Columbia Funds Series Trust I

497 1 d497.htm COLUMBIA FUNDS SERIES TRUST I Columbia Funds Series Trust I

Filed pursuant to Rule 497(b).

File no. 333-148106.

LOGO

HIGH YIELD FUND

One Financial Center, Boston, Massachusetts 02111- 2621

Dear Shareholder:

I am writing to ask for your vote on the proposed merger of High Yield Fund (the “Acquired Fund”), a series of Excelsior Funds Trust, into Columbia High Yield Opportunity Fund (the “Acquiring Fund”), a series of Columbia Funds Series Trust I, at a special meeting of shareholders of the Acquired Fund to be held on March 14, 2008.

The proposed merger is one of several mergers recommended by Columbia Management Group, LLC (“CMG”) following the recent acquisition by Bank of America Corporation (“Bank of America”) of U.S. Trust Corporation (“U.S. Trust”). The acquisition included all of U.S. Trust’s subsidiaries, including the investment advisor to the Acquired Fund. Bank of America is the ultimate parent of Columbia Management Advisors, LLC (“Columbia Management”), the investment advisor to the Acquiring Fund. Shareholders of the Excelsior Funds previously approved new investment advisory agreements that became effective upon completion of the acquisition. CMG’s overall goal in proposing these fund mergers is twofold. First, by merging Excelsior Funds into Columbia Funds with generally similar investment strategies, the combined investment portfolios will be larger, which tends to lead to greater efficiency. Second, by streamlining the product offering of the fund complex, management, distribution and other resources will be more effectively concentrated on a more focused group of portfolios. The merger of the Acquired Fund into the Acquiring Fund will enable Acquired Fund shareholders to invest in a larger, potentially more efficient investment portfolio while continuing to pursue a similar investment strategy.

Should the merger be approved and other conditions to the merger be satisfied, your current investment will be exchanged for an equal investment (that is, dollar value) in the Acquiring Fund. The exchange is expected to be tax-free for U.S. federal income tax purposes. Shareholders of the Acquired Fund will receive shares of the Acquiring Fund corresponding to the class of shares they currently own (for example, holders of Shares Class shares will receive Class Z shares of the Acquiring Fund). More information on the specific details of and reasons for the merger is contained in the enclosed combined Prospectus/Proxy Statement. Please read it carefully.

THE TRUSTEES OF YOUR FUND UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR THE MERGER.

YOUR VOTE IS IMPORTANT. YOU CAN VOTE BY COMPLETING THE ENCLOSED PROXY CARD. A SELF-ADDRESSED POSTAGE-PAID ENVELOPE HAS BEEN ENCLOSED FOR YOUR CONVENIENCE.

We appreciate your participation and prompt response in this matter and thank you for your continued support.

Sincerely,

Christopher L. Wilson

President and Principal Executive Officer

Excelsior Funds Trust

February 8, 2008

LOGO

NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD

March 14, 2008

HIGH YIELD FUND

A Series of Excelsior Funds Trust

One Financial Center

Boston, Massachusetts 02111-2621

1-800-708-7953

February 8, 2008

To the Shareholders of High Yield Fund:

NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of High Yield Fund (the “Acquired Fund”), a series of Excelsior Funds Trust, will be held at 2:00 p.m. Eastern time on March 14, 2008, at One Financial Center, Boston, Massachusetts 02111-2621, for the following purposes:

To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Acquired Fund to, and the assumption of all of the liabilities of the Acquired Fund by, Columbia High Yield Opportunity Fund (the “Acquiring Fund”), a series of Columbia Funds Series Trust I, in exchange for shares of the Acquiring Fund, and (ii) the distribution of such shares to the shareholders of the Acquired Fund in complete liquidation of the Acquired Fund.

To consider and act upon such other matters as may properly come before the meeting or any adjourned session of the meeting.

Shareholders of record of the Acquired Fund at the close of business on December 21, 2007 are entitled to notice of and to vote at the meeting and any adjourned session of the meeting.

By Order of the Board of Trustees,

James R. Bordewick, Jr.,

Secretary

Excelsior Funds Trust


NOTICE:		YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE SEE THE ENCLOSED PROSPECTUS/PROXY STATEMENT AND OTHER MATERIALS FOR INSTRUCTIONS ON HOW TO VOTE EASILY AND QUICKLY.

PROSPECTUS/PROXY STATEMENT

January 16, 2008

Acquisition of the Assets and Liabilities of

HIGH YIELD FUND

c/o Excelsior Funds Trust

One Financial Center

Boston, Massachusetts 02111-2621

1-800-708-7953

by and in Exchange for Shares of

COLUMBIA HIGH YIELD OPPORTUNITY FUND

c/o Columbia Funds Series Trust I

One Financial Center

Boston, Massachusetts 02111-2621

1-800-708-7953


TABLE OF CONTENTS

I.	Questions and Answers Regarding Approval of the Merger	3

II.	Proposal — Merger of the Acquired Fund into the Acquiring Fund	15
	The Proposal	15
	Principal Investment Risks	15
	Information about the Merger	18

III.	General	28
	Voting Information	28
	Information about Proxies and the Conduct of the Meeting	28
Appendix A — Form of Agreement and Plan of Reorganization		A-1
Appendix B — Fund Information		B-1
Appendix C — Capitalization		C-1
Appendix D — Information Applicable to the Acquiring Fund		D-1
Appendix E — Financial Highlights for the Acquiring Fund		E-1
Appendix F — Comparison of Organizational Documents		F-1

The prospectus/proxy statement (the “Prospectus/Proxy Statement”) and the enclosed proxy card (the “Proxy Card”) are expected to be mailed to shareholders beginning on or about February 8, 2008.

The Prospectus/Proxy Statement contains information shareholders should know before voting on the following proposal:

Proposal: Approval of the Agreement and Plan of Reorganization, with respect to the proposed acquisition of High Yield Fund (the “Acquired Fund”), a series of Excelsior Funds Trust (the “Excelsior Trust”), by Columbia High Yield Opportunity Fund (the “Acquiring Fund”), a series of Columbia Funds Series Trust I (the “Columbia Trust”) (the “Agreement and Plan of Reorganization”).

The proposal will be considered by shareholders of the Acquired Fund at a special meeting of shareholders of the Acquired Fund (the “Meeting”) that will be held at One Financial Center, Boston, Massachusetts 02111-2621. Although the Agreement and Plan of Reorganization contemplates a transaction in which the Acquired Fund transfers all of its assets and liabilities to the Acquiring Fund in exchange for shares of the Acquiring Fund, the Prospectus/Proxy Statement refers to the transaction as a “Merger.” The Acquired Fund and the Acquiring Fund are referred to herein collectively as the “Funds” (or individually as a “Fund”). The Funds are series of separate registered open-end management investment companies. Please read the Prospectus/Proxy Statement and keep it for future reference.

The Acquiring Fund is managed by Columbia Management Advisors, LLC (“Columbia Management”), an affiliate of United States Trust Company, National Association (“USTNA”) (through its separate identifiable division, U.S. Trust New York Asset Management Division (“USTNY”)), the investment advisor of the Acquired Fund. Bank of America Corporation, the ultimate parent of Columbia Management, acquired U.S. Trust Corporation, the ultimate parent of USTNA, on July 1, 2007. Prior to that acquisition, Columbia Management and USTNA were not affiliates of each other.

Effective on or about February 15, 2008, the investment advisory contract pursuant to which USTNY provides investment advisory services to the Acquired Fund will be assigned to UST Advisers, Inc. (“UST Advisers”). Both USTNY and UST Advisers are wholly-owned subsidiaries of Bank of America Corporation. The Board of Trustees of the Excelsior Trust approved the transfer at a meeting held on December 12, 2007, in anticipation of the merger of USTNA into Bank of America, N.A., which is scheduled to take place on February 22, 2008. This transfer will not change (i) the way in which the Acquired Fund is managed, including the level of services provided, (ii) the team of investment professionals providing services to the Acquired Fund, or (iii) the management fees the Acquired Fund pays.

If the Agreement and Plan of Reorganization is approved by the shareholders of the Acquired Fund and the Merger is consummated, the Acquired Fund will transfer all of the assets and liabilities attributable to each class of its shares to the Acquiring Fund in exchange for Class Z shares of the Acquiring Fund with the same aggregate net asset value as the net value of the assets and liabilities transferred. After that exchange, shares received by the Acquired Fund will be distributed pro rata to shareholders of each class of shares, and such shareholders will become shareholders of the Acquiring Fund.

The following documents have been filed with the Securities and Exchange Commission (the “SEC”) and are incorporated into the Prospectus/Proxy Statement by reference:

The Statement of Additional Information of the Acquiring Fund dated January 16, 2008, relating to the Prospectus/Proxy Statement.

The Prospectuses of the Acquired Fund dated July 1, 2007, as supplemented to date.

The Statement of Additional Information of the Acquired Fund dated July 1, 2007, as supplemented to date.

The Report of Independent Registered Public Accounting Firm and the audited financial statements included in the Annual Report to Shareholders of the Acquired Fund dated March 31, 2007, and the unaudited financial statements included in the Semiannual Report to Shareholders of the Acquired Fund dated September 30, 2007.

The Acquired Fund previously has sent its most recent annual report and semiannual report to its shareholders. For a free copy of the Acquired Fund’s most recent reports or any of the documents listed above, call 1-800-708-7953, or write to the Acquired Fund at the address listed on the cover of the Prospectus/Proxy Statement. Shareholders also may obtain many of these documents by accessing the Acquired Fund’s Internet site at www.columbiafunds.com. Text-only versions of the Acquired Fund’s documents can be viewed online or downloaded without charge from the EDGAR database on the SEC’s Internet site at www.sec.gov. Shareholders can review and copy information about the Funds by visiting the Public Reference Room, Office of Consumer Affairs and Information Services, U.S. Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-2521. Shareholders can obtain copies, upon payment of a duplicating fee, by sending an e-mail request to publicinfo@sec.gov or by writing the Public Reference Room at the address above. Information on the operation of the Public Reference Room may be obtained by calling 1-202-551-5850.

The SEC has not approved or disapproved these securities or determined if the Prospectus/Proxy Statement is truthful or complete. Any representation to the contrary is a criminal offense.

An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

I. QUESTIONS AND ANSWERS REGARDING APPROVAL OF THE MERGER

The following questions and answers provide an overview of key features of the Merger and of the information contained in the Prospectus/Proxy Statement. Please review the Prospectus/Proxy Statement prior to executing a proxy or casting a vote. For answers to questions about the Merger, please call 1-800-708-7953.

1.	What Merger is being proposed?

The Board of Trustees (the “Board”) of High Yield Fund (the “Acquired Fund”), a series of Excelsior Funds Trust (the “Excelsior Trust”), is recommending that shareholders approve the merger of the Acquired Fund into Columbia High Yield Opportunity Fund (the “Acquiring Fund”), a series of Columbia Funds Series Trust I (the “Columbia Trust”). This means that the Acquired Fund would transfer all of its assets and liabilities to the Acquiring Fund in exchange for shares of the Acquiring Fund. If the Merger is approved and completed, Shares Class and Institutional Shares Class shareholders of the Acquired Fund will receive Class Z shares of the Acquiring Fund with a dollar value equal to the dollar value of their Acquired Fund shares on the business day prior to the closing of the Merger. The Merger currently is scheduled to take place at the end of the first quarter of 2008.

2.	Why is the Merger being proposed?

The Board recommends approval of the Merger because the Merger offers shareholders of the Acquired Fund the opportunity to invest in a larger combined portfolio that has a similar investment

objective and similar principal investment strategies, except that the Acquiring Fund has no stated limit on investments in foreign securities, while the Acquired Fund may invest only up to 25% of its assets in foreign securities. Spreading fixed costs over a broader asset base allows the potential for more efficient operation and lower overall operating expense ratios. In reviewing the Merger, the Board also considered that, based on estimated operating expense ratios, shareholders of Shares Class shares of the Acquired Fund, following the Merger, are expected to experience total and net operating expense ratios that are lower than the current total and net operating expense ratios of Shares Class shares, while shareholders of Institutional Shares Class shares of the Acquired Fund, following the Merger, are expected to experience total and net operating expense ratios that are higher than the current total and net operating expense ratios of Institutional Shares Class shares. Please review “Reasons for the Merger and Trustees’ Considerations” in Section II of the Prospectus/Proxy Statement for more information regarding the factors considered by the Board.

3.	How do the fees and the operating expense ratios of the Funds compare, and what are they estimated to be following the Merger?

The tables below allow a shareholder to compare the sales charges, the fees and the operating expense ratios of the Funds and to analyze the estimated expenses that Columbia Management expects the Acquiring Fund to bear in the first year following the Merger. The Annual Fund Operating Expenses set forth in the tables below are paid by each Fund. They include management fees, distribution and service fees (if applicable) and administrative costs, including pricing and custody services.

The Annual Fund Operating Expenses shown in the tables below represent expenses for each Fund’s most recent fiscal year (ended May 31, 2007 for the Acquiring Fund and ended March 31, 2007 for the Acquired Fund) and those projected for the Acquiring Fund on a pro forma combined basis after giving effect to the proposed Merger and based on pro forma combined net assets as of May 31, 2007.

Based on the operating expense ratios shown below, the total and net operating expense ratios of Class Z shares of the Acquiring Fund following the Merger are expected to be lower than the total and net operating expense ratios of Shares Class shares of the Acquired Fund and higher than the total and net operating expense ratios of Institutional Shares Class shares of the Acquired Fund.

If the Merger occurs, certain Merger expenses will be allocated to the Acquired Fund, which will reduce the Acquired Fund’s net asset value prior to the closing of the Merger (by less than $0.01 per share based on shares outstanding as of May 31, 2007). Based on the operating expense ratios shown below, it is projected that, after the Merger, Shares Class shareholders of the Acquired Fund will benefit from expense savings that will offset the allocated Merger expenses. However, the benefit of these projected expense savings will not be realized immediately. It is projected that the aggregate expense savings will not exceed the allocated Merger expenses of the Acquired Fund until approximately 3 months after the Merger. Institutional Shares Class shareholders of the Acquired Fund are not expected to benefit from expense savings. If a shareholder redeems his or her shares prior to that time, the shareholder will receive no net benefit from the projected expense savings.

Although Institutional Shares Class shareholders of the Acquired Fund are not expected to benefit from expense savings as a result of the Merger, they will bear a proportionate share of any Merger expenses allocated to the Acquired Fund.

Shareholder Fees

(paid directly from shareholder’s investment)


	High Yield Fund (Acquired Fund)				Columbia High Yield Opportunity Fund (Acquiring Fund)	*Pro Forma* Columbia High Yield Opportunity Fund (Acquiring Fund)
	Institutional Shares Class		Shares Class		Class Z	Class Z
Redemption fee (%) (as a percentage of the amount redeemed, if applicable)	2.00	⁽¹⁾	2.00	⁽¹⁾	N/A	N/A

Annual Fund Operating Expenses (as a % of average daily net assets)

(deducted directly from Fund assets)


	High Yield Fund (Acquired Fund)				Columbia High Yield Opportunity Fund (Acquiring Fund)		*Pro Forma* Columbia High Yield Opportunity Fund (Acquiring Fund)
	Institutional Shares Class		Shares Class		Class Z		Class Z
Management Fees	0.95	⁽²⁾	0.95	⁽²⁾	0.60	⁽³⁾	0.60	⁽³⁾
Distribution and Service Fees	0.00		0.00	⁽⁴⁾	0.00		0.00
Other Expenses	0.40		0.74		0.27	⁽⁵⁾	0.35	⁽⁵⁾

Total Annual Fund Operating Expenses	1.35		1.69		0.87		0.95
Less Fee Waivers and/or Reimbursements	(0.55	)⁽⁶⁾	(0.64	)⁽⁶⁾			(0.08	)⁽⁷⁾

Net Annual Fund Operating Expenses	0.80		1.05				0.87

(1)	The redemption fee is charged on shares redeemed or exchanged within 60 days of the date of purchase.

(2)

The Acquired Fund pays an investment advisory fee of 0.80% and an administration fee of 0.15%. Columbia Management receives an administration fee, computed daily and paid monthly, based on the combined aggregate average daily net assets of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust (excluding Emerging Markets Fund, International Fund, International Equity Fund and Pacific/Asia Fund). The breakpoint schedule is as follows: 0.20% for net assets up to $200 million; 0.175% for net assets in excess of $200 million and up to $400 million; and 0.15% for net assets in excess of $400 million. Columbia Management has voluntarily agreed to waive 0.05% of the administration fee. If this waiver were reflected in the table, “Management Fees” would be 0.90% for each of Shares Class shares and Institutional Shares Class shares and “Total Annual Fund Operating Expenses” would be 1.64% and 1.30% for Shares Class shares and Institutional Shares Class shares, respectively. Columbia Management, at its discretion, may revise or discontinue this arrangement at any time.

(3)

The Acquiring Fund pays an investment advisory fee of 0.60%. Columbia Management has implemented a breakpoint schedule for the Acquiring Fund’s investment advisory fee. The investment advisory fee charged to the Acquiring Fund will decline as Acquiring Fund assets grow and will continue to be based on a percentage of the Acquiring Fund’s average daily net assets. The current breakpoint schedule for the Acquiring Fund is as follows: 0.60% for assets up to $500 million; 0.55% for assets in excess of $500 million and up to $1 billion; 0.52% for assets in excess of $1 billion and up to $1.5 billion; and 0.49% for assets in excess of $1.5 billion.

(4)	The Acquired Fund has adopted a distribution plan under Rule 12b-1 of the Investment Company Act of 1940 that authorizes, with respect to Shares Class shares, the payment of up to 0.25% for the distribution of Shares Class shares. However, no fees are being assessed under the plan at this time.

(5)	Other expenses have been restated to reflect contractual changes to the fees paid by the Acquiring Fund.

(6)

(7)

Example Expenses

Example Expenses help shareholders compare the cost of investing in the Acquired Fund currently with the cost of investing in the Acquiring Fund both currently and on a pro forma combined basis and also allow shareholders to compare these costs with the cost of investing in other mutual funds. The tables take into account any contractual expense reduction arrangements described in the footnotes to the Annual Fund Operating Expenses table for the periods indicated in such table. The Example Expenses use the following hypothetical conditions:

$10,000 initial investment.

5% total return for each year.

Each Fund’s operating expenses remain the same.

Reinvestment of all dividends and distributions.

Example Expenses

(actual costs may be higher or lower)


	1 Year		3 Years		5 Years		10 Years
High Yield Fund (Acquired Fund)
Shares Class	$	107	$	470	$	858	$	1,944
Institutional Shares Class	$	82	$	373	$	687	$	1,576

Columbia High Yield Opportunity Fund (Acquiring Fund)
Class Z	$	89	$	278	$	482	$	1,073

Columbia High Yield Opportunity Fund (pro forma combined) (Acquiring Fund)
Class Z	$	89	$	294	$	517	$	1,158

The projected post-Merger pro forma combined Annual Fund Operating Expenses and Example Expenses presented above are based on numerous material assumptions, including (1) that the current contractual agreements will remain in place and (2) that certain fixed costs involved in operating the Acquired Fund will be eliminated. Although these projections represent good faith estimates, there can be no assurance that any particular level of expenses or expense savings will be achieved because expenses depend on a variety of factors, including the future level of Acquiring Fund assets, many of which are beyond the control of the Acquiring Fund or Columbia Management.

Hypothetical Investment and Expense Information

Please see Appendix D for supplemental hypothetical investment expense information that provides additional information in a different format from the preceding Annual Fund Operating Expenses and Example Expenses tables about the effect of the pro forma expenses of the Acquiring Fund, including investment advisory fees and other Acquiring Fund costs, on the Acquiring Fund’s returns over a 10-year period.

4.	How do the investment objectives, principal investment strategies and investment policies of the Funds compare?

The Acquired Fund and the Acquiring Fund have similar investment objectives and principal investment strategies. The Acquired Fund seeks a high level of current income as its primary objective, and may also consider the potential for capital appreciation as a secondary objective, when consistent with its primary objective. The Acquiring Fund seeks total return, consisting of current income and capital appreciation. Under normal circumstances, both Funds will invest at least 80% of their net assets (including borrowings for investment purposes) in below investment grade securities (commonly referred to as “junk bonds”). The Acquiring Fund may invest in debt securities of any maturity. Both Funds may invest in debt securities issued by foreign governments, companies or other entities, including in emerging market countries (though the Acquired Fund may invest no more than 25% of its assets in the obligations of foreign issuers while the Acquiring Fund has no similar limitation). Each Fund may invest in derivatives—the Acquired Fund may invest in futures and options for hedging purposes, while the Acquiring Fund may invest in futures, options, swap contracts and other derivative instruments for both hedging and non-hedging purposes.

The table below shows the investment objectives and principal investment strategies of each Fund.


	High Yield Fund (Acquired Fund)	Columbia High Yield Opportunity Fund (Acquiring Fund)
Investment Objective	The Acquired Fund seeks a high level of current income as its primary objective, and may also consider the potential for capital appreciation as a secondary objective, when consistent with its primary objective.	The Acquiring Fund seeks total return, consisting of current income and capital appreciation.

Principal Investment Strategies	Under normal circumstances, the Acquired Fund invests at least 80% of its net assets in high yield, fixed income securities that are rated in the lower rating categories of a nationally recognized rating agency (e.g., Ba or lower by Moody’s Corporation (Moody’s) or BB or lower by Standard & Poor’s, a division of the McGraw Hill Companies (S&P)), or unrated securities that USTNY believes are of comparable quality. For purposes of this test only, net assets includes borrowings for investment purposes. The Acquired Fund will provide shareholders with at least 60 days’ prior notice of any change in this policy. Securities rated below Baa3 by Moody’s or below BBB by S&P are commonly known as “junk bonds.” The Acquired Fund may invest in all types of fixed-income securities, including: · Senior and subordinated corporate debt obligations (such as bonds, debentures, notes and commercial paper) · Convertible and non-convertible corporate debt obligations · Custodial receipts · Municipal securities and obligations of the U.S. government, its agencies and instrumentalities · Preferred stock · Mortgage and other asset-backed securities	Under normal circumstances, the Acquiring Fund invests at least 80% of net assets in below investment grade corporate debt securities. These securities commonly are referred to as “junk bonds” and generally will be rated below investment grade by at least one nationally recognized rating service or unrated but determined by Columbia Management to be of comparable quality. The Acquiring Fund may invest in debt securities issued by foreign governments, companies or other entities, including in emerging market countries. The Acquiring Fund also may invest in equity securities, including common stocks, preferred stocks, warrants and debt securities convertible into common stocks. The Acquiring Fund may invest in derivatives, including futures, options, swap contracts and other derivative instruments. The Acquiring Fund may invest in derivatives for both hedging and non-hedging purposes, including, for example, to seek to enhance returns or as a substitute for a position in an underlying asset. The Acquiring Fund also may invest in private placements. Columbia Management considers local, national and global economic conditions, market conditions, interest rate movements, and other relevant factors to determine the allocation of the Acquiring Fund’s assets among different issuers, industry sectors and maturities.

High Yield Fund

(Acquired Fund)

Columbia High Yield Opportunity Fund

(Acquiring Fund)

Although the Acquired Fund invests primarily in the debt obligations of domestic issuers, it may invest up to 25% of its assets in obligations of foreign issuers (including emerging countries), including obligations of foreign corporations, banks and governments.

The Acquired Fund does not have any portfolio maturity limitation and may invest its assets from time to time primarily in instruments with short, medium and long maturities. The Acquired Fund may also purchase the securities of issuers that are in default and/or subject to insolvency and/or bankruptcy proceedings.

The Acquired Fund may use financial and stock index futures and options to protect against adverse changes to the value of portfolio securities due to anticipated changes in interest rates or market conditions.

In selecting securities for the Acquired Fund’s portfolio, USTNY performs its own independent investment analysis of each issuer to determine its creditworthiness. In doing so, USTNY considers a number of factors, including the issuer’s financial and managerial strength and its sensitivity to economic and market conditions as well as other factors.

In connection with selecting individual investments for the Acquiring Fund, Columbia Management evaluates a security based on its potential to generate income and/or capital appreciation. Columbia Management considers, among other factors, the creditworthiness of the issuer of the security and the various features of the security, such as its coupon, yield, maturity, any call features and value relative to other securities.

Columbia Management may sell a security if it believes that there is deterioration in the issuer’s financial condition, or that other investments are more attractive; if there is deterioration in a security’s credit rating; or for other reasons.

The Funds’ fundamental investment policies are similar. For purposes of this discussion, a “fundamental” investment policy is one that may not be changed without a shareholder vote. The Funds’ fundamental investment policies are set forth below:


As a matter of fundamental policy, the Acquired Fund may not:		As a matter of fundamental policy, the Acquiring Fund may not:
Borrow money, except from banks, or mortgage or hypothecate assets of the Acquired Fund, except in an amount not to exceed ¹/3 of the current value of the Acquired Fund’s assets (including such borrowing) less liabilities (not including such borrowing) or by entering into reverse repurchase agreements or by engaging in other investment techniques constituting leverage as permitted by SEC rules. The Acquired Fund may pledge, mortgage or hypothecate its assets to secure such borrowings, reverse repurchase agreements, or when-issued securities, provided that collateral arrangements with respect to options and futures, including deposits of initial margin and variation margin, are not considered a pledge of assets for purposes of this restriction, and except that assets may be pledged to secure letters of credit solely for the purpose of participating in a captive insurance company sponsored by the Investment Company Institute. The Acquired Fund will not purchase securities while borrowings exceed 5% of its total assets. Asset coverage of at least 300% (as defined in the 1940 Act), inclusive of any amounts borrowed, must be maintained at all times.		Borrow money or issue senior securities except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.

Underwrite securities issued by other persons except insofar as the Excelsior Trust or the Acquired Fund may technically be deemed an underwriter under the 1933 Act in selling a portfolio security.		Underwrite any issue of securities issued by other persons within the meaning of the Securities Act of 1933, as amended (the “1933 Act”) except when it might be deemed to be an underwriter either: (a) in connection with the disposition of a portfolio security; or (b) in connection with the purchase of securities directly from the issuer thereof in accordance with the Acquiring Fund’s investment objective. This restriction shall not limit the Acquiring Fund’s ability to invest in securities issued by other registered investment companies.

Make loans to other persons except (a) through the lending of the Acquired Fund’s portfolio securities and provided that any such loans not exceed 30% of the Acquired Fund’s total assets (taken at market value), (b) through the use of repurchase agreements or the purchase of short-term obligations, or (c) by purchasing debt securities of types distributed publicly or privately.		Make loans, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.


As a matter of fundamental policy, the Acquired Fund may not:		As a matter of fundamental policy, the Acquiring Fund may not:
Purchase or sell real estate (including limited partnership interests in partnerships substantially all of whose assets consist of real estate but excluding securities secured by real estate or interests therein), interests in oil, gas or mineral leases, commodities or commodity contracts (except futures and option contracts) in the ordinary course of business (the Excelsior Trust may hold and sell, for the Acquired Fund’s portfolio, real estate acquired as a result of the Acquired Fund’s ownership of securities).		Purchase or sell real estate, except the Acquiring Fund may: (i) purchase securities of issuers which deal or invest in real estate, (ii) purchase securities which are secured by real estate or interests in real estate and (iii) hold and dispose of real estate or interests in real estate acquired through the exercise of its rights as a holder of securities which are secured by real estate or interests therein. Purchase or sell commodities, except that the Acquiring Fund may to the extent consistent with its investment objective: (i) invest in securities of companies that purchase or sell commodities or which invest in such programs, and (ii) purchase and sell options, forward contracts, futures contracts, and options on futures contracts and enter into swap contracts and other financial transactions relating to commodities. This limitation does not apply to foreign currency transactions including without limitation forward currency contracts.

Invest 25% or more of its assets in any one industry (excluding U.S. government securities).		Purchase any securities which would cause 25% or more of the value of its total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that: (i) there is no limitation with respect to obligations issued or guaranteed by the U.S. Government, any state or territory of the United States or any of their agencies, instrumentalities or political subdivisions; and (ii) notwithstanding this limitation or any other fundamental investment limitation, assets may be invested in the securities of one or more management investment companies to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.

Issue any senior security (as that term is defined in the 1940 Act) if such issuance is specifically prohibited by the 1940 Act or the rules and regulations promulgated thereunder, provided that collateral arrangements with respect to options and futures, including deposits of initial deposit and variation margin, are not considered to be the issuance of a senior security for purposes of this restriction.		Borrow money or issue senior securities except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.


As a matter of fundamental policy, the Acquired Fund may not:		As a matter of fundamental policy, the Acquiring Fund may not:
As a diversified portfolio, 75% of the assets of the Acquired Fund are represented by cash and cash items (including receivables), government securities, securities of other investment companies, and other securities which for purposes of this calculation are subject to the following fundamental limitations: (a) the Acquired Fund may not invest more than 5% of its total assets in the securities of any one issuer, and (b) the Acquired Fund may not own more than 10% of the outstanding voting securities of any one issuer. In addition, the Acquired Fund may not invest 25% or more of its assets in the securities of issuers in any one industry. For purposes of these policies and limitations, the Acquired Fund considers certificates of deposit and demand and time deposits issued by a U.S. branch of a domestic bank or savings association having capital, surplus and undivided profits in excess of $100,000,000 at the time of investment to be “cash items.”		Purchase securities (except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities) of any one issuer if, as a result, more than 5% of its total assets will be invested in the securities of such issuer or it would own more than 10% of the voting securities of such issuer, except that: (i) up to 25% of its total assets may be invested without regard to these limitations and (ii) the Acquiring Fund’s assets may be invested in the securities of one or more management investment companies to the extent permitted by the 1940 Act, the rules and regulations thereunder, or any applicable exemptive relief.

The following highlights the differences in the Funds’ non-fundamental investment policies (policies that may be changed without a shareholder vote):

The Acquiring Fund may not sell securities short, except as permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. The Acquired Fund may not make short sales of securities or maintain a short position (excluding short sales if the Acquired Fund owns an equal amount of such securities or securities convertible into or exchangeable for, without payment of any further consideration, securities of equivalent kind and amount) if such short sales represent more than 25% of the Acquired Fund’s net assets (taken at market value); provided, however, that the value of the Acquired Fund’s short sales of securities (excluding U.S. government securities) of any one issuer may not be greater than 2% of the value (taken at market value) of the Acquired Fund’s net assets or more than 2% of the securities of any class of any issuer.

The Acquired Fund may not enter into repurchase agreements providing for settlement in more than seven days after notice. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not purchase any security or evidence of interest therein on margin, except that such short-term credit as may be necessary for the clearance of purchases and sales of securities may be obtained and except that deposits of initial and variation margin may be made in connection with the purchase, ownership, holding or sale of futures. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not invest for the purpose of exercising control or management. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not purchase securities issued by any other investment company except by purchase in the open market where no commission or profit to a sponsor or dealer results from such purchase other than the customary broker’s commission, or except when such purchase, though not made in the open market, is part of a plan of merger or consolidation; provided, however, that securities of any investment company will not be purchased for the Acquired Fund if such purchase at the time thereof would cause (a) more than 10% of the Acquired Fund’s total assets (taken at the greater of cost or market value) to be invested in the securities of such issuers; (b) more than 5% of the Acquired Fund’s total assets (taken at the greater of cost or market value) to be invested in any one investment company; or (c) more than 3% of the outstanding voting securities of any such issuer to be held for the Acquired Fund. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not purchase securities of any issuer if such purchase at the time thereof would cause the Acquired Fund to hold more than 10% of any class of securities of such issuer, for which purposes all indebtedness of an issuer shall be deemed a single class and all preferred stock of an issuer shall be deemed a single class, except that futures or option contracts shall not be subject to this restriction. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not purchase or retain in the Acquired Fund’s portfolio any securities issued by an issuer any of whose officers, directors, trustees or security holders is an officer or trustee of the Excelsior Trust, or is an officer or partner of the investment advisor of the Acquired Fund, if after the purchase of the securities of such issuer for the Acquired Fund one or more of such persons owns beneficially more than ¹/2 of 1% of the shares or securities, or both, all taken at market value, of such issuer, and such persons owning more than ¹/2 of 1% of such shares or securities together own beneficially more than 5% of such shares or securities, or both, all taken at market value. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not invest more than 5% of the Acquired Fund’s net assets in warrants (valued at the lower of cost or market). The Acquiring Fund has no similar stated non-fundamental investment policy.

For a complete list of each Fund’s investment policies, see each Fund’s Statement of Additional Information.

5.	What class of Acquiring Fund shares will shareholders receive if the Merger occurs?

If the Merger occurs, Shares Class and Institutional Shares Class shareholders of the Acquired Fund will receive Class Z shares of the Acquiring Fund. The Merger will not result in any substantive changes to shareholder rights regarding, or procedures for, purchases, redemptions or exchanges of shares, except that with respect to the purchase of shares, only eligible investors can invest in Class Z shares of the Acquiring Fund, whereas there are no similar purchase restrictions on Shares Class shares of the Acquired Fund. Shareholders of Shares Class shares and Institutional Shares Class shares of the Acquired Fund will be deemed to be eligible investors for purposes of their purchases of Class Z shares of the Acquiring Fund.

For more information on the Acquiring Fund’s current distribution, purchase, redemption and exchange policies and procedures, see Appendix D.

6.	What are the expected federal income tax consequences of the Merger?

The Merger is expected to be tax-free to shareholders for federal income tax purposes, although this result is not free from doubt. This means that neither shareholders nor the Funds are expected to recognize a gain or loss directly as a result of the Merger. However, because the Merger will end the tax year of the Acquired Fund, it may accelerate distributions from the Acquired Fund to shareholders. Specifically, the Acquired Fund will recognize any net tax-exempt investment income, any net investment company taxable income (computed without regard to the deduction for dividends paid) and any net capital gains, including those realized on disposition of portfolio securities in connection with the Merger (after reduction by any available capital loss carryforwards), or net capital losses in the short tax year ending on the date of the Merger, and will declare and pay a distribution of such income and any such net capital gains remaining after reduction of any available capital loss carryforwards to its shareholders on or before that date.

A portion of the portfolio assets of the Acquired Fund may be sold in connection with the Merger. The actual tax effect of such sales will depend on the difference between the price at which such portfolio assets are sold and the Acquired Fund’s basis in such assets. Any capital gains recognized in these sales on a net basis will be distributed to the Acquired Fund’s shareholders as capital gain dividends (to the extent of net realized long-term capital gains distributed) and/or ordinary dividends (to the extent of net realized short-term capital gains distributed) during or with respect to the year of sale, and such distributions will be taxable to shareholders.

The cost basis and holding period of shares in the Acquired Fund are expected to carry over to new shares in the Acquiring Fund. At any time prior to the consummation of the Merger, a shareholder may redeem shares, likely resulting in recognition of gain or loss to such shareholder for federal income tax purposes.

Certain other tax consequences are discussed below under “Federal Income Tax Consequences.”

7.	Who bears the expenses associated with the Merger?

The Acquiring Fund, the Acquired Fund and Columbia Management each may bear a portion of the out-of-pocket expenses associated with the Merger, as noted below. Out-of-pocket expenses associated with the Merger (“Merger Expenses”) include, but are not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including the Prospectus/Proxy Statement, and any filings with the SEC and/or other governmental authorities in connection with the Merger; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Merger; (3) the legal fees and expenses incurred by the Funds in connection with the Merger.

The methodology for determining the portions of the Merger Expenses to be borne by the Funds is as follows. The estimated Merger Expenses are first allocated to the Acquiring Fund or to the Acquired Fund. Estimated Merger Expenses that are specifically allocable to one Fund are allocated to that Fund (e.g., the costs of printing and mailing the Prospectus/Proxy Statement are allocated exclusively to the Acquired Fund). Estimated Merger Expenses that are not specifically allocable to either Fund are divided equally between the Funds. Each Fund will bear the estimated Merger Expenses allocated to it only to the extent of the anticipated reductions in ongoing expenses expected to be borne by that Fund over the first year following the Merger (the “Estimated First Year Savings”). Columbia Management bears the amount of estimated Merger Expenses allocated to a Fund, if any, that is in excess of the Fund’s Estimated First Year Savings.

The estimated Merger Expenses to be borne by the Acquired Fund and the Acquiring Fund are approximately $40,864 and $75,070, respectively (each less than $0.01 per share based on shares outstanding as of May 31, 2007). As noted above, Shares Class shareholders of the Acquired Fund are expected to benefit from expense savings as a result of the Merger. Although Institutional Shares Class shareholders of the Acquired Fund are not expected to benefit from expense savings as a result of the Merger, they will bear a proportionate share of any Merger Expenses allocated to the Acquired Fund. Should the Merger fail to occur, Columbia Management will bear all Merger Expenses.

8.	Who is eligible to vote?

Shareholders of record on December 21, 2007 are entitled to attend and to vote at the Meeting and any adjourned session of the Meeting. All shareholders of the Acquired Fund, regardless of the class of shares held, will vote together as a single class on the proposal. Each whole share is entitled to one vote, and each fractional share is entitled to a proportionate fractional vote. Shares represented by properly executed proxies, unless revoked before or at the Meeting, will be voted according to shareholder instructions. If a shareholder signs a proxy but does not fill in a vote, the shareholder’s shares will be voted to approve the Merger, and if any other business comes before the Meeting, the shareholder’s shares will be voted at the discretion of the persons named as proxies.

II. PROPOSAL — MERGER OF THE ACQUIRED FUND INTO THE ACQUIRING FUND

The Proposal

Shareholders of the Acquired Fund are being asked to approve the Agreement and Plan of Reorganization, the form of which is attached as Appendix A to the Prospectus/Proxy Statement. By approving the Agreement and Plan of Reorganization, shareholders are approving the merger of the Acquired Fund into the Acquiring Fund.

Principal Investment Risks

What are the principal investment risks of the Acquiring Fund, and how do they compare with those of the Acquired Fund?

The principal investment risks associated with the Acquiring Fund and the Acquired Fund generally are similar because the Funds have similar investment objectives and principal investment strategies. Because the Acquiring Fund may invest in foreign securities to a greater extent than the Acquired Fund, it may be subject to greater foreign securities risk and currency risk. The actual risks of investing in each Fund depend on the securities held in each Fund’s portfolio and on market conditions, both of which change over time. Both Funds are subject to low and below investment grade securities risk, investment strategy risk, market risk, credit risk, interest rate risk, currency risk, foreign securities risk, derivatives risk and emerging market securities risk, each of which is described below.

Low and Below Investment Grade Securities Risk—The Fund invests in debt securities with the lowest investment grade rating (e.g., BBB by Standard & Poor’s or Fitch) or that are below investment grade (e.g., BB or below by Standard & Poor’s or Fitch). These securities are more speculative than securities with higher ratings, and tend to be more sensitive to credit risk, particularly during a downturn in the economy, which is more likely to weaken the ability of the issuers to make principal and interest payments on these securities than is the case for higher-rated securities. These securities typically pay a premium—a high interest rate or yield—because of the increased risk of loss of value, including default. These securities also are generally less liquid than higher-rated securities. The securities ratings provided by Moody’s Investors Service, Standard & Poor’s and Fitch are based on analyses by these ratings agencies of the credit quality of the securities and may not take into account every risk related to whether interest or principal will be timely repaid.

Investment Strategy Risk—The Fund’s advisor uses the principal investment strategies and other investment strategies to seek to achieve the Fund’s investment objective. Investment decisions made by the advisor in using these strategies may not produce the returns expected by the advisor, may cause the Fund’s shares to lose value or may cause the Fund to underperform other funds with similar investment objectives.

Market Risk—Market risk refers to the possibility that the market values of securities that the Fund holds will rise or fall, sometimes rapidly or unpredictably. Security values may fall because of factors affecting individual companies, industries or sectors, or the markets as a whole, reducing the value of an investment in the Fund. Accordingly, an investment in the Fund could lose money over short or even long periods. The market values of the securities the Fund holds also can be affected by changes or perceived changes in U.S. or foreign economies and financial markets, among other factors. In general, equity securities tend to have greater price volatility than debt securities.

Credit Risk—Credit risk applies to most debt securities, but is generally not a factor for obligations backed by the “full faith and credit” of the U.S. Government. The Fund could lose money if the issuer of a debt security is unable or perceived to be unable to pay interest or repay principal when it becomes due. Various factors could affect the issuer’s actual or perceived willingness or ability to make timely interest or principal payments, including changes in the issuer’s financial condition or in general economic conditions. Debt securities backed by an issuer’s taxing authority may be subject to legal limits on the issuer’s power to increase taxes or otherwise to raise revenue, or may be dependent on legislative appropriation or government aid. Certain debt securities are backed only by revenues derived from a particular project or source, rather than by an issuer’s taxing authority, and thus may have a greater risk of default.

Interest Rate Risk—The Fund invests in debt securities and so is subject to interest rate risk. In general, if prevailing interest rates rise, the values of debt securities will tend to fall, and if interest rates fall, the values of debt securities will tend to rise. Changes in the value of a debt security usually will not affect the amount of income the Fund receives from it but will affect the value of the Fund’s shares. Interest rate risk is generally greater for debt securities with longer maturities/durations.

Currency Risk—The Fund invests in securities denominated in different currencies. If the value of a foreign currency were to decline against the U.S. dollar, such decline would reduce the U.S. dollar value of any securities held by the Fund denominated in that currency.

Foreign Securities Risk—Foreign securities are subject to special risks as compared to securities of U.S. issuers. For example, foreign markets can be extremely volatile. Fluctuations in currency exchange rates may impact the value of foreign securities denominated in foreign currencies, or in U.S. dollars, without a change in the intrinsic value of those securities. Foreign securities may be less liquid than domestic securities so that the Fund may, at times, be unable to sell foreign securities at desirable times or prices. Brokerage commissions, custodial fees and other fees are also generally higher for foreign securities. The Fund may have limited or no legal recourse in the event of default with respect to certain foreign securities, including those issued by foreign governments. In addition, foreign governments may impose potentially confiscatory withholding taxes, which could reduce the amount of income and capital gains available to distribute to shareholders. Other risks include possible delays in the settlement of transactions or in the payment of income; generally less publicly available information about companies; the impact of political, social or diplomatic events; possible seizure, expropriation or nationalization of a company or its assets; possible imposition of currency exchange controls; and accounting, auditing and financial reporting standards that may be less comprehensive and stringent than those applicable to domestic companies.

Derivatives Risk—Derivatives are financial contracts whose values are based on (or “derived” from) traditional securities (such as a stock or bond), assets (such as a commodity like gold), reference rates (such as LIBOR) or market indices (such as the S&P 500^® Index). Derivatives involve special risks and may result in losses. Derivative strategies often involve leverage, which may exaggerate a loss, potentially causing the Fund to lose more money than it would have lost had it invested in the underlying security. The values of derivatives may move in unexpected ways, especially in unusual market conditions, and may result in increased volatility. The use of derivatives may also increase the amount of taxes payable by shareholders. Other risks arise from the Fund’s potential inability to terminate or sell derivative positions. A liquid secondary market may not always exist for the Fund’s derivative positions at times when the Fund might wish to terminate or sell such positions. Over-the-counter instruments (investments not traded on an exchange) may be illiquid, and transactions in derivatives traded in the over-the-counter market are subject to the risk that the other party will not meet its obligations. The use of derivatives also involves the risk of mispricing or improper valuation, the risk of ambiguous documentation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying security, asset, reference rate or index. The Fund may not be able to find a suitable derivative transaction counterparty, and thus may be unable to invest in derivatives altogether. For more information on the risks of derivative investment and strategies, see the SAI.

Emerging Market Securities Risk—The Fund invests in securities issued by companies in emerging market countries, like those in Eastern Europe, the Middle East, Asia or Africa. These securities are more likely to have greater exposure to the risks of investing in foreign securities that are described in “Foreign Securities Risk.” In addition, these countries are more likely to experience instability resulting, for example, from rapid social, political and economic development. Their economies are usually less mature and their securities markets are typically less developed with more limited trading activity than more developed countries. Emerging market securities tend to be more volatile than securities in more developed markets. Many of these countries are heavily dependent on international trade, which makes them more sensitive to world commodity prices and economic downturns in other countries. Some emerging market countries have a higher risk of currency devaluations, and some of these countries may experience periods of high inflation or rapid changes in inflation rates.

In addition to the risks described above, the Acquiring Fund is subject to the following additional principal investment risks: changing distribution levels risk, convertible securities risk, liquidity risk, and reinvestment risk, each of which is described below. While these additional risks may also be risks of the Acquired Fund, they are not stated as principal investment risks of the Acquired Fund.

Changing Distribution Levels Risk—The amount of the distributions paid by the Fund generally depends on the amount of income and/or dividends received by the Fund on the securities it holds. The Fund may not be able to pay distributions or may have to reduce its distribution level if the income and/or dividends the Fund receives from its investments decline.

Convertible Securities Risk—Convertible securities are subject to the usual risks associated with debt securities, such as interest rate risk and credit risk. Convertible securities also react to changes in the value of the common stock into which they convert, and are thus subject to market risk. Because the value of a convertible security can be influenced by both interest rates and market movements, a convertible security generally is not as sensitive to interest rates as a similar debt security, and generally will not vary in value in response to other factors to the same extent as the underlying common stock. In the event of a liquidation of the issuing company, holders of convertible securities would typically be paid before the company’s common stockholders but after holders of any senior debt obligations of the company. The Fund may be forced to convert a convertible security before it otherwise would choose to do so, which may decrease the Fund’s return.

Liquidity Risk—Illiquid securities are securities that cannot be readily disposed of in the normal course of business. There is a risk that the Fund may not be able to sell such securities at the time it desires, or that it cannot sell such securities without adversely affecting their price.

Reinvestment Risk—Income from the Fund’s debt investments will decline if and when the Fund invests the proceeds from matured, traded or called securities in securities with lower interest rates.

Information about the Merger

Shares that Shareholders Will Receive

If the Merger occurs, Shares Class and Institutional Shares Class shareholders of the Acquired Fund will receive Class Z shares of the Acquiring Fund. As compared to the Acquired Fund shares currently owned by shareholders, the Acquiring Fund shares that shareholders will receive will have the following characteristics:

They will have an aggregate net asset value equal to the aggregate net asset value of a shareholder’s current shares as of the business day before the closing of the Merger. The net asset value of a shareholder’s current shares will reflect the expenses of the Merger allocated to the Acquired Fund.

They will entitle shareholders to rights generally similar to those currently enjoyed by shareholders of the Acquired Fund, but as shareholders of the Acquiring Fund. Please see Appendix F to the Prospectus/Proxy Statement for information regarding the differences between the rights of shareholders of the Acquiring Fund and shareholders of the Acquired Fund.

The Merger will not result in any substantive changes to procedures for purchasing, redeeming and exchanging shares, except that with respect to the purchase of shares, only eligible investors can invest in Class Z shares of the Acquiring Fund, whereas there are no similar purchase restrictions on Shares Class shares of the Acquired Fund. Shareholders of Shares Class shares and Institutional Shares Class shares of the Acquired Fund will be deemed to be eligible investors for purposes of their purchases of Class Z shares of the Acquiring Fund. Please see Appendix D to the Prospectus/Proxy Statement for more information about the current procedures for purchasing, redeeming and exchanging shares of the Acquiring Fund.

An investor’s account in the Acquiring Fund will be subject to the Acquiring Fund’s small account policy. Under this policy, an investor’s account in the Acquiring Fund generally will be subject to a $20 annual fee if the value of that account (treating each account of the Acquiring Fund owned by the investor separately from any other account of the Acquiring Fund owned by such investor) falls below the applicable minimum initial investment requirement. Also under this policy, the Acquiring Fund will generally automatically sell an investor’s shares if the value of an account falls below $250. Additional information about the Acquiring Fund’s small account policy, including exceptions to the small account policy, and applicable investment minimums is described in Appendix D. The Acquired Fund has no similar small account policy.

The account options a shareholder has selected for handling distributions from the Acquired Fund will not change as a result of the Merger.

Shares of the Acquired Fund accrue dividends based on the “exclude” methodology (shareholders begin earning dividends on the day after the fund receives payment for their shares, and continue to earn dividends through the day the redemption of such shares settles) while shares of the Acquiring Fund accrue dividends based on the “include” methodology (so shareholders begin earning dividends on the day the fund receives payment for their shares, and continue to earn dividends through the day before the day the redemption of such shares settles). As a result, shareholders of the Acquired Fund may receive dividends on one less day as a result of the Merger.

Capitalization

Information concerning the capitalization of each Fund is contained in Appendix C to the Prospectus/Proxy Statement.

Reasons for the Merger and Trustees’ Considerations

The Board, including all trustees who are not “interested persons” (as such term is defined in the 1940 Act) of the Excelsior Trust, based upon its evaluation of the information presented to it, and in light of its fiduciary duties under federal and state law, determined on behalf of the Acquired Fund that the Merger would be in the best interests of the Acquired Fund’s shareholders and that the interests of existing shareholders in the Acquired Fund would not be diluted as a result of the Merger. The Board has unanimously approved the Agreement and Plan of Reorganization and the Merger, and recommends that Acquired Fund shareholders vote in favor of the Merger by approving the Agreement and Plan of Reorganization.

Columbia Management proposed the Merger to the Board at a meeting held on September 27-28, 2007. At the meeting, the Board (with the advice and assistance of independent counsel) considered, among other things, in no order of priority:

the Merger as part of Columbia Management’s overall effort to consolidate the Excelsior Funds into the Columbia family of funds;

various potential shareholder benefits of the Merger;

various alternatives to the Merger, including the continued operation of the Acquired Fund and certain other funds as a separate fund complex and the possible liquidation of the Acquired Fund;

the current asset level of the Acquired Fund and the combined pro forma asset level of the Acquiring Fund;

the historical performance of the Acquired Fund and the Acquiring Fund (see “Performance Information” below), although no assurances were given that the Acquiring Fund would achieve any particular level of performance after the Merger;

the investment objectives and principal investment strategies of the Funds;

that holders of Shares Class shares of the Acquired Fund are expected to experience lower total and net operating expense ratios and that holders of Institutional Shares Class shares of the Acquired Fund are expected to experience higher total and net operating expense ratios as holders of Class Z shares of the Acquiring Fund for at least one year after the Merger;

the anticipated tax-free nature of the exchange of shares in the Merger, and other expected U.S. federal income tax consequences of the Merger;

the potential benefits of the Merger to Columbia Management and its affiliates;

10.

various aspects of the Merger and the Agreement and Plan of Reorganization;

11.

the fact that shareholders of the Acquired Fund will experience no substantive change in shareholder services as a result of the Merger; and

12.

that the costs associated with the Merger will be borne by the Acquired Fund and the Acquiring Fund only to the extent that Columbia Management anticipates a reduction in expenses to shareholders of such Fund in the first year following the Merger.

The Board also considered that the Funds have different boards as well as different (although affiliated) investment advisers. Additionally, the Funds have different outside legal counsel. The Board also considered, however, that many of the Funds’ service providers are identical. Both Funds have the same administrator and pricing and bookkeeping agent (Columbia Management), distributor (Columbia Management Distributors, Inc.), transfer agent (Columbia Management Services, Inc.) and custodian and fund accountant (State Street Bank and Trust Company).

If the Merger is approved by the shareholders, the transaction will combine the Acquired Fund’s assets with those of the Acquiring Fund, resulting in a combined portfolio that is larger than the Acquired Fund’s. Larger mutual funds often have more buying power (for example, they have greater opportunity to purchase round lots of securities) and generally are better able to diversify their portfolios.

Columbia Management also believes that the Merger helps eliminate overlapping products within the Columbia Funds family. The Acquired Fund and the Acquiring Fund are both high yield funds and have similar investment objectives and principal investment strategies. Columbia Management believes that streamlining its product offerings in a particular asset segment will help to minimize investor confusion.

Regulatory Matters

Columbia Management and Columbia Management Distributors, Inc. (collectively, the “Columbia Group”) are subject to an Assurance of Discontinuance with the New York Attorney General (“NYAG”) (the “NYAG Settlement”) and a cease-and-desist order by the SEC (the “SEC Order”) on matters relating to mutual fund trading. The SEC Order and the NYAG Settlement are referred to collectively as the “Settlements.” In connection with Columbia Management providing services to the Columbia Funds, the Boards of Trustees of the Columbia Funds have agreed to conform to certain governance requirements, including the election of an independent board chair. Under the terms of the SEC Order, the Columbia Group agreed, among other things, to: pay disgorgement and 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 and independent fee consultant. The NYAG Settlement also, among other things, requires Columbia Management and its affiliates to reduce management fees for certain of the funds in the Columbia family of mutual funds and other mutual funds through November 30, 2009 and to make certain disclosures to investors relating to expenses. Please see Appendix D for more information.

Performance Information

The bar charts below show the percentage gain or loss in each calendar year (before taxes) for the 10-year (or since inception) period ended December 31, 2007 for Shares Class shares of the Acquired Fund and for Class Z shares of the Acquiring Fund. The bar charts should give a shareholder a general idea of how the Acquired Fund’s and the Acquiring Fund’s returns have varied from year to year. The bar charts include the effect of Fund expenses. The calculations of total returns assume the reinvestment of all dividends and capital gain distributions on the reinvestment dates. Performance results include the effect of expense reduction arrangements, if any. If these arrangements had not been in place, total returns would have been lower. Any expense reduction arrangements may be discontinued at any time after the end of their contract period. As with all mutual funds, past performance is not an indication of future results. No assurance can be given that the Acquiring Fund will achieve any particular level of performance after the Merger.

Additional discussion of the manner of calculating total return is contained in each Fund’s Prospectus and Statement of Additional Information.

High Yield Fund

(Acquired Fund)

LOGO

For period shown in bar chart:

Best quarter: 2nd quarter 2003, 14.26%

Worst quarter: 3rd quarter 2002, (11.44)%

Columbia High Yield Opportunity Fund⁽¹⁾

(Acquiring Fund)

LOGO

For period shown in bar chart:

Best quarter: 2nd quarter 2003, 8.51%

Worst quarter: 4th quarter 2000, (7.88)%

(1)

Class Z is a newer class of shares. Its performance information includes returns of the Acquiring Fund’s Class A shares (the oldest existing share class) for periods prior to its inception. These returns have not been restated to reflect any differences in expenses (such as distribution and service fees) between Class A shares and Class Z shares. If differences in expenses had been reflected, the returns shown for periods prior to the inception of Class Z shares would have been higher, because Class Z shares are not subject to any distribution and service fees. Class A shares were initially offered on October 21, 1971, and Class Z shares were initially offered on January 8, 1999.

The following tables list the average annual total return for the one-year, five-year and ten-year (or since inception) periods ended December 31, 2007 for Shares Class and Institutional Shares Class shares of the Acquired Fund and Class Z shares of the Acquiring Fund. After-tax returns are shown only for Shares Class shares and Class Z shares; after tax returns for other share classes will vary. These tables are intended to provide shareholders with some indication of the risks of investing in the Acquired Fund and the Acquiring Fund. Each table also includes the performance of one or more relevant broad-based market indices. The indices are not available for investment, are unmanaged and do not reflect deductions for sales charges, fees, brokerage commissions, taxes or other expenses of investing.

After-tax returns are calculated using the historical highest individual federal income tax rates and do not reflect the effect of state and local taxes. Actual after-tax returns depend on an investor’s tax situation, may differ from those shown and may not be relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

High Yield Fund (Acquired Fund)

Average Annual Total Returns — For Periods Ended December 31, 2007


	1 Year	5 Year	Since Inception⁽¹⁾
Shares Class(%)
Return before taxes	-0.25	10.31	5.66
Return after taxes on distributions	-2.75	7.31	1.14
Return after taxes on distributions and sale of fund shares	-0.10	7.10	1.96
Institutional Shares Class(%)
Return before taxes	0.21	10.53	5.92
Merrill Lynch High Yield, Cash Pay Index(%)⁽²⁾ (reflects no deduction for fees, expenses, or taxes)	2.17	10.57	7.84

(1)	Since October 31, 2000.

(2)

The Merrill Lynch High Yield, Cash Pay Index is an unmanaged index comprised of publicly placed, non-convertible, coupon bearing domestic debt. Issues in the index are less than investment grade as rated by S&P or Moody’s and must not be in default. Issues have a term to maturity of at least one year.

Columbia High Yield Opportunity Fund (Acquiring Fund)

Average Annual Total Returns — For Periods Ended December 31, 2007


	1 Year	5 Year	10 Year
Class Z(%)⁽¹⁾
Return before taxes	1.14	9.86	3.88
Return after taxes on distributions	-1.44	6.88	0.50
Return after taxes on distributions and sale of shares	0.77	6.73	1.16
JPMorgan Global High Yield Index(%)⁽²⁾ (reflects no deductions for fees, expenses or taxes)	2.89	10.95	5.94
Credit Suisse High Yield Index(%)⁽³⁾ (reflects no deductions for fees, expenses or taxes)	2.65	10.97	6.10

(1)

Class Z is a newer class of shares. Its performance information includes returns of the Acquiring Fund’s Class A shares (the oldest existing share class) for periods prior to its inception. These returns have been adjusted to reflect that Class Z shares are sold without a sales charge. These returns have not been restated to reflect any differences in expenses (such as distribution and service fees) between Class A shares and Class Z shares. If differences in expenses had been reflected, the returns shown for periods prior to the inception of Class Z shares would have been higher, because Class Z shares are not subject to any distribution and service fees. Class A shares were initially offered on October 21, 1971, and Class Z shares were initially offered on January 8, 1999.

(2)	The Credit Suisse High Yield Index is a broad-based index that tracks the performance of high yield bonds.

(3)	The JPMorgan Global High Yield Index is designed to mirror the investable universe of the US dollar global high-yield corporate debt market, including domestic and international issues.

Terms of the Agreement and Plan of Reorganization

If approved by the shareholders of the Acquired Fund and if all other conditions are satisfied, the Merger is expected to occur late in the first quarter of 2008. The following is a brief summary of the principal terms of the Agreement and Plan of Reorganization. Please review Appendix A to the Prospectus/Proxy Statement for more information regarding the Agreement and Plan of Reorganization.

The Acquired Fund will transfer all of the assets and liabilities attributable to each class of its shares to the Acquiring Fund in exchange for Class Z shares of the Acquiring Fund with an aggregate net asset value equal to the net value of the transferred assets and liabilities.

The assets of the Acquired Fund and the Acquiring Fund will be valued for purposes of the Merger as of the close of regular trading on the New York Stock Exchange (generally 4:00 p.m. Eastern time) on the business day next preceding the closing date of the Merger (currently scheduled to occur late in the first quarter of 2008), using the valuation procedures of the Acquiring Fund.

The Class Z shares of the Acquiring Fund received by the Acquired Fund will be distributed to the shareholders of the Acquired Fund pro rata in accordance with their percentage ownership of Shares Class or Institutional Shares Class shares, as applicable, of the Acquired Fund in complete liquidation of the Acquired Fund.

After the Merger, the Acquired Fund’s affairs will be wound up in an orderly fashion and it will be terminated under state law.

The Merger requires approval by the Acquired Fund’s shareholders and satisfaction of a number of other conditions; the Merger may be terminated at any time with the approval of the Board and the board of trustees of the Columbia Trust.

Shareholders should be aware that the Merger as proposed is not expected to result in recognition of gain or loss to shareholders for federal income tax purposes. However, the Merger will end the tax year of the Acquired Fund, likely accelerating taxable distributions from the Acquired Fund to shareholders. Shares may be redeemed at any time prior to the consummation of the Merger, likely resulting in the recognition of gain or loss to the redeeming shareholder for federal income tax purposes.

Federal Income Tax Consequences

The Merger is intended to be a tax-free reorganization for federal income tax purposes. For the Merger, Ropes & Gray LLP will deliver to the Acquiring Fund and to the Acquired Fund an opinion, and the closing of the Merger will be conditioned on receipt by the Funds of such opinion, to the effect that, on the basis of existing provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury regulations promulgated thereunder, current administrative rules, pronouncements, and court decisions, while the matter is not free from doubt, generally for federal income tax purposes:

the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code, and the Acquired Fund and the Acquiring Fund each will be a “party to a reorganization” within the meaning of Section 368(b) of the Code;

under Sections 361 and 357 of the Code, no gain or loss will be recognized by the Acquired Fund upon the transfer of its assets to the Acquiring Fund in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of the Acquired Fund’s liabilities, or upon the distribution of Acquiring Fund shares by the Acquired Fund to its shareholders in liquidation;

under Section 354 of the Code, no gain or loss will be recognized by shareholders of the Acquired Fund on the distribution of Acquiring Fund shares to them in exchange for their shares of the Acquired Fund;

under Section 358 of the Code, the aggregate tax basis of the Acquiring Fund shares that the Acquired Fund’s shareholders receive in exchange for their Acquired Fund shares will be the same as the aggregate tax basis of the Acquired Fund shares exchanged therefor;

under Section 1223(1) of the Code, an Acquired Fund shareholder’s holding period for the Acquiring Fund shares received will be determined by including the holding period for the Acquired Fund shares exchanged therefor, provided that at the time of the exchange the shareholder held the Acquired Fund shares as a capital asset;

under Section 1032 of the Code, no gain or loss will be recognized by the Acquiring Fund upon receipt of the assets transferred to the Acquiring Fund in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund;

under Section 362(b) of the Code, the Acquiring Fund’s tax basis in the assets that the Acquiring Fund receives from the Acquired Fund will be the same as the Acquired Fund’s tax basis in such assets immediately prior to such exchange;

under Section 1223(2) of the Code, the Acquiring Fund’s holding periods in such assets will include the Acquired Fund’s holding periods in such assets; and

The Acquiring Fund will succeed to and take into account the items of the Acquired Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the Regulations thereunder.

The opinion will express no view with respect to the effect of the reorganization on any transferred asset as to which any unrealized gain or loss is required to be recognized under federal income tax principles (i) at the end of a taxable year or upon termination thereof or (ii) upon the transfer of such asset regardless of whether such a transfer would otherwise be a non-taxable transaction.

The opinion will be based on certain factual certifications made by officers of the Acquired Fund, the Acquiring Fund, the Excelsior Trust and the Columbia Trust and will also be based on customary assumptions. The opinion is not a guarantee that the tax consequences of the Merger will be as described above. The opinion will note and distinguish certain published precedent. There is no assurance that the Internal Revenue Service or a court would agree with the opinion.

the deduction for dividends paid), net tax-exempt income and net capital gain, including gain realized on disposition of portfolio securities in connection with the Merger (after reduction by any available capital loss carryforwards), if any, through the closing of the Merger. Such distributions may include amounts that are taxable to shareholders. Shareholders of the Acquired Fund will receive a proportionate share of any taxable gains realized by the Acquiring Fund but not distributed to its shareholders prior to the Merger when such gains are eventually distributed by the combined fund.

In addition, the unrealized capital gains, unrealized capital losses, and capital loss carryforwards of the combined fund are likely to be different, to a greater or lesser degree, from those of the Acquired Fund and the Acquiring Fund, respectively. Shareholders of either Fund may experience an increase in the shareholder’s proportionate share of unrealized capital gains or a decrease in the shareholder’s proportionate share of unrealized capital losses and/or capital loss carryforwards as a result of the Merger, which could accelerate the timing of taxable distributions to shareholders.

The Acquiring Fund’s ability to use the pre-Merger losses of either Fund to offset post-Merger gains of the combined fund may be limited as a result of the Merger due to the application of loss limitation rules under federal tax law. In addition, for five years beginning after the closing date of the Merger, the combined fund will not be allowed to offset gains “built in” to either Fund at the time of the Merger against capital losses (including capital loss carry forwards) built in to the other Fund. Moreover, for the taxable year ending after the closing date of the Merger, only that percentage of the Acquiring Fund’s capital gain net income for such taxable year (excluding capital loss carryforwards) as corresponds to the percentage of its year that remains following the Merger can be reduced by capital loss carryforwards (including as otherwise limited) of the Acquired Fund. The effect of these limitations, however, will depend on the amount of gains and losses in each Fund at the time of the Merger and at the close of each taxable year. As a result, under certain circumstances, the Acquired Fund shareholders could receive taxable distributions earlier than they would have had the Merger not occurred.

This description of the federal income tax consequences of the Merger is made without regard to the particular circumstances of any shareholder. Shareholders are urged to consult their own tax advisors as to the specific consequences to them of the Merger, including the applicability and effect of state, local, non-U.S. and other tax laws.

THE BOARD UNANIMOUSLY RECOMMENDS APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.

Required Vote for Proposal

Approval of the Agreement and Plan of Reorganization will require the affirmative vote of the holders of the lesser of (1) 67% or more of the Acquired Fund’s voting securities present at the Meeting, if the holders of more than 50% of the outstanding voting securities of the Acquired Fund are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of the Acquired Fund. A vote of the shareholders of the Acquiring Fund is not needed to approve the Merger.

III. GENERAL

Voting Information

The Board is soliciting proxies from the shareholders of the Acquired Fund in connection with the Meeting, which has been called to be held at 2:00 p.m. Eastern time on March 14, 2008, at One Financial Center, Boston, Massachusetts 02111-2621. The meeting notice, the Prospectus/Proxy Statement and the Proxy Card are expected to be mailed to shareholders beginning on or about February 8, 2008.

Information about Proxies and the Conduct of the Meeting

Solicitation of Proxies. Proxies will be solicited primarily through the mailing of the Prospectus/Proxy Statement and its enclosures, but proxies also may be solicited through further mailings, telephone calls, personal interviews or e-mail by officers of the Acquired Fund or by employees or agents of Columbia Management and its affiliated companies. In addition, Computershare Fund Services, 280 Oser Avenue, Hauppauge, NY 11788, has been engaged to assist in the solicitation of proxies, at an estimated cost of $2,167.

Voting Process. Shareholders can vote in any one of the following ways:

By mail, by filling out and returning the enclosed Proxy Card;

By phone, fax or Internet (see the enclosed Proxy Card for instructions); or

In person at the Meeting.

Shareholders who owned shares on the record date, December 21, 2007, are entitled to vote at the Meeting and at any adjourned session of the Meeting. Each whole share is entitled to one vote, and each fractional share is entitled to a proportionate fractional vote. If a shareholder chooses to vote by mail or by fax and such shareholder is an individual account owner, such shareholder should sign exactly as the name appears on the Proxy Card. Either owner of a joint account may sign the Proxy Card, but the signer’s name must match exactly the name that appears on the Proxy Card.

Quorum and Method of Tabulation. Shares represented by a duly executed proxy will be voted as instructed on the Proxy Card. If a proxy is executed, but no instructions are given, the proxy will be voted in favor of the proposal. A shareholder can revoke a proxy at any time prior to the Meeting by sending a signed, written letter of revocation to the Secretary of the Acquired Fund, by properly executing and submitting a later-dated proxy or by attending the Meeting and voting in person. Merely attending the Meeting without voting will not revoke a proxy.

shares that are present and entitled to vote. Abstentions and broker non-votes will have the effect of a negative vote on the proposal. “Broker non-votes” are shares held by a broker or nominee as to which (i) the broker or nominee does not have discretionary voting power and (ii) the broker or nominee has not received instructions from the beneficial owner or other person who is entitled to instruct how the shares should be voted.

Underwriter Address. The address of the Funds’ principal underwriter, Columbia Management Distributors, Inc., is One Financial Center, Boston, Massachusetts 02111.

Share Ownership. Appendix B to the Prospectus/Proxy Statement lists the total number of shares of each class of shares of the Acquired Fund outstanding as of December 21, 2007 and entitled to vote at the Meeting. It also identifies holders of more than five percent of any class of shares of the Acquired Fund or Class Z shares of the Acquiring Fund, and contains information about the executive officers and trustees of the Acquired Fund and their shareholdings in the Acquired Fund.

Adjournments; Other Business. If a quorum is not present at the Meeting, or if the Acquired Fund has not received enough votes by the time of the Meeting to approve the proposal, the persons named as proxies or shareholders present at the Meeting may propose that the Meeting be adjourned one or more times to permit further solicitation of proxies. Any adjournment requires the affirmative vote of a majority of the total number of votes properly cast on the matter, whether or not a quorum is present. The persons named as proxies will vote in favor of any such adjournment all proxies that they are entitled to vote in favor of the proposal. They will vote against any such adjournment any proxy that directs them to vote against the proposal. They will not vote any proxy that directs them to abstain from voting on the proposal.

The Meeting has been called to transact any business that properly comes before it. The only business that management of the Acquired Fund intends to present or knows that others will present is the proposal. If any other matters properly come before the Meeting, and on all matters incidental to the conduct of the Meeting, the persons named as proxies intend to vote the proxies in accordance with their judgment, except when the Secretary of the Acquired Fund has previously received written instructions to the contrary from the shareholder entitled to vote the shares.

[THIS PAGE INTENTIONALLY LEFT BLANK]

Appendix A — Agreement and Plan of Reorganization

THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of [•], 2008, is by and among Excelsior Funds Trust, Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. (each an “Acquired Company”), each on behalf of each series thereof identified in Exhibit A hereto as an Acquired Fund (each an “Acquired Fund”), Columbia Funds Series Trust I (the “Acquiring Trust”), on behalf of each series thereof identified in Exhibit A hereto as the corresponding Acquiring Fund (each an “Acquiring Fund”), and Columbia Management Advisors, LLC (“Columbia”).

This Agreement shall be treated as if each reorganization between an Acquired Fund and its corresponding Acquiring Fund contemplated hereby had been the subject of a separate agreement.

This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the meaning of Section 361(a) and Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the “Code”), and any successor provision. The reorganization will consist of the transfer of all of the assets of each Acquired Fund attributable to each class of its shares in exchange for shares of the corresponding class of shares of the corresponding Acquiring Fund (the “Acquisition Shares”), and the assumption by each Acquiring Fund of the liabilities of the corresponding Acquired Fund and the distribution of the Acquisition Shares to the relevant shareholders of such Acquired Fund in liquidation of such Acquired Fund, all upon the terms and conditions set forth in this Agreement.

In consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:

1.	TRANSFER OF ASSETS OF EACH ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF LIABILITIES AND ACQUISITION SHARES AND LIQUIDATION OF SUCH ACQUIRED FUND.

1.1.

Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein,

(a)

Each Acquired Fund will transfer and deliver to the corresponding Acquiring Fund, and each Acquiring Fund will acquire all the assets of the corresponding Acquired Fund as set forth in paragraph 1.2;

(b)

Each Acquiring Fund will assume all of the corresponding Acquired Fund’s liabilities and obligations of any kind whatsoever, whether absolute, accrued, contingent or otherwise, in existence on the Closing Date (as defined in paragraph 1.2 hereof) (the “Obligations”), except that expenses of the reorganization contemplated hereby to be paid by the Acquired Fund pursuant to paragraph 9.2 shall not be assumed or paid by the Acquiring Fund; and

(c)

Each Acquiring Fund will issue and deliver to the corresponding Acquired Fund in exchange for the net assets attributable to each class of its shares a number of Acquisition Shares of the corresponding class (including fractional shares, if any) determined by dividing the value of such net assets, computed in the manner and as of the time and date set forth in paragraph 2.1, by the net asset value of one Acquisition Share of the corresponding class computed in the manner and as of the time and date set forth in paragraph 2.2. Such transactions shall take place at the closing provided for in paragraph 3.1 (the “Closing”).

A-1

1.2.

The assets of each Acquired Fund to be acquired by the corresponding Acquiring Fund shall consist of all cash, securities, dividends and interest receivable, receivables for shares sold and all other assets that are owned by the Acquired Fund on the closing date provided in paragraph 3.1 (the “Closing Date”) and any deferred expenses, other than unamortized organizational expenses, shown as an asset on the books of the Acquired Fund on the Closing Date. Each Acquiring Fund agrees that all rights to indemnification and all limitations of liability existing in favor of the applicable Acquired Company’s current and former trustee/directors and officers, acting in their capacities as such, under the applicable Acquired Company’s organizational documents as in effect as of the date of this Agreement or under any other agreement of the Acquired Fund shall survive the reorganization as obligations of the Acquiring Trust, on behalf of the Acquiring Fund, and shall continue in full force and effect, without any amendment thereto, and shall constitute rights which may be asserted against the Acquiring Trust, on behalf of the Acquiring Fund, its successors or assigns.

1.3.

As provided in paragraph 3.4, as soon after the Closing Date as is conveniently practicable (the “Liquidation Date”), each Acquired Fund will liquidate and distribute pro rata to its shareholders of record of each class of its shares, determined as of the close of business on the Valuation Date (as defined in paragraph 2.1), the Acquisition Shares of the corresponding class received by the Acquired Fund pursuant to paragraph 1.1. Such liquidation and distribution will be accomplished by the transfer of the Acquisition Shares then credited to the account of each Acquired Fund on the books of the corresponding Acquiring Fund to open accounts on the share records of the corresponding Acquiring Fund in the names of the Acquired Fund’s shareholders and representing the respective pro rata number of Acquisition Shares due such shareholders. The Acquiring Fund shall not be obligated to issue certificates representing Acquisition Shares in connection with such exchange.

1.4.

With respect to Acquisition Shares distributable pursuant to paragraph 1.3 to an Acquired Fund shareholder holding a certificate or certificates for shares of the Acquired Fund, if any, on the Valuation Date, the Acquired Fund will not permit such shareholder to receive Acquisition Share certificates therefor, exchange such Acquisition Shares for shares of other investment companies, effect an account transfer of such Acquisition Shares or pledge or redeem such Acquisition Shares until such Acquired Fund shareholder has surrendered all his or her outstanding certificates for Acquired Fund shares or, in the event of lost certificates, posted adequate bond.

1.5.

As soon as practicable after the Closing Date, each Acquired Fund shall make all filings and take all other steps as shall be necessary and proper to effect its complete dissolution under applicable state law. After the Closing Date, no Acquired Fund shall conduct any business except in connection with its dissolution.

2.	VALUATION.

2.1.

For the purpose of paragraph 1, the value of each Acquired Fund’s assets to be acquired by the corresponding Acquiring Fund hereunder shall be the value of such assets computed as of the close of regular trading on the New York Stock Exchange on the business day next preceding the Closing (such time and date being herein called the “Valuation Date”) using the valuation procedures set forth in the organizational documents of the corresponding Acquiring Fund

A-2

and the then current prospectus or prospectuses or statement or statements of additional information of the corresponding Acquiring Fund (collectively, as amended or supplemented from time to time, the “Acquiring Fund Prospectus”), after deduction for the expenses of the reorganization contemplated hereby to be paid by the Acquired Fund pursuant to paragraph 9.2, and shall be certified by the Acquired Fund.

2.2.

For the purpose of paragraph 2.1, the net asset value of an Acquisition Share of each class shall be the net asset value per share computed as of the close of regular trading on the New York Stock Exchange on the Valuation Date, using the valuation procedures set forth in the organizational documents of the Acquiring Fund and the Acquiring Fund Prospectus.

3.	CLOSING AND CLOSING DATE.

3.1.

The Closing Date shall be on March 31, 2008, or on such other date as the parties may agree. The Closing shall be held at Columbia’s offices, One Financial Center, Boston, Massachusetts 02111 (or such other place as the parties may agree), at such time as the parties may agree.

3.2.

The portfolio securities of each Acquired Fund shall be made available by the Acquired Fund to the custodian for the corresponding Acquiring Fund (the “Custodian”), for examination no later than five business days preceding the Valuation Date. On the Closing Date, such portfolio securities and all the Acquired Fund’s cash shall be delivered by the Acquired Fund to the Custodian for the account of the corresponding Acquiring Fund, such portfolio securities to be duly endorsed in proper form for transfer in such manner and condition as to constitute good delivery thereof in accordance with the custom of brokers or, in the case of portfolio securities held in the U.S. Treasury Department’s book-entry system or by the Depository Trust Company, Participants Trust Company or other third party depositories, by transfer to the account of the Custodian in accordance with Rule 17f-4, Rule 17f-5 or Rule 17f-7, as the case may be, under the Investment Company Act of 1940, as amended (the “1940 Act”) and accompanied by all necessary federal and state stock transfer stamps or a check for the appropriate purchase price thereof. The cash delivered shall be in the form of currency or certified or official bank checks, payable to the order of “State Street Bank and Trust Company, custodian for [Acquiring Fund]”.

3.3.

In the event that on the Valuation Date (a) the New York Stock Exchange shall be closed to trading or trading thereon shall be restricted, or (b) trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of each Acquired Fund or the corresponding Acquiring Fund is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored; provided that if trading shall not be fully resumed and reporting restored within three business days of the Valuation Date, this Agreement may be terminated by either the Acquired Fund or the corresponding Acquiring Fund upon the giving of written notice to the other party.

3.4.

At the Closing, each Acquired Fund or its transfer agent shall deliver to the corresponding Acquiring Fund or its designated agent a list of the names and addresses of the Acquired Fund’s shareholders and the number of outstanding shares of each class of the Acquired Fund owned by each Acquired Fund shareholder, all as of the close of business on the Valuation Date, certified by any Vice President, Secretary or Assistant Secretary of the Acquired Fund.

A-3

The Acquiring Trust will provide to the Acquired Fund evidence satisfactory to the Acquired Fund that the Acquisition Shares issuable pursuant to paragraph 1.1 have been credited to the Acquired Fund’s account on the books of the Acquiring Fund. On the Liquidation Date, each Acquiring Fund will provide to the corresponding Acquired Fund evidence satisfactory to the corresponding Acquired Fund that such Acquisition Shares have been credited pro rata to open accounts in the names of the corresponding Acquired Fund’s shareholders as provided in paragraph 1.3.

3.5.

At the Closing, each party shall deliver to the other such bills of sale, instruments of assumption of liabilities, checks, assignments, stock certificates, receipts or other documents as such other party or its counsel may reasonably request in connection with the transfer of assets, assumption of liabilities and dissolution contemplated by paragraph 1.

4.	REPRESENTATIONS AND WARRANTIES.

4.1.

Each Acquired Fund represents and warrants the following to the corresponding Acquiring Fund as of the date hereof and agrees to confirm the continuing accuracy and completeness in all material respects of the following on the Closing Date:

(a)

Excelsior Funds Trust is a Delaware statutory trust that is duly organized, validly existing and in good standing under the laws of the State of Delaware, and each of Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. is a Maryland corporation that is duly organized, validly existing and in good standing under the laws of the State of Maryland;

(b)

Each Acquired Company is a duly registered investment company classified as a management company of the open-end type and its registration with the Securities and Exchange Commission as an investment company under the 1940 Act is in full force and effect, and the Acquired Fund is a separate series thereof duly designated in accordance with the applicable provisions of the Declaration of Trust or Articles of Incorporation, as applicable, of the applicable Acquired Company and the 1940 Act;

(c)

The Acquired Fund is not in violation in any material respect of any provision of its organizational documents or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Acquired Fund is a party or by which the Acquired Fund is bound, and the execution, delivery and performance of this Agreement will not result in any such violation;

(d)

The Acquired Fund has no material contracts or other commitments (other than this Agreement and such other contracts as may be entered into in the ordinary course of its business) that if terminated may result in material liability to the Acquired Fund or under which (whether or not terminated) any material payments for periods subsequent to the Closing Date will be due from the Acquired Fund;

(e)

To the knowledge of the Acquired Fund, except as has been disclosed in writing to the corresponding Acquiring Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or threatened as to the Acquired Fund, any of its properties or assets, or any person whom the Acquired Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, and the Acquired Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated hereby;

A-4

(f)

The statement of assets and liabilities, the statement of operations, the statement of changes in net assets, and the schedule of investments of the Acquired Fund, as of the last day of and for its most recently completed fiscal year, audited by PricewaterhouseCoopers LLP (and, if applicable, an unaudited statement of assets and liabilities, statement of operations, statement of changes in net assets and schedule of investments for any subsequent semiannual period following the most recently completed fiscal year), copies of which have been furnished to the corresponding Acquiring Fund, fairly reflect the financial condition and results of operations of the Acquired Fund as of such dates and for the periods then ended in accordance with generally accepted accounting principles consistently applied, and the Acquired Fund has no known liabilities of a material amount, contingent or otherwise, other than those shown on the statements of assets and liabilities referred to above or those incurred in the ordinary course of its business since the last day of the Acquired Fund’s most recently completed fiscal year;

(g)

Since the last day of the Acquired Fund’s most recently completed fiscal year, there has not been any material adverse change in the Acquired Fund’s financial condition, assets, liabilities or business (other than changes occurring in the ordinary course of business), or any incurrence by the Acquired Fund of indebtedness, except as disclosed in writing to the corresponding Acquiring Fund. For the purposes of this subparagraph (g), distributions of net investment income and net realized capital gains, changes in portfolio securities, changes in the market value of portfolio securities or net redemptions shall be deemed to be in the ordinary course of business;

(h)

As of the Closing Date, all federal and other tax returns and reports of the Acquired Fund required by law to have been filed by such date (giving effect to extensions) shall have been filed, and all federal and other taxes shown to be due on such returns and reports or on any assessment received shall have been paid, or provisions shall have been made for the payment thereof, except for amounts that alone and in the aggregate would not reasonably be expected to have a material adverse effect. All of the Acquired Fund’s tax liabilities will have been adequately provided for on its books. To the best of the Acquired Fund’s knowledge, it will not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and it will not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid;

(i)

The Acquired Fund meets the requirements of subchapter M of the Code for treatment as a “regulated investment company” within the meaning of Section 851 of the Code, and will continue meeting such requirements at all times through the Closing Date. The Acquired Fund has not at any time since its inception been liable for, and is not now liable for, any material income or excise tax pursuant to Section 852 or 4982 of the Code. The Acquired Fund is in compliance in all material respects with applicable regulations of the Internal Revenue Service pertaining to the reporting of dividends and other distributions on and redemptions of its capital stock and to withholding in respect of dividends and other distributions to shareholders, and is not liable for any material penalties that could be imposed thereunder;

(j)

A-5

Acquired Fund’s then current prospectus or prospectuses or statement or statements of additional information (collectively, as amended or supplemented from time to time, the “Acquired Fund Prospectus”)) by the Acquired Fund and will have been issued in compliance with all applicable registration or qualification requirements of federal and state securities laws. Except as set forth on Exhibit B hereto, no options, warrants or other rights to subscribe for or purchase, or securities convertible into, any shares of common stock of the Acquired Fund are outstanding and none will be outstanding on the Closing Date;

(k)

The Acquired Fund’s investment operations from inception to the date hereof have been in compliance in all material respects with the investment policies and investment restrictions set forth in the Acquired Fund Prospectus, except as previously disclosed in writing to the corresponding Acquiring Fund;

(l)

The execution, delivery and performance of this Agreement has been duly authorized by the trustees of the Acquired Fund, and, upon approval thereof by the required majority of the shareholders of the Acquired Fund, this Agreement will constitute the valid and binding obligation of the Acquired Fund enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and other equitable principles;

(m)

The Acquisition Shares to be issued to the Acquired Fund pursuant to paragraph 1 will not be acquired for the purpose of making any distribution thereof other than to the Acquired Fund’s shareholders as provided in paragraph 1.3;

(n)

The information provided by the Acquired Fund for use in the Registration Statement and Prospectus/Proxy Statement referred to in paragraph 5.3 shall be accurate and complete in all material respects and shall comply with federal securities and other laws and regulations as applicable thereto;

(o)

No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Acquired Fund of the transactions contemplated by this Agreement, except such as may be required under the Securities Act of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934, as amended (the “1934 Act”), the 1940 Act and state securities or “Blue Sky” laws (which terms used herein shall include the laws of the District of Columbia and of Puerto Rico);

(p)

At the Closing Date, the Acquired Fund will have good and marketable title to its assets to be transferred to the corresponding Acquiring Fund pursuant to paragraph 1.1 and will have full right, power and authority to sell, assign, transfer and deliver the Investments (as defined below) and any other assets and liabilities of the Acquired Fund to be transferred to the corresponding Acquiring Fund pursuant to this Agreement. At the Closing Date, subject only to the delivery of the Investments and any such other assets and liabilities and payment therefor as contemplated by this Agreement, the corresponding Acquiring Fund will acquire good and marketable title thereto and will acquire the Investments and any such other assets and liabilities subject to no encumbrances, liens or security interests whatsoever and without any restrictions upon the transfer thereof, except as previously disclosed to the corresponding Acquiring Fund. As used in this Agreement, the term “Investments” shall mean the Acquired Fund’s investments shown on the schedule of its

A-6

investments as of the date of its most recently completed fiscal year, referred to in subparagraph 4.1(f) hereof, as supplemented with such changes in the portfolio as the Acquired Fund shall make, and changes resulting from stock dividends, stock split-ups, mergers and similar corporate actions through the Closing Date;

(q)

At the Closing Date, the Acquired Fund will have sold such of its assets, if any, as are necessary based on information provided by the corresponding Acquiring Fund and contingent on the accuracy of such information to assure that, after giving effect to the acquisition of the assets of the Acquired Fund pursuant to this Agreement, the Acquiring Fund will remain a “diversified company” within the meaning of Section 5(b)(1) of the 1940 Act and in compliance with such other mandatory investment restrictions as are set forth in the Acquiring Fund Prospectus, as amended through the Closing Date; and

(r)

No registration of any of the Investments would be required if they were, as of the time of such transfer, the subject of a public distribution by either of the corresponding Acquiring Fund or the Acquired Fund, except as previously disclosed by the Acquired Fund to the corresponding Acquiring Fund.

4.2.

Each Acquiring Fund represents and warrants the following to the corresponding Acquired Fund as of the date hereof and agrees to confirm the continuing accuracy and completeness in all material respects of the following on the Closing Date:

(a)

The Acquiring Trust is a Massachusetts business trust that is duly organized, validly existing and in good standing under the laws of The Commonwealth of Massachusetts;

(b)

The Acquiring Trust is a duly registered investment company classified as a management company of the open-end type and its registration with the Securities and Exchange Commission as an investment company under the 1940 Act is in full force and effect, and the Acquiring Fund is a separate series thereof duly designated in accordance with the applicable provisions of the Declaration of Trust of the Acquiring Trust and the 1940 Act;

(c)

The Acquiring Fund Prospectus conforms in all material respects to the applicable requirements of the 1933 Act and the rules and regulations of the Securities and Exchange Commission thereunder and does not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and there are no material contracts to which the Acquiring Fund is a party that are not referred to in such Prospectus or in the registration statement of which it is a part;

(d)

At the Closing Date, the Acquiring Fund will have good and marketable title to its assets;

(e)

The Acquiring Fund is not in violation in any material respect of any provisions of its organizational documents or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Acquiring Fund is a party or by which the Acquiring Fund is bound, and the execution, delivery and performance of this Agreement will not result in any such violation;

(f)

A-7

Acquiring Fund, any of its properties or assets, or any person whom the Acquiring Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, and the Acquiring Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated hereby;

(g)

The statement of assets and liabilities, the statement of operations, the statement of changes in net assets, and the schedule of investments of the Acquiring Fund, as of the last day of and for its most recently completed fiscal year, audited by PricewaterhouseCoopers LLP (and, if applicable, an unaudited statement of assets and liabilities, statement of operations, statement of changes in net assets and schedule of investments for any subsequent semiannual period following the most recently completed fiscal year), copies of which have been furnished to the Acquired Fund, fairly reflect the financial condition and results of operations of the Acquiring Fund as of such dates and for the periods then ended in accordance with generally accepted accounting principles consistently applied, and the Acquiring Fund has no known liabilities of a material amount, contingent or otherwise, other than those shown on the statements of assets referred to above or those incurred in the ordinary course of its business since the last day of the Acquiring Fund’s most recently completed fiscal year;

(h)

Since the last day of the Acquiring Fund’s most recently completed fiscal year, there has not been any material adverse change in the Acquiring Fund’s financial condition, assets, liabilities or business (other than changes occurring in the ordinary course of business), or any incurrence by the Acquiring Fund of indebtedness, except as disclosed in writing to the Acquired Fund. For the purposes of this subparagraph (h), distributions of net investment income and net realized capital gains, changes in portfolio securities, changes in the market value of portfolio securities or net redemptions shall be deemed to be in the ordinary course of business;

(i)

As of the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law to have been filed by such date (giving effect to extensions) shall have been filed, and all federal and other taxes shown to be due on such returns and reports or any assessments received shall have been paid, or provisions shall have been made for the payment thereof. All of the Acquiring Fund’s tax liabilities will have been adequately provided for on its books. To the best of the Acquiring Fund’s knowledge, it will not have not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and it will not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid;

(j)

The Acquiring Fund has met the requirements of subchapter M of the Code for treatment as a “regulated investment company” within the meaning of Section 851 of the Code in respect of each taxable year since the commencement of operations, and will continue to meet such requirements at all times through the Closing Date. The Acquiring Fund has not at any time since its inception been liable for, nor is it now liable for, any material income or excise tax pursuant to Section 852 or 4982 of the Code. The Acquiring Fund is in compliance in all material respects with applicable regulations of the Internal Revenue Service pertaining to the reporting of dividends and other distributions on and

A-8

redemptions of its capital stock and to withholding in respect of dividends and other distributions to shareholders, and is not liable for any material penalties that could be imposed thereunder;

(k)

Exhibit C hereto sets forth the authorized capital of the Acquiring Fund. All issued and outstanding shares of the Acquiring Fund are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable (except as set forth in the Acquiring Fund Prospectus) by the Acquiring Fund and will have been issued in compliance with all applicable registration or qualification requirements of federal and state securities laws. Except as set forth on Exhibit C hereto, no options, warrants or other rights to subscribe for or purchase, or securities convertible into, any shares of common stock of the Acquiring Fund are outstanding and none will be outstanding on the Closing Date;

(l)

The Acquiring Fund’s investment operations from inception to the date hereof have been in compliance in all material respects with the investment policies and investment restrictions set forth in the Acquiring Fund Prospectus;

(m)

The execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Acquiring Fund, and this Agreement constitutes the valid and binding obligation of the Acquiring Fund enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and other equitable principles;

(n)

The Acquisition Shares to be issued and delivered to the corresponding Acquired Fund pursuant to the terms of this Agreement will at the Closing Date have been duly authorized and, when so issued and delivered, will be duly and validly issued shares in the Acquiring Fund, and will be fully paid and non-assessable (except as set forth in the Acquiring Fund Prospectus) by the Acquiring Fund, and no shareholder of the Acquiring Fund will have any preemptive right of subscription or purchase in respect thereof;

(o)

The information to be furnished by the Acquiring Fund for use in the Registration Statement and Prospectus/Proxy Statement referred to in paragraph 5.3 shall be accurate and complete in all material respects and shall comply with federal securities and other laws and regulations applicable thereto; and

(p)

No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Acquiring Fund of the transactions contemplated by this Agreement, except such as may be required under the 1933 Act, the 1934 Act, the 1940 Act and state securities or “Blue Sky” laws (which term as used herein shall include the laws of the District of Columbia and of Puerto Rico).

5.	COVENANTS OF EACH ACQUIRED FUND AND THE CORRESPONDING ACQUIRING FUND.

Each Acquired Fund and the corresponding Acquiring Fund hereby covenants and agrees with the other as follows:

5.1.

Each Acquiring Fund and each Acquired Fund will each operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include regular and customary periodic dividends and distributions.

A-9

5.2.

Each Acquired Fund will call a meeting of its shareholders to be held prior to the Closing Date to consider and act upon this Agreement and take all other reasonable action necessary to obtain the required shareholder approval of the transactions contemplated hereby.

5.3.

In connection with each Acquired Fund shareholders’ meeting referred to in paragraph 5.2, the corresponding Acquiring Fund will prepare a Prospectus/Proxy Statement for such meeting, to be included in a Registration Statement on Form N-14 (the “Registration Statement”), which the corresponding Acquiring Fund will prepare and file for registration under the 1933 Act of the Acquisition Shares to be distributed to each Acquired Fund’s shareholders pursuant hereto, all in compliance with the applicable requirements of the 1933 Act, the 1934 Act, and the 1940 Act.

5.4.

The information to be furnished by each Acquired Fund for use in the Registration Statement and the information to be furnished by the corresponding Acquiring Fund for use in the Prospectus/Proxy Statement, each as referred to in paragraph 5.3, shall be accurate and complete in all material respects and shall comply with federal securities and other laws and regulations thereunder applicable thereto.

5.5.

Each Acquiring Fund will advise the corresponding Acquired Fund promptly if at any time prior to the Closing Date the assets of such Acquired Fund include any securities that the Acquiring Fund is not permitted to acquire.

5.6.

Subject to the provisions of this Agreement, the Acquired Fund and the corresponding Acquiring Fund will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to cause the conditions to the other party’s obligations to consummate the transactions contemplated hereby to be met or fulfilled and otherwise to consummate and make effective such transactions.

5.7.

Each Acquiring Fund will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state securities or “Blue Sky” laws as it may deem appropriate in order to continue its operations after the Closing Date.

6.	CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRED FUND.

The obligation of each Acquired Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the corresponding Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, to the following further conditions:

6.1.

The corresponding Acquiring Fund shall have delivered to the Acquired Fund a certificate executed in its name by its President or a Vice President and its Treasurer or an Assistant Treasurer, in form and substance satisfactory to the Acquired Fund and dated as of the Closing Date, to the effect that the representations and warranties of the corresponding Acquiring Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and that the corresponding Acquiring Fund has complied with all the covenants and agreements and satisfied all of the conditions on its part to be performed or satisfied under this Agreement at or prior to the Closing Date.

A-10

6.2.

The Acquired Fund shall have received a favorable opinion of Ropes & Gray LLP, dated the Closing Date and in a form satisfactory to the Acquired Fund, to the following effect:

(a)

The Acquiring Trust is a Massachusetts business trust duly organized and validly existing under the laws of The Commonwealth of Massachusetts and has power to own all of its properties and assets and to carry on its business as presently conducted, and the Acquiring Fund is a separate series thereof duly constituted in accordance with the applicable provisions of the 1940 Act and the Declaration of Trust and Bylaws of the Acquiring Trust;

(b)

This Agreement has been duly authorized, executed and delivered on behalf of the corresponding Acquiring Fund and, assuming the Registration Statement and Prospectus/Proxy Statement referred to in paragraph 5.3 comply with applicable federal securities laws and assuming the due authorization, execution and delivery of this Agreement by the Acquired Fund, is the valid and binding obligation of the corresponding Acquiring Fund enforceable against the corresponding Acquiring Fund in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and other equitable principles;

(c)

The corresponding Acquiring Fund has the power to assume the liabilities to be assumed by it hereunder and upon consummation of the transactions contemplated hereby the corresponding Acquiring Fund will have duly assumed such liabilities;

(d)

The Acquisition Shares to be issued for transfer to the Acquired Fund’s shareholders as provided by this Agreement are duly authorized and upon such transfer and delivery will be validly issued and outstanding and fully paid and nonassessable shares in the corresponding Acquiring Fund, and no shareholder of the corresponding Acquiring Fund has any preemptive right of subscription or purchase in respect thereof;

(e)

The execution and delivery of this Agreement did not, and the performance by the corresponding Acquiring Fund of its obligations hereunder will not, violate the corresponding Acquiring Fund’s organizational documents, or any provision of any agreement known to such counsel to which the corresponding Acquiring Fund is a party or by which it is bound or, to the knowledge of such counsel, result in the acceleration of any obligation or the imposition of any penalty under any agreement, judgment or decree to which such Acquiring Fund is a party or by which it is bound;

(f)

To the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental authority is required for the consummation by the corresponding Acquiring Fund of the transactions contemplated by this Agreement except such as may be required under state securities or “Blue Sky” laws or such as have been obtained;

(g)

Such counsel does not know of any legal or governmental proceedings relating to the Acquiring Fund existing on or before the date of mailing of the Prospectus/Proxy Statement referred to in paragraph 5.3 or the Closing Date required to be described in the Registration Statement that are not described as required;

(h)

The Acquiring Trust is registered with the Securities and Exchange Commission as an investment company under the 1940 Act; and

A-11

(i)

To the knowledge of such counsel, except as has been disclosed in writing to the Acquired Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or threatened as to the corresponding Acquiring Fund or any of its properties or assets or any person whom the Acquired Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, and the corresponding Acquiring Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transaction contemplated hereby.

6.3.

For the period beginning at the Closing Date and ending not less than six years thereafter, Columbia, its successors and assigns, shall provide, or cause to be provided, liability coverage at least comparable to the liability coverage currently applicable to both former and current trustees/directors and officers of each Acquired Company as of the date of this Agreement, covering the actions of such trustees/directors and officers of such Acquired Company for the period they served as such. Any related costs or expenses shall be borne by the applicable Acquired Company.

7.	CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING FUND.

The obligations of each Acquiring Fund to complete the transactions provided for herein shall be subject, at its election, to the performance by the corresponding Acquired Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, to the following further conditions:

7.1.

The corresponding Acquired Fund shall have delivered to the Acquiring Fund a certificate executed in its name by its President or a Vice President and its Treasurer or an Assistant Treasurer, in form and substance satisfactory to the Acquiring Fund and dated as of the Closing Date, to the effect that the representations and warranties of the corresponding Acquired Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and that the corresponding Acquired Fund has complied with all the covenants and agreements and satisfied all of the conditions on its part to be performed or satisfied under this Agreement at or prior to the Closing Date;

7.2.

The Acquiring Fund shall have received a favorable opinion of Morgan, Lewis & Bockius LLP dated the Closing Date and in a form satisfactory to the Acquiring Fund, to the following effect:

(a)

Each Acquired Company is a Delaware statutory trust or Maryland corporation, as applicable, duly organized and validly existing under the laws of the State of Delaware or Maryland, respectively, and has power to own all of its properties and assets and to carry on its business as presently conducted, and the corresponding Acquired Fund is a separate series thereof duly constituted in accordance with the applicable provisions of the 1940 Act and the Declaration of Trust or Articles of Incorporation, respectively, and Bylaws of such Acquired Company;

(b)

A-12

and assuming the due authorization, execution and delivery of this Agreement by the Acquiring Fund, is the valid and binding obligation of the corresponding Acquired Fund enforceable against the corresponding Acquired Fund in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and other equitable principles;

(c)

The corresponding Acquired Fund has the power to sell, assign, transfer and deliver the assets to be transferred by it hereunder, and, upon consummation of the transactions contemplated hereby, the corresponding Acquired Fund will have duly transferred such assets to the Acquiring Fund;

(d)

The execution and delivery of this Agreement did not, and the performance by the corresponding Acquired Fund of its obligations hereunder will not, violate the corresponding Acquired Fund’s organizational documents or any provision of any agreement known to such counsel to which the corresponding Acquired Fund is a party or by which it is bound or, to the knowledge of such counsel, result in the acceleration of any obligation or the imposition of any penalty under any agreement, judgment or decree to which the corresponding Acquired Fund is a party or by which it is bound;

(e)

To the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental authority is required for the consummation by the corresponding Acquired Fund of the transactions contemplated by this Agreement, except such as have been obtained;

(f)

Such counsel does not know of any legal or governmental proceedings relating to the corresponding Acquired Fund existing on or before the date of mailing of the Prospectus/Proxy Statement referred to in paragraph 5.3 or the Closing Date required to be described in the Prospectus/Proxy Statement that are not described as required;

(g)

Each Acquired Company is registered with the Securities and Exchange Commission as an investment company under the 1940 Act; and

(h)

To the knowledge of such counsel, except as has been disclosed in writing to the Acquiring Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or threatened as to the corresponding Acquired Fund or any of its properties or assets or any person whom the Acquiring Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, and the corresponding Acquired Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transaction contemplated thereby.

7.3.

A-13

on or after [[INSERT DATE]], and on or prior to the Closing Date (computed without regard to any deduction for dividends paid), and all of its net capital gains realized (after reduction for any capital loss carryover) in each of its taxable years ending on or after [[INSERT DATE]], and on or prior to the Closing Date.

7.4.

The corresponding Acquired Fund shall have furnished to the Acquiring Fund a certificate, signed by the President (or any Vice President) and the Treasurer (or Assistant Treasurer) of the corresponding Acquired Fund, as to the adjusted tax basis in the hands of the corresponding Acquired Fund of the securities delivered to the Acquiring Fund pursuant to this Agreement.

7.5.

The custodian of the corresponding Acquired Fund shall have delivered to the Acquiring.

7.6.

Fund a certificate identifying all of the assets of the corresponding Acquired Fund held by such custodian as of the Valuation Date.

8.	FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRED FUND AND THE CORRESPONDING ACQUIRING FUND.

The respective obligations of each Acquired Fund and the corresponding Acquiring Fund hereunder are subject to the further conditions that on or before the Closing Date:

8.1.

This Agreement and the transactions contemplated herein shall have received all necessary shareholder approvals at the meeting of shareholders of each Acquired Fund referred to in paragraph 5.2.

8.2.

On the Closing Date no action, suit or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated hereby.

8.3.

All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities (including those of the Securities and Exchange Commission and of state “Blue Sky” and securities authorities) deemed necessary by the Acquired Fund or the corresponding Acquiring Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except when failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquired Fund or the corresponding Acquiring Fund.

8.4.

The Registration Statement shall have become effective under the 1933 Act and no stop order suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act.

8.5.

The Acquired Fund shall have received a favorable opinion of Ropes & Gray LLP satisfactory to the Acquired Fund, and the corresponding Acquiring Fund shall have received a favorable opinion of Ropes & Gray LLP satisfactory to the corresponding Acquiring Fund, each substantially to the effect that, on the basis of existing provisions of the Code, Treasury regulations promulgated thereunder, current administrative rules, pronouncements, and court decisions, while the matter is not free from doubt, generally for federal income tax purposes:

(a)

The transactions contemplated by this Agreement will constitute a reorganization within the meaning of Section 368(a) of the Code, and the Acquired Fund and the

A-14

corresponding Acquiring Fund will each be “a party to a reorganization” within the meaning of Section 368(b) of the Code;

(b)

No gain or loss will be recognized by the Acquired Fund (i) upon the transfer of its assets to the corresponding Acquiring Fund in exchange for the Acquisition Shares and the assumption by the corresponding Acquiring Fund of the liabilities of the Acquired Fund or (ii) upon the distribution of the Acquisition Shares by the Acquired Fund to its shareholders in liquidation, as contemplated in paragraph 1 hereof;

(c)

No gain or loss will be recognized by the corresponding Acquiring Fund upon receipt of the assets of the Acquired Fund in exchange for the assumption of liabilities and obligations and issuance of the Acquisition Shares as contemplated in paragraph 1 hereof;

(d)

The tax basis of the assets of the Acquired Fund acquired by the corresponding Acquiring Fund will be the same as the tax basis of such assets in the hands of the Acquired Fund immediately prior to the transfer;

(e)

The holding period of the assets of the Acquired Fund in the hands of the corresponding Acquiring Fund will include the period during which such assets were held by the Acquired Fund;

(f)

No gain or loss will be recognized by the Acquired Fund’s shareholders upon the exchange of all of their shares of the Acquired Fund for the Acquisition Shares;

(g)

The aggregate tax basis of the Acquisition Shares to be received by a shareholder of the Acquired Fund will be the same as the aggregate tax basis of the Acquired Fund’s shares exchanged therefor;

(h)

The Acquired Fund shareholder’s holding period for the Acquisition Shares to be received will include the period during which the Acquired Fund’s shares exchanged therefor were held, provided that such shareholder held the Acquired Fund’s shares as a capital asset on the date of the exchange; and

(i)

The corresponding Acquiring Fund will succeed to and take into account the items of the Acquired Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the regulations thereunder.

The opinion will be based on certain factual certifications made by officers of the Acquired Fund, the corresponding Acquiring Fund, the applicable Acquired Company and the Acquiring Trust and will also be based on customary assumptions. The opinion is not a guarantee that the tax consequences of the relevant reorganization will be as described above. The opinion will note and distinguish certain published precedent. There is no assurance that the Internal Revenue Service or a court would agree with the opinion.

Ropes & Gray LLP will express no view with respect to the effect of the reorganization on any transferred asset as to which any unrealized gain or loss is required to be recognized under federal income tax principles (i) at the end of a taxable year or upon termination thereof, or (ii) upon the transfer of such asset regardless of whether such a transfer would otherwise be a non-taxable transaction.

A-15

8.6.

At any time prior to the Closing, any of the foregoing conditions of this Agreement may be waived jointly by the board of trustees/directors of the applicable Acquired Company and the Acquiring Trust, if, in their judgment, such waiver will not have a material adverse effect on the interests of the shareholders of the Acquired Fund or the corresponding Acquiring Fund.

9.	BROKERAGE FEES AND EXPENSES.

9.1.

Each Acquired Fund and corresponding Acquiring Fund represents and warrants to the other that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein.

9.2.

All fees paid to governmental authorities for the registration or qualification of the Acquisition Shares and all transfer agency costs related to the Acquisition Shares shall be allocated to the corresponding Acquiring Fund. All fees and expenses related to printing and mailing communications to Acquired Fund shareholders shall be allocated to the Acquired Fund. All of the other expenses of the transactions, including without limitation, accounting, legal and custodial expenses, contemplated by this Agreement shall be allocated equally between the Acquired Fund and the corresponding Acquiring Fund. The expenses detailed above shall be borne by the Fund to which they are allocated; except that Columbia shall bear such expenses to the extent such expenses exceed the anticipated reduction in expenses borne by the Fund’s shareholders over the first year following the reorganization. In the event the Closing does not occur, Columbia shall bear all such expenses.

10.	ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.

10.1.

Each Acquired Fund and corresponding Acquiring Fund agrees that neither party has made any representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement between the parties.

10.2.

The representations, warranties and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall not survive the consummation of the transactions contemplated hereunder except paragraphs 1.1, 1.2, 1.3, 1.5, 5.4, 5.6, 6.3, 9, 10, 13 and 14.

11.	TERMINATION.

11.1.

This Agreement may be terminated by the mutual agreement of each Acquired Fund and corresponding Acquiring Fund. In addition, either an Acquired Fund or the corresponding Acquiring Fund may at its option terminate this Agreement at or prior to the Closing Date because:

(a)

of a material breach by the other of any representation, warranty, covenant or agreement contained herein to be performed by the other party at or prior to the Closing Date;

(b)

a condition herein expressed to be precedent to the obligations of the terminating party has not been met and it reasonably appears that it will not or cannot be met;

A-16

(c)

any governmental authority of competent jurisdiction shall have issued any judgment, injunction, order, ruling or decree or taken any other action restraining, enjoining or otherwise prohibiting this Agreement or the consummation of any of the transactions contemplated herein and such judgment, injunction, order, ruling, decree or other action becomes final and non-appealable; provided that the party seeking to terminate this Agreement pursuant to this Section 11.1(c) shall have used its reasonable best efforts to have such judgment, injunction, order, ruling, decree or other action lifted, vacated or denied; or.

(d)

the difference between the per share net asset values of an Acquired Fund and its corresponding Acquiring Fund equals or exceeds $0.0015 on the Valuation Date, as computed by using market values in accordance with the policies and procedures established by the Acquiring Fund,

If the transactions contemplated by this Agreement have not been substantially completed by December 31, 2008, this Agreement shall automatically terminate on that date unless a later date is agreed to by both the Acquired Fund and the corresponding Acquiring Fund.

11.2.

If for any reason the transactions contemplated by this Agreement are not consummated, no party shall be liable to any other party for any damages resulting therefrom, including without limitation consequential damages.

12.	AMENDMENTS.

This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the authorized officers of each Acquired Fund and corresponding Acquiring Fund; provided, however, that following the shareholders’ meeting called by each Acquired Fund pursuant to paragraph 5.2 no such amendment may have the effect of changing the provisions for determining the number of the Acquisition Shares to be issued to shareholders of such Acquired Fund under this Agreement to the detriment of such shareholders without their further approval.

13.

NOTICES.

Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by prepaid telegraph, telecopy or certified mail addressed to the Acquired Fund or the corresponding Acquiring Fund, One Financial Center, Boston, Massachusetts 02111, Attention: Secretary.

14.	HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; NON- RECOURSE.

14.1.

The article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

14.2.

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

14.3.

This Agreement shall be governed by and construed in accordance with the domestic substantive laws of The Commonwealth of Massachusetts, without giving effect to any choice

A-17

or conflicts of law rule or provision that would result in the application of the domestic substantive laws of any other jurisdiction.

14.4.

This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.

14.5.

A copy of the Declaration of Trust of the Acquiring Trust is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that no trustee, officer, agent or employee of the Acquiring Trust shall have any personal liability under this Agreement, and that insofar as it relates to any Acquiring Fund, this Agreement is binding only upon the assets and properties of such Acquiring Fund.

[Remainder of page intentionally left blank.]

A-18

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as a sealed instrument by its President, a Vice President or Treasurer and attested by its Secretary or Assistant Secretary.

EXCELSIOR FUNDS TRUST

EXCELSIOR FUNDS, INC.

EXCELSIOR TAX-EXEMPT FUNDS, INC.

each on behalf of each Acquired Fund series thereof

By:

Name:

Title:

ATTEST:

By:

Name:

Title:

COLUMBIA FUNDS SERIES TRUST I

on behalf of each Acquiring Fund

By:

Name:

Title:

ATTEST:

By:

Name:

Title:

Solely for purposes of Paragraphs 6.3 and 9.2 of the Agreement

COLUMBIA MANAGEMENT ADVISORS, LLC

By:

Name:

Title:

EXHIBIT A


Acquired Fund (Share Classes)		Acquiring Fund (Share Classes)
Equity Income Fund		Columbia Dividend Income Fund
Retirement Shares Class		Class R
Shares Class		Class Z

High Yield Fund		Columbia High Yield Opportunity Fund
Institutional Shares Class		Class Z
Shares Class		Class Z

Long-Term Tax-Exempt Fund		Columbia Tax-Exempt Fund
Shares Class		Class Z

Real Estate Fund		Columbia Real Estate Equity Fund
Shares Class		Class Z

EXHIBIT B

Authorized Capital of each Acquired Fund


Acquired Fund		Authorized Capital
Equity Income Fund		Unlimited
High Yield Fund		Unlimited
Long-Term Tax-Exempt Fund		500,000,000
Real Estate Fund		500,000,000

EXHIBIT C

Authorized Capital of each Acquiring Fund


Acquiring Fund		Authorized Capital
Columbia Dividend Income Fund		Unlimited
Columbia High Yield Opportunity Fund		Unlimited
Columbia Real Estate Equity Fund		Unlimited
Columbia Tax-Exempt Fund		Unlimited

Appendix B—Fund Information

Shares of the Acquired Fund Outstanding and Entitled to Vote

The number of Shares Class and Institutional Shares Class shares of the Acquired Fund outstanding and entitled to vote as of December 21, 2007 was as follows:


Fund	Class	Number of Shares Outstanding and Entitled to Vote
Acquired Fund	Shares Class	16,576,090.283
	Institutional Shares Class	595,488.278

Ownership of Shares

As of December 21, 2007, the officers and trustees of the Columbia Trust, as a group, owned less than one percent of the then outstanding shares of the Acquiring Fund. As of December 21, 2007, the officers and trustees of the Excelsior Trust, as a group, owned less than one percent of the then outstanding shares of the Acquired Fund.

As of December 21, 2007, USTNY, a national banking association organized under the laws of the United States, 114 West 47^th Street, New York, NY 10036, may be deemed to have “beneficially” owned 83.67% of the outstanding shares of the Acquired Fund. Atwell & Co. is the nominee for USTNY. Accordingly, USTNY may be considered to be a “controlling person” of the Acquired Fund. A controlling person’s vote could have a more significant effect on matters presented to shareholders for approval than the vote of other Acquired Fund shareholders. Bank of America Corporation, a publicly-traded financial services corporation, is the ultimate parent company of USTNY.

As of December 21, 2007, the following shareholders of record each owned five percent or more of the outstanding shares of the noted class of shares of the noted Fund:

Fund and Class

Name and Address of
Shareholder

Number of
Outstanding Shares
of Class Owned

Percentage of
Outstanding
Shares of
Class Owned

Percentage of
Outstanding
Shares of Class
Owned Upon
Consummation
of Merger*

High Yield Fund (Acquired Fund)
Shares Class

Atwell & Co

PO Box 456

Wall Street Station

New York, NY 10005

12,410,849.653

74.87

46.06

B-1


Fund and Class	Name and Address of Shareholder	Number of Outstanding Shares of Class Owned	Percentage of Outstanding Shares of Class Owned		Percentage of Outstanding Shares of Class Owned Upon Consummation of Merger*
	Charles Schwab & Co Inc Special Custody A/C For Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4151	1,431,522.185	8.64	%	5.31	%

	Atwell & Co PO Box 2044 Peck Slip Station New York, NY 10038	929,455.791	5.61	%	3.45	%

Institutional Shares Class	Atwell & Co PO Box 456 Wall Street Station New York, NY 10005	393,429.458	66.07	%	1.46	%

	Atwell & Co PO Box 2044 Peck Slip Station New York, NY 10038	123,600.059	20.76	%	0.46	%

	Atwell & Co PO Box 2044 Peck Slip Station New York, NY 10038	61,220.160	10.28	%	0.23	%

Columbia High Yield Opportunity Fund (Acquiring Fund) Class Z	Funds Accounting Bank of America NA Attn Joan Wray/ 411 N Akard Street Dallas, TX 75201-3307	7,396,602.930	75.07	%	27.26	%

*	Percentage owned assuming consummation of the Merger on December 21, 2007.

B-2

Appendix C — Capitalization

The following table shows on an unaudited basis the capitalization of the Acquired Fund and the Acquiring Fund as of November 30, 2007, and on a pro forma combined basis, giving effect to the acquisition of the assets and liabilities of the Acquired Fund by the Acquiring Fund at net asset value as of that date:


	Excelsior High Yield Fund (Acquired Fund)		Columbia High Yield Opportunity Fund (Acquiring Fund)		Pro Forma Adjustments			*Pro Forma* Columbia High Yield Opportunity Fund (Acquiring Fund)⁽¹⁾
Class A
Net asset value	$	—	$	224,713,219	$	(48,859	)⁽²⁾	$	224,664,360
Shares outstanding		—		51,535,576		—			51,535,576
Net asset value per share	$	—	$	4.36				$	4.36
Class B
Net asset value	$	—	$	62,962,082	$	(13,690	)⁽²⁾	$	62,948,392
Shares outstanding		—		14,437,025		—			14,437,025
Net asset value per share	$	—	$	4.36				$	4.36
Class C
Net asset value	$	—	$	17,198,649	$	(3,740	)⁽²⁾	$	17,194,909
Shares outstanding		—		3,943,638		—			3,943,638
Net asset value per share	$	—	$	4.36				$	4.36
Class Z
Net asset value	$	—	$	40,383,887	$	79,790,772	⁽²⁾⁽³⁾	$	120,174,659
Shares outstanding		—		9,260,731		18,302,650	⁽³⁾		27,563,381
Net asset value per share	$	—	$	4.36				$	4.36
Institutional Shares Class⁽⁴⁾
Net asset value	$	3,328,486	$	—	$	(3,328,486	)	$	—
Shares outstanding		746,796		—		(746,796	)		—
Net asset value per share	$	4.46	$	—				$	—
Shares Class⁽⁴⁾
Net asset value	$	76,511,931	$	—	$	(76,511,931	)	$	—
Shares outstanding		17,154,312		—		(17,154,312	)		—
Net asset value per share	$	4.46	$	—				$	—

(1)

Assumes the Merger was consummated on November 30, 2007 and is for information purposes only. No assurance can be given as to how many shares of the Acquiring Fund will be received by the shareholders of the Acquired Fund on the date the Merger takes place, and the foregoing should not be relied upon reflect the number of shares of the Acquiring Fund that actually will be received on or after such date.

(2)	Adjustments reflect one time proxy, accounting, legal and other costs of the Merger as approved by the Board and the board of trustees of the Columbia Trust of $40,864 and $75,070 to be borne by the Acquired Fund and the Acquiring Fund, respectively.

(3)	Includes net assets and shares from Institutional Shares Class and Shares Class shares. Institutional Shares Class and Shares Class shares will be exchanged for Class Z shares on the date of the Merger.

(4)	Institutional Shares Class and Shares Class shares of the Acquired Fund are exchanged for Class Z shares of the Acquiring Fund based on the net asset value per share of the Acquiring Fund’s Class Z shares on the business day immediately preceding the Merger.

C-1

Appendix D — Information Applicable to the Acquiring Fund

Below is information regarding the Acquiring Fund. All references to the Fund in this Appendix D refer to the Acquiring Fund

ADDITIONAL INVESTMENT STRATEGIES AND POLICIES

This section describes certain strategies and policies that the Fund may utilize in pursuit of its investment objective, and describes some additional factors and risks involved with investing in the Fund.

Changing the Fund’s Investment Objective and Policies

The Fund’s investment objective and certain of its investment policies can be changed without shareholder approval unless otherwise stated in the Prospectus/Proxy Statement or the Fund’s Statement of Additional Information (“SAI”). Shareholders vote on changes to other investment policies that are designated as fundamental in accordance with the requirements of the 1940 Act.

Investment Guidelines

As a general matter, unless otherwise noted, whenever an investment policy or limitation states a maximum percentage of the Fund’s assets that may be invested in any security or other asset, or sets forth a policy regarding an investment standard, compliance with that percentage limitation or standard will be determined solely at the time of the Fund’s acquisition of the security or asset.

Holding Other Kinds of Investments

The Fund may hold investments that aren’t part of its principal investment strategies. These investments are described in the SAI. The Fund may choose not to invest in certain securities described in the Prospectus/Proxy Statement and in the SAI, although it has the ability to do so.

Investing in the Columbia Money Market Funds

The Fund may invest uninvested cash and cash collateral received in connection with its securities lending program in shares of the registered or unregistered money market funds advised by Columbia Management. Columbia Management and its affiliates receive fees from these funds for providing advisory and other services in addition to the fees which they are entitled to receive from the Fund for services provided directly.

Lending Securities

The Fund may lend portfolio securities to approved broker/dealers or other financial intermediaries on a fully collateralized basis in order to earn additional income. The Fund may lose money from securities lending if, for example, it is delayed or prevented from selling the collateral after the loan is made or in recovering the securities loaned, or if it incurs losses on the reinvestment of cash collateral.

D-1

Portfolio Holdings Disclosure

A description of Columbia Funds’ policies and procedures with respect to the disclosure of Fund portfolio securities is available in the SAI. The Fund discloses its portfolio holdings on the Columbia Funds’ website, www.columbiafunds.com, as described below. Once posted, the portfolio holdings information will remain available on the website until at least the date on which such Fund files a Form N-CSR or Form N-Q (forms filed with the SEC that include portfolio holdings information) for the period that includes the date as of which the information is current.

The Fund’s complete portfolio holdings as of a fiscal quarter-end are disclosed approximately 60 calendar days after such quarter-end and the Fund’s largest 15 holdings as a percent of the Fund’s portfolio as of a month-end are disclosed approximately 15 calendar days after such month-end.

In addition, more current information concerning the Fund’s portfolio holdings as of specified dates may also be disclosed on the Columbia Funds’ website.

Investing Defensively

The Fund may from time to time take temporary defensive investment positions that are inconsistent with the Fund’s principal investment strategies in attempting to respond to adverse market, economic, political or other conditions. The Fund may not achieve its investment objective while it is investing defensively.

Mailings to Households

In order to reduce shareholder expenses we may, if prior consent has been provided, mail only one copy of the Fund’s prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, call 800.345.6611 or, if your shares are held through a financial intermediary, contact your intermediary directly.

Portfolio Turnover

A mutual fund that replaces, or turns over, more than 100% of its investments in a year is considered to have a high portfolio turnover rate. A high portfolio turnover can generate larger distributions of short-term capital gains to shareholders, which are generally taxable at higher rates than long-term capital gains for federal income tax purposes. A high portfolio turnover rate can also mean higher brokerage and other transaction costs, which could reduce a fund’s returns. In general, the greater the volume of buying and selling by a fund, the greater the impact that brokerage commissions will have on its returns. The Fund generally buys securities for capital appreciation, investment income or both. However, the Fund may sell securities regardless of how long they’ve been held. You’ll find the Fund’s historical portfolio turnover rates in Appendix E.

MANAGEMENT OF THE FUND

Primary Service Providers

D-2

key services to the Fund and the other Columbia Funds, including investment advisory, distribution, administration, shareholder servicing and transfer agency, and are paid for providing these services. These service relationships are described below.

Columbia Management

Columbia Management is located at 100 Federal Street, Boston, MA 02110, and serves as investment advisor to over 100 Columbia Funds mutual fund portfolios. As of December 31, 2007, Columbia Management had assets under management of approximately $370.2 billion. Columbia Management is a registered investment advisor and an indirect, wholly owned subsidiary of Bank of America. Its management experience covers all major asset classes, including equity securities, fixed income securities and money market instruments. In addition to serving as investment advisor to mutual funds, Columbia Management acts as an investment manager for individuals, corporations, retirement plans, private investment companies and financial intermediaries.

Subject to oversight by the board of trustees of the Columbia Trust, Columbia Management manages the day-to-day operations of the Fund, determining what securities and other investments the Fund should buy or sell and executing the Fund’s portfolio transactions. Although Columbia Management is responsible for the investment management of the Fund, Columbia Management may delegate certain of its duties to one or more investment sub-advisors. Columbia Management may also use the research and other expertise of its affiliates and third parties in managing the Fund’s investments.

The Fund pays Columbia Management a fee for its investment advisory services. The fee is calculated as a percentage of the average daily net assets of the Fund and is paid monthly. For the Fund’s most recent fiscal year, aggregate advisory fees paid to Columbia Management by the Fund amounted to 0.60% of average daily net assets of the Fund.

A discussion regarding the basis for the board’s approval of the Fund’s investment advisory agreement with Columbia Management is available in the Fund’s semi annual report to shareholders for the fiscal period ended November 30, 2006.

Sub-Advisor(s)

Columbia Management may engage an investment sub-advisor or sub-advisors to make the day-to-day investment decisions for the Fund. Columbia Management retains ultimate responsibility (subject to board oversight) for overseeing any sub-advisor it engages and for evaluating the Fund’s needs and available sub-advisors’ skills and abilities on an ongoing basis. Based on its evaluations, Columbia Management may at times recommend to the board that the Fund change, add or terminate one or more sub-advisors; continue to retain a sub-advisor even though the sub-advisor’s ownership or corporate structure has changed; or materially change a sub-advisory agreement with a sub-advisor. Applicable law requires the Fund to obtain shareholder approval in order to act on most of these types of recommendations, even if the board has approved the proposed action and believes that the action is in shareholders’ best interests. Columbia Management and the Columbia Funds have applied for relief from the SEC to permit the Fund to act on many of Columbia Management’s recommendations with approval only by the board and not by Fund shareholders. Columbia Management or the Fund would

D-3

inform the Fund’s shareholders of any actions taken in reliance on this relief. Until Columbia Management and the Fund obtain this relief, the Fund will continue to submit these matters to shareholders for their approval to the extent required by applicable law.

At present, Columbia Management has not engaged any investment sub-advisor for the Fund.

Portfolio Managers

Information about Columbia Management’s portfolio managers who are primarily responsible for overseeing the Fund’s investments is shown in the table below. The SAI provides more information about each portfolio manager’s compensation, other accounts managed by each portfolio manager and each portfolio manager’s ownership of securities in the Fund.

Kevin L. Cronk

Service with the Fund since February 2003. Investment management experience since 1994.

Senior Vice President of Columbia Management, and Columbia Management associated since August 1999.

Thomas A. LaPointe

Service with the Fund since February 2003. Investment management experience since 1994.

Senior Vice President of Columbia Management, and Columbia Management associated since February 1999.

The Administrator

Columbia Management is responsible for overseeing the administrative operations of the Fund, including the general supervision of the Fund’s operations, coordination of the Fund’s service providers, and the provision of office facilities and related clerical and administrative services. The Fund pays Columbia Management a fee for its services, plus certain out-of-pocket expenses. Columbia Management does not currently receive any fees for the administrative services it provides the Fund.

The Distributor

Shares of the Fund are distributed by the Distributor, which is located at One Financial Center, Boston, MA 02111. The Distributor is a registered broker/dealer and an indirect, wholly owned subsidiary of Bank of America. The Distributor and its affiliates may pay commissions, distribution and service fees and/or other compensation to entities, including Bank of America affiliates, for selling shares and providing services to investors.

The Transfer Agent

The Transfer Agent is a registered transfer agent and an indirect, wholly owned subsidiary of Bank of America. The Transfer Agent is located at One Financial Center, Boston, MA 02111, and its responsibilities include processing purchases, sales and exchanges, calculating and paying distributions, keeping shareholder records, preparing account statements and providing customer service. The Fund pays the Transfer Agent monthly fees on a per-account basis. Fees paid to the Transfer Agent include

D-4

reimbursements for certain out-of-pocket expenses and sub-transfer agency fees, subject to certain limitations paid by the Transfer Agent on the Fund’s behalf.

Other Roles and Relationships of Bank of America and its Affiliates — Certain Conflicts of Interest

As described in Management of the Fund—Primary Service Providers, Columbia Management, the Distributor and the Transfer Agent, all affiliates of Bank of America, provide various services to the Fund for which they are compensated. Bank of America and its affiliates may also provide other services to the Fund and be compensated for them.

Columbia Management and its affiliates may provide investment advisory and other services to other clients and customers substantially similar to those provided to the Fund. These activities, and other financial services activities of Bank of America and its affiliates, may present actual and potential conflicts of interest and introduce certain investment constraints.

Bank of America is a major financial services company, engaged in a broad range of financial activities beyond the mutual fund-related activities of Columbia Management, including, among others, commercial banking, investment banking, broker/dealer (sales and trading), asset management, insurance and other financial activities. These additional activities may involve multiple advisory, transactional, lending, financial and other interests in securities and other instruments, and in companies that issue securities and other instruments, which may be bought, sold or held by the Fund.

Conflicts of interest and limitations that could affect the Fund may arise from, for example, the following:

compensation and other benefits received by Columbia Management and other Bank of America affiliates related to the management/administration of the Fund and the sale of its shares;

the allocation of, and competition for, investment opportunities among the Fund and other funds and accounts advised/managed by Columbia Management and other Bank of America affiliates;

separate and potentially divergent management of the Fund and other funds and accounts advised/managed by Columbia Management and other Bank of America affiliates;

regulatory and other investment restrictions on investment activities of Columbia Management and other Bank of America affiliates and accounts advised/managed by them;

lending, investment banking and other relationships of Bank of America affiliates with companies and other entities in which the Fund invests; and

regulatory and other restrictions relating to the sharing of information between Bank of America and its affiliates, including Columbia Management, and the Fund.

Bank of America and its affiliates also provide a variety of products and services that, in some manner, may use the Fund and other Columbia Funds as investment options. For example:

the Columbia Funds are available as investments in connection with brokerage and other securities products offered by Banc of America Investment Services, Inc., an affiliated retail broker/dealer of Bank of America;

D-5

the Columbia Funds are used as investments in connection with fiduciary, investment management and other accounts offered by U.S. Trust, Bank of America Private Wealth Management, as well as certain Columbia Funds structured as “funds of funds;” and

the Columbia Money Market Funds are offered as an investment option for a variety of cash “sweep” account programs offered by Bank of America and its affiliates.

The use of the Columbia Funds as investment options in connection with other products and services offered by Bank of America and its affiliates may introduce economic and other conflicts of interest of which you should be aware. These conflicts of interest are highlighted in sections of account documentation and other disclosure materials relating to these products and services, as well as in the SAI.

Columbia Management and Bank of America have adopted various policies and procedures that are intended to identify, monitor and address conflicts of interest. However, there is no absolute assurance that these policies, procedures and disclosures will be effective.

Additional information about Bank of America and the types of conflicts of interest and other matters referenced above is set forth in the Investment Advisory and Other Services—Other Roles and Relationships of Bank of America and Affiliates—Certain Conflicts of Interest section of the SAI, which is identified by the LOGO . Investors in the Fund should carefully review these disclosures and consult with their financial advisor if they have any questions.

Certain Legal Matters

On February 9, 2005, Columbia Management Advisors, Inc. (which has since merged into Banc of America Capital Management, LLC (now named Columbia Management Advisors, LLC)) (“Columbia”) and Columbia Funds Distributor, Inc. (which has been renamed Columbia Management Distributors, Inc.) (the “Distributor”) (collectively, the “Columbia Group”) entered into an Assurance of Discontinuance with the New York Attorney General (“NYAG”) (the “NYAG Settlement”) and consented to the entry of a cease-and-desist order by the Securities and Exchange Commission (“SEC”) (the “SEC Order”) on matters relating to mutual fund trading.

Under the terms of the SEC Order, the Columbia Group agreed, among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review the Columbia Group’s applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The Columbia Funds have also voluntarily undertaken to implement certain governance measures designed to maintain the independence of their boards of trustees. The NYAG Settlement also, among other things, requires Columbia and its affiliates to reduce management fees for certain Columbia Funds (including the former Nations Funds) and other mutual funds collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions.

Pursuant to the procedures set forth in the SEC Order, the $140 million in settlement amounts described above is being distributed in accordance with a distribution plan that was developed by an

D-6

independent distribution consultant and approved by the SEC on April 6, 2007. Distributions under the distribution plan began in late June 2007.

A copy of the SEC Order is available on the SEC website at http://www.sec.gov. A copy of the NYAG Settlement is available as part of the Bank of America Corporation Form 8-K filing on February 10, 2005.

In connection with the events described above, various parties have filed suit against certain funds, the Trustees of the Columbia Funds, FleetBoston Financial Corporation and its affiliated entities and/or Bank of America and its affiliated entities.

On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred these cases and cases against other mutual fund companies based on similar allegations to the United States District Court in Maryland for consolidated or coordinated pretrial proceedings (the “MDL”). Subsequently, additional related cases were transferred to the MDL. On September 29, 2004, the plaintiffs in the MDL filed amended and consolidated complaints. One of these amended complaints is a putative class action that includes claims under the federal securities laws and state common law, and that names Columbia, the Distributor, the Trustees of the Columbia Funds, Bank of America Corporation and others as defendants. Another of the amended complaints is a derivative action purportedly on behalf of the Columbia Funds that asserts claims under federal securities laws and state common law.

On February 25, 2005, Columbia and other defendants filed motions to dismiss the claims in the pending cases. On March 1, 2006, for reasons stated in the court’s memoranda dated November 3, 2005, the U.S. District Court for the District of Maryland granted in part and denied in part the defendants’ motions to dismiss. The court dismissed all of the class action claims pending against the Columbia Funds Trusts. As to Columbia and the Distributor, the claims under the Securities Act of 1933, the claims under Sections 34(b) and 36(a) of the Investment Company Act of 1940 (“ICA”) and the state law claims were dismissed. The claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and claims under Section 36(b) of the ICA were not dismissed.

On March 21, 2005, a purported class action was filed in Massachusetts state court alleging that certain conduct, including market timing, entitled Class B shareholders in certain Columbia funds to an exemption from contingent deferred sales charges upon early redemption (“the CDSC Lawsuit”). The CDSC Lawsuit was removed to federal court in Massachusetts and transferred to the MDL.

On September 14, 2007, the plaintiffs and the Columbia defendants named in the MDL, including the Columbia Funds, entered into a stipulation of settlement with respect to all Columbia-related claims in the MDL described above, including the CDSC Lawsuit. The settlement is subject to court approval.

D-7

claims by plaintiffs and entered final judgment in favor of the defendants. The plaintiffs appealed to the United States Court of Appeals for the First Circuit on December 30, 2005. A stipulation and settlement agreement dated January 19, 2007 was filed in the First Circuit on February 14, 2007, with a joint stipulation of dismissal and motion for remand to obtain district court approval of the settlement. That joint motion was granted and the appeal was dismissed. On March 6, 2007, the case was remanded to the District Court. The settlement, approved by the District Court on September 18, 2007, became effective October 19, 2007. Pursuant to the settlement, the funds’ adviser and/or its affiliates made certain payments, including plaintiffs’ attorneys’ fees and costs of notice to class members.

CHOOSING A SHARE CLASS

Description of the Share Class

Share Class Features

The Fund offers four classes of shares. Only Class Z shares are discussed in the Prospectus/Proxy Statement. Each share class has its own investment eligibility criteria, cost structure and other features. The following summarizes the primary features of the Class Z shares. Contact your financial advisor or Columbia Funds for more information about the Fund’s share classes and how to choose among them.


		Class Z Shares
Eligible Investors and Minimum Initial Investments		Class Z shares are available only to certain eligible investors, which are subject to different minimum initial investment requirements. These minimum initial investment amounts range from $0 to $2,500. See Buying, Selling and Exchanging Shares—Opening an Account and Placing Orders for details.

Investment Limits		none

Conversion Features		none

Front-End sales Charges		none

Contingent Deferred Sales Charges		none

Distribution and Service Fees		none

FUNDamentals^™

Selling and/or Servicing Agents

The terms “selling agent” and “servicing agent” refer to the financial intermediary that employs your financial advisor. Selling and/or servicing agents include, for example, brokerage firms, banks, investment advisors, third party administrators and other financial intermediaries, including affiliates of Bank of America, such as Banc of America Investment Services, Inc.

Financial Intermediary Compensation

The Distributor and Columbia Management may make payments, from their own resources, to certain financial intermediaries, including other Bank of America affiliates, for marketing/sales support

D-8

services relating to the Columbia Funds. Such payments are generally based upon one or more of the following factors: average net assets of the Columbia Funds sold by the Distributor attributable to that intermediary, gross sales of the Columbia Funds distributed by the Distributor attributable to that intermediary, reimbursement of ticket charges (fees that an intermediary firm charges its representatives for effecting transactions in Fund shares) or a negotiated lump sum payment. While the financial arrangements may vary for each intermediary, the support payments to any one intermediary are generally between 0.05% and 0.35% (and 0.03% and 0.12% with regard to the Columbia Money Market Funds) on an annual basis for payments based on average net assets of the Fund attributable to the intermediary, and between 0.10% and 0.25% on an annual basis for firms receiving a payment based on gross sales of the Columbia Funds (other than the Columbia Money Market Funds) attributable to the intermediary.

The Distributor and Columbia Management may make payments in larger amounts or on a basis other than those described above when dealing with other affiliates of Bank of America. Such increased payments to the other Bank of America affiliate may enable the other Bank of America affiliate to offset credits that it may provide to customers in order to avoid having such customers pay fees to multiple Bank of America entities in connection with the customers’ investments in the Fund.

The Distributor and Columbia Management may also make payments to financial intermediaries, including other Bank of America affiliates, that provide shareholder services to retirement plans and other investment programs to compensate those intermediaries for services they provide to such programs, including, but not limited to, sub-accounting, sub-transfer agency, similar shareholder or participant recordkeeping, shareholder or participant reporting, or shareholder or participant transaction processing.

These payments for shareholder servicing support vary by financial intermediary but generally are not expected, with certain limited exceptions, to exceed 0.35% of the average aggregate value of the Fund’s shares in any intermediary’s program on an annual basis for those classes of shares that pay a service fee pursuant to a plan under Rule 12b-1 under the 1940 Act, and 0.45% of the average aggregate value of the Fund’s shares in any intermediary’s program on an annual basis for those classes of shares that do not pay a service fee pursuant to a plan under Rule 12b-1 under the 1940 Act.

As of November 1, 2007, the board has authorized the Fund to reimburse the Transfer Agent for amounts paid to financial intermediaries that maintain assets in omnibus accounts, subject to an annual cap of 0.15% of the average aggregate value of the Fund’s shares maintained in such accounts. The amounts in excess of that reimbursed by the Fund are borne by the Distributor or Columbia Management. The Distributor and Columbia Management may make other payments or allow promotional incentives to broker/dealers to the extent permitted by SEC and Financial Industry Regulatory Authority (FINRA) rules and by other applicable laws and regulations.

D-9

Prospectus/Proxy Statement. You should consult with your financial intermediary and review carefully any disclosure your financial intermediary provides regarding its services and compensation. Depending on the financial arrangement in place at any particular time, a financial intermediary and its financial consultants may have a financial incentive for recommending the Fund or a particular share class over others. See Management of the Fund—Other Roles and Relationships of Bank of America and its Affiliates—Certain Conflicts of Interest for more information.

BUYING, SELLING AND EXCHANGING SHARES

Share Price Determination

The price you pay or receive when you buy, sell or exchange shares is the Fund’s next determined net asset value (or NAV) per share for a given share class. The Fund calculates the net asset value per share for each class of the Fund at the end of each business day.


FUNDamentals^™
NAV Calculation:

Each of the Funds’ share classes calculates its NAV as follows:

NAV	=	(Value of assets of the share class) - (Liabilities of the share class)
		Number of outstanding shares of the class

The value of the Fund’s shares is based on the total market value of all of the securities and other assets that it holds as of a specified time. The prices reported on stock exchanges and other securities markets around the world are usually used to value securities in the Fund. The Fund uses the amortized cost method, which approximates market value, to value short-term investments maturing in 60 days or less.

If a market price isn’t readily available, the Fund will determine the price of the security held by the Fund based on Columbia Management’s determination of the security’s fair value. A market price is considered not readily available if, among other circumstances, the most recent reported price is deemed unreliable. In addition, the Fund may use fair valuation to price securities that trade on a foreign exchange when a significant event has occurred after the foreign exchange closes but before the time at which the Fund’s share price is calculated. Foreign exchanges typically close before the time at which Fund share prices are calculated, and may be closed altogether on some days when the Fund is open. Such significant events affecting a foreign security may include, but are not limited to: (1) those impacting a single issuer; (2) governmental action that affects securities in one sector or country; (3) natural disasters or armed conflicts affecting a country or region; or (4) significant domestic or foreign market fluctuations. The Fund uses various criteria, including an evaluation of U.S. market moves after the close of foreign markets, in determining whether a security’s market price is readily available and, if not, the fair value of the security.

D-10

performance to diverge to a greater degree from the performance of various benchmarks used to compare the Fund’s performance because benchmarks generally do not use fair valuation techniques. Because of the judgment involved in fair valuation decisions, there can be no assurance that the value ascribed to a particular security is accurate. The Fund has retained an independent fair valuation pricing service to assist in the fair valuation process for foreign securities. International markets are sometimes open on days when U.S. markets are closed, which means that the value of foreign securities owned by the Fund could change on days when Fund shares cannot be bought or sold.

Transaction Rules and Policies

Remember that sales charges may apply to your transactions. You should also ask your selling and/or servicing agent about its rules, fees and policies for buying, selling and exchanging shares, which may be different from those described here, and about its related programs or services.

Also remember that the Fund may refuse any order to buy or exchange shares. If this happens, we’ll return any money we’ve received, but no interest will be paid on that money.

Order Processing

Orders to buy, sell or exchange shares are processed on business days. Orders can be delivered by mail, by telephone or online. Orders received in “good form” by the Transfer Agent or your selling and/or servicing agent before the end of a business day will receive that day’s net asset value per share. Orders received after the end of a business day will receive the next business day’s net asset value per share. The business day that applies to your order is also called a trade date.

FUNDamentals^™

Business Days

A business day is any day that the New York Stock Exchange (NYSE) is open. A business day ends at the close of regular trading on the NYSE, usually at 4:00 p.m. Eastern time. If the NYSE closes early, the business day ends as of the time the NYSE closes. On holidays and other days when the NYSE is closed, a Fund’s net asset value is not calculated and the Fund does not accept buy or sell orders. However, the value of a Fund’s assets may still be affected on such days to the extent that the Fund holds foreign securities that trade on days that foreign markets are open.

“Good Form”

An order is in “good form” if the Transfer Agent or your selling and/or servicing agent has all of the information and documentation it deems necessary to effect your order. For example, when you sell shares by letter of instruction, “good form” means that your letter has (i) complete instructions and the signatures of all account owners, (ii) a Medallion signature guarantee for amounts equal to or greater than $100,000 and (iii) any other required documents completed and attached. For the documents required for sales by corporations, agents, fiduciaries, surviving joint owners and other legal entities, call 800.345.6611.

Medallion Signature Guarantees

Qualified customers can obtain a Medallion signature guarantee from any financial institution— including commercial banks such as Bank of America, credit unions and broker/dealers—that

D-11

participates in one of the three Medallion signature guarantee programs recognized by the SEC. These Medallion signature guarantee programs are the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature Program (MSP).

Written Transactions

Once you have an account, you can communicate written buy, sell and exchange orders to the Transfer Agent at the following address: Columbia Funds, c/o Columbia Management Services, Inc., P.O. Box 8081, Boston, MA 02266-8081.

Telephone Transactions

Once you have an account, you can place orders to buy, sell or exchange by telephone depending on how you complete the telephone authorization section of your account application. To place orders by telephone, call 800.422.3737. Have your account number and taxpayer identification number (TIN) available when calling.

You can sell up to an aggregate of $100,000 of shares via the telephone in any 30-day period if you qualify for telephone orders.

Telephone orders may not be as secure as written orders. Columbia Funds will take reasonable steps to confirm that telephone instructions are genuine. For example, we require proof of your identification before we will act on instructions received by telephone and may record telephone conversations. However, the Fund and its agents will not be responsible for any losses, costs or expenses resulting from an unauthorized telephone instruction when reasonable steps have been taken to confirm that telephone instructions are genuine. Telephone orders may be difficult to complete during periods of significant economic or market change or business interruption.

Online Transactions

Once you have an account, contact Columbia Funds at 800.345.6611 for more information on account trading restrictions and the special sign-up procedures required for online transactions. The Transfer Agent has procedures in place to authenticate electronic orders you deliver through the internet. You will be required to accept the terms of an online agreement and establish and utilize a password in order to access online account services.

You can sell up to an aggregate of $100,000 of shares through the internet in any 30-day period if you qualify for internet orders.

Customer Identification Program

D-12

account, which may result in a return of your investment monies. In addition, if the Fund is unable to verify your identity after your account is open, the Fund reserves the right to close your account or take other steps as deemed reasonable. The Fund shall not be held liable for any loss resulting from any purchase delay, application rejection or account closure due to a failure to provide proper identifying information.

Small Account Policy — Accounts Below $250

Columbia Funds generally will automatically sell your shares if the value of your account (treating each account of the Fund you own separately from any other account of the Fund you may own) falls below $250. If your shares are sold, the Transfer Agent will remit the sale proceeds to you. Any otherwise applicable CDSC will not be imposed on such automatic sale of your shares. The Transfer Agent will send you written notification in advance of any automatic sale, which will provide details on how you may avoid such automatic sale. Generally, you may avoid such automatic sale by raising your account balance, consolidating your accounts through an exchange of shares of another Columbia Fund in which you hold shares, or setting up a Systematic Investment Plan. Contact the Transfer Agent, review our website at www.columbiafunds.com, call 800.345.6611 or contact your financial advisor for more information. The automatic sale of shares of accounts valued at less than $250 is expected to take place in the second quarter of each calendar year.

Columbia Funds may also sell your shares if a financial intermediary tells us to sell your shares pursuant to arrangements made with you, and under certain other circumstances allowed under the 1940 Act.

Small Account Policy — Minimum Balance Fee

If the value of your account (treating each account of the Fund you own separately from any other account of the Fund you may own) falls below the minimum initial investment requirement applicable to you, your account generally will be subject to a $20 annual fee. This fee will be assessed through the automatic sale of shares in your account. Any otherwise applicable CDSC will not be imposed on such automatic sale of your shares. The Transfer Agent will reduce the expenses paid by the Fund by any amounts it collects from the assessment of this fee. For Funds that do not have transfer agency expenses against which to offset the amount collected through assessment of this fee, the fee will be paid directly to the Fund. The Transfer Agent will send you written notification in advance of assessing any fee, which will provide details on how you can avoid the imposition of such fee. Generally, you may avoid the imposition of such fee by raising your account balance, consolidating your accounts through an exchange of shares of another Columbia Fund in which you hold shares, or setting up a Systematic Investment Plan. Contact the Transfer Agent, review our website at www.columbiafunds.com, call 800.345.6611 or contact your financial advisor for more information.

Columbia Funds reserves the right to change the minimum investment requirements for any Fund. We also reserve the right to lower the account size trigger point for the minimum balance fee in any year or for any class of shares when we believe it is appropriate to do so in light of declines in the market value of Fund shares, sales loads applicable to a particular class of shares, or for other reasons.

D-13

Exceptions to the Small Account Policy

The automatic sale of shares of accounts under $250 and the annual minimum balance fee described previously do not apply to shareholders of Class R shares or shareholders holding their shares through broker/dealer networked accounts; wrap fee and omnibus accounts; accounts with active Systematic Investment Plans or payroll deduction plans; accounts that were created by the automatic conversion of Class B shares to Class A shares or former Class G shares to Class T shares; and certain qualified retirement plans and health savings accounts. The automatic sale of shares of accounts under $250 does not apply to individual retirement plans.

Cash Flows

The timing and magnitude of cash inflows from investors buying Fund shares could prevent the Fund from always being fully invested. Conversely, the timing and magnitude of cash outflows to investors selling Fund shares could require large ready reserves of uninvested cash to meet shareholder redemptions. Either situation could adversely impact the Fund’s performance.

Excessive Trading Practices

Right to Reject or Restrict Share Transaction Orders—The Fund is intended for investors with long-term investment purposes and is not intended as a vehicle for frequent trading activity (market timing) that is excessive. Investors should transact in Fund shares primarily for investment purposes. The Board has adopted excessive trading policies and procedures that are designed to deter excessive trading by investors (the Excessive Trading Policies and Procedures). The Fund discourages and does not accommodate excessive trading.

The Fund reserves the right to reject, without any prior notice, any buy or exchange order for any reason, and will not be liable for any loss resulting from rejected orders. For example, the Fund may in its discretion restrict, reject or cancel a buy or exchange order even if the transaction is not subject to the specific exchange limitation described below if the Fund or its agents determine that accepting the order could interfere with efficient management of the Fund’s portfolio or is otherwise contrary to the Fund’s best interests. The Excessive Trading Policies and Procedures apply equally to buy or exchange transactions communicated directly to the Transfer Agent and to those received by selling and/or servicing agents.

Specific Buying and Exchanging Limitations—If the Fund detects that an investor has made two “material round trips” in any 28-day period, it will generally reject the investor’s future buy orders, including exchange buy orders, involving any Columbia Fund.

For these purposes, a “round trip” is a purchase or exchange into the Fund followed by a sale or exchange out of the Fund. A “material” round trip is one that is deemed by the Fund to be material in terms of its amount or its potential detrimental impact on the Fund. Independent of this limit, the Fund may, in its discretion, reject future buy orders by any person, group or account that appears to have engaged in any type of excessive trading activity.

D-14

retirement plan sponsor or certain other retirement plan transactions consisting of rollover transactions, loan repayments and disbursements, and required minimum distribution redemptions. They may be modified or rescinded for accounts held by certain retirement plans to conform to plan limits, for considerations relating to the Employee Retirement Income Security Act of 1974 or regulations of the Department of Labor, and for certain asset allocation or wrap programs. Accounts known to be under common ownership or control generally will be counted together, but accounts maintained or managed by a common intermediary generally will not be considered to be under common ownership or control. The Fund retains the right to modify these restrictions at any time without prior notice to shareholders.

Limitations on the Ability to Detect and Prevent Excessive Trading Practices—The Fund takes various steps designed to detect and prevent excessive trading, including daily review of available shareholder transaction information. However, the Fund receives buy, sell and exchange orders through financial intermediaries, and cannot always know or reasonably detect excessive trading that may be facilitated by financial intermediaries or by the use of the omnibus account arrangements they offer. Omnibus account arrangements are common forms of holding shares of mutual funds, particularly among certain financial intermediaries such as broker/dealers, retirement plans and variable insurance products. These arrangements often permit financial intermediaries to aggregate their clients’ transactions and accounts, and in these circumstances, the identity of the shareholders is often not known.

Some financial intermediaries apply their own restrictions or policies to underlying investor accounts, which may be more or less restrictive than those described here. This may impact the Fund’s ability to curtail excessive trading, even where it is identified. For these and other reasons, it is possible that excessive trading may occur despite the Fund’s efforts to detect and prevent it.

Although these restrictions and policies involve judgments that are inherently subjective and may involve some selectivity in their application, the Fund seeks to act in a manner that it believes is consistent with the best interests of shareholders in making any such judgments.

Risks of Excessive Trading—Excessive trading creates certain risks to the Fund’s long-term shareholders and may create the following adverse effects:

negative impact on the Fund’s performance;

potential dilution of the value of the Fund’s shares;

interference with the efficient management of the Fund’s portfolio, such as the need to maintain undesirably large cash positions, the need to use its line of credit or the need to buy or sell securities it otherwise would not have bought or sold;

losses on the sale of investments resulting from the need to sell securities at less favorable prices;

increased taxable gains to the Fund’s remaining shareholders resulting from the need to sell securities to meet sell orders; and

increased brokerage and administrative costs.

D-15

time that influence the value of foreign securities, investors may seek to trade Fund shares in an effort to benefit from their understanding of the value of foreign securities as of the Fund’s valuation time. This is often referred to as price arbitrage. The Fund has adopted procedures designed to adjust closing market prices of foreign securities under certain circumstances to reflect what the Fund believes to be the fair value of those securities as of its valuation time. To the extent the adjustments don’t work fully, investors engaging in price arbitrage may cause dilution in the value of the Fund’s shares held by other shareholders.

Similarly, to the extent that the Fund invests significantly in thinly traded high yield bonds (junk bonds) or equity securities of small-capitalization companies, because these securities are often traded infrequently, investors may seek to trade their shares in an effort to benefit from their understanding of the value of these securities. This is also a type of price arbitrage. Any such frequent trading strategies may interfere with efficient management of the Fund’s portfolio to a greater degree than would be the case for mutual funds that invest in highly liquid securities, in part because the Fund may have difficulty selling those portfolio securities at advantageous times or prices to satisfy large and/or frequent sell orders. Any successful price arbitrage may also cause dilution in the value of Fund shares held by other shareholders.

Opening an Account and Placing Orders

Columbia Funds encourages you to consult with a financial advisor who can help you with your investment decisions and who can help you open an account. Once you have an account, you can buy, sell and exchange shares by contacting your financial advisor who will send your order to the Transfer Agent or your selling and/or servicing agent. As described in Buying, Selling and Exchanging Shares—Transaction Rules and Policies, once you have an account you can also communicate your orders directly to the Transfer Agent by mail, by telephone or online.

BUYING SHARES

Eligible Investors: Class Z Shares

Once you have opened an account, you can buy Class Z shares in a lump sum, through our Systematic Investment Plan, by dividend diversification, by wire or by electronic funds transfer. Class Z shares are only available to the categories of eligible investors described below, each of which is subject to its own minimum initial investment requirements.

Minimum Initial Investments

There is no minimum initial investment in Class Z shares for the following categories of eligible investors:

Any person investing all or part of the proceeds of a distribution, rollover or transfer of assets into a Columbia Management Individual Retirement Account, from any deferred compensation plan which was a shareholder of any of the funds of Columbia Acorn Trust (formerly named Liberty Acorn Trust) on September 29, 2000, in which the investor was a participant and through which the investor invested in one or more of the funds of Columbia Acorn Trust immediately prior to the distribution, transfer or rollover.

D-16

Any health savings account sponsored by a third party platform, including those sponsored by Bank of America affiliates, and any omnibus group retirement plan for which a financial intermediary or other entity provides services and is not compensated by the Funds for those services, other than in the form of payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent.

Any investor participating in a wrap program sponsored by a financial intermediary or other entity that is paid an asset-based fee by the investor and that is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent.

The minimum initial investment in Class Z shares for the following categories of eligible investors is $1,000:

Any individual retirement plan (assuming the eligibility criteria below are met) or group retirement plan that is not held in an omnibus manner for which a financial intermediary or other entity provides services and is not compensated by the Funds for those services, other than in the form of payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent.

The minimum initial investment in Class Z shares for the following categories of eligible investors is $2,500:

Any client of Bank of America or one of its subsidiaries buying shares through an asset management company, trust, fiduciary, retirement plan administration or similar arrangement with Bank of America or the subsidiary.

Any investor buying shares through a Columbia Management state tuition plan organized under Section 529 of the Internal Revenue Code.

Any shareholder (as well as any family member of a shareholder or person listed on an account registration for any account of the shareholder) of another fund distributed by the Distributor (i) who holds Class Z Shares; (ii) who held Primary A shares prior to the share class redesignation of Primary A shares as Class Z shares that occurred on August 22, 2005; (iii) who holds Class A shares that were obtained by an exchange of Class Z shares; or (iv) who bought shares of certain mutual funds that were not subject to sales charges and that merged with another fund distributed by the Distributor.

Any trustee or director (or family member of a trustee or director) of a fund distributed by the Distributor.

Any employee (or family member of an employee) of Bank of America or one of its subsidiaries.

Any investor participating in an account offered by a financial intermediary or other entity that provides services to such an account, is paid an asset-based fee by the investor and is not compensated by the Funds for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent (each investor buying shares through a financial intermediary must independently satisfy the minimum Investment requirement noted above).

Any institutional investor who is a corporation, partnership, trust, foundation, endowment, institution, government entity, or similar organization, which meets the respective qualifications for an accredited investor, as defined under the Securities Act of 1933.

D-17

Certain financial institutions and intermediaries, such as insurance companies, trust companies, banks, endowments, investment companies or foundations, buying shares for their own account, including Bank of America and its affiliates and/or subsidiaries.

Minimum Additional Investments

There is no minimum additional investment for Class Z shares.

Systematic Investment Plan

The Systematic Investment Plan allows you to make regular purchases in amounts of $50 or more via automatic transfers from your bank account to the Fund on a monthly, quarterly or semi-annual basis. Contact the Transfer Agent or your financial advisor to set up the plan.

Dividend Diversification

Generally, you may automatically invest distributions made by another Columbia Fund into the same class of shares (and in some cases certain other classes of shares) of the Fund at no additional sales charge. A sales charge may apply when you invest distributions made by a Columbia Fund that were not assessed a sales charge at the time of your initial purchase. Call Columbia Funds at 800.345.6611 for details.

Wire Purchases

You may buy Class Z shares of the Fund by wiring money from your bank account to your Fund account by calling the Transfer Agent at 800.422.3737.

Electronic Funds Transfer

You may buy Class Z shares of the Fund by electronically transferring money from your bank account to your Fund account by calling the Transfer Agent at 800.422.3737. An electronic funds transfer may take up to three business days to settle and be considered in “good form.” You must set up this feature by contacting the Transfer Agent prior to your request.

Other Purchase Rules You Should Know

Once the Transfer Agent or your selling and/or servicing agent receives your buy order in “good form,” your purchase will be made at the next calculated net asset value per share.

You generally buy Class Z shares at net asset value per share because no front-end sales charge applies to purchases of this share class.

The Fund reserves the right to cancel your order if it doesn’t receive payment within three business days of receiving your buy order. The Fund will return any payment received for orders that have been cancelled, but no interest will be paid on that money.

Selling and/or servicing agents are responsible for sending your buy orders to the Transfer Agent and ensuring that we receive your money on time.

Shares bought are recorded on the books of the Fund. The Fund doesn’t issue certificates.

D-18

SELLING SHARES

When you sell your shares, the Fund is effectively buying them back from you. This is called a redemption.

Wire Redemptions

You may request that your Class Z shares sale proceeds be wired to your bank account by calling the Transfer Agent at 800.422.3737. You must set up this feature prior to your request. For shares sold by Fedwire, there is generally a fee of $7.50. The receiving bank may charge an additional fee. The Transfer Agent may waive the fee for certain accounts.

Electronic Funds Transfer

You may sell Class Z shares of the Fund and request that the proceeds be electronically transferred to your bank account by calling the Transfer Agent at 800.422.3737. It may take up to three business days for the sale proceeds to be received by your bank. You must set up this feature by contacting the Transfer Agent prior to your request.

Systematic Withdrawal Plan

The Systematic Withdrawal Plan lets you withdraw funds from your Class Z shares account any day of the month on a monthly, quarterly or semi-annual basis. Contact the Transfer Agent or your financial advisor to set up the plan. Your account balance generally must be at least $5,000 to set up the plan, but certain fee-based and wrap accounts are not subject to this requirement. If you set up the plan after you’ve opened your account, your signature must be Medallion guaranteed.

You can choose to receive your withdrawals via check or direct deposit into your bank account. You can cancel the plan by giving Columbia Funds 30 days notice in writing or by calling the Transfer Agent at 800.422.3737. It’s important to remember that if you withdraw more than your investment in the Fund is earning, you’ll eventually use up your original investment.

In-Kind Distributions

The Fund reserves the right to honor sell orders with in-kind distributions of portfolio securities instead of cash. In the event the Fund makes such an in-kind distribution, you may incur the brokerage and transaction costs associated with converting the portfolio securities you receive into cash. Also, the portfolio securities you receive may increase or decrease in value before you convert them into cash.

Other Redemption Rules You Should Know

Once the Transfer Agent or your selling and/or servicing agent receives your sell order in “good form,” your shares will be sold at the next calculated net asset value per share.

If you sell your shares directly through Columbia Funds, we will normally send the sale proceeds by mail or electronically transfer them to your bank account within three business days after the Transfer Agent or your selling and/or servicing agent receives your order in “good form.”

D-19

If you sell your shares through a selling agent, Columbia Funds will normally send the sale proceeds by Fedwire within three business days after the Transfer Agent or your selling and/or servicing agent receives your order in “good form.”

If you paid for your shares by check or by wire transfer from your bank account as an Automated Clearing House (ACH) transaction, Columbia Funds will hold the sale proceeds when you sell those shares for up to 10 days after the trade date of the purchase.

No interest will be paid on uncashed redemption checks.

Columbia Funds can delay payment of the sale proceeds for up to seven days and may suspend redemptions and/or postpone payment of redemption proceeds when the NYSE is closed or during emergency circumstances as determined by the SEC.

Other restrictions may apply to retirement accounts. For information about these restrictions, contact your retirement plan administrator.

Also keep in mind Columbia Funds’ Small Account Policy, which is described above in Buying, Selling and Exchanging Shares—Transaction Rules and Policies.

EXCHANGING SHARES

You can generally sell shares of the Fund to buy shares of another Columbia Fund, in what is called an exchange. You should read the prospectus of, and make sure you understand the investment objective and principal investment strategies of, the Columbia Fund into which you are exchanging.

Systematic Exchanges

You may buy Class Z shares of the Fund by exchanging $100 or more each month from another Columbia Fund for shares of the same class of the Fund at no additional cost. Contact the Transfer Agent or your financial advisor to set up the plan. If you set up your plan to exchange more than $100,000 each month, you must have your signature Medallion guaranteed.

Exchanges will continue as long as your balance is sufficient to complete the systematic monthly transfers, subject to Columbia Funds’ Small Account Policy described above in Buying, Selling and Exchanging Shares—Transaction Rules and Policies. You may terminate the program or change the amount you would like to exchange (subject to the $100 minimum) by calling Columbia Funds at 800.345.6611. A sales charge may apply when you exchange shares of a Columbia Fund that were not assessed a sales charge at the time of your initial purchase.

The rules described below for making exchanges apply to systematic exchanges.

Other Exchange Rules You Should Know

Exchanges are made at net asset value.

You can generally make exchanges between like share classes of any Columbia Fund. Some exceptions apply.

The rules for buying shares of a Columbia Fund apply to exchanges into that Fund.

D-20

You may make exchanges only into a Columbia Fund that is legally offered and sold in your state of residence.

You generally may make an exchange only into a Columbia Fund that is accepting investments.

The Fund may change or cancel your right to make an exchange by giving the amount of notice required by regulatory authorities (generally 60 days for a material change or cancellation).

Unless your account is part of a tax-advantaged retirement plan, an exchange for shares of another Fund is a taxable event, and you may realize a gain or loss for tax purposes.

Same-Fund Exchange Privilege for Class Z Shares

Certain shareholders invested in a class of shares other than Class Z may become eligible to be invested in Class Z shares. Upon a determination of such eligibility, any such shareholders will be eligible to exchange their shares for Class Z shares of the same fund. No sales charges or other charges will apply to such an exchange. Ordinarily, shareholders will not recognize a gain or loss for federal income tax purposes upon such an exchange. Investors should contact their selling and/or servicing agents to learn more about the details of the Class Z shares exchange privilege.

DISTRIBUTIONS AND TAXES

Distributions to Shareholders

A mutual fund can make money two ways:

It can earn income on its investments. Examples of fund income are interest paid on money market instruments and bonds, and dividends paid on common stocks.

A mutual fund can also have capital gain if the value of its investments increases. While a fund continues to hold an investment, any gain is unrealized. If the fund sells an investment, it generally will realize a capital gain if it sells that investment for a higher price than it originally paid. Capital gains are either short-term or long-term, depending on whether the fund holds the securities for one year or less (short-term gains) or more than one year (long-term gains).

FUNDamentals^™

Distributions

Mutual funds make payments of fund earnings to shareholders, distributing them among all shareholders of the fund. As a shareholder, you are entitled to your portion of a fund’ s distributed income, including capital gain.

Reinvesting your distributions buys you more shares of a fund—which lets you take advantage of the potential for compound growth. Putting the money you earn back into your investment means it, in turn, may earn even more money. Over time, the power of compounding has the potential to significantly increase the value of your investment. There is no assurance, however, that you’ll earn more money if you reinvest your distributions rather than receive them in cash.

D-21

The Fund intends to pay out, in the form of distributions to shareholders, a sufficient amount of its net income (interest and dividends less expenses) and net capital gains so that the Fund won’t have to pay any federal income tax on undistributed income and gains. The Fund intends to distribute any net realized capital gain (whether long-term or short-term gain) at least once a year. Normally, the Fund will declare and pay distributions of net investment income according to the following schedule:


Declaration and Distribution Schedule
Declarations		daily
Distributions		monthly

The Fund may, however, declare and pay distributions of net investment income more frequently.

Different share classes of the Fund usually pay different net investment income distribution amounts, because each class has different expenses. Each time a distribution is made, the net asset value per share of the share class is reduced by the amount of the distribution.

The Fund generally pays cash distributions within five business days after the distribution was declared. If you sell all of your shares after the record date but before the payment date for a distribution, you’ll normally receive that distribution in cash within five business days after the sale was made.

The Fund will automatically reinvest distributions in additional shares of the same share class of the Fund unless you inform us you want to receive your distributions in cash. You can do this by writing Columbia Funds at the address on the back cover, or by calling us at 800.345.6611. No sales charges apply to the purchase or sale of such shares. Distributions of $10 or less will automatically be reinvested in additional Fund shares only. If you elect to receive distributions by check and the check is returned as undeliverable, all subsequent distributions will be reinvested in additional shares of the Fund.

Unless you are investing through a tax-deferred retirement account (such as an IRA), you should consider avoiding buying Fund shares shortly before the Fund makes a distribution, because doing so can cost you money in taxes. This is because you will, in effect, receive part of your purchase price back in the distribution. This is known as “buying a dividend.” To avoid “buying a dividend,” check the Fund’s distribution schedule above before you invest. Similarly, if you buy shares of the Fund when it holds securities with unrealized capital gain, you will, in effect, receive part of your purchase price back if and when the Fund sells those securities and distributes the realized gain. This distribution is also subject to tax. The Fund may have, or may build up over time, high levels of unrealized capital gain. If you buy shares of the Fund when it has capital loss carryforwards, the Fund may have the ability to offset future capital gains realized by the Fund that otherwise would have been distributed to shareholders with such carryforwards, although capital loss carryforwards generally expire after eight taxable years and may be subject to substantial limitations.

Taxes and Your Investment

The Fund will send you a statement each year showing how much you’ve received in distributions in the prior year and the distributions’ character for federal income tax purposes. In addition, you should be aware of the following:

The Fund intends to qualify each year as a regulated investment company. A regulated investment company is not subject to tax at the fund level on income and gains from

D-22

investments that are distributed to shareholders. However, the Fund’s failure to qualify as a regulated investment company would result in fund level taxation, and consequently, a reduction in income available for distribution to you.

Distributions are usually taxable to you when paid, whether they are paid in cash or automatically reinvested in additional shares of the Fund.

Distributions of the Fund’s ordinary income and net short-term capital gain, if any, generally are taxable to you as ordinary income. Distributions of the Fund’s net long-term capital gain, if any, generally are taxable to you as long-term capital gain. Whether capital gains are long-term or short-term is determined by how long the Fund has owned the investments that generated them, rather than how long you have owned your shares.

The Fund expects that distributions will consist primarily of ordinary income.

For taxable years beginning on or before December 31, 2010, if you are an individual and you meet certain holding period and other requirements for your Fund shares, a portion of your distributions may be treated as “qualified dividend income.” Qualified dividend income is income attributable to the Fund’s dividends received from certain U.S. and foreign corporations, as long as the Fund meets certain holding period and other requirements for the stock producing such dividends. The Fund does not expect a significant portion of Fund distributions to be derived from qualified dividend income.

For taxable years beginning on or before December 31, 2010, the maximum individual federal income tax rate on net long-term capital gain and qualified dividend income is 15%.

A sale or exchange of Fund shares is a taxable event. This includes redemptions where you are paid in securities. Your sales (including those paid in securities) and exchanges of Fund shares usually will result in a taxable capital gain or loss to you, equal to the difference between the amount you receive for your shares (or are deemed to have received in the case of exchanges) and the amount you paid (or are deemed to have paid) for them. Any such capital gain or loss generally will be long-term capital gain or loss if you have held your Fund shares for more than one year at the time of sale or exchange. In certain circumstances, capital losses may be disallowed.

The Fund is required by federal law to withhold tax on any taxable distributions and sale proceeds paid to you (including amounts paid to you in securities and amounts deemed to be paid to you upon an exchange of shares) if: you haven’t provided a correct taxpayer identification number (TIN) or haven’t certified to the Fund that withholding doesn’t apply; the Internal Revenue Service (IRS) has notified us that the TIN listed on your account is incorrect according to its records; or the IRS informs the Fund that you are otherwise subject to backup withholding.

FUNDamentals^™

Taxes

The information provided above is only a summary of how U.S. federal income taxes may affect your investment in a Fund. It is not intended as a substitute for careful tax planning. Your investment in a Fund may have other tax implications.

D-23

It does not apply to certain types of investors who may be subject to special rules, including foreign or tax-exempt investors or those holding Fund shares through a tax-advantaged account, such as a 401(k) plan or IRA.

You should consult with your own tax advisor about the particular tax consequences to you of an investment in a Fund, including the effect of any foreign, state and local taxes, and the effect of possible changes in applicable tax laws.

HYPOTHETICAL FEES AND EXPENSES

The following supplemental hypothetical investment information provides additional information about the effect of the fees and expenses of the Fund, including investment advisory fees and other Fund costs, on the Fund’s returns over a 10-year period. The chart shows the estimated fees and expenses that would be charged on a hypothetical investment of $10,000 in Class Z shares of the Fund, assuming a 5% return each year, the cumulative return after fees and expenses and the hypothetical year-end balance before fees and expenses. The annual expense ratio used for the share class, which is the same as that stated in the Annual Fund Operating Expense table, is presented in the chart and is net of any contractual fee waivers or expense reimbursements for the period of contractual commitment. Your actual costs may be higher or lower.

Columbia High Yield Opportunity Fund — Class Z Shares


	Maximum Sales Charge 0.00%		Initial Hypothetical Investment Amount $10,000.00				Assumed Rate of Return 5%
Year	Cumulative Return Before Fees & Expenses		Annual Expense Ratio^(a)		Cumulative Return After Fees & Expenses		Hypothetical Year-End Balance After Fees & Expenses		Annual Fees & Expenses^(b)
1	5.00	%	0.87	%	4.13	%	$	10,413.02	$	88.78
2	10.25	%	0.95	%	8.35	%	$	10,834.86	$	100.82
3	15.76	%	0.95	%	12.74	%	$	11,273.80	$	104.90
4	21.55	%	0.95	%	17.31	%	$	11,730.52	$	109.16
5	27.63	%	0.95	%	22.06	%	$	12,205.74	$	113.58
6	34.01	%	0.95	%	27.00	%	$	12,700.21	$	118.18
7	40.71	%	0.95	%	32.15	%	$	13,214.72	$	122.97
8	47.75	%	0.95	%	37.50	%	$	13,750.06	$	127.95
9	55.13	%	0.95	%	43.07	%	$	14,307.10	$	133.12
10	62.89	%	0.95	%	48.87	%	$	14,886.70	$	138.52
Total Gain After Fees & Expenses							$	4,886.70

Total Annual Fees & Expenses									$	1,157.97

(a)	The annual expense ratio shown is the pro forma operating expense ratio of the Fund assuming the consummation of the Merger.

(b)	Annual Fees and Expenses are calculated based on the average between the beginning and ending balance for each year. All information is calculated on an annual compounding basis.

D-24

Appendix E –– Financial Highlights for the Acquiring Fund

The financial highlights table below is intended to help you understand the Acquiring Fund’s financial performance. Information is shown for the last five fiscal years, which run from June 1 to May 31, unless otherwise indicated. Certain information reflects financial results for a single fund share. The total return line represents the rate that you would have earned (or lost) on an investment in the Acquiring Fund (assuming the reinvestment of all dividends and distributions). This information has been derived from the Acquiring Fund’s financial statements which have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with the Acquiring Fund’s financial statements, is included in the Acquiring Fund’s annual report. You can request a free annual report containing these financial statements by calling 1-800-426-3750.

Selected data for a Class Z share outstanding throughout each period is as follows:

Class Z Shares


	Year Ended May 31,												Period Ended May 31, 2003^(a)			Year Ended December 31, 2002
	2007			2006			2005			2004			Period Ended May 31, 2003^(a)			Year Ended December 31, 2002
Net Asset Value, Beginning of Period	$	4.50		$	4.56		$	4.54		$	4.30		$	4.01		$	4.62

Income from Investment Operations:
Net investment income^(b)		0.34			0.34			0.37			0.36			0.15			0.33
Net realized and unrealized gain (loss) on investments, foreign currency and swap contracts		0.23			(0.03	)		0.04			0.21			0.29			(0.51	)

Total from Investment Operations		0.57			0.31			0.41			0.57			0.44			(0.18	)

Less Distributions Declared to Shareholders:
From net investment income		(0.35	)		(0.37	)		(0.39	)		(0.33	)		(0.15	)		(0.40	)
Return of Capital		—			—			—			—			—			(0.03	)

Total Distributions Declared to Shareholders		(0.35	)		(0.37	)		(0.39	)		(0.33	)		(0.15	)		(0.43	)

Net Asset Value, End of Period	$	4.72		$	4.50		$	4.56		$	4.54		$	4.30		$	4.01
Total return^(c)		13.26	%		6.97	%^(d)		9.21	%^(e)		13.58	%^(d)		11.12	%^(d)(f)		(4.03	)%

Ratios to Average Net Assets/ Supplemental Data:
Net operating expenses^(g)		0.87	%		0.87	%		0.90	%		0.94	%		1.04	%^(h)		1.06	%
Interest expense		—	%⁽ⁱ⁾		—			—			—			—			—
Net expenses^(g)		0.87	%		0.87	%		0.90	%		0.94	%		1.04	%^(h)		1.06	%
Waiver/ Reimbursement		—			0.02	%		—			0.01	%		—	%^(h)(i)		—
Net investment income^(g)		7.44	%		7.53	%		7.80	%		7.92	%		8.49	%^(h)		8.17	%
Portfolio turnover rate		75	%		61	%		67	%		75	%		45	%^(f)		63	%
Net assets, end of period (000’s)	$	29,220		$	11,190		$	12,829		$	14,194		$	45,803		$	35,541

(a)	The Acquiring Fund changed its fiscal year end from December 31 to May 31.

(b)	Per share data was calculated using the average shares outstanding during the period.

(c)	Total return at net asset value assuming all distributions reinvested.

(d)	Had the investment advisor and/or any of its affiliates not waived or reimbursed a portion of expenses, total return would have been reduced.

(e)	Total return includes a voluntary reimbursement by the investment advisor for a realized investment loss. This reimbursement had an impact of less than 0.01% on the Acquiring Fund’s total return.

(f)	Not annualized.

(g)	The benefits derived from custody credits had an impact of less than 0.01%.

(h)	Annualized.

(i)	Rounds to less than 0.01%.

E-1

Appendix F — Comparison of Organizational Documents

Comparison of the Declaration of Trust of the Excelsior Trust

and the Declaration of Trust of the Columbia Trust

The material differences between the terms of the Declaration of Trust of the Excelsior Trust (“EFT”), of which the Acquired Fund is a series, and the Declaration of Trust of the Columbia Trust (“CFST I”), of which the Acquiring Fund is a series, are highlighted below.

Shareholder voting rights: CFST I shareholders have the right to vote on issues as required by the 1940 Act, including 1) to elect trustees, 2) to approve investment advisory agreements and principal underwriting agreements, 3) to approve a change in sub-classification, 4) to approve any change in fundamental investment policies, 5) to approve a distribution plan under Rule 12b-1, 6) to terminate CFST I’s independent public accountant, 7) to decide whether or not a court action, proceeding or claim should be brought or maintained derivatively or as a class action on behalf of CFST I or shareholders, and 8) with respect to the termination of CFST I or any series or class by the shareholders. EFT shareholders have the power to vote only with respect to 1) the removal of trustees to the extent provided in the Declaration of Trust, 2) any investment advisory or management contract, 3) any termination of EFT to the extent provided in the Declaration of Trust, 4) the amendment of the Declaration of Trust to the extent and as provided in the Declaration of Trust, and 5) such additional matters relating to EFT as may be required or authorized by law, the Declaration of Trust, the Bylaws or any registration of EFT with the SEC or any state, or as the trustees may consider necessary or desirable.

Shareholder meetings, quorum and voting: A special meeting of EFT shareholders may be called by the trustees and must be called by the trustees upon the written request of shareholders owning at least ten percent of the outstanding shares of the series or class entitled to vote. Only the trustees may call CFST I shareholder meetings. A quorum is met for EFT when 33¹/3% of the shares entitled to vote are present. A quorum is met for CFST I when 30% of the shares entitled to vote are present. For both EFT and CFST I, a majority of shares voted decides all matters, except that a plurality elects a trustee. For both EFT and CFST I, when a matter affects the rights of a specific series or class, a majority of the shares of such series or class entitled to vote is required to decide the question.

Notice to shareholders and proxies: Notice of EFT shareholder meetings must be sent to shareholders not less than 15 days prior to the meeting; CFST I shareholder meetings require only 7 days prior notice. Both EFT and CFST I notices may be sent by mail; however, CFST I notices also may be sent via “facsimile or other electronic transmission.” In general, both EFT and CFST I shares may be voted in person or by proxy.

Amendment to the Declaration of Trust: CFST I trustees can amend the Declaration of Trust without shareholder approval provided they give notice of any non-ministerial amendment to shareholders. EFT trustees can amend the Declaration of Trust without shareholder approval, except that shareholders are entitled to vote on amendments 1) that would affect the voting rights of shareholders, 2) for which shareholder approval is required by law or EFT’s registration statement filed with the SEC, and 3) that are submitted to them by the trustees in their discretion.

F-1

shares entitled to vote. EFT trustees may terminate EFT or any series thereof subject to a majority shareholder vote of EFT or of the series affected. However, EFT trustees may terminate EFT or any series without shareholder approval if a majority of the trustees determines that the continuation of EFT or the series is not in the best interests of EFT, such series or their respective shareholders as a result of factors or events adversely affecting the ability of EFT or such series to conduct its business and operations in an economically viable manner.

Merger, consolidation or conversion: CFST I trustees may cause CFST I or any series thereof to be merged or consolidated with another trust or company. CFST I trustees are expressly allowed to transfer all or a substantial portion of the assets of CFST I to another trust or company. CFST I trustees may accomplish such merger or consolidation without the vote of shareholders, unless such shareholder vote is required by law. EFT trustees have the same power to merge or consolidate EFT so long as the surviving entity is EFT or another open-end management investment company registered under the 1940 Act, or a series thereof that will succeed or assume EFT’s registration under the 1940 Act.

Committees: CFST I trustees have the power to form committees consisting of one or more trustees to exercise the powers and authority of the trustees to the extent the trustees determine. EFT trustees have the power to establish committees for such purposes, with such membership, and with such responsibilities as the trustees may consider proper. EFT trustees are expressly granted authority to establish a committee with the power to act for and bind the trustees and EFT with respect to any legal actions or proceedings concerning EFT.

Trustee removal: EFT trustees may be removed with or without cause at any time by a written instrument signed by at least two-thirds of the other trustees. CFST I trustees may be removed with or without cause by majority vote of the trustees. Additionally, as required by Section 16(c) of the 1940 Act, a trustee of either EFT or CSFT I may be removed at a shareholders meeting by a vote of at least two-thirds of the outstanding shares.

Trustee liability and indemnification: CFST I trustees are specifically exempted from any liability whatsoever in connection with the property or affairs of CFST I or arising out of the neglect of officers, agents, employees or other trustees of CFST I. In addition, CFST I trustees who hold a position or special appointment, such as chair of a committee, or who are singled out as experts on particular issues are not held to any higher standard than other trustees with respect to their duties. EFT trustees are exempted from liability for any claims against the trust. EFT trustees are also exempted from liability for any act or omission or for neglect or wrongdoing of them or any officer, agent, employee, investment advisor or independent contractor provided that the trustees exercised reasonable care and acted under the reasonable belief that their actions were in the best interest of EFT. Notwithstanding the foregoing, trustees of neither EFT nor CFST I are exempted from liability for willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of their office.

With respect to expenses incurred in defending trustees, EFT trustees can be advanced expenses upon a written agreement whereby the trustee agrees to repay the amount advanced if he is found not to be entitled to indemnification so long as 1) the trustee posts security for the undertaking, 2) EFT has insurance for losses arising by reason of lawful advances or 3) a majority of a quorum of disinterested trustees, or independent legal counsel, determines that the trustee will ultimately be found entitled to indemnification.

F-2

Distributions: CFST I trustees must make distributions of net income at least yearly. EFT trustees are not required to pay distributions, although such distributions are typically paid in order to ensure qualification as a regulated investment company under the Internal Revenue Code of 1986, as amended.

F-3

EXC-51/149033-0208

Filed pursuant to Rule 497(b).
File no. 333-148106.

REAL ESTATE FUND

One Financial Center,

Boston, Massachusetts 02111-2621

Dear Shareholder:

I am writing to ask for your vote on the proposed merger of Real Estate Fund (the “Acquired Fund”), a series of Excelsior Funds, Inc., into Columbia Real Estate Equity Fund (the “Acquiring Fund”), a series of Columbia Funds Series Trust I, at a special meeting of shareholders of the Acquired Fund to be held on March 14, 2008.

THE DIRECTORS OF YOUR FUND UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR THE MERGER.

YOUR VOTE IS IMPORTANT. YOU CAN VOTE BY COMPLETING THE ENCLOSED PROXY CARD. A SELF-ADDRESSED POSTAGE-PAID ENVELOPE HAS BEEN ENCLOSED FOR YOUR CONVENIENCE.

We appreciate your participation and prompt response in this matter and thank you for your continued support.

Sincerely,

Christopher L. Wilson

President and Principal Executive Officer

Excelsior Funds, Inc.

February 8, 2008

NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD

March 14, 2008

REAL ESTATE FUND

A Series of Excelsior Funds, Inc.

One Financial Center

Boston, Massachusetts 02111-2621

1-800-708-7953

February 8, 2008

To the Shareholders of Real Estate Fund:

NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of Real Estate Fund (the “Acquired Fund”), a series of Excelsior Funds, Inc., will be held at 2:00 p.m. Eastern time on March 14, 2008, at One Financial Center, Boston, Massachusetts 02111-2621, for the following purposes:

To approve an Agreement and Plan of Reorganization providing for (i) the sale of all of the assets of the Acquired Fund to, and the assumption of all of the liabilities of the Acquired Fund by, Columbia Real Estate Equity Fund (the “Acquiring Fund”), a series of Columbia Funds Series Trust I, in exchange for shares of the Acquiring Fund, and (ii) the distribution of such shares to the shareholders of the Acquired Fund in complete liquidation of the Acquired Fund.

To consider and act upon such other matters as may properly come before the meeting or any adjourned session of the meeting.

Shareholders of record of the Acquired Fund at the close of business on December 21, 2007 are entitled to notice of and to vote at the meeting and any adjourned session of the meeting.

By Order of the Board of Directors,

James R. Bordewick, Jr.,

Secretary

Excelsior Funds, Inc.


NOTICE:		YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE SEE THE ENCLOSED PROSPECTUS/PROXY STATEMENT AND OTHER MATERIALS FOR INSTRUCTIONS ON HOW TO VOTE EASILY AND QUICKLY.

PROSPECTUS/PROXY STATEMENT

January 16, 2008

Acquisition of the Assets and Liabilities of

REAL ESTATE FUND

c/o Excelsior Funds, Inc.

One Financial Center

Boston, Massachusetts 02111-2621

1-800-708-7953

by and in Exchange for Shares of

COLUMBIA REAL ESTATE EQUITY FUND

c/o Columbia Funds Series Trust I

One Financial Center

Boston, Massachusetts 02111-2621

1-800-708-7953

TABLE OF CONTENTS


I.	Questions and Answers Regarding Approval of the Merger	3
II.	Proposal—Merger of the Acquired Fund into the Acquiring Fund	14
	The Proposal	14
	Principal Investment Risks	14
	Information about the Merger	16
III.	General	24
	Voting Information	24
	Information about Proxies and the Conduct of the Meeting	24
Appendix A—Form of Agreement and Plan of Reorganization		A-1
Appendix B—Fund Information		B-1
Appendix C—Capitalization		C-1
Appendix D—Information Applicable to the Acquiring Fund		D-1
Appendix E—Financial Highlights for the Acquiring Fund		E-1
Appendix F—Comparison of Organizational Documents		F-1

The Prospectus/Proxy Statement contains information shareholders should know before voting on the following proposal:

Proposal: Approval of the Agreement and Plan of Reorganization with respect to the proposed acquisition of Real Estate Fund (the “Acquired Fund”), a series of Excelsior Funds, Inc. (the “Acquired Company”), by Columbia Real Estate Equity Fund (the “Acquiring Fund”), a series of Columbia Funds Series Trust I (the “Columbia Trust”) (the “Agreement and Plan of Reorganization”).

Effective on or about February 15, 2008, the investment advisory contract pursuant to which USTNY provides investment advisory services to the Acquired Fund will be assigned to UST Advisers, Inc. (“UST Advisers”). Both USTNY and UST Advisers are wholly-owned subsidiaries of Bank of America Corporation. The Board of Directors of the Acquired Company approved the transfer at a meeting held on December 12, 2007, in anticipation of the merger of USTNA into Bank of America, N.A., which is scheduled to take place on February 22, 2008. This transfer will not change (i) the way in which the Acquired Fund is managed, including the level of services provided, (ii) the team of investment professionals providing services to the Acquired Fund, or (iii) the management fees the Acquired Fund pays.

If the Agreement and Plan of Reorganization is approved by the shareholders of the Acquired Fund and the Merger is consummated, the Acquired Fund will transfer all of the assets and liabilities attributable to its Shares Class shares to the Acquiring Fund in exchange for Class Z shares of the Acquiring Fund with the same aggregate net asset value as the net value of the assets and liabilities transferred. After that exchange, shares received by the Acquired Fund will be distributed pro rata to its shareholders, and such shareholders will become shareholders of the Acquiring Fund.

The following documents have been filed with the Securities and Exchange Commission (the “SEC”) and are incorporated into the Prospectus/Proxy Statement by reference:

The Statement of Additional Information of the Acquiring Fund dated January 16, 2008, relating to the Prospectus/Proxy Statement.

The Prospectuses of the Acquired Fund dated July 1, 2007, as supplemented to date.

The Statement of Additional Information of the Acquired Fund dated July 1, 2007, as supplemented to date.

The Acquired Fund previously has sent its most recent annual report and semiannual report to its shareholders. For a free copy of the Acquired Fund’s most recent reports or any of the documents listed above, call 1-800-708-7953, or write to the Acquired Fund at the address listed on the cover of the Prospectus/Proxy Statement. Shareholders also may obtain many of these documents by accessing the Acquired Fund’s Internet site at www.columbiafunds.com. Text-only versions of the Acquired Fund’s documents can be viewed online or downloaded, without charge, from the EDGAR database on the SEC’s Internet site at www.sec.gov. Shareholders can review and copy information about the Funds by visiting the Public Reference Room, Office of Consumer Affairs and Information Services, U.S. Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-2521. Shareholders can obtain copies, upon payment of a duplicating fee, by sending an e-mail request to publicinfo@sec.gov or by writing the Public Reference Room at the address above. Information on the operation of the Public Reference Room may be obtained by calling 1-202-551-5850.

The SEC has not approved or disapproved these securities or determined if the Prospectus/Proxy Statement is truthful or complete. Any representation to the contrary is a criminal offense.

An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

I. QUESTIONS AND ANSWERS REGARDING APPROVAL OF THE MERGER

1.	What Merger is being proposed?

The Board of Directors (the “Board”) Real Estate Fund (the “Acquired Fund”), a series of Excelsior Funds, Inc. (the “Acquired Company”) is recommending that shareholders approve the merger of the Acquired Fund into Columbia Real Estate Equity Fund (the “Acquiring Fund”), a series of Columbia Funds Series Trust I (the “Columbia Trust”). This means that the Acquired Fund would transfer all of its assets and liabilities to the Acquiring Fund in exchange for shares of the Acquiring Fund. If the Merger is approved and completed, Shares Class shareholders of the Acquired Fund will receive Class Z shares of the Acquiring Fund with a dollar value equal to the dollar value of their Acquired Fund shares on the business day prior to the closing of the Merger. The Merger currently is scheduled to take place at the end of the first quarter of 2008.

2.	Why is the Merger being proposed?

The Board recommends approval of the Merger because the Merger offers shareholders of the Acquired Fund the opportunity to invest in a larger combined portfolio that has a similar investment objective and similar principal investment strategies. Spreading fixed costs over a broader asset base allows the potential for more efficient operation and lower overall operating expense ratios. In reviewing the Merger, the Board also considered that, based on estimated operating expense ratios, shareholders of the Acquired Fund, following the Merger, are expected to experience a total operating expense ratio that is lower than the current total and net operating expense ratios of the Acquired Fund.

Please review “Reasons for the Merger and Directors’ Considerations” in Section II of the Prospectus/Proxy Statement for more information regarding the factors considered by the Board.

3.	How do the fees and the operating expense ratios of the Funds compare, and what are they estimated to be following the Merger?

The tables below allow a shareholder to compare the sales charges, the fees, and the operating expense ratios of each Fund and to analyze the estimated expenses that Columbia Management expects the Acquiring Fund to bear in the first year following the Merger. The Annual Fund Operating Expenses set forth in the tables below are paid by each Fund. They include management fees, distribution and service fees (if applicable) and administrative costs, including pricing and custody services.

The Annual Fund Operating Expenses shown in the tables below represent expenses for each Fund’s most recent fiscal year (ended March 31, 2007 for the Acquired Fund and ended August 31, 2007 for the Acquiring Fund) and those projected for the Acquiring Fund on a pro forma combined basis after giving effect to the proposed Merger and are based on pro forma combined net assets as of August 31, 2007.

If the Merger occurs, certain Merger expenses will be allocated to the Acquired Fund, which will reduce the Acquired Fund’s net asset value prior to the closing of the Merger (by approximately $0.01 per share based on shares outstanding as of August 31, 2007). Based on the operating expense ratios shown below, it is projected that, after the Merger, shareholders of the Acquired Fund will benefit from expense savings that will offset the allocated Merger expenses. However, the benefit of these projected expense savings will not be realized immediately. It is projected that the aggregate expense savings will not exceed the allocated Merger expenses of the Acquired Fund until approximately 4 months after the Merger. If a shareholder redeems his or her shares prior to that time, the shareholder will receive no net benefit from the projected expense savings.

Based on the operating expense ratios shown below, the total operating expense ratio of Class Z shares of the Acquiring Fund following the Merger is expected to be lower than the total and net operating expense ratios of Shares Class shares of the Acquired Fund.

Shareholder Fees

(paid directly from shareholder’s investment)


	Real Estate Fund (Acquired Fund) Shares Class		Columbia Real Estate Equity Fund (Acquiring Fund) Class Z	*Pro Forma* Columbia Real Estate Equity Fund (Acquiring Fund) Class Z
Redemption fee (%) (as a percentage of the amount redeemed, if applicable)	2.00	⁽¹⁾	N/A	N/A

Annual Fund Operating Expenses (as a % of average daily net assets)

(deducted directly from Fund assets)


	Real Estate Fund (Acquired Fund) Shares Class		Columbia Real Estate Equity Fund (Acquiring Fund) Class Z		*Pro Forma* Columbia Real Estate Equity Fund (Acquiring Fund) Class Z
Management Fees	1.15	⁽²⁾	0.75	⁽³⁾	0.75	⁽³⁾
Distribution and Service Fees	0.00		0.00		0.00
Other Expenses	0.38		0.23	⁽⁴⁾	0.20	⁽⁴⁾

Total Annual Fund Operating Expenses	1.53		0.98		0.95
Less Fee Waivers and/or Reimbursements	(0.28	)⁽⁵⁾

Net Annual Fund Operating Expenses	1.25

⁽¹⁾

The redemption fee is charged on shares redeemed or exchanged within 60 days of the date of purchase.

⁽²⁾

The Acquired Fund pays an investment advisory fee of 1.00% and an administration fee of 0.15%. Columbia Management receives an administration fee, computed daily and paid monthly, based on the combined aggregate average daily net assets of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust (excluding Emerging Markets Fund, International Fund, International Equity Fund and Pacific/Asia Fund). The breakpoint schedule for the administration fee is as follows: 0.20% for net assets up to $200 million; 0.175% for net assets in excess of $200 million and up to $400 million; and 0.15% for net assets in excess of $400 million. Columbia Management has voluntarily agreed to waive 0.05% of the administration fee. If this waiver were reflected in the table, “Management Fees” would be 1.10% and “Total Annual Fund Operating Expenses” would be 1.48%. Columbia Management, at its discretion, may revise or discontinue this arrangement at any time.

⁽³⁾

The Acquiring Fund pays an investment advisory fee of 0.75%.

⁽⁴⁾

Other expenses have been restated to reflect contractual changes to the fees paid by the Acquiring Fund.

⁽⁵⁾

Example Expenses

$10,000 initial investment.

5% total return for each year.

Each Fund’s operating expenses remain the same.

Reinvestment of all dividends and distributions.

Example Expenses

(actual costs may be higher or lower)


	1 Year		3 Years		5 Years		10 Years
Real Estate Fund (Acquired Fund)
Shares Class	$	127	$	456	$	808	$	1,800

Columbia Real Estate Equity Fund (Acquiring Fund)
Class Z	$	100	$	312	$	542	$	1,201

Columbia Real Estate Equity Fund (Acquiring Fund) (pro forma combined)
Class Z	$	97	$	303	$	525	$	1,166

Hypothetical Investment and Expense Information

4.	How do the investment objectives, principal investment strategies and investment policies of the Funds compare?

The Acquired Fund and the Acquiring Fund have a similar investment objective and similar investment strategies. Both Funds seek income and capital appreciation, and under normal market conditions, both Funds invest at least 80% of net assets, including borrowings for investment purposes, in stocks of companies engaged in the real estate industry, including REITs.

The table below shows the investment objective and principal investment strategies of each Fund.


	Real Estate Fund (Acquired Fund)	Columbia Real Estate Fund (Acquired Fund)
Investment Objective	The Acquired Fund seeks current income and long-term capital appreciation by investing in real estate investment trusts (REITs) and other companies principally engaged in the real estate business.	The Acquiring Fund seeks capital appreciation and above-average income by investing, under normal market conditions, at least 80% of its net assets (plus any borrowings for investment purposes) in the stocks of companies principally engaged in the real estate industry, including real estate investment trusts (REITs).

Principal Investment Strategies	Under normal circumstances, the Acquired Fund invests at least 80% of its net assets in REITs and other publicly-traded equity securities of U.S. and foreign companies engaged in the real estate industry. For purposes of this test only, net assets include borrowings for investment purposes. The Acquired Fund will provide shareholders with at least 60 days’ prior notice of any change in this policy. REITs pool investors’ funds for investment directly in real estate (equity REITs), real estate loans (mortgage REITs), or a combination of the two (hybrid REITs). The Acquired Fund’s investments will include investments in equity and hybrid REITs. REITs generally are income producing investments. The Acquired Fund may also invest in other issuers engaged in the real estate business, such as developers, mortgage lenders and servicers, construction companies and building material suppliers.	Under normal circumstances, the Acquiring Fund invests at least 80% of net assets in equity securities of companies principally engaged in the real estate industry, including REITs. A company is “principally engaged” in the real estate industry if at least 50% of its gross income or net profits are attributable to the ownership, construction, management or sale of residential, commercial or industrial real estate. The Acquiring Fund may invest in equity REITs, mortgage REITs and hybrid REITs. The Acquiring Fund may invest in derivatives, including futures, options, swap contracts and other derivative instruments. The Acquiring Fund may invest in derivatives for both hedging and non-hedging purposes, including, for example, to seek to enhance returns or as a substitute for a position in an underlying asset.

Real Estate Fund
(Acquired Fund)

Columbia Real Estate
Equity Fund
(Acquiring Fund)

USTNY takes a long-term approach to managing the Acquired Fund and seeks to identify companies whose value is not reflected in their current market price or with characteristics that will lead to above- average earnings growth. USTNY analyzes demographic and macroeconomic factors to determine regional allocations. Based on its regional allocations, USTNY selects particular investments based on its analysis of valuation relative to underlying real estate values.

Under normal circumstances, the Acquiring Fund invests at least 80% of net assets (which includes net assets plus any borrowings for investment purposes) in a diversified portfolio of income-producing (dividend-paying) equity securities, which will consist primarily of common stocks but also may include preferred stocks and convertible securities. The Acquiring Fund invests principally in securities of companies that Columbia Management believes are undervalued but also may invest in securities of companies that Columbia Management believes have the potential for long-term growth. The Acquiring Fund may invest in companies that have market capitalizations of any size.

The Acquiring Fund may invest up to 20% of net assets in debt securities, including securities that, at the time of purchase, are rated low and below investment grade or are unrated but determined by Columbia Management to be of comparable quality, which are commonly referred to as “junk bonds.”

The Acquiring Fund may also invest up to 20% of net assets in foreign securities. The Acquiring Fund may invest directly in foreign securities or indirectly through depositary receipts. Depositary receipts are receipts issued by a bank or trust company and evidence ownership of underlying securities issued by foreign companies.

The Acquiring Fund may invest in derivatives, including futures, options, swap contracts and other derivative instruments. The Acquiring Fund may invest in derivatives for both hedging and non-hedging purposes, including, for example, to seek to enhance returns or as a substitute for a position in an underlying asset.

Real Estate Fund
(Acquired Fund)

Columbia Real Estate
Equity Fund
(Acquiring Fund)

Columbia Management combines fundamental and quantitative analysis with risk management in identifying investment opportunities and constructing the Acquiring Fund’s portfolio. Columbia Management considers, among other factors:

• various measures of valuation, including price-to-cash flow, price-to-earnings, price-to-sales, and price-to-book value. Columbia Management believes that companies with lower valuations are generally more likely to provide opportunities for capital appreciation.

• potential indicators of stock price appreciation, such as anticipated earnings growth, company restructuring, changes in management, business model changes, new product opportunities, or anticipated improvements in macroeconomic factors.

• the financial condition and management of a company, including its competitive position, the quality of its balance sheet and earnings, its future prospects, and the potential for growth and stock price appreciation.

• overall economic and market conditions.

Columbia Management may sell a security when the security’s price reaches a target set by Columbia Management; if Columbia Management believes that there is deterioration in the issuer’s financial circumstances or fundamental prospects, or that other investments are more attractive; or for other reasons.


		Real Estate Fund (Acquired Fund)		Columbia Real Estate Equity Fund (Acquiring Fund)
				The Acquiring Fund’s policy regarding the 80% investment requirement of “net assets” (which includes net assets plus any borrowings for investment purposes) discussed above may not be changed without shareholder approval.


As a matter of fundamental policy, the Acquired Fund may not:		As a matter of fundamental policy, the Acquiring Fund may not:

Make loans, except that (i) the Acquired Fund may purchase or hold debt securities in accordance with its investment objective and policies, and may enter into repurchase agreements with respect to obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, and (ii) the Acquired Fund may lend portfolio securities in accordance with [its] investment objective[ ] and policies.		Make loans, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.

Borrow money (including entering into reverse repurchase agreements and purchasing when-issued securities), or mortgage, pledge or hypothecate its assets except to the extent permitted under the 1940 Act. Optioned stock held in escrow is not deemed to be a pledge.		Borrow money or issue senior securities except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.

Act as an underwriter of securities within the meaning of the Securities Act of 1933, except insofar as it might be deemed to be an underwriter upon disposition of certain portfolio securities acquired within the limitation on purchases of restricted securities and except to the extent that the purchase of obligations directly from the issuer thereof in accordance with its investment objective, policies and limitations may be deemed to be underwriting.		Underwrite any issue of securities issued by other persons within the meaning of the Securities Act of 1933, as amended (“1933 Act”), except when it might be deemed to be an underwriter either: (a) in connection with the disposition of a portfolio security; or (b) in connection with the purchase of securities directly from the issuer thereof in accordance with its investment objective. This restriction shall not limit the Acquiring Fund’s ability to invest in securities issued by other registered investment companies.

Purchase or sell real estate, except that (a) the Acquired Fund may purchase securities of issuers which deal in real estate and may purchase


As a matter of fundamental policy, the Acquired Fund may not:		As a matter of fundamental policy, the Acquiring Fund may not:
securities which are secured by real estate or interests therein, and (b) the Acquired Fund may hold and sell any real estate it acquires as a result of the Acquired Fund’s ownership of such securities. (For the purpose of this investment limitation, the prohibition of purchases of real estate includes acquisition of limited partnership interests in partnerships formed with a view toward investing in real estate, but does not prohibit purchases of shares in real estate investment trusts.)

Issue any senior securities, except insofar as any borrowing in accordance with the Acquired Fund’s investment limitations might be considered to be the issuance of a senior security.		Borrow money or issue senior securities except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.

Purchase or sell commodities or commodities futures contracts or invest in oil, gas, or other mineral exploration or development programs; provided, however, that the Acquired Fund may: (a) purchase publicly traded securities of companies engaging in whole or in part in such activities or invest in liquidating trust receipts, certificates of beneficial ownership or other instruments in accordance with its investment objective and policies, and (b) purchase and sell options, forward contracts, futures contracts and futures options.		Purchase or sell commodities, except that the Acquiring Fund may to the extent consistent with its investment objective, invest in securities of companies that purchase or sell commodities or which invest in such programs, and purchase and sell options, forward contracts, futures contracts, and options on futures contracts and enter into swap contracts and other financial transactions relating to commodities. This limitation does not apply to foreign currency transactions including without limitation forward currency contracts.

Invest in the securities of any single issuer if, as a result, the Acquired Fund holds more than 10% of the outstanding voting securities of such issuer.

Purchase any securities which would cause more than 25% of the value of its total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that (i) the Acquired Fund will concentrate its investments in the securities of issuers principally engaged in the real estate business, and (ii) neither all finance companies, as a group, nor all utility companies, as a group, are considered a single industry for purposes of this policy.		Purchase any securities which would cause 25% or more of the value of its total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that: (i) there is no limitation with respect to obligations issued or guaranteed by the U.S. Government, any state or territory of the United States or any of their agencies, instrumentalities or political subdivisions; (ii) notwithstanding this limitation or any other fundamental investment limitation, assets may be invested in the securities of one or more management investmentcompanies to the extent permitted by the 1940 Act, the rules and


As a matter of fundamental policy, the Acquired Fund may not:		As a matter of fundamental policy, the Acquiring Fund may not:
		regulations thereunder and any applicable exemptive relief; and (iii) under normal market conditions, the Acquiring Fund will invest at least 25% of the value of its total assets at the time of purchase in the securities of issuers conducting their principal business activities in the real estate industry.

The following highlights the differences in the Funds’ non-fundamental investment policies (policies that may be changed without a shareholder vote):

The Acquired Fund may not invest in companies for the purpose of exercising management or control. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not acquire any other investment company or investment company security, except in connection with a merger, consolidation, reorganization, or acquisition of assets or where otherwise permitted by the 1940 Act. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not purchase securities on margin (except in connection with purchases of futures or options in compliance with its investment strategies), make short sales of securities or maintain a short position. The Acquiring Fund has no similar stated non-fundamental investment policy.

The Acquired Fund may not invest in obligations of foreign branches of financial institutions or in domestic branches of foreign banks if immediately after such purchase (i) more than 5% of the value of its total assets would be invested in obligations of any one foreign branch of the financial institution or domestic branch of a foreign bank; or (ii) more than 20% of its total assets would be invested in foreign branches of financial institutions or in domestic branches of foreign banks. In addition, the Acquired Fund will not purchase portfolio securities while borrowings in excess of 5% of its total assets are outstanding. The Acquiring Fund has no similar stated non-fundamental investment policy.

For a complete list of each Fund’s investment policies, see each Fund’s Statement of Additional Information.

5.	What class of Acquiring Fund shares will shareholders receive if the Merger occurs?

If the Merger occurs, shareholders of Shares Class shares of the Acquired Fund will receive Class Z shares of the Acquiring Fund. The Merger will not result in any substantive changes to shareholder rights regarding, or procedures for, purchases, redemptions or exchanges of shares, except that with respect to the purchase of shares, only eligible investors can invest in Class Z shares of the Acquiring Fund, whereas there are no similar purchase restrictions on Shares Class shares of the Acquired Fund. Shareholders of Shares Class shares of the Acquired Fund will be deemed to be eligible investors for purposes of their purchases of Class Z shares of the Acquiring Fund.

For more information on the Acquiring Fund’s current distribution, purchase, redemption and exchange policies and procedures, see Appendix D.

6.	What are the expected federal income tax consequences of the Merger?

The Merger is expected to be tax-free to shareholders for federal income tax purposes, although this result is not free from doubt. This means that neither shareholders nor the Funds are expected to recognize a gain or loss directly as a result of the Merger. However, because the Merger will end the tax year of the Acquired Fund, it may accelerate distributions from the Acquired Fund to shareholders. Specifically, the Acquired Fund will recognize any net tax-exempt investment income, any net investment company taxable income (computed without regard to the deduction for dividends paid), and any net capital gains, including those realized on disposition of portfolio securities in connection with the Merger (after reduction by any available capital loss carryforwards), or net capital losses in the short tax year ending on the date of the Merger, and will declare and pay a distribution of such income and any such net capital gains remaining after reduction of any available capital loss carryforwards to its shareholders on or before that date.

Certain other tax consequences are discussed below under “Federal Income Tax Consequences.”

7.	Who bears the expenses associated with the Merger?

The Acquiring Fund, the Acquired Fund and Columbia Management each may bear a portion of the out-of-pocket expenses associated with the Merger, as noted below. Out-of-pocket expenses associated with the Merger (“Merger Expenses”) include, but are not limited to: (1) the expenses associated with the preparation, printing and mailing of any shareholder communications, including the Prospectus/Proxy Statement, and any filings with the SEC and/or other governmental authorities in connection with the Merger; (2) the fees and expenses of any proxy solicitation firm retained in connection with the Merger; and (3) the legal fees and expenses incurred by the Funds in connection with the Merger.

Acquired Fund). Estimated Merger Expenses that are not specifically allocable to either Fund are divided equally between the Funds. Each Fund will bear the estimated Merger Expenses allocated to it only to the extent of the anticipated reductions in ongoing expenses expected to be borne by that Fund over the first year following the Merger (the “Estimated First Year Savings”). Columbia Management bears the amount of estimated Merger Expenses allocated to a Fund, if any, that is in excess of the Fund’s Estimated First Year Savings. The estimated Merger Expenses to be borne by the Acquired Fund and the Acquiring Fund are approximately $90,958 and $48,043, respectively (approximately $0.01 and less than $0.01 per share, respectively, based on shares outstanding as of August 31, 2007). Should the Merger fail to occur, Columbia Management will bear all Merger Expenses.

8. Who is eligible to vote?

Shareholders of record on December 21, 2007 are entitled to attend and to vote at the Meeting and any adjourned session of the Meeting. All shareholders of the Acquired Fund will vote together as a single class on the proposal. Each whole share is entitled to one vote, and each fractional share is entitled to a proportionate fractional vote. Shares represented by properly executed proxies, unless revoked before or at the Meeting, will be voted according to shareholder instructions. If a shareholder signs a proxy but does not fill in a vote, the shareholder’s shares will be voted to approve the Merger, and if any other business comes before the Meeting, the shareholder’s shares will be voted at the discretion of the persons named as proxies.

II. PROPOSAL — MERGER OF THE ACQUIRED FUND INTO THE ACQUIRING FUND

The Proposal

Shareholders of the Acquired Fund are being asked to approve the Agreement and Plan of Reorganization, the form of which is attached as Appendix A to this Prospectus/Proxy Statement. By approving the Agreement and Plan of Reorganization, shareholders are approving the merger of the Acquired Fund into the Acquiring Fund.

Principal Investment Risks

What are the principal investment risks of the Acquiring Fund, and how do they compare with those of the Acquired Fund?

The principal investment risks associated with the Acquiring Fund and the Acquired Fund generally are similar because the Funds have similar investment objectives and principal investment strategies. The actual risks of investing in each Fund depend on the securities held in each Fund’s portfolio and on market conditions, both of which change over time. Both Funds are subject to credit risk, interest rate risk, investment strategy risk, market risk, and real estate investment trusts risk, each of which is described below.

Debt securities backed by an issuer’s taxing authority may be subject to legal limits on the issuer’s power to increase taxes or otherwise to raise revenue, or may be dependent on legislative appropriation or government aid. Certain debt securities are backed only by revenues derived from a particular project or source, rather than by an issuer’s taxing authority, and thus may have a greater risk of default.

Interest Rate Risk—Debt securities are subject to interest rate risk. In general, if prevailing interest rates rise, the values of debt securities will tend to fall, and if interest rates fall, the values of debt securities will tend to rise. Changes in the value of a debt security usually will not affect the amount of income the Fund receives from it but will affect the value of the Fund’s shares. Interest rate risk is generally greater for debt securities with longer maturities/durations.

Real Estate Investment Trusts Risk—Real estate investment trusts (REITs) are entities that either own properties or make construction or mortgage loans, and also may include operating or finance companies. The value of REIT shares is affected by, among other factors, changes in the value of the underlying properties owned by the REIT and/or by changes in the prospect for earnings and/or cash flow growth of the REIT itself. In addition, certain of the risks associated with general real estate ownership apply to the Fund’s REIT investments, including risks related to general and local economic conditions, possible lack of availability of financing and changes in interest rates.

Non-Diversified Mutual Fund Risk—The Fund is non-diversified, which generally means that it may invest a greater percentage of its total assets in the securities of fewer issuers than a “diversified” fund. This increases the risk that a change in the value of any one investment held by the Fund could affect the overall value of the Fund more than it would affect that of a diversified fund holding a greater number of investments. Accordingly, the Fund’s value will likely be more volatile than the value of more diversified funds.

In addition to the risks described above, the Acquiring Fund is also subject to reinvestment risk and derivatives risk, each of which is described below.

Reinvestment Risk—Income from the Fund’s debt securities portfolio will decline if and when the Fund invests the proceeds from matured, traded or called securities in securities with market interest rates that are below the current earnings rate of the Fund’s portfolio.

Derivatives Risk—Derivatives are financial contracts whose values are, for example, based on (or “derived” from) traditional securities (such as a stock or bond), assets (such as a commodity like gold), reference rates (such as LIBOR) or market indices (such as the S&P 500^® Index). Derivatives involve special risks and may result in losses. Derivative strategies often involve leverage, which may exaggerate a loss, potentially causing the Fund to lose more money than it would have lost had it invested in the underlying security. The values of derivatives may move in unexpected ways, especially in unusual market conditions, and may result in increased volatility. The use of derivatives may also increase the amount of taxes payable by shareholders. Other risks arise from the Fund’s potential inability to terminate or sell derivative positions. A liquid secondary market may not always exist for the Fund’s derivative positions at times when the Fund might wish to terminate or sell such positions. Over-the-counter instruments (investments not traded on an exchange) may be illiquid, and transactions in derivatives traded in the over-the-counter market are subject to the risk that the other party will not meet its obligations. The use of derivatives also involves the risks of mispricing or improper valuation and that changes in the value of the derivative may not correlate perfectly with the underlying security, asset, reference rate or index. The Fund may not be able to find a suitable derivative transaction counterparty, and thus may be unable to invest in derivatives altogether. For more information on the risks of derivative investments and strategies, see the SAI.

Information about the Merger

Shares that Shareholders Will Receive

If the Merger occurs, Shares Class shareholders of the Acquired Fund will receive Class Z shares of the Acquiring Fund. As compared to the Acquired Fund shares currently owned by shareholders, the Acquiring Fund shares that shareholders will receive will have the following characteristics:

The Merger will not result in any substantive changes to procedures for purchasing, redeeming and exchanging shares, except that with respect to the purchase of shares, only eligible investors can invest in Class Z shares of the Acquiring Fund, whereas there are no similar purchase restrictions on Shares Class shares of the Acquired Fund. Shareholders of Shares Class shares of the Acquired Fund will be deemed to be eligible investors for purposes of their purchases of Class Z shares of the Acquiring Fund. Please see Appendix D to the Prospectus/Proxy Statement for more information about the current procedures for purchasing, redeeming and exchanging shares of the Acquiring Fund.

falls below the applicable minimum initial investment requirement. Also under this policy, the Acquiring Fund will generally automatically sell an investor’s shares if the value of an account falls below $250. Additional information about the Acquiring Fund’s small account policy, including exceptions to the small account policy and applicable investment minimums, is described in Appendix D. The Acquired Fund has no similar small account policy.

The account options a shareholder has selected for handling distributions from the Acquired Fund will not change as a result of the Merger.

Capitalization

Information concerning the capitalization of each Fund is contained in Appendix C to the Prospectus/Proxy Statement.

Reasons for the Merger and Directors’ Considerations

The Board, including all directors who are not “interested persons” (as such term is defined in the 1940 Act) of the Acquired Company based upon its evaluation of the information presented to it, and in light of its fiduciary duties under federal and state law, determined on behalf of the Acquired Fund that the Merger would be in the best interests of the Acquired Fund’s shareholders and that the interests of existing shareholders in the Acquired Fund would not be diluted as a result of the Merger. The Board has unanimously approved the Agreement and Plan of Reorganization and the Merger, and recommends that Acquired Fund shareholders vote in favor of the Merger by approving the Agreement and Plan of Reorganization.

the Merger as part of Columbia Management’s overall effort to consolidate the Excelsior Funds into the Columbia family of funds;

various potential shareholder benefits of the Merger;

various alternatives to the Merger, including the continued operation of the Acquired Fund and certain other funds as a separate fund complex and the possible liquidation of the Acquired Fund;

the current asset level of the Acquired Fund and the combined pro forma asset level of the Acquiring Fund;

the investment objectives and principal investment strategies of the Funds;

that holders of shares of the Acquired Fund are expected to experience lower total and net operating expense ratios as holders of shares of the Acquiring Fund for at least one year after the Merger;

the anticipated tax-free nature of the exchange of shares in the Merger, and other expected U.S. federal income tax consequences of the Merger;

the potential benefits of the Merger to Columbia Management and its affiliates;

10.

various aspects of the Merger and the Agreement and Plan of Reorganization;

11.

the fact that shareholders of the Acquired Fund will experience no substantive change in shareholder services as a result of the Merger; and

12.

The Board also considered that the Funds have different boards as well as different (although affiliated) investment advisors. Additionally, the Funds have different outside legal counsel. The Board also considered, however, that many of the Funds’ service providers are identical, and that the same portfolio managers of the current advisors who are responsible for the day-to-day investment decisions of the Acquired Fund are expected by Columbia Management to continue to be responsible for the day-to-day investment decisions of the Acquiring Fund upon completion of the Merger. Both Funds have the same administrator and pricing and bookkeeping agent (Columbia Management), distributor (Columbia Management Distributors, Inc.), transfer agent (Columbia Management Services, Inc.) and custodian and fund accountant (State Street Bank and Trust Company).

Columbia Management also believes that the Merger helps eliminate overlapping products within the Columbia Funds family. The Acquired Fund and the Acquiring Fund are both real estate funds and have similar investment objectives and principal investment strategies. Columbia Management believes that streamlining its product offerings in a particular asset segment will help to minimize investor confusion.

Regulatory Matters

and retain an independent distribution consultant and independent fee consultant. The NYAG Settlement also, among other things, requires Columbia Management and its affiliates to reduce management fees for certain of the funds in the Columbia family of mutual funds and other mutual funds through November 30, 2009 and to make certain disclosures to investors relating to expenses. Please see Appendix D for more information.

Performance Information

The bar charts below show the percentage gain or loss in each calendar year (before taxes) for the 10-year period ended December 31, 2007 for Shares Class shares of the Acquired Fund and for Class Z shares of the Acquiring Fund. The bar charts should give a shareholder a general idea of how the Acquired Fund’s and the Acquiring Fund’s returns have varied from year to year. The bar charts include the effect of Fund expenses. The calculations of total returns assume the reinvestment of all dividends and capital gain distributions on the reinvestment dates. Performance results include the effect of expense reduction arrangements, if any. If these arrangements had not been in place, total returns would have been lower. Any expense reduction arrangements may be discontinued at any time after the end of their contract period. As with all mutual funds, past performance is not an indication of future results. No assurance can be given that the Acquiring Fund will achieve any particular level of performance after the Merger.

Additional discussion of the manner of calculating total return is contained in each Fund’s Prospectus and Statement of Additional Information.

Real Estate Fund (Acquired Fund)

LOGO

For period shown in bar chart:

Best quarter: 4th quarter 2004, 14.68%

Worst quarter: 4th quarter 2007, (11.66)%

Columbia Real Estate Equity Fund (Acquiring Fund)

LOGO

For period shown in bar chart:

Best quarter: 4th quarter 2004, 15.47%

Worst quarter: 4th quarter 2007, (12.91)%

The following tables list the average annual total return for the one-year, five-year and ten-year periods ended December 31, 2007 for Shares Class shares of the Acquired Fund and Class Z shares of the Acquiring Fund. These tables are intended to provide shareholders with some indication of the risks of investing in the Acquired Fund and the Acquiring Fund. Each table also includes the performance of one or more relevant broad-based market indices. Indices are not available for investment, are unmanaged and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing.

Real Estate Fund (Acquired Fund)

Average Annual Total Returns—For Periods Ended December 31, 2007


	1 Year	5 Years	10 Years
Shares Class (%)
Return before taxes	(16.92)	16.03	9.73
Return after taxes on distributions	(23.82)	12.36	6.87
Return after taxes on distributions and sale of fund shares	(3.17)	13.49	7.46
MSCI US REIT Index (%)⁽¹⁾	(16.82)	17.91	10.37
Standard & Poor’s 500 Composite Stock Price Index (%)⁽²⁾	5.49	12.83	5.91

⁽¹⁾	The MSCI US REIT Index is an unmanaged market capitalization-weighted index composed of the largest and most actively traded equity REITs that generate most of their revenue and income from real estate rental and leasing operations.

⁽²⁾	The Standard & Poor’s 500 Composite Stock Price Index is a widely accepted unmanaged index of U.S. stock market performance.

Columbia Real Estate Equity Fund (Acquiring Fund)

Average Annual Total Returns—For Periods Ended December 31, 2007


	1 Year	5 Years	10 Years
Class Z (%)
Return before taxes	(17.38)	16.06	9.69
Return after taxes on distributions	(23.14)	12.17	6.96
Return after taxes on distributions and sale of fund shares	(2.46)	14.10	7.89
NAREIT Index (%)⁽¹⁾	(15.69)	18.17	10.49

⁽¹⁾	The NAREIT Index (National Association of Real Estate Investment Trusts) is an unmanaged index which tracks the performance of all publicly-traded equity real estate investment trusts (REITS).

Terms of the Agreement and Plan of Reorganization

If approved by the shareholders of the Acquired Fund, and if all other conditions are satisfied, the Merger is expected to occur late in the first quarter of 2008. The following is a brief summary of the principal terms of the Agreement and Plan of Reorganization. Please review Appendix A to the Prospectus/Proxy Statement for more information regarding the Agreement and Plan of Reorganization.

The Acquired Fund will transfer all of the assets and liabilities attributable to its Shares Class shares to the Acquiring Fund in exchange for Class Z shares of the Acquiring Fund with an aggregate net asset value equal to the net value of the transferred assets and liabilities.

The shares of the Acquiring Fund received by the Acquired Fund will be distributed to the shareholders of the Acquired Fund pro rata in accordance with their percentage ownership of Shares Class shares of the Acquired Fund in complete liquidation of the Acquired Fund.

After the Merger, the Acquired Fund’s affairs will be wound up in an orderly fashion and it will be terminated under state law.

Federal Income Tax Consequences

under Section 1223(2) of the Code, the Acquiring Fund’s holding periods in such assets will include the Acquired Fund’s holding periods in such assets; and

The opinion will be based on certain factual certifications made by officers of the Acquired Fund, the Acquiring Fund, the Acquired Company and the Columbia Trust and will also be based on customary assumptions. The opinion is not a guarantee that the tax consequences of the Merger will be as described above. The opinion will note and distinguish certain published precedent. There is no assurance that the Internal Revenue Service or a court would agree with the opinion.

Prior to the closing of the Merger, the Acquired Fund will, and the Acquiring Fund may, declare a distribution to shareholders that, together with all previous distributions, will have the effect of distributing to shareholders all of its investment company taxable income (computed without regard to the deduction for dividends paid), net tax-exempt income and net capital gain, including gain realized on disposition of portfolio securities in connection with the Merger (after reduction by any available capital loss carryforwards), if any, through the closing of the Merger. Such distributions may include amounts that are taxable to shareholders. Shareholders of the Acquired Fund will receive a proportionate share of any taxable gains realized by the Acquiring Fund but not distributed to its shareholders prior to the Merger when such gains are eventually distributed by the combined fund.

THE BOARD UNANIMOUSLY RECOMMENDS APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.

Required Vote for Proposal

III. GENERAL

Voting Information

Information about Proxies and the Conduct of the Meeting

Voting Process. Shareholders can vote in any one of the following ways:

By mail, by filling out and returning the enclosed Proxy Card;

By phone, fax or Internet (see the enclosed Proxy Card for instructions); or

In person at the Meeting.

executing and submitting a later-dated proxy or by attending the Meeting and voting in person. Merely attending the Meeting without voting will not revoke a proxy.

Votes cast in person or by proxy at the Meeting will be counted by persons appointed by the Acquired Fund as tellers or inspectors of election for the Meeting (the “Tellers”). With respect to the Acquired Fund, more than fifty percent (50%) of the shares of the Acquired Fund entitled to vote present in person or represented by proxy, constitutes a quorum for the transaction of business by the shareholders of the Acquired Fund at the Meeting. In determining whether a quorum is present, the Tellers will count shares represented by proxies that reflect abstentions and “broker non-votes” as shares that are present and entitled to vote. Abstentions and broker non-votes will have the effect of a negative vote on the proposal. “Broker non-votes” are shares held by a broker or nominee as to which (i) the broker or nominee does not have discretionary voting power and (ii) the broker or nominee has not received instructions from the beneficial owner or other person who is entitled to instruct how the shares should be voted.

Underwriter Address. The address of the Funds’ principal underwriter, Columbia Management Distributors, Inc., is One Financial Center, Boston, Massachusetts 02111.

Share Ownership. Appendix B to the Prospectus/Proxy Statement lists the total number of shares of the Acquired Fund outstanding as of December 21, 2007 and entitled to vote at the Meeting. It also identifies holders of more than five percent of the Shares Class shares of the Acquired Fund or the Class Z shares of the Acquiring Fund, and contains information about the executive officers and directors of the Acquired Fund and their shareholdings in the Acquired Fund.

[THIS PAGE INTENTIONALLY LEFT BLANK]

Appendix A — Agreement and Plan of Reorganization

THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of [·], 2008, is by and among Excelsior Funds Trust, Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. (each an “Acquired Company”), each on behalf of each series thereof identified in Exhibit A hereto as an Acquired Fund (each an “Acquired Fund”), Columbia Funds Series Trust I (the “Acquiring Trust”), on behalf of each series thereof identified in Exhibit A hereto as the corresponding Acquiring Fund (each an “Acquiring Fund”), and Columbia Management Advisors, LLC (“Columbia”).

This Agreement shall be treated as if each reorganization between an Acquired Fund and its corresponding Acquiring Fund contemplated hereby had been the subject of a separate agreement.

In consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:

1.	TRANSFER OF ASSETS OF EACH ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF LIABILITIES AND ACQUISITION SHARES AND LIQUIDATION OF SUCH ACQUIRED FUND.

1.1.

Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein,

(a)

Each Acquired Fund will transfer and deliver to the corresponding Acquiring Fund, and each Acquiring Fund will acquire all the assets of the corresponding Acquired Fund as set forth in paragraph 1.2;

(b)

(c)

A-1

1.2.

The assets of each Acquired Fund to be acquired by the corresponding Acquiring Fund shall consist of all cash, securities, dividends and interest receivable, receivables for shares sold and all other assets that are owned by the Acquired Fund on the closing date provided in paragraph 3.1 (the “Closing Date”) and any deferred expenses, other than unamortized organizational expenses, shown as an asset on the books of the Acquired Fund on the Closing Date. Each Acquiring Fund agrees that all rights to indemnification and all limitations of liability existing in favor of the the applicable Acquired Company’s current and former trustee/directors and officers, acting in their capacities as such, under the applicable Acquired Company’s organizational documents as in effect as of the date of this Agreement or under any other agreement of the Acquired Fund shall survive the reorganization as obligations of the Acquiring Trust, on behalf of the Acquiring Fund, and shall continue in full force and effect, without any amendment thereto, and shall constitute rights which may be asserted against the Acquiring Trust, on behalf of the Acquiring Fund, its successors or assigns.

1.3.

1.4.

1.5.

2.	VALUATION.

2.1.

A-2

preceding the Closing (such time and date being herein called the “Valuation Date”) using the valuation procedures set forth in the organizational documents of the corresponding Acquiring Fund and the then current prospectus or prospectuses or statement or statements of additional information of the corresponding Acquiring Fund (collectively, as amended or supplemented from time to time, the “Acquiring Fund Prospectus”), after deduction for the expenses of the reorganization contemplated hereby to be paid by the Acquired Fund pursuant to paragraph 9.2, and shall be certified by the Acquired Fund.

2.2.

3.	CLOSING AND CLOSING DATE.

3.1.

3.2.

3.3.

3.4.

A-3

Fund owned by each Acquired Fund shareholder, all as of the close of business on the Valuation Date, certified by any Vice President, Secretary or Assistant Secretary of the Acquired Fund. The Acquiring Trust will provide to the Acquired Fund evidence satisfactory to the Acquired Fund that the Acquisition Shares issuable pursuant to paragraph 1.1 have been credited to the Acquired Fund’s account on the books of the Acquiring Fund. On the Liquidation Date, each Acquiring Fund will provide to the corresponding Acquired Fund evidence satisfactory to the corresponding Acquired Fund that such Acquisition Shares have been credited pro rata to open accounts in the names of the corresponding Acquired Fund’s shareholders as provided in paragraph 1.3.

3.5.

4.	REPRESENTATIONS AND WARRANTIES.

4.1.

(a)

(b)

(c)

(d)

(e)

A-4

threatened as to the Acquired Fund, any of its properties or assets, or any person whom the Acquired Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, and the Acquired Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated hereby;

(f)

(g)

(h)

(i)

A-5

Code. The Acquired Fund is in compliance in all material respects with applicable regulations of the Internal Revenue Service pertaining to the reporting of dividends and other distributions on and redemptions of its capital stock and to withholding in respect of dividends and other distributions to shareholders, and is not liable for any material penalties that could be imposed thereunder;

(j)

Exhibit B hereto sets forth the authorized capital of the Acquired Fund. All issued and outstanding shares of the Acquired Fund are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable (except as set forth in the Acquired Fund’s then current prospectus or prospectuses or statement or statements of additional information (collectively, as amended or supplemented from time to time, the “Acquired Fund Prospectus”)) by the Acquired Fund and will have been issued in compliance with all applicable registration or qualification requirements of federal and state securities laws. Except as set forth on Exhibit B hereto, no options, warrants or other rights to subscribe for or purchase, or securities convertible into, any shares of common stock of the Acquired Fund are outstanding and none will be outstanding on the Closing Date;

(k)

(l)

(m)

(n)

(o)

A-6

(p)

(q)

(r)

4.2.

(a)

The Acquiring Trust is a Massachusetts business trust that is duly organized, validly existing and in good standing under the laws of The Commonwealth of Massachusetts;

(b)

(c)

A-7

material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and there are no material contracts to which the Acquiring Fund is a party that are not referred to in such Prospectus or in the registration statement of which it is a part;

(d)

At the Closing Date, the Acquiring Fund will have good and marketable title to its assets;

(e)

(f)

To the knowledge of the Acquiring Fund, except as has been disclosed in writing to the corresponding Acquired Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or threatened as to the Acquiring Fund, any of its properties or assets, or any person whom the Acquiring Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, and the Acquiring Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated hereby;

(g)

(h)

(i)

As of the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law to have been filed by such date (giving effect to extensions) shall

A-8

have been filed, and all federal and other taxes shown to be due on such returns and reports or any assessments received shall have been paid, or provisions shall have been made for the payment thereof. All of the Acquiring Fund’s tax liabilities will have been adequately provided for on its books. To the best of the Acquiring Fund’s knowledge, it will not have not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and it will not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid;

(j)

(k)

(l)

(m)

(n)

(o)

The information to be furnished by the Acquiring Fund for use in the Registration Statement and Prospectus/Proxy Statement referred to in paragraph 5.3 shall be

A-9

accurate and complete in all material respects and shall comply with federal securities and other laws and regulations applicable thereto; and

(p)

5.	COVENANTS OF EACH ACQUIRED FUND AND THE CORRESPONDING ACQUIRING FUND.

Each Acquired Fund and the corresponding Acquiring Fund hereby covenants and agrees with the other as follows:

5.1.

5.2.

5.3.

5.4.

5.5.

5.6.

5.7.

A-10

6.	CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRED FUND.

6.1.

6.2.

The Acquired Fund shall have received a favorable opinion of Ropes & Gray LLP, dated the Closing Date and in a form satisfactory to the Acquired Fund, to the following effect:

(a)

(b)

(c)

(d)

(e)

A-11

agreement known to such counsel to which the corresponding Acquiring Fund is a party or by which it is bound or, to the knowledge of such counsel, result in the acceleration of any obligation or the imposition of any penalty under any agreement, judgment or decree to which such Acquiring Fund is a party or by which it is bound;

(f)

(g)

(h)

The Acquiring Trust is registered with the Securities and Exchange Commission as an investment company under the 1940 Act; and

(i)

6.3.

7.	CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING FUND.

7.1.

A-12

the corresponding Acquired Fund has complied with all the covenants and agreements and satisfied all of the conditions on its part to be performed or satisfied under this Agreement at or prior to the Closing Date;

7.2.

The Acquiring Fund shall have received a favorable opinion of Morgan, Lewis & Bockius LLP dated the Closing Date and in a form satisfactory to the Acquiring Fund, to the following effect:

(a)

(b)

This Agreement has been duly authorized, executed and delivered on behalf of the corresponding Acquired Fund and, assuming the Registration Statement and Prospectus/Proxy Statement referred to in paragraph 5.3 comply with applicable federal securities laws and assuming the due authorization, execution and delivery of this Agreement by the Acquiring Fund, is the valid and binding obligation of the corresponding Acquired Fund enforceable against the corresponding Acquired Fund in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and other equitable principles;

(c)

(d)

(e)

To the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental authority is required for the consummation by the corresponding Acquired Fund of the transactions contemplated by this Agreement, except such as have been obtained;

(f)

A-13

(g)

Each Acquired Company is registered with the Securities and Exchange Commission as an investment company under the 1940 Act; and

(h)

7.3.

Prior to the Closing Date, the corresponding Acquired Fund shall have declared a dividend or dividends which, together with all previous dividends, shall have the effect of distributing (i) all of the excess of (x) the corresponding Acquired Fund’s interest income excludable from gross income under Section 103 of the Code over (y) the corresponding Acquired Fund’s deductions disallowed under Sections 265 or 271 of the Code and (ii) all of the corresponding Acquired Fund’s investment company taxable income as defined in Section 852 of the Code (in each case computed without regard to any deduction for dividends paid) for its taxable years ending on or after [[INSERT DATE]], and on or prior to the Closing Date (computed without regard to any deduction for dividends paid), and all of its net capital gains realized (after reduction for any capital loss carryover) in each of its taxable years ending on or after [[INSERT DATE]], and on or prior to the Closing Date.

7.4.

7.5.

The custodian of the corresponding Acquired Fund shall have delivered to the Acquiring.

7.6.

Fund a certificate identifying all of the assets of the corresponding Acquired Fund held by such custodian as of the Valuation Date.

8.	FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRED FUND AND THE CORRESPONDING ACQUIRING FUND.

The respective obligations of each Acquired Fund and the corresponding Acquiring Fund hereunder are subject to the further conditions that on or before the Closing Date:

8.1.

This Agreement and the transactions contemplated herein shall have received all necessary shareholder approvals at the meeting of shareholders of each Acquired Fund referred to in paragraph 5.2.

8.2.

A-14

8.3.

8.4.

8.5.

(a)

The transactions contemplated by this Agreement will constitute a reorganization within the meaning of Section 368(a) of the Code, and the Acquired Fund and the corresponding Acquiring Fund will each be “a party to a reorganization” within the meaning of Section 368(b) of the Code;

(b)

(c)

(d)

(e)

The holding period of the assets of the Acquired Fund in the hands of the corresponding Acquiring Fund will include the period during which such assets were held by the Acquired Fund;

(f)

No gain or loss will be recognized by the Acquired Fund’s shareholders upon the exchange of all of their shares of the Acquired Fund for the Acquisition Shares;

(g)

The aggregate tax basis of the Acquisition Shares to be received by a shareholder of the Acquired Fund will be the same as the aggregate tax basis of the Acquired Fund’s shares exchanged therefor;

A-15

(h)

(i)

8.6.

9.	BROKERAGE FEES AND EXPENSES.

9.1.

9.2.

A-16

10.	ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.

10.1.

10.2.

11.	TERMINATION.

11.1.

(a)

of a material breach by the other of any representation, warranty, covenant or agreement contained herein to be performed by the other party at or prior to the Closing Date;

(b)

a condition herein expressed to be precedent to the obligations of the terminating party has not been met and it reasonably appears that it will not or cannot be met;

(c)

(d)

11.2.

A-17

12.	AMENDMENTS.

13.

NOTICES.

14.	HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; NON- RECOURSE.

14.1.

The article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

14.2.

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

14.3.

This Agreement shall be governed by and construed in accordance with the domestic substantive laws of The Commonwealth of Massachusetts, without giving effect to any choice or conflicts of law rule or provision that would result in the application of the domestic substantive laws of any other jurisdiction.

14.4.

14.5.

[Remainder of page intentionally left blank.]

A-18


		EXCELSIOR FUNDS TRUST EXCELSIOR FUNDS, INC. EXCELSIOR TAX-EXEMPT FUNDS, INC.
		each on behalf of each Acquired Fund series thereof

		By:
		Name:
		Title:

		ATTEST:

		By:
		Name:
		Title:

		COLUMBIA FUNDS SERIES TRUST I
		on behalf of each Acquiring Fund

		By:
		Name:
		Title:

		ATTEST:

		By:
		Name:
		Title:

		Solely for purposes of Paragraphs 6.3 and 9.2 of the Agreement

		COLUMBIA MANAGEMENT ADVISORS, LLC

		By:
		Name:
		Title:

EXHIBIT A


Acquired Fund (Share Classes)		Acquiring Fund (Share Classes)
Equity Income Fund		Columbia Dividend Income Fund
Retirement Shares Class		Class R
Shares Class		Class Z
High Yield Fund		Columbia High Yield Opportunity Fund
Institutional Shares Class		Class Z
Shares Class		Class Z
Long-Term Tax-Exempt Fund		Columbia Tax-Exempt Fund
Shares Class		Class Z
Real Estate Fund		Columbia Real Estate Equity Fund
Shares Class		Class Z

EXHIBIT B

Authorized Capital of each Acquired Fund


Acquired Fund		Authorized Capital
Equity Income Fund		Unlimited
High Yield Fund		Unlimited
Long-Term Tax-Exempt Fund		500,000,000
Real Estate Fund		500,000,000

EXHIBIT C

Authorized Capital of each Acquiring Fund


Acquiring Fund		Authorized Capital
Columbia Dividend Income Fund		Unlimited
Columbia High Yield Opportunity Fund		Unlimited
Columbia Real Estate Equity Fund		Unlimited
Columbia Tax-Exempt Fund		Unlimited

Appendix B — Fund Information

Shares of the Acquired Fund Outstanding and Entitled to Vote

The number of Shares Class shares of the Acquired Fund outstanding and entitled to vote as of December 21, 2007 was as follows:

Fund

Class

Number of Shares Outstanding

and Entitled to Vote

Acquired Fund

Shares Class

8,743,543.123

Ownership of Shares

As of December 21, 2007, the officers and trustees of the Columbia Trust, as a group, owned less than one percent of the then outstanding shares of the Acquiring Fund. As of December 21, 2007, the directors and officers of the Acquired Company, as a group, owned less than one percent of the then outstanding shares of the Acquired Fund.

As of December 21, 2007, USTNY, a national banking association organized under the laws of the United States, 114 West 47th Street, New York, New York 10036, may be deemed to have “beneficially” owned 35.44% of the outstanding shares of the Acquired Fund. Atwell & Co. is the nominee for USTNY. Accordingly, USTNY may be considered to be a “controlling person” of the Acquired Fund. A controlling person’s vote could have a more significant effect on matters presented to shareholders for approval than the vote of other Acquired Fund shareholders. Bank of America Corporation, a publicly-traded financial services corporation, is the ultimate parent company of USTNY.

B-1

As of December 21, 2007, the following shareholders of record each owned five percent or more of the outstanding shares of the noted class of shares of the noted Fund:


Fund and Class	Name and Address of Shareholder	Number of Outstanding Shares of Class Owned	Percentage of Outstanding Shares of Class Owned	Percentage of Outstanding Shares of Class Owned Upon Consummation of Merger⁽¹⁾
Real Estate Fund (Acquired Fund) Shares Class	Charles Schwab & Co, Inc Special Custody A/C for Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4151	2,046,097.149	23.40%	3.16	%

	Atwell & Co PO Box 456 Wall Street Station New York, NY 10005	2,500,092.960	28.59%	3.87	%

Columbia Real Estate Equity Fund (Acquiring Fund) Class Z	Charles Schwab & Co, Inc Special Custody A/C for Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4151	4,320,827.749	21.72%	18.78	%

	Bank of America NA Attn: Joan Wray/Funds Accounting 411 N Akard Street Dallas, TX 75201-3307	4,546,920.377	22.86%	19.77	%

⁽¹⁾

Percentage owned assuming completion of the Merger on December 21, 2007.

B-2

Appendix C — Capitalization

The following table shows, on an unaudited basis, the capitalization of the Acquired Fund and the Acquiring Fund as of November 30, 2007, and on a pro forma combined basis, after giving effect to the acquisition of the assets and liabilities of the Acquired Fund by the Acquiring Fund at net asset value as of that date:


	Real Estate Fund (Acquired Fund)		Columbia Real Estate Equity Fund (Acquiring Fund)		Pro Forma Adjustments			*Pro Forma* Columbia Real Estate Equity Fund (Acquiring Fund)⁽¹⁾
Shares Class⁽²⁾
Net asset value	$	80,396,482			$	(80,396,482	)
Shares outstanding		8,147,083				(8,147,083	)
Net asset value per share	$	9.87

Class Z
Net asset value			$	321,379,337	$	80,262,876	⁽³⁾⁽⁴⁾	$	401,642,213
Shares outstanding				16,135,929		4,033,427	⁽⁴⁾		20,169,356
Net asset value per share			$	19.92				$	19.91

⁽¹⁾

Assumes the Merger was consummated on November 30, 2007, and is for information purposes only. No assurance can be given as to how many shares of the Acquiring Fund will be received by the shareholders of the Acquired Fund on the date the Merger takes place, and the foregoing should not be relied upon to reflect the number of shares of the Acquiring Fund that actually will be received on or after such date.

⁽²⁾	Shares Class shares of the Acquired Fund are exchanged for Class Z shares of the Acquiring Fund based on the net asset value per share of the Acquiring Fund’s Class Z shares on the business day immediately preceding the Merger.

⁽³⁾	Adjustments reflect one time proxy, accounting, legal and other costs of the Merger as approved by the Board and the board of trustees of the Acquiring Fund of $90,958 and $48,043 to be borne by the Acquired Fund and the Acquiring Fund, respectively.

⁽⁴⁾	Includes net assets and shares from Shares Class shares. Shares Class shares will be exchanged for Class Z shares on the date of the Merger.

C-1

Appendix D — Information Applicable to the Acquiring Fund

Below is information regarding the Acquiring Fund. All references to the Fund in this Appendix D refer to the Acquiring Fund

ADDITIONAL INVESTMENT STRATEGIES AND POLICIES

Changing the Fund’s Investment Objective and Policies

The Fund’s investment objective and certain of its investment policies can be changed without shareholder approval unless otherwise stated in this Prospectus/Proxy Statement or the Fund’s Statement of Additional Information (”SAI”). Shareholders vote on changes to other investment policies that are designated as fundamental in accordance with the requirements of the 1940 Act.

Investment Guidelines

Holding Other Kinds of Investments

The Fund may hold investments that aren’t part of its principal investment strategies. These investments are described in the SAI. The Fund may choose not to invest in certain securities described in this Prospectus/Proxy Statement and in the SAI, although it has the ability to do so.

Investing in the Columbia Money Market Funds

Lending Securities

Portfolio Holdings Disclosure

D-1

information will remain available on the website until at least the date on which such Fund files a Form N-CSR or Form N-Q (forms filed with the SEC that include portfolio holdings information) for the period that includes the date as of which the information is current.

The Fund’s complete portfolio holdings as of a month-end are disclosed approximately 30 calendar days after such month-end. The Fund’s largest 15 holdings as a percent of the Fund’s portfolio as of a month-end are disclosed approximately 15 calendar days after such month-end.

In addition, more current information concerning the Fund’s portfolio holdings as of specified dates may also be disclosed on the Columbia Funds’ website.

Investing Defensively

Portfolio Turnover

Mailings to Households

Portfolio Turnover

D-2

MANAGEMENT OF THE FUND

Primary Service Providers

Columbia Management, Columbia Management Distributors, Inc. (the “Distributor”) and Columbia Management Services, Inc. (the “Transfer Agent”), all affiliates of Bank of America, currently provide key services to the Fund and the other Columbia Funds, including investment advisory, distribution, administration, shareholder servicing and transfer agency, and are paid for providing these services. These service relationships are described below.

Columbia Management

The Fund pays Columbia Management a fee for its investment advisory services. The fee is calculated as a percentage of the average daily net assets of the Fund and is paid monthly. For the Fund’s most recent fiscal year ended August 31, 2007, aggregate advisory fees paid to Columbia Management by the Fund amounted to 0.75% of average daily net assets of the Fund.

A discussion regarding the basis for the board’s approval of the Fund’s investment advisory agreement with Columbia Management is available in the Fund’s semi-annual report to shareholders for the fiscal period ended February 28, 2007.

Sub-Advisor(s)

D-3

from the SEC to permit the Fund to act on many of Columbia Management’s recommendations with japproval only by the board and not by Fund shareholders. Columbia Management or the Fund would inform the Fund’s shareholders of any actions taken in reliance on this relief. Until Columbia Management and the Fund obtain this relief, the Fund will continue to submit these matters to shareholders for their approval to the extent required by applicable law.

At present, Columbia Management has not engaged any investment subadvisor for the Fund.

Portfolio Managers

Arthur J. Hurley

Service with the Fund (manager) since September, 2006.

Investment management experience since 1998.

Director of Columbia Management, associated with Columbia Management or its predecessors since September, 2006. Prior to September 2006, Mr. Hurley served as a senior portfolio manager for Lee Munder Capital Group.

The Administrator

Columbia Management is responsible for overseeing the administrative operations of the Fund, including the general supervision of the Fund’s operations, coordination of the Fund’s service providers, and the provision of office facilities and related clerical and administrative services. Columbia Management does not currently receive any fees for the administrative services it provides the Fund.

The Distributor

Shares of the Fund are distributed by the Distributor, which is located at One Financial Center, Boston, MA 02111. The Distributor is a registered broker/dealer and an indirect, wholly owned subsidiary of Bank of America. The Distributor and its affiliates may pay commissions, distribution and service fees and/or other compensation to entities, including Bank of America affiliates for selling shares and providing services to investors.

The Transfer Agent

D-4

Other Roles and Relationships of Bank of America and its Affiliates—Certain Conflicts of Interest

Bank of America is a major financial services company, engaged in a broad range of financial activities beyond the mutual fund-related activities of Columbia Management, including, among others, commercial banking, investment banking, broker/ dealer (sales and trading), asset management, insurance and other financial activities. These additional activities may involve multiple advisory, transactional, lending, financial and other interests in securities and other instruments, and in companies that issue securities and other instruments, which may be bought, sold or held by the Fund.