-----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, JJy3P7WTZlwzE2HuK12lUx/19kF1/oB6m9E6Un10bX/9jCfEVIsRMDfSrPEWevlU hzM9BRfcmKPVE39SwaioUg== 0001193125-05-181505.txt : 20050907 0001193125-05-181505.hdr.sgml : 20050907 20050907162539 ACCESSION NUMBER: 0001193125-05-181505 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050907 DATE AS OF CHANGE: 20050907 EFFECTIVENESS DATE: 20050907 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-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04367 FILM NUMBER: 051073043 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-CSR 1 dncsr.txt COLUMBIA FUNDS TRUST IX - HIGH YIELD MUNI. FUND, MANAGED MUNI. FUND 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: 06/30/05 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. [PHOTO] COLUMBIA HIGH YIELD MUNICIPAL FUND Annual Report June 30, 2005 PRESIDENT'S MESSAGE -------------------------- Columbia High Yield Municipal Fund [PHOTO] Dear Shareholder: Columbia Management, the asset management division of Bank of America, is in the final stages of a significant business integration effort. Over the last year, we have been integrating various components of the Nations Funds, Galaxy Funds and Columbia Funds, which will result in a single fund family that covers a wide range of markets, sectors and asset classes. Our team of talented, seasoned investment professionals will continue to strive to achieve strong results within their investment categories. Our objective is not only to provide our shareholders with the best products but also to enhance the breadth and availability of our services. Given our ability to now leverage the size and scale of the Columbia Management business, I am pleased that these efforts will also result in substantial cost savings to the funds. Our goal is to create a more simplified, clearly delineated product line. Through thoughtful project planning and execution, we will initially reduce the number of retail mutual funds from over 140 to fewer than 90. Earlier this year several fund mergers and liquidations were successfully completed. As we work to complete the remaining product and service provider consolidations in the coming months, we remain committed to building a mutual fund business that meets, and hopefully exceeds, your desire for personal financial solutions. We will continue to strive for the highest standards of performance and service excellence. The asset management business is in a time of transformation and we are committed to being progressive and innovative in our approach to the business. We value the confidence you have placed in us to assist you in managing your funds during these changing times. As with all businesses within Bank of America, we understand that your trust must be continuously earned and will remain focused on producing results for you. In the pages that follow, you'll find a discussion of the economic environment during the period followed by a detailed report from the fund's manager or managers on key factors that influenced performance. We encourage you to read the manager reports carefully and discuss any questions you have with your financial advisor. As always, we thank you for choosing Columbia Management. We look forward to helping you keep your long-term financial goals on target in the years to come. Sincerely, /s/ Christopher L. Wilson President, Columbia Funds Christopher L. Wilson is Head of Mutual Funds for Columbia Management, President of Columbia Funds, President & CEO of Nations Funds and President of Galaxy Funds. He is 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 joined Bank of America in August 2004. Table of Contents Performance Information.... 1 Fund Profile............... 2 Understanding Your Expenses 3 Economic Update............ 4 Portfolio Manager's Report. 5 Financial Statements....... 7 Investment Portfolio..... 8
Statement of Assets and Liabilities.. 37 Statement of Operations.............. 38 Statement of Changes in Net Assets... 39 Notes to Financial Statements........ 41 Financial Highlights................. 48 Report of Independent Registered Public Accounting Firm...... 52 Unaudited Information.................. 53 Trustees............................... 54 Officers............................... 56 Important Information About This Report...................... 57
The views expressed in the President's Message and Portfolio Manager's Report reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Fund. References to specific company securities should not be construed as a recommendation or investment advice. -------------------------- Not FDIC May Lose Value Insured ----------------- No Bank Guarantee - -----------------
PERFORMANCE INFORMATION ---------------------------------- Columbia High Yield Municipal Fund
Performance of a $10,000 investment 07/01/95 - 06/30/05 ($)
sales charge: without with ---------------------------- Class A 17,542 16,715 ---------------------------- Class B 17,154 17,154 ---------------------------- Class C 17,229 17,229 ---------------------------- Class Z 17,760 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. Growth of a $10,000 investment 07/01/95 - 06/30/05 [CHART] Class A Class A Lehman shares without shares with Brothers Municipal sales charge sales charge Bond Index --------------- --------------- ---------------- 07/01/1995 $10,000 $ 9,525 $10,000 07/31/1995 10,095 9,615 10,095 08/31/1995 10,199 9,715 10,223 09/30/1995 10,256 9,769 10,288 10/31/1995 10,423 9,928 10,437 11/30/1995 10,617 10,113 10,610 12/31/1995 10,750 10,239 10,712 01/31/1996 10,823 10,309 10,793 02/29/1996 10,734 10,224 10,720 03/31/1996 10,613 10,109 10,583 04/30/1996 10,581 10,078 10,553 05/31/1996 10,597 10,094 10,549 06/30/1996 10,686 10,178 10,664 07/31/1996 10,739 10,229 10,760 08/31/1996 10,765 10,254 10,758 09/30/1996 10,913 10,394 10,908 10/31/1996 11,034 10,510 11,032 11/30/1996 11,210 10,678 11,233 12/31/1996 11,232 10,698 11,186 01/31/1997 11,260 10,725 11,207 02/28/1997 11,350 10,811 11,311 03/31/1997 11,250 10,716 11,160 04/30/1997 11,334 10,796 11,254 05/31/1997 11,510 10,963 11,424 06/30/1997 11,635 11,083 11,546 07/31/1997 11,911 11,345 11,866 08/31/1997 11,858 11,294 11,754 09/30/1997 11,975 11,406 11,894 10/31/1997 12,052 11,479 11,970 11/30/1997 12,136 11,559 12,041 12/31/1997 12,305 11,720 12,217 01/31/1998 12,423 11,833 12,343 02/28/1998 12,443 11,852 12,346 03/31/1998 12,448 11,856 12,357 04/30/1998 12,420 11,830 12,302 05/31/1998 12,582 11,984 12,496 06/30/1998 12,606 12,007 12,545 07/31/1998 12,641 12,040 12,576 08/31/1998 12,794 12,186 12,771 09/30/1998 12,891 12,279 12,931 10/31/1998 12,873 12,262 12,931 11/30/1998 12,918 12,304 12,976 12/31/1998 12,954 12,339 13,009 01/31/1999 13,066 12,445 13,163 02/28/1999 13,032 12,413 13,105 03/31/1999 13,069 12,449 13,124 04/30/1999 13,117 12,494 13,157 05/31/1999 13,143 12,518 13,080 06/30/1999 13,007 12,390 12,892 07/31/1999 13,045 12,425 12,938 08/31/1999 12,916 12,302 12,835 09/30/1999 12,897 12,284 12,840 10/31/1999 12,721 12,117 12,701 11/30/1999 12,804 12,196 12,836 12/31/1999 12,676 12,074 12,740 01/31/2000 12,574 11,977 12,684 02/29/2000 12,676 12,074 12,831 03/31/2000 12,847 12,237 13,110 04/30/2000 12,824 12,215 13,033 05/31/2000 12,756 12,150 12,965 06/30/2000 12,982 12,365 13,309 07/31/2000 13,133 12,509 13,494 08/31/2000 13,307 12,675 13,702 09/30/2000 13,261 12,631 13,630 10/31/2000 13,336 12,703 13,779 11/30/2000 13,370 12,735 13,884 12/31/2000 13,556 12,912 14,227 01/31/2001 13,630 12,983 14,368 02/28/2001 13,640 12,992 14,413 03/31/2001 13,730 13,078 14,543 04/30/2001 13,588 12,943 14,386 05/31/2001 13,716 13,065 14,542 06/30/2001 13,833 13,176 14,639 07/31/2001 14,073 13,405 14,856 08/31/2001 14,441 13,755 15,101 09/30/2001 14,282 13,603 15,049 10/31/2001 14,425 13,739 15,228 11/30/2001 14,341 13,660 15,101 12/31/2001 14,243 13,567 14,957 01/31/2002 14,400 13,716 15,216 02/28/2002 14,546 13,855 15,398 03/31/2002 14,326 13,645 15,097 04/30/2002 14,598 13,905 15,391 05/31/2002 14,649 13,953 15,485 06/30/2002 14,791 14,089 15,649 07/31/2002 14,908 14,200 15,851 08/31/2002 15,026 14,312 16,041 09/30/2002 15,197 14,475 16,392 10/31/2002 14,902 14,194 16,120 11/30/2002 14,969 14,258 16,053 12/31/2002 15,143 14,424 16,391 01/31/2003 15,107 14,389 16,350 02/28/2003 15,317 14,589 16,579 03/31/2003 15,321 14,594 16,589 04/30/2003 15,478 14,742 16,699 05/31/2003 15,770 15,021 17,089 06/30/2003 15,767 15,018 17,018 07/31/2003 15,382 14,652 16,422 08/31/2003 15,488 14,753 16,545 09/30/2003 15,803 15,052 17,032 10/31/2003 15,822 15,070 16,946 11/30/2003 16,040 15,278 17,123 12/31/2003 16,159 15,391 17,265 01/31/2004 16,220 15,450 17,363 02/29/2004 16,455 15,674 17,624 03/31/2004 16,373 15,595 17,562 04/30/2004 16,118 15,352 17,146 05/31/2004 16,050 15,288 17,084 06/30/2004 16,100 15,335 17,146 07/31/2004 16,314 15,539 17,372 08/31/2004 16,544 15,758 17,719 09/30/2004 16,641 15,851 17,813 10/31/2004 16,768 15,971 17,966 11/30/2004 16,778 15,981 17,819 12/31/2004 16,979 16,173 18,036 01/31/2005 17,122 16,309 18,204 02/28/2005 17,144 16,330 18,144 03/31/2005 17,074 16,263 18,030 04/30/2005 17,310 16,487 18,315 05/31/2005 17,438 16,609 18,445 06/30/2005 17,542 16,715 18,559 06/30/2005 17,542 16,715 18,559 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A Shares of Columbia High Yield Municipal Fund during the stated time period, and does not reflect the deduction of taxes that a 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, they do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Average annual total return as of 06/30/05 (%)
Share class A B C Z ------------------------------------------------------------ Inception 07/31/00 07/15/02 07/15/02 03/05/84 ------------------------------------------------------------ Sales charge without with without with without with without ------------------------------------------------------------ 1-year 9.00 3.79 8.19 3.19 8.35 7.35 9.22 ------------------------------------------------------------ 5-year 6.20 5.18 5.73 5.41 5.82 5.82 6.47 ------------------------------------------------------------ 10-year 5.78 5.27 5.54 5.54 5.59 5.59 5.91 ------------------------------------------------------------
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 HAVE BEEN LOWER. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class A is a newer class of shares. Its performance information includes returns of the fund's class Z shares (the oldest existing fund class) for periods prior to its inception. These returns have not been restated to reflect any differences in expenses (such as Rule 12b-1 fees) between class Z shares and the newer class of shares. If differences in expenses had been reflected, the returns shown for periods prior to the inception of the newer class of shares would have been lower. Class Z shares were initially offered on March 5, 1984, and class A shares were initially offered on July 31, 2000. Class B and class C are newer classes of shares. Their performance information includes returns of the fund's class A shares from July 31, 2000 (class A's inception) to July 15, 2002 (inception of newer classes of shares). Their performance information prior to July 31, 2000 includes returns of the fund's class Z shares (the oldest existing fund class). These returns have not been restated to reflect any differences in expenses (such as Rule 12b-1 fees) between class A or class Z shares and the newer classes of shares. If differences in expenses had been reflected, the returns shown for periods prior to the inception of the newer classes of shares would have been lower. Class Z shares were initially offered on March 5, 1984, class A shares were initially offered on July 31, 2000, and class B and class C shares were initially offered on July 15, 2002. 1 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 06/30/05 (%) AAA 24.7 -------------------- AA 4.3 -------------------- A 13.8 -------------------- BBB 21.0 -------------------- BB 4.5 -------------------- B 1.1 -------------------- CCC 0.4 -------------------- Non-rated 27.2 -------------------- Cash equivalent 3.0 --------------------
Maturity breakdown as of 06/30/05 (%) 0-1 years 0.2 ---------------------- 1-3 years 2.2 ---------------------- 3-5 years 5.5 ---------------------- 5-7 years 3.9 ---------------------- 7-10 years 5.0 ---------------------- 10-15 years 20.9 ---------------------- 15-20 years 17.3 ---------------------- 20-25 years 15.5 ---------------------- 25 years and over 26.5 ---------------------- Cash equivalent 3.0 ----------------------
Quality and maturity breakdowns are calculated as a percentage of total investments. Ratings shown in the quality breakdown represent the rating assigned to a particular bond by one of the following nationally-recognized rating agencies: Standard & Poor's, a division of The McGraw-Hill Companies, Inc., Moody's Investors Service, Inc. or Fitch Ratings Ltd. Management Style is determined by Columbia Management and is based on the investment strategy and process as outlined in the fund's prospectus. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Summary .. For the 12-month period ended June 30, 2005, the fund's class A shares returned 9.00% without sales charge. .. The fund outperformed its benchmark, the Lehman Brothers Municipal Bond Index, which returned 8.24%, but trailed the 10.08% average return of its peer group, the Lipper High Yield Municipal Debt Funds Category. .. The fund's emphasis on high-yield bonds helped it outperform its benchmark. We believe it underperformed its peer group because it had less exposure to airline and tobacco bonds than competing funds. [FLOW CHART] Lehman Brothers Municipal Class A shares Bond Index - -------------- ----------------- 9.00% 8.24% 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 $585.8 million Management Style [GRAPHIC] 2 UNDERSTANDING YOUR EXPENSES ---------------------------------- Columbia High Yield Municipal Fund
Estimating your actual expenses To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: .. For shareholders who receive their account statements from Columbia Funds Services, Inc., on or about August 22, 2005, Columbia Funds Services, Inc. will undergo a name change to Columbia Management Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 .. For shareholders who receive their account statements from their brokerage firm, contact your brokerage firm to obtain your account balance 1.Divide your ending account balance by $1,000. For example, if an account balance was $8,600 at the end of the period, the result would be 8.6 2.In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare this cost with the continuing costs of investing in other mutual funds. Analyzing your fund's expenses by share class To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 01/01/05 - 06/30/05
Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) - ------------------------------------------------------------------------------------------------- Actual Hypothetical Actual Hypothetical Actual Hypothetical - ------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1,033.62 1,020.48 4.39 4.36 0.87 - ------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1,029.80 1,016.76 8.15 8.10 1.62 - ------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1,030.50 1,017.50 7.40 7.35 1.47 - ------------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 1,034.61 1,021.47 3.38 3.36 0.67 - -------------------------------------------------------------------------------------------------
Expenses paid during the period are equal to the fund's respective class annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the fund's most recent fiscal half-year and divided by 365. Had the distributor not waived a portion of class C shares' expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only continuing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. Compare with other funds Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other fund companies, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 3 ECONOMIC UPDATE ------------------------------- Columbia High Yield Municipal Fund The US economy moved ahead at a steady pace during the 12-month period that began July 1, 2004 and ended June 30, 2005. Gross domestic product expanded at an estimated annualized rate of approximately 3.7% as job growth helped buoy consumer spending and rising profits boosted business spending. Record high energy prices failed to put a significant damper on growth as the economy actually gained strength as the period wore on. Job growth dominated the economic news and drove consumer confidence readings both up and down, depending on the number of new jobs reported. Overall, the labor market improved during the period and consumers remained significantly more optimistic about prospects for the US economy and about their own employment than they were a year ago. Consumer spending grew during the period, as retail sales and the housing market remained strong. The business sector contributed to the economy's growth. Yet, given a maturing economic cycle, two straight years of double-digit profit growth and a significant build-up of cash on corporate balance sheets, business spending was not as robust as expected. Bonds delivered solid gains The US bond market delivered solid returns despite rising short-term interest rates, which historically have driven yields on other maturity ranges higher -- and bond prices lower. That was not the case over the past 12 months. After a brief period of volatility early in 2005, the yield on the 10-year US Treasury note, a bellwether for the bond market, ended the period at 3.90% -- significantly lower than where it started the period, at 4.60%. In this environment, the Lehman Brothers Aggregate Bond Index returned 6.80% for the 12-month period. High-yield bonds led the fixed income markets, as a stronger economy resulted in improved credit ratings, stronger balance sheets and higher profits for many companies in the high-yield universe. The Merrill Lynch US High Yield, Cash Pay Index returned 10.64%. However, the sector was hit hard in the spring by news that GM and Ford bonds had been downgraded by the major rating agencies. Corporate high-yield bonds retreated then bounced back in the final months of the period. Short-term interest rates moved higher After a year of the lowest short-term interest rates in recent history, the Federal Reserve raised the federal funds rate, a key short-term rate, from 1.25% to 3.25% during the period/1/. From the outset, the Fed indicated that it would raise short-term interest rates at a "measured pace" in an attempt to balance economic growth against inflationary pressures, and so far each of its nine increases have been in one-quarter percentage point increments. In recent testimony, Fed chairman Greenspan suggested that any future increases would likely follow the same gradual course. Stock returns varied by investment style and company size Buoyed by strong gains in the fourth quarter of 2004, the S&P 500 Index -- a broad measure of large company stock market performance -- returned 6.32% for the period. Returns were lackluster throughout most of 2004, but most segments of the stock market bounced back after the presidential election was settled in November. Stocks retreated early in 2005 as rising energy prices and higher interest rates appeared to turn investors cautious once again. However, small and mid-cap stocks did significantly better than large cap stocks in the first half of the period, but large-cap stocks pulled ahead in the second half. Value stocks led growth stocks by a significant margin. /1/On August 9, 2005, the federal funds rate was increased to 3.5%. Summary For the 12-month period ended June 30, 2005 .. Bonds chalked up solid gains as measured by the Lehman Brothers Aggregate Bond Index. High-yield bonds led the fixed income markets, as measured by the Merrill Lynch US High Yield, Cash Pay Index. [FLOW CHART] Lehman Index Merrill Lynch Index - ------------ ------------------- 6.80% 10.64% .. Stocks, as measured by the S&P 500 Index, were buoyed by a fourth-quarter rally in 2004. Value stocks outperformed growth stocks by a significant margin, as measured by the Russell 1000 Value Index. [GRAPHIC] S&P 500 Index Russell Index - ------------- ------------- 6.32% 14.06% The Lehman Brothers Aggregate Bond Index is an unmanaged, market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated and 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. 4 PORTFOLIO MANAGER'S REPORT ---------------------------------- Columbia High Yield Municipal Fund For the 12-month period ended June 30, 2005, class A shares of Columbia High Yield Municipal Fund returned 9.00% without sales charge. The fund outpaced the 8.24% return for its benchmark, the Lehman Brothers Municipal Bond Index, which is restricted to investment-grade securities. The fund's return was less than the 10.08% average return of its peer group, the Lipper High Yield Municipal Debt Funds Category./1/ High-yield municipal bonds outperformed investment-grade issues over the period, causing the fund to deliver stronger returns than its benchmark. Ongoing strong economic growth bolstered the credit quality of high-yield issuers and investors sought out the greater returns offered by high-yield securities. We believe underweights in tobacco and airline bonds were the primary factors in the fund's underperformance relative to its peer group. Health care and utilities holdings helped performance The fund's core holdings continued to be in hospital, retirement housing and electrical utility issues. During the reporting period, holdings in hospitals and continuing care retirement centers rallied as an aging population and a healthy economy led to improving business prospects. In addition, some of the fund's positions did well as construction projects neared completion. Certain health care bonds also benefited as the spread between yields of lower-quality and higher-quality bonds (but similar maturities) narrowed. Security selection in the utilities sector aided results as well. In particular, the fund's position in Multitrade of Pittsylvania, an independent power generator in Virginia, performed strongly when it was purchased by Dominion Virginia Power, an electric utility whose bonds are A-rated. However, Treasury futures contracts, which were used to reduce the duration of the fund, declined in value, offsetting some of the gains from the bonds. Tobacco and airline underweights detracted from results We believe underweights in tobacco and airline bonds were the primary factors in the fund's underperformance relative to its peer group. While those bonds have delivered strong returns in recent quarters, we maintained less exposure to them because of their higher risk. In addition, the fund's holding in a South Carolina multi-family housing bond was hurt when the housing project lost some government contracts. We also believe that the fund's duration was shorter than the average for its peers. Duration is a measure of interest rate sensitivity. As long-term interest rates came down, the fund did not benefit as much as funds with longer duration. Environment remains favorable for high-yield municipals We expect demand for high-yield bonds to remain strong, as investors continue to seek out opportunities to earn higher yields in an /1/Lipper Inc., a widely respected data provider in the industry, calculates an average total return (assuming reinvestment of distributions) for mutual funds with investment objectives similar to those of the fund. Lipper makes no adjustment for the effect of sales loads. Net asset value per share as of 06/30/05 ($) Class A 11.39 ------------- Class B 11.39 ------------- Class C 11.39 ------------- Class Z 11.39
Distributions declared per share 07/01/04 - 06/30/05 ($) Class A 0.54 ------------ Class B 0.45 ------------ Class C 0.47 ------------ Class Z 0.56
A portion of the fund's income may be subject to the alternative minimum tax. The fund may at times purchase tax-exempt securities at a discount. Some or all of this discount may be included in the fund's ordinary income, and is taxable when distributed. SEC yields as of 06/30/05 (%) Class A 4.11 ------------ Class B 3.57 ------------ Class C 3.72 ------------ Class Z 4.52
The 30-day SEC yields reflect the portfolio earning power net of expenses, expressed as an annualized percentage of public offering price per share at the end of the period. Taxable-equivalent SEC yields as of 06/30/05 (%) Class A 6.32 ------------ Class B 5.49 ------------ Class C 5.72 ------------ Class Z 6.95
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. 5 - -------------------------------------------------------------------------------- Columbia High Yield Municipal Fund environment of relatively stable economic growth. However, because the yield spread between high- and low-quality bonds has narrowed, we have increased the portfolio's allocation to higher-quality housing bonds and decreased its weight in lower-quality bonds. [PHOTO] Maureen G. Newman has managed the Columbia High Yield Municipal Fund since November 1998 and has been MAUREEN NEWMAN with the advisor or its predecessors or affiliate organizations since 1996. /s/ MAUREEN 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. Holdings discussed in this report as of 06/30/05 (%) Multitrade of Pittsylvania 0.6
Your fund is actively managed and the composition of its portfolio will change over time. Holding discussed is calculated as a percentage of net assets. We expect demand for high-yield bonds to remain strong, as investors continue to seek out opportunities to earn higher yields in an environment of relatively stable economic growth. 6 FINANCIAL STATEMENTS ------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
A guide to understanding your fund's financial statements --------------------------------------------------------------------------- Investment Portfolio The investment portfolio details all of the fund's holdings and their market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset, industry, country or geographic region (if applicable) to demonstrate areas of concentration and diversification. --------------------------------------------------------------------------- Statement of Assets and Liabilities This statement details the fund's assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all the fund's liabilities (including any unpaid expenses) from the total of the fund's investment and non-investment assets. The share price for each class is calculated by dividing net assets for that class by the number of shares outstanding in that class as of the last day of the reporting period. --------------------------------------------------------------------------- Statement of Operations This statement details income earned by the fund and the expenses accrued by the fund during the reporting period. The Statement of Operations also shows any net gain or loss the fund realized on the sales of its holdings during the period, as well as any unrealized gains or losses recognized over the period. The total of these results represents the fund's net increase or decrease in net assets from operations. --------------------------------------------------------------------------- Statement of Changes in Net Assets This statement demonstrates how the fund's net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and dividend reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding. --------------------------------------------------------------------------- Notes to Financial Statements These notes disclose the organizational background of the fund, its significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies. --------------------------------------------------------------------------- Financial Highlights The financial highlights demonstrate how the fund's net asset value per share was affected by the fund's operating results. The financial highlights table also discloses the classes' performance and certain key ratios (e.g., class expenses and net investment income as a percentage of average net assets).
7 INVESTMENT PORTFOLIO ----------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - 94.8% EDUCATION - 5.4% Education - 3.1% Par ($) Value ($) - -------------------------------------------------- -------------------------------------------------- --------------- ---------- CA Statewide Communities Development Authority San Francisco Art Institute, Series 2002, 7.375% 04/01/32 750,000 788,175 -------------------------------------------------- --------------- ---------- FL Broward County Educational Facilities Authority Nova Southeastern University, Series 2004, 5.625% 04/01/34 925,000 980,981 -------------------------------------------------- --------------- ---------- MA Development Finance Agency Western New England College, Series 2002, 6.125% 12/01/32 300,000 323,373 -------------------------------------------------- --------------- ---------- OH University of Cincinnati Series 2003 C, Insured: FGIC 5.000% 06/01/21 1,000,000 1,085,650 -------------------------------------------------- --------------- ---------- PA Higher Education Facilities Authority Philadelphia University, Series 2004 A, 5.125% 06/01/25 1,100,000 1,109,746 -------------------------------------------------- --------------- ---------- VT Education & Health Buildings Agency Vermont Law School Project, Series 2003 A, 5.500% 01/01/33 500,000 515,745 -------------------------------------------------- --------------- ---------- WV Higher Education Policy Commission Series 2004 B, Insured: FGIC 5.000% 04/01/34 11,000,000 11,679,690 -------------------------------------------------- --------------- ---------- WV State University Series 2000 A: Insured: AMBAC (b) 04/01/19 1,250,000 690,713 (b) 04/01/25 2,750,000 1,115,620 -------------------------------------------------- --------------- ---------- Education Total 18,289,693 Prep School - 0.8% -------------------------------------------------- --------------- ---------- CA Statewide Communities Development Authority Crossroads School of Arts & Sciences, Series 1998, 6.000% 08/01/28 (a) 980,000 1,028,226 -------------------------------------------------- --------------- ---------- IL Development Finance Authority Latin School of Chicago, Series 1998, 5.650% 08/01/28 1,725,000 1,774,990 -------------------------------------------------- --------------- ---------- MA Health & Educational Facilities Authority Learning Center for Deaf Children, Series 1999 C, 6.100% 07/01/19 1,000,000 1,025,630 -------------------------------------------------- --------------- ---------- NH Business Finance Authority Proctor Academy, Series 1998 A, 5.400% 06/01/17 895,000 930,165 -------------------------------------------------- --------------- ---------- Prep School Total 4,759,011 Student Loan - 1.5% -------------------------------------------------- --------------- ---------- CT Higher Education Supplemental Loan Authority Family Education Loan Program, Series 2005 A, AMT, Insured: MBIA 4.375% 11/15/21 1,400,000 1,412,278 -------------------------------------------------- --------------- ---------- NE Nebhelp, Inc. Series 1993 A-6, AMT, Insured: MBIA 6.450% 06/01/18 4,000,000 4,163,640
See Accompanying Notes to Financial Statements. 8 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) EDUCATION - (continued) Student Loan - (continued) Par ($) Value ($) - ---------------------------------------------------- ------------------------------------------------- --------- ---------- NM Educational Assistance Foundation Series 1996 A-2, AMT, 6.650% 11/01/25 1,915,000 1,956,919 ------------------------------------------------- --------- ---------- OH Student Loan Funding Corp. Series 1992 B, AMT, 6.750% 01/01/07 1,075,000 1,077,021 ------------------------------------------------- --------- ---------- Student Loan Total 8,609,858 ---------- EDUCATION TOTAL 31,658,562 HEALTH CARE - 24.2% Continuing Care Retirement - 7.4% ------------------------------------------------- --------- ---------- CA ABAG Finance Authority for Nonprofit Corps. Eskaton Gold River Lodge, Series 1998: 6.375% 11/15/15 (a) 625,000 676,213 6.375% 11/15/28 (a) 550,000 587,098 ------------------------------------------------- --------- ---------- CA La Verne Brethren Hillcrest Homes, Series 2003 B, 6.625% 02/15/25 685,000 760,836 ------------------------------------------------- --------- ---------- CA Statewide Communities Development Authority Eskaton Village -- Grass Valley, Series 2000, 8.250% 11/15/31 (a) 1,730,000 1,989,638 ------------------------------------------------- --------- ---------- CT Development Authority The Elim Park Baptist, Inc. Project, Series 2003, 5.850% 12/01/33 660,000 707,883 ------------------------------------------------- --------- ---------- FL Capital Projects Finance Authority Glenridge on Palmer Ranch, Series 2002 A, 8.000% 06/01/32 1,250,000 1,384,237 ------------------------------------------------- --------- ---------- FL Lee County Industrial Development Authority Shell Point Village Project, Series 1999 A, 5.500% 11/15/29 1,200,000 1,229,772 ------------------------------------------------- --------- ---------- FL Orange County Health Facilities Authority Orlando Lutheran, Series 2005, 5.700% 07/01/26 1,000,000 1,011,170 ------------------------------------------------- --------- ---------- FL Palm Beach County Health Facilities Authority Abbey Delray South, Series 2003, 5.350% 10/01/14 1,250,000 1,339,387 ------------------------------------------------- --------- ---------- GA Fulton County Canterbury Court Project, Series 2004 A, 6.125% 02/15/34 1,000,000 1,016,680 ------------------------------------------------- --------- ---------- GA Savannah Economic Development Authority Marshes of Skidaway, Series 2003 A, 7.400% 01/01/34 1,000,000 1,067,500 ------------------------------------------------- --------- ---------- IL Health Facilities Authority Lutheran Senior Ministries, Series 2001, 7.375% 08/15/31 1,300,000 1,393,925 Washington & Jane Smith Community, Series 2003 A, 7.000% 11/15/32 1,000,000 1,061,030 ------------------------------------------------- --------- ---------- MA Boston Industrial Development Financing Authority Springhouse, Inc., Series 1998, 5.875% 07/01/20 385,000 392,946
See Accompanying Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Continuing Care Retirement - (continued) Par ($) Value ($) - --------------------------------------------------- -------------------------------------------------------- --------- --------- MA Development Finance Agency Loomis Communities: Series 1999 A, 5.625% 07/01/15 650,000 655,818 Series 2002 A, 6.900% 03/01/32 220,000 237,796 -------------------------------------------------------- --------- --------- MD Westminster Economic Development Authority Carroll Lutheran Village, Inc., Series 2004 A, 6.250% 05/01/34 1,750,000 1,832,460 -------------------------------------------------------- --------- --------- MO Health & Educational Facilities Authority Lutheran Senior Services, Series 1997, 5.750% 02/01/17 2,000,000 2,088,520 -------------------------------------------------------- --------- --------- NH Higher Educational & Health Facilities Authority Rivermead at Peterborough, Series 1998: 5.625% 07/01/18 500,000 504,475 5.750% 07/01/28 1,665,000 1,663,668 -------------------------------------------------------- --------- --------- NJ Economic Development Authority Seabrook Village, Inc., Series 2000 A, 8.250% 11/15/30 1,625,000 1,817,026 Winchester Gardens, Series 2004 A, 5.800% 11/01/31 750,000 794,610 -------------------------------------------------------- --------- --------- PA Chartiers Valley Industrial & Commercial Asbury Health Center, Series 1999, Development Authority 6.375% 12/01/24 750,000 772,808 Friendship Village of South Hills, Series 2003 A, 5.750% 08/15/20 1,000,000 1,035,300 -------------------------------------------------------- --------- --------- PA Delaware County Authority Dunwoody Village, Series 2003 A, 5.375% 04/01/17 750,000 803,138 -------------------------------------------------------- --------- --------- PA Lancaster Industrial Development Authority Garden Spot Village, Series 2000 A, 7.625% 05/01/31 825,000 900,702 -------------------------------------------------------- --------- --------- PA Montgomery County Industrial Development Whitemarsh Continuing Care Retirement Community, Authority Series 2005, 6.250% 02/01/35 1,350,000 1,419,066 -------------------------------------------------------- --------- --------- TN Johnson City Health & Educational Facilities Appalachian Christian Village Project, Series 2004 A, Authority 6.250% 02/15/32 250,000 255,078 -------------------------------------------------------- --------- --------- TN Metropolitan Government Nashville & Davidson Blakeford at Green Hills, Series 1998, County 5.650% 07/01/24 1,825,000 1,827,482 -------------------------------------------------------- --------- --------- TN Shelby County Health, Educational & Housing Germantown Village, Series 2003 A, Facilities Board 7.250% 12/01/34 675,000 712,793 -------------------------------------------------------- --------- --------- TX Abilene Health Facilities Development Corp. Sears Methodist Retirement Center: Series 1998 A, 5.900% 11/15/25 1,350,000 1,344,924 Series 2003 A, 7.000% 11/15/33 800,000 851,032 -------------------------------------------------------- --------- --------- TX Houston Health Facilities Development Corp. Buckingham Senior Living Community, Inc., Series 2004 A, 7.125% 02/15/34 1,000,000 1,081,010 -------------------------------------------------------- --------- --------- VA James City County Economic Development Williamsburg Landing, Inc., Series 2005 A, Authority 5.500% 09/01/34 750,000 756,795
See Accompanying Notes to Financial Statements. 10 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Continuing Care Retirement - (continued) Par ($) Value ($) - ------------------------------------------------- ------------------------------------------------------- --------- ---------- WI Health & Educational Facilities Authority Attic Angel Obligated Group, Series 1998, 5.750% 11/15/27 2,125,000 2,059,656 Clement Manor, Series 1998, 5.750% 08/15/24 2,200,000 2,209,812 Eastcastle Place, Inc., Series 2004, 6.125% 12/01/34 500,000 503,320 Three Pillars Senior Living Communities: Series 2003, 5.600% 08/15/23 790,000 824,286 Series 2004 A, 5.500% 08/15/34 870,000 892,402 United Lutheran Program for the Aging, Series 1998, 5.700% 03/01/28 750,000 733,118 ------------------------------------------------------- --------- ---------- Continuing Care Retirement Total 43,195,410 Health Services - 0.7% ------------------------------------------------------- --------- ---------- CO Health Facilities Authority National Jewish Medical & Research Center, Series 1998, 5.375% 01/01/23 1,080,000 1,096,146 ------------------------------------------------------- --------- ---------- MA Development Finance Agency Boston Biomedical Research Institute, Series 1999: 5.650% 02/01/19 370,000 370,770 5.750% 02/01/29 550,000 567,028 ------------------------------------------------------- --------- ---------- MA Health & Educational Facilities Authority Civic Investments, Inc., Series 2002 A, 9.000% 12/15/15 1,500,000 1,732,320 ------------------------------------------------------- --------- ---------- MN Minneapolis & St. Paul Housing Redevelopment Healthpartners Project, Series 2003, Authority 5.875% 12/01/29 400,000 437,324 ------------------------------------------------------- --------- ---------- Health Services Total 4,203,588 Hospitals - 12.8% ------------------------------------------------------- --------- ---------- AZ Health Facilities Authority Phoenix Memorial Hospital, Series 1991, 8.125% 06/01/12 (c) 1,849,099 4,623 ------------------------------------------------------- --------- ---------- CA ABAG Finance Authority for Nonprofit Corps. San Diego Hospital Association, Series 2003 C, 5.375% 03/01/21 500,000 534,345 ------------------------------------------------------- --------- ---------- CA Health Facilities Financing Authority Catholic Healthcare West, Series 2004 G, 5.250% 07/01/23 500,000 528,645 Stanford Hospital & Clinics Projects, Series 2003 A, 5.000% 11/15/23 1,500,000 1,572,045 ------------------------------------------------------- --------- ---------- CA Rancho Mirage Joint Powers Financing Authority Eisenhower Medical Center, Series 2004, 5.625% 07/01/29 2,000,000 2,147,440 ------------------------------------------------------- --------- ---------- CA Statewide Communities Development Authority Kaiser Permanente, Series 2004 I, 3.450% 04/01/35 1,750,000 1,732,500 Huntington Memorial Hospital, Series 2005, 5.000% 07/01/35 2,500,000 2,603,675 ------------------------------------------------------- --------- ---------- CA Turlock Emanuel Medical Center, Inc., Series 2004, 5.375% 10/15/34 2,000,000 2,093,640 ------------------------------------------------------- --------- ---------- CA Whittier Presbyterian Intercommunity Hospital, Series 2002, 5.750% 06/01/31 1,000,000 1,075,740
See Accompanying Notes to Financial Statements. 11 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - (continued) Par ($) Value ($) - --------------------------------------------------- -------------------------------------------------- --------- --------- CO Health Facilities Authority Parkview Medical Center, Inc., Series 2001, 6.600% 09/01/25 300,000 333,945 Vail Valley Medical Center Project, Series 2004, 5.000% 01/15/20 1,000,000 1,043,940 -------------------------------------------------- --------- --------- CO La Junta Arkansas Valley Regional Medical Center Project, Series 1999, 6.100% 04/01/24 300,000 316,770 -------------------------------------------------- --------- --------- FL Hillsborough County Industrial Development Tampa General Hospital Project, Series 2003 B, Authority 5.250% 10/01/34 1,000,000 1,045,400 -------------------------------------------------- --------- --------- FL Miami Health Facilities Authority Catholic Health East, Series 2003 B, 5.125% 11/15/24 1,000,000 1,043,160 -------------------------------------------------- --------- --------- FL Orange County Health Facilities Authority Orlando Regional Healthcare System: Series 1999 E, 6.000% 10/01/26 875,000 934,211 Series 2002, 5.750% 12/01/32 350,000 377,783 -------------------------------------------------- --------- --------- FL South Lake County Hospital District South Lake Hospital, Inc., Series 2003: 6.375% 10/01/28 750,000 818,963 6.375% 10/01/34 500,000 543,790 -------------------------------------------------- --------- --------- FL West Orange Healthcare District Series 2001 A, 5.650% 02/01/22 1,450,000 1,543,104 -------------------------------------------------- --------- --------- GA Coffee County Hospital Authority Coffee Regional Medical Center, Inc., Series 2004, 5.000% 12/01/26 700,000 723,002 -------------------------------------------------- --------- --------- IL Health Facilities Authority Thorek Hospital & Medical Center, Series 1998, 5.375% 08/15/28 500,000 515,070 -------------------------------------------------- --------- --------- IL Southwestern Development Authority Anderson Hospital, Series 1999: 5.500% 08/15/20 500,000 520,850 5.625% 08/15/29 250,000 259,810 -------------------------------------------------- --------- --------- IN Health Facility Financing Authority Community Foundation of Northwest Indiana, Inc., Series 2004 A, 6.000% 03/01/34 850,000 913,436 -------------------------------------------------- --------- --------- MA Health & Educational Facilities Authority Jordan Hospital: Series 1998 D, 5.250% 10/01/18 600,000 613,560 Series 2003 E, 6.750% 10/01/33 750,000 833,505 Milford-Whitinsville Regional Hospital: Series 1998 C, 5.750% 07/15/13 610,000 640,366 Series 2002 D, 6.350% 07/15/32 1,715,000 1,841,738 -------------------------------------------------- --------- --------- MD Health & Higher Educational Facilities Authority Adventist Healthcare, Series 2003 A: 5.000% 01/01/16 400,000 416,872 5.750% 01/01/25 600,000 649,218
See Accompanying Notes to Financial Statements. 12 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - (continued) Par ($) Value ($) - --------------------------------------------------- ------------------------------------------------------ --------- --------- MI Dickinson County Dickinson County Healthcare System, Series 1999, 5.800% 11/01/24 1,000,000 1,039,390 ------------------------------------------------------ --------- --------- MI Flint Hospital Building Authority Hurley Medical Center, Series 1998 A, 5.375% 07/01/20 465,000 468,748 ------------------------------------------------------ --------- --------- MI Hospital Finance Authority McLaren Health Care Corp., Series 2005 C, 5.000% 08/01/35 2,500,000 2,579,475 Oakwood Obligated Group, Series 2003, 5.500% 11/01/18 1,600,000 1,742,816 ------------------------------------------------------ --------- --------- MN St. Paul Housing & Redevelopment Authority HealthEast, Inc., Series 1993 B, 6.625% 11/01/17 230,000 230,927 ------------------------------------------------------ --------- --------- MN Washington County Housing & Redevelopment HealthEast, Inc., Series 1998, Authority 5.250% 11/15/12 1,100,000 1,104,829 ------------------------------------------------------ --------- --------- MO Health & Educational Facilities Authority Lake Regional Health Systems Project, Series 2003, 5.700% 02/15/34 1,000,000 1,070,330 ------------------------------------------------------ --------- --------- MT Facilities Finance Authority Montana's Children's Home and Hospital, Series 2005 B, 4.750% 01/01/24 750,000 756,855 ------------------------------------------------------ --------- --------- NC Medical Care Commission Stanly Memorial Hospital, Series 1999, 6.375% 10/01/29 1,000,000 1,079,350 ------------------------------------------------------ --------- --------- NH Higher Educational & Health Facilities Authority Catholic Medical Center, Series 2002, 6.125% 07/01/32 400,000 431,848 Littleton Hospital Association, Inc.: Series 1998 A: 5.900% 05/01/18 500,000 517,335 6.000% 05/01/28 1,000,000 1,020,870 Series 1998 B, 5.900% 05/01/28 675,000 686,259 ------------------------------------------------------ --------- --------- NJ Health Care Facilities Authority Capital Health Systems, Inc., Series 2003 A, 5.750% 07/01/23 1,250,000 1,358,412 ------------------------------------------------------ --------- --------- NM Farmington San Juan Medical Center Project, Series 2004 A, 5.000% 06/01/23 500,000 518,555 ------------------------------------------------------ --------- --------- NV Henderson Catholic Healthcare West, Series 1998: 5.125% 07/01/28 540,000 551,329 5.375% 07/01/26 790,000 814,664 ------------------------------------------------------ --------- --------- NY Dormitory Authority Memorial Sloan-Kettering Cancer Center, Series 2003: Insured: MBIA (b) 07/01/25 3,600,000 1,519,200 (b) 07/01/26 4,400,000 1,767,480 Mt. Sinai Hospital, Series 2000 C, 5.500% 07/01/26 (d) 2,275,000 2,306,349 North Shore -- Long Island Jewish Medical Center, Series 2003, 5.500% 05/01/33 400,000 429,336
See Accompanying Notes to Financial Statements. 13 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - (continued) Par ($) Value ($) - --------------------------------------------------- ----------------------------------------------------- --------- --------- NY Monroe County Industrial Development Agency Highland Hospital Rochester Project, Series 2005, 5.000% 08/01/25 1,115,000 1,152,810 ----------------------------------------------------- --------- --------- OH Highland County Joint Township Hospital District Series 1999, 6.750% 12/01/29 1,875,000 1,927,969 ----------------------------------------------------- --------- --------- OH Lakewood Hospital Improvement District Lakewood Hospital Association, Series 2003, 5.500% 02/15/15 1,250,000 1,358,937 ----------------------------------------------------- --------- --------- OH Miami County Hospital Facilities Authority Upper Valley Medical Center, Inc.: Series 1996 A: 6.250% 05/15/16 500,000 519,005 6.375% 05/15/26 1,015,000 1,051,946 Series 1996 C, 6.250% 05/15/13 285,000 296,283 ----------------------------------------------------- --------- --------- OH Sandusky County Memorial Hospital, Series 1998, 5.150% 01/01/10 250,000 257,893 ----------------------------------------------------- --------- --------- OK Development Finance Authority Duncan Regional Hospital, Series 2003 A, 5.125% 12/01/23 2,000,000 2,086,060 ----------------------------------------------------- --------- --------- OK Stillwater Medical Center Authority Series 2003, 5.625% 05/15/23 1,000,000 1,056,180 Series 2005, 5.000% 05/15/17 1,155,000 1,193,057 ----------------------------------------------------- --------- --------- PA Allegheny County Hospital Development Authority Ohio Valley General Hospital, Series 1998 A, 5.450% 01/01/28 1,550,000 1,586,456 ----------------------------------------------------- --------- --------- SC Jobs Economic Development Authority Bon Secours Health Systems, Inc., Series 2002 A, 5.500% 11/15/23 2,250,000 2,386,867 ----------------------------------------------------- --------- --------- SD Health & Educational Facilities Authority Sioux Valley Hospital & Health System, Series 2004 A, 5.250% 11/01/34 1,100,000 1,164,317 ----------------------------------------------------- --------- --------- TN Knox County Health, Educational & Housing East Tennessee Hospital, Series 2003 B, Facilities Authority 5.750% 07/01/33 150,000 161,232 ----------------------------------------------------- --------- --------- TX Tyler Health Facilities Development Corp. Mother Frances Hospital, Series 2001, 6.000% 07/01/31 750,000 804,143 ----------------------------------------------------- --------- --------- VA Augusta County Industrial Development Authority Augusta Health Care, Inc., Series 2003, 5.250% 09/01/19 2,000,000 2,222,420 ----------------------------------------------------- --------- --------- WA Health Care Facilities Authority Kadlec Medical Center, Series 2001, Insured: RAD 5.875% 12/01/21 600,000 657,672 ----------------------------------------------------- --------- --------- WA Skagit County Public Hospital District No. 1 Series 2003, 6.000% 12/01/23 1,000,000 1,092,400
See Accompanying Notes to Financial Statements. 14 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - (continued) Par ($) Value ($) - ---------------------------------------------- ---------------------------------------------------- --------- ---------- WI Health & Educational Facilities Authority Aurora Health Care, Inc., Series 2003, 6.400% 04/15/33 700,000 782,733 Fort Healthcare, Inc. Project, Series 2004, 6.100% 05/01/34 1,965,000 2,142,184 Wheaton Franciscan Services, Series 2002, 5.750% 08/15/30 1,050,000 1,129,979 ---------------------------------------------------- --------- ---------- Hospitals Total 75,246,046 Intermediate Care Facilities - 0.8% ---------------------------------------------------- --------- ---------- IL Development Facilities Finance Authority Hoosier Care, Inc., Series 1999 A, 7.125% 06/01/34 1,445,000 1,356,580 ---------------------------------------------------- --------- ---------- IN Health Facilities Financing Authority Hoosier Care, Inc., Series 1999 A, 7.125% 06/01/34 1,195,000 1,121,878 ---------------------------------------------------- --------- ---------- LA Public Facilities Authority Progressive Healthcare Providers, Inc., Series 1998, 6.375% 10/01/28 2,000,000 1,962,640 ---------------------------------------------------- --------- ---------- Intermediate Care Facilities Total 4,441,098 Nursing Homes - 2.5% ---------------------------------------------------- --------- ---------- AK Juneau St. Ann's Care Center, Inc., Series 1999, 6.875% 12/01/25 1,750,000 1,721,895 ---------------------------------------------------- --------- ---------- CO Health Facilities Authority Volunteers of America Care Facilities: Series 1998 A, 5.750% 07/01/20 700,000 683,809 Series 1999 A: 5.750% 07/01/10 785,000 782,025 6.000% 07/01/29 520,000 509,616 ---------------------------------------------------- --------- ---------- DE Economic Development Authority Churchman's Village Project, Series 1991 A, 10.000% 03/01/21 650,000 658,879 ---------------------------------------------------- --------- ---------- IA Finance Authority Care Initiatives Project: Series 1996, 9.250% 07/01/25 485,000 589,993 Series 1998 B: 5.500% 07/01/08 395,000 396,829 5.750% 07/01/18 600,000 602,106 5.750% 07/01/28 1,475,000 1,390,541 ---------------------------------------------------- --------- ---------- MA Development Finance Agency Alliance Health Care Facilities, Series 1999 A, 7.100% 07/01/32 2,225,000 2,269,277 ---------------------------------------------------- --------- ---------- MA Industrial Finance Agency GF/Massachusetts, Inc., Series 1994 A, 8.300% 07/01/23 875,000 882,262 ---------------------------------------------------- --------- ---------- MI Cheboygan County Economic Development Corp. Metro Health Foundation Project, Series 1993, 11.000% 11/01/22 (c) 446,155 45 ---------------------------------------------------- --------- ---------- MN Carlton Inter-Faith Social Services, Inc., Series 2000, 7.500% 04/01/19 250,000 267,205
See Accompanying Notes to Financial Statements. 15 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Nursing Homes - (continued) Par ($) Value ($) - --------------------------------------------------- --------------------------------------------------- --------- ----------- MN Sartell Foundation for Healthcare, Series 1999 A, 6.625% 09/01/29 2,000,000 2,073,940 --------------------------------------------------- --------- ----------- PA Chester County Industrial Development Authority RHA/Pennsylvania Nursing Home, Series 2002, 8.500% 05/01/32 390,000 392,246 --------------------------------------------------- --------- ----------- PA Delaware County Industrial Development Authority Care Institute-Main and Haverford LLC, Series 2005, 9.000% 08/01/31 50,000 48,312 --------------------------------------------------- --------- ----------- PA Lackawanna County Industrial Development Greenridge Nursing Center, Series 1990, Authority 7.750% 12/01/10 (e)(f) 95,000 85,500 --------------------------------------------------- --------- ----------- PA Luzerne County Industrial Development Authority Millville Nursing Center, Series 1990, 7.750% 12/01/12 (e)(f) 160,000 144,000 --------------------------------------------------- --------- ----------- TX Kirbyville Health Facilities Development Corp. Heartway III Project, Series 1997 A, 10.000% 03/20/18 (g) 539,213 161,818 --------------------------------------------------- --------- ----------- WA Kitsap County Consolidated Housing Authority Martha & Mary Health Services, Series 1996, Insured: GNMA 7.100% 02/20/36 1,000,000 1,149,280 --------------------------------------------------- --------- ----------- Nursing Homes Total 14,809,578 ----------- HEALTH CARE TOTAL 141,895,720 HOUSING - 10.2% Assisted Living / Senior - 2.4% --------------------------------------------------- --------- ----------- DE Kent County Heritage at Dover, Series 1999, AMT, 7.625% 01/01/30 2,390,000 2,213,809 --------------------------------------------------- --------- ----------- GA Columbus Housing Authority The Gardens at Calvary Project, Series 1999, 7.000% 11/15/29 2,000,000 1,777,820 --------------------------------------------------- --------- ----------- IL Development Finance Authority Care Institute, Inc., Series 1995, 8.250% 06/01/25 1,845,000 1,915,553 --------------------------------------------------- --------- ----------- MN Roseville Care Institute, Inc., Series 1993, 7.750% 11/01/23 (g) 1,270,000 889,000 --------------------------------------------------- --------- ----------- NC Medical Care Commission DePaul Community Facilities: Series 1998, 6.125% 01/01/28 500,000 466,130 Series 1999, 7.625% 11/01/29 1,940,000 2,034,245 --------------------------------------------------- --------- ----------- NY Huntington Housing Authority Gurwin Jewish Senior Center, Series 1999 A: 5.875% 05/01/19 1,900,000 1,878,245 6.000% 05/01/29 625,000 616,350 --------------------------------------------------- --------- ----------- NY Mount Vernon Industrial Development Agency Series 1999, 6.200% 06/01/29 1,000,000 1,029,770
See Accompanying Notes to Financial Statements. 16 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HOUSING - (continued) Assisted Living / Senior - (continued) Par ($) Value ($) - ------------------------------------------------ ---------------------------------------------------------- --------- ---------- NY Suffolk County Industrial Development Agency Gurwin-Jewish Phase II, Series 2004, 6.700% 05/01/39 500,000 522,605 ---------------------------------------------------------- --------- ---------- TX Bell County Health Facility Development Corp. Care Institute, Inc., Series 1994, 9.000% 11/01/24 930,000 884,449 ---------------------------------------------------------- --------- ---------- Assisted Living / Senior Total 14,227,976 Multi-Family - 5.0% ---------------------------------------------------------- --------- ---------- CO Health Facilities Authority Birchwood Manor Project, Series 1991 A, Insured: GNMA 7.250% 04/01/11 385,000 386,324 ---------------------------------------------------------- --------- ---------- DC Housing Finance Agency FDS Residential II LP, Series 2004, AMT, Insured: FHA 4.850% 06/01/35 1,460,000 1,477,097 ---------------------------------------------------------- --------- ---------- DE Wilmington Electra Arms Senior Association Project, Series 1998, AMT, 6.250% 06/01/28 915,000 791,557 ---------------------------------------------------------- --------- ---------- FL Broward County Housing Finance Authority Chaves Lake Apartment Project, Series 2000 A, AMT, 7.500% 07/01/40 1,250,000 1,265,175 ---------------------------------------------------------- --------- ---------- FL Clay County Housing Finance Authority Madison Commons Apartments, Series 2000 A, AMT, 7.450% 07/01/40 1,230,000 1,248,647 ---------------------------------------------------------- --------- ---------- MA Housing Finance Agency Series 2004 A, AMT, Insured: FSA 5.250% 07/01/25 5,000,000 5,191,800 Series 2005 A, AMT, 5.200% 06/01/36 1,500,000 1,522,815 Series 2005 E, AMT, 5.000% 12/01/28 750,000 764,077 ---------------------------------------------------------- --------- ---------- ME Housing Authority Series 2005 A-2, AMT, Insured: FSA 4.950% 11/15/27 2,500,000 2,542,975 ---------------------------------------------------------- --------- ---------- MN Lakeville Southfork Apartments Project, Series 1989 A, 9.875% 02/01/20 700,000 699,965 ---------------------------------------------------------- --------- ---------- MN Washington County Housing & Redevelopment Cottages of Aspen, Series 1992, AMT, Authority 9.250% 06/01/22 445,000 455,311 ---------------------------------------------------------- --------- ---------- MN White Bear Lake Birch Lake Townhomes, Series 1989 A, 9.750% 07/15/19 750,000 753,668 ---------------------------------------------------------- --------- ---------- NC Medical Care Commission ARC Projects, Series 2004 A, 5.800% 10/01/34 800,000 817,152
See Accompanying Notes to Financial Statements. 17 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HOUSING - (continued) Multi-Family - (continued) Par ($) Value ($) - ----------------------------------------------- -------------------------------------------------- --------- ---------- NC Raleigh Housing Authority Cedar Point Apartments, Series 1999 A: 5.100% 11/01/10 (g) 250,000 135,000 5.875% 11/01/24 (g) 200,000 108,000 -------------------------------------------------- --------- ---------- NJ Housing & Mortgage Finance Agency Series 2005 A, AMT, Insured: FGIC 4.950% 11/01/37 2,685,000 2,727,101 -------------------------------------------------- --------- ---------- NM Mortgage Finance Authority Series 2005, AMT, 4.800% 09/01/40 1,200,000 1,199,880 -------------------------------------------------- --------- ---------- Resolution Trust Corp. Pass-Through Certificates, Series 1993 A, 8.500% 12/01/16 (h) 455,481 452,571 -------------------------------------------------- --------- ---------- TN Chattanooga Health, Educational & Housing Series 2005, Facility Board 6.000% 10/01/35 600,000 607,254 -------------------------------------------------- --------- ---------- TN Franklin Industrial Development Board Landings Apartment Project, Series 1996 B, 8.750% 04/01/27 1,550,000 1,588,424 -------------------------------------------------- --------- ---------- TX Affordable Housing Corp. NHT/GTEX Project, Series 2001 C, 10.000% 10/01/31 (e)(g) 1,560,000 15,600 -------------------------------------------------- --------- ---------- TX El Paso County Housing Finance Corp. American Village Communities: Series 2000 C, 8.000% 12/01/32 580,000 600,207 Series 2000 D, 10.000% 12/01/32 685,000 715,702 -------------------------------------------------- --------- ---------- VA Alexandria Redevelopment & Housing Authority Courthouse Commons Apartments, Series 1990 A, AMT, 10.000% 01/01/21 500,000 407,160 -------------------------------------------------- --------- ---------- WA Tacoma Housing Authority Redwood, Series 2005, AMT, Insured: GNMA 5.050% 11/20/37 3,000,000 3,064,980 -------------------------------------------------- --------- ---------- Multi-Family Total 29,538,442 Single-Family - 2.8% -------------------------------------------------- --------- ---------- CO Housing and Finance Authority Series 1995 D-1 AMT, 7.375% 06/01/26 95,000 96,325 Series 1997 A-2, AMT, 7.250% 05/01/27 65,000 65,745 -------------------------------------------------- --------- ---------- ME Housing Authority Series 2005 D-2, AMT, 4.800% 11/15/36 (d) 2,000,000 2,007,840 -------------------------------------------------- --------- ---------- MT Board of Housing Series 2005 A, AMT, 5.000% 06/01/36 1,000,000 1,022,490 -------------------------------------------------- --------- ---------- NJ Housing & Mortgage Finance Agency Series 2005 M, AMT, 5.000% 10/01/36 2,000,000 2,051,880
See Accompanying Notes to Financial Statements. 18 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) HOUSING - (continued) Single-Family - (continued) Par ($) Value ($) - ------------------------------------------- -------------------------------------------- --------- ---------- RI Housing & Mortgage Finance Corp. Series 2005, AMT, 4.750% 10/01/30 4,000,000 4,031,080 -------------------------------------------- --------- ---------- TX Affordable Housing Corp. Series 2005 A, AMT, Insured: GNMA 5.100% 09/01/39 (d) 3,300,000 3,404,016 -------------------------------------------- --------- ---------- VA Housing Development Authority Series 2005 A, AMT, 5.000% 01/01/31 1,500,000 1,536,525 -------------------------------------------- --------- ---------- WI Housing & Economic Development Authority Series 2005 C, AMT, 4.875% 03/01/36 2,000,000 2,031,220 -------------------------------------------- --------- ---------- Single-Family Total 16,247,121 ---------- HOUSING TOTAL 60,013,539 INDUSTRIALS - 4.6% Food Products - 0.8% -------------------------------------------- --------- ---------- LA Port of New Orleans Continental Grain Co., Series 1993, 7.500% 07/01/13 2,000,000 2,035,180 -------------------------------------------- --------- ---------- MI Strategic Fund Michigan Sugar Co.: Carrollton Project, Series 1998 C, AMT, 6.550% 11/01/25 1,500,000 1,448,685 Sebewaing Project, Series 1998 A, 6.250% 11/01/15 1,000,000 1,009,540 -------------------------------------------- --------- ---------- OH Toledo Lucas County Port Authority Cargill, Inc. Project, Series 2004 A, 4.800% 03/01/22 500,000 510,995 -------------------------------------------- --------- ---------- Food Products Total 5,004,400 Forest Products & Paper - 1.7% -------------------------------------------- --------- ---------- AL Camden Industrial Development Board Weyerhaeuser Co., Series 2003 B, AMT, 6.375% 12/01/24 275,000 302,896 -------------------------------------------- --------- ---------- AL Courtland Industrial Development Board International Paper Co., Series 2003 B, AMT, 6.250% 08/01/25 2,000,000 2,172,820 -------------------------------------------- --------- ---------- AL Phenix City Industrial Development Board Meadwestvaco Corp., Series 2002 A, AMT, 6.350% 05/15/35 1,000,000 1,085,950 -------------------------------------------- --------- ---------- AR Camden International Paper Co., Series 2004 A, AMT, 5.000% 11/01/18 250,000 255,790 -------------------------------------------- --------- ---------- GA Rockdale County Development Authority Visy Paper, Inc., Series 1993, AMT, 7.500% 01/01/26 2,800,000 2,836,260 -------------------------------------------- --------- ---------- MS Lowndes County Weyerhaeuser Co. Project: Series 1992 A, 6.800% 04/01/22 1,995,000 2,449,481 Series 1992 B, 6.700% 04/01/22 230,000 282,513
See Accompanying Notes to Financial Statements. 19 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) INDUSTRIALS - (continued) Forest Products & Paper - (continued) Par ($) Value ($) - -------------------------------------------------- -------------------------------------------------------- --------- ---------- VA Bedford County Industrial Development Authority Nekoosa Packaging Corp., Series 1998, AMT, 5.600% 12/01/25 400,000 405,256 -------------------------------------------------------- --------- ---------- Forest Products & Paper Total 9,790,966 Manufacturing - 0.5% -------------------------------------------------------- --------- ---------- IL Will-Kankakee Regional Development Authority Flanders Corp., Precisionaire Project, Series 1997, AMT, 6.500% 12/15/17 780,000 797,347 -------------------------------------------------------- --------- ---------- KS Wichita Airport Authority Cessna Citation Service Center, Series 2002 A, AMT, 6.250% 06/15/32 1,875,000 2,015,063 -------------------------------------------------------- --------- ---------- Manufacturing Total 2,812,410 Metals & Mining - 0.2% -------------------------------------------------------- --------- ---------- NV Department of Business & Industry Wheeling-Pittsburgh Steel Corp., Series 1999 A, AMT, 8.000% 09/01/14 (h) 444,193 456,440 -------------------------------------------------------- --------- ---------- VA Greensville County Industrial Development Wheeling-Pittsburgh Steel Corp., Series 1999 A, AMT, Authority 7.000% 04/01/14 865,000 841,809 -------------------------------------------------------- --------- ---------- Metals & Mining Total 1,298,249 Oil & Gas - 1.4% -------------------------------------------------------- --------- ---------- NJ Middlesex County Pollution Control Authority Amerada Hess Corp., Series 2004, 6.050% 09/15/34 285,000 305,232 -------------------------------------------------------- --------- ---------- NV Clark County Industrial Development Authority Southwest Gas Corp., Series 2003 E, AMT, 5.800% 03/01/38 1,750,000 1,889,580 -------------------------------------------------------- --------- ---------- TX Gulf Coast Industrial Development Authority Citgo Petroleum, Series 1998, AMT, 8.000% 04/01/28 875,000 993,930 -------------------------------------------------------- --------- ---------- TX Texas City Industrial Development Corp. Arco Pipe Line Co. Project, Series 1990, 7.375% 10/01/20 2,000,000 2,659,820 -------------------------------------------------------- --------- ---------- VI Virgin Islands Government Hovensa, Series 2002, AMT, 6.500% 07/01/21 125,000 142,820 -------------------------------------------------------- --------- ---------- VI Virgin Islands Public Finance Authority Hovensa LCC: Series 2003, AMT, 6.125% 07/01/22 875,000 967,383 Series 2004, AMT, 5.875% 07/01/22 1,000,000 1,088,510 -------------------------------------------------------- --------- ---------- Oil & Gas Total 8,047,275 ---------- INDUSTRIALS TOTAL 26,953,300 OTHER - 8.9% Other - 0.6% -------------------------------------------------------- --------- ---------- NJ Economic Development Authority Motor Vehicle Commission, Series 2003 A, Insured: MBIA (b) 07/01/14 2,500,000 1,764,175
See Accompanying Notes to Financial Statements. 20 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) OTHER - (continued) Other - (continued) Par ($) Value ($) - -------------------------------------------------- ------------------------------------------- ---------- --------- NY Convention Center Operating Corp. Yale Building Project, Series 2003, (b) 06/01/08 2,100,000 1,838,718 ------------------------------------------- ---------- --------- Other Total 3,602,893 Pool / Bond Bank - 0.5% ------------------------------------------- ---------- --------- OH Cleveland-Cuyahoga County Port Authority Myers University Project: Series 2004 E, 5.600% 05/15/25 530,000 542,694 Series 2005 B, 5.125% 05/15/25 750,000 755,662 ------------------------------------------- ---------- --------- OH Summit County Port Authority Seville Project, Series 2005 A, 5.100% 05/15/25 500,000 504,530 ------------------------------------------- ---------- --------- SD Economic Development Finance Authority Davis Family Sodak, Series 2004 4-A, AMT, 6.000% 04/01/29 1,400,000 1,452,892 ------------------------------------------- ---------- --------- Pool / Bond Bank Total 3,255,778 Refunded / Escrowed(i) - 5.9% ------------------------------------------- ---------- --------- CO Adams County Series 1991 B: Escrowed to Maturity 11.250% 09/01/11 220,000 314,939 Pre-refunded 09/01/09 11.250% 09/01/11 (k) 325,000 425,380 Pre-refunded 09/01/10 11.250% 09/01/11 360,000 493,560 ------------------------------------------- ---------- --------- CO Department of Transportation Series 2001: Pre-refunded 06/15/08 Insured: MBIA 8.495% 12/15/08 (h)(j) 3,000,000 3,802,470 8.495% 12/15/08 (h)(j) 2,000,000 2,534,520 ------------------------------------------- ---------- --------- CO E-470 Public Highway Authority Series 2000 B, Pre-refunded 09/01/10 (b) 09/01/35 17,500,000 2,243,850 ------------------------------------------- ---------- --------- CT Development Authority New Haven Residuals LP, Series 1996, AMT, Escrowed to Maturity 8.250% 12/01/06 335,000 352,286 ------------------------------------------- ---------- --------- FL Northern Palm Beach County Improvement District Series 1999: Pre-refunded 08/01/09 Insured: MBIA 5.900% 08/01/19 500,000 560,255 6.000% 08/01/29 750,000 843,247 ------------------------------------------- ---------- --------- FL Orange County Health Facilities Authority Orlando Lutheran Towers, Inc., Series 1996, Pre-refunded 07/01/06 8.625% 07/01/20 1,500,000 1,629,255
See Accompanying Notes to Financial Statements. 21 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) OTHER - (continued) Refunded / Escrowed(i) - (continued) Par ($) Value ($) - ---------------------------------------------- ---------------------------------------------------------- --------- ---------- FL Tampa Bay Water Utility Systems Series 1999, Pre-refunded 10/01/11 Insured: FGIC 8.975% 10/01/23 (h)(j) 7,500,000 9,623,325 ---------------------------------------------------------- --------- ---------- GA Forsyth County Hospital Authority Georgia Baptist Health Care System, Series 1998, Escrowed to Maturity 6.000% 10/01/08 620,000 650,628 ---------------------------------------------------------- --------- ---------- GA Municipal Electric Authority Series 1991 V: Escrowed to Maturity 6.600% 01/01/18 690,000 857,980 Pre-refunded 01/01/13 6.600% 01/01/18 75,000 93,218 ---------------------------------------------------------- --------- ---------- IL University of Illinois Utility Infrastructure Projects, Series 2001 A, Pre-refunded 08/15/11 Insured: AMBAC 5.500% 08/15/16 1,425,000 1,604,251 ---------------------------------------------------------- --------- ---------- NC Eastern Municipal Power Agency Series 1991 A, Escrowed to Maturity 6.500% 01/01/18 3,320,000 4,228,452 ---------------------------------------------------------- --------- ---------- NC Lincoln County Lincoln County Hospital, Series 1991, Escrowed to Maturity 9.000% 05/01/07 85,000 91,335 ---------------------------------------------------------- --------- ---------- NJ Economic Development Authority Winchester Gardens, Series 1996 A, Pre-refunded 11/01/06 8.625% 11/01/25 2,000,000 2,191,900 ---------------------------------------------------------- --------- ---------- NY New York Series 1995 B, Escrowed to Maturity 7.250% 08/15/07 55,000 60,156 ---------------------------------------------------------- --------- ---------- TN Shelby County Health, Educational & Housing Open Arms Development Centers: Facilities Board Series 1992 A, Pre-refunded 08/01/07 9.750% 08/01/19 280,000 327,169 Series 1992 C, Pre-refunded 08/01/07 9.750% 08/01/19 280,000 325,836 ---------------------------------------------------------- --------- ---------- WV Hospital Finance Authority Charleston Area Medical Center, Series 2000, Pre-refunded 09/01/10 6.750% 09/01/30 925,000 1,092,138 ---------------------------------------------------------- --------- ---------- Refunded / Escrowed Total 34,346,150 Tobacco - 1.9% ---------------------------------------------------------- --------- ---------- CA Golden State Tobacco Securitization Corp. Series 2003 A-1: 6.250% 06/01/33 2,850,000 3,115,534 6.750% 06/01/39 200,000 225,082 Series 2003 B, 5.500% 06/01/43 1,250,000 1,374,375 ---------------------------------------------------------- --------- ---------- LA Tobacco Settlement Financing Corp. Series 2001 B, 5.875% 05/15/39 1,000,000 1,040,580
See Accompanying Notes to Financial Statements. 22 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) OTHER - (continued) Tobacco - (continued) Par ($) Value ($) - ---------------------------------------------------- ------------------------------------------------ --------- ---------- NJ Tobacco Settlement Financing Corp. Series 2003, 6.750% 06/01/39 2,000,000 2,245,220 ------------------------------------------------ --------- ---------- SC Tobacco Settlement Financing Corp. Series 2001 B, 6.375% 05/15/28 1,000,000 1,065,370 ------------------------------------------------ --------- ---------- VA Tobacco Settlement Financing Corp. Series 2005, 5.625% 06/01/37 2,000,000 2,054,980 ------------------------------------------------ --------- ---------- Tobacco Total 11,121,141 ---------- OTHER TOTAL 52,325,962 OTHER REVENUE - 2.7% Hotels - 1.0% ------------------------------------------------ --------- ---------- NJ Middlesex County Improvement Authority Heldrich Associates LLC, Series 2005 B, 6.250% 01/01/37 2,250,000 2,249,123 ------------------------------------------------ --------- ---------- PA Philadelphia Authority for Industrial Development Doubletree Project, Series 1997 A, 6.500% 10/01/27 2,000,000 2,075,820 ------------------------------------------------ --------- ---------- TX San Antonio Convention Hotel Finance Corp. Hotel Investments LP, Series 2005 A, AMT, Insured: AMBAC 5.000% 07/15/34 1,500,000 1,560,885 ------------------------------------------------ --------- ---------- Hotels Total 5,885,828 Recreation - 1.3% ------------------------------------------------ --------- ---------- CA Agua Caliente Band Cahuilla Indians Series 2003, 6.000% 07/01/18 1,000,000 1,057,190 ------------------------------------------------ --------- ---------- CA Cabazon Band Mission Indians Series 2004: 8.375% 10/01/15 (h) 550,000 570,141 8.750% 10/01/19 (h) 1,950,000 2,019,401 ------------------------------------------------ --------- ---------- CT Mashantucket Western Pequot Tribe Series 1999 B, (b) 09/01/15 (h) 2,000,000 1,221,220 ------------------------------------------------ --------- ---------- CT Mohegan Tribe Gaming Authority Series 2001, 6.250% 01/01/31 (h) 475,000 515,370 ------------------------------------------------ --------- ---------- FL Capital Trust Agency Seminole Tribe Convention Center, Series 2002 A, 10.000% 10/01/33 (h) 2,050,000 2,282,634 ------------------------------------------------ --------- ---------- NM Red River Sports Facility Red River Ski Area Project, Series 1998, 6.450% 06/01/07 120,000 121,442 ------------------------------------------------ --------- ---------- Recreation Total 7,787,398 Retail - 0.4% ------------------------------------------------ --------- ---------- LA Beauregard Parish OfficeMax Corp., Series 2002, 6.800% 02/01/27 1,750,000 1,898,488
See Accompanying Notes to Financial Statements. 23 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) OTHER REVENUE - (continued) Retail - (continued) Par ($) Value ($) - --------------------------------------------------- --------------------------------------------------- --------- ---------- OH Lake County North Madison Properties, Series 1993, 8.819% 09/01/11 445,000 446,566 --------------------------------------------------- --------- ---------- Retail Total 2,345,054 ---------- OTHER REVENUE TOTAL 16,018,280 RESOURCE RECOVERY - 1.7% Disposal - 0.7% --------------------------------------------------- --------- ---------- IL Development Finance Authority Waste Management, Inc., Series 1997, AMT, 5.050% 01/01/10 250,000 261,663 --------------------------------------------------- --------- ---------- MA Industrial Finance Agency Peabody Monofill Associates, Inc., Series 1994, 9.000% 09/01/05 180,000 180,653 --------------------------------------------------- --------- ---------- OH Solid Waste Republic Services, Series 2004, AMT, 4.250% 04/01/33 2,000,000 1,989,780 --------------------------------------------------- --------- ---------- UT Carbon County Laidlaw Environmental, Series 1997 A, AMT, 7.450% 07/01/17 1,500,000 1,577,190 --------------------------------------------------- --------- ---------- Disposal Total 4,009,286 Resource Recovery - 1.0% --------------------------------------------------- --------- ---------- MA Development Finance Agency Ogden Haverhill Associates, Series 1999 A, AMT, 6.700% 12/01/14 750,000 815,138 --------------------------------------------------- --------- ---------- MA Industrial Finance Agency Ogden Haverhill Associates, Series 1998 A, AMT: 5.500% 12/01/13 500,000 512,860 5.600% 12/01/19 1,000,000 1,028,080 --------------------------------------------------- --------- ---------- NY Niagara County Industrial Development Agency American REF-Fuel Co., LLC, Series 2001 A, AMT, 5.450% 11/15/26 1,000,000 1,079,520 --------------------------------------------------- --------- ---------- PA Delaware County Industrial Development Authority American REF-Fuel Co., Series 1997 A, 6.200% 07/01/19 2,225,000 2,317,493 --------------------------------------------------- --------- ---------- Resource Recovery Total 5,753,091 ---------- RESOURCE RECOVERY TOTAL 9,762,377 TAX-BACKED - 16.6% Local Appropriated - 2.1% --------------------------------------------------- --------- ---------- CA Compton Civic Center & Capital Improvements, Series 1997 A, 5.500% 09/01/15 1,500,000 1,569,165 --------------------------------------------------- --------- ---------- CA Southeast Resource Recovery Facilities Authority Series 2003 B, AMT, Insured: AMBAC 5.375% 12/01/18 2,000,000 2,179,640 --------------------------------------------------- --------- ---------- MN Andover Economic Development Authority Andover Community Center, Series 2004, 5.200% 02/01/34 750,000 786,307
See Accompanying Notes to Financial Statements. 24 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Local Appropriated - (continued) Par ($) Value ($) - --------------------------------------------- ---------------------------------------------- --------- ---------- MO Industrial Development Authority Convention Center Hotel, Series 2000, Insured: AMBAC (b) 07/15/18 3,000,000 1,735,740 ---------------------------------------------- --------- ---------- SC Berkeley County School District Series 2003, 5.000% 12/01/28 2,000,000 2,069,360 ---------------------------------------------- --------- ---------- SC Dorchester County School District No. 2 Series 2004, 5.250% 12/01/29 1,000,000 1,056,240 ---------------------------------------------- --------- ---------- SC Lancaster Educational Assistance Program Lancaster County School District, Series 2004, 5.000% 12/01/26 1,350,000 1,386,693 ---------------------------------------------- --------- ---------- SC Laurens County School District No. 55 Series 2005, 5.250% 12/01/30 1,400,000 1,456,952 ---------------------------------------------- --------- ---------- Local Appropriated Total 12,240,097 Local General Obligations - 4.4% ---------------------------------------------- --------- ---------- CA East Side Union High School District Series 2003 B, Insured: MBIA 5.100% 02/01/20 1,320,000 1,498,042 ---------------------------------------------- --------- ---------- CA Empire Union School District Series 1987-1 A, Insured: AMBAC (b) 10/01/21 1,665,000 812,953 ---------------------------------------------- --------- ---------- CA Los Angeles Community College District Series 2003 B, Insured: FSA 5.000% 08/01/19 2,000,000 2,188,980 ---------------------------------------------- --------- ---------- CA Los Angeles Unified School District Series 1997 E, Insured: MBIA 5.125% 01/01/27 3,800,000 4,049,318 Series 2002, Insured: MBIA 5.750% 07/01/16 800,000 952,720 ---------------------------------------------- --------- ---------- CA Modesto High School District Series 2002 A, Insured: FGIC (b) 08/01/19 2,650,000 1,439,427 ---------------------------------------------- --------- ---------- CA Pasadena Community College District Series 2003 A, Insured: FGIC 5.000% 06/01/19 1,290,000 1,409,725 ---------------------------------------------- --------- ---------- CA Rocklin Unified School District Series 2003, Insured: FGIC (b) 08/01/17 3,130,000 1,880,566 ---------------------------------------------- --------- ---------- CA William S. Hart Union High School District Series 2003 A, Insured: MBIA 5.000% 09/01/19 1,625,000 1,769,934
See Accompanying Notes to Financial Statements. 25 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Local General Obligations - (continued) Par ($) Value ($) - ---------------------------------------------------- ------------------------------------ --------- ---------- CO Red Sky Ranch Metropolitan District Series 2003, 6.050% 12/01/33 1,000,000 1,032,690 ------------------------------------ --------- ---------- IL Hoffman Estates Park District Series 2004, 5.250% 12/01/23 1,000,000 1,068,110 ------------------------------------ --------- ---------- NY New York City Series 1995 B, 7.250% 08/15/07 945,000 1,027,612 Series 2003 J, 5.500% 06/01/18 1,500,000 1,661,040 ------------------------------------ --------- ---------- OH Dublin City School District Series 2003, Insured: FSA 5.000% 12/01/20 2,450,000 2,671,137 ------------------------------------ --------- ---------- TX Dallas County Flood Control District Series 2002, 7.250% 04/01/32 1,000,000 1,045,490 ------------------------------------ --------- ---------- WA Clark County School District No. 37 Series 2001 C, Insured: FGIC (b) 12/01/18 2,500,000 1,401,425 ------------------------------------ --------- ---------- Local General Obligations Total 25,909,169 Special Non - Property Tax - 2.1% ------------------------------------ --------- ---------- MO St. Louis County Industrial Development Authority Kiel Center Arena, Series 1992, AMT, 7.875% 12/01/24 3,000,000 3,059,400 ------------------------------------ --------- ---------- NJ Economic Development Authority Cigarette Tax, Series 2004: 5.500% 06/15/31 315,000 333,481 5.750% 06/15/29 1,000,000 1,082,110 ------------------------------------ --------- ---------- NY Thruway Authority Series 2003 A, Insured: MBIA 5.000% 03/15/20 3,500,000 3,795,225 ------------------------------------ --------- ---------- PR Commonwealth of Puerto Rico Highway & Series 2003 AA: Transportation Authority Insured: MBIA 5.500% 07/01/18 1,225,000 1,450,963 5.500% 07/01/19 2,320,000 2,756,369 ------------------------------------ --------- ---------- Special Non - Property Tax Total 12,477,548 Special Property Tax - 4.9% ------------------------------------ --------- ---------- CA Carson Improvement Bond Act 1915 Series 1992, 7.375% 09/02/22 135,000 144,077 ------------------------------------ --------- ---------- CA Huntington Beach Community Facilities District Grand Coast Resort, Series 2001-1, 6.450% 09/01/31 1,250,000 1,318,675 ------------------------------------ --------- ---------- CA Irvine Improvement Bond Act 1915 No. 00-18-GRP 3, Series 2003, 5.550% 09/02/26 500,000 509,810
See Accompanying Notes to Financial Statements. 26 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Special Property Tax - (continued) Par ($) Value ($) - --------------------------------------------------- ------------------------------------------------ --------- --------- CA Lincoln Community Facilities District No. 2003-1 Series 2004: 5.750% 09/01/20 500,000 509,195 5.900% 09/01/24 500,000 513,400 ------------------------------------------------ --------- --------- CA Oakdale Public Financing Authority Central City Redevelopment Project, Series 2004, 5.375% 06/01/33 2,000,000 2,049,020 ------------------------------------------------ --------- --------- CA Oceanside Community Development Commission Downtown Redevelopment Project, Series 2003, 5.700% 09/01/25 500,000 525,940 ------------------------------------------------ --------- --------- CA Orange County Community Facilities District Ladera Ranch: Series 1999 A, 6.500% 08/15/21 1,000,000 1,139,450 Series 2003 A, 5.550% 08/15/33 1,000,000 1,031,300 ------------------------------------------------ --------- --------- CA Orange County Improvement Bond Act 1915 Phase IV, No. 01-1-B, Series 2003, 5.750% 09/02/33 1,000,000 1,030,470 ------------------------------------------------ --------- --------- CA Redwood City Community Facilities District No. 1 Series 2003 B, 6.000% 09/01/33 700,000 734,405 ------------------------------------------------ --------- --------- CA Temecula Valley Unified School District No. 1 Series 2003, 6.125% 09/01/33 600,000 614,844 ------------------------------------------------ --------- --------- FL Brandy Creek Community Development District Series 2003 A, 6.350% 05/01/34 990,000 1,049,875 ------------------------------------------------ --------- --------- FL Celebration Community Development District Series 2003 A, 6.400% 05/01/34 990,000 1,061,013 ------------------------------------------------ --------- --------- FL Colonial Country Club Community Development Series 2003, District 6.400% 05/01/33 735,000 787,722 ------------------------------------------------ --------- --------- FL Concorde Estates Community Development District Series 2004 A, 5.850% 05/01/35 1,320,000 1,353,290 ------------------------------------------------ --------- --------- FL Double Branch Community Development District Series 2002 A, 6.700% 05/01/34 695,000 760,379 Series 2003 B, 5.375% 05/01/08 720,000 732,586 ------------------------------------------------ --------- --------- FL Heritage Palms Community Development District Series 1999 A, 6.250% 11/01/07 140,000 140,829 ------------------------------------------------ --------- --------- FL Islands at Doral Southwest Community Series 2003, Development District 6.375% 05/01/35 770,000 823,476 ------------------------------------------------ --------- --------- FL Lexington Oaks Community Development District Series 1998 A, 6.125% 05/01/19 250,000 254,683 Series 2000 A, 7.200% 05/01/30 665,000 697,492 Series 2002 A, 6.700% 05/01/33 250,000 268,535
See Accompanying Notes to Financial Statements. 27 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Special Property Tax - (continued) Par ($) Value ($) - ------------------------------------------------ ------------------------------------------------ --------- ---------- FL Middle Village Community Development District Series 2004 A, 6.000% 05/01/35 2,000,000 2,082,840 ------------------------------------------------ --------- ---------- FL Orlando Conroy Road Interchange Project, Series 1998 A: 5.500% 05/01/10 280,000 290,430 5.800% 05/01/26 600,000 616,974 ------------------------------------------------ --------- ---------- FL Seven Oaks Community Development District Series 2004 A, 5.875% 05/01/35 500,000 510,650 Series 2004 B, 5.000% 05/01/09 750,000 757,575 ------------------------------------------------ --------- ---------- FL Stoneybrook Community Development District Series 1998 A, 6.100% 05/01/19 750,000 764,242 Series 1998 B, 5.700% 05/01/08 25,000 25,414 ------------------------------------------------ --------- ---------- FL Westchester Community Development District Series 2003, 6.125% 05/01/35 800,000 842,792 ------------------------------------------------ --------- ---------- IL Chicago Pilsen Redevelopment, Series 2004 B, 6.750% 06/01/22 1,225,000 1,291,787 ------------------------------------------------ --------- ---------- IL Lincolnshire Special Services Area No. 1 Sedgebrook Project, Series 2004, 6.250% 03/01/34 750,000 796,417 ------------------------------------------------ --------- ---------- MI Pontiac Finance Authority Development Area No. 3, Series 2002, 6.375% 06/01/31 1,000,000 1,013,250 ------------------------------------------------ --------- ---------- MO Riverside L-385 Levee Project, Series 2004, 5.250% 05/01/20 1,275,000 1,323,526 ------------------------------------------------ --------- ---------- Special Property Tax Total 28,366,363 State Appropriated - 0.7% ------------------------------------------------ --------- ---------- CA Public Works Board Coalinga State Hospital, Series 2004 A, 5.500% 06/01/19 1,000,000 1,122,730 ------------------------------------------------ --------- ---------- LA Military Department Custody Receipts, Series 2004, 4.850% 05/01/24 1,500,000 1,503,630 ------------------------------------------------ --------- ---------- NY Triborough Bridge & Tunnel Authority Javits Convention Center Project, Series 1990 E, 7.250% 01/01/10 1,525,000 1,685,644 ------------------------------------------------ --------- ---------- State Appropriated Total 4,312,004 State General Obligations - 2.4% ------------------------------------------------ --------- ---------- CA State Series 2003: 5.250% 02/01/18 2,000,000 2,257,960 5.250% 02/01/20 2,000,000 2,267,060 5.250% 02/01/23 800,000 905,824 ------------------------------------------------ --------- ---------- MA Massachusetts Bay Transportation Authority Series 1992 B, Insured: MBIA 6.200% 03/01/16 5,825,000 6,978,758
See Accompanying Notes to Financial Statements. 28 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) State General Obligations - (continued) Par ($) - ---------------------------------------------------- --------------------------------------------------------- --------- PR Commonwealth of Puerto Rico Series 2004 A, 5.000% 07/01/30 1,200,000 --------------------------------------------------------- --------- State General Obligations Total TAX-BACKED TOTAL TRANSPORTATION - 6.6% Air Transportation - 2.9% --------------------------------------------------------- --------- CA Los Angeles Regional Airports Improvement Corp. American Airlines, Inc., Series 2000 C, AMT, 7.500% 12/01/24 400,000 --------------------------------------------------------- --------- FL Capital Trust Agency Air Cargo Orlando Project, Series 2003, AMT, 6.750% 01/01/32 650,000 --------------------------------------------------------- --------- IN Indianapolis Airport Authority Fed Ex Corp., Series 2004, AMT, 5.100% 01/15/17 1,000,000 --------------------------------------------------------- --------- MA Port Authority Delta Air Lines, Inc., Series 2001 A, AMT, Insured: AMBAC 5.500% 01/01/16 2,935,000 --------------------------------------------------------- --------- MN Minneapolis & St. Paul Metropolitan Airports Northwest Airlines, Inc.: Commission Series 2001 A, AMT, 7.000% 04/01/25 1,800,000 Series 2005, AMT, 7.375% 04/01/25 500,000 --------------------------------------------------------- --------- NC Charlotte Douglas International Airport US Airways, Inc.: Series 1998, AMT, 5.600% 07/01/27 (l) 1,500,000 Series 2000, AMT, 7.750% 02/01/28 (l) 1,250,000 --------------------------------------------------------- --------- NJ Economic Development Authority Continental Airlines, Inc.: Series 1999, AMT: 6.250% 09/15/19 1,600,000 6.250% 09/15/29 500,000 Series 2003, AMT, 9.000% 06/01/33 1,000,000 --------------------------------------------------------- --------- PA Philadelphia Authority for Industrial Development Aero Philadelphia, Series 1999, AMT: 5.250% 01/01/09 250,000 5.500% 01/01/24 1,000,000 --------------------------------------------------------- --------- TX Dallas-Fort Worth International Airport Facility AMR Corp., Series 2000 A, 9.000% 05/01/29 (d) 2,250,000 --------------------------------------------------------- --------- TX Houston Industrial Development Corp. United Parcel Service of America, Inc., Series 2002, AMT, 6.000% 03/01/23 1,035,000 --------------------------------------------------------- --------- Air Transportation Total
Value ($) - --------------------------------------------------------- ---------- Series 2004 A, 5.000% 07/01/30 1,286,280 - --------------------------------------------------------- ---------- State General Obligations Total 13,695,882 ---------- TAX-BACKED TOTAL 97,001,063 - --------------------------------------------------------- ---------- American Airlines, Inc., Series 2000 C, AMT, 7.500% 12/01/24 421,020 - --------------------------------------------------------- ---------- Air Cargo Orlando Project, Series 2003, AMT, 6.750% 01/01/32 654,251 - --------------------------------------------------------- ---------- Fed Ex Corp., Series 2004, AMT, 5.100% 01/15/17 1,058,530 - --------------------------------------------------------- ---------- Delta Air Lines, Inc., Series 2001 A, AMT, Insured: AMBAC 5.500% 01/01/16 3,126,215 - --------------------------------------------------------- ---------- Northwest Airlines, Inc.: Series 2001 A, AMT, 7.000% 04/01/25 1,682,226 Series 2005, AMT, 7.375% 04/01/25 485,220 - --------------------------------------------------------- ---------- US Airways, Inc.: Series 1998, AMT, 5.600% 07/01/27 (l) 975,105 Series 2000, AMT, 7.750% 02/01/28 (l) 920,688 - --------------------------------------------------------- ---------- Continental Airlines, Inc.: Series 1999, AMT: 6.250% 09/15/19 1,430,624 6.250% 09/15/29 434,880 Series 2003, AMT, 9.000% 06/01/33 1,054,490 - --------------------------------------------------------- ---------- Aero Philadelphia, Series 1999, AMT: 5.250% 01/01/09 252,453 5.500% 01/01/24 999,110 - --------------------------------------------------------- ---------- AMR Corp., Series 2000 A, 9.000% 05/01/29 (d) 2,285,167 - --------------------------------------------------------- ---------- United Parcel Service of America, Inc., Series 2002, AMT, 6.000% 03/01/23 1,086,419 - --------------------------------------------------------- ---------- Air Transportation Total 16,866,398
See Accompanying Notes to Financial Statements. 29 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) TRANSPORTATION - (continued) Airports - 1.5% Par ($) Value ($) - ---------------------------------------------- ---------------------------------------- --------- ---------- CA Burbank Glendale Pasadena Airport Authority Series 2005 B, AMT, Insured: AMBAC 5.000% 07/01/23 1,500,000 1,573,440 ---------------------------------------- --------- ---------- DC Metropolitan Washington Airports Authority Series 2003 A, AMT, Insured: FGIC 5.000% 10/01/33 1,500,000 1,559,520 ---------------------------------------- --------- ---------- GA Augusta Airport Revenue Series 2005, 5.150% 01/01/35 600,000 616,056 ---------------------------------------- --------- ---------- NC Charlotte Douglas International Airport Series 1999, AMT, Insured: MBIA 9.560% 04/20/19 (h)(j)(k) 4,000,000 4,863,440 ---------------------------------------- --------- ---------- Airports Total 8,612,456 Ports - 1.0% ---------------------------------------- --------- ---------- WA Port of Seattle Series 2000 A, AMT, Insured: MBIA 9.446% 08/01/07 (h)(j) 1,250,000 1,507,075 Series 2000 B, AMT, Insured: MBIA 9.446% 08/01/08 (h)(j) 3,750,000 4,599,412 ---------------------------------------- --------- ---------- Ports Total 6,106,487 Toll Facilities - 0.9% ---------------------------------------- --------- ---------- CO E-470 Public Highway Authority Series 2000 B, Insured: MBIA (b) 09/01/18 4,000,000 2,275,360 ---------------------------------------- --------- ---------- CO Northwest Parkway Public Highway Authority Series 2001 D, 7.125% 06/15/41 2,750,000 2,976,105 ---------------------------------------- --------- ---------- Toll Facilities Total 5,251,465 Transportation - 0.3% ---------------------------------------- --------- ---------- NV Department of Business & Industry Las Vegas Monorail Project, Series 2000, 7.375% 01/01/40 1,750,000 1,837,867 ---------------------------------------- --------- ---------- Transportation Total 1,837,867 ---------- TRANSPORTATION TOTAL 38,674,673 UTILITIES - 13.9% Independent Power Producers - 2.5% ---------------------------------------- --------- ---------- MI Midland County Economic Development Corp. Series 2000 A, AMT, 6.875% 07/23/09 1,650,000 1,737,334 ---------------------------------------- --------- ---------- NY Port Authority of New York & New Jersey KIAC Partners, Series 1996 IV, AMT, 6.750% 10/01/11 1,000,000 1,055,690
See Accompanying Notes to Financial Statements. 30 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) UTILITIES - (continued) Independent Power Producers - (continued) Par ($) Value ($) - ------------------------------------------------ ---------------------------------------------------- --------- ---------- PA Carbon City Industrial Development Authority Panther Creek Partners Project, Series 2000, AMT, 6.650% 05/01/10 835,000 908,513 ---------------------------------------------------- --------- ---------- PA Economic Development Financing Authority Colver Project, Series 1994 D, AMT, 7.150% 12/01/18 2,650,000 2,763,950 Northampton Generating: Series 1994 A, AMT, 6.500% 01/01/13 3,000,000 3,047,040 Series 1994 B, AMT, 6.750% 01/01/07 1,320,000 1,364,722 ---------------------------------------------------- --------- ---------- VA Pittsylvania County Industrial Development Multi-trade of Pittsylvania, Series 1994 A, AMT: Authority 7.450% 01/01/09 2,900,000 2,976,821 7.500% 01/01/14 500,000 513,125 ---------------------------------------------------- --------- ---------- Independent Power Producers Total 14,367,195 Investor Owned - 4.9% ---------------------------------------------------- --------- ---------- AZ Maricopa County Pollution Control Corp. El Paso Electric Co., Series 2002 A, 6.250% 05/01/37 1,000,000 1,002,850 Southern California Edison Co., Series 2000 A, 2.900% 06/01/35 1,000,000 976,530 ---------------------------------------------------- --------- ---------- CA Chula Vista Industrial Development Authority San Diego Gas & Electric, Series 1996, AMT, 5.500% 12/01/21 1,275,000 1,380,583 ---------------------------------------------------- --------- ---------- FL Polk County Industrial Development Authority Tampa Electric Co. Project, Series 1996, AMT, 5.850% 12/01/30 1,500,000 1,541,205 ---------------------------------------------------- --------- ---------- IL Development Finance Authority Peoples Gas Light & Coke Co., Series 2003 E, AMT, Insured: AMBAC 4.875% 11/01/38 2,500,000 2,599,675 ---------------------------------------------------- --------- ---------- IN Petersburg Indianapolis Power & Light Co.: Series 1991, 5.750% 08/01/21 1,000,000 1,057,610 Series 1995, 6.625% 12/01/24 255,000 260,704 ---------------------------------------------------- --------- ---------- LA Calcasieu Parish Industrial Development Board Entergy Gulf States, Inc., Series 1999, 5.450% 07/01/10 500,000 502,025 ---------------------------------------------------- --------- ---------- LA West Feliciana Parish Entergy Gulf States, Inc., Series 1999 B, 6.600% 09/01/28 250,000 253,055 ---------------------------------------------------- --------- ---------- MS Business Finance Corp. Systems Energy Resources, Inc. Project, Series 1999, 5.900% 05/01/22 1,500,000 1,526,175 ---------------------------------------------------- --------- ---------- MT Forsyth Portland General, Series 1998 A, 5.200% 05/01/33 375,000 394,118 ---------------------------------------------------- --------- ---------- NC Wake County Industrial Facilities & Pollution Carolina Power & Light Co., Series 2002, Control Financing Authority 5.375% 02/01/17 2,000,000 2,165,940 ---------------------------------------------------- --------- ---------- NM Farmington Tucson Electric Power Co., Series 1997 A, 6.950% 10/01/20 2,000,000 2,105,820
See Accompanying Notes to Financial Statements. 31 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) UTILITIES - (continued) Investor Owned - (continued) Par ($) Value ($) - ------------------------------------------------ --------------------------------------------------- ---------- ---------- NV Clark County Industrial Development Authority Nevada Power Co.: Series 1995 B, AMT, 5.900% 10/01/30 2,135,000 2,136,302 Series 1997 A, AMT, 5.900% 11/01/32 750,000 750,592 Southern California Edison Co., Series 2000 A, AMT, 3.250% 06/01/31 1,000,000 986,570 --------------------------------------------------- ---------- ---------- PA Economic Development Financing Authority Reliant Energy, Inc., Series 2001 A, AMT, 6.750% 12/01/36 800,000 859,176 --------------------------------------------------- ---------- ---------- SC Berkeley County Pollution Control Facilities South Carolina Generating Co. Project, Series 2003, Authority 4.875% 10/01/14 1,500,000 1,606,575 --------------------------------------------------- ---------- ---------- TX Brazos River Authority TXU Energy Co. LLC: Series 2001 C, AMT, 5.750% 05/01/36 515,000 551,050 Series 2003 C, AMT, 6.750% 10/01/38 1,180,000 1,320,031 --------------------------------------------------- ---------- ---------- WY Campbell County Black Hills Power, Inc., Series 2004, 5.350% 10/01/24 3,250,000 3,375,385 --------------------------------------------------- ---------- ---------- WY Converse County PacifiCorp, Series 1988, 3.900% 01/01/14 1,500,000 1,472,970 --------------------------------------------------- ---------- ---------- Investor Owned Total 28,824,941 Joint Power Authority - 0.5% --------------------------------------------------- ---------- ---------- NC Eastern Municipal Power Agency Series 1991 A, 6.500% 01/01/18 1,680,000 2,041,872 Series 2003 C, 5.375% 01/01/17 1,000,000 1,073,620 --------------------------------------------------- ---------- ---------- Joint Power Authority Total 3,115,492 Municipal Electric - 4.5% --------------------------------------------------- ---------- ---------- GA Municipal Electric Authority Series 1991 V, 6.600% 01/01/18 3,300,000 4,037,088 --------------------------------------------------- ---------- ---------- MN Western Municipal Power Agency Series 2003 B, Insured: MBIA 5.000% 01/01/15 500,000 557,620 --------------------------------------------------- ---------- ---------- NY Long Island Power Authority Series 1998, Insured: AMBAC 5.000% 04/01/10 2,000,000 2,166,180 Series 2003 A, 5.000% 06/01/09 2,000,000 2,134,620 --------------------------------------------------- ---------- ---------- PR Electric Power Authority Series 1998 NN, 5.500% 07/01/20 1,005,000 1,162,725 --------------------------------------------------- ---------- ---------- TX Lower Colorado River Authority Series 1999 A, Insured: AMBAC 5.500% 05/15/21 15,000,000 16,237,200 --------------------------------------------------- ---------- ---------- Municipal Electric Total 26,295,433
See Accompanying Notes to Financial Statements. 32 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Municipal Bonds - (continued) UTILITIES - (continued) Water & Sewer - 1.5% Par ($) Value ($) - --------------------------------------------------- ---------------------------------------------------- --------- ----------- AZ Gilbert Water Resources Municipal Property Corp. Wastewater Systems & Utilities Revenue, Series 2004, 4.900% 04/01/19 1,000,000 1,003,350 ---------------------------------------------------- --------- ----------- CA Department of Water Resources Central Valley Project, Series 2002 X, Insured: FGIC 5.500% 12/01/17 1,300,000 1,531,270 ---------------------------------------------------- --------- ----------- FL Key West Sewer Revenue, Series 2003, Insured: FGIC 5.250% 10/01/18 1,000,000 1,112,320 ---------------------------------------------------- --------- ----------- MS V Lakes Utility District Series 1994, 8.250% 07/15/24 400,000 405,072 ---------------------------------------------------- --------- ----------- NH Industrial Development Authority Pennichuck Water Works, Inc., Series 1988, AMT, 7.500% 07/01/18 440,000 509,674 ---------------------------------------------------- --------- ----------- PA Dauphin County Industrial Development Authority Dauphin Water Supply Co., Series 1992 A, AMT, 6.900% 06/01/24 3,200,000 4,153,760 ---------------------------------------------------- --------- ----------- Water & Sewer Total 8,715,446 ----------- UTILITIES TOTAL 81,318,507 Total Municipal Bonds (cost of $528,141,260) 555,621,983 Municipal Preferred Stocks - 1.5% HOUSING - 1.5% Multi-Family - 1.5% - --------------------------------------------------- ---------------------------------------------------- --------- ----------- Charter Municipal Mortgage Acceptance Co. AMT: 6.300% 04/30/19 1,000,000 1,076,100 6.625% 06/30/09 (h) 2,000,000 2,189,300 7.600% 11/30/10 (h) 1,500,000 1,719,285 ---------------------------------------------------- --------- ----------- GMAC Municipal Mortgage Trust AMT: 5.600% 10/31/39 (h) 1,000,000 1,042,290 5.700% 10/31/40 (h) 1,500,000 1,519,215 ---------------------------------------------------- --------- ----------- MuniMae Trust AMT, 5.800% 06/30/49 (h) 1,000,000 1,006,790 ---------------------------------------------------- --------- ----------- Multi-Family Total 8,552,980 ----------- HOUSING TOTAL 8,552,980 Total Municipal Preferred Stocks (cost of $8,000,000) 8,552,980
See Accompanying Notes to Financial Statements. 33 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Investment Company - 0.0% Shares Value ($) - ---------------------------------------------- ------------------------------------------------------ --------- --------- Dreyfus Tax-Exempt Cash Management Fund 9,215 9,215 --------- Total Investment Company (cost of $9,215) 9,215 Short-Term Obligations - 4.0% Par ($) VARIABLE RATE DEMAND NOTES (m) - 4.0% ------------------------------------------------------ --------- --------- FL Collier County Health Facilities Authority Fairview Hospital, Series 2003 C-1, 2.290% 01/01/35 1,500,000 1,500,000 ------------------------------------------------------ --------- --------- FL Orange County School Board Series 2002 B, 2.250% 08/01/27 400,000 400,000 ------------------------------------------------------ --------- --------- FL Pinellas County Health Facility Authority Pooled Hospital Loan Program, Series 1985, 2.350% 12/01/15 2,000,000 2,000,000 ------------------------------------------------------ --------- --------- IA Finance Authority Drake University, Series 2001, 2.350% 07/01/31 700,000 700,000 Village Court Associates, Series 1985 A, 2.300% 11/01/15 600,000 600,000 ------------------------------------------------------ --------- --------- IA Woodbury County Educational Facility Siouxland Medical Educational Foundation, Series 1996, 2.350% 11/01/16 1,500,000 1,500,000 ------------------------------------------------------ --------- --------- IL Health Facilities Authority OSF Healthcare System, Series 2002, 2.230% 11/15/27 1,700,000 1,700,000 ------------------------------------------------------ --------- --------- IN Educational Facilities Authority DePauw University, Series 2002, 2.300% 07/01/32 3,000,000 3,000,000 ------------------------------------------------------ --------- --------- IN Indiana Health Facility Financing Authority Fayette Memorial Hospital Association, Series 2002 A, 2.350% 10/01/32 1,700,000 1,700,000 ------------------------------------------------------ --------- --------- MI Northern Michigan University Series 2001, 2.300% 06/01/31 400,000 400,000 ------------------------------------------------------ --------- --------- MN Mankato Bethany Lutheran College, Series 2000 B, 2.350% 11/01/15 400,000 400,000 ------------------------------------------------------ --------- --------- MS Jackson County Chevron Corp., Series 1992, 2.250% 12/01/16 1,900,000 1,900,000 ------------------------------------------------------ --------- --------- ND Ward County Trinity Health, Series 2002 A, 2.350% 07/01/29 5,000 5,000 ------------------------------------------------------ --------- --------- SD Health & Educational Facilities Authority Rapid City Regional Hospital, Series 2003, 2.300% 09/01/27 700,000 700,000 ------------------------------------------------------ --------- --------- TX Splendora Higher Education Facilities Fort Bend Baptist Academy, Series 2001 A, 2.300% 12/01/26 400,000 400,000 ------------------------------------------------------ --------- --------- WI Health & Educational Facilities Authority Riverview Hospital Association, Series 2001, 2.350% 10/01/30 1,005,000 1,005,000
See Accompanying Notes to Financial Statements. 34 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund
Short-Term Obligations - (continued) VARIABLE RATE DEMAND NOTES (m) - (continued) Par ($) Value ($) - -------------------------------- ---------------------------------------- --------- ----------- WY Uinta County Chevron Corp.: Series 1992, 2.250% 12/01/22 500,000 500,000 Series 1993, 2.250% 08/15/20 5,200,000 5,200,000 ---------------------------------------- --------- ----------- VARIABLE RATE DEMAND NOTES TOTAL 23,610,000 Total Short-Term Obligations (cost of $23,610,000) 23,610,000 Total Investments - 100.3% (cost of $559,760,475) (n) 587,794,178 Other Assets & Liabilities, Net - (0.3)% (1,962,672) Net Assets - 100.0% 585,831,506
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 registration prior to resale. At June 30, 2005, the value of these securities amounted to $4,281,175, which represents 0.7% 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 $ 622,309 6.375% 11/15/28 07/30/98 541,671 CA Statewide Communities Development Authority: Crossroads School of Arts & Sciences, Series 1998, 6.000% 08/01/28 08/21/98 980,000 Eskaton Village -- Grass Valley, Series 2000, 8.250% 11/15/31 09/08/00 1,730,000 ---------- $3,873,980 ----------
(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. At June 30, 2005, the value of these securities amounted to $4,668, which represents less than 0.1% of net assets. (d)Security purchased on a delayed delivery basis. (e)Represents fair value as determined in good faith under procedures approved by the Board of Trustees. (f)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. At June 30, 2005, the value of these securities amounted to $229,500, which represents less than 0.1% of net assets. (g)The issuer is in default of certain debt covenants. Income is not being fully accrued. At June 30, 2005, the value of these securities amounted to $1,309,418, which represents 0.2% of net assets. See Accompanying Notes to Financial Statements. 35 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund (h)Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2005, these securities, which did not include any illiquid securities, amounted to $41,924,899, which represents 7.2% of net assets. (i)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. (j)The interest rate shown on floating rate or variable rate securities reflects the rate at June 30, 2005. (k)The security or a portion of the security is pledged as collateral for open futures contracts. At June 30, 2005, the total market value of securities pledged amounted to $1,768,905. (l)The issuer has filed for bankruptcy protection under Chapter 11. Income is being accrued. At June 30, 2005, the value of these securities amounted to $1,895,793, which represents 0.3% of net assets. (m)Variable rate demand notes. These securities are payable upon demand and are secured by letters of credit or other credit support agreements from banks. The interest rates change periodically and the interest rates shown reflect the rates at June 30, 2005. (n)Cost for federal income tax purposes is $559,435,062.
At June 30, 2005, the Fund held the following open short futures contracts. Number of Aggregate Expiration Unrealized Type Contracts Value Face Value Date Depreciation ----------------------------------------------------------------------------- U.S. Treasury Notes 548 $62,180,875 $61,831,079 Sept-2005 $ (349,796) U.S. Long Bonds 450 53,437,500 52,288,931 Sept-2005 (1,148,569) ----------- $(1,498,365) -----------
At June 30, 2005, the composition of the Fund by revenue source is as follows: REVENUE SOURCE (UNAUDITED) % OF NET ASSETS ------------------------------------------------------------------------------ Health Care 24.2 % Tax-Backed 16.6 Utilities 13.9 Housing 11.7 Other 8.9 Transportation 6.6 Education 5.4 Industrials 4.6 Other Revenue 2.7 Resource Recovery 1.7 Investment Company 0.0 Short-Term Obligations 4.0 Other Assets & Liabilities, Net (0.3) ------ 100.0 % ------
ACRONYM NAME ------- ---------------------------------------- ABAG Association of Bay Area Government AMBAC Ambac Assurance Corp. AMT Alternative Minimum Tax FGIC Financial Guaranty Insurance Co. FHA Federal Housing Administration FSA Financial Security Assurance, Inc. GNMA Government National Mortgage Association MBIA MBIA Insurance Corp. RAD Radian Asset Assurance, Inc.
See Accompanying Notes to Financial Statements. 36 STATEMENT OF ASSETS AND LIABILITIES ----------------------- June 30, 2005 Columbia High Yield Municipal Fund
($) - ------------------------- -------------------------------------------------------- ----------- Assets Investments, at cost 559,760,475 ----------- Investments, at value 587,794,178 Cash 269,003 Receivable for: Investments sold 665,771 Fund shares sold 2,069,612 Interest 8,316,095 Deferred Trustees' compensation plan 17,682 ----------- Total Assets 599,132,341 -------------------------------------------------------- ----------- Liabilities Payable for: Investments purchased on a delayed delivery basis 9,947,940 Fund shares repurchased 1,072,189 Futures variation margin 378,500 Distributions 1,507,523 Investment advisory fee 191,606 Administration fee 52,258 Transfer agent fee 23,994 Pricing and bookkeeping fees 2,661 Chief compliance officer fees 1,516 Trustees' fees 696 Custody fee 751 Distribution and service fees 44,930 Deferred Trustees' fees 17,682 Other liabilities 58,589 ----------- Total Liabilities 13,300,835 Net Assets 585,831,506 -------------------------------------------------------- ----------- Composition of Net Assets Paid-in capital 592,274,263 Undistributed net investment income 844,636 Accumulated net realized loss (33,822,731) Net unrealized appreciation (depreciation) on: Investments 28,033,703 Futures contracts (1,498,365) ----------- Net Assets 585,831,506 -------------------------------------------------------- ----------- Class A Net assets 91,470,027 Shares outstanding 8,031,506 Net asset value per share 11.39(a) Maximum offering price per share ($11.39/0.9525) 11.96(b) -------------------------------------------------------- ----------- Class B Net assets 32,823,697 Shares outstanding 2,882,088 Net asset value and offering price per share 11.39(a) -------------------------------------------------------- ----------- Class C Net assets 13,592,595 Shares outstanding 1,193,483 Net asset value and offering price per share 11.39(a) -------------------------------------------------------- ----------- Class Z Net assets 447,945,187 Shares outstanding 39,331,673 Net asset value, offering and redemption price per share 11.39
(a)Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b)On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 37 STATEMENT OF OPERATIONS ----------------------- For the Year Ended June 30, 2005 Columbia High Yield Municipal Fund
($) - --------------------------------------- -------------------------------------------------------------- ----------- Investment Income Interest 29,106,974 Dividends 13,034 ----------- Total Investment Income 29,120,008 -------------------------------------------------------------- ----------- Expenses Investment advisory fee 2,129,398 Administration fee 588,599 Distribution fee: Class B 269,525 Class C 92,616 Service fee: Class A 169,190 Class B 71,873 Class C 24,672 Transfer agent fee 289,169 Pricing and bookkeeping fees 171,148 Trustees' fees 17,170 Custody fee 25,904 Chief compliance officer fees (See Note 4) 5,224 Non-recurring costs (See Note 8) 9,758 Other expenses 230,057 ----------- Total Expenses 4,094,303 Fees waived by Distributor -- Class C (18,600) Non-recurring costs assumed by Investment Advisor (See Note 8) (9,758) Custody earnings credit (2,999) ----------- Net Expenses 4,062,946 ----------- Net Investment Income 25,057,062 -------------------------------------------------------------- ----------- Net Realized and Unrealized Gain (Loss) Net realized loss on: on Investments and Futures Contracts Investments (2,810,809) Futures contracts (8,709,330) ----------- Net realized loss (11,520,139) Net change in unrealized appreciation (depreciation) on: Investments 31,282,314 Futures contracts (885,016) ----------- Net change in unrealized appreciation (depreciation) 30,397,298 ----------- Net Gain 18,877,159 ----------- Net Increase in Net Assets from Operations 43,934,221
See Accompanying Notes to Financial Statements. 38 STATEMENT OF CHANGES IN NET ASSETS ----------------------- Columbia High Yield Municipal Fund
Year Ended June 30, ------------------------- Increase (Decrease) in Net Assets: 2005($) 2004($) - -------------------------------------- ---------------------------------------------------- ----------- ----------- Operations Net investment income 25,057,062 22,553,671 Net realized loss on investments and futures contracts (11,520,139) (2,835,595) Net change in unrealized appreciation (depreciation) on investments and futures contracts 30,397,298 (9,901,895) ----------- ----------- Net Increase from Operations 43,934,221 9,816,181 ---------------------------------------------------- ----------- ----------- Distributions Declared to Shareholders From net investment income: Class A (4,039,490) (3,706,340) Class B (1,451,136) (1,815,192) Class C (514,762) (424,459) Class Z (18,981,629) (15,175,224) ----------- ----------- Total Distributions Declared to Shareholders (24,987,017) (21,121,215) ---------------------------------------------------- ----------- ----------- Share Transactions Class A: Subscriptions 24,413,595 16,363,219 Distributions reinvested 2,014,069 1,627,683 Redemptions (15,795,139) (16,560,731) ----------- ----------- Net Increase 10,632,525 1,430,171 Class B: Subscriptions 3,883,850 4,301,221 Distributions reinvested 690,077 790,221 Redemptions (12,256,354) (16,184,713) ----------- ----------- Net Decrease (7,682,427) (11,093,271) Class C: Subscriptions 4,326,866 5,046,875 Distributions reinvested 231,237 189,787 Redemptions (1,890,906) (3,607,047) ----------- ----------- Net Increase 2,667,197 1,629,615 Class Z: Subscriptions 155,603,726 159,946,744 Distributions reinvested 6,059,174 6,658,155 Redemptions (69,107,309) (62,076,415) ----------- ----------- Net Increase 92,555,591 104,528,484 Net Increase from Share Transactions 98,172,886 96,494,999 ----------- ----------- Total Increase in Net Assets 117,120,090 85,189,965 ---------------------------------------------------- ----------- ----------- Net Assets Beginning of period 468,711,416 383,521,451 End of period 585,831,506 468,711,416 Undistributed net investment income at end of period 844,636 780,462
See Accompanying Notes to Financial Statements. 39 - -------------------------------------------------------------------------------- Columbia High Yield Municipal Fund
Year Ended June 30, ----------------------- 2005 2004 - ----------------- ------------------------------------- ---------- ---------- Changes in Shares Class A: Subscriptions 2,168,016 1,465,019 Issued for distributions reinvested 178,946 146,315 Redemptions (1,405,266) (1,487,321) ---------- ---------- Net Increase 941,696 124,013 Class B: Subscriptions 345,103 386,742 Issued for distributions reinvested 61,363 71,050 Redemptions (1,090,001) (1,452,718) ---------- ---------- Net Decrease (683,535) (994,926) Class C: Subscriptions 384,643 452,312 Issued for distributions reinvested 20,544 17,051 Redemptions (167,685) (323,401) ---------- ---------- Net Increase 237,502 145,962 Class Z: Subscriptions 13,801,567 14,361,735 Issued for distributions reinvested 538,636 598,631 Redemptions (6,145,800) (5,590,536) ---------- ---------- Net Increase 8,194,403 9,369,830
See Accompanying Notes to Financial Statements. 40 NOTES TO FINANCIAL STATEMENTS ----------------------- June 30, 2005 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 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 have quotations which management believes are not appropriate, are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. If a security is valued at "fair value", such value is likely to be different from the last quoted market price for the security. Security Transactions Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. 41 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund Futures Contracts The Fund may invest in municipal and U.S. Treasury futures contracts. The Fund will invest in these instruments to hedge against the effects of changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions, for 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. 42 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund Note 3. Federal Tax Information The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended June 30, 2005, permanent book and tax basis differences resulting primarily from differing treatments for discount accretion/premium amortization on debt securities, capital loss carryforwards expired and market discount reclassifications were identified and reclassified among the components of the Fund's net assets as follows:
Undistributed Accumulated Net Investment Net Realized Paid-In Income Loss Capital ---------------------------------------- $(5,871) $1,531,836 $(1,525,965) ----------------------------------------
Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended June 30, 2005 and June 30, 2004 was as follows:
June 30, 2005 June 30, 2004 ---------------------------------------------------- Distributions paid from: ---------------------------------------------------- Tax-Exempt Income $24,945,098 $21,095,918 ---------------------------------------------------- Ordinary Income 41,919 25,297 ---------------------------------------------------- Long-Term Capital Gains -- -- ----------------------------------------------------
As of June 30, 2005, the components of distributable earnings on a tax basis were as follows:
Undistributed Undistributed Undistributed Net Tax-Exempt Ordinary Long-Term Unrealized Income Income Capital Gains Appreciation* ------------------------------------------------------- $2,806,008 $-- $-- $28,359,116 -------------------------------------------------------
*The differences between book-basis and tax-basis net unrealized appreciation are primarily due to discount accretion/premium amortization on debt securities. Unrealized appreciation and depreciation at June 30, 2005, based on cost of investments for federal income tax purposes, was: Unrealized appreciation $34,395,256 Unrealized depreciation (6,036,140) ----------- Net unrealized appreciation $28,359,116 -----------------------------------------
The following capital loss carryforwards may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code:
Year of Capital Loss Expiration Carryforward ----------------------- 2006 $ 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 2013 5,621,572 ----------- Total $22,219,869 -----------------------
Of the capital loss carryforwards attributable to the Fund, $6,846,435 ($1,931,613 will expire on June 30, 2007, $2,738,332 will expire on June 30, 2008, $1,081,414 will expire on June 30, 2009 and $1,095,076 will expire on June 30, 2010) was obtained in the merger with Liberty High Yield Municipal Fund. Utilization of these losses could be subject to limitations imposed by the Internal Revenue Code. Capital loss carryforwards of $1,525,965 expired during the year ended June 30, 2005. Any capital loss carryforwards acquired as part of a merger that are permanently lost due to provisions under Internal Revenue Code are included as being expired. Expired capital loss carryforwards are recorded as a reduction of paid-in capital. Under current tax rules, certain capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of June 30, 2005, post-October capital losses of $3,296,431 attributed to security transactions were deferred to July 1, 2005. 43 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund Note 4. Fees and Compensation Paid to Affiliates Investment Advisory Fee Columbia Management Advisors, Inc. ("Columbia"), an indirect wholly owned subsidiary of Bank of America Corporation ("BOA"), is the investment advisor to the Fund. Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets at the following annual rates:
Average Daily Net Assets Annual Fee Rate -------------------------------------------- First $100 million 0.450% -------------------------------------------- $100 million to $200 million 0.425% -------------------------------------------- Over $200 million 0.400% --------------------------------------------
For the year ended June 30, 2005, the Fund's effective investment advisory fee rate was 0.41%. Administration Fee Columbia provides administrative and other services to the Fund for a monthly administration fee based on the Fund's average daily net assets at the following annual rates:
Average Daily Net Assets Annual Fee Rate -------------------------------------------- First $100 million 0.150% -------------------------------------------- $100 million to $200 million 0.125% -------------------------------------------- Over $200 million 0.100% --------------------------------------------
For the year ended June 30, 2005, the Fund's effective administration fee rate was 0.11%. 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 year ended June 30, 2005, the effective pricing and bookkeeping fee rate for the Fund, inclusive of out-of-pocket expenses, was 0.033%. 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 year ended June 30, 2005, the Fund's effective transfer agent fee rate, inclusive of out-of-pocket expenses, was 0.06%. Underwriting Discounts, Service and Distribution Fees Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Fund. For the year ended June 30, 2005, the Distributor has retained net underwriting discounts of $25,515 on sales of the Fund's Class A shares and received net CDSC of $49,465 and $3,905 on Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan") which allows the payment of a monthly service fee to the Distributor. 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. 44 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund Custody Credits The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. These credits are recorded as a reduction of total expenses on the Statement of Operations. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. Fees Paid to Officers and Trustees With the exception of one officer, all officers of the Fund are employees of Columbia or its affiliates and receive no compensation from the Fund. The Board of Trustees 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 for the Office of the Chief Compliance Officer will not exceed $15,000 per year. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. Other Columbia provides certain services to the Fund related to Sarbanes-Oxley compliance. For the year ended June 30, 2005, the Fund paid $2,001 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. Note 5. Purchases and Sales of Securities For the year ended June 30, 2005, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $120,833,797 and $36,490,863, respectively. Note 6. Line of Credit The Fund and other affiliated funds participate in a $350,000,000 committed unsecured revolving line of credit provided by State Street Bank and Trust Company. Borrowings are used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at a rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum is accrued and apportioned among the participating funds based on their pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the year ended June 30, 2005, the Fund did not borrow under this arrangement. Note 7. Shares of Beneficial Interest As of June 30, 2005, the Fund had shareholders whose shares were beneficially owned by participant accounts over which Bank of America and/or its affiliates had either sole or joint investment discretion. Subscription and redemption activity of these accounts may have a significant effect on the operations of the Fund. The number of such accounts and the percentage of shares of beneficial interest outstanding held therein are as follows:
Number of % of Shares Shareholders Outstanding Held ----------------------------- 1 46.8% -----------------------------
Note 8. 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 Service, Inc., except for Radian Asset Assurance, Inc. which is rated Aa3. At June 30, 2005, private insurers who insured greater than 5% of the total investments of the Fund were as follows:
% of Total Insurer Investments -------------------------------------------- MBIA Insurance Corp. 9.4% -------------------------------------------- Financial Guaranty Insurance Co. 6.0 -------------------------------------------- Ambac Assurance Corp. 6.0 --------------------------------------------
Geographic Concentration The Fund has greater than 5% of its total investments at June 30, 2005 invested in debt obligations issued by the states of California, Florida, Massachusetts and 45 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund 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 that there is no established secondary market. Industry Focus The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. Legal Proceedings On February 9, 2005, Columbia 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 Securities and Exchange Commission ("SEC") (the "SEC Order"). The SEC Order and the NYAG Settlement are referred to collectively as the "Settlements". The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle which Columbia Group entered into with the SEC and NYAG in March 2004. Under the terms of the SEC Order, the Columbia Group has agreed among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review the Columbia Group's applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The Columbia Funds have also voluntarily undertaken to implement certain governance measures designed to maintain the independence of their boards of trustees. The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce certain Columbia Funds, Nations Funds and other mutual funds management fees collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions. Pursuant to the procedures set forth in the SEC order, the $140 million in settlement amounts described above will be distributed in accordance with a distribution plan 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. At this time, the distribution plan is still under development. As such, any gain to the Fund or its shareholders cannot currently be determined. As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of fund shares, which could increase transaction costs or operating expenses, or have other adverse consequences for the funds. A copy of the SEC Order is available on the SEC website at http://www.sec.gov. A copy of the NYAG Settlement is available as part of the Bank of America Corporation Form 8-K filing on February 10, 2005. In connection with events described in detail above, various parties have filed suit against certain funds, the Trustees of the Columbia Funds, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America Corporation and its affiliated entities. More than 300 cases including those filed against entities unaffiliated with the funds, their Boards, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America Corporation and its affiliated entities have been transferred to the Federal District Court in Maryland and consolidated in a multi-district proceeding (the "MDL"). 46 - -------------------------------------------------------------------------------- June 30, 2005 Columbia High Yield Municipal Fund The derivative cases purportedly brought on behalf of the Columbia Funds in the MDL have been consolidated under the lead case. The fund derivative plaintiffs allege that the funds were harmed by market timing and late trading activity and seek, among other things, removal of the trustees of the Columbia Funds, removal of the Columbia Group, disgorgement of all management fees and monetary damages. On March 21, 2005 purported class action plaintiffs filed suit in Massachusetts state court alleging that the conduct, including market timing, entitles Class B shareholders in certain Columbia funds to an exemption from contingent deferred sales charges upon early redemption (the "CDSC Lawsuit"). The CDSC Lawsuit has been removed to federal court in Massachusetts and the federal Judicial Panel has conditionally ordered its transfer to the MDL. The MDL is ongoing. Accordingly, an estimate of the financial impact of this litigation on any fund, if any, cannot currently be made. On January 11, 2005, a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Columbia Funds 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. In 2004, certain Columbia funds, advisers and affiliated entities were named as defendants in certain purported shareholder class and derivative actions making claims, including claims under the Investment Company and the Investment Advisers Acts of 1940 and state law. The suits allege, inter alia, that the fees and expenses paid by the funds are excessive and that the advisers and their affiliates inappropriately used fund assets to distribute the funds and for other improper purpose. On March 2, 2005, the actions were consolidated in the Massachusetts federal court as In re Columbia Entities Litigation. The plaintiffs filed a consolidated amended complaint on June 9, 2005. The Fund 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 Fund. For the year ended June 30, 2005, Columbia has assumed $9,758 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. 47 FINANCIAL HIGHLIGHTS ----------------------- Columbia High Yield Municipal Fund Selected data for a share outstanding throughout each period is as follows:
Period Ended Year Ended June 30, June 30, ------------------------------------------- 2001(a) Class A Shares 2005 2004 2003 2002 - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.96 $ 11.25 $ 11.26 $11.13 $11.11 - ----------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.54 0.56 0.60 0.61(c) 0.58 Net realized and unrealized gain (loss) on investments and futures contracts 0.43 (0.33) 0.11 0.15(c) 0.01 ------- ------- ------- ------ ------------ Total from Investment Operations 0.97 0.23 0.71 0.76 0.59 - ----------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.54) (0.52) (0.72) (0.63) (0.57) - ----------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 11.39 $ 10.96 $ 11.25 $11.26 $11.13 Total return (d) 9.00% 2.10% 6.58% 6.93% 5.42%(e) - ----------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (f) 0.87% 0.89% 1.07% 1.13% 1.06%(g) Net investment income (f) 4.79% 5.04% 5.39% 5.41%(c) 5.65%(g) Portfolio turnover rate 7% 10% 17% 16%(h) 16%(h) Net assets, end of period (000's) $91,470 $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. 48 - -------------------------------------------------------------------------------- Columbia High Yield Municipal Fund Selected data for a share outstanding throughout each period is as follows:
Period Ended Year Ended June 30, June 30, ------------------- 2003(a) Class B Shares 2005 2004 - ----------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.96 $ 11.25 $ 11.31 - ------------------------------------------------------------------------------------------------------ Income from Investment Operations: Net investment income (b) 0.46 0.48 0.51 Net realized and unrealized gain (loss) on investments and futures contracts 0.42 (0.33) 0.05 ------- ------- ------------ Total from Investment Operations 0.88 0.15 0.56 - ------------------------------------------------------------------------------------------------------ Less Distributions Declared to Shareholders: From net investment income (0.45) (0.44) (0.62) - ------------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $ 11.39 $ 10.96 $ 11.25 Total return (c) 8.19% 1.33% 5.14%(d) - ------------------------------------------------------------------------------------------------------ Ratios to Average Net Assets/Supplemental Data: Expenses (e) 1.62% 1.64% 1.81%(f) Net investment income (e) 4.04% 4.29% 4.70%(f) Portfolio turnover rate 7% 10% 17% Net assets, end of period (000's) $32,824 $39,097 $51,292 - ------------------------------------------------------------------------------------------------------
(a)Class B shares were initially offered on July 15, 2002. Per share data and total return reflect activity from that date. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (d)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. 49 - -------------------------------------------------------------------------------- Columbia High Yield Municipal Fund Selected data for a share outstanding throughout each period is as follows:
Period Ended Year Ended June 30, June 30, ------------------- 2003(a) Class C Shares 2005 2004 - ----------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.96 $ 11.25 $11.31 - ------------------------------------------------------------------------------------------------------ Income from Investment Operations: Net investment income (b) 0.47 0.49 0.51 Net realized and unrealized gain (loss) on investments and futures contracts 0.43 (0.32) 0.07 ------- ------- ------------ Total from Investment Operations 0.90 0.17 0.58 - ------------------------------------------------------------------------------------------------------ Less Distributions Declared to Shareholders: From net investment income (0.47) (0.46) (0.64) - ------------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $ 11.39 $ 10.96 $11.25 Total return (c)(d) 8.35% 1.48% 5.29%(e) - ------------------------------------------------------------------------------------------------------ Ratios to Average Net Assets/Supplemental Data: Expenses (f) 1.47% 1.49% 1.67%(g) Net investment income (f) 4.19% 4.44% 4.75%(g) Waiver/reimbursement 0.15% 0.15% 0.15%(g) Portfolio turnover rate 7% 10% 17% Net assets, end of period (000's) $13,593 $10,482 $9,110 - ------------------------------------------------------------------------------------------------------
(a)Class C shares were initially offered on July 15, 2002. Per share data and total return reflect activity from that date. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (d)Had the Distributor 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. 50 - -------------------------------------------------------------------------------- Columbia High Yield Municipal Fund Selected data for a share outstanding throughout each period is as follows:
Year Ended June 30, -------------------------------------------------------------------- Class Z Shares 2005 2004 2003(a) 2002 2001 - -------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 10.96 $ 11.25 $ 11.26 $ 11.12 $ 11.04 - -------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.56 0.58 0.63 0.64(c) 0.65 Net realized and unrealized gain (loss) on investments and futures contracts 0.43 (0.32) 0.11 0.15(c) 0.08 --------- --------- --------- --------- --------- Total from Investment Operations 0.99 0.26 0.74 0.79 0.73 - -------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.56) (0.55) (0.75) (0.65) (0.65) - -------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 11.39 $ 10.96 $ 11.25 $ 11.26 $ 11.12 Total return (d) 9.22% 2.33% 6.82% 7.30% 6.78% - -------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (e) 0.67% 0.69% 0.86% 0.88% 0.81% Net investment income (e) 4.99% 5.24% 5.59% 5.66%(c) 5.86% Portfolio turnover rate 7% 10% 17% 16%(f) 16%(f) Net assets, end of period (000's) $ 447,945 $ 341,394 $ 244,784 $ 213,271 $ 224,950 - --------------------------------------------------------------------------------------------------------------------
(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)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f)Portfolio turnover rate disclosed is for the SR&F High-Yield Municipals Portfolio. 51 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ---------------------------------- Columbia High Yield Municipal Fund
To the Trustees of Columbia Funds Trust IX and the Shareholders of Columbia High Yield Municipal Fund In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia High Yield Municipal Fund (the "Fund")(a series of Columbia Funds Trust IX) at June 30, 2005, the results of its operations for the year then ended and, the changes in its net assets and the financial highlights for the years ended June 30, 2005 and 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the three years in the period ended June 30, 2003 were audited by other independent accountants whose report dated August 19, 2003 expressed an unqualified opinion on those statements. PricewaterhouseCoopers LLP Boston, Massachusetts August 25, 2005 52 UNAUDITED INFORMATION ---------------------------------- Columbia High Yield Municipal Fund Federal Income Tax Information 99.83% of the distributions from net investment income will be treated as exempt income for federal income tax purposes. As of June 30, 2005, 17.28% of distributions from net investment income is subject to alternative minimum tax. 53 TRUSTEES ---------------------------------- Columbia High Yield Municipal Fund The Trustrees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex.
Name, address and age, Position with funds, Principal occupation(s) during past five years, Number of portfolios in Year first elected or appointed to office/1/ Columbia Funds Complex overseen by trustee/director, Other directorships held Disinterested Trustees DOUGLAS A. HACKER (Age 49) Executive Vice President-Strategy of United Airlines (airline) since P.O. Box 66100 December, 2002 (formerly President of UAL Loyalty Services (airline) from Chicago, IL 60666 September, 2001 to December, 2002; Executive Vice President and Chief Trustee (since 1996) Financial Officer of United Airlines from July, 1999 to September, 2001; Senior Vice President-Finance from March, 1993 to July, 1999). Oversees 104, Nash Finch Company (food distributor) --------------------------------------------------------------------------- JANET LANGFORD KELLY (Age 47) Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP (law firm); Adjunct 9534 W. Gull Lake Drive Professor of Law, Northwestern University, since September, 2004 (formerly Richland, MI 49083-8530 Chief Administrative Officer and Senior Vice President, Kmart Holding Trustee (since 1996) Corporation (consumer goods), from September, 2003 to March, 2004; Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999). Oversees 104, None --------------------------------------------------------------------------- RICHARD W. LOWRY (Age 69) Private Investor since August, 1987 (formerly Chairman and Chief Executive 10701 Charleston Drive Officer, U.S. Plywood Corporation (building products manufacturer)). Vero Beach, FL 32963 Oversees 106(3), None Trustee (since 1995) --------------------------------------------------------------------------- CHARLES R. NELSON (Age 62) Professor of Economics, University of Washington, since January, 1976; Department of Economics Ford and Louisa Van Voorhis Professor of Political Economy, University of University of Washington Washington, since September, 1993 (formerly Director, Institute for Seattle, WA 98195 Economic Research, University of Washington from September, 2001 to June, Trustee (since 1981) 2003) Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. Oversees 104, None --------------------------------------------------------------------------- JOHN J. NEUHAUSER (Age 62) Academic Vice President and Dean of Faculties since August, 1999, Boston 84 College Road College (formerly Dean, Boston College School of Management from Chestnut Hill, MA 02467-3838 September, 1977 to August, 1999). Oversees 1063, Saucony, Inc. (athletic Trustee (since 1985) footwear) ---------------------------------------------------------------------------
/1/In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex. 54 - -------------------------------------------------------------------------------- Columbia High Yield Municipal Fund
Name, address and age, Position with funds, Principal occupation(s) during past five years, Number of portfolios in Year first elected or appointed to office/1/ Columbia Funds Complex overseen by trustee/director, Other directorships held Disinterested Trustees PATRICK J. SIMPSON (Age 61) Partner, Perkins Coie L.L.P. (law firm). Oversees 104, None 1120 N.W. Couch Street Tenth Floor Portland, OR 97209-4128 Trustee (since 2000) --------------------------------------------------------------------------- THOMAS E. STITZEL (Age 69) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 2208 Tawny Woods Place 1999, College of Business, Boise State University); Chartered Financial Boise, ID 83706 Analyst. Oversees 104, None Trustee (since 1998) --------------------------------------------------------------------------- THOMAS C. THEOBALD (Age 68) Partner and Senior Advisor, Chicago Growth Partners (private equity 8 Sound Shore Drive, investing) since September, 2004 (formerly Managing Director, William Suite 285 Blair Capital Partners (private equity investing) from September, 1994 to Greenwich, CT 06830 September, 2004). Oversees 104, Anixter International (network support Trustee and Chairman of the Board/4/ equipment distributor); Ventas, Inc. (real estate investment trust); Jones (since 1996) Lang LaSalle (real estate management services) and Ambac Financial Group (financial guaranty insurance) --------------------------------------------------------------------------- ANNE-LEE VERVILLE (Age 59) Retired since 1997 (formerly General Manager, Global Education Industry, 359 Stickney Hill Road IBM Corporation (computer and technology) from 1994 to 1997). Oversees Hopkinton, NH 03229 104, Chairman of the Board of Directors, Enesco Group, Inc. (designer, Trustee (since 1998) importer and distributor of giftware and collectibles) --------------------------------------------------------------------------- RICHARD L. WOOLWORTH (Age 64) Retired since December 2003 (formerly Chairman and Chief Executive 100 S.W. Market Street Officer, The Regence Group (regional health insurer); Chairman and Chief #1500 Executive Officer, BlueCross BlueShield of Oregon; Certified Public Portland, OR 97207 Accountant, Arthur Young & Company). Oversees 104, Northwest Natural Gas Trustee (since 1991) Co. (natural gas service provider) --------------------------------------------------------------------------- Interested Trustee WILLIAM E. MAYER/2/ (Age 65) Partner, Park Avenue Equity Partners (private equity) since February, 1999 399 Park Avenue (formerly Partner, Development Capital LLC from November 1996 to February, Suite 3204 1999). Oversees 106/3/, Lee Enterprises (print media), WR Hambrecht + Co. New York, NY 10022 (financial service provider); Reader's Digest (publishing); OPENFIELD Trustee (since 1994) Solutions (retail industry technology provider) ---------------------------------------------------------------------------
/2/Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. /3/Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. /4/Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. The Statement of Additional Information Includes additional information about the Trustees of the Funds and is available, without charge, upon request by calling 800-426-3750. 55 OFFICERS ---------------------------------- Columbia High Yield Municipal Fund Name, address and age, Position with Columbia Funds, Year first elected or appointed to office Principal occupation(s) during past five years CHRISTOPHER L. WILSON (Age 47) Head of Mutual Funds since August, 2004 and Senior Vice President of the One Financial Center Advisor since January, 2005; President of the Columbia Funds, Liberty Boston, MA 02111 Funds and Stein Roe Funds since October, 2004; President and Chief President (since 2004) Executive Officer of the Nations Funds since January, 2005; President of the Galaxy Funds since April 2005; Director of Bank of America Global Liquidity Funds, plc since May 2005; Director of Banc of America Capital Management (Ireland), Limited since May 2005; Senior Vice President of BACAP Distributors LLC since January, 2005; Director of FIM Funding, Inc. since January, 2005; Senior Vice President of Columbia Funds Distributor, Inc. since January, 2005; Director of Columbia Funds Services, Inc. since January, 2005 (formerly President and Chief Executive Officer, CDC IXIS Asset Management Services, Inc. from September, 1998 to August, 2004). --------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (Age 40) Treasurer of the Columbia Funds since October, 2003 and of the Liberty One Financial Center Funds, Stein Roe Funds and All-Star Funds since December, 2000; Vice Boston, MA 02111 President of the Advisor since April, 2003 (formerly President of the Treasurer (since 2000) Columbia Funds, Liberty Funds and Stein Roe Funds from February, 2004 to October, 2004; Chief Accounting Officer and Controller of the Liberty Funds and All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002 (formerly Treasurer from December, 2002 to December, 2004 and President from February, 2004 to December, 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of Colonial Management Associates, Inc. from February, 1998 to October, 2000). --------------------------------------------------------------------------- MARY JOAN HOENE (Age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds, 40 West 57th Street Liberty Funds, Stein Roe Funds and All-Star Funds since August, 2004 New York, NY 10005 (formerly Partner, Carter, Ledyard & Milburn LLP from January, 2001 to Senior Vice President and August, 2004; Counsel, Carter, Ledyard & Milburn LLP from November, 1999 Chief Compliance Officer (since 2004) to December, 2000; Vice President and Counsel, Equitable Life Assurance Society of the United States from April, 1998 to November, 1999). --------------------------------------------------------------------------- MICHAEL G. CLARKE (Age 35) Chief Accounting Officer of the Columbia Funds, Liberty Funds, Stein Roe One Financial Center Funds and All-Star Funds since October, 2004 (formerly Controller of the Boston, MA 02111 Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds from Chief Accounting Officer (since 2004) May, 2004 to October, 2004; Assistant Treasurer from June, 2002 to May, 2004; Vice President, Product Strategy & Development of the Liberty Funds and Stein Roe Funds from February, 2001 to June, 2002; Assistant Treasurer of the Liberty Funds, Stein Roe Funds and the All-Star Funds from August, 1999 to February, 2001; Audit Manager, Deloitte & Touche LLP from May, 1997 to August, 1999). --------------------------------------------------------------------------- JEFFREY R. COLEMAN (Age 35) Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and One Financial Center All-Star Funds since October, 2004 (formerly Vice President of CDC IXIS Boston, MA 02111 Asset Management Services, Inc. and Deputy Treasurer of the CDC Nvest Controller (since 2004) Funds and Loomis Sayles Funds from February, 2003 to September, 2004; Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August, 2000 to February, 2003; Tax Manager of PFPC, Inc. from November, 1996 to August, 2000). --------------------------------------------------------------------------- R. SCOTT HENDERSON (Age 45) Secretary of the Columbia Funds, Liberty Funds and Stein Roe Funds since One Financial Center December, 2004 (formerly Of Counsel, Bingham McCutchen from April, 2001 to Boston, MA 02111 September, 2004; Executive Director and General Counsel, Massachusetts Secretary (since 2004) Pension Reserves Investment Management Board from September, 1997 to March, 2001). ---------------------------------------------------------------------------
56 IMPORTANT INFORMATION ABOUT THIS REPORT ----------------------- Columbia High Yield Municipal Fund Transfer Agent Columbia Management Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800-345-6611 Distributor Columbia Management Distributors, Inc. One Financial Center Boston MA 02111 Investment Advisor Columbia Management Advisors, Inc. 100 Federal Street Boston MA 02110 The fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia 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 fund and with the most recent copy of the Columbia Funds Performance Update. A description of the policies and procedures that the fund uses to determine how to vote proxies and a copy of the fund's voting record are available (i) at www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2005 is available from the SEC's website. Information regarding how the fund voted proxies relating to portfolio securities is also available from the fund's website. The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Columbia Management is the primary investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and advise institutional and mutual fund portfolios. Columbia Management Advisors, Inc. will combine with Banc of America Capital Management, LLC on or about September 30, 2005. At that time, the newly combined advisor will undergo a name change to Columbia Management Advisors, LLC and will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 57 [GRAPHIC APPEARS HERE] Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia High Yield Municipal Fund Annual Report, June 30, 2005 Columbia Management(R) [GRAPHIC] COLUMBIA MANAGED MUNICIPALS FUND Annual Report June 30, 2005 PRESIDENT'S MESSAGE -------------------------- Columbia Managed Municipals Fund [PHOTO] Dear Shareholder: Columbia Management, the asset management division of Bank of America, is in the final stages of a significant business integration effort. Over the last year, we have been integrating various components of the Nations Funds, Galaxy Funds and Columbia Funds, which will result in a single fund family that covers a wide range of markets, sectors and asset classes. Our team of talented, seasoned investment professionals will continue to strive to achieve strong results within their investment categories. Our objective is not only to provide our shareholders with the best products but also to enhance the breadth and availability of our services. Given our ability to now leverage the size and scale of the Columbia Management business, I am pleased that these efforts will also result in substantial cost savings to the funds. Our goal is to create a more simplified, clearly delineated product line. Through thoughtful project planning and execution, we will initially reduce the number of retail mutual funds from over 140 to fewer than 90. Earlier this year several fund mergers and liquidations were successfully completed. As we work to complete the remaining product and service provider consolidations in the coming months, we remain committed to building a mutual fund business that meets, and hopefully exceeds, your desire for personal financial solutions. We will continue to strive for the highest standards of performance and service excellence. The asset management business is in a time of transformation and we are committed to being progressive and innovative in our approach to the business. We value the confidence you have placed in us to assist you in managing your funds during these changing times. As with all businesses within Bank of America, we understand that your trust must be continuously earned and will remain focused on producing results for you. In the pages that follow, you'll find a discussion of the economic environment during the period followed by a detailed report from the fund's manager or managers on key factors that influenced performance. We encourage you to read the manager reports carefully and discuss any questions you have with your financial advisor. As always, we thank you for choosing Columbia Management. We look forward to helping you keep your long-term financial goals on target in the years to come. Sincerely, /s/ Christopher L. Wilson President, Columbia Funds Christopher L. Wilson is Head of Mutual Funds for Columbia Management, President of Columbia Funds, President & CEO of Nations Funds and President of Galaxy Funds. He is 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 joined Bank of America in August 2004. Table of Contents Performance Information.... 1 Fund Profile............... 2 Understanding Your Expenses 3 Economic Update............ 4 Portfolio Manager's Report. 5 Investment Portfolio....... 8
Statement of Assets and Liabilities 25 Statement of Operations............ 26 Statement of Changes in Net Assets. 27 Notes to Financial Statements...... 29 Financial Highlights............... 36 Report of Independent Registered Public Accounting Firm.. 40 Unaudited Information.............. 41 Trustees........................... 42 Officers........................... 44 Important Information About This Report.................. 45
The views expressed in the President's Message and Portfolio Manager's Report reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Fund. References to specific company securities should not be construed as a recommendation or investment advice. -------------------------- Not FDIC May Lose Value Insured ----------------- No Bank Guarantee - -----------------
PERFORMANCE INFORMATION -------------------------- Columbia Managed Municipals Fund Performance of a $10,000 investment 07/01/95 - 06/30/05
sales charge: without with ---------------------------- Class A 17,930 17,075 ---------------------------- Class B 17,578 17,578 ---------------------------- Class C 17,717 17,717 ---------------------------- Class Z 18,028 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. Growth of a $10,000 investment 07/01/95 - 06/30/05 [CHART] Class A Class A shares without shares with Lehman Brothers sales charge sales charge Municipal Bond Index ------------ ------------ -------------------- $10,000 $ 9,525 $10,000 7/31/1995 10,071 9,593 10,095 8/31/1995 10,188 9,704 10,223 9/30/1995 10,268 9,781 10,288 10/31/1995 10,432 9,936 10,437 11/30/1995 10,652 10,146 10,610 12/31/1995 10,781 10,268 10,712 1/31/1996 10,852 10,336 10,793 2/29/1996 10,719 10,210 10,720 3/31/1996 10,544 10,043 10,583 4/30/1996 10,508 10,009 10,553 5/31/1996 10,520 10,021 10,549 6/30/1996 10,628 10,123 10,664 7/31/1996 10,724 10,215 10,760 8/31/1996 10,713 10,204 10,758 9/30/1996 10,882 10,365 10,908 10/31/1996 11,017 10,493 11,032 11/30/1996 11,235 10,701 11,233 12/31/1996 11,188 10,656 11,186 1/31/1997 11,201 10,669 11,207 2/28/1997 11,309 10,771 11,311 3/31/1997 11,148 10,618 11,160 4/30/1997 11,235 10,701 11,254 5/31/1997 11,411 10,869 11,424 6/30/1997 11,537 10,989 11,546 7/31/1997 11,880 11,315 11,866 8/31/1997 11,752 11,194 11,754 9/30/1997 11,909 11,343 11,894 10/31/1997 11,974 11,405 11,970 11/30/1997 12,038 11,466 12,041 12/31/1997 12,233 11,652 12,217 1/31/1998 12,350 11,764 12,343 2/28/1998 12,332 11,746 12,346 3/31/1998 12,319 11,734 12,357 4/30/1998 12,265 11,682 12,302 5/31/1998 12,464 11,872 12,496 6/30/1998 12,502 11,909 12,545 7/31/1998 12,530 11,935 12,576 8/31/1998 12,732 12,127 12,771 9/30/1998 12,878 12,266 12,931 10/31/1998 12,837 12,227 12,931 11/30/1998 12,875 12,264 12,976 12/31/1998 12,905 12,292 13,009 1/31/1999 13,070 12,449 13,163 2/28/1999 12,970 12,353 13,105 3/31/1999 12,970 12,353 13,124 4/30/1999 13,021 12,403 13,157 5/31/1999 12,922 12,309 13,080 6/30/1999 12,712 12,108 12,892 7/31/1999 12,756 12,150 12,938 8/31/1999 12,630 12,030 12,835 9/30/1999 12,600 12,001 12,840 10/31/1999 12,443 11,852 12,701 11/30/1999 12,542 11,946 12,836 12/31/1999 12,461 11,870 12,740 1/31/2000 12,371 11,783 12,684 2/29/2000 12,540 11,944 12,831 3/31/2000 12,807 12,199 13,110 4/30/2000 12,714 12,110 13,033 5/31/2000 12,608 12,009 12,965 6/30/2000 12,950 12,335 13,309 7/31/2000 13,143 12,518 13,494 8/31/2000 13,379 12,744 13,702 9/30/2000 13,256 12,627 13,630 10/31/2000 13,407 12,770 13,779 11/30/2000 13,557 12,913 13,884 12/31/2000 14,020 13,354 14,227 1/31/2001 14,100 13,430 14,368 2/28/2001 14,184 13,511 14,413 3/31/2001 14,291 13,612 14,543 4/30/2001 13,925 13,263 14,386 5/31/2001 14,110 13,440 14,542 6/30/2001 14,264 13,586 14,639 7/31/2001 14,625 13,930 14,856 8/31/2001 14,987 14,276 15,101 9/30/2001 14,839 14,134 15,049 10/31/2001 15,108 14,390 15,228 11/30/2001 14,781 14,079 15,101 12/31/2001 14,552 13,861 14,957 1/31/2002 14,832 14,127 15,216 2/28/2002 15,061 14,346 15,398 3/31/2002 14,650 13,954 15,097 4/30/2002 15,009 14,296 15,391 5/31/2002 15,098 14,381 15,485 6/30/2002 15,271 14,546 15,649 7/31/2002 15,447 14,713 15,851 8/31/2002 15,606 14,865 16,041 9/30/2002 15,988 15,229 16,392 10/31/2002 15,597 14,856 16,120 11/30/2002 15,494 14,758 16,053 12/31/2002 15,934 15,177 16,391 1/31/2003 15,782 15,033 16,350 2/28/2003 16,139 15,373 16,579 3/31/2003 16,092 15,328 16,589 4/30/2003 16,289 15,515 16,699 5/31/2003 16,857 16,056 17,089 6/30/2003 16,697 15,904 17,018 7/31/2003 15,825 15,074 16,422 8/31/2003 15,987 15,227 16,545 9/30/2003 16,596 15,808 17,032 10/31/2003 16,435 15,654 16,946 11/30/2003 16,672 15,880 17,123 12/31/2003 16,805 16,007 17,265 1/31/2004 16,881 16,079 17,363 2/29/2004 17,200 16,383 17,624 3/31/2004 17,019 16,211 17,562 4/30/2004 16,483 15,700 17,146 5/31/2004 16,414 15,634 17,084 6/30/2004 16,494 15,711 17,146 7/31/2004 16,709 15,915 17,372 8/31/2004 17,113 16,300 17,719 9/30/2004 17,195 16,378 17,813 10/31/2004 17,350 16,526 17,966 11/30/2004 17,143 16,329 17,819 12/31/2004 17,397 16,571 18,036 1/31/2005 17,575 16,740 18,204 2/28/2005 17,462 16,633 18,144 3/31/2005 17,253 16,433 18,030 4/30/2005 17,606 16,770 18,315 5/31/2005 17,803 16,958 18,445 6/30/2005 17,930 17,075 18,559 The chart above shows the growth in value of a hypothetical $10,000 investment in Class A Shares of Columbia Managed Municipals Fund during the stated time period, and does 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, they do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Average annual total return as of 06/30/05 (%)
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 ------------------------------------------------------------ 1-year 8.77 3.60 7.96 2.96 8.28 7.28 8.99 ------------------------------------------------------------ 5-year 6.73 5.70 6.31 6.00 6.48 6.48 6.85 ------------------------------------------------------------ 10-year 6.01 5.50 5.80 5.80 5.89 5.89 6.07 ------------------------------------------------------------
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 HAVE BEEN LOWER. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class 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. 1 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 06/30/05 (%) AAA 69.0 --------------------- AA 5.2 --------------------- A 8.2 --------------------- BBB 9.5 --------------------- B 0.4 --------------------- CCC 0.2 --------------------- CC 0.2 --------------------- Non-rated 5.8 --------------------- Cash equivalents 1.5 ---------------------
Top 5 sectors as of 06/30/05 (%) Refunded/escrowed 13.0 ------------------------------ Local general obligations 12.6 ------------------------------ Municipal electric 8.7 ------------------------------ Water & sewer 7.7 ------------------------------ State general obligations 7.4 ------------------------------
Maturity breakdown as of 06/30/05 (%) 0-1 years 0.1 ---------------------- 1-3 years 1.0 ---------------------- 3-5 years 8.2 ---------------------- 5-7 years 4.5 ---------------------- 7-10 years 12.9 ---------------------- 10-15 years 35.3 ---------------------- 15-20 years 18.3 ---------------------- 20-25 years 12.4 ---------------------- 25 years and over 5.8 ---------------------- Cash equivalents 1.5 ----------------------
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 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. Past performance is no guarantee of future results. Summary .. For the 12-month period ended June 30, 2005, the fund's class A shares returned 8.77% without sales charge. .. The fund outperformed both its benchmark, the Lehman Brothers Municipal Bond Index, and the average return of its peer group, the Lipper General Municipal Debt Fund Category. .. The fund did better than its benchmark because it had more exposure to long-term bonds and relatively less exposure to short-term bonds. We believe this positioning also helped the fund outperform its peer group average. [FLOW CHART] Lehman Brothers Class A shares Municipal Bond Index -------------- -------------------- 8.77% 8.24% 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 $407.5 million Management Style [GRAPHIC] 2 UNDERSTANDING YOUR EXPENSES -------------------------- Columbia Managed Municipals Fund Estimating your actual expenses To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: .. For shareholders who receive their account statements from Columbia Funds Services, Inc., on or about August 22, 2005, Columbia Fund Services, Inc. will undergo a name change to Columbia Management services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 .. For shareholders who receive their account statements from their brokerage firm, contact your brokerage firm to obtain your account balance 1.Divide your ending account balance by $1,000. For example, if an account balance was $8,600 at the end of the period, the result would be 8.6 2.In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also ongoing costs, which generally include investment advisory, Rule 12b-1 fees and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare this cost with the continuing costs of investing in other mutual funds. Analyzing your fund's expenses by share class To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during this reporting period. 01/01/05 -- 06/30/05
Account beginning ($) Account end of the ($) Expenses during the ($) Fund's expense (%) - ----------------------------------------------------------------------------------------------- Actual Hypothetical Actual Hypothetical Actual Hypothetical - ----------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1,031.81 1,020.82 4.46 4.43 0.87 - ----------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1,027.98 1,017.04 8.28 8.24 1.62 - ----------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1,029.49 1,018.55 6.75 6.72 1.32 - ----------------------------------------------------------------------------------------------- Class Z 1,000.00 1,000.00 1,032.92 1,021.93 3.33 3.31 0.65 - -----------------------------------------------------------------------------------------------
Expenses paid during the period are equal to the fund's respective class annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the fund's most recent fiscal half-year and divided by 365. Had the distributor not waived a portion of class C shares' expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only continuing costs of investing in the fund and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. Compare with other funds Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other fund companies, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 3 ECONOMIC UPDATE -------------------------------- Columbia Managed Municipals Fund The US economy moved ahead at a steady pace during the 12-month period that began July 1, 2004 and ended June 30, 2005. Gross domestic product expanded at an estimated annualized rate of approximately 3.7% as job growth helped buoy consumer spending and rising profits boosted business spending. Record high energy prices failed to put a significant damper on growth as the economy actually gained strength as the period wore on. Job growth dominated the economic news and drove consumer confidence readings both up and down, depending on the number of new jobs reported. Overall, the labor market improved during the period and consumers remained significantly more optimistic about prospects for the US economy and about their own employment than they were a year ago. Consumer spending grew during the period, as retail sales and the housing market remained strong. The business sector contributed to the economy's growth. Yet, given a maturing economic cycle, two straight years of double-digit profit growth and a significant build-up of cash on corporate balance sheets, business spending was not as robust as expected. Bonds delivered solid gains The US bond market delivered solid returns despite rising short-term interest rates, which historically have driven yields on other maturity ranges higher -- and bond prices lower. That was not the case over the past 12 months. After a brief period of volatility early in 2005, the yield on the 10-year U.S. Treasury note, a bellwether for the bond market, ended the period at 3.90% -- significantly lower than where it started the period, at 4.60%. In this environment, the Lehman Brothers Aggregate Bond Index returned 6.80% for the 12-month period. Municipal bonds did even better as state revenues strengthened and fiscal constraints helped many states balance their budgets. High-yield bonds led the fixed income markets, as a stronger economy resulted in improved credit ratings, stronger balance sheets and higher profits for many companies in the high-yield universe. The Merrill Lynch US High Yield, Cash Pay Index returned 10.64%. The sector was hit hard in the spring on news that GM and Ford bonds had been downgraded by the major rating agencies. High-yield bonds retreated then bounced back in the final months of the period. Short-term interest rates moved higher After a year of the lowest short-term interest rates in recent history, the Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.25% to 3.25% during the period./1/ From the outset, the Fed indicated that it would raise short-term interest rates at a "measured pace" in an attempt to balance economic growth against inflationary pressures, and so far each of its nine increases have been in one-quarter percentage point increments. In recent testimony, Fed chairman Greenspan suggested that any future increases would likely follow the same gradual course. Stock returns varied by investment style and company size Buoyed by strong gains in the fourth quarter of 2004, the S&P 500 Index -- a broad measure of large company stock market performance -- returned 6.32% for the period. Returns were lackluster throughout most of 2004, but most segments of the stock market bounced back after the presidential election was settled in November. Stocks retreated early in 2005 as rising energy prices and higher interest rates appeared to turn investors cautious once again. Small and mid-cap stocks did significantly better than large-cap stocks in the first half of the period, but large-cap stocks pulled ahead in the second half. Value stocks led growth stocks by a significant margin. /1/On August 9, 2005, the federal funds rate was increased to 3.5%. Summary For the 12-month period ended June 30, 2005 .. Bonds chalked up solid gains as measured by the Lehman Brothers Aggregate Bond Index. High-yield bonds led the fixed income markets, as measured by the Merrill Lynch US High Yield, Cash Pay Index. [FLOW CHART] Lehman Index Merrill Lynch Index --------- ------------------ 6.80% 10.64% .. Stocks, as measured by the S&P 500 Index, were buoyed by a fourth-quarter rally in 2004. Value stocks outperformed growth stocks by a significant margin, as measured by the Russell 1000 Value Index. [FLOW CHART] S&P 500 Index Russell Index ------------- -------------- 6.32% 14.06% The Lehman Brothers Aggregate Bond Index is an unmanaged, market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated, and 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. 4 PORTFOLIO MANAGER'S REPORT -------------------------- Columbia Managed Municipals Fund For the 12-month period ended June 30, 2005, Columbia Managed Municipals Fund class A shares returned 8.77% without sales charge. The fund outperformed its benchmark, the Lehman Brothers Municipal Bond Index, which returned 8.24% for the same period, as well as the 7.30% average return of the Lipper General Municipal Debt Fund Category./1/ Long-term bonds and non-callable bonds helped returns We believe that the fund's holdings in longer-term bonds and its relatively light exposure to shorter-term bonds accounted for its performance advantage over its peer group. In an environment of modest economic growth and relatively benign inflation, yields on longer-term bonds declined and prices rose. Generally, bonds with maturities of 15 years and longer fared better than the short end of the maturity spectrum. Short-term bond prices fell as the Federal Reserve Board (the Fed) raised the federal funds rate -- a key short-term borrowing rate -- on eight separate occasions during the period. The federal funds rate began the reporting period at 1.25% and ended it at 3.25%. In particular, the fund's holdings in non-callable bonds maturing in 15 years or longer helped performance. Without a call provision, an issuer cannot redeem its bonds prior to maturity. Non-callable bonds also helped to limit the fund's exposure to reinvestment risk in an environment of declining long-term interest rates. Also, the fund's duration (a measure of its sensitivity to interest rate changes) was generally longer than its peers and helped performance as long-term interest rates declined. Zero coupon and high-yield bonds added to return Zero coupon bonds performed well for the fund. These bonds are highly sensitive to interest rate fluctuations because they do not make periodic interest payments but instead are sold at a deep discount to face value. In addition, the fund's exposure to high-yield municipal securities also boosted performance, partly because the yield spread between higher and lower-rated securities narrowed as investors continued to seek out higher yields -- despite their risks -- in a low-rate environment. An update on the bond insurance industry Recently, the bond insurance industry, which is dominated by established companies characterized by ultraconservative underwriting standards, has come under scrutiny and you may have seen stories about it in the press. MBIA, the world's largest bond insurer, has received subpoena requests from state and federal authorities covering several points of interest. Because approximately 22% of the portfolio is invested in bonds insured by MBIA, we have followed this matter with great interest. Based on information that is available to date, and as of this writing, we have been comfortable with MBIA's underwriting model and claims-paying ability and have continued to approve their insured municipal bonds for purchase. /1/Lipper Inc., a widely respected data provider in the industry, calculates an average total return (assuming reinvestment of distributions) for mutual funds with investment objectives similar to those of the fund. Lipper makes no adjustment for the effect of sales loads. Net asset value per share as of 06/30/05 ($) Class A 9.11 ------------ Class B 9.11 ------------ Class C 9.11 ------------ Class Z 9.11
Distributions declared per share 07/01/04 - 06/30/05 ($) Class A 0.38 ------------ Class B 0.32 ------------ Class C 0.34 ------------ Class Z 0.40
A portion of the fund's income may be subject to the alternative minimum tax. The fund may at times purchase tax-exempt securities at a discount. Some or all of this discount may be included in the fund's ordinary income, and is taxable when distributed. SEC yields as of 06/30/05 (%) Class A 3.14 ------------ Class B 2.55 ------------ Class C 2.85 ------------ Class Z 3.54
The 30-day SEC yields reflect the portfolio's earning power, net of expenses, expressed as an annualized percentage of the public offering price at the end of the period. Taxable-equivalent SEC yields as of 06/30/05 (%) Class A 4.83 ------------ Class B 3.92 ------------ Class C 4.38 ------------ Class Z 5.45
Taxable-equivalent SEC yields are based on the maximum effective 35.0% federal income tax rate and applicable state income tax rate. This tax rate does not reflect the phase out of exemptions or the reduction of the otherwise allowable deductions that occur when adjusted gross income exceeds certain levels. 5 ------------------------------ Columbia Managed Municipals Fund Inflation remained in check We anticipate that economic growth will be gradual, both domestically and around the world. High energy prices and relatively low business confidence continue to restrain job and wage growth in the United States. Meanwhile, China continued to flood the US market with cheap goods and services, which has helped keep a lid on price inflation. Against this backdrop, we plan to maintain the fund's focus on municipal issues with maturities of 15 years and longer, with a special emphasis on bonds with call protection. We seek to manage the fund's sensitivity to changing interest rates and to maintain our bias towards higher sensitivity as long as inflationary pressures remain subdued. 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 [GRAPHIC] its predecessors from 1995 to 2001. /s/ Kimberly A.Campbell
The Board of Trustees approved a proposal to reorganize the Columbia Managed Municipals Fund into Columbia Tax-Exempt Fund, subject to shareholder approval. Shareholders are scheduled to vote on this reorganization in the third quarter of 2005. The reorganization is proposed to take place within a reasonable time thereafter. Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yield and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices typically drop, and vice versa. Tax-exempt investing offers current tax-exempt income, but it also involves special risks. 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. Against this backdrop, we plan to maintain the fund's focus on municipal issues with maturities of 15 years and longer, with a special emphasis on bonds with call protection. 6 FINANCIAL STATEMENTS -------------------------------- June 30, 2005 Columbia Managed Municipals Fund
A guide to understanding your fund's financial statements --------------------------------------------------------------------------- Investment Portfolio The investment portfolio details all of the fund's holdings and their market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset, industry, country or geographic region (if applicable) to demonstrate areas of concentration and diversification. --------------------------------------------------------------------------- Statement of Assets and Liabilities This statement details the fund's assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all the fund's liabilities (including any unpaid expenses) from the total of the fund's investment and non-investment assets. The share price for each class is calculated by dividing net assets for that class by the number of shares outstanding in that class as of the last day of the reporting period. --------------------------------------------------------------------------- Statement of Operations This statement details income earned by the fund and the expenses accrued by the fund during the reporting period. The Statement of Operations also shows any net gain or loss the fund realized on the sales of its holdings during the period, as well as any unrealized gains or losses recognized over the period. The total of these results represents the fund's net increase or decrease in net assets from operations. --------------------------------------------------------------------------- Statement of Changes in Net Assets This statement demonstrates how the fund's net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and dividend reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding. --------------------------------------------------------------------------- Notes to Financial Statements These notes disclose the organizational background of the fund, its significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies. --------------------------------------------------------------------------- Financial Highlights The financial highlights demonstrate how the fund's net asset value per share was affected by the fund's operating results. The financial highlights table also discloses the classes' performance and certain key ratios (e.g., class expenses and net investment income as a percentage of average net assets).
7 INVESTMENT PORTFOLIO -------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - 97.1% EDUCATION - 4.8% Education - 4.8% Par ($) Value ($) - ------------------------------------------------- ----------------------------------------------------- --------- ---------- CA Educational Facilities Authority Loyola Marymount University, Series 2001, Insured: MBIA (a) 10/01/20 1,000,000 511,040 ----------------------------------------------------- --------- ---------- MA College Building Authority Series 1994 A, 7.500% 05/01/14 3,500,000 4,445,700 ----------------------------------------------------- --------- ---------- MA Health & Education Facilities Authority Massachusetts Institute of Technology, Series 2002 K, 5.500% 07/01/22 1,000,000 1,198,910 ----------------------------------------------------- --------- ---------- NY Dormitory Authority Educational Housing Services, Series 2005, Insured: AMBAC 5.250% 07/01/30 3,000,000 3,489,840 ----------------------------------------------------- --------- ---------- OH Higher Educational Facility Revenue Case Western Reserve University, Series 1994, 6.250% 10/01/17 4,340,000 5,388,067 ----------------------------------------------------- --------- ---------- VA College Building Authority Virginia Educational Facilities, Washington & Lee University, Series 2001, 5.375% 01/01/21 2,000,000 2,330,600 ----------------------------------------------------- --------- ---------- WV State University Series 2000 A, Insured: AMBAC (a) 04/01/18 3,800,000 2,208,788 ----------------------------------------------------- --------- ---------- Education Total 19,572,945 ---------- EDUCATION TOTAL 19,572,945 HEALTH CARE - 6.1% Continuing Care Retirement - 0.5% ----------------------------------------------------- --------- ---------- FL Capital Projects Finance Authority Glenridge on Palmer Ranch, Series 2002 A, 8.000% 06/01/32 500,000 553,695 ----------------------------------------------------- --------- ---------- HI Department of Budget & Finance Kahala Nui Project, Series 2003 A, 7.875% 11/15/23 500,000 571,415 ----------------------------------------------------- --------- ---------- OH Hamilton County Health Care Facilities Revenue Twin Towers, Series 1998 A, 5.125% 10/01/18 500,000 509,865 ----------------------------------------------------- --------- ---------- PA Montgomery County Industrial Development Whitemarsh Continuing Care Retirement Community, Authority Series 2005, 6.125% 02/01/28 500,000 525,540 ----------------------------------------------------- --------- ---------- Continuing Care Retirement Total 2,160,515 Health Services - 0.5% ----------------------------------------------------- --------- ---------- MA Development Finance Agency Boston Biomedical Research Institute, Series 1999, 5.650% 02/01/19 310,000 310,645 ----------------------------------------------------- --------- ---------- WI Health & Educational Facilities Authority Marshfield Clinic, Series 1999, Insured: RAD 6.250% 02/15/29 1,600,000 1,782,512 ----------------------------------------------------- --------- ---------- Health Services Total 2,093,157
See Accompanying Notes to Financial Statements. 8 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Hospitals - 4.5% Par ($) Value ($) - --------------------------------------------------- -------------------------------------------------------- --------- ---------- CA ABAG Finance Authority for Nonprofit Corps. San Diego Hospital Association, Series 2003 C, 5.375% 03/01/20 1,320,000 1,413,812 -------------------------------------------------------- --------- ---------- CA Health Facilities Financing Authority Catholic Healthcare West, Series 2004 G, 5.250% 07/01/23 500,000 528,645 -------------------------------------------------------- --------- ---------- FL Hillsborough County Industrial Development Tampa General Hospital, Series 2003 A: Authority 5.000% 10/01/18 825,000 867,232 5.250% 10/01/24 800,000 842,616 -------------------------------------------------------- --------- ---------- FL West Orange Healthcare District Series 2001 A, 5.650% 02/01/22 1,050,000 1,117,420 -------------------------------------------------------- --------- ---------- LA Public Facilities Authority Touro Infirmary, Series 1999 A, 5.625% 08/15/29 1,240,000 1,295,874 -------------------------------------------------------- --------- ---------- MA Health & Educational Facilities Authority South Shore Hospital, Series 1999 F: 5.625% 07/01/19 1,000,000 1,056,120 5.750% 07/01/29 2,500,000 2,621,575 -------------------------------------------------------- --------- ---------- MD Health & Educational Facilities Authority University of Maryland Medical System, Series 2000, 6.750% 07/01/30 500,000 563,950 -------------------------------------------------------- --------- ---------- MO Health & Educational Facilities Authority Lake Regional Health Systems, Series 2003, 5.600% 02/15/25 625,000 668,819 -------------------------------------------------------- --------- ---------- MS Medical Center Building Corp. University of Mississippi Medical Center, Series 1998 B, Insured: AMBAC 5.500% 12/01/23 1,000,000 1,179,740 -------------------------------------------------------- --------- ---------- NM Farmington San Juan Medical Center Project, Series 2004 A, 5.000% 06/01/23 500,000 518,555 -------------------------------------------------------- --------- ---------- NV Henderson Catholic Healthcare West, Series 1999 A, 6.750% 07/01/20 1,000,000 1,120,670 -------------------------------------------------------- --------- ---------- OH Highland County Joint Township Hospital District Series 1999, 6.750% 12/01/29 475,000 488,419 -------------------------------------------------------- --------- ---------- OH Miami County Hospital Facilities Revenue Upper Valley Medical Center, Series 1996 C, 6.000% 05/15/06 270,000 276,637 -------------------------------------------------------- --------- ---------- OK Development Finance Authority Duncan Regional Hospital, Series 2003 A, 5.125% 12/01/23 1,000,000 1,043,030 -------------------------------------------------------- --------- ---------- TN Knox County Health, Educational & Housing East Tennessee Hospital, Series 2003 B, Facilities Authority 5.750% 07/01/33 650,000 698,672 -------------------------------------------------------- --------- ---------- WI Health & Educational Facilities Authority Aurora Health Care, Inc., Series 2003, 6.400% 04/15/33 1,075,000 1,202,054 Wheaton Franciscan Services, Series 2002, 5.750% 08/15/30 900,000 968,553 -------------------------------------------------------- --------- ---------- Hospitals Total 18,472,393
See Accompanying Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) HEALTH CARE - (continued) Intermediate Care Facilities - 0.6% Par ($) Value ($) - ----------------------------------------------- -------------------------------------------------- --------- ---------- IN Health Facilities Financing Authority Hoosier Care, Inc., Series 1999 A, 7.125% 06/01/34 2,380,000 2,234,368 -------------------------------------------------- --------- ---------- Intermediate Care Facilities Total 2,234,368 ---------- HEALTH CARE TOTAL 24,960,433 HOUSING - 2.0% Assisted Living/Senior - 0.2% -------------------------------------------------- --------- ---------- NY Suffolk County Industrial Development Agency Gurwin-Jewish Phase II, Series 2004, 6.700% 05/01/39 900,000 940,689 -------------------------------------------------- --------- ---------- Assisted Living/Senior Total 940,689 Multi-Family - 1.4% -------------------------------------------------- --------- ---------- FL Broward County Housing Finance Authority Chaves Lake Apartment Project, Series 2000 A, AMT, 7.500% 07/01/40 1,500,000 1,518,210 -------------------------------------------------- --------- ---------- FL Clay County Housing Finance Authority Madison Commons Apartments, Series 2000 A, AMT, 7.450% 07/01/40 725,000 735,991 -------------------------------------------------- --------- ---------- MA Housing Finance Agency Series 2004 A, AMT, Insured: FSA 5.250% 07/01/25 2,000,000 2,076,720 -------------------------------------------------- --------- ---------- NC Medical Care Commission ARC Projects, Series 2004 A, 5.800% 10/01/34 1,400,000 1,430,016 -------------------------------------------------- --------- ---------- Multi-Family Total 5,760,937 Single-Family - 0.4% -------------------------------------------------- --------- ---------- NM Mortgage Finance Authority Series 2000 A-2, AMT, Insured: FHA 7.100% 09/01/30 465,000 477,709 -------------------------------------------------- --------- ---------- NV Housing Division Series 1991 A-2, AMT, Insured: FHA 7.750% 04/01/22 235,000 235,458 -------------------------------------------------- --------- ---------- OH Housing Finance Agency Series 1997 A-1, AMT, Insured: GNMA 6.050% 09/01/17 405,000 423,257 -------------------------------------------------- --------- ---------- RI Housing & Mortgage Finance Corp. Series 1988, AMT, Insured: FHA 7.550% 10/01/22 515,000 515,613 -------------------------------------------------- --------- ---------- Single-Family Total 1,652,037 ---------- HOUSING TOTAL 8,353,663
See Accompanying Notes to Financial Statements. 10 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) INDUSTRIALS - 2.6% Food Products - 0.3% Par ($) Value ($) - -------------------------------------------------- -------------------------------------------- ---------- ---------- MI Strategic Fund Michigan Sugar Co.: Carrollton Project, Series 1998 C, AMT, 6.550% 11/01/25 800,000 772,632 Imperial Holly Corp., Series 1998 B, 6.450% 11/01/25 700,000 668,430 -------------------------------------------- ---------- ---------- Food Products Total 1,441,062 Forest Products & Paper - 1.4% -------------------------------------------- ---------- ---------- FL Escambia County Environmental Improvement International Paper Co., Series 2003 A, AMT, Authority 5.750% 11/01/27 550,000 576,268 -------------------------------------------- ---------- ---------- WA Port Longview Industrial Development Corp. Weyerhaeuser Corp., Series 1992, AMT, 6.875% 10/01/08 4,750,000 5,221,770 -------------------------------------------- ---------- ---------- Forest Products & Paper Total 5,798,038 Manufacturing - 0.4% -------------------------------------------- ---------- ---------- MO Development Finance Board Procter & Gamble Co., Series 1999, AMT, 5.200% 03/15/29 1,385,000 1,553,568 -------------------------------------------- ---------- ---------- Manufacturing Total 1,553,568 Oil & Gas - 0.3% -------------------------------------------- ---------- ---------- NJ Middlesex County Pollution Control Authority Amerada Hess Corp., Series 2004, 6.050% 09/15/34 240,000 257,038 -------------------------------------------- ---------- ---------- VI Virgin Islands Public Finance Authority Hovensa LCC, Series 2003, AMT, 6.125% 07/01/22 875,000 967,382 -------------------------------------------- ---------- ---------- Oil & Gas Total 1,224,420 Other Industrial Development Bonds - 0.2% -------------------------------------------- ---------- ---------- MI Strategic Fund Obligation Ltd. NSF International Project, Series 2004, 5.250% 08/01/26 600,000 630,198 -------------------------------------------- ---------- ---------- Other Industrial Development Bonds Total 630,198 ---------- INDUSTRIALS TOTAL 10,647,286 OTHER - 13.9% Refunded/Escrowed(b) - 13.0% -------------------------------------------- ---------- ---------- CA Foothill Eastern Transportation Corridor Agency Series 1995 A, Escrowed to Maturity (a) 01/01/18 10,000,000 6,020,400 -------------------------------------------- ---------- ---------- FL Jacksonville Transportation Authority Series 1985, Escrowed to Maturity 9.200% 01/01/15 2,000,000 2,728,900 -------------------------------------------- ---------- ---------- GA Fulton County Water & Sewer Series 1992, Escrowed to Maturity Insured: FGIC 6.375% 01/01/14 13,270,000 15,627,946 -------------------------------------------- ---------- ---------- GA Municipal Electric Authority Series 1991: Escrowed to Maturity Insured: MBIA 6.600% 01/01/18 4,020,000 4,948,736
See Accompanying Notes to Financial Statements. 11 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) OTHER - (continued) Refunded/Escrowed(b) - (continued) Par ($) Value ($) - ------------------------------------------- ------------------------------------------------------ --------- ---------- ID Health Facilities Authority IHC Hospitals, Inc., Series 1992, Escrowed to Maturity 6.650% 02/15/21 1,200,000 1,584,000 ------------------------------------------------------ --------- ---------- IL Health Facilities Authority Swedish American Hospital, Series 2000, Pre-refunded 05/15/10 6.875% 11/15/30 1,000,000 1,176,400 ------------------------------------------------------ --------- ---------- IL Metropolitan Pier & Exposition Authority Series 1996, Escrowed to Maturity Insured: MBIA (a) 06/15/12 2,655,000 2,064,502 ------------------------------------------------------ --------- ---------- NC Eastern Municipal Power Agency Series 1991 A, Escrowed to Maturity 6.500% 01/01/18 4,315,000 5,495,714 ------------------------------------------------------ --------- ---------- NY Triborough Bridge & Tunnel Authority Series 1992 Y, Escrowed to Maturity 6.125% 01/01/21 5,500,000 6,897,825 ------------------------------------------------------ --------- ---------- OH Cleveland-Cuyahoga County Port Authority Oglebay Norton Co., Series 1997, AMT, Escrowed to Maturity 6.000% 03/01/07 140,000 145,293 ------------------------------------------------------ --------- ---------- OH Hilliard School District Series 1995 A, Escrowed to Maturity Insured: FGIC (a) 12/01/12 2,505,000 1,918,605 ------------------------------------------------------ --------- ---------- OH Water Development Authority Series 1990, Escrowed to Maturity Insured: AMBAC 6.000% 12/01/16 1,000,000 1,156,130 ------------------------------------------------------ --------- ---------- TX Houston Water & Sewer Revenue Series 1998, Escrowed to Maturity Insured: FSA (a) 12/01/23 2,515,000 1,114,044 ------------------------------------------------------ --------- ---------- TX Municipal Power Agency Series 1989, Escrowed to Maturity Insured: AMBAC (a) 09/01/08 75,000 68,132 ------------------------------------------------------ --------- ---------- WV Hospital Finance Authority Charleston Area Medical Center, Series 2000, Pre-refunded 09/01/10 6.750% 09/01/30 1,610,000 1,900,911 ------------------------------------------------------ --------- ---------- Refunded / Escrowed Total 52,847,538 Tobacco - 0.9% ------------------------------------------------------ --------- ---------- NJ Tobacco Settlement Financing Corp. Series 2003, 6.750% 06/01/39 1,415,000 1,588,493 ------------------------------------------------------ --------- ---------- VA Tobacco Settlement Financing Corp. Series 2005, 5.500% 06/01/26 2,000,000 2,051,400 ------------------------------------------------------ --------- ---------- Tobacco Total 3,639,893 ---------- OTHER TOTAL 56,487,431
See Accompanying Notes to Financial Statements. 12 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) OTHER REVENUE - 1.5% Hotels - 0.3% Par ($) Value ($) - ----------------------------------------- -------------------------------------------------- --------- --------- NJ Middlesex County Improvement Authority Heldrich Associates LLC, Series 2005 B, 6.250% 01/01/37 1,000,000 999,610 -------------------------------------------------- --------- --------- Hotels Total 999,610 Recreation - 1.2% -------------------------------------------------- --------- --------- CA Agua Caliente Band Cahuilla Indians Series 2003, 6.000% 07/01/18 350,000 370,017 -------------------------------------------------- --------- --------- CA Cabazon Band Mission Indians Series 2004: 8.375% 10/01/15 (c) 595,000 616,789 8.750% 10/01/19 (c) 2,100,000 2,174,739 -------------------------------------------------- --------- --------- FL Capital Trust Agency Seminole Tribe Convention Center, Series 2002 A, 10.000% 10/01/33 (c) 1,500,000 1,670,220 -------------------------------------------------- --------- --------- Recreation Total 4,831,765 Retail - 0.0% -------------------------------------------------- --------- --------- OH Lake County North Madison Properties, Series 1993, 8.819% 09/01/11 160,000 160,563 -------------------------------------------------- --------- --------- Retail Total 160,563 --------- OTHER REVENUE TOTAL 5,991,938 RESOURCE RECOVERY - 0.4% Disposal - 0.4% -------------------------------------------------- --------- --------- IL Development Finance Authority Waste Management, Inc., Series 1997, AMT, 5.050% 01/01/10 500,000 523,325 -------------------------------------------------- --------- --------- MI Strategic Fund Waste Management, Inc., Series 1995, AMT, 5.200% 04/01/10 500,000 525,375 -------------------------------------------------- --------- --------- NV Department of Business & Industry Republic Services, Inc. Project, Series 2003, AMT, 5.625% 12/01/26 500,000 547,445 -------------------------------------------------- --------- --------- Disposal Total 1,596,145 --------- RESOURCE RECOVERY TOTAL 1,596,145 TAX-BACKED - 34.4% Local Appropriated - 1.7% -------------------------------------------------- --------- --------- IL Chicago Board of Education Series 1992 A, Insured: MBIA 6.000% 01/01/16 5,000,000 5,978,850 -------------------------------------------------- --------- --------- IN Crown Point School Building Corp. Series 2000, Insured: MBIA (a) 01/15/19 1,665,000 924,758 -------------------------------------------------- --------- --------- Local Appropriated Total 6,903,608
See Accompanying Notes to Financial Statements. 13 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Local General Obligations - 12.6% Par ($) Value ($) - ------------------------------------------------- ------------------ --------- --------- AK North Slope Borough Series 1999 A, Insured: MBIA (a) 06/30/10 2,515,000 2,116,725 Series 2000 B, Insured: MBIA (a) 06/30/10 2,000,000 1,684,760 Series 2001 A, Insured: MBIA (a) 06/30/12 5,000,000 3,847,050 ------------------ --------- --------- CA Golden West School Authority Series 1999 A, Insured: MBIA (a) 08/01/15 1,500,000 1,006,020 ------------------ --------- --------- CA Los Angeles Unified School District Series 2002, Insured: MBIA 5.750% 07/01/16 400,000 476,360 ------------------ --------- --------- CA West Contra Costa Unified School District Series 2001 B, Insured: MBIA 6.000% 08/01/24 465,000 581,864 ------------------ --------- --------- CA Yuba City Unified School District Series 2000, Insured: FGIC (a) 09/01/18 1,160,000 658,161 ------------------ --------- --------- IL Champaign County Series 1999, Insured: FGIC 8.250% 01/01/20 1,015,000 1,467,162 ------------------ --------- --------- IL Chicago Board of Education Series 1998 B-1, Insured: FGIC (a) 12/01/21 1,500,000 724,695 ------------------ --------- --------- IL Chicago Series 1999, Insured: FGIC 5.500% 01/01/23 2,250,000 2,646,900 ------------------ --------- --------- IL Cook County School District No. 102 Series 2001, Insured: FGIC (a) 12/01/20 3,065,000 1,552,545 ------------------ --------- --------- IL Will County Forest Preservation District Series 1999 B, Insured: FGIC (a) 12/01/16 1,000,000 622,100 ------------------ --------- --------- IL Will County United School District No. 365-UVY Series 1999 B, Insured: FSA (a) 11/01/18 1,900,000 1,071,581 ------------------ --------- --------- LA New Orleans Series 1991, Insured: AMBAC (a) 09/01/12 6,250,000 4,803,000
See Accompanying Notes to Financial Statements. 14 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Local General Obligations - (continued) Par ($) Value ($) - ------------------------------------------------- ------------------ --------- --------- MO Springfield School District No. R-12 Series 1991 B, Insured: FGIC 9.500% 03/01/07 600,000 664,536 ------------------ --------- --------- NE Omaha Convention Center/Arena Series 2004, 5.250% 04/01/23 1,000,000 1,164,700 ------------------ --------- --------- OH Adams County Ohio Valley Local School District Series 1995, Insured: MBIA 7.000% 12/01/15 3,000,000 3,727,920 ------------------ --------- --------- OH Beavercreek Local School District Series 1996, Insured: FGIC 6.600% 12/01/15 2,500,000 3,083,650 ------------------ --------- --------- OH Crooksville Exempt Village School District Series 1986, 7.375% 12/01/07 25,000 27,201 ------------------ --------- --------- OH Cuyahoga County Series 1993 A, Insured: MBIA (a) 10/01/12 1,000,000 764,880 ------------------ --------- --------- OH Dublin City School District Series 1997, Insured: MBIA (a) 12/01/11 900,000 714,726 ------------------ --------- --------- OH Eastern Local School District Brown & Highland Series 1995, Counties Insured: FGIC 6.250% 12/01/17 1,160,000 1,439,247 ------------------ --------- --------- OH Gahanna-Jefferson City School District Series 1993, Insured: AMBAC (a) 12/01/11 795,000 632,136 ------------------ --------- --------- OH Kings Local School District Series 1995, Insured: FGIC 7.500% 12/01/16 2,110,000 2,727,048 ------------------ --------- --------- OH Lakota Local School District Series 2001, Insured: FGIC 5.500% 12/01/18 1,460,000 1,725,749 ------------------ --------- --------- OH Massillon City School District Series 2002: Insured: AMBAC (a) 12/01/09 900,000 779,706 (a) 12/01/11 1,000,000 794,140 ------------------ --------- --------- OH Monroe Local School District Series 2002, Insured: AMBAC 5.750% 12/01/19 1,195,000 1,450,336 ------------------ --------- --------- OH North Fork Local School District Series 2001, Insured: FSA 5.750% 12/01/17 510,000 615,029
See Accompanying Notes to Financial Statements. 15 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Local General Obligations - (continued) Par ($) Value ($) - ---------------------------------------------- ---------------------------------------------------------- --------- ---------- OH Pickerington Local School District Series 2001, Insured: FGIC (a) 12/01/16 1,340,000 840,167 ---------------------------------------------------------- --------- ---------- OH River Valley Local School District School Facilities Construction & Improvement, Series 2001, Insured: FSA 5.250% 11/01/23 500,000 579,925 ---------------------------------------------------------- --------- ---------- OH Shaker Heights City School District Series 1990 A, 7.100% 12/15/10 550,000 615,197 ---------------------------------------------------------- --------- ---------- OH Southwest Licking Local School District Series 1999, Insured: FGIC 5.750% 12/01/16 400,000 477,032 ---------------------------------------------------------- --------- ---------- OH Tri-County North Local School District Series 1986, 8.125% 12/01/06 75,000 79,800 ---------------------------------------------------------- --------- ---------- OH West Chester Township Series 2002, Insured: AMBAC 5.750% 12/01/20 1,000,000 1,218,050 ---------------------------------------------------------- --------- ---------- OR Linn County Community School District No. 9 Series 2005, Lebanon Insured: FGIC 5.500% 06/15/30 1,435,000 1,734,312 ---------------------------------------------------------- --------- ---------- TX Dallas County Flood Control District Series 2002, 7.250% 04/01/32 1,500,000 1,568,235 ---------------------------------------------------------- --------- ---------- WA Clark County School District No. 37 Series 2001 C, Insured: FGIC (a) 12/01/20 1,150,000 582,521 ---------------------------------------------------------- --------- ---------- Local General Obligations Total 51,265,166 Special Non-Property Tax - 6.5% ---------------------------------------------------------- --------- ---------- IL Metropolitan Pier & Exposition Authority Series 1996 A: Insured: MBIA (a) 06/15/12 2,345,000 1,812,521 (a) 12/15/12 8,850,000 6,704,229 ---------------------------------------------------------- --------- ---------- MA Massachusetts Bay Transportation Authority Series 2003 A, 5.250% 07/01/19 1,200,000 1,383,360 Series 2005 A, 5.000% 07/01/25 3,000,000 3,383,730 ---------------------------------------------------------- --------- ---------- MI Trunk Line Series 2004, Insured: FSA 5.000% 11/01/19 1,000,000 1,128,100 ---------------------------------------------------------- --------- ---------- NJ Economic Development Authority Cigarette Tax, Series 2004, 5.500% 06/15/31 150,000 158,801 ---------------------------------------------------------- --------- ---------- NY Dormitory Authority State Personal Income Tax Revenue, Series 2005 B, Insured: AMBAC 5.500% 03/15/27 3,860,000 4,650,412
See Accompanying Notes to Financial Statements. 16 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) Special Non-Property Tax - (continued) Par ($) Value ($) - ------------------------------------------------- --------------------------------------------------------- --------- ---------- NY Local Government Assistance Corp. Series 1993 E, Insured: MBIA 5.000% 04/01/21 1,000,000 1,120,960 --------------------------------------------------------- --------- ---------- OH Hamilton County Sales Tax Revenue Series 2000 B, Insured: AMBAC (a) 12/01/20 2,000,000 1,026,920 --------------------------------------------------------- --------- ---------- PR Commonwealth of Puerto Rico Highway & Series 2003 AA, Transportation Authority Insured: MBIA 5.500% 07/01/19 1,000,000 1,188,090 --------------------------------------------------------- --------- ---------- PR Commonwealth of Puerto Rico Infrastructure Series 2005 C, Financing Authority Insured: AMBAC 5.500% 07/01/26 2,000,000 2,407,580 --------------------------------------------------------- --------- ---------- WA Central Puget Sound Regional Transportation Series 1998, Authority Insured: FGIC 5.250% 02/01/21 1,500,000 1,713,975 --------------------------------------------------------- --------- ---------- Special Non-Property Tax Total 26,678,678 Special Property Tax - 0.7% --------------------------------------------------------- --------- ---------- CA Huntington Beach Community Facilities District Grand Coast Resort, Series 2001-1, 6.450% 09/01/31 500,000 527,470 --------------------------------------------------------- --------- ---------- CA Santa Margarita Water District Series 1999, 6.250% 09/01/29 750,000 803,062 --------------------------------------------------------- --------- ---------- FL Double Branch Community Development District Series 2002 A, 6.700% 05/01/34 395,000 432,158 --------------------------------------------------------- --------- ---------- FL Westchester Community Development District Special Assessment, Series 2003, No. 1 6.000% 05/01/23 560,000 589,109 --------------------------------------------------------- --------- ---------- IL Sports Facilities Authority Series 2001, Insured: AMBAC (a) 06/15/18 1,000,000 580,600 --------------------------------------------------------- --------- ---------- Special Property Tax Total 2,932,399 State Appropriated - 5.5% --------------------------------------------------------- --------- ---------- CA Public Works Board Department of Mental Health Lease Revenue, Coalinga State Hospital, Series 2004 A, 5.500% 06/01/15 1,000,000 1,132,650 --------------------------------------------------------- --------- ---------- KY Turnpike Authority Series 1992, Insured: FGIC (a) 01/01/10 (d) 7,500,000 6,469,350 --------------------------------------------------------- --------- ---------- NJ Economic Development Authority Series 2005 N-1, Insured: FGIC 5.500% 09/01/27 3,000,000 3,617,460
See Accompanying Notes to Financial Statements. 17 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) TAX-BACKED - (continued) State Appropriated - (continued) Par ($) Value ($) - ------------------------------------------------ ------------------------------------------ --------- ----------- NJ Transportation Trust Fund Authority Series 1999 A: 5.750% 06/15/18 5,000,000 5,911,450 5.750% 06/15/20 1,000,000 1,191,800 ------------------------------------------ --------- ----------- UT Building Ownership Authority Facilities Master Lease, Series 1998 C, Insured: FSA 5.500% 05/15/19 3,450,000 4,041,088 ------------------------------------------ --------- ----------- State Appropriated Total 22,363,798 State General Obligations - 7.4% ------------------------------------------ --------- ----------- CA State Series 2003, 5.250% 02/01/23 2,000,000 2,264,560 Series 2004, 5.000% 02/01/22 2,000,000 2,129,100 ------------------------------------------ --------- ----------- IL State Series 2001, Insured: FGIC 6.000% 11/01/26 3,000,000 3,795,270 ------------------------------------------ --------- ----------- MA Massachusetts Bay Transportation Authority Series 1992 B, Insured: MBIA 6.200% 03/01/16 3,825,000 4,582,618 Series 1994 A: 7.000% 03/01/14 3,150,000 3,873,586 Insured: FSA 7.000% 03/01/19 2,500,000 3,229,700 ------------------------------------------ --------- ----------- NJ Washington Township Board of Education Mercer Series 2005, County Insured: FSA 5.250% 01/01/27 1,410,000 1,640,239 ------------------------------------------ --------- ----------- OH State Series 1992, 6.100% 08/01/12 380,000 445,288 ------------------------------------------ --------- ----------- PR Commonwealth of Puerto Rico Public Improvement: Series 2001 A, Insured: MBIA 5.500% 07/01/16 4,230,000 4,963,270 Series 2004 A, 5.250% 07/01/21 3,000,000 3,255,180 ------------------------------------------ --------- ----------- State General Obligations Total 30,178,811 ----------- TAX-BACKED TOTAL 140,322,460 TRANSPORTATION - 7.9% Air Transportation - 1.8% ------------------------------------------ --------- ----------- IN Indianapolis Airport Authority Fed Ex Corp., Series 2004, AMT, 5.100% 01/15/17 500,000 529,265 United Airlines, Inc., Series 1995 A, AMT, 6.500% 11/15/31 (e) 1,360,000 173,454 ------------------------------------------ --------- ----------- KY Kenton County Airport Board Delta Air Lines, Inc., Series 1992 A, AMT, 7.500% 02/01/20 1,000,000 891,050
See Accompanying Notes to Financial Statements. 18 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) TRANSPORTATION - (continued) Air Transportation - (continued) Par ($) Value ($) - --------------------------------------------------- ----------------------------------------------------- --------- --------- MN Minneapolis & St. Paul Metropolitan Airports Northwest Airlines, Inc., Series 2001 A, AMT, Commission 7.000% 04/01/25 1,250,000 1,168,213 ----------------------------------------------------- --------- --------- NC Charlotte Douglas International Airport US Airways, Inc.: Series 1998, AMT, 5.600% 07/01/27 (f) 1,000,000 650,070 Series 2000, AMT, 7.750% 02/01/28 (f) 1,000,000 736,550 ----------------------------------------------------- --------- --------- NJ Economic Development Authority Continental Airlines, Inc., Series 1999, AMT, 6.250% 09/15/29 2,000,000 1,739,520 ----------------------------------------------------- --------- --------- TN Memphis Shelby County Airport Authority Special Fed Ex Corp. Project, Series 2002, Facilities Revenue 5.050% 09/01/12 500,000 534,345 ----------------------------------------------------- --------- --------- TX Dallas-Fort Worth International Airport Facility AMR Corp. Series 2000, AMT, 8.500% 05/01/29 (g) 1,000,000 1,004,000 ----------------------------------------------------- --------- --------- Air Transportation Total 7,426,467 Airports - 0.6% ----------------------------------------------------- --------- --------- MA Port Authority Series 1999, AMT, IFRN, Insured: FGIC 9.485% 01/01/21 (h) 1,000,000 1,199,270 ----------------------------------------------------- --------- --------- MO St. Louis Airport Revenue Lambert-St. Louis International Airport, Series 2005, Insured: MBIA 5.500% 07/01/27 (g) 1,000,000 1,174,360 ----------------------------------------------------- --------- --------- Airports Total 2,373,630 Toll Facilities - 3.4% ----------------------------------------------------- --------- --------- CO E-470 Public Highway Authority Series 2000 B, Insured: MBIA (a) 09/01/18 4,600,000 2,616,664 ----------------------------------------------------- --------- --------- KY Turnpike Authority Series 1993, Insured: AMBAC 5.000% 07/01/25 2,000,000 2,153,300 ----------------------------------------------------- --------- --------- MA Turnpike Authority Series 1997 C, Insured: MBIA (a) 01/01/20 2,000,000 1,073,000 ----------------------------------------------------- --------- --------- NJ Turnpike Authority Series 2005, Insured: FSA 5.250% 01/01/30 2,000,000 2,339,760 ----------------------------------------------------- --------- --------- NY Triborough Bridge & Tunnel Authority Series 2002, Insured: MBIA 5.500% 11/15/20 2,050,000 2,437,019 ----------------------------------------------------- --------- --------- OH Turnpike Commission Series 1998 A, Insured: FGIC 5.500% 02/15/17 1,690,000 1,976,962
See Accompanying Notes to Financial Statements. 19 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) TRANSPORTATION - (continued) Toll Facilities - (continued) Par ($) Value ($) - --------------------------------------------------- --------------------------------------------------- --------- ---------- VA Richmond Metropolitan Authority Series 1998, Insured: FGIC 5.250% 07/15/22 1,100,000 1,270,170 --------------------------------------------------- --------- ---------- Toll Facilities Total 13,866,875 Transportation - 2.1% --------------------------------------------------- --------- ---------- GA Metropolitan Atlanta Rapid Transit Authority Series 1992 P, Insured: AMBAC 6.250% 07/01/20 4,000,000 4,891,400 --------------------------------------------------- --------- ---------- NV Department of Business & Industry Las Vegas Monorail Project, Series 2000: 7.375% 01/01/30 650,000 685,932 7.375% 01/01/40 500,000 525,105 --------------------------------------------------- --------- ---------- OH Toledo-Lucas County Port Authority CSX Transportation, Inc., Series 1992, 6.450% 12/15/21 2,000,000 2,339,940 --------------------------------------------------- --------- ---------- Transportation Total 8,442,377 ---------- TRANSPORTATION TOTAL 32,109,349 UTILITIES - 23.5% Independent Power Producers - 0.6% --------------------------------------------------- --------- ---------- NY Suffolk County Industrial Development Authority Nissequogue Cogeneration Partners Facilities, Series 1998, AMT, 5.500% 01/01/23 1,000,000 1,007,990 --------------------------------------------------- --------- ---------- PA Carbon City Industrial Development Authority Panther Creek Partners Project, Series 2000, AMT, 6.650% 05/01/10 750,000 816,030 --------------------------------------------------- --------- ---------- PR Commonwealth of Puerto Rico Industrial, Tourist, AES Project, Series 2000, AMT, Educational, Medical & Environmental Authority 6.625% 06/01/26 645,000 700,818 --------------------------------------------------- --------- ---------- Independent Power Producers Total 2,524,838 Investor Owned - 1.7% --------------------------------------------------- --------- ---------- IN Development Finance Authority Series 1999, AMT, 5.950% 08/01/30 1,000,000 1,032,290 --------------------------------------------------- --------- ---------- IN Petersburg Series 1995 C, AMT, 5.950% 12/01/29 1,500,000 1,564,620 --------------------------------------------------- --------- ---------- OH Air Quality Development Authority Cleveland Electric Illuminating Co., Series 2002 A, 6.000% 12/01/13 500,000 530,765 --------------------------------------------------- --------- ---------- TX Brazos River Authority TXU Energy Co. LLC: Series 1999 B, AMT, 6.750% 09/01/34 2,455,000 2,811,196 Series 2001 C, AMT, 5.750% 05/01/36 395,000 422,650 --------------------------------------------------- --------- ---------- WY Lincoln County Environmental Improvement Pacificorp Project, Series 1995, AMT, 4.125% 11/01/25 500,000 495,920 --------------------------------------------------- --------- ---------- Investor Owned Total 6,857,441
See Accompanying Notes to Financial Statements. 20 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) UTILITIES - (continued) Joint Power Authority - 4.8% Par ($) Value ($) - --------------------------------------------- ------------------------------------- ---------- ---------- NC Eastern Municipal Power Agency Series 1991 A, 6.500% 01/01/18 2,185,000 2,655,649 Series 1992, Insured: MBIA (a) 01/01/09 2,260,000 2,026,339 Series 1993, Insured: AMBAC 6.000% 01/01/18 7,000,000 8,466,850 ------------------------------------- ---------- ---------- WA Public Power Supply System Nuclear Project No. 3, Series 1989 B, (a) 07/01/08 7,000,000 6,357,890 ------------------------------------- ---------- ---------- Joint Power Authority Total 19,506,728 Municipal Electric - 8.7% ------------------------------------- ---------- ---------- GA Municipal Electric Authority Series 1991, Insured: MBIA 6.600% 01/01/18 17,280,000 21,285,677 ------------------------------------- ---------- ---------- OH Cleveland Public Power Systems Revenue Series 1994 A, Insured: MBIA (a) 11/15/13 2,000,000 1,457,400 ------------------------------------- ---------- ---------- PA Westmoreland County Municipal Authority Series 2000 A, Insured: FGIC (a) 08/15/23 1,400,000 619,416 ------------------------------------- ---------- ---------- PR Commonwealth of Puerto Rico Electric Power Series 2002 KK, Authority Insured: MBIA 5.500% 07/01/16 2,000,000 2,346,700 ------------------------------------- ---------- ---------- SD Heartland Consumers Power District Series 1992, Insured: FSA 6.000% 01/01/17 8,000,000 9,611,120 ------------------------------------- ---------- ---------- Municipal Electric Total 35,320,313 Water & Sewer - 7.7% ------------------------------------- ---------- ---------- GA Atlanta Water & Wastewater Revenue Series 1993, Insured: FGIC 5.500% 11/01/22 3,225,000 3,821,044 Series 2001 A, Insured: MBIA 5.500% 11/01/27 1,500,000 1,797,810 ------------------------------------- ---------- ---------- GA Fulton County Water & Sewer Series 1992, Insured: FGIC 6.375% 01/01/14 430,000 503,457 ------------------------------------- ---------- ---------- OH Cleveland Waterworks Revenue Series 1993 G, Insured: MBIA 5.500% 01/01/21 3,000,000 3,531,420
See Accompanying Notes to Financial Statements. 21 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Municipal Bonds - (continued) UTILITIES - (continued) Water & Sewer - (continued) Par ($) Value ($) - -------------------------------------------------- --------------------------------------------- --------- ----------- OH Lakewood Water Systems Revenue Series 1995, Insured: AMBAC 5.850% 07/01/20 2,405,000 2,946,197 --------------------------------------------- --------- ----------- OH Warren Waterworks Revenue Series 1997, Insured: FGIC 5.500% 11/01/15 500,000 567,955 --------------------------------------------- --------- ----------- OH Water Development Authority Series 1991 B, Insured: FSA 5.500% 06/01/18 1,000,000 1,178,990 --------------------------------------------- --------- ----------- PA Allegheny County Sanitation Authority Series 1991 A, Insured: FGIC (a) 06/01/07 2,370,000 2,239,745 --------------------------------------------- --------- ----------- PA Dauphin County Industrial Development Authority Dauphin Water Supply Co., Series 1992 A, AMT, 6.900% 06/01/24 3,400,000 4,413,370 --------------------------------------------- --------- ----------- TX Houston Water & Sewer System Revenue Series 1991 C: Insured: AMBAC (a) 12/01/08 4,000,000 3,595,400 (a) 12/01/09 4,000,000 3,465,360 (a) 12/01/10 3,750,000 3,113,325 Series 1998 A, Insured: FSA (a) 12/01/23 985,000 429,293 --------------------------------------------- --------- ----------- Water & Sewer Total 31,603,366 ----------- UTILITIES TOTAL 95,812,686 Total Municipal Bonds (cost of $352,477,696) 395,854,336 Municipal Preferred Stocks - 1.1% HOUSING - 1.1% Multi-Family - 1.1% - -------------------------------------------------- --------------------------------------------- --------- ----------- Charter Municipal Mortgage Acceptance Co. AMT, 6.625% 06/30/09 (c) 2,000,000 2,189,300 --------------------------------------------- --------- ----------- MuniMae Trust AMT, 7.750% 06/30/50 (c) 2,000,000 2,302,680 --------------------------------------------- --------- ----------- Multi-Family Total 4,491,980 ----------- HOUSING TOTAL 4,491,980 Total Municipal Preferred Stocks (cost of $4,000,000) 4,491,980
See Accompanying Notes to Financial Statements. 22 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund
Investment Company - 0.0% Shares Value ($) - --------------------------------------------- -------------------------------------------------------- --------- ----------- Dreyfus Tax-Exempt Cash Management Fund 1 1 Total Investment Company (cost of $1) 1 Short-Term Obligations - 1.2% VARIABLE RATE DEMAND NOTES(i) - 1.2% Par ($) - --------------------------------------------- -------------------------------------------------------- --------- ----------- FL Alachua County Health Facilities Authority Oak Hammock of the University of Florida, Series 2002 A, 2.300% 10/01/32 800,000 800,000 -------------------------------------------------------- --------- ----------- FL Pinellas County Health Facility Authority Pooled Hospital Loan Program, Series 1985, 2.350% 12/01/15 2,000,000 2,000,000 -------------------------------------------------------- --------- ----------- MN Brooklyn Center Revenue BCC Associates LLC, Series 2001, 2.350% 12/01/14 200,000 200,000 -------------------------------------------------------- --------- ----------- MS Jackson County Chevron Corp., Series 1993, 2.250% 06/01/23 500,000 500,000 -------------------------------------------------------- --------- ----------- WI Health & Educational Facilities Authority ProHealth Care, Inc., Series 2001 B, 2.300% 08/15/30 1,000,000 1,000,000 -------------------------------------------------------- --------- ----------- WY Uinta County Chevron Corp., Series 1993, 2.250% 08/15/20 300,000 300,000 -------------------------------------------------------- --------- ----------- VARIABLE RATE DEMAND NOTES TOTAL 4,800,000 Total Short-Term Obligations (cost of $4,800,000) 4,800,000 Total Investments - 99.4% (cost of $361,277,697) (j) 405,146,317 Other Assets & Liabilities, Net - 0.6% 2,332,610 Net Assets - 100.0% 407,478,927
NOTES TO INVESTMENT PORTFOLIO: (a)Zero coupon bond. (b)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. (c)Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2005, these securities, which did not include any illiquid securities, amounted to $8,953,728, which represents 2.2% of net assets. (d)A portion of the security with a market value of $2,587,740 is pledged as collateral for open futures contracts. (e)The issuer has filed for bankruptcy protection under Chapter 11 and is in default of certain debt covenants. Income is not being accrued. At June 30, 2005, the value of this security represents less than 0.1% of net assets. (f)The issuer has filed for bankruptcy protection under Chapter 11. Income is being accrued. At June 30, 2005, the value of these securities amounted to $1,386,620, which represents 0.3% of net assets. See Accompanying Notes to Financial Statements. 23 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund (g)Security purchased on a delayed delivery basis. (h)The interest rate shown on floating rate or variable rate securities reflects the rate at June 30, 2005. (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 at June 30, 2005. (j)Cost for federal income tax purposes is $361,051,123.
At June 30, 2005, 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 327 $37,104,281 $37,065,865 Sept-2005 $(38,416)
At June 30, 2005, the composition of the Fund by revenue source is as follows: REVENUE SOURCE (UNAUDITED) % OF NET ASSETS ------------------------------------------------------------------------------ Tax-Backed 34.4% Utilities 23.5 Other 13.9 Transportation 7.9 Health Care 6.1 Education 4.8 Housing 3.1 Industrials 2.6 Other Revenue 1.5 Resource Recovery 0.4 Investment Company 0.0 Short-Term Obligations 1.2 Other Assets & Liabilities, Net 0.6 ----- 100.0% -----
ACRONYM NAME ------- ---- ABAG Association of Bay Area Government AMBAC Ambac Assurance Corp. AMT Alternative Minimum Tax FGIC Financial Guaranty Insurance Co. FHA Federal Housing Administration FSA Financial Security Assurance, Inc. GNMA Government National Mortgage Association IFRN Inverse Floating Rate Note MBIA MBIA Insurance Corp. RAD Radian Asset Assurance, Inc.
See Accompanying Notes to Financial Statements. 24 STATEMENT OF ASSETS AND LIABILITIES -------------------------------- June 30, 2005 Columbia Managed Municipals Fund
($) - ------------------------- -------------------------------------------------------- ----------- Assets Investments, at cost 361,277,697 ----------- Investments, at value 405,146,317 Cash 31,570 Receivable for: Fund shares sold 38,143 Interest 5,568,538 Deferred Trustees' compensation plan 14,265 ----------- Total Assets 410,798,833 -------------------------------------------------------- ----------- Liabilities Payable for: Investments purchased on a delayed delivery basis 2,161,700 Fund shares repurchased 191,414 Futures variation margin 66,422 Distributions 536,620 Investment advisory fee 129,725 Administration fee 39,578 Transfer agent fee 43,496 Pricing and bookkeeping fees 11,951 Chief compliance officer fees 1,297 Merger fees 36,003 Trustees' fees 1,238 Custody fee 202 Distribution and service fees 13,678 Deferred Trustees' fees 14,265 Other liabilities 72,317 ----------- Total Liabilities 3,319,906 Net Assets 407,478,927 -------------------------------------------------------- ----------- Composition of Net Assets Paid-in capital 361,872,331 Undistributed net investment income 390,383 Accumulated net realized gain 1,386,009 Net unrealized appreciation (depreciation) on: Investments 43,868,620 Futures contracts (38,416) ----------- Net Assets 407,478,927 -------------------------------------------------------- ----------- Class A Net assets 45,128,965 Shares outstanding 4,955,064 Net asset value per share 9.11(a) Maximum offering price per share ($9.11/0.9525) 9.56(b) -------------------------------------------------------- ----------- Class B Net assets 5,830,983 Shares outstanding 640,234 Net asset value and offering price per share 9.11(a) -------------------------------------------------------- ----------- Class C Net assets 2,219,294 Shares outstanding 243,676 Net asset value and offering price per share 9.11(a) -------------------------------------------------------- ----------- Class Z Net assets 354,299,685 Shares outstanding 38,901,500 Net asset value, offering and redemption price per share 9.11
(a)Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b)On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 25 STATEMENT OF OPERATIONS -------------------------------- For the Year Ended June 30, 2005 Columbia Managed Municipals Fund
($) - --------------------------- -------------------------------------------------------------- ---------- Investment Income Interest 21,578,212 Dividends 5,561 ---------- Total Investment Income 21,583,773 -------------------------------------------------------------- ---------- Expenses Investment advisory fee 1,757,076 Administration fee 499,769 Distribution fee: Class B 46,527 Class C 15,484 Service fee: Class A 102,462 Class B 13,710 Class C 4,565 Transfer agent fee 298,129 Pricing and bookkeeping fees 142,095 Trustees' fees 18,152 Custody fee 19,473 Chief compliance officer fees (See Note 4) 4,678 Merger costs 36,003 Non-recurring costs (See Note 8) 7,910 Other expenses 165,108 ---------- Total Expenses 3,131,141 Fees waived by Distributor - Class C (6,201) Non-recurring costs assumed by Investment Advisor (See Note 8) (7,910) Custody earnings credit (2,431) ---------- Net Expenses 3,114,599 ---------- Net Investment Income 18,469,174 -------------------------------------------------------------- ---------- Net Realized and Unrealized Net realized gain (loss) on: Gain (Loss) on Investments Investments 7,166,234 and Futures Contracts Futures contracts (1,048,306) ---------- Net realized gain 6,117,928 ---------- Net change in unrealized appreciation (depreciation) on: Investments 11,744,551 Futures contracts (228,676) ---------- Net change in unrealized appreciation (depreciation) 11,515,875 ---------- Net Gain 17,633,803 ---------- Net Increase in Net Assets from Operations 36,102,977
See Accompanying Notes to Financial Statements. 26 STATEMENT OF CHANGES IN NET ASSETS -------------------------------- Columbia Managed Municipals Fund
Year Ended June 30, ------------------------- Increase (Decrease) in Net Assets: 2005 ($) 2004 ($) - -------------------------------------- ---------------------------------------------------- ----------- ----------- Operations Net investment income 18,469,174 20,328,310 Net realized gain (loss) on investments and futures contracts 6,117,928 (1,253,955) Net change in unrealized appreciation (depreciation) on investments and futures contracts 11,515,875 (24,204,248) ----------- ----------- Net Increase (Decrease) from Operations 36,102,977 (5,129,893) ---------------------------------------------------- ----------- ----------- Distributions Declared to Shareholders From net investment income: Class A (1,978,398) (2,121,281) Class B (218,472) (269,381) Class C (78,648) (65,540) Class Z (16,343,506) (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 (18,619,024) (27,732,018) ---------------------------------------------------- ----------- ----------- Share Transactions Class A: Subscriptions 867,123 2,317,399 Distributions reinvested 1,168,101 1,867,215 Redemptions (5,951,837) (7,450,680) ----------- ----------- Net Decrease (3,916,613) (3,266,066) Class B: Subscriptions 321,120 384,216 Distributions reinvested 138,929 271,743 Redemptions (1,518,830) (2,432,358) ----------- ----------- Net Decrease (1,058,781) (1,776,399) Class C: Subscriptions 993,570 773,448 Distributions reinvested 40,846 66,607 Redemptions (801,393) (389,459) ----------- ----------- Net Increase 233,023 450,596 Class Z: Subscriptions 6,587,333 35,414,788 Distributions reinvested 10,277,728 16,961,581 Redemptions (47,622,286) (86,349,551) ----------- ----------- Net Decrease (30,757,225) (33,973,182) Net Decrease from Share Transactions (35,499,596) (38,565,051) ----------- ----------- Total Decrease in Net Assets (18,015,643) (71,426,962) ---------------------------------------------------- ----------- ----------- Net Assets Beginning of period 425,494,570 496,921,532 End of period 407,478,927 425,494,570 Undistributed net investment income at end of period 390,383 593,469
See Accompanying Notes to Financial Statements. 27 - -------------------------------------------------------------------------------- Columbia Managed Municipals Fund
Year Ended June 30, ----------------------- 2005 2004 - ----------------- ------------------------------------- ---------- ---------- Changes in Shares Class A: Subscriptions 96,296 257,713 Issued for distributions reinvested 129,916 206,432 Redemptions (661,348) (830,384) ---------- ---------- Net Decrease (435,136) (366,239) Class B: Subscriptions 35,761 42,983 Issued for distributions reinvested 15,454 30,019 Redemptions (168,795) (270,238) ---------- ---------- Net Decrease (117,580) (197,236) Class C: Subscriptions 110,252 85,547 Issued for distributions reinvested 4,543 7,364 Redemptions (89,358) (43,146) ---------- ---------- Net Increase 25,437 49,765 Class Z: Subscriptions 732,286 3,916,866 Issued for distributions reinvested 1,143,011 1,875,256 Redemptions (5,304,336) (9,573,470) ---------- ---------- Net Decrease (3,429,039) (3,781,348)
See Accompanying Notes to Financial Statements. 28 NOTES TO FINANCIAL STATEMENTS -------------------------------- June 30, 2005 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 have quotations which management believes are not appropriate, are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. If a security is valued at "fair value", such value is likely to be different from the last quoted market price for the security. Security Transactions Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. 29 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund Futures Contracts The Fund may invest in municipal and U.S. Treasury futures contracts. The Fund will invest in these instruments to hedge against the effects of changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions, for 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. 30 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund Note 3. Federal Tax Information The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended June 30, 2005, permanent book and tax basis differences resulting primarily from differing treatments for discount accretion/premium amortization on debt securities and market discount reclassifications were identified and reclassified among the components of the Fund's net assets as follows:
Undistributed Accumulated Net Investment Net Realized Paid-In Income Gain Capital ----------------------------------- $(53,236) $53,237 $(1) -----------------------------------
Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years ended June 30, 2005 and June 30, 2004 was as follows:
June 30, June 30, 2005 2004 ------------------------------------------------ Distributions paid from: ------------------------------------------------ Tax-exempt income $18,592,979 $19,931,482 ------------------------------------------------ Ordinary income 26,045 40,499 ------------------------------------------------ Long-term capital gains -- 7,760,037 ------------------------------------------------
As of June 30, 2005, the components of distributable earnings on a tax basis were as follows:
Undistributed Undistributed Undistributed Tax-Exempt Ordinary Long-Term Net Unrealized Income Income Capital Gains Appreciation* -------------------------------------------------------- $716,486 $-- $4,553,172 $44,095,194 --------------------------------------------------------
*The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to discount accretion/premium amortization on debt securities. Unrealized appreciation and depreciation at June 30, 2005, based on cost of investments for federal income tax purposes, was: Unrealized appreciation $45,732,636 Unrealized depreciation (1,637,442) ----------- Net unrealized appreciation $44,095,194 -----------------------------------------
Capital loss carryforwards of $1,522,991 were utilized during the year ended June 30, 2005. Note 4. Fees and Compensation Paid to Affiliates Investment Advisory Fee Columbia Management Advisors, Inc. ("Columbia"), an indirect wholly owned subsidiary of Bank of America Corporation ("BOA"), is the investment advisor to the Fund. Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets at the following annual rates:
Average Daily Net Assets Annual Fee Rate -------------------------------------------- First $100 million 0.450% -------------------------------------------- $100 million to $200 million 0.425% -------------------------------------------- $200 million to $1 billion 0.400% -------------------------------------------- Over $1 billion 0.375% --------------------------------------------
For the year ended June 30, 2005, the Fund's 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% -------------------------------------------- $100 million to $200 million 0.125% -------------------------------------------- $200 million to $1 billion 0.100% -------------------------------------------- Over $1 billion 0.075% --------------------------------------------
For the year ended June 30, 2005, the Fund's 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 31 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund 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 year ended June 30, 2005, the 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 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. For the year ended June 30, 2005, the Fund's 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 year ended June 30, 2005, the Distributor has retained net underwriting discounts of $1,093 on sales of the Fund's Class A shares and received net CDSC of $8,138 and $345 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 allows 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 (which was acquired by the Fund on November 1, 2002) 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 year ended June 30, 2005, the 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 year ended June 30, 2005, the 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. 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 for the Office of the Chief Compliance Officer will not exceed $15,000 per year. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. Other Columbia provides certain services to the Fund related to Sarbanes-Oxley compliance. For the year ended June 30, 2005, the Fund paid $1,919 to Columbia for such services. This amount is included in "Other expenses" on the Statement of Operations. 32 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund Note 5. Purchases and Sales of Securities For the year ended June 30, 2005, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $66,754,659 and $101,741,640, respectively. Note 6. Line of Credit The Fund and other affiliated funds participate in a $350,000,000 committed unsecured revolving line of credit provided by State Street Bank and Trust Company. Borrowings are used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at a rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum is accrued and apportioned among the participating funds based on their pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the year ended June 30, 2005, the Fund did not borrow under this arrangement. Note 7. Shares of Beneficial Interest As of June 30, 2005, the Fund had shareholders that held greater than 5% of the shares outstanding. Subscription and redemption activity of these accounts may have a significant effect on the operations of the Fund. The number of such accounts and the percentage of shares of beneficial interest outstanding held therein are as follows:
Number of % of Shares Shareholders Outstanding Held ----------------------------- 1 6.0% -----------------------------
Note 8. 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 Service, Inc., except for Radian Asset Assurance, Inc. which is rated Aa3. At June 30, 2005, private insurers who insured greater than 5% of the total investments of the Fund were as follows:
% of Total Insurer Investments ------------------------------------------------ MBIA Insurance Corp. 22.1% ------------------------------------------------ Financial Guaranty Insurance Co. 16.4 ------------------------------------------------ Ambac Assurance Corp. 13.6 ------------------------------------------------ Financial Security Assurance, Inc. 7.2 ------------------------------------------------
Geographic Concentration The Fund has greater than 5% of its total investments at June 30, 2005 invested in debt obligations issued by the states of California, Georgia, Illinois, Massachusetts, New York, North Carolina 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 that there is no established secondary market. Industry Focus The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. Legal Proceedings On February 9, 2005, Columbia 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 Securities and Exchange Commission ("SEC") 33 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund (the "SEC Order"). The SEC Order and the NYAG Settlement are referred to collectively as the "Settlements". The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle which Columbia Group entered into with the SEC and NYAG in March 2004. Under the terms of the SEC Order, the Columbia Group has agreed among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review the Columbia Group's applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The Columbia Funds have also voluntarily undertaken to implement certain governance measures designed to maintain the independence of their boards of trustees. The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce certain Columbia Funds, Nations Funds and other mutual funds management fees collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions. Pursuant to the procedures set forth in the SEC order, the $140 million in settlement amounts described above will be distributed in accordance with a distribution plan 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. At this time, the distribution plan is still under development. As such, any gain to the Fund or its shareholders cannot currently be determined. As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of fund shares, which could increase transaction costs or operating expenses, or have other adverse consequences for the funds. A copy of the SEC Order is available on the SEC website at http://www.sec.gov. A copy of the NYAG Settlement is available as part of the Bank of America Corporation Form 8-K filing on February 10, 2005. In connection with events described in detail above, various parties have filed suit against certain funds, the Trustees of the Columbia Funds, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America Corporation and its affiliated entities. More than 300 cases including those filed against entities unaffiliated with the funds, their Boards, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America Corporation and its affiliated entities have been transferred to the Federal District Court in Maryland and consolidated in a multi-district proceeding (the "MDL"). The derivative cases purportedly brought on behalf of the Columbia Funds in the MDL have been consolidated under the lead case. The fund derivative plaintiffs allege that the funds were harmed by market timing and late trading activity and seek, among other things, removal of the trustees of the Columbia Funds, removal of the Columbia Group, disgorgement of all management fees and monetary damages. On March 21, 2005 purported class action plaintiffs filed suit in Massachusetts state court alleging that the conduct, including market timing, entitles Class B shareholders in certain Columbia funds to an exemption from contingent deferred sales charges upon early redemption (the "CDSC Lawsuit"). The CDSC Lawsuit has been removed to federal court in Massachusetts and the federal Judicial Panel has conditionally ordered its transfer to the MDL. The MDL is ongoing. Accordingly, an estimate of the financial impact of this litigation on any fund, if any, cannot currently be made. On January 11, 2005, a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Columbia Funds 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. In 2004, certain Columbia funds, advisers and affiliated entities were named as defendants in certain purported shareholder class and derivative actions 34 - -------------------------------------------------------------------------------- June 30, 2005 Columbia Managed Municipals Fund making claims, including claims under the Investment Company and the Investment Advisers Acts of 1940 and state law. The suits allege, inter alia, that the fees and expenses paid by the funds are excessive and that the advisers and their affiliates inappropriately used fund assets to distribute the funds and for other improper purpose. On March 2, 2005, the actions were consolidated in the Massachusetts federal court as In re Columbia Entities Litigation. The plaintiffs filed a consolidated amended complaint on June 9, 2005. The Fund 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 Fund. For the year ended June 30, 2005, Columbia has assumed $7,910 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. Note 9. Proposed Reorganization On February 10, 2005, the Board of Trustees approved a proposal to merge the Columbia Managed Municipal Bond Fund into the Columbia Tax-Exempt Bond Fund. The merger is subject to approval by shareholders of the fund and the satisfaction of certain other conditions. The merger is expected to be completed in the third quarter of 2005. Any merger related cost paid by the fund will be reimbursed if the merger is not approved by the shareholders. 35 FINANCIAL HIGHLIGHTS -------------------------------- Columbia Managed Municipals Fund Selected data for a share outstanding throughout each period is as follows:
Period Ended Year Ended June 30, June 30, -------------------- 2003(a) Class A Shares 2005 2004 -------- - ------------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $ 8.74 $ 9.38 $ 9.01 - ----------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.38 0.38 0.26 Net realized and unrealized gain (loss) on investments and futures contracts 0.37 (0.49) 0.37 ------- ------- -------- Total from Investment Operations 0.75 (0.11) 0.63 - ----------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.38) (0.38) (0.26) From net realized gains -- (0.15) -- ------- ------- -------- Total Distributions Declared to Shareholders (0.38) (0.53) (0.26) - ----------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.11 $ 8.74 $ 9.38 Total return (c) 8.77% (1.20)% 7.06%(d) - ----------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (e) 0.91% 0.94% 0.97%(f) Net investment income (e) 4.22% 4.23% 4.27%(f) Portfolio turnover rate 16% 8% 40% Net assets, end of period (000's) $45,129 $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. 36 FINANCIAL HIGHLIGHTS -------------------------------- Columbia Managed Municipals Fund Selected data for a share outstanding throughout each period is as follows:
Period Ended Year Ended June 30, June 30, ---------------------- 2003(a) Class B Shares 2005 2004 -------- - -------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 8.74 $ 9.38 $ 9.01 - ------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.31 0.31 0.21 Net realized and unrealized gain (loss) on investments and futures contracts 0.38 (0.49) 0.37 -------- ------- -------- Total from Investment Operations 0.69 (0.18) 0.58 - ------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.32) (0.31) (0.21) From net realized gains -- (0.15) -- -------- ------- -------- Total Distributions Declared to Shareholders (0.32) (0.46) (0.21) - ------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.11 $ 8.74 $ 9.38 Total return (c) 7.96% (1.94)% 6.54%(d) - ------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (e) 1.66% 1.69% 1.72%(f) Net investment income (e) 3.47% 3.48% 3.52%(f) Portfolio turnover rate 16% 8% 40% Net assets, end of period (000's) $5,831 $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. 37 FINANCIAL HIGHLIGHTS -------------------------------- Columbia Managed Municipals Fund Selected data for a share outstanding throughout each period is as follows:
Period Ended Year Ended June 30, June 30, ---------------------- 2003(a) Class C Shares 2005 2004 -------- - -------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 8.74 $ 9.38 $ 9.01 - ------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.34 0.34 0.25 Net realized and unrealized gain (loss) on investments and futures contracts 0.37 (0.49) 0.35 -------- ------- -------- Total from Investment Operations 0.71 (0.15) 0.60 - ------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.34) (0.34) (0.23) From net realized gains -- (0.15) -- -------- ------- -------- Total Distributions Declared to Shareholders (0.34) (0.49) (0.23) - ------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.11 $ 8.74 $ 9.38 Total return (c)(d) 8.28% (1.65)% 6.75%(e) - ------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (f) 1.36% 1.36% 1.02%(g) Net investment income (f) 3.77% 3.81% 4.20%(g) Waiver/reimbursement 0.30% 0.33% 0.70%(g) Portfolio turnover rate 16% 8% 40% Net assets, end of period (000's) $2,219 $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. 38 FINANCIAL HIGHLIGHTS -------------------------------- Columbia Managed Municipals Fund Selected data for a share outstanding throughout each period is as follows:
Year Ended June 30, ------------------------------------------------------------- Class Z Shares 2005 2004 2003(a) 2002 2001 - --------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 8.74 $ 9.38 $ 8.95 $ 8.99 $ 8.65 - --------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.40 0.40 0.42 0.43(c) 0.45 Net realized and unrealized gain (loss) on investments and futures contracts 0.37 (0.49) 0.41 0.18(c) 0.41 -------- -------- -------- -------- -------- Total from Investment Operations 0.77 (0.09) 0.83 0.61 0.86 - --------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.40) (0.40) (0.40) (0.44) (0.45) From net realized gains -- (0.15) -- (0.21) (0.07) -------- -------- -------- -------- -------- Total Distributions Declared to Shareholders (0.40) (0.55) (0.40) (0.65) (0.52) - --------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.11 $ 8.74 $ 9.38 $ 8.95 $ 8.99 Total return (d) 8.99% (1.02)% 9.50% 7.06% 10.13% - --------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets/Supplemental Data: Expenses (e) 0.69% 0.72% 0.76% 0.76% 0.74% Net investment income (e) 4.44% 4.45% 4.58% 4.82%(c) 5.07% Portfolio turnover rate 16% 8% 40% 17% 17% Net assets, end of period (000's) $354,300 $369,872 $432,407 $442,660 $454,366 - ---------------------------------------------------------------------------------------------------------------------
(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 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 the period 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)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 39 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------- Columbia Managed Municipals Fund
To the Trustees of Columbia Funds Trust IX and the Shareholders of Columbia Managed Municipals Fund In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia Managed Municipals Fund (the "Fund") (a series of Columbia Funds Trust IX) at June 30, 2005, the results of its operations for the year then ended and, the changes in its net assets and the financial highlights for the years ended June 30, 2005 and 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the three years in the period ended June 30, 2003 were audited by other independent accountants whose report dated August 19, 2003 expressed an unqualified opinion on those statements. PricewaterhouseCoopers LLP Boston, Massachusetts August 25, 2005 40 UNAUDITED INFORMATION -------------------------------- Columbia Managed Municipals Fund Federal Income Tax Information For the fiscal year ended June 30, 2005, the Fund designates long-term capital gains of $4,553,172. 99.86% of the distributions from net investment income will be treated as exempt income for federal income tax purposes. As of June 30, 2005, 14.88% of distributions from net investment income is subject to alternative minimum tax. 41 TRUSTEES -------------------------------- Columbia Managed Municipals Fund The Trustees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. Name, address and age, Position with funds, Principal occupation(s) during past five years, Number of portfolios in Year first elected or appointed to office/1/ Columbia Funds Complex overseen by trustee/director, Other directorships held Disinterested Trustees DOUGLAS A. HACKER (Age 49) Executive Vice President-Strategy of United Airlines (airline) since P.O. Box 66100 December, 2002 (formerly President of UAL Loyalty Services (airline) from Chicago, IL 60666 September, 2001 to December, 2002; Executive Vice President and Chief Trustee (since 1996) Financial Officer of United Airlines from July, 1999 to September, 2001; Senior Vice President-Finance from March, 1993 to July, 1999). Oversees 104, Nash Finch Company (food distributor) --------------------------------------------------------------------------- JANET LANGFORD KELLY (Age 47) Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP (law firm); Adjunct 9534 W. Gull Lake Drive Professor of Law, Northwestern University, since September, 2004 (formerly Richland, MI 49083-8530 Chief Administrative Officer and Senior Vice President, Kmart Holding Trustee (since 1996) Corporation (consumer goods), from September, 2003 to March, 2004; Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999). Oversees 104, None --------------------------------------------------------------------------- RICHARD W. LOWRY (Age 69) Private Investor since August, 1987 (formerly Chairman and Chief Executive 10701 Charleston Drive Officer, U.S. Plywood Corporation (building products manufacturer)). Vero Beach, FL 32963 Oversees 106/3/, None Trustee (since 1995) --------------------------------------------------------------------------- CHARLES R. NELSON (Age 62) Professor of Economics, University of Washington, since January, 1976; Department of Economics Ford and Louisa Van Voorhis Professor of Political Economy, University of University of Washington Washington, since September, 1993 (formerly Director, Institute for Seattle, WA 98195 Economic Research, University of Washington from September, 2001 to June, Trustee (since 1981) 2003) Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. Oversees 104, None --------------------------------------------------------------------------- JOHN J. NEUHAUSER (Age 62) Academic Vice President and Dean of Faculties since August, 1999, Boston 84 College Road College (formerly Dean, Boston College School of Management from Chestnut Hill, MA 02467-3838 September, 1977 to August, 1999). Oversees 106/3/, Saucony, Inc. (athletic Trustee (since 1985) footwear) ---------------------------------------------------------------------------
/1/In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex. /3/Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. 42 - -------------------------------------------------------------------------------- Columbia Managed Municipals Fund Name, address and age, Position with funds, Principal occupation(s) during past five years, Number of portfolios in Year first elected or appointed to office/1/ Columbia Funds Complex overseen by trustee/director, Other directorships held Disinterested Trustees PATRICK J. SIMPSON (Age 61) Partner, Perkins Coie L.L.P. (law firm). Oversees 104, None 1120 N.W. Couch Street Tenth Floor Portland, OR 97209-4128 Trustee (since 2000) --------------------------------------------------------------------------- THOMAS E. STITZEL (Age 69) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 2208 Tawny Woods Place 1999, College of Business, Boise State University); Chartered Financial Boise, ID 83706 Analyst. Oversees 104, None Trustee (since 1998) --------------------------------------------------------------------------- THOMAS C. THEOBALD (Age 68) Partner and Senior Advisor, Chicago Growth Partners (private equity 8 Sound Shore Drive, investing) since September, 2004 (formerly Managing Director, William Suite 285 Blair Capital Partners (private equity investing) from September, 1994 to Greenwich, CT 06830 September, 2004). Oversees 104, Anixter International (network support Trustee and Chairman of the Board/4/ equipment distributor); Ventas, Inc. (real estate investment trust); Jones (since 1996) Lang LaSalle (real estate management services) and Ambac Financial Group (financial guaranty insurance) --------------------------------------------------------------------------- ANNE-LEE VERVILLE (Age 59) Retired since 1997 (formerly General Manager, Global Education Industry, 359 Stickney Hill Road IBM Corporation (computer and technology) from 1994 to 1997). Oversees Hopkinton, NH 03229 104, Chairman of the Board of Directors, Enesco Group, Inc. (designer, Trustee (since 1998) importer and distributor of giftware and collectibles) --------------------------------------------------------------------------- RICHARD L. WOOLWORTH (Age 64) Retired since December 2003 (formerly Chairman and Chief Executive 100 S.W. Market Street Officer, The Regence Group (regional health insurer); Chairman and Chief #1500 Executive Officer, BlueCross BlueShield of Oregon; Certified Public Portland, OR 97207 Accountant, Arthur Young & Company). Oversees 104, Northwest Natural Gas Trustee (since 1991) Co. (natural gas service provider) --------------------------------------------------------------------------- Interested Trustee WILLIAM E. MAYER/2/ (Age 65) Partner, Park Avenue Equity Partners (private equity) since February, 1999 399 Park Avenue (formerly Partner, Development Capital LLC from November 1996 to February, Suite 3204 1999). Oversees 106/3/, Lee Enterprises (print media), WR Hambrecht + Co. New York, NY 10022 (financial service provider); Reader's Digest (publishing); OPENFIELD Trustee (since 1994) Solutions (retail industry technology provider) ---------------------------------------------------------------------------
/2/Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co./ / /3/Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. /4/Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. The Statement of Additional Information Includes additional information about the Trustees of the Funds and is available, without charge, upon request by calling 800-426-3750. 43 OFFICERS -------------------------------- Columbia Managed Municipals Fund Name, address and age, Position with Columbia Funds, Year first elected or appointed to office Principal occupation(s) during past five years CHRISTOPHER L. WILSON (Age 47) Head of Mutual Funds since August, 2004 and Senior Vice President of the One Financial Center Advisor since January, 2005; President of the Columbia Funds, Liberty Boston, MA 02111 Funds and Stein Roe Funds since October, 2004; President and Chief President (since 2004) Executive Officer of the Nations Funds since January, 2005; President of the Galaxy Funds since April 2005; Director of Bank of America Global Liquidity Funds, plc since May 2005; Director of Banc of America Capital Management (Ireland), Limited since May 2005; Senior Vice President of BACAP Distributors LLC since January, 2005; Director of FIM Funding, Inc. since January, 2005; Senior Vice President of Columbia Funds Distributor, Inc. since January, 2005; Director of Columbia Funds Services, Inc. since January, 2005 (formerly President and Chief Executive Officer, CDC IXIS Asset Management Services, Inc. from September, 1998 to August, 2004). --------------------------------------------------------------------------- J. KEVIN CONNAUGHTON (Age 40) Treasurer of the Columbia Funds since October, 2003 and of the Liberty One Financial Center Funds, Stein Roe Funds and All-Star Funds since December, 2000; Vice Boston, MA 02111 President of the Advisor since April, 2003 (formerly President of the Treasurer (since 2000) Columbia Funds, Liberty Funds and Stein Roe Funds from February, 2004 to October, 2004; Chief Accounting Officer and Controller of the Liberty Funds and All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002 (formerly Treasurer from December, 2002 to December, 2004 and President from February, 2004 to December, 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of Colonial Management Associates, Inc. from February, 1998 to October, 2000). --------------------------------------------------------------------------- MARY JOAN HOENE (Age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds, 40 West 57th Street Liberty Funds, Stein Roe Funds and All-Star Funds since August, 2004 New York, NY 10005 (formerly Partner, Carter, Ledyard & Milburn LLP from January, 2001 to Senior Vice President and August, 2004; Counsel, Carter, Ledyard & Milburn LLP from November, 1999 Chief Compliance Officer (since 2004) to December, 2000; Vice President and Counsel, Equitable Life Assurance Society of the United States from April, 1998 to November, 1999). --------------------------------------------------------------------------- MICHAEL G. CLARKE (Age 35) Chief Accounting Officer of the Columbia Funds, Liberty Funds, Stein Roe One Financial Center Funds and All-Star Funds since October, 2004 (formerly Controller of the Boston, MA 02111 Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds from Chief Accounting Officer (since 2004) May, 2004 to October, 2004; Assistant Treasurer from June, 2002 to May, 2004; Vice President, Product Strategy & Development of the Liberty Funds and Stein Roe Funds from February, 2001 to June, 2002; Assistant Treasurer of the Liberty Funds, Stein Roe Funds and the All-Star Funds from August, 1999 to February, 2001; Audit Manager, Deloitte & Touche LLP from May, 1997 to August, 1999). --------------------------------------------------------------------------- JEFFREY R. COLEMAN (Age 35) Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and One Financial Center All-Star Funds since October, 2004 (formerly Vice President of CDC IXIS Boston, MA 02111 Asset Management Services, Inc. and Deputy Treasurer of the CDC Nvest Controller (since 2004) Funds and Loomis Sayles Funds from February, 2003 to September, 2004; Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August, 2000 to February, 2003; Tax Manager of PFPC, Inc. from November, 1996 to August, 2000). --------------------------------------------------------------------------- R. SCOTT HENDERSON (Age 45) Secretary of the Columbia Funds, Liberty Funds and Stein Roe Funds since One Financial Center December, 2004 (formerly Of Counsel, Bingham McCutchen from April, 2001 to Boston, MA 02111 September, 2004; Executive Director and General Counsel, Massachusetts Secretary (since 2004) Pension Reserves Investment Management Board from September, 1997 to March, 2001). ---------------------------------------------------------------------------
44 IMPORTANT INFORMATION ABOUT THIS REPORT -------------------------------- Columbia Managed Municipals Fund Transfer Agent Columbia Management Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800-345-6611 Distributor Columbia Management Distributors, Inc. One Financial Center Boston MA 02111 Investment Advisor Columbia Management Advisors, Inc. 100 Federal Street Boston MA 02110 The fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia 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 fund and with the most recent copy of the Columbia Funds Performance Update. A description of the policies and procedures that the fund uses to determine how to vote proxies and a copy of the fund's voting record are available (i) at www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2005 is available from the SEC's website. Information regarding how the fund voted proxies relating to portfolio securities is also available from the fund's website. The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Columbia Management is the primary investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and advise institutional and mutual fund portfolios. Columbia Management Advisors, Inc. will combine with Banc of America Capital Management, LLC on or about September 30, 2005. At that time, the newly combined advisor will undergo a name change to Columbia Management Advisors, LLC and will continue to operate as a SEC-registered investment advisor, wholly owned subsidiary of Bank of America, N.A. and part of Columbia Management. 45 [GRAPHIC APPEARS HERE] Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia Managed Municipals Fund Annual Report, June 30, 2005 Columbia Management(R) Item 2. Code of Ethics. (a) The registrant has, as of the end of the period covered by this report, adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (b) During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, there were not any waivers or implicit waivers to a provision of the code of ethics adopted in 2(a) above. Item 3. Audit Committee Financial Expert. The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members of the registrant's Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr. Woolworth are each independent trustees, as defined in paragraph (a)(2) of this item's instructions and collectively constitute the entire Audit Committee. Item 4. Principal Accountant Fees and Services. Fee information below is disclosed in aggregate for the two series of the registrant whose reports to stockholders are included in this annual filing. Effective March 1, 2004, the two series of the registrant engaged new independent accountants. Unless otherwise noted, fees disclosed below represent fees paid or accrued to the current and predecessor principal accountants while each was engaged by the registrant. (a) Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended June 30, 2005 and June 30, 2004 are approximately as follows: 2005 2004 $ 57,400 $ 52,800 Audit Fees include amounts related to the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. (b) Aggregate Audit-Related Fees billed by the principal accountant for professional services rendered during the fiscal years ended June 30, 2005 and June 30, 2004 are approximately as follows: 2005 2004 $ 7,400 $ 8,000 Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported in Audit Fees above. In both fiscal years 2005 and 2004, Audit-Related Fees include certain agreed-upon procedures performed for semi-annual shareholder reports. (c) Aggregate Tax Fees billed by the principal accountant for professional services rendered during the fiscal years ended June 30, 2005 and June 30, 2004 are approximately as follows: 2005 2004 $ 6,400 $ 7,100 Tax Fees in both fiscal years 2005 and 2004 consist primarily of the review of annual tax returns and include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning. (d) Aggregate All Other Fees billed by the principal accountant for professional services rendered during the fiscal years ended June 30, 2005 and June 30, 2004 are approximately as follows: 2005 2004 $ 0 $ 0 All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above. None of the amounts described in paragraphs (a) through (d) above were approved pursuant to the "de minimus" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (e)(1) Audit Committee Pre-Approval Policies and Procedures I. General Overview The Audit Committee of the registrant has adopted a formal policy (the "Policy") which sets forth the procedures and the conditions pursuant to which the Audit Committee will pre-approve (i) all audit and non-audit (including audit related, tax and all other) services provided by the registrant's independent auditor to the registrant and individual funds (collectively "Fund Services"), and (ii) all non-audit services provided by the registrant's independent auditor to the funds' adviser or a control affiliate of the adviser, that relate directly to the funds' operations and financial reporting (collectively "Fund-related Adviser Services"). A "control affiliate" is an entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the funds, and the term "adviser" is deemed to exclude any unaffiliated sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser. The adviser and control affiliates are collectively referred to as "Adviser Entities." The Audit Committee uses a combination of specific (on a case-by-case basis as potential services are contemplated) and general (pre-determined list of permitted services) pre-approvals. Unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent auditor. The Policy does not delegate the Audit Committee's responsibilities to pre-approve services performed by the independent auditor to management. II. General Procedures On an annual basis, the Fund Treasurer and/or Director of Trustee Administration shall submit to the Audit Committee a schedule of the types of Fund Services and Fund-related Adviser Services that are subject to general pre-approval. These schedules will provide a description of each type of service that is subject to general pre-approval and, where possible, will provide estimated fees for each instance of providing each service. This general pre-approval and related fees (where provided) will generally cover a one-year period (for example, from June 1 through May 31 of the following year). The Audit Committee will review and approve the types of services and review the projected fees for the next one-year period and may add to, or subtract from, the list of general pre-approved services from time to time, based on subsequent determinations. This approval acknowledges that the Audit Committee is in agreement with the specific types of services that the independent auditor will be permitted to perform. The fee amounts will be updated to the extent necessary at other regularly scheduled meetings of the Audit Committee. In addition to the fees for each individual service, the Audit Committee has the authority to implement a fee cap on the aggregate amount of non-audit services provided to an individual fund. If, subsequent to general pre-approval, a fund, its investment adviser or a control affiliate determines that it would like to engage the independent auditor to perform a service that requires pre-approval and that is not included in the general pre-approval list, the specific pre-approval procedure shall be as follows: . A brief written request shall be prepared by management detailing the proposed engagement with explanation as to why the work is proposed to be performed by the independent auditor; . The request should be addressed to the Audit Committee with copies to the Fund Treasurer and/or Director of Trustee Administration; . The Fund Treasurer and/or Director of Trustee Administration will arrange for a discussion of the service to be included on the agenda for the next regularly scheduled Audit Committee meeting, when the Committee will discuss the proposed engagement and approve or deny the request. . If the timing of the project is critical and the project needs to commence before the next regularly scheduled meeting, the Chairperson of the Audit Committee may approve or deny the request on behalf of the Audit Committee, or, in the Chairperson's discretion, determine to call a special meeting of the Audit Committee for the purpose of considering the proposal. Should the Chairperson of the Audit Committee be unavailable, any other member of the Audit Committee may serve as an alternate for the purpose of approving or denying the request. Discussion with the Chairperson (or alternate, if necessary) will be arranged by the Fund Treasurer and/or Director of Trustee Administration. The independent auditor will not commence any such project unless and until specific approval has been given. III. Certain Other Services Provided to Adviser Entities The Audit Committee recognizes that there are cases where services proposed to be provided by the independent auditor to the adviser or control affiliates are not Fund-related Adviser Services within the meaning of the Policy, but nonetheless may be relevant to the Audit Committee's ongoing evaluation of the auditor's independence and objectivity with respect to its audit services to the funds. As a result, in all cases where an Adviser Entity engages the independent auditor to provide audit or non-audit services that are not Fund Services or Fund-related Adviser Services, were not subject to pre-approval by the Audit Committee, and the projected fees for any such engagement (or the aggregate of all such engagements during the period covered by the Policy) exceeds a pre-determined threshold established by the Audit Committee; the independent auditor, Fund Treasurer and/or Director of Trustee Administration will notify the Audit Committee not later than its next meeting. Such notification shall include a general description of the services provided, the entity that is to be the recipient of such services, the timing of the engagement, the entity's reasons for selecting the independent auditor, and the projected fees. Such information will allow the Audit Committee to consider whether non-audit services provided to the adviser and Adviser Entities, which were not subject to Audit Committee pre-approval, are compatible with maintaining the auditor's independence with respect to the Funds. IV. Reporting to the Audit Committee The Fund Treasurer or Director of Trustee Administration shall report to the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services initiated since the last such report was rendered, including: . A general description of the services, and . Actual billed and projected fees, and . The means by which such Fund Services or Fund-related Adviser Services were pre-approved by the Audit Committee. In addition, the independent auditor shall report to the Audit Committee annually, and no more than 90 days prior to the filing of audit reports with the SEC, all non-audit services provided to entities in the funds' "investment company complex," as defined by SEC rules, that did not require pre-approval under the Policy. V. Amendments; Annual Approval by Audit Committee The Policy may be amended from time to time by the Audit Committee. Prompt notice of any amendments will be provided to the independent auditor, Fund Treasurer and Director of Trustee Administration. The Policy shall be reviewed and approved at least annually by the Audit Committee. ***** (e)(2) The percentage of services described in paragraphs (b) through (d) of this Item approved pursuant to the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during both fiscal years ended June 30, 2005 and June 30, 2004 was zero. (f) Not applicable. (g) All non-audit fees billed by the registrant's accountant for services rendered to the registrant for the fiscal years ended June 30, 2005 and June 30, 2004 are disclosed in (b) through (d) of this Item. During the fiscal years ended June 30, 2005 and June 30, 2004, there were no Audit-Related Fees or Tax Fees that were approved for services to the investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. During the fiscal years ended June 30, 2005 and June 30, 2004, All Other Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were approximately $95,500 and $95,000, respectively. For both fiscal years, All Other Fees consist primarily of internal controls reviews of the registrant's transfer agent. The percentage of Audit-Related Fees, Tax Fees and All Other Fees required to be approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception during both fiscal years ended June 30, 2005 and June 30, 2004 was zero. (h) The registrant's Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant's adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence. The Audit Committee determined that the provision of such services is compatible with maintaining the principal accountant's independence. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments The registrant's "Schedule I - Investments in securities of unaffiliated issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. There have not been any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, since those procedures were last disclosed in response to requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item. Item 11. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officers, based on their evaluation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing of this report, has concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant's management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH. (a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (a)(3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Columbia Funds Trust IX --------------------------------------------------- By (Signature and Title) /S/ Christopher L. Wilson -------------------------------------- Christopher L. Wilson, President Date August 29, 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 August 29, 2005 ----------------------------------------------------------- By (Signature and Title) /S/ J. Kevin Connaughton -------------------------------------- J. Kevin Connaughton, Treasurer Date August 29, 2005 ----------------------------------------------------------- EX-99.CODE 2 dex99code.txt CODE OF ETHICS COLUMBIA MANAGEMENT GROUP FAMILY OF FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code This Code of Ethics (the "Code") for the investment companies within the Columbia Management Group fund complex (collectively the "Funds" and each, a "Fund") applies to the Funds' Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, and Director of Trustee Administration (the "Covered Officers") for the purpose of promoting: . honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; . full, fair, accurate, timely and understandable disclosure in reports and documents that a Fund files with, or submits to, the Securities and Exchange Commission ("SEC"), and in other public communications made by a Fund; . compliance with applicable laws and governmental rules and regulations; . the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and . accountability for adherence to the Code. Each Covered Officer shall adhere to a high standard of business ethics and shall be sensitive to situations that may give rise to actual or apparent conflicts of interest. II. Administration of the Code The Boards of Trustees and Boards of Directors of the Funds (collectively, the "Board") shall designate an individual to be primarily responsible for the administration of the Code (the "Code Officer"). The Code shall be administered by the Columbia Management Group Compliance Department. In the absence of the Code Officer, his or her designee shall serve as the Code Officer, but only on a temporary basis. Each Fund has designated a chief legal officer (the "Chief Legal Officer") for purposes of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. The Chief Legal Officer of a Fund shall assist the Fund's Code Officer in administration of this Code. The Chief Legal Officer shall be responsible for applying this Code to specific situations in which questions are presented under it (in consultation with Fund counsel, where appropriate) and has the authority to interpret this Code in any particular situation. However, any waivers sought by a Covered Officer must be approved by each Audit Committee of the Funds (collectively, the "Audit Committee"). III. Managing Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his/her service to, a Fund. For example, a conflict of interest would arise if a Covered Officer, or a family member, receives improper personal benefits as a result of the Covered Officer's position with a Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and a Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (the "Company Act") and the Investment Advisers Act of 1940 (the "Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Fund because of their status as "affiliated persons" of the Fund. A Fund's and its investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of those provisions. This Code does not, and is not intended to, repeat or replace those programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between a Fund and its investment adviser, administrator, principal underwriter, pricing and bookkeeping agent and/or transfer agent (each, a "Service Provider") of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Fund or for a Service Provider, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Service Provider and a Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the Service Provider and is consistent with the performance by the Covered Officers of their duties as officers of a Fund. In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions of the Company Act and the Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of a Fund. Each Covered Officer must: . not use personal influence or personal relationships improperly to influence investment decisions or financial reporting by a Fund whereby the Covered Officer or an immediate family member would benefit personally to the detriment of a Fund; and . not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer or an immediate family member rather than the benefit of the Fund./1/. There are some conflict of interest situations that must be approved by the Code Officer, after consultation with the Chief Legal Officer. Those situations include, but are not limited to,: . service as director on the board of any public or private company; . the receipt of any gifts in excess of $100 in the aggregate from a third party that does or seeks to do business with the Funds during any 12-month period; . the receipt of any entertainment from any company with which a Fund has current or prospective business dealings, unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; . any material ownership interest in, or any consulting or employment relationship with, any Fund service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; . a direct or indirect material financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. IV. Disclosure and Compliance Each Covered Officer shall: . be familiar with the disclosure requirements generally applicable to the Funds; . not knowingly misrepresent, or cause others to misrepresent, facts about any Fund to others, whether within or outside the Fund, - ---------- /1/ For purposes of this Code, personal trading activity of the Covered Officers shall be monitored in accordance with the Columbia Management Group Code of Ethics. Each Covered Officer shall be considered an "Access Person" under such Code. The term "immediate family" shall have the same meaning as provided in such Code. including to the Fund's trustees and auditors, and to governmental regulators and self-regulatory organizations; . to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and . promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. V. Reporting and Accountability Each Covered Officer must: . upon adoption of the Code (or after becoming a Covered Officer), affirm in writing to the Board that he/she has received, read and understands the Code; . annually affirm to the Board compliance with the requirements of the Code; . not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; . notify the Chief Legal Officer and the Code Officer promptly if he/she knows of any violation of this Code; and . respond to the trustee and officer questionnaires circulated periodically in connection with the preparation of disclosure documents for the Funds. The Code Officer shall maintain records of all activities related to this Code. The Funds will follow the procedures set forth below in investigating and enforcing this Code: . The Chief Legal Officer and/or the Code Officer will take all appropriate action to investigate any potential violation reported to him/her; . If, after such investigation, the Chief Legal Officer and the Code Officer believes that no violation has occurred, the Code Officer will notify the person(s) reporting the potential violation, and no further action is required; . Any matter that the Chief Legal Officer and/or the Code Officer believes is a violation will be reported to the Audit Committee; . If the Audit Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to the Chief Executive Officer of Columbia Management Group; or a recommendation to sanction or dismiss the Covered Officer; . The Audit Committee will be responsible for granting waivers in its sole discretion; . Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. The Chief Legal Officer shall: . report to the Audit Committee quarterly any approvals provided in accordance with Section III of this Code; and . report to the Audit Committee quarterly any violations of, or material issues arising under, this Code. VI. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for the purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other polices or procedures of the Funds or the Funds' Service Providers govern or purport to govern the behavior or activities (including, but not limited to, personal trading activities) of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment advisers' and principal underwriter's codes of ethics under Rule 17j-1 under the Company Act and any policies and procedures of the Service Providers are separate requirements applicable to the Covered Officers and are not part of this Code. VII. Amendments All material amendments to this Code must be approved or ratified by the Board, including a majority of independent directors. VIII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board, the Covered Officers, the Chief Legal Officer, the Code Officer, outside audit firms and legal counsel to the Funds, and senior management of Columbia Management Group. IX. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. EX-99.CERT 3 dex99cert.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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) 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: August 29, 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) 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: August 29, 2005 /S/ J. Kevin Connaughton --------------------------------------- J. Kevin Connaughton, Treasurer EX-99.906CT 4 dex99906ct.txt CERTIFICATION PURSUANT TO SECTION 906 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 June 30, 2005, 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: August 29, 2005 /S/ Christopher L. Wilson --------------------------------------- Christopher L. Wilson, President Date: August 29, 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. Section1350 and is not being filed as part of the Form N-CSR with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----