COLUMBIA FIXED INCOME SECURITIES FUND INC, 497, 1998-03-03

COLUMBIA FIXED INCOME SECURITIES FUND INC
497, 1998-03-03

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<PAGE>

RULE 497(E)
REG. NOS. 02-79750/811-3581

[LOGO]

COLUMBIA FUNDS
PROSPECTUS AND 1997 ANNUAL REPORT
February 23, 1998

COLUMBIA FIXED INCOME SECURITIES FUND
<PAGE>
COLUMBIA FIXED INCOME
SECURITIES FUND, INC.
-------------------------------
PROSPECTUS -- FEBRUARY 23, 1998
----------------------------------------------

This Prospectus contains information relating to the Columbia Fixed Income
Securities Fund, Inc. (the "Fund"), a mutual fund managed by Columbia Funds
Management Company (the "Advisor"). The Fund seeks a high level of income by
investing in a broad range of investment-grade fixed income securities with
intermediate- to long-term maturities. Because the Fund is no-load, you pay no
sales charges to invest in it.

This Prospectus contains information you should know about the Fund before
investing. Please keep it for future reference. A Statement of Additional
Information about the Fund dated February 23, 1998 has been filed with the
Securities and Exchange Commission and is available along with other related
materials on the SEC's Internet Web site (www.sec.gov). For a printed copy of
the Statement of Additional Information, please call the Fund at 1-800-547-1707.
The Statement of Additional Information is legally a part of (incorporated by
reference into) this Prospectus.

THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL SECURITIES OF THE FUND ONLY IN
THOSE STATES WHERE THE FUND'S SHARES HAVE BEEN REGISTERED FOR SALE. THE FUND
WILL NOT ACCEPT APPLICATIONS FROM PERSONS RESIDING IN STATES WHERE THE FUND'S
SHARES ARE NOT REGISTERED.

SHARES OF THE FUND ARE NOT BANK DEPOSITS OR OBLIGATIONS, OR GUARANTEED OR
ENDORSED BY, FLEET FINANCIAL GROUP, INC. OR ANY OF ITS AFFILIATES, THE ADVISOR,
OR ANY FLEET BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY, GUARANTEED
BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. INVESTMENT IN THE FUND INVOLVES INVESTMENT RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.

LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION ("SEC"), NOR HAS THE SEC OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS
-------------------------

FUND EXPENSES..................................................................1

FINANCIAL HIGHLIGHTS...........................................................1

FUND DESCRIPTION...............................................................2

PERFORMANCE....................................................................5

FUND MANAGEMENT................................................................6

Investment Advisor...........................................................6

Investment Team..............................................................7

Personal Trading.............................................................7

Other Service Providers......................................................8

Other Information............................................................8

INVESTOR SERVICES..............................................................9

How to Open a New Account....................................................9

How to Purchase Shares.......................................................9

Paying for Your Shares......................................................10

How to Redeem (Sell) Shares.................................................10

Payment of Redemption Proceeds..............................................12

How to Exchange Shares......................................................12

Processing Your Order.......................................................12

Determining Your Share Price................................................12

Investor Inquiries..........................................................13

Account Privileges..........................................................13

IRAs and Retirement Plans...................................................14

Private Management Accounts.................................................14

DISTRIBUTIONS AND TAXES.......................................................15

ADDITIONAL INFORMATION........................................................16

1997 ANNUAL REPORT............................................................19
FOR FURTHER INFORMATION OR ASSISTANCE IN
OPENING AN ACCOUNT, PLEASE CALL:
222-3606 IN PORTLAND OR
1-800-547-1707 NATIONWIDE.
YOU MAY ALSO VISIT THE FUND'S WEB SITE AT
WWW.COLUMBIAFUNDS.COM.
<PAGE>
FUND EXPENSES
-----------------------------------------------------------------

The following information is provided to assist you in understanding the various
costs and expenses that an investor in the Fund will bear directly or
indirectly. "Annual Fund Operating Expenses" are the expenses incurred by the
Fund for 1997. Expenses paid by the Fund include management fees as well as
audit, transfer agent, custodian and legal fees and other business operating
expenses. For more information about Fund expenses, see "Fund Description -- No
Sales Load or 12b-1 Fees" and "Fund Management."

-- SHAREHOLDER TRANSACTION COSTS --

<TABLE>
<S> <C>
SALES LOAD IMPOSED ON PURCHASES....... NONE
SALES LOAD IMPOSED ON REINVESTED
DIVIDENDS............................. NONE
REDEMPTION FEES*...................... NONE
EXCHANGE FEES......................... NONE
*WIRE REDEMPTIONS MAY BE SUBJECT TO A FEE OF UP
TO $5, IN ADDITION TO ANY CHARGES BY YOUR BANK.
</TABLE>

-- ANNUAL FUND OPERATING EXPENSES --
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<S> <C>
MANAGEMENT FEES....................... 0.50%
12B-1 FEES............................ NONE
OTHER OPERATING EXPENSES.............. 0.16%
TOTAL FUND OPERATING EXPENSES....... 0.66%
</TABLE>

Based on the expense ratio above, you would pay the following expenses on a
$1,000 investment (assuming a 5% annual return and redemption at the end of each
time period).

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------- --------- --------- ---------
<S> <C> <C> <C>
$7 $21 $37 $82
THIS EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES
OR PERFORMANCE; ACTUAL EXPENSES AND
PERFORMANCE MAY BE GREATER OR LESS THAN
THOSE SHOWN.
</TABLE>

FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------
The table below provides information for a share of the Fund outstanding
throughout the periods presented and has been audited by Coopers & Lybrand
L.L.P., independent accountants, as stated in their report on page 32 of this
Prospectus and Annual Report. Additional information about the performance of
the Fund for 1997, including a discussion by the investment advisor to the Fund,
is contained on page 21.

- ---------------- ----------------

-- COLUMBIA FIXED INCOME SECURITIES FUND, INC. --
--------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.08 $13.51 $12.16 $13.44 $13.28 $13.59 $12.72 $12.75 $12.11
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................ .85 .85 .88 .83 .85 .95 1.00 1.03 1.04
Net realized and unrealized gains
(losses) on investments............. .36 (.43) 1.35 (1.28) .52 .09 1.05 (.03) .64
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations... 1.21 .42 2.23 (.45) 1.37 1.04 2.05 1.00 1.68
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net investment
income)............................. (.85) (.85) (.88) (.83) (.85) (.95) (1.00) (1.03) (1.04)
Distributions (from capital gains)... (.03) (.36) (.40) (.18)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions................ (.88) (.85) (.88) (.83) (1.21) (1.35) (1.18) (1.03) (1.04)
NET ASSET VALUE, END OF PERIOD $13.41 $13.08 $13.51 $12.16 $13.44 $13.28 $13.59 $12.72 $12.75
TOTAL RETURN........................... 9.56% 3.37% 18.91% -3.36% 10.47% 7.99% 16.84% 8.30% 14.35%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................ $381,333 $356,421 $316,259 $252,090 $300,532 $262,647 $207,271 $133,875 $110,525
Ratio of expenses to average net
assets................................ 0.66% 0.64% 0.65% 0.66% 0.66% 0.66% 0.69% 0.73% 0.74%
Ratio of net investment income to
average net assets.................... 6.43% 6.53% 6.80% 6.53% 6.14% 7.03% 7.63% 8.20% 8.27%
Portfolio turnover rate................ 196.28% 178.25% 137.41% 139.81% 118.80% 195.67% 158.95% 131.81% 114.00%

1988
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.23
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................ 1.04
Net realized and unrealized gains
(losses) on investments............. (.12)
- ---------------------------------------
Total from investment operations... .92
- ---------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net investment
income)............................. (1.04)
Distributions (from capital gains)...
- ---------------------------------------
Total distributions................ (1.04)
NET ASSET VALUE, END OF PERIOD $12.11
TOTAL RETURN........................... 7.72%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................ $102,604
Ratio of expenses to average net
assets................................ 0.77%
Ratio of net investment income to
average net assets.................... 8.44%
Portfolio turnover rate................ 133.20%
</TABLE>

- --------------------------------------------------------------------------------

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FUND DESCRIPTION
-----------------------------------------------------------------

The Fund is an open-end, diversified management investment company (that is, a
"mutual fund"), and is managed by Columbia Funds Management Company (the
"Advisor").

-- NO SALES LOAD OR 12B-1 FEES --

MANY MUTUAL FUNDS CHARGE FEES TO COMPENSATE SALES REPRESENTATIVES FOR
PROMOTING AND SELLING THEIR FUNDS. THERE ARE FUNDS, HOWEVER, THAT CHARGE NO
SALES FEES WHEN YOU BUY SHARES. WITH THESE FUNDS, ALL OF YOUR MONEY, INSTEAD
OF JUST A PORTION, IS INVESTED. IN ADDITION, SOME "NO-LOAD" MUTUAL FUNDS
CHARGE AN ANNUAL 12B-1 FEE AGAINST FUND ASSETS TO HELP PAY FOR THE SALE OF
FUND SHARES. THE FUND IS SOLD WITHOUT SALES LOADS OR 12B-1 FEES; ALL THE MONEY
YOU PAY TO BUY SHARES IS INVESTED IN THE FUND.

-- A TEAM APPROACH TO INVESTING --

The Fund is managed by the Advisor using a team approach (please see "Fund
Management"). Bonds are selected using a "top down, sector rotation" emphasis,
supplemented by a bottoms up, company analysis. The top down analysis begins
with an overall evaluation of the investment environment before focusing on
individual security selection. As part of this review, the investment team
considers such broad indicators as:

- - economic growth, because industries and asset classes behave differently at
various stages of a business cycle

- - inflation, which is a major factor in determining the price investors are
willing to pay for a given level of earnings (price/earnings ratio)

- - interest rates, which provide information about the cost of money and the
attractiveness of different asset classes

- - Federal Reserve policy, which controls the availability of money to help
regulate the economy

- - corporate profits, which indicate the overall health and prosperity of
companies whose stocks and bonds are publicly traded

- - demographics, which refer to the characteristics and dynamics of the
population

- - money flows, which refer to the current and expected level of equity
investments by major classes of investors

To ensure depth and breadth of analysis, each Columbia investment team member
has responsibility for analyzing and researching specific market sectors or
industries, and bringing their findings to team meetings for review and
discussion. Once individual sectors are identified for emphasis, securities
within the targeted sectors are recommended based on fundamental and technical
analysis.
"S ECTOR ROTATION" REFERS TO THE DYNAMIC PROCESS OF
EMPHASIZING OR DE-EMPHASIZING INVESTMENT IN INDUSTRY GROUPS OR ASSET
CLASSES BASED ON THEIR RELATIVE ATTRACTIVENESS.

For fixed income securities, a top down analysis is also used to determine
sector emphasis between different types of instruments used by the Fund (for
example, corporate bonds, Treasuries, or mortgage pass-through securities) and
desired levels of average quality, maturity and duration. These determinations
are made in light of the Fund's individual investment objective.

Top down, sector rotation emphasis is intended to give the investment team a
better understanding of the long-term prospects of a particular security, based
on the characteristics of the existing economy and investor temperament. In this
way, Columbia's investment team is better able to anticipate and act upon market
change, understand its effect on the risk and rewards of fund securities, and
thereby generate consistent, competitive results over the long term.

Although the Fund will generally emphasize investments for long-term capital
appreciation, the Fund may

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2
<PAGE>
FUND DESCRIPTION
-----------------------------------------------------------------
invest for short-term capital appreciation when management believes it is
consistent with sound investment practices and the Fund's overall objective.
These determinations will be made without a vote of the shareholders of the
Fund. There is no assurance that the Fund will achieve its investment objective.

-- COLUMBIA FIXED INCOME --

SECURITIES FUND
-------------------------------

The Fund was incorporated on October 12, 1982 under Delaware law and began
offering shares to the public on February 25, 1983. The Fund was reincorporated
under Oregon law on April 29, 1988.

-- INVESTMENT OBJECTIVE --

The Fund seeks to provide shareholders with a high level of income, consistent
with preservation of capital. To achieve this objective, the Fund invests in a
broad range of fixed income securities, consisting of corporate debt securities
(bonds, debentures, and notes), asset-backed securities, bank obligations,
collateralized bonds, loan and mortgage obligations, commercial paper, preferred
stocks, repurchase agreements, savings and loan obligations, and U.S. Government
and agency obligations. Debt securities and preferred stocks may be convertible
into, or exchangeable for, common stocks, and may have warrants attached.
Information regarding these securities is provided in the Statement of
Additional Information. This investment objective may not be changed without a
vote of a majority of the outstanding voting securities of the Fund.
T O ACHIEVE ITS INVESTMENT OBJECTIVE, THE FUND
EXPECTS TO INVEST A MAJOR PORTION (NORMALLY AT LEAST 95%) OF ITS ASSETS IN
INVESTMENT-GRADE DEBT SECURITIES.

"Investment-grade" debt securities are considered to be those which, at the time
of investment are: (a) rated Baa or higher by Moody's; (b) rated BBB or higher
by Standard & Poor's; or (c) unrated, but believed by the Advisor to be
equivalent to securities with those ratings. Up to 5% of the Fund's assets may
be invested in lower-grade securities (rated Ba or B by Moody's or BB or B by
Standard & Poor's) when the Advisor believes these securities present attractive
investment opportunities despite their speculative characteristics. For
information on the risks of lower-rated securities, please see the Statement of
Additional Information.

Although bonds rated Baa or BBB are believed to have adequate capacity to pay
principal and interest, they have speculative characteristics because they lack
certain protective elements. In addition, the prices of bonds rated Baa or BBB
may be more sensitive to adverse economic changes or individual corporate
developments than bonds with higher investment ratings. The Fund will evaluate
the appropriateness, in light of the then existing circumstances, of retaining
any security whose credit rating drops below Baa or BBB after its purchase by
the Fund. Additional ratings information is provided under "Additional
Information -- Bond Ratings."

A portion of the Fund's portfolio will ordinarily be invested in obligations
issued by the U.S. Government and its agencies and instrumentalities (such as
the Federal Home Loan Mortgage Corp., the Government National Mortgage
Association, the Federal National Mortgage Association, and the Federal Housing
Administration) and in short-term corporate obligations when the Advisor
believes the issuer is financially sound. The Fund may also invest in repurchase
agreements, which are described under "Additional Information."

The Fund will usually invest some portion of its assets in collateralized
mortgage obligations ("CMOs") issued by a U.S. agency or instrumentality, or in
privately issued CMOs that carry an investment-grade rating. The holder of a CMO
is entitled to interest and/or principal payments that are fully collateralized
by a portfolio or pool of mortgages or mortgage-backed

-
3
<PAGE>
FUND DESCRIPTION
-----------------------------------------------------------------
securities. CMOs are generally issued in different classes, with different
priorities as to the receipt of interest and/or principal payments on the
underlying mortgages. In addition to the interest rate risk carried by all fixed
income securities, mortgage-related securities and CMOs are also subject to
risks relating to cash flow uncertainty; that is, the risk that assumed
prepayment rates on the underlying mortgages will increase or decrease. Changes
in assumed prepayment rates have the effect of shortening or lengthening the
effective maturity of the CMO held by the Fund, which may have an adverse effect
on the value of the CMO. The Fund will invest only in those CMOs whose
characteristics and terms are consistent with the average maturity and market
risk profile of the other fixed income securities held by the Fund.

There are no limitations on the average maturity of the Fund's portfolio.
Securities will be selected on the basis of the Advisor's assessment of interest
rate trends and the liquidity of various instruments under prevailing market
conditions. Shifting the average maturity of the portfolio in response to
anticipated changes in interest rates will generally be carried out through the
sale of securities and the purchase of different securities within the desired
maturity range. This may result in a greater level of realized capital gains and
losses than if the Fund held all securities to maturity. Portfolio decisions
will be made solely on the basis of investment, rather than tax, considerations.
Generally, the securities purchased will be of an intermediate maturity (less
than 10 years) when interest rates are expected to rise and of a relatively long
maturity (over 10 years) when interest rates are expected to decline.

-- INVESTMENT RESTRICTIONS --
AND RISK FACTORS

For information on the investment by the Fund in repurchase agreements, illiquid
securities, when-issued securities, and temporary investments, please see
"Additional Information." A description of other investment restrictions and
certain investment practices of the Fund is included in the Statement of
Additional Information.

All fixed income securities are subject to two types of risk: credit risk and
interest rate risk. Credit risk refers to the ability of the issuer to meet
interest and principal payments when due. The ratings of fixed income securities
by Moody's and Standard & Poor's are a generally accepted barometer of credit
risk. See "Additional Information -- Bond Ratings."

Interest rate risk refers to fluctuations in the net asset value of any
portfolio of fixed income securities resulting from the inverse relationship
between the price of fixed income securities and interest rates.
W HEN INTEREST RATES RISE, BOND PRICES GENERALLY
FALL AND, CONVERSELY, WHEN INTEREST RATES FALL, BOND PRICES GENERALLY
RISE.

The change in net asset value depends upon several factors, including a bond's
maturity date. In general, bonds with longer maturities are more sensitive to
interest rate changes than bonds with shorter maturities.

-
4
<PAGE>
PERFORMANCE
-----------------------------------------------------------------

This section is designed to help you understand terms used to describe Fund
performance, such as "total return," "average annual total return," and "yield."
For additional information on yield and total return calculations for the Fund,
see the Statement of Additional Information.

-- UNDERSTANDING "RETURN" --

"TOTAL RETURN" REFERS TO THE CHANGE IN VALUE OF AN INVESTMENT IN THE FUND OVER
A STATED PERIOD, ASSUMING THE REINVESTMENT OF ANY DIVIDENDS AND CAPITAL GAINS.
"AVERAGE ANNUAL TOTAL RETURN" IS A HYPOTHETICAL RATE OF RETURN THAT, IF
ACHIEVED ANNUALLY, WOULD HAVE PRODUCED THE SAME TOTAL RETURN IF PERFORMANCE
HAD BEEN CONSTANT OVER THE ENTIRE PERIOD. AVERAGE ANNUAL TOTAL RETURNS SMOOTH
OUT THE VARIATIONS IN PERFORMANCE BUT ARE NOT THE SAME AS ACTUAL ANNUAL
RESULTS.

The average annual total returns for the Fund for the following periods ended
December 31, 1997 were 9.56% for one year, 7.53% for five years, 9.24% for 10
years, and 9.66% since inception of the Fund on February 25, 1983.

-- YIELD --

The Fund will, from time to time, advertise or quote current yield. The current
yield represents the annualization of the Fund's net investment income over a
recent 30-day period divided by the Fund's net asset value at the end of that
period. The current yield for the Fund for the 30-day period ended December 31,
1997 was 6.35%.

-- PERFORMANCE COMPARISONS --

The Fund may compare its performance to other mutual funds and to the mutual
fund industry as a whole, as quoted by ranking services such as Lipper
Analytical Services, Inc. or Morningstar, Inc., or as reported in financial
publications such as BARRON'S, BUSINESS WEEK, FORBES, MONEY MAGAZINE, and THE
WALL STREET JOURNAL. The Fund may also compare its performance to that of a
recognized stock or bond index, such as the S&P 500 Stock Index, the Russell
2000 Stock Index, the Lehman Aggregate Bond Index, and other relevant indices.
Unmanaged indices may assume the reinvestment of dividends, but generally do not
reflect deductions for administrative and management costs and expenses.
P ERFORMANCE INFORMATION ON THE FUND DOES NOT
GUARANTEE FUTURE RESULTS. SHARE PRICE AND RETURNS WILL FLUCTUATE, AND YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.

In addition, the Fund may also compare its performance to other income-producing
securities such as: (i) money market funds; (ii) various bank products (such as
certificates of deposit and money market deposit accounts); and (iii) U.S.
Treasury bills or notes. There are differences between these income-producing
alternatives and the Fund other than their yields. For example, the yield of the
Fund is not fixed and will fluctuate. In addition, your investment is not
insured and its yield is not guaranteed. Although the yields of bank money
market deposit accounts will fluctuate, principal will not fluctuate and is
insured by the Federal Deposit Insurance Corporation up to $100,000. Bank
passbook savings accounts normally offer a fixed rate of interest, and their
principal and interest are also guaranteed and insured up to $100,000. Bank
certificates of deposit offer fixed or variable rates for a set term. Principal
and fixed rates are guaranteed and insured. There is no fluctuation in principal
value. Withdrawal of these deposits before maturity will normally be subject to
a penalty.

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5
<PAGE>
FUND MANAGEMENT
-----------------------------------------------------------------

-- BOARD OF DIRECTORS --

The Fund is managed under the supervision of its Board of Directors, which has
responsibility for overseeing decisions relating to the investment policies and
objectives of the Fund. The Board of Directors of the Fund meets quarterly to
review the Fund's investment policies, performance, expenses, and other business
matters.

-- INVESTMENT ADVISOR --

The Fund has contracted with Columbia Funds Management Company (the "Advisor")
to provide investment advisory services. The Advisor, subject to general
responsibility of the Fund's Board of Directors, is responsible for the overall
management of the Fund's business affairs. The Advisor or its predecessor has
acted in this capacity since 1967, and also provides investment management
services to each of the following Columbia Funds: Columbia Common Stock Fund,
Columbia International Stock Fund, Columbia Special Fund, Columbia Growth Fund,
Columbia Small Cap Fund, Columbia Real Estate Equity Fund, Columbia Balanced
Fund, Columbia Daily Income Company, Columbia U.S. Government Securities Fund,
Columbia Municipal Bond Fund, and Columbia High Yield Fund. The Advisor is an
indirect wholly owned subsidiary of Fleet Financial Group, Inc. ("Fleet"), a
publicly owned multibank holding company registered under the Bank Holding
Company Act of 1956 with total assets of approximately $85 billion at December
31, 1997. The address of the Advisor is 1300 S.W. Sixth Avenue, P.O. Box 1350,
Portland, Oregon 97207-1350.

Under the investment advisory contract with the Fund, the Advisor provides
research, advice, and supervision with respect to investment matters and
determines what securities to purchase or sell and what portion of the Fund's
assets to invest. The Advisor provides office space and pays all executive
salaries and expenses and ordinary office expenses of the Fund (other than the
expenses of clerical services relating to the administration of the Fund).

The investment advisory fee of the Fund is accrued daily and paid monthly. The
investment advisory fee of the Fund equals the annual rate of 0.50 of 1% of
daily net assets. For the year ended December 31, 1997, the investment advisory
fee incurred by the Fund, expressed as a percentage of average net assets, was
0.50%.

The Advisor has entered into an agreement with Columbia Management Co. ("CMC"),
under which CMC provides the Advisor with statistical and other factual
information, advice regarding economic factors and trends, and advice as to
occasional transactions in specific securities. CMC, upon receipt of specific
instructions from the Advisor, also contacts brokerage firms to conduct
securities transactions for the Fund. The Advisor pays CMC a fee for these
services. The Fund's expenses are not increased by this arrangement, and no
amounts are paid by the Fund to CMC under this agreement. CMC is an indirect
wholly owned subsidiary of Fleet.

The Fund assumes the following costs and expenses: costs relating to corporate
matters; cost of services to shareholders; transfer and dividend paying agent
fees; custodian fees; legal, auditing, and accounting expenses; disinterested
directors' fees; taxes and governmental fees; interest; brokers' commissions;
transaction expenses; cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase, or redemption of its
shares; expenses of registering or qualifying its shares for sale; transfer
taxes; all expenses of preparing its registration statements, prospectuses, and
reports; and the cost of printing and delivering to shareholders its
prospectuses and reports. Information on the Fund's expenses, as a percentage of
its average net assets, is located under "Fund Expenses" and "Financial
Highlights."

The Advisor may use its broker dealer affiliates and other firms that sell Fund
shares to carry out the Fund's

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6
<PAGE>
FUND MANAGEMENT
-----------------------------------------------------------------
brokerage transactions, provided that the Fund receives brokerage services and
commission rates comparable to other broker-dealers.

Third-party administrators of tax-qualified retirement plans and other financial
institutions ("Financial Intermediaries") may establish omnibus accounts with
the Fund and provide sub-transfer agency, recordkeeping, or other services to
participants and beneficial owners in the omnibus accounts. In recognition that
these arrangements reduce or eliminate the need for the Fund's transfer agent to
provide such services, the Fund and the Advisor may pay the Financial
Intermediary a sub-transfer agent or recordkeeping fee. All Financial
Intermediaries enter into an agreement with the Fund that authorizes them to
accept purchase and redemption orders on behalf of the Fund. The Fund will be
deemed to have received a purchase or redemption order when an authorized
Financial Intermediary or its delegate accepts the order. The order will be
priced at the Fund's net asset value next computed after it is accepted by the
Financial Intermediary or its delegate.

-- COLUMBIA INVESTMENT TEAM --

The Advisor uses an investment team approach to analyze investment themes and
strategies for the Fund. Thomas L. Thomsen, President, Chief Investment Officer
and Director of the Advisor, supervises the Investment Team in establishing
these broad investment strategies and determining portfolio guidelines for the
Fund. Prior to joining the Investment Team in 1978, Mr. Thomsen was a Senior
Investment Officer for the Treasury Department of the State of Oregon
(1974-1978) and a Fixed Income Portfolio Manager for First National Bank of
Oregon (1969-1973).

Members of the Investment Team are responsible for the analysis of particular
industries or types of fixed income securities and for recommendations on
individual securities within those industries or asset categories. See "Fund
Description -- A Team Approach to Investing." Leonard A. Aplet and Jeffrey L.
Rippey share responsibility for the day-to-day investment decisions for the Fund
(both since 1989).

Mr. Aplet, a Vice President of the Advisor and a Chartered Financial Analyst,
received a Masters of Business Administration from the University of California
at Berkeley prior to joining the Investment Team in 1987.

Mr. Rippey, a Vice President of the Advisor and a Chartered Financial Analyst,
worked in the Trust Department of Rainier National Bank prior to joining the
Investment Team in 1981.

-- PERSONAL TRADING --

Members of the Investment Team and other personnel of the Fund or the Advisor
are permitted to trade securities for their own or family accounts, subject to
the rules of the Code of Ethics adopted by the Fund and the Advisor.
T HE RULES THAT GOVERN PERSONAL TRADING BY
INVESTMENT PERSONNEL ARE BASED ON THE PRINCIPLE THAT EMPLOYEES OWE A
FIDUCIARY DUTY TO CONDUCT THEIR TRADES IN A MANNER THAT IS NOT DETRIMENTAL TO
THE FUND OR ITS SHAREHOLDERS.

The Fund has adopted the recommendations of the Investment Company Institute, an
organization composed of members of the mutual fund industry, relating to
restrictions on personal trading. For more information on the Code of Ethics and
specific trading restrictions, see the Statement of Additional Information.

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7
<PAGE>
FUND MANAGEMENT
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-- OTHER SERVICE PROVIDERS --

TRANSFER AGENT. Columbia Trust Company acts as transfer agent and dividend
paying agent for the Fund. Its address is 1301 S.W. Fifth Avenue, P.O. Box 1350,
Portland, Oregon 97207-1350. The transfer agent is an indirect wholly owned
subsidiary of Fleet.

DISTRIBUTOR. Provident Distributors, Inc. ("PDI") is the principal underwriter
of the Fund's shares. PDI's address is Four Falls Corporate Center, 6th Floor,
West Conshohocken, PA 19428-2961. Columbia Financial Center Incorporated
("Columbia Financial"), an indirect wholly owned subsidiary of Fleet, has
entered into a Broker-Dealer Agreement with PDI to sell shares of the Fund. You
may invest money or redeem shares in the Fund through Columbia Financial. Its
address is 1301 S.W. Fifth Avenue, P.O. Box 1350, Portland, Oregon 97207-1350.
PDI and Columbia Financial do not charge any fees or commissions to investors or
the Fund for the sale of shares of the Fund.

CUSTODIAN. United States National Bank of Oregon, 321 S.W. Sixth Avenue,
Portland, Oregon 97208, serves as general custodian for the Fund.

-- OTHER INFORMATION --

VOTING RIGHTS. The Fund is a separate corporation. All shares of the Fund have
equal voting, redemption, dividend, and liquidation rights. All issued and
outstanding shares of the Fund are fully paid and nonassessable. Shares have no
preemptive or conversion rights. Fractional shares have the same rights
proportionately as full shares. The shares of the Fund do not have cumulative
voting rights, which means that holders of more than 50 percent of the shares of
the Fund voting for the election of directors can elect all of the directors.

SHAREHOLDER MEETINGS. The Fund is not required to hold annual shareholder
meetings. Special meetings may be called, however, as required or deemed
desirable for purposes such as electing directors, changing fundamental
investment policies, or approving an investment management agreement. The
holders of not less than 10% of the shares of the Fund may request in writing
that a special meeting be called for a specified purpose. If such a special
meeting is called to vote on the removal of one or more directors of the Fund,
shareholders of the Fund will be assisted in communications with other
shareholders of the Fund.

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This section is designed to provide you with information about opening an
account and conducting transactions directly with the Fund. In addition,
information is provided on the different types of accounts and services offered
by the Fund as well as the policies relating to those services.

If you are investing in the Fund through your employer's retirement plan, your
plan administrator or employee benefits office can provide you with information
about how to invest in the Fund.

-- HOW TO OPEN A NEW ACCOUNT --

Please complete and sign a Fund application and make your check payable to the
Fund for the minimum required investment. See "Minimum Investments." Please be
sure to include a tax identification number on your application or it may be
rejected and returned to you. The completed application and a check should be
mailed to:

Columbia Financial Center
P.O. Box 1350
Portland, Oregon 97207-1350
Attn.: New Accounts

-- HOW TO PURCHASE SHARES --

Shares of the Fund are offered at the share price, or net asset value ("NAV"),
next determined (normally 4 p.m., New York time) after an order is accepted. See
"Processing Your Order" and "Determining Your Share Price." Shares can be
purchased in the following ways:

IN PERSON: Investments can be made in person by visiting the Fund at 1301 S.W.
Fifth Avenue, Portland, Oregon between 7:30 a.m. and 5:00 p.m. on any business
day that the New York Stock Exchange (NYSE) is open for business.

BY MAIL: Send a check, with either a completed Investment Slip from the bottom
of a confirmation statement, or a letter indicating the account number and
registration, to:

Columbia Financial Center
P.O. Box 1350
Portland, Oregon 97207-1350
Attn.: Investments

BY WIRE: You may have your bank wire federal funds. Call the Fund for
instructions and notification that money is being wired:

Portland area 222-3606
Nationwide (toll-free)
1-800-547-1707

BY TELEPHONE: You may make additional investments in the Fund by telephone from
a predesignated bank account ("Televest"). The minimum investment that can be
made by Televest is $100. Shareholders must complete the appropriate sections of
the application or call the Fund to request a Televest form. An investment using
Televest is processed on the day the Fund receives your investment from your
bank, usually the business day following the day of your telephone call.

-- MINIMUM INVESTMENTS --

THE FUND HAS A MINIMUM INITIAL INVESTMENT REQUIREMENT OF $1,000. THIS MINIMUM
IS WAIVED FOR ACCOUNTS USING THE AUTOMATIC INVESTMENT PLAN. SUBSEQUENT
INVESTMENTS (OTHER THAN THROUGH THE AUTOMATIC INVESTMENT PLAN) MUST BE AT
LEAST $100 AND SHOULD ALWAYS IDENTIFY YOUR NAME, THE FUND'S NAME, AND YOUR
ACCOUNT NUMBER. MANAGEMENT OF THE FUND MAY, AT ITS SOLE DISCRETION, WAIVE THE
MINIMUM PURCHASE AND ACCOUNT SIZE REQUIREMENTS FOR CERTAIN GROUP PLANS OR
ACCOUNTS OPENED BY AGENTS OR FIDUCIARIES (SUCH AS A BANK TRUST DEPARTMENT,
INVESTMENT ADVISOR, OR SECURITIES BROKER), FOR INDIVIDUAL RETIREMENT PLANS OR
IN OTHER CIRCUMSTANCES.

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BY AUTOMATIC INVESTMENT: Investments in the Fund may be made automatically from
your bank under Columbia's Automatic Investment Plan ("AIP"). Shareholders whose
bank is a member of the National Automated Clearing House Association may choose
to have amounts of $50 or more automatically transferred from a bank checking
account to the Fund on or about the 5th or 20th, or both, of each month.
Shareholders must complete the AIP section of the application or a separate AIP
form to participate in the AIP. If you stop investing in the Fund using an AIP,
your account may be closed if you fail to reach or maintain a minimum account
balance. See "Account Privileges -- Involuntary Redemptions."

BY EXCHANGE: You may purchase shares of the Fund with the proceeds from a
redemption of shares of any other Columbia Fund with the same account number.
See "How to Exchange Shares."

THROUGH YOUR BROKER-DEALER OR BANK: You may purchase or redeem shares of the
Fund through your broker, bank, or other financial institution, which may charge
a commission or fee for assisting in handling your order and which may be
required to be registered as a broker or dealer under federal or state
securities laws.

CLOSING THE FUND TO NEW INVESTORS: The Advisor to the Fund reserves the right
at its discretion to close the Fund to new investors. A number of factors may be
considered in making such a decision, including the total assets and flow of new
investments into the Fund. If the Fund is closed, shareholders who maintain open
accounts with the Fund may make additional investments in the Fund. Once a
shareholder's account in the Fund is closed, however, additional investments may
not be possible.

-- PAYING FOR YOUR SHARES --

Payment for Fund shares is subject to the following policies:

- - Checks should be drawn on U.S. banks and made payable to the Fund

- - Never send cash or cash equivalents; the Fund will not accept responsibility
for their receipt

- - The Fund reserves the right to reject any order

- - If your order is canceled because your check did not clear the bank or the
Fund was unable to debit your predesignated bank account, you will be
responsible for any losses or fees imposed by your bank or attributable to a
loss in value of the shares purchased

- - The Fund may reject any third party checks used to make an investment or open
a new account

-- HOW TO REDEEM (SELL) SHARES --

You may redeem all or a portion of your investment in the Fund on any business
day that the NYSE is open for business. All redemptions of shares of the Fund
will be at the share price (NAV) computed after receipt of a valid redemption
request. In every case, sufficient full and fractional shares will be redeemed
to cover the amount of the redemption request.

If certificates for Fund shares have been issued to you, they must be returned
to the Fund and properly endorsed before a redemption of these shares may be
processed. Redemptions from a Columbia-sponsored IRA or retirement plan require
the completion of certain additional forms to ensure compliance with IRS
regulations. If a redemption request cannot be processed for any of these
reasons, the redemption request will be returned to you and no redemption will
be made until a valid request is submitted. Shares can be redeemed in the
following ways:

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IN WRITING: You may redeem shares of the Fund by providing a written
instruction to the Fund at the address shown below. A signature guarantee may be
required. Please see "Signature Requirements."

Columbia Financial Center
P.O. Box 1350
Portland, Oregon 97207-1350
Attn.: Redemptions

SIGNATURE REQUIREMENTS: Redemption requests must be signed by each shareholder
required to sign on the account. Accounts in the names of corporations,
fiduciaries, and institutions may require additional documentation. Please
contact the Fund if your account falls into one of these categories.

To protect you and the Fund against fraud, a SIGNATURE GUARANTEE is also
required in any of the following situations:

- - The redemption request exceeds $50,000

- - You request a check made payable to anyone other than the shareholder(s) of
record or other predesignated party

- - You request that proceeds be sent to an address other than the address of
record or an account other than a previously designated bank account

- - You would like the check mailed to an address that has changed in the last 10
days

- - You wish to transfer or change ownership of the account

The Fund reserves the right to require a signature guarantee in other
circumstances or to reject an order for certain legal reasons. You may obtain a
signature guarantee from an eligible guarantor institution such as a bank,
broker-dealer, credit union, savings and loan association, national securities
exchange or trust company. A notary public cannot provide a signature guarantee.

BY TELEPHONE: You may redeem shares by telephone unless you decline this
service by checking the appropriate box on the application. Proceeds from
telephone redemptions may be mailed only to the registered name and address on
your account or transferred to the bank designated on the application or to
another Columbia Fund with an identical account number. A maximum of $50,000 may
be redeemed by telephone and mailed to your registered address. There is no such
limitation on telephone redemptions transferred to your bank. Telephone
redemptions may be made by calling the Fund between 7:30 a.m. and 5:00 p.m.,
Pacific Time, at:

Portland area 222-3606
Nationwide (toll-free)
1-800-547-1707

You may experience some difficulty in implementing a telephone redemption during
periods of drastic economic or financial market changes. Telephone redemption
privileges may be modified or terminated at any time without notice to
shareholders. Please see "Account Privileges -- Telephone Redemptions."

BY AUTOMATIC WITHDRAWAL: If your account value in the Fund is $5,000 or more,
you may elect to receive automatic cash withdrawals of $50 or more from the Fund
in accordance with either of the following withdrawal options:

- - Income earned; you may elect to receive any dividends or capital gains
distributions on your shares, provided such dividends and distributions exceed
$25

- - Fixed amount; you may elect to receive a monthly or quarterly fixed amount of
$50 or more

Automatic withdrawals will be made within seven days after the end of the month
or quarter to which they relate.

To the extent redemptions for automatic withdrawals exceed dividends declared on
shares in your account, the number of shares in your account will be reduced. If
the value of your account falls below the Fund minimum, your account is subject
to being closed on 60 days written notice. The minimum withdrawal amount

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has been established for administrative convenience and should not be considered
as recommended for all investors. For tax reporting, a capital gain or loss may
be realized on each fixed-amount withdrawal.

An automatic withdrawal plan may be modified or terminated at any time upon
prior notice by the Fund or the shareholder.

-- PAYMENT OF REDEMPTION PROCEEDS --

Redemption proceeds are normally transmitted in the manner specified in the
redemption request on the business day following the effective date of the
redemption. Proceeds transmitted over the Automated Clearing House (ACH) system
are usually credited to a shareholder's account on the second business day
following the redemption request. Except as provided by rules of the Securities
and Exchange Commission, redemption proceeds must be transmitted to you within
seven days of the redemption date.

REDEMPTION OF RECENTLY PURCHASED SHARES. Although you may redeem shares of the
Fund that you have recently purchased by check, the Fund may hold the redemption
proceeds until payment for the purchase of such shares has cleared, which may
take up to 15 days from the date of purchase. No interest is paid on the
redemption proceeds after the redemption date and before the proceeds are sent
to you. This holding period does not apply to the redemption of shares purchased
by bank wire or with a cashiers or certified check.

There is no charge for redemption payments that are mailed. Amounts transferred
by wire must be at least $1,000, and the bank wire cost for each redemption will
be charged against your account. Your bank may also impose an incoming wire
charge.

-- HOW TO EXCHANGE SHARES --

You may use proceeds from the redemption of shares of the Fund to purchase
shares of another Columbia Fund offering shares for sale in your state of
residence. There is no charge for this exchange privilege. Before making an
exchange, you should read the portions of the Prospectus relating to the
Columbia Fund or Funds into which the shares are to be exchanged. The shares of
the Columbia Fund to be acquired will be purchased at the NAV next determined
after acceptance of the purchase order by the Fund in accordance with its policy
for accepting investments. The exchange of shares of the Fund for shares of
another Columbia Fund is treated, for federal income tax purposes, as a sale on
which you may realize a taxable gain or loss. Certain restrictions may apply to
exchange transactions. See "Account Privileges -- Exchange Privilege."

-- PROCESSING YOUR ORDER --

Orders received by the Fund will be processed the day they are received. Orders
received before the close of regular trading on the NYSE (normally 4 p.m. New
York time) will be entered at the Fund's share price computed that day. Orders
received after the close of regular trading on the NYSE will be entered at the
Fund's share price next determined. All investments will be credited to your
account in full and fractional shares computed to the third decimal place. The
Fund reserves the right to reject any order.

Shares purchased will be credited to your account on the record books of the
Fund. The Fund will not issue share certificates except on request. Certificates
for fractional shares will not be issued.

-- DETERMINING YOUR SHARE PRICE --

The share price, or NAV, of the Fund is determined by the Advisor, under
procedures approved by the Fund's Board of Directors, as of the close of regular
trading (normally 4 p.m. New York time) on each day the NYSE is open for
business and at other times determined by the Board of Directors. The NAV is
computed by dividing the value of all assets of the Fund, less its liabilities,
by the number of shares outstanding.

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Portfolio securities will be valued according to the market value obtained from
the broadest and most representative markets. These market quotations, depending
on local convention or regulation, may be the last sale price, last bid or asked
price, or the mean between the last bid and asked price as of, in each case, the
close of the applicable exchange or other designated time. Securities for which
market quotations are not readily available and other assets will be valued at
fair value as determined in good faith under procedures established by and under
the general supervision of the Board of Directors of the Fund. These procedures
may include valuing portfolio securities by reference to other securities with
comparable ratings, interest rates, and maturities and by using pricing
services. Fair value for debt securities for which market quotations are not
readily available and with remaining maturities of less than 60 days is based on
cost adjusted for amortization of discount or premium and accrued interest
(unless the Board of Directors believes unusual circumstances indicate another
method of determining fair value should be used).

-- INVESTOR INQUIRIES --

If you have any questions about this Prospectus, the Fund or your account,
please call the Fund at:

Portland area 222-3606
Nationwide (toll-free) 1-800-547-1707

or write or visit the Fund at:

Columbia Financial Center
1301 S.W. Fifth Avenue
Portland, Oregon 97201
www.columbiafunds.com

-- ACCOUNT PRIVILEGES --

EXCHANGE PRIVILEGE. Telephone exchange privileges are available to you
automatically unless you decline this service by checking the appropriate box on
the application. Telephone exchanges may be made from the Fund into another
Columbia Fund only within the same account number. To prevent the abuse of the
exchange privilege to the disadvantage of other shareholders, the Fund reserves
the right to terminate the exchange privilege of any shareholder who makes more
than four exchanges out of the Fund during the calendar year. The exchange
privilege may be modified or terminated at any time, and the Fund may
discontinue offering its shares generally or in any particular state without
notice to shareholders.

TELEPHONE REDEMPTIONS. The Fund does not accept responsibility for the
authenticity of telephone instructions, and, accordingly, shareholders who have
approved telephone redemptions assume the risk of any losses due to fraudulent
telephone instructions that the Fund reasonably believes to be genuine. The Fund
employs certain procedures to determine whether telephone instructions are
genuine, including requesting personal shareholder information prior to acting
on telephone instructions, providing written confirmations of each telephone
transaction, and recording all telephone instructions. The Fund may be liable
for losses due to fraudulent telephone instructions if it fails to follow these
procedures. For your protection, the ability to redeem by telephone and have the
proceeds mailed to your registered address may be suspended for up to 30 days
following an account address change.

INVOLUNTARY REDEMPTIONS. Upon 60 days prior written notice, the Fund may redeem
all of your shares without your consent if:

- - Your account balance falls below $500. However, if you wish to maintain the
account, you may during the 60-day notice period either: (i) add to your
account to bring it to the required minimum, or (ii) establish an Automatic
Investment Plan with a minimum monthly investment of $50.

- - You are a U.S. shareholder and fail to provide the Fund with a certified
taxpayer identification number.

- - You are a foreign shareholder and fail to provide the Fund with a current Form
W-8, "Certificate of Foreign Status."

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The Fund also reserves the right to close a shareholder's account if the
shareholder's actions are deemed to be detrimental to the Fund or its
shareholders. If the Fund redeems shares, payment will be made promptly at the
current net asset value. A redemption may result in a realized capital gain or
loss.

TAXPAYER IDENTIFICATION NUMBER. Federal law requires the Fund to withhold 31%
of dividends and redemption proceeds paid to certain shareholders who have not
complied with certain tax regulations. The Fund will generally not accept an
investment to establish a new account that does not comply with these
regulations. You will be asked to certify on your account application that the
social security number or tax identification number provided is correct and that
you are not subject to 31% backup withholding for previous underreporting of
income to the Internal Revenue Service.

SHAREHOLDER STATEMENTS AND REPORTS. The Fund will send a separate confirmation
of each nonroutine transaction that affects your account balance or
registration. Routine, pre-authorized transactions are confirmed in the monthly
or quarterly account statements provided to shareholders. The types of
pre-authorized transactions that will be confirmed on your account statement
include:

- - Periodic share purchases through an Automatic Investment Plan

- - Reinvestment of dividends and capital gains distributions

- - Automatic withdrawals or exchanges between the Fund and another Columbia Fund

The Fund will mail to its shareholders on or before January 31 of each year a
summary of the federal
income tax status of the Fund's distributions for the preceding year.

Financial reports on the Fund, which include a listing of the Fund's portfolio
securities, are mailed semiannually to shareholders. To reduce Fund expenses,
only one such report and the annually updated prospectus will be mailed to
accounts with the same Tax Identification Number. In addition, shareholders or
multiple accounts at the same mailing address can eliminate duplicate enclosures
for statements mailed to that address by filing a SAVMAIL form with the Fund.
For a SAVMAIL form or to receive additional copies of any shareholder report or
prospectus, please call an Investor Services Representative at 1-800-547-1707.

-- IRAS AND RETIREMENT PLANS --

Investors may invest in the Fund through Columbia's Traditional, Roth,
Education, SIMPLE, or SEP IRA programs, or Columbia's Prototype Money Purchase
Pension and Profit Sharing Plan. Please contact the Fund for further information
and application forms. Investments may also be made in the Fund in connection
with established retirement plans.

-- PRIVATE MANAGEMENT ACCOUNTS --

Columbia Trust Company offers Private Management Accounts that provide
investment management tailored to the specific investment objectives of
individuals, institutions, trusts, and estates, using the Fund and other
Columbia Funds as investment vehicles. The annual fee for this service is:

- - .75% on the first $500,000

- - .50% on the next $500,000

- - .25% on assets over $1 million

The minimum fee for this service is $1,000 and the maximum fee is $15,000. These
fees are in addition to investment advisory fees paid by the Fund and other
Columbia Funds to the Advisor. For additional information, please call Columbia
Trust Company at 503-222-3600.

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-- DISTRIBUTIONS --

The Fund is required to distribute to shareholders each year all of its net
investment income and any net realized capital gains. Net investment income
(income from dividends, interest and any net realized short-term capital gains)
is distributed by the Fund as a dividend. Any net long-term capital gains
realized on the sale of portfolio securities by the Fund are distributed as
capital gains distributions.

Dividends are declared daily and paid monthly, while capital gains distributions
are declared and paid in December. If you redeem all of your shares of the Fund,
the undistributed dividends on the redeemed shares will be paid at that time. If
you elect to receive dividends and/or capital gains distributions in cash and
such dividend or capital gains distribution is returned to the Fund as
undeliverable to your address of record, your distribution option shall be
converted to having all dividends and capital gains distributions reinvested in
additional shares. No interest will accrue on any dividend or capital gain
distributions returned to the Fund as undeliverable.

-- DISTRIBUTION OPTIONS --

Unless you select a different option, all dividends and capital gains
distributions are reinvested in additional shares at a price equal to the NAV at
the close of business on the reinvestment date. You may elect at any time, by
notifying the Fund, to receive your distributions in cash or to reinvest them in
another Columbia Fund.

-- TAXATION OF DISTRIBUTIONS --

The tax character of distributions from the Fund is the same whether they are
paid in cash or reinvested in additional shares. Dividends declared in October,
November, or December to shareholders of record as of a date in one of those
months and paid the following January will be reportable as if received by the
shareholders on December 31. This section provides only a brief summary of the
major tax considerations affecting the Fund and its shareholders and is not a
complete or detailed explanation of tax matters. Investors should consult their
tax advisors concerning the tax consequences of investing in the Fund.

FEDERAL INCOME TAXES. Distributions from the Fund of net investment income or
net realized short-term capital gains are generally taxable to shareholders as
ordinary income. Distributions designated as the excess of net long-term capital
gain over net short-term capital loss are taxable to shareholders at the
applicable long-term capital gains rate, regardless of the length of time the
shareholder held the Fund's shares. Information on the tax status of
distributions by the Fund is mailed to shareholders each year on or before
January 31.

STATE INCOME TAXES. In addition to federal taxes, shareholders of the Fund may
be subject to state and local taxes on distributions from the Fund. Shareholders
should consult with their tax advisors concerning state and local tax
consequences of investing in the Fund.

"BUYING A DIVIDEND." If you buy shares of the Fund before it pays a
distribution, you will pay the full price of the shares and receive a portion of
the purchase price back in the form of a taxable distribution. The Fund's NAV
and your cost basis in the purchased shares is reduced by the amount of the
distribution. The impact of this tax result is most significant when shares are
purchased shortly before an annual distribution of capital gains or other
earnings.

-- TAXATION OF THE FUND --

The Fund intends to qualify as a regulated investment company under the Internal
Revenue Code. By qualifying and meeting certain other requirements, the Fund
generally will not be subject to federal income taxes to the extent it
distributes to its shareholders its net investment income and realized capital
gains. The Fund intends to make sufficient distributions to relieve itself from
liability for federal income taxes.

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-- REPURCHASE AGREEMENTS --

The Fund may use repurchase agreements to invest cash, generally on a short-term
basis. Repurchase agreements involve the purchase of a security by the Fund and
a simultaneous agreement by the seller (generally a bank or dealer) to
repurchase the security from the Fund at a specified date or upon demand. These
securities involve the risk that the seller will fail to repurchase the
security, as agreed. In that case, the Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter delays and incur
costs in liquidating the security. The Fund will enter into repurchase
agreements only with those banks or securities dealers who are deemed
creditworthy based on criteria adopted by its Board of Directors. There is no
limit on the portion of the Fund's assets that may be invested in repurchase
agreements with maturities of seven days or less.

-- ILLIQUID SECURITIES --

No illiquid securities will be acquired if, upon purchase, more than 5% of the
value of the Fund's net assets would consist of these securities. "Illiquid
securities" are securities that may not be sold or disposed of in the ordinary
course of business within seven days at approximately the price used to
determine the Fund's net asset value.

Under current interpretations of the Staff of the Securities and Exchange
Commission, the following securities in which the Fund may invest will be
considered illiquid:

- - repurchase agreements maturing in more than seven days

- - restricted securities (securities whose public resale is subject to legal
restrictions)

- - options, with respect to specific securities, not traded on a national
securities exchange that are not readily marketable

- - any other securities in which the Fund may invest that are not readily
marketable

-- TEMPORARY INVESTMENTS --

When, as a result of market conditions, the Fund determines that a temporary
defensive position is warranted to help preserve capital, the Fund may without
limit temporarily retain cash or invest in prime commercial paper, high-grade
debt securities, securities of the U.S. Government and its agencies and
instrumentalities, and high-quality money market instruments, including
repurchase agreements. When the Fund assumes a temporary defensive position, it
is not invested in securities designed to achieve its stated investment
objective.

-- WHEN-ISSUED SECURITIES --

When issued, delayed delivery and forward transactions generally involve the
purchase of a security with payment and delivery at sometime in the future
(i.e., beyond normal settlement). The Fund does not earn interest on such
securities until settlement and bears the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner. To
the extent the Fund engages in when-issued and delayed-delivery transactions, it
will do so to acquire portfolio securities consistent with its investment
objectives and policies and not for investment leverage. The Fund may use spot
and forward foreign currency exchange transactions to reduce the risk associated
with fluctuations in exchange rates when securities are purchased or sold on a
when-issued or delayed-delivery basis.

-- DOLLAR ROLL TRANSACTIONS --

The Fund may enter into dollar roll transactions with selected banks and
broker-dealers. Dollar roll transactions consist of the sale by the Fund of
mortgage-backed securities, together with a commitment to purchase similar, but
not identical, securities at a future date, at the same price. In addition, the
Fund is paid a fee as consideration for entering into the commitment to
purchase. Dollar rolls may be renewed after cash

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settlement and initially involve only a firm commitment agreement by the Fund to
buy a security. The Fund will not use such transactions for leveraging purposes,
and accordingly, if required by the Securities and Exchange Commission or any
applicable law, will segregate cash, U.S. Government securities, or other high
grade debt obligations in an amount sufficient to meet their purchase
obligations under these transactions.

-- LOAN TRANSACTIONS --

The Fund may lend its portfolio securities to qualified institutional investors
for the short-term purpose of realizing additional income. The aggregate value
of all securities loaned may not exceed 33-1/3% of the Fund's total assets, and
such loans will be collateralized by cash, cash equivalents, or an irrevocable
letter of credit in accordance with regulations adopted by the Securities and
Exchange Commission. While there may be delays in recovery of loaned securities
or even a loss of rights in collateral supplied if the borrower fails
financially, loans will be made only to firms deemed by the Fund's management to
have a satisfactory credit rating. For more information on loan transactions,
see the Statement of Additional Information.

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-- BOND RATINGS --

Moody's bond ratings:

AAA -- Best quality; smallest degree of investment risk.

AA -- High quality by all standards; Aa and Aaa are known as high-grade bonds.

A -- Many favorable investment attributes; considered upper medium-grade
obligations.

BAA -- Medium-grade obligations; neither highly protected nor poorly secured.
Interest and principal appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time.

BA -- Speculative elements; future payments of interest and principal cannot be
considered well assured. Protection of interest and principal payments may be
very moderate and not well safeguarded during both good and bad times over the
future.

B -- Generally lacking characteristics of a desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.

Standard & Poor's bond ratings:

AAA -- Highest rating; extremely strong capacity to pay principal and interest.

AA -- Also high-quality with a very strong capacity to pay principal and
interest; differ from AAA issues only by a small degree.

A -- Strong capacity to pay principal and interest; somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions.

BBB -- Adequate capacity to pay principal and interest; normally exhibit
adequate protection parameters, but adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay principal
and interest than for higher-rated bonds.

Bonds rated AAA, AA, A, and BBB are considered investment-grade bonds.

BB -- Less near-term vulnerability to default than other speculative grade debt;
face major ongoing uncertainties or exposure to adverse business, financial, or
economic conditions that could lead to inadequate capacity to meet timely
interest and principal payments.

B -- Greater vulnerability to default but presently have the capacity to meet
interest payments and principal repayments; adverse business, financial, or
economic conditions would likely impair capacity or willingness to pay interest
and repay principal.

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1997 ANNUAL REPORT
---------------------------------------------------------
An Overview of the Markets

A LOOK BACK AT 1997

The year was ushered in with favorable economic conditions. While the GDP
exceeded expectations in the first quarter, it was not accompanied by higher
inflation. The Fed, nevertheless, responded to the quickly growing economy by
raising short-term interest rates .25% at the end of March. This action set the
tone for a dramatic increase in stock market volatility in the second quarter
that continued throughout much of the year. Immediately after the rate hike,
both the S&P 500 and NASDAQ gave up most of their year-to-date gains, only to
have investors bid prices right back up. By the end of the second quarter, the
S&P 500 had gained 20.59%, led by a narrow group of large company stocks.

GROSS DOMESTIC PRODUCT
VS. INFLATION IN 1997

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
GROSS DOMESTIC PRODUST VS. INFLATION IN
1997
GDP INFLATION
(SEASONALLY ADJUSTED
ANNUAL RATE)
<S> <C> <C>
1QTR 4.90%
2QTR 3.30%
3QTR 3.10%
4QTR 4.30%
</TABLE>

In the third quarter, the market began to broaden as investors gained confidence
about continued moderate economic growth and low inflation. Investors moved away
from large capitalization stocks to seek values in smaller cap companies and
issues overseas. Meanwhile, continuing earnings growth, expanding profit
margins, subdued inflation and low interest rates all suggested that the stock
market would prolong its historic bull run for a 13th consecutive year. Although
it appeared that the economy was approaching full utilization, there were no
signs of excess or imbalance that suggested the Fed might tighten rates in the
near term.

30-YEAR TREASURY YIELDS
OVER THE LAST SIX YEARS

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

In the fourth quarter, currency devaluations in Southeast Asia rocked investment
communities worldwide and market volatility picked up dramatically in late
October. The financial crisis in Asian markets was aggravated by overlending and
the large amount of debt held by many private companies. At the same time,
Japan, which represents a significant percentage of the world markets, showed
renewed signs of a slowdown and this created little relief for international
investors.

As a result of this turbulence, a flight to safety prompted investors to migrate
back to more liquid, large capitalization stocks and to U.S. Treasuries, pushing
the yield of the long bond below 6% for the first time in almost two years.

MARKET OUTLOOK

The U.S. equity markets continue to trade at valuation levels that are
historically high, but many positive factors support these valuations. The Fed
remains vigilant, poised to tighten if economic growth or inflation heat up, but
ready to provide liquidity if the economy slows or international concerns
intensify. The current scenario -- expectations for modest increases in
corporate profits, low inflation and declining interest rates -- is generally
positive for the stock market.

19
<PAGE>
AN OVERVIEW OF THE MARKETS
---------------------------------------------------------------------------

At this point, however, we believe that some caution is warranted. Increased
risk in the equity markets is evidenced by continued higher volatility and a
preference for greater liquidity. Concerns are growing that 1998 earnings may
not rise sufficiently to justify current prices. The potential for much slower
growth in emerging countries (particularly in Southeast Asia and Latin America)
is dimming earnings prospects for many multinational companies.

INVESTMENT STRATEGY

We have positioned our equity portfolios to favor domestic growth over cyclical
issues. Areas that merit particular emphasis, we believe, include retail issues,
health care and consumer staple stocks. Continuing strength in consumer
confidence and the low level of inflation support an overweighting in these
issues in spite of somewhat high valuations. We have increased utility stock
holdings to take advantage of their stable relative earnings and high dividend
yields. Energy issues have been deemphasized because of slowing world growth and
falling commodity prices.

CONSUMER CONFIDENCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

REIT valuations remain attractive relative to the broader market, and
expectations for double-digit total returns are not unreasonable, with lower
volatility than the S&P.

As we look to the year ahead, we continue to believe that economic indicators
support prospects for a healthy economy. However, peaking profit margins and
slowing world growth should, we believe, lead to moderating corporate earnings
growth. We anticipate the recent high level of market volatility to continue, so
we remain focused on companies that are expected to maintain competitive
strength in their industries and deliver dependable earnings growth.

So that you may evaluate how the Fund performed given this economic and
financial market backdrop, the following page contains a discussion of the
Fund's investment activity during 1997, along with a graph illustrating the
growth of $10,000 over ten years. The Fund compares its performance to a
relevant benchmark. Unlike the Fund, however, this benchmark index is not
actively managed and has no operating expenses, portfolio transaction costs or
cash flows.

We hope you find this information useful, and we look forward to serving your
investment needs in the years to come.

THE INVESTMENT TEAM
COLUMBIA FUNDS MANAGEMENT COMPANY
FEBRUARY 1998

20
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------

- ---- ----

-- COLUMBIA FIXED INCOME SECURITIES FUND --
-------------------------------------------

For 1997, Columbia Fixed Income Securities Fund posted a total return of 9.56%.
Although bonds suffered early in the year under pressures of a rapidly growing
economy and rising interest rates, the bond market closed the year with a
powerful rally triggered by market turmoil in Southeast Asia.

After a volatile first quarter, bonds responded positively in the second and
third quarters to a moderately growing economy with little sign of inflation. As
worldwide stock market volatility intensified in the fourth quarter, investors
sought refuge in fixed income. To take advantage of the changing dynamics in
this arena, we initiated several shifts in asset allocation. For instance, the
yield differential between mortgages and Treasuries fluctuated periodically
throughout the year, providing us with opportunities to increase mortgage
weightings when prices were low, and decrease mortgage weightings (take profits)
when prices crept up. As interest rates dropped in the fourth quarter, we
reduced the average coupon (fixed interest rate paid on bonds) of mortgage
securities in order to stave off any price deterioration resulting from
homeowners refinancing their mortgages (prepayment risk).

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
<S> <C>
Collateralized Mortgage Obligations 47.5%
Corporate Bonds 25.9%
Treasury/Agency Obligations 14.2%
Mortgage Pass-Throughs 4.3%
Asset Backed Securities 3.0%
Cash 5.1%
as of December 31, 1997
</TABLE>

The corporate bond sector became attractive when their prices declined relative
to Treasuries. We then increased the corporate bond weighting by approximately
3% in the fourth quarter, mostly in the finance sector. Short-term asset-backed
securities, such as home equity loans, performed quite well in the fourth
quarter, and we took profits in this sector.

The Fund invests in a broad range of fixed income securities. At least 95% of
assets are invested in debt securities rated Baa or higher, although the vast
majority is usually invested in securities rated A or higher. The average target
maturity and duration of the Fund are approximately 5.5 years and 4.6 years,
respectively, which is slightly longer than the Fund's benchmark, the Lehman
Aggregate Bond Index.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO QUALITY
<S> <C>
Treasury/Agency Obligations 58.8%
Aaa 14.9%
Aa 3.3%
A 9.2%
Baa 10.8%
Other 3.0%
as of December 31, 1997
as rated by Moody's Investor Services,
Inc.
</TABLE>

GROWTH OF $10,000 OVER 10 YEARS

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
COLUMBIA CONSUMER
FIXED INCOME LEHMAN PRICE INDEX
SECURITIES FUND AGGREGATE (INFLATION)
12/31/87 $10,000 $10,000 $10,000
12/31/88 $10,772 $10,789 $10,407
<S> <C> <C> <C>
12/31/89 $12,318 $12,357 $10,922
12/31/90 $13,340 $13,464 $11,630
12/31/91 $15,587 $15,618 $11,960
12/31/92 $16,832 $16,774 $12,324
12/31/93 $18,594 $18,409 $12,648
12/31/94 $17,970 $17,872 $12,981
12/31/95 $21,368 $21,173 $13,323
12/31/96 $22,088 $21,941 $13,770
12/31/97 $24,196 $24,059 $13,957
Average Annual Total Returns
As of December 31, 1997
CFIS Lehman Aggregate
1 Year 9.56% 9.65%
5 Years 7.53% 7.48%
10 Years 9.24% 9.18%
Past Performance is not predictive of future
performance.
</TABLE>

21
<PAGE>
SCHEDULE OF INVESTMENTS
-----------------------------------------------------------------

[LOGO]
- ---------------- ----------------

-- COLUMBIA FIXED INCOME SECURITIES FUND, INC. --
-------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
December 31, 1997 AMOUNT VALUE(1)
------------- --------------
<S> <C> <C>
U.S. GOVERNMENT, FEDERAL AGENCY OBLIGATIONS (55.8%)
U.S. TREASURY BONDS & NOTES (12.8%)
U.S. Treasury Bonds
8.875% 08/15/2017................................................................... $ 14,630,000 $ 19,414,464
8.125% 08/15/2019................................................................... 5,000,000 6,257,815
U.S. Treasury Notes
6.125% 08/31/1998................................................................... 23,054,000 23,129,640
--------------
48,801,919
--------------
OTHER GOVERNMENT AGENCY OBLIGATIONS (1.4%)
Farm Credit Systems Financial Assistance Corp. Series A
9.375% 07/21/2003................................................................... 4,660,000 5,408,489
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) (2.9%)
7.500% 10/15/2026 - 10/15/2027...................................................... 10,640,503 10,899,812
--------------
FEDERAL HOUSING ADMINISTRATION (FHA) (1.4%)
FHA Insured Project Pool #2022
7.430% 12/01/2020................................................................... 1,720,239 1,729,649
FHA Insured Project Pool #1984-D
9.680% 02/01/2024................................................................... 268,635 280,807
FHA Insured Project Pool #051-11078
8.350% 04/01/2030................................................................... 2,217,205 2,323,077
FHA Insured Project Pool #092-35499
8.450% 11/15/2031................................................................... 789,545 829,519
--------------
5,163,052
--------------
AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS (37.3%)
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1558 Cl. C
6.500% 07/15/2023................................................................... 2,084,000 2,058,835
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1971 Cl. A
7.500% 07/15/2027................................................................... 4,041,000 4,194,560
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1971 Cl. E
7.500% 01/20/2024................................................................... 16,646,000 17,103,349
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1995 Cl. A
7.500% 08/20/2027................................................................... 1,750,000 1,813,372
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1995 Cl. D
7.500% 08/20/2012................................................................... 9,155,000 9,322,569
FHLMC GNMA Multiclass Mtg. Partn. Ctfs. Gtd. Series 40 Cl. N
6.500% 05/17/2021................................................................... 4,700,000 4,608,044

<CAPTION>
PRINCIPAL
AMOUNT VALUE(1)
------------- --------------
<S> <C> <C>
<S> <C> <C>
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1763 Cl. H
8.250% 07/15/2023................................................................... $ 692,000 $ 741,370
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1910 Cl. D
8.000% 11/15/2024................................................................... 1,850,000 1,945,057
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1920 Cl. N
7.000% 02/15/2026................................................................... 3,110,000 3,110,000
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1941 Cl. C
6.750% 06/15/2022................................................................... 2,980,000 2,980,924
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1933 Cl. AE
7.000% 03/15/2025................................................................... 5,156,300 5,198,820
FHLMC Multiclass Mtg. Partn. Ctfs. Gtd.
Series 1933 Cl. C
7.000% 03/15/2025................................................................... 3,316,818 3,346,782
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1991-94 Cl. C
0.000% 01/25/1999................................................................... 1,654,184 1,609,719
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-G1 Cl. B
7.500% 06/20/2024................................................................... 7,760,000 8,026,711
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-G4 Cl. C
7.500% 06/17/2024................................................................... 7,223,000 7,438,620
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-G5 Cl. VD
7.250% 04/17/2010................................................................... 3,600,000 3,737,611
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-24 Cl. YL
7.000% 04/18/2027................................................................... 3,166,000 3,199,890
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-38 Cl. G
7.500% 05/17/2026................................................................... 1,843,511 1,884,476
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-38 Cl. H
7.500% 05/17/2027................................................................... 1,766,000 1,842,838
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-38 Cl. L
7.500% 02/17/2012................................................................... 4,100,000 4,132,816
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-39 Cl. B
7.500% 05/17/2027................................................................... 2,673,000 2,801,594
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-43 Cl. B
7.500% 08/18/2025................................................................... 9,700,000 9,991,569
</TABLE>

22
<PAGE>
SCHEDULE OF INVESTMENTS
-----------------------------------------------------------------

[LOGO]
- ---------------- ----------------

-- COLUMBIA FIXED INCOME SECURITIES FUND, INC. --
-------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE(1)
------------- --------------
<S> <C> <C>
</TABLE>

U.S. GOVERNMENT, FEDERAL AGENCY OBLIGATIONS (CONTINUED)
<TABLE>
<S> <C> <C>
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-44 Cl. PG
7.000% 02/18/2024................................................................... $ 3,920,000 $ 4,024,673
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-63 Cl. PH
7.000% 07/18/2026................................................................... 7,230,000 7,412,105
FNMA Gtd. REMIC Pass Thru Ctf. REMIC Tr. 1997-74 Cl. D
7.500% 09/20/2023................................................................... 10,600,000 10,890,222
GNMA Gtd. REMIC Pass Thru Secs. REMIC Tr. 1996-23 Cl. C
7.500% 12/20/2022................................................................... 3,607,000 3,721,955
GNMA Gtd. REMIC Pass Thru Secs. REMIC Tr. 1997-11 Cl. M
8.000% 05/16/2024................................................................... 1,190,000 1,248,105
GNMA Gtd. REMIC Pass Thru Secs. REMIC Tr. 1997-2 Cl. K
7.500% 01/20/2024................................................................... 2,410,000 2,489,819
GNMA Gtd. REMIC Pass Thru Secs. REMIC Tr. 1997-4 Cl. M
7.500% 02/16/2012................................................................... 4,357,000 4,468,626
GNMA Gtd. REMIC Pass Thru Secs. REMIC Tr. 1997-4 Cl. N
7.500% 02/16/2027................................................................... 4,165,468 4,313,842
GNMA Gtd. REMIC Pass Thru Secs. REMIC Tr. 1998-1 Cl. A
7.000% 01/15/2028................................................................... 1,890,000 1,878,773
Puerto Rico Housing Finance Corp.
Series A Cl. 4
9.000% 07/20/2017................................................................... 864,542 864,542
--------------
142,402,188
--------------
Total U.S. Government,
Federal Agency Obligations
(Cost $206,029,797) ................................................................. 212,675,460
--------------
OTHER SECURITIZED LOANS (13.2%)
COLLATERALIZED MORTGAGE OBLIGATIONS (10.2%)
BA Mortgage Securities, Inc.
Series 1997-2 Cl. 1A-3
7.400% 10/25/2027................................................................... 2,913,413 2,938,518
Bear Stearns Mortgage Securities, Inc.
Series 1996-2 Cl. A1
6.758% 01/25/2025................................................................... 4,298,842 4,283,979
GE Capital Mortgage Services, Inc.
Series 1997-8 Cl. A6
7.250% 10/25/2027................................................................... 2,480,000 2,539,056
<CAPTION>
PRINCIPAL
AMOUNT VALUE(1)
------------- --------------
<S> <C> <C>
<S> <C> <C>
GE Capital Mortgage Services, Inc.
Series 1997-8 Cl. A7
7.250% 10/25/2027................................................................... $ 6,232,714 $ 6,273,296
Mortgage Obligation Structured Trust (144A)
Series 1993-1 Cl. B1
10.668% 10/25/2018................................................................... 2,837,841 2,970,425
Norwest Asset Securities Corp.
Series 1997-16 Cl. A2
6.750% 10/25/2027................................................................... 13,470,000 13,369,234
PNC Mortgage Securities Corp.
Series 1997-4 Cl. 2PP2
7.500% 07/25/2027................................................................... 2,895,000 2,945,786
Residential Funding Morgage Securities, Inc.
Series 1993-S45 Cl. A-10
8.000% 12/25/2023................................................................... 1,250,000 1,286,756
Structured Asset Securities Corp.
Series 1997-4 Cl. 2A2
7.000% 12/25/2027................................................................... 2,500,000 2,525,440
--------------
39,132,490
--------------
ASSET BACKED SECURITIES (3.0%)
Empire Funding Home Loan Owner Trust
Series 1997-1 Cl. A-2
7.060% 03/25/2023................................................................... 2,890,000 2,903,901
Empire Funding Home Loan Owner Trust
Series 1997-2 Cl. A-1
8.850% 09/25/2023................................................................... 1,896,251 1,895,984
Saxon Asset Securities Co.
Series 1996-1 Cl. A2
8.060% 09/25/2027................................................................... 6,265,000 6,546,925
--------------
11,346,810
--------------
Total Other Securitized Loans
(Cost $49,626,860) .................................................................. 50,479,300
--------------
CORPORATE BONDS (25.9%)
INDUSTRIAL (11.0%)
Ethan Allen, Inc.
8.750% 03/15/2001................................................................... 1,975,000 2,019,437
Federal Express Corp. Pass Thru Trust
Series 1997-1C
7.650% 01/15/2014................................................................... 2,300,000 2,457,711
Foster Wheeler Corp.
6.750% 11/15/2005................................................................... 2,925,000 2,943,486
Georgia-Pacific Corp.
9.950% 06/15/2002................................................................... 3,250,000 3,678,187
Gulf Canada Resources Ltd.
9.625% 07/01/2005................................................................... 1,250,000 1,359,375
</TABLE>

23
<PAGE>
SCHEDULE OF INVESTMENTS
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[LOGO]
- ---------------- ----------------

-- COLUMBIA FIXED INCOME SECURITIES FUND, INC. --
-------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE(1)
------------- --------------
<S> <C> <C>
</TABLE>

CORPORATE BONDS (CONTINUED)
<TABLE>
<S> <C> <C>
Heritage Media Corp.
8.750% 02/15/2006................................................................... $ 1,250,000 $ 1,329,687
Hilton Hotels Corp.
7.375% 06/01/2002................................................................... 4,000,000 4,106,880
Hollinger International Publishing, Inc.
8.625% 03/15/2005................................................................... 300,000 310,500
ICI Wilmington, Inc.
7.050% 09/15/2007................................................................... 3,805,000 3,949,476
Johns Manville International Grp.
10.875% 12/15/2004................................................................... 1,500,000 1,665,000
Lenfest Communications, Inc.
8.375% 11/01/2005................................................................... 1,350,000 1,387,125
Marriott International, Inc.
6.750% 12/01/2009................................................................... 2,750,000 2,807,613
Nabisco, Inc.
6.700% 06/15/2002................................................................... 3,750,000 3,798,150
Precision Castparts Corp.
6.750% 12/15/2007................................................................... 1,650,000 1,653,482
Sears, Roebuck Acceptance Corp.
6.400% 10/11/2000................................................................... 4,525,000 4,552,060
Tenet Healthcare Corp.
8.625% 12/01/2003................................................................... 750,000 781,875
Time Warner Entertainment Co. L.P.
8.375% 03/15/2023................................................................... 2,600,000 2,967,068
--------------
41,767,112
--------------
FINANCIAL (13.4%)
Aetna Services, Inc.
7.625% 08/15/2026................................................................... 5,000,000 5,261,850
American Health Properties, Inc.
7.500% 01/15/2007................................................................... 650,000 677,469
Bankamerica Corp.
5.938% 02/20/2002................................................................... 3,500,000 3,488,975
Deutsche Bank Financial, Inc.
7.500% 04/25/2009................................................................... 2,700,000 2,908,116
Equitable Cos., Inc.
9.000% 12/15/2004................................................................... 855,000 969,630
First Bank System, Inc.
6.188% 11/26/2010................................................................... 7,230,000 7,222,770
Ford Motor Credit Co.
6.500% 02/28/2002................................................................... 4,135,000 4,175,978
General Electric Capital Corp.
Medium Term Notes
6.350% 09/15/2001................................................................... 3,200,000 3,252,224
Goldman Sachs Group L.P. (144A)
Medium Term Notes
7.200% 03/01/2007................................................................... 3,700,000 3,839,046
<CAPTION>
PRINCIPAL
AMOUNT VALUE(1)
------------- --------------
<S> <C> <C>
<S> <C> <C>
Health Care Properties, Inc.
6.500% 02/15/2006................................................................... $ 6,400,000 $ 6,362,304
Liberty Property L.P.
7.100% 08/15/2004................................................................... 3,725,000 3,810,526
Merrill Lynch & Co., Inc.
Medium Term Notes
6.450% 06/20/2000................................................................... 3,650,000 3,680,441
Swiss Bank Corp. N.Y.
7.250% 09/01/2006................................................................... 1,825,000 1,923,714
USL Capital Corp.
6.500% 12/01/2003................................................................... 3,350,000 3,358,475
--------------
50,931,518
--------------
UTILITY (1.5%)
California Energy Co., Inc.
9.875% 06/30/2003................................................................... 1,000,000 1,084,570
Northern Indiana Public Service Co.
Medium Term Notes
6.900% 06/01/2000................................................................... 1,250,000 1,269,538
6.750% 06/01/2000................................................................... 2,500,000 2,530,800
Worldcom, Inc.
8.875% 01/15/2006................................................................... 900,000 968,328
--------------
5,853,236
--------------
Total Corporate Bonds
(Cost $96,450,075) .................................................................. 98,551,866
--------------
Total investments, excluding temporary cash investment
(Cost $352,106,732) ................................................................. 361,706,626
--------------
REPURCHASE AGREEMENT (4.4%)
Goldman Sachs Corp.
6.337% dated 12/31/1997,
due 01/02/1998 in the
amount of $16,762,082
Collateralized by U.S. Treasury Notes
5.875% due 08/31/1999
(Cost $16,756,264)................................................................... 16,756,264 16,756,264
--------------
TOTAL INVESTMENTS (99.3%)
(Cost $368,862,996)...................................................................... 378,462,890
RECEIVABLES LESS LIABILITIES (0.7%)....................................................... 2,869,864
--------------
NET ASSETS (100.0%)....................................................................... $ 381,332,754
--------------
--------------
</TABLE>

(1) See Note 1 of Notes to Financial Statements.

The accompanying notes are an integral part
of the financial statements.

24
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------------------------------------

<TABLE>
<CAPTION>
COLUMBIA FIXED
INCOME SECURITIES
December 31, 1997 FUND, INC.
-----------------
<S> <C>
ASSETS:
Investments at identified cost............................ $352,106,732
- ------------------------------------------------------------ -----------------
Investments at value (Notes 1 and 2)...................... $361,706,626
Temporary cash investments, at cost (Note 1).............. 16,756,264
Receivable for:
Interest................................................ 4,146,142
Investments sold........................................ 1,734,615
Capital stock sold...................................... 587,519
-----------------
Total assets.............................................. 384,931,166
-----------------
LIABILITIES:
Payable for:
Capital stock redeemed.................................. 258,822
Dividends and distributions............................. 678,152
Investments purchased................................... 2,065,838
Investment management fee (Note 4)...................... 161,421
Accrued expenses........................................ 434,179
-----------------
Total liabilities......................................... 3,598,412
-----------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES................. $381,332,754
-----------------
-----------------
Net assets consist of:
Unrealized appreciation on investments.................... $ 9,599,894
Undistributed net realized gain from investments.......... 8,080
Capital shares (Note 3)................................... 284,274
Capital paid in (Note 3).................................. 371,440,506
-----------------
$381,332,754
-----------------
-----------------
SHARES OF CAPITAL STOCK OUTSTANDING (NOTE 3)................ 28,427,440
-----------------
-----------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(1)........................................................ $ 13.41
-----------------
-----------------
</TABLE>

(1) The net asset value per share is computed by dividing net assets applicable
to outstanding shares by shares of capital stock outstanding.

The accompanying notes are an integral part of the financial statements.

25
<PAGE>
STATEMENT OF OPERATIONS
-----------------------------------------------------------------

<TABLE>
<CAPTION>
COLUMBIA FIXED
INCOME SECURITIES
Year Ended December 31, 1997 FUND, INC.
-----------------
<S> <C>
INVESTMENT INCOME:
Income:
Interest...................................... $25,828,885
-----------------
Total income................................ 25,828,885
-----------------
Expenses:
Investment management fees (Note 4)........... 1,821,809
Shareholder servicing costs (Note 4).......... 315,560
Reports to shareholders....................... 80,510
Accounting expense............................ 37,923
Financial information and subscriptions....... 15,912
Custodian fees................................ 14,491
Bank transaction and checking fees............ 24,208
Registration fees............................. 38,435
Legal, insurance and auditing fees............ 37,787
Other......................................... 4,224
-----------------
Total expenses.............................. 2,390,859
-----------------
Net investment income (Note 1).................. 23,438,026
-----------------
REALIZED GAIN AND UNREALIZED APPRECIATION FROM
INVESTMENT TRANSACTIONS:
Net realized gain from investments (Note 2)..... 2,758,117
Net unrealized appreciation on investments
during the period (Note 1)..................... 7,594,450
-----------------
Net gain on investments (Note 1)................ 10,352,567
-----------------
Net increase in net assets resulting from
operations..................................... $33,790,593
-----------------
-----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

26
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------------------------------------

<TABLE>
<CAPTION>
COLUMBIA
FIXED INCOME SECURITIES
Years Ended December 31, FUND, INC.
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................... $ 23,438,026 $ 21,823,484
Net realized gain from investments (Note
2)..................................... 2,758,117 1,600,093
Change in net unrealized appreciation
(depreciation) on investments.......... 7,594,450 (11,107,884)
------------ ------------
Net increase in net assets resulting
from operations........................ 33,790,593 12,315,693
Distributions to shareholders:
From net investment income.............. (23,438,026) (21,823,484)
From net realized gain from investment
transactions........................... (847,470)
Capital share transactions, net (Note
3)....................................... 15,406,761 49,669,884
------------ ------------
Net increase in net assets.............. 24,911,858 40,162,093

NET ASSETS:
Beginning of period....................... 356,420,896 316,258,803
------------ ------------
End of period............................. $381,332,754 $356,420,896
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------

-- 1. SIGNIFICANT ACCOUNTING POLICIES --

Columbia Fixed Income Securities Fund, Inc. (CFIS) is an open-end, diversified
investment company registered under the Investment Company Act of 1940, as
amended. The policies described below are consistently followed by CFIS in the
preparation of its financial statements in conformity with generally accepted
accounting principles.

INVESTMENT VALUATION. CFIS fixed income investments are carried at values
deemed best to reflect their fair values as determined in good faith by or under
the supervision of officers of CFIS specifically so authorized by its Directors.
These values are based on market value as quoted by dealers who are market
makers in these securities or by an independent pricing service unless unusual
circumstances indicate that another method of determining fair value should be
considered. Market values for CFIS fixed income investments are based on the
average of bid and ask prices or by reference to other securities with
comparable ratings, interest rates and maturities. Temporary cash investments in
short-term securities (principally repurchase agreements) are valued at cost,
which approximates market.

INTEREST INCOME. Interest income is recorded on the accrual basis. Amortization
of discount or premium is recorded over the life of the respective instrument.

SHAREHOLDER DISTRIBUTIONS. CFIS distributes its net investment income monthly
and any net realized gains annually. Distributions to shareholders are recorded
on the ex-dividend date. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to the deferral of
losses from wash sales.

USE OF ESTIMATES. The preparation of the financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

FEDERAL INCOME TAXES. CFIS has made no provision for federal income taxes on
net investment income or net realized gains from sales of securities, since it
is the intention of CFIS to comply with the provisions of the Internal Revenue
Code available to certain investment companies, and to make distributions of
income and security profits sufficient to relieve them from substantially all
federal income taxes.

OTHER. Investment transactions are accounted for on the date the investments
are purchased or sold. The cost of investments sold is determined by the use of
the specific identification method for both financial reporting and income tax
purposes. Realized gains and losses from investment transactions and unrealized
appreciation or depreciation of investments are reported on the basis of
identified costs.

CFIS, through its custodian, receives delivery of underlying securities
collateralizing repurchase agreements (included in temporary cash investments).
Market values of these securities are required to be at least 100% of the cost
of the repurchase agreements. CFIS' investment advisor determines that the value
of the underlying securities is at all times at least equal to the resale price.
In the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.

28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

-- 2. INVESTMENT TRANSACTIONS --

Aggregate purchases, sales and maturities, net realized gain and unrealized
appreciation (depreciation) of investments, excluding temporary cash
investments, as of and for the period ended December 31, 1997, were as follows:

<TABLE>
<CAPTION>
COLUMBIA FIXED
INCOME SECURITIES
FUND, INC. (CFIS)
-----------------
PURCHASES:
<S> <C>
Investment securities other than U.S.
Government obligations............... $205,016,907
U.S. Government obligations........... 514,542,364
-----------------
Total purchases..................... $719,559,271
-----------------
-----------------
SALES AND MATURITIES:
Investment securities other than U.S.
Government obligations............... $179,565,984
U.S. Government obligations........... 528,675,378
-----------------
Total sales and maturities.......... $708,241,362
-----------------
-----------------
NET REALIZED GAIN (LOSS):
Investment securities other than U.S.
Government obligations............... $ (80,814)
U.S. Government obligations........... 2,838,931
-----------------
Total net realized gain............. $ 2,758,117
-----------------
-----------------
UNREALIZED APPRECIATION (DEPRECIATION)
AS OF DECEMBER 31, 1997:
Appreciation.......................... $ 9,785,428
Depreciation.......................... (185,534)
-----------------
Net unrealized appreciation......... $ 9,599,894
-----------------
-----------------
UNREALIZED APPRECIATION (DEPRECIATION)
FOR FEDERAL INCOME TAX PURPOSES AS OF
DECEMBER 31, 1997:
Appreciation.......................... $ 9,785,428
Depreciation.......................... (186,732)
-----------------
Net unrealized appreciation......... $ 9,598,696
-----------------
-----------------
For federal income tax purposes, the
cost of investments owned at December
31, 1997............................... $352,107,930
-----------------
-----------------
</TABLE>

- --------------------------------------------------------------------------------

29
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

-- 3. CAPITAL STOCK --

<TABLE>
<CAPTION>
COLUMBIA FIXED
INCOME SECURITIES
FUND, INC. (CFIS)
-------------------------
1997 1996
----------- ------------
SHARES:
<S> <C> <C>
Shares sold............................................................... 8,909,289 9,571,457
Shares issued for reinvestment of dividends............................... 1,456,925 1,427,852
----------- ------------
10,366,214 10,999,309
Less shares redeemed...................................................... (9,188,186) (7,165,704)
----------- ------------
Net increase in shares.................................................... 1,178,028 3,833,605
----------- ------------
----------- ------------
AMOUNTS:
Sales..................................................................... $117,209,758 $124,564,521
Reinvestment of dividends................................................. 19,185,059 18,580,087
----------- ------------
136,394,817 143,144,608
Less redemptions.......................................................... (120,988,056) (93,474,724)
----------- ------------
Net increase.............................................................. $15,406,761 $ 49,669,884
----------- ------------
----------- ------------
Capital stock authorized (shares)......................................... 200,000,000
Par Value................................................................. $.01
</TABLE>

-- 4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES --

<TABLE>
<CAPTION>
COLUMBIA FIXED
INCOME SECURITIES
FUND, INC. (CFIS)
-----------------
Investment management fees incurred..... $1,821,809
<S> <C>
Investment management fee computation
basis (percentage of daily net assets
per annum)............................. 0.50 of 1%
Transfer agent fee (included in
shareholder servicing costs)........... $249,777
Fees earned by directors not affiliated
with the Fund's investment advisor,
transfer agent, or Columbia Management
Co..................................... $3,611
Value of investments held at December
31, 1997 by:
Columbia Management Co................ $1,015,605
Columbia Funds Management Company..... $291,606
</TABLE>

- --------------------------------------------------------------------------------

30
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

-- 4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES, CONTINUED --

The investment advisor of CFIS is Columbia Funds Management Company (CFMC). The
transfer agent for CFIS is Columbia Trust Company (CTC), a majority owned
subsidiary of CFMC. The transfer agent is compensated based on a per account
fee.

On December 10, 1997, CFMC, CTC and Columbia Management Company (CMC), an
affiliated company, became indirect subsidiaries of Fleet Financial Group, Inc.
(Fleet), a publicly owned multi-bank holding company registered under the Bank
Holding Company Act of 1956. Prior to that date, certain officers and directors
of CFIS were also officers and directors of CFMC, CTC and CMC. Those individuals
did not receive any compensation or other payment from CFIS. As a result of
federal banking regulations, no officers or directors of CFIS are officers or
directors of CFMC, CTC or CMC following the transaction with Fleet. J. Jerry
Inskeep, Jr., an officer and director of CFIS, is affiliated with Fleet, but
receives no compensation or other payment from CFIS.

As a result of the transaction with Fleet, directors of CFIS were required to
approve new contracts for investment advisory and transfer agent services
between CFIS and CFMC and CTC, respectively. The new contracts are the same in
all material respects to the corresponding previous contracts. Shareholders of
CFIS were required to approve a new investment advisory contract. The proxy
voting results of the contract's approval by shareholders of CFIS is set forth
at the end of this 1997 Annual Report.

31
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
-----------------------------------------------------------------

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS,
COLUMBIA FIXED INCOME SECURITIES FUND, INC. (CFIS)

We have audited the accompanying statement of assets and liabilities of CFIS,
including the schedule of investments, as of December 31, 1997, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of CFIS's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of CFIS
as of December 31, 1997, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein,
in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.
Portland, Oregon
February 12, 1998

32
<PAGE>
PROXY VOTING RESULTS
-----------------------------------------------------------------

On December 4, 1997, CFIS held a Special Meeting of Shareholders to approve a
new investment advisory contract with the Advisor. The need to approve a new
investment advisory contract was caused by the change in control of the Advisor
resulting from the acquisition of the Advisor by Fleet Financial Group, Inc. A
new investment advisory contract was approved by CFIS as shown below:

TOTAL
OUTSTANDING FOR AGAINST ABSTENTION
------------ --------- ---------- -----------
<S> <C> <C> <C> <C>
Columbia Fixed Income Securities
Fund.............................. 27,941,833 15,526,380 226,012 255,217
</TABLE>
<PAGE>
NOTES
<PAGE>
COLUMBIA FUNDS

-- 1301 S.W. Fifth Avenue, Portland, Oregon 97201 --
-- DIRECTORS --
-------------------------------------------
JAMES C. GEORGE
J. JERRY INSKEEP, JR.
THOMAS R. MACKENZIE
RICHARD L. WOOLWORTH
-- INVESTMENT ADVISOR --
-------------------------------------------
COLUMBIA FUNDS MANAGEMENT COMPANY
1300 S.W. SIXTH AVENUE
PORTLAND, OREGON 97201
-- LEGAL COUNSEL --
-------------------------------------------
STOEL RIVES L.L.P.
900 S.W. FIFTH AVENUE, SUITE 2300
PORTLAND, OREGON 97201
-- AUDITORS --
-------------------------------------------
COOPERS & LYBRAND L.L.P.
1300 S.W. FIFTH AVENUE, SUITE 2700
PORTLAND, OREGON 97201
-- TRANSFER AGENT --
-------------------------------------------
COLUMBIA TRUST COMPANY
1301 S.W. FIFTH AVENUE
PORTLAND, OREGON 97201
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
THE MANAGERS' VIEWS CONTAINED IN THIS REPORT ARE SUBJECT TO CHANGE AT ANY TIME,
BASED ON MARKET AND OTHER CONSIDERATIONS.
PORTFOLIO CHANGES SHOULD NOT BE CONSIDERED RECOMMENDATIONS FOR ACTION BY
INDIVIDUAL INVESTORS.
THE FUND IS DISTRIBUTED BY PROVIDENT DISTRIBUTORS, INC., MEMBER NASD.