managed Municipals Fund Selected data for a share outstanding throughout each period is as follows:
(unaudited) Six Months Ended Year Ended June 30, December 31, ----------------------------------------------------------------------- Class Z Shares 2004 2004 2003 (a) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 8.74 $ 9.38 $ 8.95 $ 8.99 $ 8.65 $ 9.07 - -------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: From net investment income 0.20(b) 0.40(b) 0.42(b) 0.43(b)(c) 0.45(b) 0.47 Net realized and unrealized gain (loss) on investments and futures contracts 0.28 (0.49) 0.41 0.18(c) 0.41 (0.32) -------- --------- --------- -------- --------- -------- Total from Investment Operations 0.48 (0.09) 0.83 0.61 0.86 0.15 - -------------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.20) (0.40) (0.40) (0.44) (0.45) (0.47) From net realized gains -- (0.15) -- (0.21) (0.07) (0.10) -------- --------- --------- -------- --------- -------- Total Distributions Declared to Shareholders (0.20) (0.55) (0.40) (0.65) (0.52) (0.57) - -------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.02 $ 8.74 $ 9.38 $ 8.95 $ 8.99 $ 8.65 Total return (d) 5.57%(e) (1.02)% 9.50% 7.06% 10.13% 1.86% - -------------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (f) 0.70%(g) 0.72% 0.76% 0.76% 0.74% 0.69% Net investment income (f) 4.43%(g) 4.45% 4.58% 4.82%(c) 5.07% 5.39% Portfolio turnover rate 3%(e) 8% 40% 17% 17% 19% Net assets, end of period (000's) $367,419 $ 369,872 $ 432,407 $442,660 $ 454,366 $ 458,205 - --------------------------------------------------------------------------------------------------------------------------------
(a) On July 29, 2002, the Fund's existing 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 and accreting premium and 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 4.81% to 4.82%. 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) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. 36 IMPORTANT INFORMATION ABOUT THIS REPORT Columbia Managed Municipals Fund Transfer Agent Columbia Funds Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800.345.6611 Distributor Columbia Funds Distributor, Inc. One Financial Center Boston MA 02111 Investment Advisor Columbia Management Advisors, Inc. 100 Federal Street Boston MA 02110 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 125 High Street Boston MA 02110 The funds mail one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you This report has been prepared for shareholders of Columbia Managed Municipals 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 funds and with the most recent copy of the Columbia Funds Performance Update. A description of the policies and procedures that the fund uses to determine how to vote proxies and a copy of the fund's voting record are available (i) on the fund's website, www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2004 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. 37 [GRAPHIC] eDelivery Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia Managed Municipals Fund Semiannual Report, December 31, 2004 PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 Columbia Management(R) (C)2005 Columbia Funds Distributor, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 www.columbiafunds.com 798-03/093U-0105 (02/05) 05/4354 ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS The registrant's "Schedule I - Investments in securities of unaffiliated issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have not been any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, since those procedures were last disclosed in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officers, based on their evaluation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant's management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not applicable at this time. (a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (a)(3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Columbia Funds Trust IX ------------------------------------------------------------------ By (Signature and Title) /S/ Christopher L. Wilson ------------------------------------------------------ Christopher L. Wilson, President Date March 1, 2005 -------------------------------------------------------------------------- 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 March 1, 2005 -------------------------------------------------------------------------- By (Signature and Title) /S/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, Treasurer Date March 1, 2005 -------------------------------------------------------------------------- EX-99.CERT 2 file002.txt CERTIFICATIONS I, Christopher L. Wilson, certify that: 1. I have reviewed this report on Form N-CSR of Columbia Funds Trust IX; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change 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; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 1, 2005 /S/ Christopher L. Wilson ----------------------------------- Christopher L. Wilson, President I, J. Kevin Connaughton, certify that: 1. I have reviewed this report on Form N-CSR of Columbia Funds Trust IX; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change 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; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 1, 2005 /S/ J. Kevin Connaughton ------------------------------------ J. Kevin Connaughton, Treasurer EX-99.906CERT 3 file003.txt CERTIFICATIONS CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Certified Shareholder Report of Columbia Funds Trust IX (the "Trust") on Form N-CSR for the period ending December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), the undersigned hereby certifies that, to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust. Date: March 1, 2005 /S/ Christopher L. Wilson ---------------------------------- Christopher L. Wilson, President Date: March 1, 2005 /S/ J. Kevin Connaughton ---------------------------------- J. Kevin Connaughton, Treasurer A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the "Commission") or its staff upon request. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss.1350 and is not being filed as part of the Form N-CSR with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----