COLUMBIA U S GOVERNMENT SECURITIES FUND INC, 485APOS, 2000-12-15

COLUMBIA U S GOVERNMENT SECURITIES FUND INC
485APOS, 2000-12-15

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Reg. Nos. 33-8843/811-4842

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. ____ [ ]

Post-Effective Amendment No. 18 [ X ]

and/or

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ X ]

Amendment No. 18

(Check appropriate box or boxes.)

(Exact Name of Registrant as Specified in Charter)

1300 S.W. Sixth Avenue, P.O. Box 1350, Portland, Oregon 97207
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (503) 222-3600

J. Jerry Inskeep, Jr.
1300 S.W. Sixth Avenue, P.O. Box 1350, Portland, Oregon 97207
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.

It is proposed that this filing will become effective:

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on _______________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on February 20, 2001 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on _________________ pursuant to paragraph (a)(2) of Rule 485

[ ] If appropriate: this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

<PAGE>

[LOGO]

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COLUMBIA FUNDS

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-------------------------------
PROSPECTUS
-------------------------------

FEBRUARY ____, 2001

<PAGE>

COLUMBIA COMMON STOCK FUND
----------------------------------------------------------------------
COLUMBIA GROWTH FUND
----------------------------------------------------------------------
COLUMBIA INTERNATIONAL STOCK FUND
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COLUMBIA SPECIAL FUND
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COLUMBIA SMALL CAP FUND
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COLUMBIA REAL ESTATE EQUITY FUND
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COLUMBIA BALANCED FUND
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COLUMBIA SHORT TERM BOND FUND

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COLUMBIA FIXED INCOME SECURITIES FUND
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COLUMBIA NATIONAL MUNICIPAL BOND FUND
----------------------------------------------------------------------
COLUMBIA OREGON MUNICIPAL BOND FUND
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COLUMBIA HIGH YIELD FUND
----------------------------------------------------------------------
COLUMBIA DAILY INCOME COMPANY

<PAGE>

DEAR INVESTOR:

We are pleased to present the 2001 Columbia Funds prospectus. All you need to
know about investing with Columbia is available right here. We hope you'll find
that our streamlined design and straightforward content provide a meaningful,
user-friendly report. Whether you want to open a new account or add to an
existing account, we've placed all the information at your fingertips.

As always, Columbia is committed to pursuing consistent, long-term investment
returns while managing risk for our shareholders. The past year was a rewarding,
but volatile year in the financial markets. We think you'll be pleased with the
1999 performance of Columbia Funds as reported in this prospectus. We also
strive to keep our expenses low, enabling more of your investment dollars to
work for you. This year's prospectus reports a decline in expense ratios for
nine of our 13 funds.

To gain a better understanding of our investment philosophy, fund objectives,
and management fees and expenses, we encourage you to read the prospectus
carefully before investing. If you have any questions about our products or
services, please call us toll-free at 1-800-547-1707 or at (503) 222-3606 in
Portland. An Investor Services Representative will be happy to assist you.

Thank you for your interest in Columbia Funds.

Sincerely,

/s/ Thomas L. Thomsen /s/ John A. Kemp
Thomas L. Thomsen John A. Kemp
PRESIDENT AND CHIEF INVESTMENT OFFICER CHAIRMAN AND CHIEF EXECUTIVE OFFICER
COLUMBIA FUNDS MANAGEMENT COMPANY COLUMBIA FUNDS MANAGEMENT COMPANY

<PAGE>

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TABLE OF CONTENTS
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February ___, 2001

PROSPECTUS

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

INTRODUCTION 1 A TEAM APPROACH TO INVESTING
2 RISK OF INVESTING IN MUTUAL FUNDS
--------------------------------------------------------------------------------
INFORMATION 2 STOCK FUND INVESTING
ABOUT 3 BOND FUND INVESTING
COLUMBIA FUNDS 4 COLUMBIA COMMON STOCK FUND
6 COLUMBIA GROWTH FUND
8 COLUMBIA INTERNATIONAL STOCK FUND
10 COLUMBIA SPECIAL FUND
12 COLUMBIA SMALL CAP FUND
14 COLUMBIA REAL ESTATE EQUITY FUND
16 COLUMBIA BALANCED FUND

18 COLUMBIA SHORT TERM BOND FUND

20 COLUMBIA FIXED INCOME SECURITIES FUND
22 COLUMBIA NATIONAL MUNICIPAL BOND FUND
24 COLUMBIA OREGON MUNICIPAL BOND FUND
26 COLUMBIA HIGH YIELD FUND
28 COLUMBIA DAILY INCOME COMPANY

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MANAGEMENT 30 COLUMBIA INVESTMENT TEAM
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INVESTOR 33 PURCHASING SHARES
SERVICES 33 SELLING SHARES
34 IMPORTANT FUND POLICIES
38 INSTRUCTIONS FOR ACCOUNTS
40 DISTRIBUTIONS AND TAXES
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MORE ABOUT 43 PORTFOLIO SECURITIES
THE FUNDS 47 MORE ABOUT RISKS

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed on the adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.

<PAGE>

THE COLUMBIA FAMILY
OF NO-LOAD FUNDS

COLUMBIA COMMON STOCK FUND
----------------------------------------
COLUMBIA GROWTH FUND
----------------------------------------
COLUMBIA INTERNATIONAL STOCK FUND
----------------------------------------
COLUMBIA SPECIAL FUND
----------------------------------------
COLUMBIA SMALL CAP FUND
----------------------------------------
COLUMBIA REAL ESTATE EQUITY FUND
----------------------------------------
COLUMBIA BALANCED FUND
----------------------------------------

COLUMBIA SHORT TERM BOND FUND

----------------------------------------
COLUMBIA FIXED INCOME SECURITIES FUND
----------------------------------------
COLUMBIA NATIONAL MUNICIPAL BOND FUND
----------------------------------------

COLUMBIA OREGON MUNICIPAL BOND FUND
----------------------------------------

COLUMBIA HIGH YIELD FUND
----------------------------------------
COLUMBIA DAILY INCOME COMPANY
----------------------------------------

<PAGE>

--------------------------------------------------------------------------------
INTRODUCTION
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INTRODUCTION
----------------------------------------

This Prospectus is designed to provide you with important information about
investing in Columbia Funds. The Funds are presented separately with
descriptions of the following:

[icon] GOAL AND STRATEGY
---------------------------------
[icon] INVESTMENT RISKS
---------------------------------
[icon] WHO SHOULD INVEST?
---------------------------------
[icon] HISTORICAL PERFORMANCE
---------------------------------
[icon] EXPENSES
---------------------------------
[icon] FINANCIAL HIGHLIGHTS
---------------------------------

[SIDENOTE:]
Individual analysts track specific market sectors or industries, identifying
securities within those areas that are expected to reward shareholders.

For additional information about the strategies and risks of the Funds, please
refer to "More About the Funds" in the back of this Prospectus.

A TEAM APPROACH TO INVESTING

Columbia takes a unique approach to investing, where all Funds are managed using
the expertise of the entire investment team. Through this team effort,
individual analysts and portfolio managers have responsibility for tracking
specific sectors or industries of the market, identifying securities within
those areas that are expected to reward shareholders. This investment strategy
is an integral part of security selection for all Funds.

As part of its active management, Columbia's investment team meets twice weekly
to review and discuss the dynamics of the overall investment and economic
environment. This evaluation leads to the development of broad investment
themes, which create a framework for industry and stock selection. Themes are
based on the review and discovery of changes in the environment that may not yet
be widely recognized or understood by the rest of the investment community. This
approach to investment management is often referred to as "top down, sector
rotation."

Once particular industries and market sectors are identified for emphasis,
securities within the targeted industry or sector are recommended based on
fundamental and technical analysis. This involves a bottom-up review of
individual companies, where the team looks at such factors as financial
condition, quality of management, industry dynamics, earnings growth,

<PAGE>
profit margins, sales trends, and price/earnings and price/book ratios. In the
small cap, mid-cap, high yield bond and real estate investment trust sectors,
such analysis is even more critical to uncovering companies whose products or
services are offering a competitive advantage.

For fixed income securities, a top down approach is also used to determine
sector emphasis between different types of instruments. As with the equity
investment team, Columbia's bond team is made up of various fixed income
specialists who have responsibility for analyzing and selecting particular
securities. Using sector rotation, the bond team works to appropriately shift
emphasis between levels of quality, maturity, coupon and types of debt
instruments based on their relative attractiveness. The bond team also uses a
proprietary horizon analysis model to gauge the performance of different bonds
under various interest rate scenarios.

RISK OF INVESTING IN MUTUAL FUNDS

Mutual funds are not bank deposits and are not insured or endorsed by any bank,
government agency or the FDIC. The value of your investment will likely
fluctuate. Because you could lose money by investing in these Funds, please be
sure to read all the risk disclosure carefully before investing. The description
of each Fund contains a discussion of principal investment risks, and a more
detailed discussion of risks is located at the back of this Prospectus under
"More About the Funds."

INFORMATION ABOUT COLUMBIA FUNDS
----------------------------------------

STOCK FUND INVESTING

Columbia's stock funds invest principally in the stocks of public companies.
Companies sell shares of stock to help finance their business. Returns on stocks
are earned through a combination of dividends paid on each share and any
increase or decrease in the market price of the shares. The smaller the market
capitalization of a company, generally the less likely it will pay dividends.
That's because companies with a small market capitalization tend to use excess
earnings to help fund growth. The investment strategy of a number of the equity
funds described in this Prospectus is shaped, in part, by the market
capitalization (the total value of a company's outstanding stock) of the
companies in which the Funds may invest. As of the date of this Prospectus,
large cap generally refers to companies with $9 billion or more in outstanding
stock, mid cap is considered to have approximately $2 to $9 billion, and small
cap is considered to have less than $2 billion.

Generally, stock fund returns fluctuate more than bond and money market fund
returns, but stocks historically have offered investors the most long-

2
<PAGE>
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INFORMATION ABOUT COLUMBIA FUNDS
--------------------------------------------------------------------------------

term growth. Columbia's stock funds vary in their level of risk or volatility,
depending upon the types and average market capitalizations of the stocks they
hold. As a general rule, the smaller a company's market cap, the more volatile
its stock price is likely to be.

BOND FUND INVESTING

Bonds are often called fixed income investments because they earn a fixed rate
of interest. Bonds are issued by corporations as well as by local, state and
federal governments and their agencies to raise money. The issuer of a bond is
borrowing money from investors. A bond represents a promise to pay back this
money (referred to as principal or face amount) at a specified time (maturity
date), plus a specified amount of interest (coupon).

Investment return on a bond is earned through the payment of interest and any
price appreciation or depreciation if the bond is sold before maturity. Most
bonds pay interest every six months. Because bond funds consist of many bonds
that are bought and sold on an ongoing basis, a bond fund investment does not
have a maturity date and does not earn a fixed interest rate. In addition, the
share price of a bond fund fluctuates daily to reflect the current value of all
bonds in the fund. The maturities of all the bonds within a bond fund can be
combined to determine its average maturity. Generally, the longer the average
maturity of a bond fund portfolio, the more sensitive its net asset value to
changes in interest rates.

Another distinguishing characteristic of a bond fund is its average credit
quality. Generally, the lower the credit quality of bonds in a portfolio, the
more sensitive the fund's net asset value to the activities and financial
prospects of the issuing company, as well as to general economic and market
conditions.

While bonds have not generated as high an investment return as stocks over time,
their returns are generally less volatile.

<PAGE>

COLUMBIA COMMON STOCK FUND
----------------------------------------

[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks capital appreciation by investing, under normal market
conditions, at least 65% of its assets in stocks of large-cap,
well-established companies. Many of the stocks selected by the Fund have
a history of paying level or rising dividends, and are expected to
continue paying dividends in the future.

[icon] INVESTMENT RISKS
--------------------------------
This Fund has stock market risk, which means the stocks held by the Fund
may decline in value due to the activities and financial prospects of
individual companies or to general market and economic conditions. You
could lose money as a result of your investment.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is most appropriate for:
- Long-term investors
- Investors seeking a large-cap fund to balance their bond or small- and
mid-cap stock portfolios
- Those willing to accept short-term price fluctuations

[CHART]
1992 1993 1994 1995 1996 1997 1998 1999
9.99% 16.44% 2.06% 30.84% 20.71% 25.37% 26.28% 25.76%

BEST QUARTER: 4Q '98 at 23.30% WORST QUARTER: 3Q '98 at -11.46%
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS as of 12/31/99
-------------------------------------------------------------------------------
Inception
1 Year 5 Years (10/1/91)
Columbia Common Stock Fund 25.76% 25.75% 19.97%
-------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.56% 20.08%
-------------------------------------------------------------------------------

<PAGE>
--------------------------------------------------------------------------------
STOCK FUNDS
--------------------------------------------------------------------------------

[icon] EXPENSES
--------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.

------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.60%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.17%
Total Annual Fund Operating Expenses 0.77%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$79 $246 $428 $954

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ................. $24.40 $22.02 $19.26 $18.59 $15.16
----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.03 0.09 0.29 0.25 0.26
Net realized and unrealized gains on investments. 6.25 5.68 4.58 3.61 4.38
----------------------------------------------------------------------------------------------------------
Total from investment operations ................ 6.28 5.77 4.87 3.86 4.64
----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income ............ (0.03) (0.13) (0.27) (0.23) (0.26)
Distributions from capital gains ................ (1.75) (3.26) (1.84) (2.96) (0.95)
----------------------------------------------------------------------------------------------------------
Total distributions ............................. (1.78) (3.39) (2.11) (3.19) (1.21)
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ....................... $28.90 $24.40 $22.02 $19.26 $18.59
----------------------------------------------------------------------------------------------------------
TOTAL RETURN ....................................... 25.76% 26.28% 25.37% 20.71% 30.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) .............$959,910 $797,147 $783,906 $536,760 $358,523
Ratio of expenses to average net assets ............ 0.77% 0.80% 0.77% 0.76% 0.80%
Ratio of net investment income to
average net assets .............................. 0.09% 0.56% 1.37% 1.32% 1.68%
Portfolio turnover rate ............................ 97% 141% 90% 111% 75%
</TABLE>

5
<PAGE>

COLUMBIA GROWTH FUND
----------------------------------------

[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks capital appreciation by investing, under normal market
conditions, in stocks of companies expected to experience long-term,
above average earnings growth. These companies tend to have attractive
valuations, strong competitive positions within their industry groups
and the ability to grow using internal resources. The Fund intends to
focus on growth stocks, which are those stocks that generally trade with
higher price/earnings ratios, reflecting investors' willingness to pay a
higher share price for potentially steady or higher earnings growth.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is most appropriate for:
- Long-term investors
- Investors seeking a fund with a growth investment strategy - Those
willing to accept short-term price fluctuations

[icon] HISTORICAL PERFORMANCE
--------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the S&P 500, an unmanaged index generally considered representative
of the U.S. stock market. This information may help provide an
indication of the Fund's risks and potential rewards. All figures assume
the reinvestment of dividends. Past performance cannot guarantee future
results.

[CHART]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
--------------------------------------------------------------------------------
-3.31% 34.26% 11.82% 13.01% -0.63% 32.98% 20.80% 26.32% 30.34% 26.02%

BEST QUARTER: 4Q '98 at 25.59% WORST QUARTER: 3Q '98 at -14.61%
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS as of 12/31/99
-------------------------------------------------------------------------------
1 Year 5 Years 10 Years
Columbia Growth Fund 26.02% 27.22% 18.44%
-------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.56% 18.22%
-------------------------------------------------------------------------------

<PAGE>
STOCK FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.55%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.10%
Total Annual Fund Operating Expenses 0.65%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$66 $208 $362 $810

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1995 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ................. $42.51 $34.34 $30.74 $29.84 24.84
-------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................... (0.03) 0.03 0.19 0.19 0.31
Net realized and unrealized gains on investments. 11.09 10.39 7.90 6.04 7.86
----------------------------------------------------------------------------------------------------------
Total from investment operations ................ 11.06 10.42 8.09 6.23 8.17
-------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income ............ (0.00)* (0.08) (0.17) (0.17) (0.29)
Distributions from capital gains ................ (4.66) (2.17) (4.32) (5.16) (2.88)
----------------------------------------------------------------------------------------------------------
Total distributions ............................. (4.66) (2.25) (4.49) (5.33) (3.17)
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ....................... $48.91 $42.51 $34.34 $30.74 $29.84
-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN ....................................... 26.02% 30.34% 26.32% 20.80% 32.98%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) ........... $2,160,739 $1,753,024 $1,324,918 $1,064,100 $848,731
Ratio of expenses to average net assets ............ 0.65% 0.68% 0.71% 0.71% 0.75%
Ratio of net investment income (loss) to
average net assets .............................. (0.07)% 0.21% 0.55% 0.63% 1.14%
Portfolio turnover rate ............................ 118% 105% 96% 75% 95%
* Amount represents less than $0.01 per share.
</TABLE>

7
<PAGE>

COLUMBIA INTERNATIONAL STOCK FUND
----------------------------------------
[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks long-term capital appreciation by investing, under normal
market conditions, at least 65% of its total assets in stocks issued by
companies from at least three countries outside the U.S. While the
Fund's investments are not limited as to market capitalization, the Fund
intends to invest primarily in companies considered to be large and
well-established, based on standards of the applicable country or
foreign market.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Long-term investors
- Those seeking stock market diversification outside the U.S.
- Those willing to accept substantial price fluctuations

[icon] INVESTMENT RISKS
--------------------------------
This Fund has stock market risk and foreign investment risk. You could
lose money as a result of your investment.

Stock market risk means the stocks held by the Fund may decline in value
due to the activities and financial prospects of individual companies or
to general market and economic conditions.

Foreign investment risk means the Fund's portfolio may decline in value
due to the risks associated with international investing, such as:

- Changes in currency exchange rates - Foreign taxes that could reduce
returns - Potential political or economic instability of the
country of issuer, especially in emerging or developing countries
- Lack of uniform accounting, auditing, and financial reporting
standards, with less governmental regulation and oversight than U.S.
companies
- Less liquidity than U.S. securities
- Less public information compared to U.S. companies

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the MSCI EAFE Index, an unmanaged index representing major stock
markets in Europe, Australasia and the Far East. This information may
help provide an indication of the Fund's risks and potential rewards.
All figures assume the reinvestment of dividends. Past performance
cannot guarantee future results.

1993 1994 1995 1996 1997 1998 1999
33.37% -2.47% 5.15% 16.59% 11.47% 12.83% 57.93%

BEST QUARTER: 4Q '99 at 34.96% WORST QUARTER: 3Q '98 at -17.69%

*Morgan Stanley Capital International Europe, Australasia, and Far East Index
8
<PAGE>
STOCK FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.

-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 1.00%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.48%
Total Annual Fund Operating Expenses 1.48%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$151 $468 $808 $1,768

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR .............. $15.45 $13.70 $13.86 $13.07 $12.43
-------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ................. (0.05) (0.00)* 0.03 0.03 0.02
Net realized and unrealized gains on investments
and foreign currency transactions ......... 9.00 1.76 1.56 2.13 0.62
-------------------------------------------------------------------------------------------------------------------
Total from investment operations ................ 8.95 1.76 1.59 2.16 0.64
-------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... - - - (0.23) -
Distributions from capital gains ............. (1.59) (0.01) (1.75) (1.14) -
-------------------------------------------------------------------------------------------------------------------
Total distributions ............................. (1.59) (0.01) (1.75) (1.37) -
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR .................... $22.81 $15.45 $13.70 $13.86 $13.07
-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN .................................... 57.93% 12.83% 11.47% 16.59% 5.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands)........... $239,223 $134,193 $146,281 $125,510 $100,873
Ratio of expenses to average net assets ......... 1.48% 1.56% 1.62% 1.54% 1.54%
Ratio of net investment income (loss) to
average net assets ........................... (0.35)% (0.02)% 0.19% 0.22% 0.15%
Portfolio turnover rate ......................... 94% 74% 122% 129% 156%
</TABLE>

* Amount represents less than $0.01 per share.

9
<PAGE>
COLUMBIA SPECIAL FUND
----------------------------------------

[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks significant capital appreciation by investing in a
portfolio of stocks that is considered more volatile than the S&P 500.
The Fund intends to invest primarily in small- and mid-cap companies,
but also may invest in special situations such as initial public
offerings (IPOs); companies that may benefit from technological or
product developments or new management; and companies involved in tender
offers, leveraged buy-outs or mergers.

The small- and mid-cap stocks held by the Fund are subject to greater
risk than large-cap stocks because:

- Their issuers may have limited operating histories, fewer financial
resources, inexperienced management, and may depend on a small number
of products or services

- Small- and mid-cap stocks may have low trading volumes, making it
difficult to sell a security or resulting in erratic or abrupt price
movements

Special situations have risk because they often involve major
corporate changes and, thus, present a high degree of uncertainty as
to market effect.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Long-term, aggressive growth investors
- Those looking to diversify their large-cap stock portfolios with
small- and mid-cap stock investments
- Those willing to accept substantial price fluctuations

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the S&P MidCap 400 Index, an unmanaged index generally considered
representative of the U.S. market for mid-cap stocks, and to the Russell
2000 Index, an unmanaged index generally considered representative of
the market for small domestic stocks. This information may help provide
an indication of the Fund's risks and potential rewards. All figures
assume the reinvestment of dividends. Past performance cannot guarantee
future results.

[CHART]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
-12.39% 50.46% 13.70% 21.68% 2.29% 29.53% 13.07% 12.64% 16.64% 36.33%

BEST QUARTER: 4Q '99 at 37.43% WORST QUARTER: 3Q '90 at -29.31%

-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS as of 12/31/99
-------------------------------------------------------------------------------
1 Year 5 Years 10 Years
Columbia Special Fund 36.33% 21.28% 17.21%
-------------------------------------------------------------------------------
S&P MidCap 400 Index 14.72% 23.05% 17.32%
-------------------------------------------------------------------------------
Russell 2000 Index 21.26% 16.69% 13.40%
-------------------------------------------------------------------------------
10
<PAGE>
STOCK FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.91%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.18%
Total Annual Fund Operating Expenses 1.09%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$111 $347 $601 $1,329

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1995 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............... $23.62 $20.26 $19.85 $21.44 $18.69
-------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. (0.16) (0.03) 0.01 (0.06) 0.03
Net realized and unrealized gains on investments 8.74 3.40 2.50 2.85 5.45
-------------------------------------------------------------------------------------------------------------------
Total from investment operations ................ 8.58 3.37 2.51 2.79 5.48
-------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... - (0.01) - - (0.02)
Distributions from capital gains .............. (2.27) (0.00)* (2.10) (4.38) (2.71)
-------------------------------------------------------------------------------------------------------------------
Total distributions ............................. (2.27) (0.01) (2.10) (4.38) (2.73)
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ..................... $29.93 $23.62 $20.26 $19.85 $21.44
-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN ..................................... 36.33% 16.64% 12.64% 13.07% 29.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) .......... $918,322 $969,359 $1,249,718 $1,585,284 $1,384,415
Ratio of expenses to average net assets .......... 1.09% 1.03% 0.98% 0.94% 0.98%
Ratio of net investment income (loss) to
average net assets ............................(0.64)% (0.09)% 0.04% (0.29)% 0.16%
Portfolio turnover rate .......................... 135% 135% 166% 150% 183%
</TABLE>
* Amount represents less than $0.01 per share.

11
<PAGE>
COLUMBIA SMALL CAP FUND
----------------------------------------
[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks significant capital appreciation by investing, under
normal market conditions, at least 65% of its assets in stocks, or
securities convertible into stocks, of companies with a market
capitalization of less than 250% of the dollar-weighted median market
capitalization of the S&P Small Cap 600 Index. As of the date of this
prospectus, companies with a market capitalization of approximately $2
billion or less would be considered small cap under this definition.

The small-cap stocks held by the Fund are subject to greater volatility
than large-cap stocks because:

- Small companies may have limited operating histories, fewer financial
resources, inexperienced management and may be dependent on a small
number of products or services

- Small-cap stocks may have low trading volumes, which may make it
difficult to sell a security or result in erratic or abrupt price
movements

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Long-term, aggressive growth investors
- Those looking to diversify their mid- and large-cap stock portfolios
with small-cap stock investments
- Those willing to accept substantial price fluctuations

[icon] HISTORICAL PERFORMANCE
-----------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the Russell 2000 Index, an unmanaged index generally considered
representative of the market for small domestic stocks. This information
may help provide an indication of the Fund's risks and potential
rewards. All figures assume the reinvestment of dividends. Past
performance cannot guarantee future results.
[CHART]
1997 1998 1999
34.10% 4.69% 59.15%

BEST QUARTER: 4Q '99 at 50.27% WORST QUARTER: 3Q '98 at -18.20%
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS as of 12/31/99
-------------------------------------------------------------------------------
Inception
1 Year (10/1/96)
Columbia Small Cap Fund 59.15% 31.55%
-------------------------------------------------------------------------------
Russell 2000 Index 21.26% 14.00%
-------------------------------------------------------------------------------

12
<PAGE>
STOCK FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 1.00%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.30%
Total Annual Fund Operating Expenses 1.30%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$132 $412 $713 $1,568

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1999 1998 1997 1996(1)
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ............. $17.43 $16.65 $12.99 $12.00
----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ........................... (0.14) (0.09) (0.08) (0.00)*
Net realized and unrealized gains on investments 10.45 0.87 4.51 0.99
----------------------------------------------------------------------------------------------------
Total from investment operations ................ 10.31 0.78 4.43 0.99
----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Distributions from capital gains .............. (0.48) (0.00)* (0.77) -
----------------------------------------------------------------------------------------------------
Total distributions ............................. (0.48) (0.00) (0.77) -
----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ................... $27.26 $17.43 $16.65 $12.99
----------------------------------------------------------------------------------------------------
TOTAL RETURN ..................................... 59.15% 4.69% 34.10% 7.62%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) ....... $290,374 $160,472 $96,431 $21,061
Ratio of expenses to average net assets ......... 1.30% 1.34% 1.46% 1.61%(3)
Ratio of net investment loss to average net assets (0.84)% (0.68)% (0.81)% (0.00)%(3)
Portfolio turnover rate ......................... 188% 158% 172% 33%(3)
* Amount represents less than $0.01 per share.
(1) From inception of operations on September 11, 1996.
(2) Not annualized.
(3) Annualized.
</TABLE>
13
<PAGE>
COLUMBIA REAL ESTATE EQUITY FUND
----------------------------------------
[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks capital appreciation and above-average income by
investing, under normal market conditions, at least 65% of its assets in
the stocks of companies principally engaged in the real estate industry.
A company is "principally engaged" in the real estate industry if at
least 50% of its gross income or net profits are attributable to the
ownership, construction, management, or sale of residential, commercial
or industrial real estate. While it does not invest directly in real
estate, the Fund will invest at least 65% of its assets in real estate
investment trusts ("REITs"), which pool investors' money for investment
primarily in income-producing real estate or related loans or interests.

[icon] INVESTMENT RISKS
--------------------------------
This Fund has stock market risk and real estate risk. You could lose
money as a result of your investment. Stock market risk means the stocks
held by the Fund may decline in value due to the activities and
financial prospects of individual companies or to general market and
economic conditions.

Real estate risk means the Fund may be subject to the same types of
risks associated with direct ownership of real estate:

- Declines in property value due to general, local and regional economic
conditions
- Overbuilding and extended vacancies of properties
- Increased property taxes
- Casualty or condemnation losses
- Changes in zoning laws
- Environmental clean up costs

If the Fund's investments are concentrated in a particular geographic
region, real estate risk may be even more significant. See "More About
the Funds" at the back of this prospectus for additional information
about REIT investment risk.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Long-term investors
- Those looking for an income-oriented equity fund that invests in real
estate securities
- Those willing to accept short-term price fluctuations

[icon] HISTORICAL PERFORMANCE
--------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the NAREIT Index, which is an unmanaged index that reflects
performance of all publicly-traded equity REITs. This information may
help provide an indication of the Fund's risks and potential rewards.
All figures assume the reinvestment of dividends. Past performance
cannot guarantee future results.

[CHART]

1995 1996 1997 1998 1999
16.86% 38.30% 24.74% -12.33% -2.45%

BEST QUARTER: 4Q '96 at 18.34% WORST QUARTER: 3Q '98 at -8.27%
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS as of 12/31/99
-------------------------------------------------------------------------------
Inception
1 Year 5 Years (4/1/94)
Columbia Real Estate Equity Fund -2.45% 11.51% 10.18%
-------------------------------------------------------------------------------
NAREIT* Index -4.62% 8.09% 6.89%
-------------------------------------------------------------------------------
*National Association of Real Estate Investment Trusts
14
<PAGE>
--------------------------------------------------------------------------------
STOCK FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
--------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.75%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.24%
Total Annual Fund Operating Expenses 0.99%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$101 $315 $547 $1,213

1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR................ $15.76 $18.80 $16.16 $12.71 $11.72
----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.......................... 0.82 0.75 0.79 0.77 0.78
Net realized and unrealized gains
(losses) on investments..................... (1.19) (3.04) 3.15 3.94 1.12
----------------------------------------------------------------------------------------------------------
Total from investment operations................. (0.37) (2.29) 3.94 4.71 1.90
----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income........... (0.71) (0.66) (0.62) (0.52) (0.49)
Distributions from capital gains............... - - (0.51) (0.53) (0.14)
Returns of capital............................. (0.11) (0.09) (0.17) (0.21) (0.28)
----------------------------------------------------------------------------------------------------------
Total distributions.............................. (0.82) (0.75) (1.30) (1.26) (0.91)
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR..................... $14.57 $15.76 $18.80 $16.16 $12.71
----------------------------------------------------------------------------------------------------------
TOTAL RETURN...................................... -2.45% -12.33% 24.74% 38.30% 16.86%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands)........... $241,716 $164,172 $151,554 $68,073 $21,587
Ratio of expenses to average net assets........... 0.99% 1.01% 1.02% 1.06% 1.18%
Ratio of net investment income to average
net assets..................................... 5.66% 4.60% 4.87% 6.23% 6.71%
Portfolio turnover rate........................... 29% 6% 34% 46% 54%
</TABLE>

15
<PAGE>
COLUMBIA BALANCED FUND
----------------------------------------
[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks high total return by investing in common stocks and debt
securities. Normally, 35% to 65% of assets will be allocated to stocks
and 35% to 65% will be allocated to debt securities. The Fund invests
primarily in stocks of large-cap, well-established companies. The debt
securities will be primarily investment-grade (rated BBB or higher by
S&P or Baa or higher by Moody's), or their unrated equivalents,
including obligations of the U.S. Government, its agencies and
instrumentalities, corporate debt securities, asset-backed securities,
collateralized bonds, and loan and mortgage obligations.

[icon] INVESTMENT RISKS
--------------------------------
Because this Fund invests in stocks and bonds, it has stock market risk,
interest rate risk, credit risk and prepayment risk. You could lose
money as a result of your investment.

Stock market risk means the stocks held by the Fund may decline in value
due to the activities and financial prospects of individual companies or
to general market and economic conditions.

Interest rate risk refers to the possibility that bonds in the Fund may
go down in value when interest rates rise.

Credit risk refers to the possibility that the companies issuing bonds
held by the Fund may not be able to pay interest and principal when due.

Prepayment risk refers to the possibility that the mortgage securities
held by the Fund may be adversely affected by changes in prepayment
rates on the underlying mortgages.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Long-term investors seeking to balance the higher volatility of stocks
with the greater stability of income-generating bonds
- Investors seeking moderate growth over the long term

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the S&P 500, an unmanaged index generally considered representative
of the U.S. stock market and the Lehman Aggregate, an unmanaged index
composed of investment-grade U.S. Treasury and agency securities,
corporate bonds, and mortgage-backed bonds. This information may help
provide an indication of the Fund's risks and potential rewards. All
figures assume the reinvestment of dividends. Past performance cannot
guarantee future results.

[CHART]
1992 1993 1994 1995 1996 1997 1998 1999
8.89% 13.62% 0.10% 25.08% 11.78% 18.74% 20.07% 12.70%

BEST QUARTER: 4Q '98 at 12.86% WORST QUARTER: 3Q '98 at -4.76%
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS as of 12/31/99
-------------------------------------------------------------------------------
Inception
1 Year 5 Years (10/1/91)
Columbia Balanced Fund 12.70% 17.57% 14.15%
-------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.56% 20.08%
-------------------------------------------------------------------------------
Lehman Aggregate Bond Index -0.82% 7.73% 6.94%
-------------------------------------------------------------------------------

16
<PAGE>
--------------------------------------------------------------------------------
BALANCED FUND
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.50%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.16%
Total Annual Fund Operating Expenses 0.66%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$67 $211 $368 $822

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............... $23.17 $21.42 $20.32 $20.08 $17.28
----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.69 0.72 0.84 0.76 0.73
Net realized and unrealized gains on investments 2.21 3.52 2.92 1.58 3.54
----------------------------------------------------------------------------------------------------------
Total from investment operations ................ 2.90 4.24 3.76 2.34 4.27
----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.69) (0.73) (0.83) (0.76) (0.73)
Distributions from capital gains .............. (0.66) (1.76) (1.83) (1.34) (0.74)
----------------------------------------------------------------------------------------------------------
Total distributions ............................. (1.35) (2.49) (2.66) (2.10) (1.47)
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ..................... $24.72 $23.17 $21.42 $20.32 $20.08
----------------------------------------------------------------------------------------------------------
TOTAL RETURN ..................................... 12.70% 20.07% 18.74% 11.78% 25.08%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) ........ $1,040,940 $975,381 $792,378 $672,593 $486,767
Ratio of expenses to average net assets .......... 0.66% 0.67% 0.68% 0.66% 0.69%
Ratio of net investment income to average
net assets .................................... 2.85% 3.22% 3.83% 3.82% 4.05%
Portfolio turnover rate .......................... 133% 128% 149% 133% 108%
</TABLE>

17
<PAGE>

COLUMBIA SHORT TERM BOND FUND

----------------------------------------
[icon] GOAL AND STRATEGY
--------------------------------

The Fund seeks a high level of current income consistent with a high
degree of principal stability by investing primarily in short-term,
investment-grade, fixed income securities (rated BBB or higher by
S&P or Baa or higher by Moody's, or if unrated deemed to be of
comparable quality. Under normal market conditions, the Fund intends
to invest at least 50% of its assets in direct and indirect
obligations of the U.S. Government, its agencies and
instrumentalities, and corporate debt securities rated in the two
highest categories by S&P (AAA or AA) or Moody's (Aaa or Aa). The
Fund's average portfolio duration will not exceed three years.

[icon] INVESTMENT RISKS
--------------------------------

This Fund has interest rate risk, credit risk, and prepayment risk.
You could lose money as a result of your investment.

Interest rate risk refers to the possibility that your investment
may go down in value when interest rates rise.

Credit risk refers to the possibility the issuer of a bond may not
be able to pay interest and principal when due.

Prepayment risk refers to the possibility that the mortgage-backed,
fixed income securities held by the Fund may be adversely affected
by changes in prepayment rates on the underlying mortgages.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Risk-averse, short-term investors
- Those willing to accept only a small amount of price volatility
- Those focused on the preservation of assets rather than the
appreciation of assets
- Those looking to diversify a balanced portfolio with a short-term,
income-earning investment

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the Merrill Lynch 1-3 Treasury Index, which represents the average
return of all Treasury notes with a 1- to 3-year maturity. This
information may help provide an indication of the Fund's risks and
potential rewards. All figures assume the reinvestment of dividends.
Past performance cannot guarantee future results.

[CHART]

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
12.72% 5.81% 5.91% -0.03% 10.21% 3.85% 5.76% 6.43% 1.80% ___%

BEST QUARTER: 3Q '91 at 4.23% WORST QUARTER: 1Q '92 at -0.93%

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

AVERAGE ANNUAL TOTAL RETURNS as of 12/31/2000

-------------------------------------------------------------------------------
1 Year 5 Years 10 Years
Columbia

Short Term Bond Fund ___% ___% ___%

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

Merrill Lynch 1-3 Treasury Index* ___% ___% ___%

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

Merrill Lynch 1-5 Year Government/Corporate Index ___% ___% ___%

* The Merrill Lynch 1-3 Treasury Index is an unmanaged index designed to measure
the return of Treasury bills with maturities of one to three years. This index
is intended to provide a benchmark for the prior investment objective and
strategy of the Fund, when the Fund invested at least 80% of its assets in U.S.
Government obligations. On September 15, 2000, the shareholders of the Fund
approved a modification to the Fund's investment objective and strategy to
change the Fund from a U.S. Government bond fund to a short term bond fund. The
effective date for this change was November 1, 2000. Going forward, the Fund
will compare its performance to the Merrill Lynch 1-5 Year Government/Corporate
Index, which serves as a more useful comparison for the Fund given its revised
investment strategy.

<PAGE>
BOND FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------

(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.50%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.__%
Total Annual Fund Operating Expenses 0.__%
Expense Reimbursement 0.__%
Net Expenses 0.75%*

* For the fiscal period ending December 31, 2001 and for the fiscal years
ending December 31, 2002 and 2003, the Fund's adviser has agreed to
limit the Fund's total expenses to 0.75% of Fund assets.

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------

$-- $--- $--- $----

2000 1999 1998 1997 1996

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

<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ..... $___ $8.39 $8.29 $8.24 $8.34

----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:

Net investment income ............... ____ 0.33 0.38 0.41 0.41
Net realized and unrealized gains
(losses) on investments .......... ____ (0.18) 0.14 0.05 (0.10)

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

Total from investment operations ....... ____ 0.15 0.52 0.46 0.31

----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:

Dividends from net investment income ____ (0.33) (0.38) (0.41) (0.41)
Distributions from capital gains .... ____ (0.01) (0.04) - -

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

Total distributions .................... ____ (0.34) (0.42) (0.41) (0.41)

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

NET ASSET VALUE, END OF YEAR ........... $___ $8.20 $8.39 $8.29 $8.24

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

TOTAL RETURN ........................... ____ 1.80% 6.43% 5.76% 3.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) . $___ $38,072 $40,578 $37,837 $40,776
Ratio of expenses to average net assets ____ 0.91% 0.89% 0.87% 0.80%
Ratio of net investment income to
average net assets ................... ____ 4.09% 4.55% 4.99% 4.99%
Portfolio turnover rate ................ ____ 211% 182% 184% 179%

</TABLE>
19
<PAGE>
COLUMBIA FIXED INCOME SECURITIES FUND
----------------------------------------
[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks a high level of income by investing in a broad range of
debt securities with intermediate to long-term maturities. The Fund
intends to invest 90% of its assets, under normal market conditions, in
investment-grade debt securities (rated BBB or higher by S&P or Baa or
higher by Moody's), or their unrated equivalents, including obligations
of the U.S. Government, its agencies and instrumentalities, corporate
debt securities, asset-backed securities, collateralized bonds, and loan
and mortgage obligations.

[icon] INVESTMENT RISKS
--------------------------------
This Fund has interest rate risk, credit risk, and prepayment risk. You
could lose money as a result of your investment.

Interest rate risk refers to the possibility that your investment may go
down in value when interest rates rise.

Credit risk refers to the possibility the issuer of a bond may not be
able to pay interest and principal when due.

Prepayment risk refers to the possibility that the mortgage securities
held by the Fund may be adversely affected by changes in prepayment
rates on the underlying mortgages.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Long-term, income-oriented investors
- Investors willing to accept greater price fluctuation than is
generally associated with short-term bonds
- Those looking to diversify their stock portfolio with a fund
investing in bonds

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the Lehman Aggregate Bond Index, an unmanaged index composed of
investment-grade U.S. Treasury and agency securities, corporate bonds
and mortgage-backed bonds. This information may help provide an
indication of the Fund's risks and potential rewards. All figures assume
the reinvestment of dividends. Past performance cannot guarantee future
results.

[CHART]

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
8.30% 16.84% 7.99% 10.47% -3.36% 18.91% 3.37% 9.56% 7.44% -1.50%

BEST QUARTER: 2Q '95 at 6.36% WORST QUARTER: 1Q '94 at -3.04%

20
<PAGE>
BOND FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.50%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.14%
Total Annual Fund Operating Expenses 0.64%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$65 $205 $357 $798

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............... $13.42 $13.41 $13.08 $13.51 $12.16
----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.78 0.83 0.85 0.85 0.88
Net realized and unrealized gains
(losses) on investments .................... (0.98) 0.14 0.36 (0.43) 1.35
----------------------------------------------------------------------------------------------------------
Total from investment operations ................ (0.20) 0.97 1.21 0.42 2.23
----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.78) (0.83) (0.85) (0.85) (0.88)
Distributions from capital gains .............. (0.00)* (0.13) (0.03) - -
----------------------------------------------------------------------------------------------------------
Total distributions ............................. (0.78) (0.96) (0.88) (0.85) (0.88)
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ..................... $12.44 $13.42 $13.41 $13.08 $13.51
----------------------------------------------------------------------------------------------------------
TOTAL RETURN ..................................... -1.50% 7.44% 9.56% 3.37% 18.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) .......... $397,147 $422,330 $381,333 $356,421 $316,259
Ratio of expenses to average net assets ........ 0.64% 0.65% 0.66% 0.64% 0.65%
Ratio of net investment income to
average net assets ............................ 6.03% 6.15% 6.43% 6.53% 6.80%
Portfolio turnover rate .......................... 155% 107% 196% 178% 137%
</TABLE>

* Amount represents less than $0.01 per share.
21
<PAGE>
COLUMBIA NATIONAL MUNICIPAL BOND FUND
----------------------------------------
[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks a high level of income exempt from federal income tax by
investing up to 100%, but no less than 80%, of its assets in municipal
securities issued by state and local governments, their agencies and
authorities, as well as the District of Columbia and U.S. territories
and possessions, to finance various public or private projects. The Fund
will only invest in municipal securities rated investment grade by a
securities rating agency or, if unrated, determined by Columbia to be of
equivalent investment quality. The Fund intends to maintain an average
portfolio maturity of approximately 10 to 12 years.

[icon] INVESTMENT RISKS
--------------------------------
This Fund has interest rate risk, credit risk, political risk and
geographic risk. You could lose money as a result of your investment.

Interest rate risk refers to the possibility that your investment may go
down in value when interest rates rise.

Credit risk refers to the possibility the issuer of a bond may not be
able to pay interest and principal when due.

Political risk refers to the chance that a significant change in tax
laws affecting municipal bonds or federal income tax rates, or even
serious discussions on these topics in Congress, could impact the demand
for municipal bonds and cause their prices to fall.

Geographic risk refers to the potential for price declines resulting
from a negative development in a single state in which the Fund holds
bonds.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Investors seeking income exempt from federal income tax
- Investors willing to accept greater price fluctuation than is
generally associated with short-term bonds
- Conservative, long-term investors nearing or in retirement

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
Since the Fund did not begin operations until February 10, 1999, no
historical performance is presented.

<PAGE>
BOND FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
--------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.50%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 1.22%
Total Annual Fund Operating Expenses 1.72%
Expense Reimbursement 1.07%*
Net Expenses 0.65%

*For the fiscal year ending December 31, 2000, the advisor has contractually
agreed to reimburse the Fund for all ordinary expenses to the extent necessary
to maintain Total Annual Fund Operating Expenses at 0.65%.

This is a hypothetical example intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
Although your actual cost may be higher or lower, you would pay the
following expenses on a $10,000 investment, assuming: 1) a 5% annual
return, 2) the Fund's operating expenses remain the same, 3) you redeem
all your shares at the end of the periods shown, and 4) all
distributions are reinvested.
---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$66 $208 $362 $810

[icon] FINANCIAL HIGHLIGHTS
--------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the period indicated. Certain information reflects financial results for
a single Fund share. Total return shows how much your Fund investment
increased or decreased during each period, assuming reinvested dividends
and distributions. PricewaterhouseCoopers LLP, independent accountants,
has audited this information. Their report, along with the Fund's
financial statements, is included in the Funds' annual report, which is
available upon request.
1999(1)
----------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD..................... $10.00
----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................. 0.34
Net realized and unrealized losses
on investments..................................... (0.72)
----------------------------------------------------------------------
Total from investment operations...................... (0.38)
----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income.................. (0.34)
----------------------------------------------------------------------
Total distributions................................... (0.34)
----------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD........................... $9.28
----------------------------------------------------------------------
TOTAL RETURN............................................. -3.93%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................. $10,135
Ratio of expenses to average net assets.................. 0.65%(3)
Ratio of expenses to average net
assets before reimbursement........................... 1.72%(3)
Ratio of net investment income to
average net assets.................................... 4.21%(3)
Portfolio turnover rate.................................. 12%(3)

(1) From inception of operations on February 10, 1999.
(2) Not annualized.
(3) Annualized.
23
<PAGE>
COLUMBIA OREGON MUNICIPAL BOND FUND
----------------------------------------
[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks a high level of income exempt from federal and Oregon
income tax by investing up to 100%, but no less than 80%, of its assets
in municipal securities issued by the State of Oregon (and its political
subdivisions, agencies, authorities and instrumentalities). Normally,
the Fund will invest in Oregon municipal securities rated investment
grade (by a securities rating agency) or, if unrated, determined by
Columbia to be of equivalent investment quality. The Fund intends to
maintain an average portfolio maturity of approximately 10 to 12 years.

[icon] INVESTMENT RISKS
--------------------------------
This Fund has interest rate risk, credit risk, political risk and
geographic risk. You could lose money as a result of your investment.
Interest rate risk refers to the possibility that your investment value
may go down when interest rates rise. Credit risk refers to the
possibility that the issuer of a bond may not be able to pay interest
and principal when due.

Geographic risk refers to the fact that the Fund's concentration in
Oregon tax-exempt bonds may cause it to be exposed to risks that do not
apply to other bond funds:
- Low trading volumes for Oregon municipal bonds
- Unfavorable economic conditions in Oregon
- Legal and legislative changes affecting the ability of Oregon
municipalities to issue bonds

The Fund is non-diversified, which means it may invest a greater
percentage of its assets in one issuer.

[icon] WHO SHOULD INVEST?
------------------------------------------------------------------------
This Fund is appropriate for:
- Oregon residents seeking income exempt from federal and state personal
income tax
- Those able to accept more price fluctuation than is generally
associated with short-term bonds
- Conservative, long-term investors nearing or in retirement

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to the Lehman General Obligation Bond Index, which represents average
market weighted performance of general obligation bonds that have been
issued in the last five years with maturities greater than one year.
This information may help provide an indication of the Fund's risks and
potential rewards. All figures assume the reinvestment of dividends.
Past performance cannot guarantee future results.

[CHART]

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
6.89% 11.73% 6.46% 10.73% -4.68 14.15% 3.77% 8.36% 5.58% -2.65%

BEST QUARTER: 1Q '95 at 5.76% WORST QUARTER: 1Q '94 at -5.01%

24
<PAGE>
BOND FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.50%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.07%
Total Annual Fund Operating Expenses 0.57%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$58 $183 $318 $714

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............... $12.46 $12.47 $12.15 $12.37 $11.48
----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.56 0.58 0.60 0.61 0.63
Net realized and unrealized gains
(losses) on investments .................... (0.88) 0.10 0.39 (0.16) 0.96
----------------------------------------------------------------------------------------------------------
Total from investment operations ................ (0.32) 0.68 0.99 0.45 1.59
----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.56) (0.58) (0.60) (0.61) (0.63)
Distributions from capital gains .............. (0.02) (0.11) (0.07) (0.06) (0.07)
----------------------------------------------------------------------------------------------------------
Total distributions ............................. (0.58) (0.69) (0.67) (0.67) (0.70)
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ..................... $11.56 $12.46 $12.47 $12.15 $12.37
----------------------------------------------------------------------------------------------------------
TOTAL RETURN ..................................... -2.65% 5.58% 8.36% 3.77% 14.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) .......... $409,919 $462,809 $409,148 $375,667 $383,796
Ratio of expenses to average net assets .......... 0.57% 0.58% 0.57% 0.56% 0.57%
Ratio of net investment income to
average net assets .......................... 4.64% 4.60% 4.87% 5.00% 5.22%
Portfolio turnover rate .......................... 28% 17% 17% 19% 21%
</TABLE>

25
<PAGE>
COLUMBIA HIGH YIELD FUND
----------------------------------------

[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks a high level of income, with capital appreciation as a
secondary goal, by investing in non-investment- grade corporate debt
securities, commonly referred to as "junk" or "high-yield" bonds.
Normally, the Fund will invest at least 80% of assets in bonds rated Ba
or B by Moody's or BB or B by S&P. No more than 10% of the Fund's assets
will be invested in securities rated Caa by Moody's or CCC by S&P, and
no Fund assets will be invested in securities below these grades. By
focusing on higher quality junk bonds, the Fund seeks access to higher
yielding bonds without assuming all the risk associated with the broader
lower-rated bond market.

[icon] INVESTMENT RISKS
--------------------------------
This Fund has interest rate risk and credit risk. You could lose money
as a result of your investment. Interest rate risk refers to the
possibility that your investment may go down in value when interest
rates rise. Credit risk refers to the possibility that the issuing
company may not be able to pay interest and principal when due. The Fund
generally invests in lower-rated bonds subject to greater default risk
than higher-rated, lower yielding bonds. High yield bonds may be issued
to fund corporate restructurings, such as leveraged buyouts, mergers,
acquisitions, debt recapitalizations, or similar events. High yield
bonds are often issued by smaller, less creditworthy companies or by
companies with substantial debt. The prices of high yield bonds are
generally more sensitive than higher-rated bonds to the financial
condition of the issuer and adverse changes in the economy.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Those willing to accept substantial price fluctuations
- Investors seeking to boost their bond portfolio's yield

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table compares Fund performance over time
to two benchmarks. The Salomon BB Index measures the total return of
bonds with a maturity of at least one year and includes bonds rated BB+,
BB or BB- by S&P or bonds rated Ba1, Ba2 or Ba3 by Moody's. The Lipper
High Yield Bond Fund Index reflects equally-weighted performance of the
30 largest mutual funds within its category. This information may help
provide an indication of the Fund's risks and potential rewards. All
figures assume the rein vestment of dividends. Past performance cannot
guarantee future results.

[CHART]
1994 1995 1996 1997 1998 1999
-0.92% 19.12% 9.43% 12.70% 6.26% 2.38%

BEST QUARTER: 2Q '95 at 5.56% WORST QUARTER: 1Q '94 at -2.01%

26
<PAGE>
BOND FUNDS
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.60%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.31%
Total Annual Fund Operating Expenses 0.91%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$93 $290 $504 $1,120

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............... $9.84 $10.04 $9.94 $9.88 $9.04
----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. ........................ 0.74 0.76 0.81 0.81 0.82
Net realized and unrealized gains
(losses) on investments .................... (0.51) (0.15) 0.40 0.07 0.84
----------------------------------------------------------------------------------------------------------
Total from investment operations ............... 0.23 0.61 1.21 0.88 1.66
----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.74) (0.76) (0.81) (0.81) (0.82)
Distributions from capital gains .............. (0.01) (0.05) (0.30) (0.01) -
----------------------------------------------------------------------------------------------------------
Total distributions ............................. (0.75) (0.81) (1.11) (0.82) (0.82)
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ..................... $9.32 $9.84 $10.04 $9.94 $9.88
----------------------------------------------------------------------------------------------------------
TOTAL RETURN ..................................... 2.38% 6.26% 12.70% 9.43% 19.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) .......... $71,678 $57,524 $39,278 $28,818 $23,471
Ratio of expenses to average net assets ........ 0.91% 0.95% 1.00% 0.93% 1.00%
Ratio of expenses to average net assets
before voluntary reimbursement ................ 0.91% 0.95% 1.02% 1.00% 1.06%
Ratio of net investment income to
average net assets .............................. 7.71% 7.52% 8.05% 8.29% 8.62%
Portfolio turnover rate ............................ 49% 79% 124% 62% 52%
</TABLE>

27
<PAGE>
COLUMBIA DAILY INCOME COMPANY
----------------------------------------

[icon] GOAL AND STRATEGY
--------------------------------
The Fund seeks a high level of income consistent with the maintenance of
liquidity and the preservation of capital by investing primarily in the
following high quality money market securities: securities issued by the
U.S. Government and its agencies and instrumentalities, whose principal
and interest are guaranteed; commercial paper which, if rated by S&P or
Moody's, is rated, at the time of purchase, A-1 by S&P and Prime 1 by
Moody's or, if not rated, is determined to be of comparable quality by
the Fund; and other high quality corporate debt with average maturities
of less than 12 months. The Fund's assets will be invested in short-term
debt obligations maturing within one year. The average dollar-weighted
maturity of the portfolio will not exceed 90 days.

[icon] INVESTMENT RISKS
--------------------------------
An investment in this or any other money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency. Although the Fund seeks to preserve the value of
shareholders' investments at $1 per share, it is possible to lose money
by investing in the Fund. Additionally, there is a chance that the
Fund's returns may not keep pace with the rate of inflation over the
long term.

[icon] WHO SHOULD INVEST?
--------------------------------
This Fund is appropriate for:
- Short-term, risk averse investors
- Investors focused on the preservation of assets rather than the
appreciation of assets
- Investors seeking liquidity

[icon] HISTORICAL PERFORMANCE
------------------------------------------------------------------------
The bar chart below illustrates how the Fund's total return has varied
from year to year, while the table shows performance over time. This
information may help provide an indication of the Fund's risks and
potential rewards. All figures assume the reinvestment of dividends.
Past performance cannot guarantee future results.

[CHART]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
7.48% 5.66% 3.25% 2.51% 3.68% 5.49% 4.96% 5.11% 5.09% 4.71%

BEST QUARTER: 2Q '90 at 1.93% WORST QUARTER: 2Q '93 at 0.60%

28
<PAGE>
MONEY MARKET FUND
--------------------------------------------------------------------------------
[icon] EXPENSES
------------------------------------------------------------------------
As a Columbia shareholder, you pay no transaction fees such as sales
loads or redemption and exchange fees when you buy or sell shares. The
table below describes the annual expenses you may pay when you hold Fund
shares.
-------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------
(expenses that are paid out of Fund assets)
MANAGEMENT FEES 0.47%
Distribution and/or Service (12b-1) Fees None
OTHER EXPENSES 0.17%
Total Annual Fund Operating Expenses 0.64%

---------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------
$65 $205 $357 $798

[icon] FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
This table will help you understand the Fund's financial performance for
the periods indicated. Certain information reflects financial results
for a single Fund share. Total return shows how much your Fund
investment increased or decreased during each period, assuming
reinvested dividends and distributions. PricewaterhouseCoopers LLP,
independent accountants, has audited this information. Their report,
along with the Fund's financial statements, is included in the Funds'
annual report, which is available upon request.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ............... $1.00 $1.00 $1.00 $1.00 $1.00
----------------------------------------------------------------------------------------------------------
NCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.046 0.050 0.050 0.048 0.053
----------------------------------------------------------------------------------------------------------
Total from investment operations ................ 0.046 0.050 0.050 0.048 0.053
----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.046) (0.050) (0.050) (0.048) (0.053)
----------------------------------------------------------------------------------------------------------
Total distributions ............................. (0.046) (0.050) (0.050) (0.048) (0.053)
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ..................... $1.00 $1.00 $1.00 $1.00 $1.00
----------------------------------------------------------------------------------------------------------
TOTAL RETURN ..................................... 4.71% 5.09% 5.11% 4.96% 5.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) ........ $1,165,289 $1,109,141 $1,169,096 $889,800 $800,656
Ratio of expenses to average net assets .......... 0.64% 0.62% 0.63% 0.62% 0.64%
Ratio of net investment income to
average net assets ............................ 4.61% 4.97% 4.99% 4.84% 5.34%
</TABLE>

29
<PAGE>
MANAGEMENT
---------------------------------------

The Funds' investment adviser is Columbia Funds Management Company ("Columbia"),
P.O. Box 1350, Portland, Oregon 97207-1350. Columbia is responsible for managing
the Funds' portfolios and its business affairs, subject to oversight by the
Funds' Boards of Directors. Columbia or its predecessor has acted as an
investment adviser since 1967.

For the year ended December 31, 1999, the investment advisory fees paid to
Columbia by each of the Funds, expressed as a percentage of net assets, were as
follows:

Columbia Common Stock Fund 0.60%
Columbia Growth Fund 0.55%
Columbia International Stock Fund 1.00%
Columbia Special Fund 0.91%
Columbia Small Cap Fund 1.00%
Columbia Real Estate Equity Fund 0.75%
Columbia Balanced Fund 0.50%

Columbia Short Term Bond Fund 0.50%

Columbia Fixed Income Securities Fund 0.50%
Columbia National Municipal Bond Fund 0.50%
Columbia Oregon Municipal Bond Fund 0.50%
Columbia High Yield Fund 0.60%
Columbia Daily Income Company 0.47%

[SIDENOTE:]
Columbia's Investment Team is responsible for developing investment themes and
strategies for the Funds. [LOGO]

COLUMBIA INVESTMENT TEAM
Columbia's Investment Team is responsible for developing investment themes and
strategies for the Funds. Thomas L. Thomsen is President, Chief Investment
Officer and a Director of Columbia and supervises the Team's activities. Prior
to joining Columbia 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).

For most Funds, a lead portfolio manager is responsible for implementing and
maintaining the investment themes and strategies developed by the Team, while
adhering to the specific goal and strategy of the Fund.

COMMON STOCK FUND -- TEAM MANAGED (SINCE 1998).
Based on an analysis of macro-economic factors and the investment
environment, Columbia's Asset Allocation Committee is responsible for
determining the sector or industry weightings for the Fund. Individual

30
<PAGE>
--------------------------------------------------------------------------------
MANAGEMENT
--------------------------------------------------------------------------------

members of the Investment Team then select securities within the sectors or
asset classes for which they have research and analytic responsibility.

GROWTH FUND -- ALEXANDER S. MACMILLAN (SINCE 1992).
A Vice President of Columbia and a Chartered Financial Analyst, Mr. Macmillan
joined Columbia in 1989. Previously, he was a Vice President and Portfolio
Manager for Gardner & Preston Moss (1982-1989). He received a Master of Business
Administration degree from the Amos Tuck School at Dartmouth College in 1980.

INTERNATIONAL STOCK FUND -- JAMES M. MCALEAR (SINCE 1992).
A Vice President of Columbia, Mr. McAlear joined Columbia in 1992. Previously,
he was a Senior Vice President of American Express Financial Advisors
(1985-1992) and an Executive Director for Merrill Lynch Europe (1972-1985). He
received a Master of Arts degree in economics from Michigan State University in
1964.

SPECIAL FUND -- RICHARD J. JOHNSON (SINCE 1998).
A Vice President of Columbia and a Chartered Financial Analyst, Mr. Johnson
joined Columbia in 1994. Previously, he served as a Portfolio Manager and
Analyst at Provident Investment Counsel (1990-1994). Mr. Johnson received a
Master of Business Administration degree from the Anderson School of Management
at UCLA in 1990.

SMALL CAP FUND -- RICHARD J. JOHNSON (SINCE 1996).

REAL ESTATE EQUITY FUND -- DAVID W. JELLISON (SINCE 1994).
A Vice President of Columbia and a Chartered Financial Analyst, Mr. Jellison
joined Columbia in 1992. Previously, he was a Senior Research Associate for RCM
Capital Management (1987-1992). Mr. Jellison received a Master of Management
degree from the J.L. Kellogg Graduate School of Management at Northwestern
University in 1984.

BALANCED FUND -- TEAM MANAGED (SINCE 1998).
Based on an analysis of macro-economic factors and the investment environment,
Columbia's Asset Allocation Committee is responsible for determining the Fund's
weightings in stocks, bonds and cash investments. That committee is also
responsible for determining the sector or industry weightings of the equity
portion of the Fund. Columbia's Bond Team is responsible for determining the
sector emphasis among different types of fixed income securities. Individual
members of the entire Investment Team then select the securities within the
sector or asset classes for which they have research and analytic
responsibility.

31
<PAGE>

SHORT TERM BOND FUND -- JEFFREY L. RIPPEY (SINCE 1987)and LEONARD A. APLET
(SINCE 2000). A Vice President of Columbia and a Chartered Financial Analyst,
Mr. Rippey joined Columbia in 1981. Previously, he worked in the Trust
Department of Rainier National Bank (1978-1981). Mr. Rippey is a 1978 graduate
of Pacific Lutheran University.

Mr. Aplet, a Vice President of Columbia and a Chartered Financial Analyst,
joined Columbia in 1987. Previously, he was an employee of the Farmers Home
Administration (1976-1985). Mr. Aplet received a Master of Business
Administration degree from the University of California at Berkeley in 1987.

FIXED INCOME SECURITIES FUND -- LEONARD A. APLET (SINCE 1989) AND JEFFREY L.
RIPPEY (SINCE 1989).

[SIDENOTE:]

The rules that govern personal trading by investment personnel are based on the
principle that employees have a fiduciary duty to conduct their trades in a
manner that is not detrimental to the Funds or their shareholders. [LOGO]

NATIONAL MUNICIPAL BOND FUND -- GRETA R. CLAPP (SINCE 1999).
A Vice President of Columbia and a Chartered Financial Analyst, Ms. Clapp joined
Columbia in 1991. Previously, she was an Assistant Vice President and Portfolio
Manager at The Putnam Companies (1985-1988). Ms. Clapp received a Master of
Business Administration degree from the University of Michigan in 1990.

OREGON MUNICIPAL BOND FUND -- GRETA R. CLAPP (SINCE 1992).

HIGH YIELD FUND -- JEFFREY L. RIPPEY (SINCE 1993) AND KURT M. HAVNAER
(SINCE 2000).
A Vice President of Columbia and a Chartered Financial Analyst, Mr. Havnaer
joined Columbia in 1996. Previously, he worked as a Portfolio Manager, Analyst
and Trader for SAFECO Asset Management Co. (1991-1996). Mr. Havnaer received a
Master of Business Administration degree from Seattle University in 1991.

COLUMBIA DAILY INCOME COMPANY -- LEONARD A. APLET
(SINCE 1988).

PERSONAL TRADING
Members of the Investment Team and other employees of the Funds or Columbia are
permitted to trade securities for their own or family accounts, subject to the
rules of the Code of Ethics adopted by the Funds and Columbia. The rules that
govern personal trading by investment personnel are based on the principle that
employees have a fiduciary duty to conduct their trades in a manner that is not
detrimental to the Funds or their shareholders. For more information on the Code
of Ethics and specific trading restrictions, see the Funds' Statement of
Additional Information.

32
<PAGE>
INVESTOR SERVICES
--------------------------------------------------------------------------------
INVESTOR SERVICES
---------------------------------------
This section is designed to acquaint you with the different services and
policies associated with an investment in Columbia Funds. For an at-a-glance
summary of account instructions, please see page 38.

PURCHASING SHARES
Shares of Columbia Funds are available at net asset value ("NAV"), which means
that you pay no sales charges or commissions to invest. Your investment will be
priced at the NAV next calculated after your order is accepted by the Funds.
Investments received for Columbia Daily Income Company must be converted to
federal funds, so there may be a one-day delay in your investment. All Bond
Funds and Columbia Daily Income Company will begin to earn interest on the day
after the investment is made.

SELLING SHARES
You can sell (redeem) shares any day the New York Stock Exchange ("NYSE") is
open for business. Your shares will be redeemed at their net asset value,
calculated after your valid redemption request is accepted by the Funds. There
are no fees to sell shares.

When redeeming, please keep these important points in mind:
- A signature guarantee may be required. See page 35 for examples of when a
signature guarantee is required.
- Any certificated shares will require the return of the certificate before a
redemption can be made.
- Redemptions of an IRA will require the completion of additional paperwork for
the purposes of IRS tax reporting.
- Redemption requests must be signed by all owners on the account.
- Redemption requests from corporations, fiduciaries and intermediaries may
require additional documentation.

Normally, your redemption proceeds will be sent to you the day after the
effective date of the redemption. Except as provided by rules of the Securities
and Exchange Commission, redemption proceeds will be sent to you no later than
seven days from the redemption date. Proceeds transmitted by way of ACH
(Automated Clearing House) are usually credited to your bank account on the
second business day following the request.

[SIDENOTE:]
--------------------------------------------------------------------------------
INVESTMENT MINIMUMS

FIRST TIME FUND INVESTMENT:
$1,000 Minimum for all Funds but the Special and Small Cap Funds, which have
$2,000 minimums
SUBSEQUENT FUND INVESTMENT:
$100 for all Funds
AUTOMATIC INVESTMENT PLAN:
$50 for all Funds (minimum requirements for first time investments are
waived)

When investing in the Funds, please keep these important points in mind:
- Personal checks for investment should be drawn on U.S. funds, must meet Fund
investment minimum requirements and be made payable to Columbia Funds
- Columbia will not accept cash investments
- Columbia reserves the right to reject any investment
- If your investment is cancelled because your check did not clear the bank
or because the Funds were unable to debit your 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
- Columbia may reject any third party checks submitted for investment

33
<PAGE>
Also, before selling recently purchased shares, please note that if the Fund has
not yet collected payment for the shares you are selling, it may delay sending
the proceeds until it has collected payment, which may take up to 15 days from
the purchase date. Additionally, the Fund reserves the right to redeem shares
in-kind under unusual circumstances. In-kind payment means payment will be made
to you in portfolio securities rather than cash. In that event, you will incur
transaction costs if you sell the securities for cash.

[SIDENOTE:]
--------------------------------------------------------------------------------
WILL A FUND EVER BE CLOSED TO NEW INVESTORS?

While Columbia reserves the right to close a Fund to new investors in the
future, all Funds are now open to new investors. Columbia will carefully
consider a number of factors prior to closing a Fund to new investors, including
a Fund's total assets and its flow of new money. If a Fund does close, existing
Fund shareholders may continue to invest in that Fund so long as the
shareholder's account remains open.

DRAFTWRITING IN COLUMBIA DAILY INCOME COMPANY.
If you are a Columbia Daily Income Company shareholder, you may redeem shares by
draft if you have completed the signature card attached to your original
application. Drafts will be furnished to you free of charge. Drafts may not be
written for less than $250. Your investment will earn daily income until your
draft is presented for payment. Of course, your draft can only be paid if you
have sufficient funds invested in Columbia Daily Income Company. A draft is a
redemption and, therefore, subject to the Fund's approval. The draftwriting
service may be terminated upon written notice.

IMPORTANT FUND POLICIES

HOW SHARES ARE PRICED.
All purchases, redemptions and exchanges will be processed at the NAV next
calculated after your request is received and accepted by a Fund. A Fund's NAV
is calculated at the close of the regular trading session of the NYSE (normally
4:00 p.m. Eastern time).

Shares will only be priced on days that the NYSE is open for trading. The NAV of
a Fund is calculated by subtracting a Fund's liabilities from its assets and
dividing the result by the number of outstanding shares. The Funds use market
prices in valuing portfolio securities. Securities for which market quotations
are not available 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 each Fund. Debt securities with remaining maturities of less than
60 days will generally be valued based on amortized cost, which approximates
market value.

34
<PAGE>
INVESTOR SERVICES
--------------------------------------------------------------------------------

Trading on many foreign securities markets is completed at various times before
the close of the NYSE or on days the NYSE is not open for business.
Consequently, the calculation of a Fund's NAV may take place at a time that is
different than when prices are determined for funds holding foreign securities.
As a result, events affecting the values of foreign portfolio securities that
occur between the time the prices are determined and the close of the NYSE will
not be reflected in a Fund's calculation of NAV, unless the Board of Directors
or Columbia, if delegated by the Board, determines that the event would
materially affect the NAV.

[SIDENOTE:]
--------------------------------------------------------------------------------
WHEN IS A SIGNATURE GUARANTEE NECESSARY?

To protect against fraud, a signature guarantee is required for each of the
following written redemption requests:
- Redemption requests over $50,000
- Redemption checks that are made payable to someone other than those
registered on the account
- A request to send proceeds to an address or account other than those of
record
- The mailing address for your redemption check has changed in the last 10 days

Columbia may require signature guarantees in other situations or reject a
redemption for legal reasons. Signature guarantees are available from a bank,
broker dealer, credit union, savings and loan, national securities exchange or
trust company. A notary public cannot supply a signature guarantee.

FINANCIAL INTERMEDIARIES.

If you invest through a third-party (rather than directly with Columbia), the
policies and fees for transacting business may be different than those described
here. Banks, brokers, 401(k) plans, financial advisors and financial
supermarkets (a "Financial Intermediary") may charge transaction fees and may
set different minimum investments or limitations on buying or selling shares.
Your total cost of investing in a Fund will be increased to the extent of any
fees charged by your Financial Intermediary. Also, because these arrangements
reduce or eliminate the need for the Fund's transfer agent to provide account
services, the Funds and Columbia may pay the Financial Intermediary a
recordkeeping or account servicing fee. Many Financial Intermediaries enter into
an agreement with the Funds that authorizes them to accept purchase and
redemption orders on behalf of the Funds. To the extent that the Financial
Intermediary has agreed to act as an agent for 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.

EXCHANGES.
On any business day, you may exchange all or a portion of your shares into any
other available Columbia Fund. To prevent excessive exchange activity to the
detriment of other shareholders, only four exchanges per Fund are allowed per
year. When exchanging into a new Fund, be sure you read the part of the
Prospectus that pertains to the Fund you exchange into. This privilege may be
revoked or modified at any time, and the Funds reserve the right to reject any
exchange request. For example, the Funds may reject exchanges from accounts
engaged in or known to engage in trading that exceeds the Fund's annual limit
(including market timing transactions).

35
<PAGE>
TELEPHONE REDEMPTIONS.
To determine whether telephone instructions are genuine, Columbia will request
personal shareholder information when you call. All telephone instructions are
recorded and a written confirmation of the redemption is mailed to the address
of record. Proceeds from a telephone redemption may only be mailed to the
registered name and address on the account, or transferred to your predesignated
bank account or to another Columbia Fund under the same account number. For your
protection, the ability to redeem by phone and have the proceeds mailed to your
address may be suspended for up to 30 days following an address change. You may
be liable for any fraudulent telephone instructions as long as Columbia takes
reasonable measures to verify the identity of the caller.

AUTOMATIC WITHDRAWALS.
Automatic withdrawals are redeemed 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 balance requirement, your account is subject to being closed on
60 days written notice.

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

- Your Fund balance falls below $500
- You are a U.S. shareholder and fail to provide a certified taxpayer
identification number
- You are a foreign shareholder and fail to provide a current Form W-8,
"Certificate of Foreign Status"

If your shares are redeemed by the Fund, payment will be made promptly at the
Fund's current net asset value, and may result in a realized capital gain or
loss.

TAXPAYER IDENTIFICATION NUMBER.
Federal law requires each Fund to withhold 31% of dividends and redemption
proceeds paid to shareholders who have not complied with certain tax
requirements. You will be asked to certify on your account application that the
Social Security number provided is correct and that you are not subject to 31%
backup withholding for previous underreporting of income to the

36
<PAGE>
INVESTOR SERVICES
--------------------------------------------------------------------------------

IRS. The Funds will generally not accept new investments that do not comply
with these requirements.

SHAREHOLDER STATEMENTS.
To stay informed about the status of your account, every Columbia Funds
shareholder receives either monthly or quarterly statements. With the exception
of recurring activity, such as an automatic investment or withdrawal plan, you
will receive a confirmation for all transactions in your account. Shareholder
reports are mailed to shareholders twice a year, and you'll also receive an
annual tax report detailing the taxable characteristics of any Fund
distributions from the prior year. To reduce Fund expenses, only one shareholder
report and the Funds' annually updated prospectus will be mailed to accounts
with the same Tax Identification Number or the same family name registered at
the same address. 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 Funds. For a SAVMAIL form or to
receive additional copies of any financial report or Prospectus, please call an
Investor Services Representative at 1-800-547-1707. If you do not wish to have
your shareholder reports and prospectuses consolidated, please call us and we
will send you individual copies within 30 days of your request.

[SIDENOTE:]
--------------------------------------------------------------------------------
RECEIVE CUSTOMIZED INVESTMENT MANAGEMENT WITH A PRIVATE MANAGEMENT ACCOUNT

For custom asset allocation services among the Columbia Funds, Columbia Trust
Company offers the Private Management Account for investments over $150,000. The
annual fee for this service is:

- .75% on the first $500,000
- .50% on the next $500,000
- .25% on assets over $1,000,000

The minimum fee for this service is $1,000 and the maximum fee is $15,000. These
fees are in addition to the underlying expenses of the Funds making up the
Private Management Account. For additional information, please call
1-800-547-1037, x2200.

37
<PAGE>
AT-A-GLANCE INSTRUCTIONS FOR ACCOUNTS

--------------------------------------------------------------------------------
OPENING A NEW ACCOUNT
--------------------------------------------------------------------------------
BY MAIL [GRAPHIC]

REGULAR MAIL
Columbia Financial Center
P.O. Box 1350
Portland, OR 97207-1350

OVERNIGHT CARRIER
Columbia Financial Center
1301 S.W. Fifth Avenue
Portland, OR 97201-5601

Complete an application and send it to the address above with your check for at
least the minimum fund investment.

--------------------------------------------------------------------------------
BY TELEPHONE [GRAPHIC]

1-800-547-1707
WIRE: Once you submit a completed application, you may open an account using
federal funds wired from your bank. Since each Fund has a different wire number,
call us for instructions.

--------------------------------------------------------------------------------
INTERNET [GRAPHIC]

www.columbiafunds.com

Download a prospectus and an application from our Web site. Mail a completed
application with your initial investment to the address above.

--------------------------------------------------------------------------------
AUTOMATIC

A minimum of $50 lets you open an account, provided you establish an automatic
investment plan (AIP). This means that investments are transferred automatically
from your bank to the Columbia Fund(s) of your choice each month. Sign up for
AIP on the application, or call us for a form.

--------------------------------------------------------------------------------
IN PERSON [GRAPHIC]

Columbia Financial Center
1301 S.W. Fifth Avenue
Portland, OR 97201-5601

7:30-5:00 PST

Visit Columbia Funds, conveniently located in downtown Portland.

--------------------------------------------------------------------------------
BUYING SHARES
--------------------------------------------------------------------------------
BY MAIL [GRAPHIC]

REGULAR MAIL
Columbia Financial Center
P.O. Box 1350
Portland, OR 97207-1350

OVERNIGHT CARRIER
Columbia Financial Center
1301 S.W. Fifth Avenue
Portland, OR 97201-5601

Send your investment to the above address. Be sure to enclose an investment slip
from the bottom of your statement.

--------------------------------------------------------------------------------
BY TELEPHONE [GRAPHIC]

1-800-547-1707

WIRE: Invest using federal funds wired from your bank. Since each Fund has a
different wire number, call us for instructions.

EXCHANGE: Use the proceeds from the redemption in one Fund to purchase shares of
another Fund with the same account number. To exchange shares, call us.

TELEVEST: Provided the service is already set up on your account (use the
application or call us for a form), request a transfer from your bank for
investment in the Columbia Funds.

--------------------------------------------------------------------------------
INTERNET [GRAPHIC]

www.columbiafunds.com

EXCHANGE: Call us for a personal identification number to access your account
online. Then, use the proceeds from the redemption in one Fund to purchase
shares of another Fund with the same account number. Submit your exchange
request through our secure account e-mail.

--------------------------------------------------------------------------------
AUTOMATIC
Arrange to have investments transferred automatically from your bank account to
the Columbia Fund(s) of your choice on the 5th, 20th, or both, of each month.
Sign up for AIP on the application or call us for a form. AIP investment minimum
is $50 per Fund.

--------------------------------------------------------------------------------
IN PERSON [GRAPHIC]
Columbia Financial Center
1301 S.W. Fifth Avenue
Portland, OR 97201-5601

7:30-5:00 PST

Visit Columbia Funds, conveniently located in downtown Portland.

38
<PAGE>
INVESTOR SERVICES
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
SELLING (REDEEMING) SHARES
--------------------------------------------------------------------------------
BY MAIL [GRAPHIC]

REGULAR MAIL
Columbia Financial Center
P.O. Box 1350
Portland, OR 97207-1350

OVERNIGHT CARRIER
Columbia Financial Center
1301 S.W. Fifth Avenue
Portland, OR 97201-5601

Send your redemption request to the above address. Redemption requests must be
signed by each shareholder required to sign on the account. A signature
guarantee may be required. Accounts in the names of corporations, fiduciaries,
and intermediaries may require additional documentation.

--------------------------------------------------------------------------------
BY TELEPHONE [GRAPHIC]

1-800-547-1707

Redeem shares by phone (unless you have declined this service on the
application.) Proceeds from telephone redemptions may be mailed only to the
account owner at the address of record (maximum $50,000) or transferred to a
bank designated on the application (any amount).

WIRE: Call us to request a wire redemption. Your request must be at least
$1,000, and the bank wire cost for each redemption will be charged against your
Columbia account. Your bank may impose a fee.

EXCHANGE: Use the proceeds from the redemption of one Fund to
purchase shares of another Fund with the same account number. To exchange
shares, call us.

--------------------------------------------------------------------------------
INTERNET [GRAPHIC]

www.columbiafunds.com

--------------------------------------------------------------------------------
AUTOMATIC
For accounts over $5,000, redeem shares on a regular basis through a transfer of
funds from your Columbia account directly to the bank designated on your
application ($50 minimum withdrawal).

--------------------------------------------------------------------------------
IN PERSON [GRAPHIC]
Columbia Financial Center
1301 S.W. Fifth Avenue
Portland, OR 97201-5601

7:30-5:00 PST

Although you can visit Columbia Funds to make a redemption request, availability
of the proceeds will vary. Please call ahead for details.

[SIDENOTE:]
TAX-ADVANTAGED INVESTING WITH A COLUMBIA IRA OR RETIREMENT PLAN

The following accounts require special applications. For an application and more
details about tax-advantaged investing, call us at 1-800-547-1707.

TRADITIONAL IRA
A Traditional IRA allows you to invest a maximum of $2,000 each year and earn
tax-deferred returns. Your contributions may be tax deductible. Deductions may
be limited if your income exceeds a certain level or if you participate in
certain retirement plans. Any withdrawals of tax deductible contributions and
tax-deferred earnings are taxable at your regular income tax rate. Early
withdrawals also may be subject to penalties. You may choose to roll over
retirement plan proceeds into an IRA in order to prolong tax-deferred savings.

ROTH IRA
A Roth IRA allows you to invest a maximum of $2,000 each year, the returns on
which are tax-free. Your contributions are not tax deductible. Your ability to
invest in a Roth IRA may be limited if your income exceeds a certain level.
Tax-free withdrawals are available after a five-year holding period, provided
you are over 59-1/2, a first time homebuyer, or satisfy other requirements.

EDUCATION IRA
This account allows you to contribute a maximum of $500 each year, the returns
on which generally are tax free when used to fund certain higher education
expenses of a child. Your contributions are not tax deductible. Your ability to
invest in an Education IRA may be limited if your income exceeds a certain
level.

RETIREMENT PLANS
A number of retirement plan options are available for small- to mid-size
businesses. Contact Columbia at 1-800-547-1037, extension 2115 for further
information.
39
<PAGE>
DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------
Each Fund distributes to shareholders its net investment income and net realized
capital gains. Net investment income (income from dividends, interest and any
net realized short-term capital gains) and net long-term capital gains (gains
realized on the sale of a security by a Fund) are distributed as follows:

--------------------------------------------------------------------------------
INCOME AND CAPITAL GAINS DISTRIBUTIONS
--------------------------------------------------------------------------------
NET INVESTMENT NET REALIZED LONG-
FUND INCOME TERM CAPITAL GAINS

Growth Fund Declared and paid Normally declared
International Stock Fund in December and paid in
Special Fund December
Small Cap Fund
--------------------------------------------------------------------------------

Common Stock Fund Declared and paid each Normally declared
Real Estate Equity Fund calendar quarter and paid in
Balanced Fund December
--------------------------------------------------------------------------------

Short Term Declared daily and Normally declared
Bond Fund paid monthly and paid in

Fixed Income December
Securities Fund
National Municipal
Bond Fund
Oregon Municipal
Bond Fund
High Yield Fund
--------------------------------------------------------------------------------
Money Market Fund Declared and paid daily Declared and paid
in December (if
any)

Unless you elect to receive your distributions in cash, income and capital gain
distributions will be reinvested in additional shares on the dividend payment
date.

TAX EFFECT OF DISTRIBUTIONS

SHAREHOLDERS OF FUNDS OTHER THAN MUNICIPAL BOND FUNDS.
Distributions from the Funds are taxable unless a shareholder is exempt from
federal or state income taxes or the investment is in a tax-advantaged account.
The tax status of any distribution is the same regardless of how long a
shareholder has been invested in the Fund and whether distributions are
reinvested or taken as cash.

40
<PAGE>
--------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------

In general, distributions are taxable as follows:

--------------------------------------------------------------------------------
TAXABILITY OF DISTRIBUTIONS
--------------------------------------------------------------------------------
TYPE OF DISTRIBUTION TAXABLE AT

Dividend Income Ordinary Income Rate
--------------------------------------------------------------------------------
Short-Term Capital Gains Ordinary Income Rate
--------------------------------------------------------------------------------
Long-Term Capital Gains 20% or 10% (depending on
whether you are in the
28% or 15% tax bracket)
[SIDENOTE:]
Distributions by the Columbia stock funds will consist primarily of capital
gains, and distributions by the Columbia bond funds and the Money Market Fund
will consist primarily of ordinary income.

Distributions by the Columbia stock funds will consist primarily of capital
gains, and distributions by the Columbia bond funds and the Money Market Fund
will consist primarily of ordinary income. In January, the Funds will send
shareholders information detailing the net investment income and capital gains
distributed in the prior year.

"BUYING A DIVIDEND." If you buy shares of a 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 income. This tax result
is extremely unlikely in the case of the Money Market Fund, which distributes
its net investment income daily and has few or no capital gains.

SHAREHOLDERS OF MUNICIPAL BOND FUNDS.
FEDERAL TAXES. A substantial portion of the net investment income distributed by
the Municipal Bond Funds will be tax-exempt interest and will not be includible
in a shareholder's gross income for federal income tax purposes. A portion of
net income distributed by these Funds may, however, be taxable as ordinary
income to the extent the distribution represents taxable interest received from
sources other than municipal bonds or taxable accrued market discount on the
sale or redemption of municipal bonds. Additionally, even though shareholders
generally will not be taxed on distributions of tax-exempt interest, to the
extent these Funds have net capital gains, shareholders will be taxed on the
gain at the applicable capital gains rate.

41
<PAGE>
STATE INCOME TAXES.

NATIONAL MUNICIPAL BOND FUND: Distributions from this Fund may be exempt from
the income tax of a state, if the distributions are derived from tax-exempt
interest paid on the municipal securities of that state or its political
subdivisions. Those distributions may not be exempt from another state's income
tax, however. In addition, distributions derived from capital gains generally
will be subject to state income tax. Shareholders of the National Municipal Bond
Fund should consult their tax advisors regarding whether any portion of
distributions received from that Fund is exempt from state income tax, because
exemption may depend upon whether the shareholder is an individual, whether the
individual is subject to tax in any given state, the residence of the
individual, and the particular state tax treatment of mutual funds.

OREGON MUNICIPAL BOND FUND: Individuals, trusts, and estates will not pay Oregon
personal income tax on distributions from the Oregon Municipal Bond Fund that
are derived from tax-exempt interest paid on the municipal securities of the
State of Oregon, its political subdivisions and certain other issuers (including
Puerto Rico and Guam). However, individuals, trusts, and estates that are
subject to Oregon personal income tax are generally subject to Oregon personal
income tax on distributions derived from other types of income received by the
Oregon Municipal Bond Fund, including capital gains. Furthermore, it is expected
that corporations subject to the Oregon corporation excise or income tax will be
subject to that tax on the income from the Fund, including income that is exempt
for federal purposes.

TAXABILITY OF TRANSACTIONS
The sale of Fund shares or the exchange of Fund shares for shares of another
Fund is considered a taxable event that may produce a gain or loss. Shareholders
are responsible for any tax liabilities generated by their transactions.

---------------------------------------------------------------
Local taxes are beyond the scope of this discussion. This section
provides only a brief summary of tax information related to the Funds.
You should consult your tax professional about the tax consequences of
investing in the Funds.
---------------------------------------------------------------

42
<PAGE>
--------------------------------------------------------------------------------
MORE ABOUT THE FUNDS
--------------------------------------------------------------------------------
MORE ABOUT THE FUNDS
---------------------------------------

This section contains additional information about the risks and types of
securities in which the Funds will principally invest. For a more detailed
description of each Fund and its investment strategy, please request a copy of
the Funds' Statement of Additional Information.

PORTFOLIO SECURITIES
INTERNATIONAL STOCK FUND.

The Fund intends to invest principally in the equity securities of companies
located in the following countries: Argentina, Australia, Brazil, Canada,
Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Korea,
Malaysia, The Netherlands, New Zealand, Norway, Portugal, Singapore, Spain,
Sweden, Switzerland, Thailand, and the United Kingdom. Equity securities in
which the Fund may invest include common stocks, preferred stocks, securities
convertible into common stocks and securities that carry the right to buy common
stocks. Although the Fund intends to invest primarily in companies located
outside the United States, it is permitted to invest up to 35% of its total
assets in U.S. companies, and it is more likely to do that when it believes
foreign market or economic conditions or trends in currency exchange rates favor
domestic securities.

Most of the securities held by the Fund will be denominated in foreign
currencies. This means that the value of the securities will be affected by
changes in the exchange rate between the U.S. dollar and foreign currencies. In
managing currency exposure, the Fund may enter into forward currency contracts.
A forward currency contract involves an agreement to purchase or sell a
specified currency at a specified future price set at the time of the contract.
When the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may desire to "lock in" the U.S. dollar
price of the security. The Fund will only enter into forward contracts for
hedging and not for purposes of speculation. Under normal market conditions, no
more than 25 percent of the Fund's assets may be committed to currency exchange
contracts.

SPECIAL FUND.
Although the Special Fund intends to invest primarily in small- to mid-cap
companies, it may invest in larger companies when Columbia believes they offer
comparable capital appreciation opportunities or to stabilize the Fund's
portfolio. Columbia will constantly monitor economic conditions to determine the
appropriate percentage of the Fund's assets that will be invested in small- to
mid-cap companies.

43
<PAGE>
The Fund may also invest in securities convertible into or exercisable for
common stock (including preferred stock, warrants, and debentures) and certain
options and financial futures contracts.

SMALL CAP FUND.
The Fund will invest, under normal conditions, at least 65% of the value of its
total assets in common stocks, or in securities convertible into common stocks,
of small-cap companies. Securities convertible into common stock may include
both debt securities and preferred stock. The Fund may also invest in warrants,
which are options to buy a stated number of underlying securities at a specified
price any time during the life of the warrants.

There is no minimum aggregate market valuation for a company to be considered an
appropriate investment for the Fund. The Fund may also invest up to 35% of its
net assets in the securities of large-cap companies when their stocks offer
capital appreciation potential that is generally comparable to small-cap
securities.

REAL ESTATE EQUITY FUND.
The Fund will invest a substantial portion of its assets in REITs. A REIT is not
taxed on income distributed to shareholders if it complies with several
requirements relating to its organization, ownership, assets, and income, and a
requirement that it distribute to its shareholders at least 95% of its taxable
income (other than net capital gains) for each taxable year.

REITs are generally classified as equity REITs, mortgage REITs, and hybrid
REITs. An equity REIT, which invests the majority of its assets directly in real
properties -- such as shopping centers, malls, multi-family housing, and
commercial properties -- derives its income primarily from rents and lease
payments. An equity REIT can also realize capital gains by selling properties
that have appreciated in value. A mortgage REIT, which invests the majority of
its assets in real estate mortgages, derives its income primarily from interest
payments. A hybrid REIT combines the characteristics of equity REITs and
mortgage REITs.

The Fund may invest up to 35% of its total net assets in equity securities of
companies outside the real estate industry and in non-convertible debt
securities. Investments outside the real estate industry will consist primarily
of securities of companies whose products and services are related to the real
estate industry. These may include manufacturers and distributors of building
supplies, financial institutions that make or service mortgages, or companies
with substantial real estate assets relative to their stock market valuations,
such as certain retailers and railroads. The Fund will only invest in
"investment-grade" debt securities.

44
<PAGE>
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MORE ABOUT THE FUNDS
--------------------------------------------------------------------------------

FIXED INCOME SECURITIES FUND, BALANCED FUND AND SHORT TERM BOND FUND.
The Fixed Income Securities Fund, the Balanced Fund and the Short Term Bond Fund
may invest in a variety of debt securities such as bonds, debentures, notes,
equipment trust certificates, and short-term obligations (those having
maturities of 12 months or less), such as prime commercial paper and bankers'
acceptances, domestic certificates of deposit, obligations of, or guaranteed by,
the U.S. Government and its agencies and instrumentalities, mortgage-backed
certificates, mortgage-backed securities and other similar securities
representing ownership in a pool of loans. The Short Term Bond Fund may also
invest in repurchase agreements with banks or securities dealers relating to
these securities.

Mortgage-backed securities are securities representing interests in "pools" of
mortgages in which payments of both interest and principal on the securities are
made monthly, in effect, "passing through" monthly payments made by the
individual borrowers on the mortgage loans that underlie the securities (net of
fees paid to the issuer or guarantor of the securities).

Payment of principal and interest on some mortgage pass-through securities (but
not the market value of the securities themselves) may be guaranteed by the full
faith and credit of the U.S. Government (in the case of securities guaranteed by
the Government National Mortgage Association ("GNMA")) or guaranteed by agencies
or instrumentalities of the U.S. Government (in the case of securities
guaranteed by the Federal National Mortgage Association ("FNMA") or the Federal
Home Loan Mortgage Corporation ("FHLMC"), which are supported only by the
discretionary authority of the U.S. Government to purchase the agency's
obligations). Mortgage pass-through securities created by non-governmental
issuers (such as commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers) may be supported with various credit enhancements such as pool
insurance, guarantees issued by governmental entities, a letter of credit from a
bank or senior/subordinated structures.

The Funds will usually invest some portion of their assets in collateralized
mortgage obligations ("CMOs") issued by U.S. agencies or instrumentalities or in
privately issued CMOs that carry an investment-grade rating. CMOs are hybrid
instruments with characteristics of both mortgage-backed bonds and mortgage
pass-through securities. Similar to a mortgage pass-through, interest and
prepaid principal on a CMO are paid, in most cases, monthly. CMOs may be
collateralized by whole mortgage loans but are more typically collateralized by
portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
FNMA. CMOs are structured in multiple classes, with each class bearing a
different stated maturity

45
<PAGE>
or interest rate. A Fund will only invest 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.

Each Fund is permitted to invest in asset-backed securities, subject to the
Fund's rating and quality requirements. Through the use of trusts and special
purpose subsidiaries, various types of assets, including home equity and
automobile loans and credit card and other types of receivables, as well as
purchase contracts, financing leases and sales agreements entered into by
municipalities, are being securitized in pass-through structures similar to the
mortgage pass-through structures described above.

MUNICIPAL BOND FUNDS.
While each of the Funds attempts to invest 100% of its assets in tax-free
municipal securities, each Fund may invest up to 20% of its assets in securities
that pay taxable interest. In such circumstances, the Fund will invest in
obligations of the U.S. Government or its agencies or instrumentalities;
obligations of U.S. banks (including certificates of deposit, bankers'
acceptances and letters of credit) that are members of the Federal Reserve
System and that have capital surplus and undivided profits as of the date of
their most recent published financial statements in excess of $100 million;
commercial paper rated Prime 1 by Moody's, A-1 or better by S&P, or if not
rated, issued by a company that, at the time of investment by the Fund, has an
outstanding debt issue rated AA or better by S&P or Aa or better by Moody's; and
repurchase agreements for any of these types of investments. The Funds may also
invest in the obligations of Puerto Rico, the U.S. Virgin Islands and Guam, the
interest on which is generally exempt from state income taxes.

TEMPORARY INVESTMENTS.
Under adverse market conditions, each Fund (other than Columbia Daily Income
Company) may depart from its principal investment strategies by taking defensive
positions in response to adverse economic or market conditions. When a Fund
assumes a temporary defensive position, it generally will not invest in
securities designed to achieve its investment goal.

PORTFOLIO TURNOVER.
Each Fund generally intends to purchase securities for long-term investment
rather than short-term gains. When circumstances warrant, however, a Fund may
sell securities without regard to the length of time they have been held. This
may result in a higher portfolio turnover rate and increase a Fund's transaction
costs, including brokerage commissions. To the extent

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short-term trades result in gains on securities held one year or less,
shareholders will be subject to taxes on these gains at ordinary income rates.
See "Information about Your Investment, DISTRIBUTIONS AND TAXES." Historical
portfolio turnover rates are shown under "Financial Highlights" in the
description of each Fund at the beginning of this Prospectus.

[SIDENOTE:]
Interest rate risk refers to the possibility that the net asset value of the
fixed income portfolios may decline due to an increase in interest
rates. [GRAPHIC]

MORE ABOUT RISKS
This section provides more information about the risks of investing in the
Funds, which you should consider before you invest.

REITs.
The Real Estate Equity Fund will, and the other Stock Funds as part of their
principal investment strategy may, invest in REITs. Investment in REITs carries
with it many of the same risks associated with direct ownership in real estate.
In addition to these risks, equity REITs may be affected by changes in the value
of the underlying property owned by the REIT, while mortgage REITs may be
affected by the quality of the credit extended. Furthermore, REITs are dependent
upon management skills, may not be diversified, and are subject to heavy cash
flow dependency, defaults by borrowers, and self-liquidation. In addition, a
REIT could fail to qualify for tax-free pass-through of income under the
Internal Revenue Code or fail to maintain its exemption from registration under
the Investment Company Act. The above factors may also adversely affect a
borrower's or a lessee's ability to meet its obligations to the REIT. If a
borrower or lessee defaults, a REIT may experience delays in enforcing its
rights as mortgagee or lessor and may incur substantial costs associated with
protection of its investments.

INTEREST RATE RISK.
Interest rate risk refers to the possibility that the net asset value of the
fixed income portfolios may decline due to an increase in interest rates.

When interest rates go up, the value of a bond fund's portfolio will likely
decline because fixed income securities in the portfolio are paying a lower
interest rate than what investors could obtain in the current market. When
interest rates go down, the value of a bond fund's portfolio will likely rise,
because fixed income securities in the portfolio are paying a higher interest
rate than newly issued fixed income securities. The amount of change in the
value of a bond fund's portfolio depends upon several factors, including the
maturity date of the fixed income securities in the portfolio. In general, fixed
income securities with longer maturities are more sensitive to interest rate
changes than securities with shorter maturities. To compensate for the higher
risk, bonds with longer maturities generally offer higher yields than bonds with
shorter maturities.

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CREDIT RISK.
The fixed income securities in the Funds' portfolios are subject to credit risk.
Credit risk refers to the possibility that the issuer of a bond may fail to make
timely payments of interest or principal. Other than the High Yield Fund and, to

a small extent, the Fixed Income Securities Fund and the Short Term Bond Fund,
all three of which may invest in non-investment grade securities, the Funds will
only invest in investment-grade fixed income securities. Investment-grade
securities are those issued by the U.S. Government, its agencies, and
instrumentalities, as well as those rated as shown below by the following rating
agencies:

--------------------------------------------------------------------------------
INVESTMENT-GRADE SECURITIES
--------------------------------------------------------------------------------
RATING AGENCY LONG-TERM SHORT-TERM
DEBT SECURITY DEBT SECURITY
Standard & Poor's (S&P) At least BBB At least A-3 or SP-2
--------------------------------------------------------------------------------
Moody's Investors
Service, Inc. (Moody's) At least Baa AT least Prime-3 or MIG 4/VMIG4
--------------------------------------------------------------------------------

The Funds may also invest in securities unrated by these agencies if Columbia
determines the security to be of equivalent investment quality to an investment
grade security. Investment-grade securities are subject to some credit risk.
Bonds in the lowest-rated investment-grade category have speculative
characteristics. Changes in economic conditions or other circumstances are more
likely to weaken the ability of the issuer to make principal and interest
payments on these bonds than is the case for higher-rated bonds. Discussion
concerning the risks of investing in non-investment grade bonds can be found in
the description of the High Yield Fund. In addition, the ratings of securities
provided by Moody's and S&P are estimates by the rating agencies of the credit
quality of the securities. The ratings may not take into account every risk
related to whether interest or principal will be repaid on a timely basis. See
the Statement of Additional Information for a complete discussion of bond
ratings.

ZERO-COUPON SECURITIES.
The High Yield Fund intends to invest in lower-rated debt securities
structured as zero-coupon securities. A zero-coupon security has no

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MORE ABOUT THE FUNDS
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cash-coupon payments. Instead, the issuer sells the security at a substantial
discount from its maturity value. The interest equivalent received by the
investor from holding this security to maturity is the difference between the
maturity value and the purchase price. Zero-coupon securities are more volatile
than cash pay securities. The Fund accrues income on these securities prior to
the receipt of cash payments. The Fund intends to distribute substantially all
of its income to its shareholders to qualify for pass-through treatment under
the tax laws and may, therefore, need to use its cash reserves to satisfy
distribution requirements.

MORTGAGE RELATED SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). In
addition to the Short Term Bond Fund, the Balanced Fund, and the Bond Fund, the
High Yield Fund may also invest in mortgage related securities and CMOs.
Investments in mortgage related securities and CMOs are subject to risks
relating to cash flow uncertainty; that is, the risk that actual prepayment on
the underlying mortgages will not correspond to the prepayment rate assumed by
the Fund prepayment risk). Unscheduled or early payments on the underlying
mortgages may shorten the securities' effective maturities and reduce their
growth potential. A decline in interest rates may lead to a faster rate of
repayment of the underlying mortgage and expose the Fund to a lower rate of
return on reinvestment. To the extent that mortgage-backed securities are held
by a Fund, the prepayment right of mortgages may limit the increase in net asset
value of the Fund because the value of the mortgage-backed securities held by
the Fund may not appreciate as rapidly as the price of non-callable debt
securities.

ALTERNATIVE MINIMUM TAX.
If you are subject to the federal alternative minimum tax, you should be aware
that up to 10% of each of the Municipal Bond Funds' net assets may be invested
in debt securities, the interest on which is subject to the alternative minimum
tax.

CONCENTRATION RISK.
The Oregon Municipal Bond Fund is "non-diversified," which means that it may
invest a greater percentage of its assets in the securities of a single issuer.
As a result, it may be more susceptible to risks associated with a single
economic, political or regulatory occurrence than a more diversified portfolio
might be.

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FOR YOUR INFORMATION
You can find additional information on the Funds in the following documents:

ANNUAL AND SEMIANNUAL REPORTS.
While the Prospectus describes the Funds' potential investments, these reports
detail the Funds' actual investments as of the report date. The reports include
a discussion by Fund management of recent market conditions, economic trends,
and Fund strategies that significantly affected Fund performance during the
reporting period.

STATEMENT OF ADDITIONAL INFORMATION ("SAI").
The SAI supplements the Prospectus and contains further information about each
Fund and its investment restrictions, risks and policies.

A current SAI for the Funds is on file with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference, which means it
is considered part of this Prospectus. You can get free copies of the current
annual/semiannual report and SAI, request other information, and discuss your
questions about the Funds by contacting the Funds at:

COLUMBIA FUNDS
1301 S.W. Fifth Avenue
Portland, Oregon 97201
Telephone: Portland (503) 222-3606
Nationwide 1-800-547-1707
www.columbiafunds.com

Information about the Funds (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C. Information about the
operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. Reports and other information regarding the Funds are also on
the SEC's Internet site at http://www.sec.gov; copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the SEC's
e-mail address of [email protected], or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.

SEC file number: 811-6341 (CCSF)
811-1449 (CGF)
811-7024 (CISF)
811-4362 (CSF)
811-7671 (CSCF)
811-8256 (CREF)
811-6338 (CBF)

811-4842 (CSTB)

811-3581 (CFIS)
811-7832 (CNBF)
811-3983 (CMBF)
811-7834 (CHYF)
811-2507 (CDIC)

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

COLUMBIA COMMON STOCK FUND, INC.
COLUMBIA GROWTH FUND, INC.
COLUMBIA INTERNATIONAL STOCK FUND, INC.
COLUMBIA SPECIAL FUND, INC.
COLUMBIA SMALL CAP FUND, INC.
COLUMBIA REAL ESTATE EQUITY FUND, INC.
COLUMBIA BALANCED FUND, INC.

COLUMBIA SHORT TERM BOND FUND, INC.

COLUMBIA FIXED INCOME SECURITIES FUND, INC.
COLUMBIA NATIONAL MUNICIPAL BOND FUND, INC.
COLUMBIA OREGON MUNICIPAL BOND FUND, INC.
COLUMBIA HIGH YIELD FUND, INC.
COLUMBIA DAILY INCOME COMPANY
--------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

Columbia Funds
1300 S.W. Sixth Avenue
P.O. Box 1350
Portland, Oregon 97207
(503) 222-3600

This Statement of Additional Information contains information relating
to 13 mutual funds: Columbia Common Stock Fund, Inc. (the "Common Stock Fund" or
"CCSF"), Columbia Growth Fund, Inc. (the "Growth Fund" or "CGF"), Columbia
International Stock Fund, Inc. (the "International Stock Fund" or "CISF"),
Columbia Special Fund, Inc. (the "Special Fund" or "CSF"), Columbia Small Cap
Fund, Inc. (the "Small Cap Fund" or "CSCF"), Columbia Real Estate Equity Fund,
Inc. (the "Real Estate Fund" or "CREF"), Columbia Balanced Fund, Inc. (the
"Balanced Fund" or "CBF"), Columbia Short Term Bond Fund, Inc. (the "Short Term
Bond Fund" or "CSTB"), Columbia Fixed Income Securities Fund, Inc. (the "Bond
Fund" or "CFIS"), Columbia National Municipal Bond Fund, Inc. (the "National
Municipal Bond Fund" or "CNMF"), Columbia Oregon Municipal Bond Fund, Inc. (the
"Oregon Municipal Bond Fund" or "CMBF"), Columbia High Yield Fund, Inc. (the
"High Yield Fund" or "CHYF"), and Columbia Daily Income Company (the "Columbia
Daily Income Company" or "CDIC") (each a "Fund" and together the "Funds").

This Statement of Additional Information is not a Prospectus. It
relates to a Prospectus dated February __, 2001 (the "Prospectus") and should be
read in conjunction with the Prospectus. Copies of the Prospectus are available
without charge upon request to any of the Funds or by calling 1-800-547-1037.

The Funds' most recent Annual Report to shareholders is a separate
document supplied with this Statement of Additional Information, and the
financial statements, accompanying notes and report of independent accountants
appearing in this Annual Report are incorporated by reference into this
Statement of Additional Information.

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TABLE OF CONTENTS

Description of the Funds....................................................3
Investment Restrictions.....................................................20
Management..................................................................38
Investment Advisory and Other Fees Paid to Affiliates.......................43
Portfolio Transactions......................................................45
Capital Stock and Other Securities..........................................47
Purchase, Redemption and Pricing of Shares..................................48
Custodians..................................................................52
Accounting Services and Financial Statements................................53
Taxes.......................................................................53
Yield and Performance.......................................................61
Financial Statements........................................................64

February __, 2001

<PAGE>
--------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
--------------------------------------------------------------------------------

Each of the Funds is an open-end, management investment company. Each
Fund, other than the Oregon Municipal Bond Fund, is diversified, which means
that, with respect to 75% of its total assets, the Fund will not invest more
than 5% of its assets in the securities of any single issuer. The investment
adviser for each of the Funds is Columbia Funds Management Company (the
"Adviser"). See the section entitled "INVESTMENT ADVISORY AND OTHER FEES PAID TO
AFFILIATES" for further information about the Adviser.

INVESTMENTS HELD AND INVESTMENT PRACTICES BY THE FUNDS
------------------------------------------------------

The Prospectus describes the fundamental investment objective and the
principal investment strategy applicable to each Fund. Each Fund's investment
objective may not be changed without shareholder approval, other than the
Special Fund, which may be changed by the Fund's Board of Directors without
shareholder approval upon 30 days written notice. What follows is additional
information regarding securities in which a Fund may invest and investment
practices in which it may engage. To determine whether a Fund purchases such
securities or engages in such practices, see the chart on pages 19 and 20 of
this Statement of Additional Information.

Securities Rating Agencies
--------------------------

Rating agencies are private services that provide ratings of the credit
quality of fixed income securities. The following is a description of the fixed
income securities ratings used by Moody's Investor Services, Inc. ("Moody's")
and Standard & Poor's Corporation ("S&P"). Subsequent to its purchase by the
Fund, a security may cease to be rated, or its rating may be reduced below the
criteria set forth for the Fund. Neither event would require the elimination of
the security from the Fund's portfolio, but the Adviser will consider that event
in its determination of whether the Fund should continue to hold such security
in its portfolio. Ratings assigned by a particular rating agency are not
absolute standards of credit quality and do not evaluate market risk. Rating
agencies may fail to make timely changes in credit ratings and an issuer's
current financial condition may be better or worse than a rating indicates.

Bond Ratings. Moody's -- The following is a description of 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 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.

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B - Generally lack 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.

Caa - Poor standing, may be in default; elements of danger with respect
to principal or interest.

S&P -- The following is a description of S&P'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.

CCC - Current identifiable vulnerability to default and dependent upon
favorable business, financial, and economic conditions to meet timely payments
of interest and repayments of principal. In the event of adverse business,
financial, or economic conditions, they are not likely to have the capacity to
pay interest and repay principal.

Bonds rated BB, B, and CCC are regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and CCC a higher degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

A Fund may purchase unrated securities (which are not rated by a rating
agency) if its portfolio manager determines that a security is of comparable
quality to a rated security that the Fund may purchase. Unrated securities may
be less liquid than comparable rated securities and involve the risk that the
portfolio manager may not accurately evaluate the security's comparative credit
rating. Analysis of the creditworthiness of issuers of high yield securities may
be more complex than for issuers of higher-quality fixed income securities. To
the extent that a Fund invests in high yield and/or unrated securities, the
Fund's success in achieving its investment objective is determined more heavily
on the portfolio manager's creditworthiness analysis than if the Fund invested
exclusively in higher-quality and rated securities.

Non-Investment Grade Securities ("Junk Bonds")
----------------------------------------------

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Investments in securities rated below investment grade (i.e., rated Ba
or lower by Moody's or BB or lower S&P) that are eligible for purchase by
certain of the Funds and in particular, by the Columbia High Yield Fund, are
described as "speculative" by both Moody's and S&P. Investment in lower rated
corporate debt securities ("high yield securities" or "junk bonds") generally
provides greater income and increased opportunity for capital appreciation than
investments in higher quality securities, but they also typically entail greater
price volatility and principal and income risk. These high yield securities are
regarded as predominately speculative with respect to the issuer's continuing
ability to meet principal and interest payments. Analysis of the
creditworthiness of issuers of debt securities that are high yield may be more
complex than for issuers of higher quality debt securities.

High yield securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than investment grade
securities. The prices of high yield securities have been found to be less
sensitive to interest-rate changes than higher-rated investments, but more
sensitive to adverse economic downturns or individual corporate developments. A
projection of an economic downturn or of a period of rising interest rates, for
example, could cause a decline in high yield security prices because the advent
of a recession could lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. If an issuer of high
yield securities defaults, in addition to risking payment of all or a portion of
interest and principal, the Funds investing in such securities may incur
additional expenses to seek recovery. The Adviser seeks to reduce these risks
through diversification, credit analysis and attention to current developments
and trends in both the economy and financial markets.

The secondary market on which high yield securities are traded may be
less liquid than the market for higher grade securities. Less liquidity in the
secondary trading market could adversely affect the price at which Funds could
sell a high yield security, and could adversely affect the daily net asset value
of the shares. Adverse publicity and investor perceptions, whether or not based
on fundamental analysis, may decrease the values and liquidity of high yield
securities, especially in a thinly-trade market. When secondary markets for high
yield securities are less liquid than the market for higher grade securities, it
may be more difficult to value the securities because such valuation may require
more research, and elements of judgment may play a greater role in the valuation
because there is less reliable, objective data available. The Adviser seeks to
minimize the risks of investing in all securities through diversification,
in-depth credit analysis and attention to current developments in interest rates
and market conditions.

The use of credit ratings as the sole method of evaluating high yield
securities can involve certain risks. For example, credit ratings evaluate the
safety of principal and interest payments, not the market value risk of high
yield securities. Also, credit rating agencies may fail to change credit ratings
in a timely fashion to reflect events since the security was last rated. The
Adviser does not rely solely on credit ratings when selecting securities for the
Funds, and develops its own independent analysis of issuer credit quality. If a
credit rating agency changes the rating of a portfolio security held by a Fund,
the Fund may retain the portfolio security if the Adviser deems it in the best
interest of shareholders.

Bank Obligations
----------------

Bank obligations in which the Funds may invest include certificates of
deposit, bankers' acceptances, and fixed time deposits. Certificates of deposit
are negotiable certificates issued against funds deposited in a commercial bank
for a definite period of time and earning a specified return. Bankers'
acceptances are negotiable drafts or bills of exchange, normally drawn by an
importer or exporter to pay for specific merchandise, which are "accepted" by a
bank, meaning, in effect, that the bank unconditionally agrees to pay the face
value of the instrument on maturity. Fixed time deposits are bank obligations
payable at a stated maturity date and bearing interest at a fixed rate. Fixed
time deposit may be withdrawn on demand by the investor, but may be subject to
early withdrawal penalties which vary depending upon market conditions and

5
<PAGE>
the remaining maturity of the obligation. There are no contractual restrictions
on the right to transfer a beneficial interest in a fixed time deposit to a
third party, although there is no market for such deposits.

Bank obligations include foreign bank obligations including Eurodollar
and Yankee obligations. Eurodollar bank obligations are dollar certificates of
deposits and time deposits issued outside the U.S. capital markets by foreign
branches of U.S. banks and by foreign banks. Yankee obligations are
dollar-denominated obligations issued in the U.S. capital markets by foreign
banks. Bank obligations are subject to the same risks that pertain to domestic
issues, notably credit risk and interest rate risk. Additionally, foreign bank
obligations are subject to many of the same risks as investments in foreign
securities (see "Foreign Equity Securities" below.) Obligations of foreign banks
involve somewhat different investment risks than those affecting obligations of
United States banks, including the possibilities that their liquidity could be
impaired because of future political and economic developments, that their
obligations may be less marketable than comparable obligations of Untied States
banks, that a foreign jurisdiction might impose withholding taxes on interest
income payable on those obligations, that foreign deposits may be seized or
nationalized, that foreign governmental restrictions such as exchange controls
may be adopted which might adversely affect the payment of principal and
interest on those obligations and that the selection of those obligations may be
more difficult because there may be less publicly available information
concerning foreign banks or the accounting, auditing and financial reporting
standards, practices and requirements applicable to foreign banks may differ
from those applicable to United States banks. Foreign banks are not generally
subject to examination by any U.S. Government agency or instrumentality.

Commercial Paper
----------------

A1 and Prime 1 are the highest commercial paper ratings issued by S&P
and Moody's, respectively.

Commercial paper rated A1 by S&P has the following characteristics: (1)
liquidity ratios are adequate to meet cash requirements; (2) long-term senior
debt is rated A or better; (3) the issuer has access to at least two additional
channels of borrowing; (4) basic earnings and cash flow have an upward trend
with an allowance made for unusual circumstances; (5) typically, the issuer's
industry is well established and the issuer has a strong position within the
industry; and (6) the reliability and quality of management are unquestioned.

Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of 10 years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparation to meet such obligations.

Government Securities
---------------------

Government securities may be either direct obligations of the U.S.
Treasury or may be the obligations of an agency or instrumentality of the United
States.

Treasury Obligations. The U.S. Treasury issues a variety of marketable
securities that are direct obligations of the U.S. Government. These securities
fall into three categories - bills, notes, and bonds - distinguished primarily
by their maturity at time of issuance. Treasury bills have maturities of one
year or less at the time of issuance, while Treasury notes currently have
maturities of 1 to 10 years. Treasury bonds can be issued with any maturity of
more than 10 years.

6
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Obligations of Agencies and Instrumentalities. Agencies and
instrumentalities of the U.S. Government are created to fill specific
governmental roles. Their activities are primarily financed through securities
whose issuance has been authorized by Congress. Agencies and instrumentalities
include Export Import Bank, Federal Housing Administration, Government National
Mortgage Association, Tennessee Valley Authority, Banks for Cooperatives,
Farmers Home Administration, Federal Home Loan Banks, Federal Intermediate
Credit Banks, Federal Land Banks, Federal National Mortgage Association, Federal
Home Loan Mortgage Corp., U.S. Postal System, and Federal Finance Bank. Although
obligations of "agencies" and "instrumentalities" are not direct obligations of
the U.S. Treasury, payment of the interest or principal on these obligations is
generally backed directly or indirectly by the U.S. Government. This support can
range from backing by the full faith and credit of the United States or U.S.
Treasury guarantees to the backing solely of the issuing instrumentality itself.

Mortgage-Backed Securities and Mortgage Pass-Through Securities
---------------------------------------------------------------

Mortgage-backed securities are interests in pools of mortgage loans,
including mortgage loans made by savings and loan institutions, mortgage
bankers, commercial banks and others. Mortgage-backed securities are sold to
investors by various governmental, government-related and private organizations
as further described below. A Fund may also invest in debt securities that are
secured with collateral consisting of mortgage-backed securities (see
"Collateralized Mortgage Obligations") and in other types of mortgage-related
securities.

Because principal may be prepaid at any time, mortgage-backed
securities involve significantly greater price and yield volatility than
traditional debt securities. A decline in interest rates may lead to a faster
rate of repayment of the underlying mortgages and expose the Fund to a lower
rate of return upon reinvestment. To the extent that mortgage-backed securities
are held by a Fund, the prepayment right will tend to limit to some degree the
increase in net asset value of the Fund because the value of the mortgage-backed
securities held by the Fund may not appreciate as rapidly as the price of
non-callable debt securities. When interest rates rise, mortgage prepayment
rates tend to decline, thus lengthening the duration of mortgage-related
securities and increasing their price volatility, affecting the price volatility
of a Fund's shares.

Interests in pools of mortgage-backed securities differ from other
forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal payments at maturity or specified call
dates. Instead, these securities provide a monthly payment which consists of
both interest and principal payments. In effect, these payments are a
"pass-through" of the monthly payments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Additional payments are caused by repayments of principal resulting
from the sale of the underlying property, refinancing or foreclosure, net of
fees or costs incurred. Some mortgage-related securities (such as securities
issued by the Government National Mortgage Association) are described as
"modified pass-through." These securities entitle the holder to receive all
interest and principal payments owed on the mortgage pool, net of certain fees,
at the scheduled payment dates regardless of whether or not the mortgagor
actually makes the payment.

The principal governmental guarantor of mortgage-related securities is
the Government National Mortgage Association ("GNMA"). GNMA is a wholly owned
U.S. Government corporation within the Department of Housing and Urban
Development. GNMA is authorized to guarantee, with the full faith and credit of
the U.S. Government, the timely payment of principal and interest on securities
issued by institutions approved by GNMA (such as savings and loan institutions,
commercial banks, and mortgage bankers) and backed by pools of FHA-insured or
VA-guaranteed mortgages. These guarantees, however, do not apply to the market
value or yield of mortgage-backed securities or to the value of a Fund's shares.
Also, GNMA

7
<PAGE>

securities often are purchased at a premium over the maturity value of the
underlying mortgages. This premium is not guaranteed and will be lost if
prepayment occurs.

Government-related guarantors (i.e., not backed by the full faith and
credit of the U.S. Government) include the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). FNMA is a
government-sponsored corporation owned entirely by private stockholders. It is
subject to regulation by the Secretary of Housing and Urban Development. FNMA
purchases conventional (i.e., not insured or guaranteed by any government
agency) mortgages from a list of approved seller/servicers, which include state
and federally-chartered savings and loan associations, mutual savings banks,
commercial banks, credit unions and mortgage bankers. Pass-through securities
issued by FNMA are guaranteed as to timely payment of principal and interest by
FNMA, but are not backed by the full faith and credit of the U.S. Government.

FHLMC is a corporate instrumentality of the U.S. Government and was
created in 1970 for the purpose of increasing the availability of mortgage
credit for residential housing. Its stock is owned by the twelve Federal Home
Loan Banks. FHLMC issues Participation Certificates ("PCs"), which represent
interests in conventional mortgages from FHLMC's national portfolio. FHLMC
guarantees the timely payment of interest and ultimate collection of principal,
but PCs are not backed by the full faith and credit of the U.S. Government.

Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers, and other secondary market issuers also
create pass-through pools of conventional mortgage loans. These issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments. However, timely payment of interest
and principal of these pools may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers, and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of its issuers will be considered in
determining whether a mortgage-related security meets a Fund's investment
quality standards. There is no assurance that the private insurers or guarantors
will meet their obligations under the insurance policies or guarantee
arrangements. A Fund may buy mortgage-related securities without insurance or
guarantees if, through an examination of the loan experience and practices of
the originators/servicers and poolers, the Adviser determines that the
securities meet the Fund's quality standards. Although the market for such
securities is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable.

Collateralized Mortgage Obligations ("CMOs")
--------------------------------------------

CMOs are hybrids between mortgage-backed bonds and mortgage
pass-through securities. Similar to a bond, interest and prepaid principal are
paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities, guaranteed by GNMA, FHLMC, or FNMA, and their income
streams.

CMOs are structured into multiple classes, each bearing a different
stated maturity. Actual maturity and average life will depend upon the
prepayment experience of the collateral. CMOs provide for a modified form of
call protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially

8
<PAGE>
protected against a sooner than desired return of principal by the sequential
payments. The prices of certain CMOs, depending on their structure and the rate
of prepayments, can be volatile. Some CMOs may also not be as liquid as other
securities.

In a typical CMO transaction, a corporation issues multiple series,
(e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are
used to purchase mortgages or mortgage pass-through certificates ("Collateral").
The Collateral is pledged to a trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C bonds all pay interest currently.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

A 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.

Other Mortgage-Backed Securities
--------------------------------

The Adviser expects that governmental, government-related or private
entities may create mortgage loan pools and other mortgage-related securities
offering mortgage pass-through and mortgage-collateralized investment in
addition to those described above. The mortgages underlying these securities may
include alternative mortgage instruments; that is, mortgage instruments whose
principal or interest payments may vary or whose terms to maturity may differ
from customary long-term fixed rate mortgages. As new types of mortgage-related
securities are developed and offered to investors, the Adviser will, consistent
with a Fund's investment objective, policies and quality standards, consider
making investments in such new types of mortgage-related securities.

Other Asset-Backed Securities
-----------------------------

The securitization techniques used to develop mortgage-backed
securities are being applied to a broad range of assets. Through the use of
trusts and special purpose corporations, various types of assets, including
automobile loans, computer leases and credit card and other types of
receivables, are being securitized in pass-through structures similar to
mortgage pass-through structures described above or in a structure similar to
the CMO structure. Consistent with a Fund's investment objectives and policies,
the Fund may invest in these and other types of asset-backed securities that may
be developed in the future. In general, the collateral supporting these
securities is of shorter maturity than mortgage loans and is less likely to
experience substantial prepayments with interest rate fluctuations.

These other asset-backed securities present certain risks that are not
presented by mortgage-backed securities. Primarily, these securities may not
have the benefit of any security interest in the related assets. Credit card
receivables are generally unsecured and the debtors are entitled to the
protection of state and federal consumer credit laws, many of which give debtors
the right to set off certain amounts owed on the credit cards, thereby reducing
the balance due. There is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities.

Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of direct parties. To reduce the effect
of failures by obligors on underlying assets to make payments, the securities
may contain elements of credit support which fall into two categories: (i)
liquidity protection and (ii) protection against losses resulting from ultimate
default by an obligor or the underlying assets. Liquidity

9
<PAGE>

protection refers to the making of advances, generally by the entity
administering the pool of assets, to ensure that the receipt of payments on the
underlying pool occurs in a timely fashion. Protection against losses results
from payment of the insurance obligations on at least a portion of the assets in
the pool. This protection may be provided through guarantee policies or letters
of credit obtained by the issuer or sponsor from third parties, through various
means of structuring the transaction or through a combination of such
approaches. The Fund will not pay any additional or separate fees for credit
support. The degree of credit support provided for each issue is generally based
on historical information respecting the level of credit risk associated with
the underlying assets. Delinquency or loss in excess of that anticipated, or
failure of the credit support could adversely affect the return on an investment
in such a security.

Floating or Variable Rate Securities
------------------------------------

Floating or variable rate securities have interest rates that
periodically change according to the rise and fall of a specified interest rate
index or a specific fixed-income security that is used as a benchmark. The
interest rate typically changes every six months, but for some securities the
rate may fluctuate weekly, monthly, or quarterly. The index used is often the
rate for 90- or 180-day Treasury Bills. Variable-rate and floating-rate
securities may have interest rate ceilings or caps that fix the interest rate on
such a security if, for example, a specified index exceeds a predetermined
interest rate. If an interest rate on a security held by the Fund becomes fixed
as a result of a ceiling or cap provision, the interest income received by the
Fund will be limited by the rate of the ceiling or cap. In addition, the
principal values of these types of securities will be adversely affected if
market interest rates continue to exceed the ceiling or cap rate.

Loan Transactions
-----------------

Loan transactions involve the lending of securities to a broker-dealer
or institutional investor for its use in connection with short sales, arbitrage,
or other securities transactions. If made, loans of portfolio securities by a
Fund will be in conformity with applicable federal and state rules and
regulations. The purpose of a qualified loan transaction is to afford a Fund the
opportunity to continue to earn income on the securities loaned and at the same
time to earn income on the collateral held by it.

It is the view of the Staff of the SEC that a Fund is permitted to
engage in loan transactions only if the following conditions are met: (1) the
Fund must receive at least 100 percent collateral in the form of cash or cash
equivalents, e.g., U.S. Treasury bills or notes, or an irrevocable letter of
credit; (2) the borrower must increase the collateral whenever the market value
of the securities loaned (determined on a daily basis) rises above the level of
the collateral; (3) the Fund must be able to terminate the loan, after notice,
at any time; (4) the Fund must receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts equivalent to any dividends, interest,
or other distributions on the securities loaned and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; (6) voting rights on the securities loaned may pass to the borrower;
however, if a material event affecting the investment occurs, the Board of
Directors must be able to terminate the loan and vote proxies or enter into an
alternative arrangement with the borrower to enable the Board to vote proxies.
Excluding items (1) and (2), these practices may be amended from time to time as
regulatory provisions permit.

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 Adviser to be of good standing and will
not be made unless, in the judgment of the Adviser, the consideration to be
earned from such loans would justify the risk.

Options and Financial Futures Transactions
------------------------------------------

10
<PAGE>
Certain Funds may invest up to 5% of its net assets in premiums on put
and call exchange-traded options. A call option gives the holder (buyer) the
right to purchase a security at a specified price (the exercise price) at any
time until a certain date (the expiration date). A put option gives the buyer
the right to sell a security at the exercise price at any time until the
expiration date. The Fund may also purchase options on securities indices.
Options on securities indices are similar to options on a security except that,
rather than the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right to receive, on
exercise of the option, an amount of cash if the closing level of the securities
index on which the option is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. A Fund may
enter into closing transactions, exercise its options, or permit the options to
expire.

A Fund may also write call options, but only if such options are
covered. A call option is covered if written on a security a Fund owns or if the
Fund has an absolute and immediate right to acquire that security without
additional cash consideration upon conversion or exchange of other securities
held by the Fund. If additional cash consideration is required, that amount must
be held in a segregated account by the Fund's custodian bank. A call option on a
securities index is covered if the Fund owns securities whose price changes, in
the opinion of the Adviser, are expected to be substantially similar to those of
the index. A call option may also be covered in any other manner in accordance
with the rules of the exchange upon which the option is traded and applicable
laws and regulations. Each Fund permitted to engage in option transactions may
write such options on up to 25 percent of its net assets.

Financial futures contracts, including interest rate futures
transactions, are commodity contracts that obligate the long or short holder to
take or make delivery of a specified quantity of a financial instrument, such as
a security or the cash value of a securities index, during a specified future
period at a specified price. The investment restrictions for the Funds permitted
to engage in financial futures transactions do not limit the percentage of the
Fund's assets that may be invested in financial futures transactions. None of
the Funds, however, intend to enter into financial futures transactions for
which the aggregate initial margin exceeds 5 percent of the net assets of the
Fund after taking into account unrealized profits and unrealized losses on any
such transactions it has entered into. A Fund may engage in futures transactions
only on commodities exchanges or boards of trade.

A Fund will not engage in transactions in index options, financial
futures contracts, or related options for speculation. A Fund may engage in
these transactions only as an attempt to hedge against market conditions
affecting the values of securities that the Fund owns or intends to purchase.
When a Fund purchases a put on a stock index or on a stock index future not held
by the Fund, the put protects the Fund against a decline in the value of all
securities held by it to the extent that the stock index moves in a similar
pattern to the prices of the securities held. The correlation, however, between
indices and price movements of the securities in which a Fund will generally
invest may be imperfect. It is expected, nonetheless, that the use of put
options that relate to such indices will, in certain circumstances, protect
against declines in values of specific portfolio securities or the Fund's
portfolio generally. Although the purchase of a put option may partially protect
a Fund from a decline in the value of a particular security or its portfolio
generally, the cost of a put will reduce the potential return on the security or
the portfolio if either increases in value.

Upon entering into a futures contract, a Fund will be required to
deposit with its custodian in a segregated account cash, certain U.S. government
securities, or any other portfolio assets as permitted by the Securities and
Exchange Commission rules and regulations in an amount known as the "initial
margin." This amount, which is subject to change, is in the nature of a
performance bond or a good faith deposit on the contract and would be returned
to the Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied.

11
<PAGE>
The principal risks of options and futures transactions are: (a)
possible imperfect correlation between movements in the prices of options,
currencies, or futures contracts and movements in the prices of the securities
or currencies hedged or used for cover; (b) lack of assurance that a liquid
secondary market will exist for any particular options or futures contract when
needed; (c) the need for additional skills and techniques beyond those required
for normal portfolio management; (d) losses on futures contracts resulting from
market movements not anticipated by the investment adviser; and (e) possible
need to defer closing out certain options or futures contracts to continue to
qualify for beneficial tax treatment afforded "regulated investment companies"
under the Code.

Foreign Equity Securities
-------------------------

Foreign equity securities include common stock and preferred stock, including
securities convertible into equity securities, American Depository Receipts
("ADRs") and Global Depository Receipts ("GDRs"). Foreign equity securities,
which are generally denominated in foreign currencies, involve risks not
typically associated with investing in domestic securities. Foreign securities
may be subject to foreign taxes that would reduce their effective yield. Certain
foreign governments levy withholding taxes against dividend and interest income.
Although in some countries a portion of these taxes is recoverable, the
unrecovered portion of any foreign withholding taxes would reduce the income a
Fund receives from its foreign investments.

Foreign investments involve other risks, including possible political
or economic instability of the country of the issuer, the difficulty of
predicting international trade patterns, and the possibility of currency
exchange controls. Foreign securities may also be subject to greater
fluctuations in price than domestic securities. There may be less publicly
available information about a foreign company than about a domestic company.
Foreign companies generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those of domestic companies.

There is generally less government regulation of stock exchanges,
brokers, and listed companies abroad than in the United States. In addition,
with respect to certain foreign countries, there is a possibility of the
adoption of a policy to withhold dividends at the source, or of expropriation,
nationalization, confiscatory taxation, or diplomatic developments that could
affect investments in those countries. Finally, in the event of default on a
foreign debt obligation, it may be more difficult for a Fund to obtain or
enforce a judgement against the issuers of the obligation. The Funds will
normally execute their portfolio securities transactions on the principal stock
exchange on which the security is traded.

The considerations noted above regarding the risk of investing in
foreign securities are generally more significant for investments in emerging or
developing countries, such as countries in Eastern Europe, Latin America, South
America or Southeast Asia. These countries may have relatively unstable
governments and securities markets in which only a small number of securities
trade. Markets of developing or emerging countries may generally be more
volatile than markets of developed countries. Investment in these markets may
involve significantly greater risks, as well as the potential for greater gains.

ADRs in registered form are dollar-denominated securities designed for
use in the U.S. securities markets. ADRs are sponsored and issued by domestic
banks and represent and may be converted into underlying foreign securities
deposited with the domestic bank or a correspondent bank. ADRs do not eliminate
the risks inherent in investing in the securities of foreign issuers. By
investing in ADRs rather than directly in the foreign security, however, a Fund
may avoid currency risks during the settlement period for either purchases or
sales. There is a large, liquid market in the United States for most ADRs. GDRs
are receipts representing an arrangement with a major foreign bank similar to
that for ADRs. GDRs are not necessarily denominated in the currency of the
underlying security.

12
<PAGE>

Additional costs may be incurred in connection with a Fund's foreign
investments. Foreign brokerage commissions are generally higher than those in
the United States. Expenses may also be incurred on currency conversions when a
Fund moves investments from one country to another. Increased custodian costs as
well as administrative difficulties may be experienced in connection with
maintaining assets in foreign jurisdictions.

Foreign Fixed Income Securities
-------------------------------

Foreign fixed income securities include debt securities of foreign
corporate issuers, certain foreign bank obligations (see "Bank Obligations"),
obligations of foreign governments or their subdivisions, agencies and
instrumentalities, and obligations of supranational entities such as the World
Bank, the European Investment Bank, and the Asian Development Bank. Any of these
securities may be denominated in foreign currency or U.S. Dollars, or may be
traded in U.S. dollars in the United States although the underlying security is
usually denominated in a foreign currency.

The risk of investing in foreign fixed income securities are the same
as the risks of investing in foreign equity securities. Additionally, investment
in sovereign debt (debit issues by governments and their agencies and
instrumentality) can involve a high degree of risk. The governmental entity that
controls the repayment of sovereign debt may not be available or willing to
repay the principal and/or interest when due in accordance with the terms of the
debt. A governmental entity's willingness or ability to repay principal and
interest due in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the governmental entity's
policy toward the International Monetary Fund, and the political constraints to
which a governmental entity may be subject Governmental entities may also depend
on expected disbursements from foreign governments, multilateral agencies and
others to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a governmental entity's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due may result in the cancellation of such
third parties' commitments to lend funds to the governmental entity, which may
further impair such debtor's ability or willingness to service its debts in a
timely manner. Consequently, governmental entities may default on their
sovereign debt. Holders of sovereign debt (including the Funds) may be requested
to participate in the rescheduling of such debt and to the extend further loans
to governmental entities. There is no bankruptcy proceeding by which sovereign
debt on which governmental entities have defaulted may be collected in while or
in part.

Currency Contracts
------------------

The value of a Fund invested in foreign securities will fluctuate as a
result of changes in the exchange rates between the U.S. dollar and the
currencies in which the foreign securities or bank deposits held by the Fund are
denominated. To reduce or limit exposure to changes in currency exchange rates
(referred to as "hedging"), a Fund may enter into forward currency exchange
contracts that, in effect, lock in a rate of exchange during the period of the
forward contracts. Forward contracts are usually entered into with currency
traders, are not traded on securities exchanges, and usually have a term of less
than one year, but can be renewed. A default on a contract would deprive a Fund
of unrealized profits or force a Fund to cover its commitments for purchase or
sale of currency, if any, at the market price. A Fund will enter into forward
contracts only for hedging purposes and not for speculation. If required by the
Investment Company Act or the Securities and Exchange Commission, a Fund may
"cover" its commitment under forward contracts by segregating cash or liquid
high-grade securities with a Fund's custodian in an amount not less than the
current value of the Fund's total assets committed to the consummation of the
contracts. Under normal market

13
<PAGE>

conditions, no more than 25% of the International Stock Fund's assets may be
committed to the consummation of currency exchange contracts.

A Fund may also purchase or sell foreign currencies on a "spot" (cash)
basis or on a forward basis to lock in the U.S. dollar value of a transaction at
the exchange rate or rates then prevailing. A Fund will use this hedging
technique in an attempt to insulate itself against possible losses resulting
from a change in the relationship between the U.S. dollar and the relevant
foreign currency during the period between the date a security is purchased or
sold and the date on which payment is made or received.

Hedging against adverse changes in exchange rates will not eliminate
fluctuation in the prices of a Fund's portfolio securities or prevent loss if
the prices of those securities decline. In addition, the use of forward
contracts may limit potential gains from an appreciation in the U.S. dollar
value of a foreign currency. Forecasting short-term currency market movements is
very difficult, and there is no assurance that short-term hedging strategies
used by a Fund will be successful.

Repurchase Agreements
---------------------

A Fund may invest in repurchase agreements, which are agreements by
which the Fund purchases a security and simultaneously commits to resell that
security to the seller (a commercial bank or securities dealer) at a stated
price within a number of days (usually not more than seven) from the date of
purchase. The resale price reflects the purchase price plus a rate of interest
that is unrelated to the coupon rate or maturity of the purchased security.
Repurchase agreements may be considered loans by the Fund collateralized by the
underlying security. The obligation of the seller to pay the stated price is in
effect secured by the underlying security. The seller will be required to
maintain the value of the collateral underlying any repurchase agreement at a
level at least equal to the price of the repurchase agreement. In the case of
default by the seller, the Fund could incur a loss. In the event of a bankruptcy
proceeding commenced against the seller, the Fund may incur costs and delays in
realizing upon the collateral. A Fund will enter into repurchase agreements only
with those banks or securities dealers who are deemed creditworthy pursuant to
criteria adopted by the Adviser. There is no limit on the portion of a Fund's
assets that may be invested in repurchase agreements with maturities of seven
days or less.

Illiquid 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 SEC, the following instruments in which a
Fund may invest will be considered illiquid: (1) repurchase agreements maturing
in more than seven days; (2) restricted securities (securities whose public
resale is subject to legal restrictions, except as described in the following
paragraph); (3) options, with respect to specific securities, not traded on a
national securities exchange that are not readily marketable; and (4) any other
securities in which a Fund may invest that are not readily marketable.

The International Stock Fund, the Small Cap Fund, the High Yield Fund,
the Real Estate Fund and the Short Term Bond Fund may purchase without limit,
however, certain restricted securities that can be resold to qualifying
institutions pursuant to a regulatory exemption under Rule 144A ("Rule 144A
securities"). If a dealer or institutional trading market exists for Rule 144A
securities, such securities are deemed to be liquid and thus exempt from that
Fund's liquidity restrictions. Under the supervision of the Board of Directors
of the Funds, the Adviser determines the liquidity of Rule 144A securities and,
through reports from the Adviser, the Board of Directors monitor trading
activity in these securities. In reaching liquidity decisions, the Adviser will
consider, among other things, the following factors: (1) the frequency of trades
and quotes for the security; (2) the number of dealers willing to purchase or
sell the security and the number of other

14
<PAGE>

potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers, and the
procedures for the transfer). If institutional trading in Rule 144A securities
declines, a Fund's liquidity could be adversely affected to the extent it is
invested in such securities.

Convertible Securities and Warrants
-----------------------------------

Convertible debentures are interest-bearing debt securities, typically
unsecured, that represent an obligation of the corporation providing the owner
with claims to the corporation's earnings and assets before common and preferred
stock owners, generally on par with unsecured creditors. If unsecured, claims of
convertible debenture owners would be inferior to claims of secured debt
holders. Convertible preferred stocks are securities that represent an ownership
interest in a corporation providing the owner with claims to the corporation's
earnings and assets before common stock owners, but after bond owners.
Investments by a Fund in convertible debentures or convertible preferred stock
would be a substitute for an investment in the underlying common stock,
primarily either in circumstances where only the convertible security is
available in quantities necessary to satisfy the Fund's investment needs (for
example, in the case of a new issuance of convertible securities) or where,
because of financial market conditions, the conversion price of the convertible
security is comparable to the price of the underlying common stock, in which
case a preferred position with respect to the corporation's earnings and assets
may be preferable to holding common stock.

Warrants are options to buy a stated number of underlying securities at
a specified price any time during the life of the warrants. The securities
underlying these warrants will be the same types of securities that a Fund will
invest in to achieve its investment objective of capital appreciation. The
purchaser of a warrant expects the market price of the underlying security will
exceed the purchase price of the warrant plus the exercise price of the warrant,
thus resulting in a profit. If the market price never exceeds the purchase price
plus the exercise price of the warrant before the expiration date of the
warrant, the purchaser will suffer a loss equal to the purchase price of the
warrant.

To the extent the High Yield Fund or the Bond Fund acquires common
stock through exercise of conversion rights or warrants or acceptance of
exchange or similar offers, the common stock will not be retained in the
portfolio. Orderly disposition of these equity securities will be made
consistent with management's judgement as to the best obtainable price.

Investments in Small and Unseasoned Companies
---------------------------------------------

Unseasoned and small companies may have limited or unprofitable
operating histories, limited financial resources, and inexperienced management.
In addition, they often face competition from larger or more established firms
that have greater resources. Securities of small and unseasoned companies are
frequently traded in the over-the-counter market or on regional exchanges where
low trading volumes may result in erratic or abrupt price movements. To dispose
of these securities, a Fund may need to sell them over an extended period or
below the original purchase price. Investments by a Fund in these small or
unseasoned companies may be regarded as speculative.

Dollar Roll Transactions
------------------------

"Dollar roll" transactions consist of the sale by a Fund to a bank or
broker-dealer (the "counterparty") of GNMA certificates or other mortgage-backed
securities together with a commitment to purchase from the counterparty similar,
but not identical, securities at a future date and at the same price. The
counterparty receives all principal and interest payments, including
prepayments, made on the security while it is the holder. The Fund receives a
fee from the counterparty as consideration for entering into the

15
<PAGE>

commitment to purchase. Dollar rolls may be renewed over a period of several
months with a new purchase and repurchase price fixed and a cash settlement made
at each renewal without physical delivery of securities. Moreover, the
transaction may be preceded by a firm commitment agreement pursuant to which the
Fund agrees to buy a security on a future date.

A Fund will not use such transactions for leveraging purposes and,
accordingly, will segregate cash, U.S. Government securities or other high grade
debt obligations in an amount sufficient to meet their purchase obligations
under the transactions. The Funds will also maintain asset coverage of at least
300% for all outstanding firm commitments, dollar rolls and other borrowings.

Dollar rolls may be treated for purposes of the Investment Company Act
of 1940 (the "1940 Act") as borrowings of the Fund because they involve the sale
of a security coupled with an agreement to repurchase. Like all borrowings, a
dollar roll involves costs to the Fund. For example, while a Fund receives a fee
as consideration for agreeing to repurchase the security, the Fund foregoes the
right to receive all principal and interest payments while the counterparty
holds the security. These payments to the counterparty may exceed the fee
received by the Fund, thereby effectively charging the Fund interest on its
borrowing. Further, although the Fund can estimate the amount of expected
principal prepayment over the term of the dollar roll, a variation in the actual
amount of prepayment could increase or decease the cost of the Fund's borrowing.

When-Issued Securities
----------------------

When-issued, delayed-delivery and forward transactions generally
involve the purchase of a security with payment and delivery in the future
(i.e., beyond normal settlement). A 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 placement and U.S. Government securities may be sold in this manner. To
the extent a 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. A Fund may use spot and
forward 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.

Zero-Coupon and Pay-in-Kind Securities
--------------------------------------

A zero-coupon security has no cash coupon payments. Instead, the issuer
sells the security at a substantial discount from its maturity value. The
interest equivalent received by the investor from holding this security to
maturity is the difference between the maturity value and the purchase price.
Pay-in-kind securities are securities that pay interest in either cash or
additional securities, at the issuer's option, for a specified period. The price
of pay-in-kind securities is expected to reflect the market value of the
underlying accrued interest, since the last payment. Zero-coupon and pay-in-kind
securities are more volatile than cash pay securities. The Fund accrues income
on these securities prior to the receipt of cash payments. The Fund intends to
distribute substantially all of its income to its shareholders to qualify for
pass-through treatment under the tax laws and may, therefore, need to use its
cash reserves to satisfy distribution requirements.

Temporary Investments
---------------------

When, as a result of market conditions, the Adviser determines a
temporary defensive position is warranted to help preserve capital, a 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. The International Stock Fund may invest in such
securities issued by entities organized in the United States or any

16
<PAGE>

foreign country, denominated in U.S. dollars or foreign currency. When a Fund
assumes a temporary defensive position, it is not invested in securities
designed to achieve its investment objective.

Non-Diversified
---------------

The Oregon Municipal Bond Fund is "non-diversified," which means that
it may invest a greater percentage of its assets in the securities of a single
issuer than the other Funds. Since the Fund invests in a relatively small number
of issuers it is more susceptible to risks associated with a single economic,
political, or regulatory occurrence than a more diversified portfolio might be.
Some of those issuers also may present substantial credit or other risks.
Similarly, the Fund may be more sensitive to adverse economic, business or
political developments if it invests a substantial portion of its assets in the
bonds of similar projects or from issuers in the same state.

17
<PAGE>
<TABLE>
<CAPTION>
Securities and Investment Practices

--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
CCSF CGF CISF CSF CSCF CREF
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Securities (Baa or * * * * * *
higher by Moody's, BBB or higher by
S&P), other than U.S. Government
obligations and municipal securities
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Non-Investment Grade Securities X X X X X X
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Domestic Bank Obligations * * * * * *
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
U.S. Government Securities * * * * * *
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Mortgage-Backed Securities NA NA NA NA NA NA
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
CMOs NA NA NA NA NA NA
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Asset-Backed Securities NA NA NA NA NA NA
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Floating or Variable Rate NA NA NA NA NA NA
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Loan Transactions X X X X O O
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Options & Financial Futures O O O O O O
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Foreign Equities
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Developed Countries 33.3%, O 10%, O + 33.3%, O 25%, O 20%, O
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Emerging Countries X X + X X X
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
ADRs 33.3%, O 10%, O + 33.3%, O 25%, O X
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Currency Contracts
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Hedging O O 25%, + O O O
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Speculation X X X X X X
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Spot Basis O O + O O O
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Repurchase Agreements * * * * * *
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------

Restricted/Illiquid (CISF, CSCF, and 5%, O 5%, O 10%, O 10%, O 10%, O 10%, O
CREF exclude 144A securities from
definition of illiquid with board
supervision)

--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Convertible Securities/Warrants O O O + + +
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Unseasoned/less than three years 5%, O 5%, O 5%, O 10%, + 10%, + 5%, +
operating history
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Small Companies O O O + + +
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Dollar Roll Transactions NA NA NA NA NA NA
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
When-Issued Securities O O O O O O
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Foreign Fixed Income Securities NA NA O NA NA NA
(including Foreign Bank Obligations)
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Zero Coupon/Pay in Kind NA NA NA NA NA NA
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Real Estate (excluding REITs) X X X X X X
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
REITs + + O + + +
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Borrowing 5%, * 5%, * 33.3%, * 5%, * 5%, * 5%, *
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------
Municipal Bonds NA NA NA NA NA NA
--------------------------------------- ----------- ---------- ---------- ----------- ---------- ---------

+ Permitted - Part of principal investment strategy X Fundamental policy/not
permitted O Permitted - Not a principal investment strategy * Temporary
Investment or cash management purposes % Percentage of total or net assets that
Fund may invest NA Not an investment strategy

18
<PAGE>

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

CSTB CFIS CMBF CNMF CHYF CBF CDIC

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

Investment Grade Securities (Baa or + + O O O + NA
higher by Moody's, BBB or higher by
S&P), other than U.S. Government
obligations and municipal securities

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

Non-Investment Grade Securities 10%, O 10%, O NA NA + 10%, O NA

--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Domestic Bank Obligations * * * * * * +
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Commercial Paper * * * * * * +
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
U.S. Government Securities + + * * * + +
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------

Mortgage-Backed Securities + + NA NA O + NA

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

CMOs + + NA NA O + NA

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

Asset-Backed Securities + + NA NA O + NA

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

Floating or Variable Rate + + NA NA O + NA

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

Loan Transactions O O O X O X X

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

Options & Financial Futures O X X X O O X

--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Foreign Equities
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Developed Countries NA NA NA NA NA 33.3%, O NA
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Emerging Countries NA NA NA NA NA X NA
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
ADRs NA NA NA NA NA 33.3%, O NA
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Currency Contracts
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Hedging NA NA NA NA NA O NA
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Speculation NA NA NA NA NA X NA
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Spot Basis NA NA NA NA NA O NA
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Repurchase Agreements * * * * * * *
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------

Restricted/Illiquid (CHYF and CSTB 10%, O 10%, O 10%, O 10%, O 10%, O 5%, O X
excludes 144A securities from
definition of illiquid with board
supervision)

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

Convertible Securities/Warrants O O NA NA O O NA

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

Unseasoned/less than three years 5%, O 5%, O NA NA 5%, + 5%, O NA
operating history

--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Small Companies NA NA NA NA + O NA
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Dollar Roll Transactions O O NA NA O O NA
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
When-Issued Securities O O O O O O O
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Foreign Fixed Income Securities 20%, O NA NA 10%, O 20%, O NA

(including Foreign Bank Obligations) 10%, O

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

Zero Coupon/Pay in Kind O O O O O O NA

--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Real Estate (excluding REITs) X X X X X X X
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------

REITs O O NA NA O O NA

--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
Borrowing 5%, * 5%, * 33.3%, * 33.3%, * 5%, * 5%, * 33.3%, *
--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------

Municipal Bonds O O + + NA O NA

--------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- -----------
</TABLE>
+ Permitted - Part of principal investment strategy X Fundamental policy/not
permitted O Permitted - Not a principal investment strategy * Temporary
Investment or cash management purposes % Percentage of total or net assets that
Fund may invest NA Not an investment strategy

19
<PAGE>

--------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
--------------------------------------------------------------------------------

The Prospectus sets forth the investment objectives and principal
investment strategies applicable to each Fund. The following is a list of
investment restrictions applicable to each Fund. If a percentage limitation is
adhered to at the time of an investment by a Fund, a later increase or decrease
in percentage resulting from any change in value or net assets will not result
in a violation of the restriction. A Fund may not change these restrictions
without the approval of a majority of its shareholders, which means the vote at
any meeting of shareholders of a Fund of (i) 67 percent or more of the shares
present or represented by proxy at the meeting (if the holders of more than 50
percent of the outstanding shares are present or represented by proxy) or (ii)
more than 50 percent of the outstanding shares, whichever is less.

Columbia Common Stock Fund, Inc.

The Common Stock Fund may not:

1. Buy or sell commodities. However, the Fund may invest in futures
contracts relating to broadly based stock indices, subject to the restrictions
in paragraph 15.

2. Concentrate investments in any industry. However, the Fund may (a)
invest up to 25 percent of the value of the total assets in any one industry and
(b) invest for temporary defensive purposes up to 100 percent of the value of
the total assets in securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities.

3. Buy or sell real estate. However, the Fund may purchase or hold
readily marketable securities issued by companies, such as real estate
investment trusts, which operate in real estate or interests therein.

4. Make loans to other persons (except by purchase of short-term
commercial paper, bonds, debentures, or other debt securities constituting part
of an issue).

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 5 percent of the outstanding voting securities of
that issuer to be held in the Fund.

7. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 5 percent of the value of the total assets of the
Fund at market value to be invested in the securities of that issuer (other than
obligations of the U.S. Government and its agencies and instrumentalities), with
reference to 75 percent of the assets of the Fund.

8. Purchase securities of other open-end investment companies.

9. Issue senior securities, bonds, or debentures.

20
<PAGE>
10. Underwrite securities of other issuers, except that the Fund may
acquire portfolio securities under circumstances where, if the securities are
later publicly offered or sold by the Fund, it might be deemed to be an
underwriter for purposes of the Securities Act of 1933.

11. Borrow money in excess of 5 percent of its net asset value. Any
borrowing must only be temporarily from banks and for extraordinary or emergency
purposes.

12. Invest its funds in the securities of any company if the purchase,
at the time thereof, would cause more than 5 percent of the value of the Fund's
total assets to be invested in companies which, including predecessors and
parents, have a record of less than three years continuous operation.

13. Invest in companies for the purpose of exercising control or
management.

14. Engage in short sales of securities except to the extent that it
owns an equal amount of the securities sold short or other securities
convertible into an equivalent amount of such securities ("short sales against
the box"). Such transactions may only be made to protect a profit in or to
attempt to minimize a loss with respect to convertible securities. In any event,
no more than 5 percent of the value of the Fund's net assets taken at market
may, at any time, be held as collateral for such sales.

15. Buy and sell puts and calls as securities, stock index futures or
options on stock index futures, or financial futures or options on financial
futures, unless such options are written by other persons and the options or
futures are offered through the facilities of a national securities association
or are listed on a national securities or commodities exchange.

16. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.

Columbia Growth Fund, Inc.

The Growth Fund may not:

1. Buy or sell commodities or commodity contracts.

2. Concentrate more than 25 percent of its investments in any one
industry.

3. Buy or sell real estate. (However, the Fund may buy readily
marketable securities such as real estate investment trusts.)

4. Make loans, except through the purchase of a portion of an issue of
publicly distributed debt securities.

5. Hold more than 5 percent of the voting securities of any one
company.

6. Purchase the securities of any issuer if the purchase at the time
thereof would cause more than 5 percent of the assets of the Fund (taken at
value) to be invested in the securities of that issuer, except U.S. Government
bonds.

7. Purchase securities of any issuer when those officers and directors
of the Fund who individually own 1/2 of 1 percent of the securities of that
issuer together own 5 percent or more.

21
<PAGE>
8. Purchase securities of other open-end investment companies.

9. Issue senior securities, bonds, or debentures.

10. Underwrite securities issued by others except as it may be deemed
to be an underwriter of restricted securities.

11. Borrow money in excess of 5 percent of its net asset value. Any
borrowing must only be temporarily from banks for extraordinary or emergency
purposes.

12. Invest more than 5 percent of its total assets at cost in the
securities of companies which (with predecessor companies) have a record of less
than three years continuous operation and equity securities which are not
readily marketable.

13. Invest in companies for purposes of control or management.

14. Buy securities on margin or make short sales.

15. Invest more than 5 percent of the value of its assets in securities
which are subject to legal or contractual restrictions on resale or are
otherwise not saleable.

16. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.

Columbia International Stock Fund, Inc.

The International Stock Fund may not:

1. Buy or sell commodities. However, the Fund may invest in futures
contracts or options on such contracts relating to broadly based stock indices,
subject to the restrictions in paragraph 15, and may enter into foreign currency
transactions.

2. Concentrate investments in any industry. However, the Fund may (a)
invest up to 25 percent of the value of its assets in any one industry and (b)
invest for temporary defensive purposes up to 100 percent of the value of its
assets in securities issued or guaranteed by the United States or its agencies
or instrumentalities.

4. Make loans to other persons, except by purchase of short-term
commercial paper, bonds, debentures, or other debt securities constituting part
of an issue and except to the extent the entry into repurchase agreements in
accordance with the Fund's investment restrictions may be deemed a loan.

5. Purchase a repurchase agreement with a maturity greater than seven
days or a security that is subject to legal or contractual restrictions on
resale or for which there are no readily available market quotations if, as a
result of such purchase, more than 10 percent of the assets of the Fund (taken
at current value) is invested in such securities. Certain restricted securities
that can be resold to qualifying institutions pursuant to a regulatory exemption
under Rule 144A of the Securities Act of 1933 and for which a dealer or

22
<PAGE>

institutional trading market exists may be deemed to be liquid securities by the
Board of Directors of the Fund and, therefore, are not subject to this
investment restriction.

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10 percent of the outstanding voting securities
of that issuer to be held by the Fund.

7. Purchase the securities of any issuer (including any foreign
government issuer) if the purchase, at the time thereof, would cause more than 5
percent of the value of the total assets of the Fund at market value to be
invested in the securities of that issuer (other than obligations of the U.S.
government and its agencies and instrumentalities), with reference to 75 percent
of the assets of the Fund.

8. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition, or reorganization, or by
purchase in the open market of securities of closed-end investment companies
where no underwriter or dealer's commission or profit, other than customary
broker's commission, is involved and only if immediately thereafter not more
than (i) 3 percent of the total outstanding voting stock of such company is
owned by the Fund, (ii) 5 percent of the Fund's total assets would be invested
in any one such company, and (iii) 10 percent of the Fund's total assets would
be invested in such securities.

9. Issue senior securities, bonds, or debentures.

10. Underwrite securities of other issuers, except that the Fund may
acquire portfolio securities in circumstances where, if the securities are later
publicly offered or sold by the Fund, it might be deemed to be an underwriter
for purposes of the Securities Act of 1933.

11. Borrow money, except temporarily for extraordinary or emergency
purposes. For all amounts borrowed, the Fund will maintain an asset coverage of
300 percent. The Fund will not make any additional investments while borrowings
exceed 5 percent of the Fund's total assets.

12. Invest its funds in the securities of any company if the purchase
would cause more than 5 percent of the value of the Fund's total assets to be
invested in companies which, including predecessors and parents, have a record
of less than three years continuous operation.

13. Invest in companies for the purpose of exercising control or
management.

15. Buy and sell puts and calls as securities, stock index futures or
options on stock index futures, or financial futures or options on financial
futures, unless such options are written by other persons and the options or
futures are offered through the facilities of a recognized securities
association or are listed on a recognized securities or commodities exchange or
similar entity.

16. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.

23
<PAGE>
Columbia Special Fund, Inc.

The Special Fund may not:

1. Buy or sell commodities. However, the Fund may invest in futures
contracts relating to broadly based stock indices, subject to the restrictions
in paragraph 15.

3. Buy or sell real estate. However, the Fund may purchase or hold
readily marketable securities issued by companies such as real estate investment
trusts, which operate in real estate or interests therein.

4. Make loans to other persons (except by purchase of short-term
commercial paper, bonds, debentures, or other debt securities constituting part
of an issue).

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10 percent of the outstanding voting securities
of that issuer to be held in the Fund.

8. Purchase securities of other open-end investment companies.

9. Issue senior securities, bonds, or debentures.

10. Underwrite securities of other issuers, except that the Fund may
acquire portfolio securities under circumstances where, if the securities are
later publicly offered or sold by the Fund, it might be deemed to be an
underwriter for purposes of the Securities Act of 1933.

11. Borrow money in excess of 5 percent of its net asset value. Any
borrowing must only be temporarily from banks and for extraordinary or emergency
purposes.

12. Invest its funds in the securities of any company if the purchase,
at the time thereof, would cause more than 10 percent of the value of the Fund's
total assets to be invested in companies which, including predecessors and
parents, have a record of less than three years continuous operation.

13. Invest in companies for the purpose of exercising control or
management.

24
<PAGE>

14. Engage in short sales of securities except to the extent that it
owns an equal amount of the securities sold short or other securities
convertible into an equivalent amount of such securities ("short sales against
the box"). Such transactions may only be made to protect a profit in or to
attempt to minimize a loss with respect to convertible securities. In any event,
no more than 10 percent of the value of the Fund's net assets taken at market
may, at any time, be held as collateral for such sales.

16. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.

Columbia Small Cap Fund, Inc.

The Small Cap Fund may not:

1. Buy or sell commodities. However, the Fund may invest in futures
contracts relating to broadly based stock indices, subject to the restrictions
in paragraph 15.

4. Make loans to other persons (except by purchase of short-term
commercial paper, bonds, debentures, or other debt securities constituting part
of an issue).

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10 percent of the outstanding voting securities
of that issuer to be held in the Fund.

8. Purchase securities of other open-end investment companies.

9. Issue senior securities, bonds, or debentures.

25
<PAGE>
10. Underwrite securities of other issuers, except that the Fund may
acquire portfolio securities under circumstances where, if the securities are
later publicly offered or sold by the Fund, it might be deemed to be an
underwriter for purposes of the Securities Act of 1933.

11. Borrow money in excess of 5 percent of its net asset value. Any
borrowing must only be temporarily from banks and for extraordinary or emergency
purposes.

13. Invest in companies for the purpose of exercising control or
management.

14. Engage in short sales of securities except to the extent that it
owns an equal amount of the securities sold short or other securities
convertible into an equivalent amount of such securities ("short sales against
the box"). Such transactions may only be made to protect a profit in or to
attempt to minimize a loss with respect to securities held by the Fund. In any
event, no more than 10 percent of the value of the Fund's net assets taken at
market may, at any time, be held as collateral for such sales.

15. Buy and sell puts and calls as securities, stock index futures or
options on stock index futures, or financial futures or options on financial
futures, unless such options or futures are offered through the facilities of a
national securities association or are listed on a national securities or
commodities exchange. The Fund may write call options that are covered in
accordance with rules established by the Securities and Exchange Commission.

16. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.

Columbia Real Estate Equity Fund, Inc.

The Real Estate Fund may not:

1. Buy or sell commodities or commodity futures contracts.

2. Buy or sell real estate. However, the Fund may purchase or hold
readily marketable securities issued by companies, such as real estate
investment trusts, that operate in real estate or interests therein, and
participation interests in pools of real estate mortgage loans.

3. Make loans to other persons (except by purchase of short-term
commercial paper, bonds, debentures, or other debt securities constituting part
of an issue). The Fund may lend portfolio securities to broker-dealers or other
institutional investors if, as a result thereof, the aggregate value of all
securities loaned does not exceed 33 1/3% of its total assets.

4. Purchase illiquid securities, including restricted securities and
repurchase agreements of more than seven days maturity, if upon the purchase
more than 10 percent 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 and include
restricted securities that are subject to legal or contractual restrictions on
resale. Certain restricted securities that can be resold to qualifying
institutions pursuant to a regulatory exemption under Rule 144A of the
Securities Act of 1933 and for which a dealer or institutional trading market
exists

26
<PAGE>

may be deemed to be liquid securities by the Board of Directors of the Fund and,
in that event, will not be subject to the above investment restriction.

5. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of that
issuer to be held in the Fund.

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 5% of the value of its total assets at market
value to be invested in the securities of that issuer (other than obligations of
the U.S. Government and its instrumentalities), with reference to 75% of the
assets of the Fund.

7. Purchase or retain securities of an issuer if those officers or
directors of the Fund or the Adviser who individually own more than 1/2 of 1% of
the outstanding securities of that issuer together own more than 5% of such
securities.

8. Purchase securities of other open-end investment companies.

9. Issue senior securities, bonds, or debentures.

10. Underwrite securities of other issuers, except the Fund may acquire
portfolio securities in circumstances where, if the securities are later
publicly offered or sold by the Fund, it might be deemed to be an underwriter
for purposes of the Securities Act of 1933.

11. Borrow money except as a temporary measure for extraordinary or
emergency purposes. The Fund's borrowings may not exceed 5% of its gross assets
valued at the lesser of cost or market value, nor may it pledge, mortgage, or
hypothecate assets if the market value of such assets exceeds 10% of the gross
assets, valued at cost, of the Fund.

12. Invest in the securities of any company if the purchase, at the
time thereof, would cause more than 5% of the value of the Fund's total assets
to be invested in companies which, including predecessors and parents, have a
record of less than three years continuous operation.

13. Invest in companies to exercise control or management.

14. Buy any securities or other property on margin, except for
short-term credits necessary for clearing transactions and except that margin
payments and other deposits in connection with transactions in options, futures,
and forward contracts shall not be deemed to constitute purchasing securities on
margin.

15. Engage in short sales of securities except to the extent that it
owns other securities convertible into an equivalent amount of such securities.
These short sales may only be made to protect a profit in or to attempt to
minimize a loss with respect to convertible securities. In any event, no more
than 10% of the Fund's net assets valued at market may, at any time, be held as
collateral for such sales.

16. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.

17. Concentrate investments in any one industry, except that the Fund
will invest at least 65% of the value of its total assets in securities of
companies principally engaged in the real estate industry.

Columbia Balanced Fund, Inc.

27
<PAGE>

The Balanced Fund may not:

1. Buy or sell commodities. However, the Fund may invest in futures
contracts relating to broadly based stock indices, subject to the restrictions
in paragraph 15.

4. Make loans to other persons (except by purchase of short-term
commercial paper, bonds, debentures, or other debt securities constituting part
of an issue).

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 5 percent of the outstanding voting securities of
that issuer to be held in the Fund.

8. Purchase securities of other open-end investment companies.

9. Issue senior securities, bonds, or debentures.

11. Borrow money in excess of 5 percent of its net asset value. Any
borrowing must only be temporarily from banks and for extraordinary or emergency
purposes.

13. Invest in companies for the purpose of exercising control or
management.

28
<PAGE>

with respect to convertible securities. In any event, no more than 5 percent of
the value of the Fund's net assets taken at market may, at any time, be held as
collateral for such sales.

16. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.

Columbia Short Term Bond Fund, Inc.

The Short Term Bond Fund may not:

1. Issue senior securities, bonds, or debentures.

2. Buy any securities or other property on margin except for use of
short-term credit necessary for clearance of purchases and sales of portfolio
securities, but it may make margin deposits

29
<PAGE>

in connection with transactions in options, futures, and options on futures or
purchase or sell puts or calls, or confirmations thereof.

3. Borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that the Fund may (i) borrow from banks, but only
if immediately after each borrowing there is asset coverage of 300 percent, (ii)
enter into transactions in options futures, options on futures, and other
derivative instruments as described in the Prospectus and this Statement of
Additional Information (the deposit of assets in escrow in connection with the
writing of covered put and call options and the purchase of securities on a
when-issued or delayed delivery basis, collateral arrangements with respect to
initial or variation margin deposit for futures contracts and commitments
entered into under swap agreements or other derivative instruments, will not be
deemed to be pledges of the Fund's assets), (iii) enter into reverse repurchase
agreements, dollar roll transactions or economically similar transactions to the
extent its commitment under such transaction is covered by the segregation of
assets, and (iv) borrow money as a temporary measure for extraordinary or
emergency purposes provided that such borrowings do not exceed 5 percent of the
gross assets of the Fund valued at the lesser of cost or market value, and the
Fund does not pledge, mortgage, or hypothecate assets valued at market to an
extent greater than 10 percent of the gross assets valued at cost of the Fund.

4. Concentrate investments in any industry. However, it may (a) invest
up to 25 percent of the value of its total assets in any one industry, (b)
invest up to 100 percent of the value of its total assets in securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, and
(c) invest for temporary defensive purposes up to 80% of the value of its total
assets in certificates of deposit (C/D's) and banker's acceptances with
maturities not greater than one year. C/D's and banker's acceptances will be
limited to domestic banks that have total assets in excess of $1 billion and are
subject to regulatory supervision by the U.S. Government or state governments.
Commitments to purchase securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities on a "when-issued" basis may not exceed 20
percent of the total assets of the Fund. Emphasis on investments in securities
of a particular industry will be shifted whenever the adviser determines that
such action is desirable for investment reasons. The directors will periodically
review these decisions of the adviser.

5. Underwrite securities of other issuers, except the Fund may acquire
portfolio securities in circumstances where, if the securities are later
publicly offered or sold by the Fund, it might be deemed to be an underwriter
for purposes of the Securities Act of 1933, as amended.

6. Purchase illiquid securities, if upon the purchase more than 10% of
the value of the Fund's net assets would consist of such illiquid securities.

7. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 5 percent of the value of its total assets at
market value to be invested in the securities of that issuer (other than
obligations of the U.S. Government and its instrumentalities), with reference to
75 percent of the assets of the Fund.

8. Buy or sell real estate. However, the Fund may purchase or hold
securities issued by companies, such as real estate investment trusts, that deal
in real estate or interests therein, and participation interests in pool of real
estate mortgage loans.

9. Buy or sell commodities or commodities contracts or oil, gas or
mineral programs, except that the Fund may purchase, sell or enter into
financial futures contracts and options on future contracts, foreign currency
forward contracts, foreign currency options, or any interest rate,
securities-

30
<PAGE>

related or foreign currency related hedging instrument, including swap
agreements and other derivative instruments, subject to compliance with any
applicable provisions of the federal securities or commodities laws.

10. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10 percent of the outstanding voting securities
of that issuer to be held in the Fund.

11. Make loans to other persons (except by purchase of short-term
commercial paper, bonds, debentures, repurchase agreements or other debt
securities constituting part of an issue). The Fund may lend portfolio
securities to broker-dealers or other institutional investors if, as a result
thereof, the aggregate value of all securities loaned does not exceed 33 1/3
percent of its total assets.

12. Purchase securities of other open-end investment companies, except
as permitted by Section 12(d)(1)(A) of the 1940 Act.

13. Invest in the securities of any company if the purchase, at the
time thereof, would cause more than 5 percent of the value of the Fund's total
assets to be invested in companies which, including predecessors and parents,
have a record of less than three years of continuous operation.

14. Invest in companies to exercise control or management.

15. Purchase or retain securities of an issuer, any of whose officers
or directors or security holders is an officer or director of the Fund or of its
adviser if, or so long as, the officers and directors of the Fund and of its
adviser together own beneficially more than 5 percent of any class of securities
of the issuer.

16. Engage in short sale of securities except to the extent that it
owns other securities convertible into an equivalent amount of such securities.
These short sales may only be made to protect a profit in or to attempt to
minimize a loss with respect to convertible securities. In any event no more
than 10 percent of the Fund's net assets valued at market may, at any time, be
held as collateral for such sales.

Columbia Fixed Income Securities Fund, Inc.

The Bond Fund may not:

1. Buy or sell commodities or commodity futures contracts.

2. Concentrate investments in any industry. However, it may (a) invest
up to 25 percent of the value of its total assets in any one industry, (b)
invest up to 100 percent of the value of its total assets in securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, and
(c) invest for defensive purposes up to 80 percent of the value of its total
assets in certificates of deposit (CDs) and bankers' acceptances with maturities
not greater than one year. CDs and banker's acceptances will be limited to
domestic banks which have total assets in excess of one billion dollars and are
subject to regulatory supervision by the U.S. Government or state governments.
Commitments to purchase securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities on a "when-issued" basis may not exceed 20
percent of the total assets of the Fund. Emphasis on investments in securities
of a particular industry will be shifted whenever the Adviser determines that
such action is desirable for investment reasons. The Board of Directors will
periodically review these decisions of the Adviser.

31
<PAGE>

4. Make loans to other persons (except by purchase of short-term
commercial paper, bonds, debentures, or other debt securities constituting part
of an issue). The Fund may lend portfolio securities to broker-dealers or other
institutional investors if, as a result thereof, the aggregate value of all
securities loaned does not exceed 33 1/3 percent of its total assets.

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10 percent of the outstanding voting securities
of that issuer to be held in the Fund.

8. Purchase or retain securities issued by an issuer, any of whose
officers or directors or security holders is an officer or director of the Fund
or of its adviser if, or so long as, the officers and directors of the Fund and
of its adviser together own beneficially more than 5 percent of any class of
securities of the issuer.

9. Purchase securities of other open-end investment companies.

10. Issue senior securities, bonds, or debentures.

11. Underwrite securities of other issuers, except the Fund may acquire
portfolio securities in circumstances where, if the securities are later
publicly offered or sold by the Fund, it might be deemed to be an underwriter
for purposes of the Securities Act of 1933.

12. Borrow money except as a temporary measure for extraordinary or
emergency purposes. Its borrowings may not exceed 5 percent of the value of the
gross assets of the Fund taken at the lesser of cost or market value, nor may it
pledge, mortgage, or hypothecate assets taken at market to an extent greater
than 10 percent of the value of the gross assets taken at cost of the Fund.

14. Invest in companies to exercise control or management.

15. Buy any securities or other property on margin, or purchase or sell
puts or calls, or combinations thereof.

32
<PAGE>

16. Engage in short sales of securities except to the extent that it
owns other securities convertible into an equivalent amount of such securities.
These short sales may only be made to protect a profit in or to attempt to
minimize a loss with respect to convertible securities. In any event, no more
than 10 percent of the value of the Fund's net assets taken at market may, at
any time, be held as collateral for such sales.

Columbia National Municipal Bond Fund, Inc.

The National Municipal Bond Fund may not:

1. Buy or sell real estate, but this shall not prevent the Fund from
investing in municipal obligations secured by real estate or interests therein.

2. Make loans to other persons except by purchase of debt securities
constituting all or part of an issue or through the loan of portfolio securities
and as otherwise permitted by the Fund's investment restrictions.

3. Purchase more than 10 percent of the voting securities of any
issuer.

4. Buy or sell commodities or commodity future contracts.

5. Purchase securities of other investment companies if, as a result of
the purchase, more than 10 percent of the assets of the Fund is invested in such
securities.

6. Issue senior securities, bonds, or debentures.

7. Sell securities short or buy any securities or other property on
margin, except for short-term credits necessary for clearing transactions.

8. Lend portfolio securities to broker-dealers or other institutional
investors if, as a result, the aggregate value of all securities loaned exceeds
33 1/3 percent of the total assets of the Fund.

9. Underwrite securities of other issuers, except that the Fund may
acquire portfolio securities in circumstances where, if the securities are later
publicly offered or sold by the Fund, it might be deemed an underwriter for
purposes of the Securities Act of 1933.

10. Borrow money except temporarily for extraordinary or emergency
purposes; nor may it pledge, mortgage, or hypothecate assets having a market
value greater than 10 percent of the cost of the gross assets of the Fund. For
amounts borrowed, the Fund shall maintain an asset coverage of 300 percent for
all borrowings. This restriction means that the Fund may not borrow money in an
amount exceeding 50 percent of its gross assets. The Fund will not make any
additional investments while borrowings exceed 5 percent of the value of the
Fund's total assets.

11. Invest more than 25 percent of its assets in a single industry.

33
<PAGE>
Columbia Oregon Municipal Bond Fund, Inc.

The Oregon Municipal Bond Fund may not:

1. Buy or sell real estate, but this shall not prevent the Fund from
investing in municipal obligations secured by real estate or interests therein.

3. Purchase more than 10 percent of the voting securities of any
issuer.

4. Buy or sell commodities or commodity future contracts.

5. Purchase securities of other investment companies if, as a result of
the purchase, more than 10 percent of the assets of the Fund is invested in such
securities.

6. Issue senior securities, bonds, or debentures.

7. Sell securities short or buy any securities or other property on
margin, except for short-term credits necessary for clearing transactions.

8. Lend portfolio securities to broker-dealers or other institutional
investors if, as a result, the aggregate value of all securities loaned exceeds
33 1/3 percent of the total assets of the Fund.

11. Invest more than 25 percent of its assets in a single industry.

Columbia High Yield Fund, Inc.

The High Yield Fund may not:

1. Buy or sell commodities or commodity futures contracts.

34
<PAGE>

have total assets in excess of $1 billion and are subject to regulatory
supervision by the U.S. Government or state governments. Commitments to purchase
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities on a "when-issued" basis may not exceed 20 percent of the
total assets of the Fund. Emphasis on investments in securities of a particular
industry will be shifted whenever the Adviser determines that such action is
desirable for investment reasons. The Board of Directors will periodically
review these decisions of the Adviser.

3. Buy or sell real estate. However, the Fund may purchase or hold
readily marketable securities issued by companies, such as real estate
investment trusts, that operate in real estate or interests therein, and
participation interests in pools of real estate mortgage loans.

5. Purchase illiquid securities, including restricted securities and
repurchase agreements of more than seven days maturity, if upon the purchase
more than 10 percent 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 and include
restricted securities that are subject to legal or contractual restrictions on
resale. Certain restricted securities that can be resold to qualifying
institutions pursuant to a regulatory exemption under Rule 144A of the
Securities Act of 1933 and for which a dealer or institutional trading market
exists may be deemed to be liquid securities by the Board of Directors of the
Fund and, therefore, are not subject to the above investment restriction.

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10 percent of the outstanding voting securities
of that issuer to be held in the Fund.

8. Purchase or retain securities of an issuer if those officers or
directors of the Fund or the Adviser who individually own more than 1/2 of 1% of
the outstanding securities of that issuer together own more than 5% of such
securities.

9. Purchase securities of other open-end investment companies.

10. Issue senior securities, bonds, or debentures.

12. Borrow money except as a temporary measure for extraordinary or
emergency purposes. Its borrowings may not exceed 5 percent of the gross assets
of the Fund valued at the lesser of cost or market value, nor may it pledge,
mortgage, or hypothecate assets valued at market to an extent greater than 10
percent of the gross assets valued at cost of the Fund.

35
<PAGE>

14. Invest in companies to exercise control or management.

15. Buy any securities or other property on margin, except for
short-term credits necessary for clearing transactions and except that margin
payments and other deposits in connection with transactions in options, futures,
and forward contracts shall not be deemed to constitute purchasing securities on
margin.

16. Engage in short sales of securities except to the extent that it
owns other securities convertible into an equivalent amount of such securities.
These short sales may only be made to protect a profit in or to attempt to
minimize a loss with respect to convertible securities. In any event, no more
than 10 percent of the Fund's net assets valued at market may, at any time, be
held as collateral for such sales.

17. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.

Columbia Daily Income Company

The Columbia Daily Income Company may not:

1. Borrow money to improve portfolio yield except as a temporary
measure to avoid disruptive redemptions, and not for investment purposes.
Borrowings will not exceed 33 1/3 percent of total assets and will be repaid
from the proceeds of sales of the Fund's shares or as maturities allow.

2. Underwrite securities issued by others except as it may be deemed to
be an underwriter in a sale of restricted securities.

3. Invest more than 5 percent of its assets (exclusive of obligations
issued or guaranteed as to principal and interest by the U.S. Government or any
agency or instrumentality thereof) in the securities of any one issuer. The Fund
may invest up to 100 percent of its total assets in obligations of U.S. banks
which are members of the Federal Reserve System. However, the Fund will not
invest more than 25 percent of its assets in any other single industry.

4. Buy or sell real estate.

5. Buy or sell commodities or commodity contracts.

6. Make loans to others (the purchase of obligations in which the Fund
is authorized to invest will not constitute loans) except that the Fund may
purchase and simultaneously resell for later delivery obligations issued or
guaranteed as to principal and interest by the U.S. Government or any agency or
instrumentality thereof if no more than 10 percent of the Fund's total assets
would be subject to such repurchase agreements maturing in more than seven days.

7. Purchase common stocks, preferred stocks, warrants, or other equity
securities.

8. Purchase securities on margin.

36
<PAGE>

9. Sell securities short.

10. Write or purchase put or call options.

11. Purchase a security which is subject to legal or contractual
restrictions on resale or for which there is no readily available market, except
that 10 percent of the Fund's total assets may be invested in repurchase
agreements maturing in more than seven days.

12. Invest in companies to exercise control or management.

13. Invest in the securities of other investment companies, except
those acquired as part of a merger, consolidation, or acquisition of assets.

Investment Restrictions Under Rule 2a-7

Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act")
requires that all portfolio securities of the Columbia Daily Income Company have
at the time of purchase a maximum remaining maturity (as defined in the rule) of
13 months and that the Fund maintain a dollar-weighted average portfolio
maturity of not more than 90 days. (The Fund, however, will be invested in
short-term debt obligations maturing within 12 months.) Rule 2a-7 further
requires that investments by a money market fund must present minimal credit
risk and, if rated, must be rated within one of the two highest rating
categories for short-term debt obligations by at least two major rating agencies
assigning a rating to the securities or issuer or, if only one rating agency has
assigned a rating, by that agency. Purchases of securities which are unrated or
rated by only one rating agency must be approved or ratified by the Board of
Directors of the Fund. Securities that are rated (or that have been issued by an
issuer that is rated with respect to a class of short-term debt obligations, or
any security within that class, comparable in priority and quality with such
securities) in the highest category by at least two major rating agencies are
designated "First Tier Securities." Securities rated in the top two categories
by at least two major rating agencies, but which are not rated in the highest
category by two or more major rating agencies, are designated "Second Tier
Securities." Securities which are unrated may be purchased only if they are
deemed to be of comparable quality to rated securities. Under Rule 2a-7, a fund
may not invest more than the greater of 1 percent of its total assets or one
million dollars, measured at the time of investment, in the securities of a
single issuer that were Second Tier Securities when acquired by the fund. In
addition, a money market fund may not under Rule 2a-7 invest more than 5 percent
of its total assets in securities that were Second Tier Securities when
acquired.

The Fund may not invest more than 5 percent of its total assets in the
securities of any one issuer, except this limitation does not apply to U.S.
Government securities and repurchase agreements thereon. The Fund may, however,
invest more than 5 percent of its total assets in the First Tier Securities of a
single issuer for up to three business days, although the Fund may not make more
than one such investment at any one time.

Investment policies by the Fund are in certain circumstances more
restrictive than the restrictions under Rule 2a-7. In particular, investments by
the Fund are restricted to the following:

1. Securities issued or guaranteed as to principal and interest by the
U.S. Government or issued or guaranteed by agencies or instrumentalities thereof
and repurchase agreements relating to these securities.

2. Commercial paper which, if rated by S&P or Moody's is rated A-1 by
S&P and Prime 1 by Moody's or, if not rated, is determined to be of comparable
quality by the Board of Directors of the Fund.

37
<PAGE>

3. Other corporate debt securities with remaining maturities of less
than 12 months, including bonds and notes, of an issuer that has received
ratings from S&P and Moody's for its other short-term debt obligations as
described in paragraph 2 above, where such corporate debt securities are
comparable in priority and security to the rated short-term debt obligations or,
if no ratings are available, where such corporate debt securities are determined
to be of comparable quality under procedures approved by the Board of Directors
of the Fund.

4. Obligations of U.S. banks that are members of the Federal Reserve
System and have capital surplus and undivided profits as of the date of their
most recent published financial statements in excess of $100 million and are
determined by the Board of Directors of the Fund to be of comparable quality to
the obligations described in paragraphs 2 or 3 above. Currently these
obligations are CDs, bankers' acceptances, and letters of credit.

--------------------------------------------------------------------------------
MANAGEMENT
--------------------------------------------------------------------------------

Each 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 each Fund meets
quarterly to review the Fund's investment policies, performance, expenses, and
other business matters. The directors and officers of the Funds are listed
below, together with their principal business occupations. All principal
business occupations have been held for more than five years, except that
positions with the Small Cap Fund and the Columbia National Municipal Bond Fund
have been held since August 1996 and January 1999, respectively, and except as
otherwise indicated.

38
<PAGE>

J. JERRY INSKEEP, JR.,* + Age 70, Chairman and Director of each Fund; Chairman
and Trustee of CMC Fund Trust ("CMC Trust"); Consultant to FleetBoston Financial
Corporation (since December 1997); formerly President of the CMC Trust and each
of the Columbia Funds; formerly Chairman and a Director of Columbia Funds
Management Company (the "Adviser"), Columbia Management Co., and Columbia Trust
Company (the "Trust Company"); and formerly a Director of Columbia Financial
Center Incorporated ("Columbia Financial"). Mr. Inskeep's business address is
1300 S.W. Sixth Avenue, P.O. Box 1350, Portland, Oregon 97207.

JAMES C. GEORGE, Age 68, Director of each Fund (since June 1994) and Trustee of
CMC Trust (since December 1997). Mr. George, former investment manger of the
Oregon State Treasury (1966-1992), is an investment consultant. Mr. George's
business address is 1001 S.W. Fifth Avenue, Portland, Oregon 97204.

PATRICK J. SIMPSON, Age 56, Director of each Fund (since April 2000) and Trustee
of CMC Trust (since April 2000); attorney with Perkins Coie LLP. Mr. Simpson's
business address is 1211 S.W. Fifth Avenue, Suite 1500, Portland, Oregon 97204.

RICHARD L. WOOLWORTH, + Age 60, Director of each Fund and Trustee of CMC Trust;
Chairman and Chief Executive Officer of Blue Cross and Blue Shield of Oregon;
and Chairman and Chief Executive Officer of the Regence Group, health insurers.
Mr. Woolworth's address is 200 S.W. Market Street, Portland, Oregon 97201.

JEFF B. CURTIS,* Age 47, President and Assistant Secretary of each Fund and CMC
Trust (since April 2000); Director and President of Columbia Financial (since
October 1999); Director and Senior Vice President (since January 1999) and
Secretary (since April 1993) of the Trust Company; Director (since December
1997) and Senior Vice President (since January 1999) of the Adviser and Columbia
Management Co. Prior to his current officer positions, Mr. Curtis was Vice
President and General Counsel of the Adviser, Columbia Management Co., the Trust
Company, and Columbia Financial (from April 1993 to December 1998). Mr. Curtis's
business address is 1300 S.W. Sixth Avenue, Portland, Oregon 97207.

THOMAS L. THOMSEN,* Age 57, Vice President of each Fund and CMC Trust (since
April 2000); President and Chief Investment Officer (since December 1997) and
Director (since 1980) of the Trust Company; Director (since 1982), President and
Chief Investment Officer (since December 1997) of the Adviser; Director (since
1989), President and Chief Investment Officer (since December 1997) of Columbia
Management Co. Prior to his current officer positions, Mr. Thomsen was Vice
President of the Adviser, Columbia Management Co. and the Trust Company. Mr.
Thomsen's business address is 1300 S.W. Sixth Avenue, Portland, Oregon 97207.

MYRON G. CHILD,* Age 61, Vice President of each Fund and CMC Trust (since April
2000); Vice President of the Trust Company (since December 1997); Vice President
of the Adviser and Columbia Management Co. (since December 1997). Prior to
becoming Vice President of the Adviser and Columbia Management Co., Mr. Child
was Corporate Controller (from March 1981 to November 1997). Mr. Child's
business address is 1300 S.W. Sixth Avenue, Portland, Oregon 97207.

KATHLEEN M. GRIFFIN,* Age 42, Vice President of each Fund and CMC Trust (since
April 2000); Vice President of Columbia Financial (since December 1997). Prior
to becoming a Vice President of

39
<PAGE>

Columbia Financial, Ms. Griffin was Manager of Shareholder Communications (from
January 1995 to November 1997). Ms. Griffin's business address is 1300 S.W.
Sixth Avenue, Portland, Oregon 97207.

JEFFREY L. LUNZER,* Age 40, Vice President of each Fund and CMC Trust (since
April 2000); Vice President of the Trust Company (since April 2000), the Adviser
and Columbia Management Co. (since January 1999). Prior to becoming Vice
President of the Trust Company, the Adviser and Columbia Management Co., Mr.
Lunzer was the Funds' Controller (from December 1998 to December 1999). Prior to
joining the Adviser and Columbia Management Co., Mr. Lunzer was Vice President
and Accounting Manager for WM Shareholder Services, Inc., a subsidiary of
Washington Mutual Bank (from 1984 to November 1998), and Treasurer and Fund
Officer of WM Group of Funds, a mutual fund company (from 1988 to November
1998). Mr. Lunzer's business address is 1300 S.W. Sixth Avenue, Portland, Oregon
97207.

SUSAN J. WOODWORTH,* Age 49, Vice President of each Fund and CMC Trust (since
April 2000); Vice President of the Trust Company (since December 1997). Prior to
becoming Vice President of the Trust Company, Ms. Woodworth was Manager of
Mutual Fund Operations (from July 1980 to November 1997). Ms. Woodworth's
business address is 1300 S.W. Sixth Avenue, Portland, Oregon 97207.

MARK A. WENTZIEN,* Age 41, Secretary of each Fund and CMC Trust (since April
2000); Director, Vice President and Secretary of Columbia Financial (since
January 1999); Associate Counsel of the Trust Company (since January 1999); Vice
President-Legal of the Adviser and Columbia Management Co. (since July 1999),
and Associate Counsel (from April 1997 to June 1999). Prior to joining the
Adviser and Columbia Management Co., Mr. Wentzien was an attorney with the law
firm of Davis Wright Tremaine LLP (from September 1985 to April 1997). Mr.
Wentzien's business address is 1300 S.W. Sixth Avenue, Portland, Oregon 97207.

*These individuals are "interested persons" as defined by the
Investment Company Act of 1940 (the "1940 Act") and receive no fees or salaries
from any Fund or the CMC Trust.

+Members of the Executive Committee. The Executive Committee has all
powers of the Board of Directors when the Board is not in session, except as
limited by law.

40
<PAGE>

The following table sets forth compensation received by the
disinterested directors for 2000. No officer of the Funds received any
compensation from the Funds in 2000.

COMPENSATION TABLE

Compensation from
Aggregate compensation Fund Complex,
Director From Fund, per Director per Director*
-------- ----------------------- -------------

Thomas R. Mackenzie** Common Stock Fund $ $______
James C. George Growth Fund $
International Stock Fund $
Special Fund $
Small Cap Fund $
Real Estate Fund $
Balanced Fund $
Columbia Daily Income Company $
Short Term Bond Fund $
Bond Fund $
Oregon Municipal Bond Fund $
High Yield Fund $
National Municipal Bond Fund $

Richard L. Woolworth*** Common Stock Fund $ $______
Growth Fund $
International Stock Fund $
Special Fund $
Small Cap Fund $
Real Estate Fund $
Balanced Fund $
Columbia Daily Income Company $
Short Term Bond Fund $
Bond Fund $
Oregon Municipal Bond Fund $
High Yield Fund $

41
<PAGE>

National Municipal Bond Fund $

Patrick J. Simpson**** Common Stock Fund $
Growth Fund $
International Stock Fund $
Special Fund $
Small Cap Fund $
Real Estate Fund $
Balanced Fund $
Columbia Daily Income Company $
Short Term Bond Fund $
Bond Fund $
Oregon Municipal Bond Fund $
High Yield Fund $
National Municipal Bond Fund $

*Includes compensation Messrs. Woolworth, Mackenzie and George received as
Trustees of CMC Trust. The Investment Adviser for CMC Trust is Columbia
Management Co., an affiliate of the Adviser.

** Mr. Mackenzie retired at the end of April, 2000.
--------------------------------------------------

***Includes compensation received by Mr. Woolworth for serving on each Fund's
Executive Committee.

**** Mr. Simpson joined the board May 1, 2000.
---------------------------------------------

42
<PAGE>

Provident Distributors, Inc. ("PDI"), a registered securities broker
and a member of the National Association of Securities Dealers, Inc., is the
principal underwriter for the Funds, and is authorized under a distribution
agreement with each Fund to sell shares of the Fund. Columbia Financial has
entered into a broker-dealer agreement with PDI to distribute the Funds' shares.
PDI and Columbia Financial do not charge any fees or commissions to investors or
the Funds for the sale of shares of a Fund.

At January 31, 2001, officers and directors, as a group, owned of
record or beneficially less than 1 percent of each Fund, other than
_________________.

At January 31, 2001, to the knowledge of the Funds, no person owned of
record or beneficially more than 5 percent of the outstanding shares of any Fund
except the following record owners: ______________.

--------------------------------------------------------------------------------
INVESTMENT ADVISORY AND OTHER FEES PAID TO AFFILIATES
--------------------------------------------------------------------------------

The investment adviser to each of the Funds is Columbia Funds
Management Company (the "Adviser"). The Adviser has entered into an investment
contract with each Fund. Pursuant to the investment contract, the Adviser
provides research, advice, and supervision with respect to investment matters
and determines which securities to purchase or sell and what portion of the
Fund's assets to invest.

The Adviser provides office space and pays all executive salaries and
executive expenses of the Fund. The Fund assumes its costs relating to corporate
matters, cost of services to shareholders, transfer and dividend paying agent
fees, custodian fees, legal and auditing expenses, disinterested director 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

43
<PAGE>

registering or qualifying its shares for sale, transfer taxes, and all other
expenses of preparing its registration statement, prospectuses, and reports.

Information regarding calculation of the advisory fee payable to the
Adviser is set forth in the Prospectus. Advisory fees paid by each of the Funds
for each of the last three years were:

Fund 2000 1999 1998
---- ---- ---- ----
Common Stock Fund $5,181,352 $5,136,336
Growth Fund $10,562,644 $8,591,359
International Stock Fund $1,592,405 $1,414,138
Special Fund $7,081,977 $9,054,501
Small Cap Fund $1,745,238 $1,246,153
Real Estate Fund $1,549,192 $1,221,370
Balanced Fund $5,094,253 $4,512,177
Short Term Bond Fund $194,635 $194,507
Bond Fund $2,105,357 $2,050,200
National Municipal Bond Fund* $27,095 ___
Oregon Municipal Bond Fund $2,246,866 $2,149,321
High Yield Fund $405,284 $292,249
Columbia Daily Income Company $5,232,688 $5,005,974

---------------
* The Fund commenced operations February 1999.

The Adviser has entered into an agreement with Columbia Management Co.
("CMC"), under which CMC provides the Adviser 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 Adviser, also contacts brokerage firms to conduct
securities transactions for the Funds. The Adviser pays CMC a fee for these
services. A Fund's expenses are not increased by this arrangement, and no
amounts are paid by a Fund to CMC under this agreement.

The transfer agent and dividend crediting agent for the Funds is
Columbia Trust Company ("Trust Company"). Its address is 1301 S.W. Fifth Avenue,
P.O. Box 1350, Portland, Oregon 97207. It issues certificates for shares of the
Funds, if requested, and records and disburses dividends for the Funds. During
1999, each Fund paid the Trust Company a per account fee of $1.66 per month for
each shareholder account with the Fund existing at any time during the month. In
addition, each Fund pays the Trust Company for extra administrative services
performed at cost in accordance with a schedule set forth in the agreement
between the Trust Company and the Fund and reimburses the Trust Company for
certain out-of-pocket expenses incurred in carrying out its duties under that
agreement. In addition to the transfer agent services described above, the Trust
Company has hired PFPC, Inc. ("PFPC") as a sub-transfer agent to provide
services related to fund transactions processed through the National Securities
Clearing Corporation on behalf of the Common Stock Fund, Growth Fund, Special
Fund, Real Estate Fund, Small Cap Fund, Balanced Fund, High Yield Fund and Bond
Fund. Each of the above Funds has agreed to pay the Trust Company the costs
incurred by Trust Company in connection with the services provided by PFPC.

Fees paid to the Trust Company for services performed in 2000 under
each transfer agent agreement were $_______ for the Common Stock Fund, $______
for the Growth Fund, $_______ for the International Stock Fund, $______ for the
Special Fund, $______ for the Small Cap Fund, $_______ for the Real Estate Fund,
$______ for the Balanced Fund,

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<PAGE>

$______ for the Short Term Bond Fund, $________ for the Bond Fund, $______ for
the Oregon Municipal Bond Fund, $______ for the High Yield Fund, $_______ for
the Columbia Daily Income Company and $______ for the Columbia National
Municipal Bond Fund.

The Adviser, the Trust Company and CMC are indirect wholly owned
subsidiaries of Fleet Boston Corporation ("Fleet"). Fleet and its affiliates
provide a wide range of banking, financial, and investment products and services
to individuals and businesses. Their principal activities include customer and
commercial banking, mortgage lending and servicing, trust administration,
investment management, retirement plan services, brokerage and clearing
services, securities underwriting, private and corporate financing and advisory
activities, and insurance services.

--------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
--------------------------------------------------------------------------------

Each Fund will not generally invest in securities for short-term
capital appreciation but, when business and economic conditions, market prices,
or the Fund's investment policy warrant, individual security positions may be
sold without regard to the length of time they have been held. This may result
in a higher portfolio turnover rate and increase a Fund's transaction costs,
including brokerage commissions. To the extent short-term trades result in gains
on securities held less than one year, shareholders will be subject to taxes at
ordinary income rates. See "TAXES" in this Statement of Additional Information.

The Funds may purchase their portfolio securities through a securities
broker and pay the broker a commission, or they may purchase the securities
directly from a dealer which acts as principal and sells securities directly for
its own account without charging a commission. The purchase price of securities
purchased from dealers serving as market makers will include the spread between
the bid and asked prices. The Funds may also purchase securities from
underwriters, the price of which will include a commission or discount paid by
the issuer to the underwriter. There is generally no stated commission in the
case of fixed income securities that are traded in the over-the-counter market,
but the price paid by a Fund usually includes an undisclosed dealer commission
or mark-up.

Prompt execution of orders at the most favorable price will be the
primary consideration of the Funds in transactions where fees or commissions are
involved. Additional factors considered by the Adviser in selecting brokers to
execute a transaction include the: (i) professional capability of the executing
broker and the value and quality of the brokerage services provided; (ii) size
and type of transaction; (iii) timing of transaction in the context of market
prices and trends; (iv) nature and character of markets for the security to be
purchased or sold; (v) the broker's execution efficiency and settlement
capability; (vi) the broker's experience and financial stability and the
execution services it renders to the Adviser on a continuing basis; and (vii)
reasonableness of commission.

Research, statistical, and other services offered by the broker also
may be taken into consideration in selecting broker-dealers. These services may
include: advice concerning the value of securities, the advisability of
investing in, purchasing, or selling securities, and the availability of
securities or the purchasers or sellers of securities; and furnishing analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategies, and performance of accounts. A commission in
excess of the amount of a commission another broker or dealer would have charged
for effecting a transaction may be paid by a Fund if the Adviser determines in
good faith that the commission is reasonable in relation to the value of the
brokerage and research services provided, viewed in terms of either that
particular transaction or management's overall responsibilities with respect to
the Fund.

45
<PAGE>

The Adviser receives a significant amount of proprietary research from
a number of brokerage firms, in most cases on an unsolicited basis. The Adviser
does not make any commitments to allocate brokerage for proprietary research.
The value of that research, however, is considered along with other factors in
the selection of brokers. This research is considered supplemental to the
Adviser's own internal research and does not, therefore, materially reduce the
overall expenses incurred by the Adviser for its research. On a semi-annual
basis, the Adviser's research analysts and portfolio managers participate in a
detailed internal survey regarding the value of proprietary research and the
skills or contributions made by the various brokerage analysts to the Adviser's
investment process. Firms are then confidentially ranked based on that survey.
Brokerage allocations are then made, as much as reasonably possible, based on
those rankings.

In limited circumstances, the Adviser may use a Fund's commissions to
acquire third party research or products that are not available through its
full-service brokers. In these arrangements, the Adviser pays an executing
broker a commission equal to the average rate paid on all other trades (e.g.,
$0.06) and achieves what it believes is best execution on the trade. The
executing broker then uses a portion of the commission to pay for a specific
research service or product provided to the Adviser. Proposed research to be
acquired in this manner must be approved by the Adviser's Chief Investment
Officer, who is responsible for determining that the research provides
appropriate assistance to the Adviser in connection with its investment
management of the Funds and that the price paid with broker commissions is fair
and reasonable.

The receipt of proprietary and third party research services or
products from brokers or dealers might be useful to the Adviser and its
affiliates in rendering investment management services to the Funds or other
clients. Conversely, research provided by brokers or dealers who have executed
orders on behalf of other clients of the Adviser and its affiliates might be
useful to the Adviser in carrying out its obligations to a Fund.

Total brokerage commissions paid by each of the respective Funds for
each of the last three years were:

Fund 2000 1999 1998
---- ---- ---- ----
Common Stock Fund $1,569,579 $2,596,285
Growth Fund $4,155,391 $3,732,855
International Stock Fund $724,858 $524,840
Special Fund $2,633,780 $3,382,721
Small Cap Fund $421,852 $375,120
Real Estate Fund $491,959 $110,166
Balanced Fund $1,013,023 $1,220,034

No brokerage commissions were paid by the Columbia Daily Income
Company, the Short Term Bond Fund, the Bond Fund, the Oregon Municipal Bond
Fund, or the High Yield Fund during the last three years. Of the commissions
paid in 2000, the Common Stock Fund paid $______, the Growth Fund paid $______,
the Special Fund paid $______, the Small Cap Fund paid $_____, the Balanced Fund
paid $______, and the Real Estate Fund paid $_____, to acquire third-party
research or products.

Provided each Fund's Board of Directors is satisfied that the Fund is
receiving the most favorable price and execution available, the Adviser may
consider the sale of the Fund's shares as a factor in the selection of brokerage
firms to execute its portfolio transactions. The placement of portfolio
transactions with brokerage firms who sell shares of a Fund is subject to rules
adopted by the National Association of Securities Dealers. The Adviser may use
research services provided by and allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, to the extent
permitted by law or order of the

46
<PAGE>

SEC, financial institutions that are affiliated with the Adviser, if the Adviser
believes that the quality of the transaction and the commission are comparable
to what they would be with other qualified brokerage firms. On October 1, 1999,
Robertson, Stephens became an affiliated broker dealer of Adviser. Each Fund may
use Robertson Stephens to execute purchase and sale orders. In each case the
percentage of aggregate brokerage commissions that may be paid to, and the
aggregate dollar amount of transactions involving, Robertson Stephens, is not
expected to exceed 1 percent. In addition to agency transactions, the Funds may
purchase securities from an underwriting syndicate in which an affiliate is a
member of the underwriting syndicate. Such trades will be executed in accordance
with the rules and regulations of the Investment Company Act of 1940. As well as
procedures adopted by the Funds.

Investment decisions for each Fund are made independently from those of
the other Funds or accounts or other investment pools managed by the Adviser or
any affiliate of the Adviser. The same security is sometimes held in the
portfolio of more than one Fund or account. Simultaneous transactions are
inevitable when several Funds or accounts are managed by the same investment
adviser, particularly when the same security is suitable for the investment
objective of more than one Fund or account. In the event of simultaneous
transactions, allocations among the Fund or accounts will be made on an
equitable basis.

Since 1967, the Adviser and the Funds have had a Code of Ethics (the
"Code") that sets forth general and specific standards relating to the
securities trading activities of all their employees. The Code does not prohibit
employees from purchasing securities that may be purchased or held by the Funds,
but is intended to ensure that all employees conduct their personal transactions
in a manner that does not interfere with the portfolio transactions of the Funds
or the Adviser's other clients or take unfair advantage of their relationship
with the Adviser. The specific standards in the Code include, among others, a
requirement that all employee trades be pre-cleared; a prohibition on investing
in initial public offerings; required pre-approval of an investment in private
placements; a prohibition on portfolio managers trading in a security seven days
before or after a trade in the same security by an account over which the
manager exercises investment discretion; and a prohibition on realizing any
profit on the trading of a security held less than 60 days. Certain securities
and transactions, such as mutual fund shares or U.S. Treasuries and purchases of
options on securities indexes or securities under an automatic dividend
reinvestment plan, are exempt from the restrictions in the Code because they
present little or no potential for abuse. Certain transactions involving the
stocks of large capitalization companies are exempt from the seven day black-out
period and short-term trading prohibitions because such transactions are highly
unlikely to affect the price of these stocks. In addition to the trading
restrictions, the Code contains reporting obligations that are designed to
ensure compliance and allow the Adviser's Ethics Committee to monitor that
compliance.

The Adviser and the Funds have also adopted a Policy and Procedures
Designed to Detect and Prevent Insider Trading (the "Insider Trading Policy").
The Insider Trading Policy prohibits any employee from trading, either
personally or on behalf of others (including a client account), on the basis of
material nonpublic information. All employees are required to certify each year
that they have read and complied with the provisions of the Code and the Insider
Trading Policy.

--------------------------------------------------------------------------------
CAPITAL STOCK AND OTHER SECURITIES
--------------------------------------------------------------------------------

Each Fund is an Oregon corporation and was organized in the year set
forth below opposite its name.

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<PAGE>

Fund Date
---- ----
Common Stock Fund 1991
Growth Fund 1967
International Stock Fund 1992
Special Fund 1985
Small Cap Fund 1996
Real Estate Fund 1994
Balanced Fund 1991
Short Term Bond Fund 1986
Bond Fund 1983
National Municipal Bond Fund 1999
Oregon Municipal Bond Fund 1984
High Yield Fund 1993
Columbia Daily Income Company 1974

All shares of each Fund have equal voting, redemption, dividend, and
liquidation rights. All issued and outstanding shares of a 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 a Fund
do not have cumulative voting rights, which means that the holders of more than
50 percent of the shares of the Fund, voting for the election of directors, can
elect all the directors.

Any reference to the phrase "vote of a majority of the outstanding
voting securities of the Fund" means the vote at any meeting of shareholders of
a Fund of (i) 67 percent or more of the shares present or represented by proxy
at the meeting, if the holders of more than 50 percent of the outstanding shares
are present or represented by proxy, or (ii) more than 50 percent of the
outstanding shares, whichever is less.

--------------------------------------------------------------------------------
PURCHASE, REDEMPTION AND PRICING OF SHARES
--------------------------------------------------------------------------------

PURCHASES AND REDEMPTIONS
-------------------------

A detailed discussion of how you may purchase, redeem and exchange
shares in each of the Funds is discussed in the Prospectus. The following
information and polices is supplemental to that found in the Prospectus.

Investment Minimums. Although the Adviser has established
minimum investment amounts, it 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
adviser, or securities broker), for individual retirement
plans or in other circumstances.

Telephone Redemptions. You may experience some difficulty in
implementing a telephone redemption during periods of intense
economic or financial market changes or activity. Telephone
redemption privileges may be modified or terminated at any
time without notice to shareholders.

Redemptions by Draft. The processing of drafts against a
Columbia Daily Income Company account is subject to the rules
and regulations of the Columbia Daily Income Company's
commercial bank. These arrangements do not establish a
checking or other

48
<PAGE>

account between you and the bank for the purpose of Federal
Deposits Insurance or otherwise. The agreements and procedures
followed by the Columbia Daily Income Company relates solely
to the bank's intermediary status for redemption of
investments in the Columbia Daily Income Company.

Automatic Withdrawals. If your account value in any Fund is
$5,000 or more, you may elect to receive automatic cash
withdrawals of $50 or more from that 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 $25.00.

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 related.

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 be closed on 60 days written notice. The minimum
withdrawal amount 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.

Redemption of Recently Purchased Shares. If a Fund has not yet
collected payment for the shares you are selling, it may delay
sending the proceeds until it has collected payment, which may
take up to 15 days from the purchase date. No interest is paid
on the redemption proceeds after the redemption date and
before the proceeds are sent to you. If you request the
redemption (by draft or other means) of Columbia Daily Income
Company shares recently purchased by check, the proceeds will
not be transmitted until the earlier to occur of your check
clearing or 15 days from the purchase date. These holding
periods do 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.

Exchanges. You may use proceeds from the redemption of shares
of any Fund to purchase share of other Funds offering shares
for sale in your state of residence. Before making an
exchange, you should read the portions of the Prospectus
relating to the Fund or Funds into which the shares are to be
exchanged. The shares of the Fund to be acquired will be
purchased at the NAV next determined after acceptance of the
purchase order by that Fund in accordance with its policy for
accepting investments. The exchange of shares of one

49
<PAGE>

Fund for shares of another Fund is treated, for federal income
tax purposes, as a sale on which you may realize a taxable
gain or loss.

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 one Fund into another Fund only within the same
account number. To prevent the abuse of the exchange privilege
to the disadvantage of other shareholders, each Fund reserves
the right to terminate the exchange privilege of any
shareholder who makes more than four exchanges out of a Fund
during the calendar year. The exchange privilege may be
modified or terminated at any time, and any Fund may
discontinue offering its shares generally or in any particular
state without notice to shareholders.

Involuntary Redemptions. Upon 60 days prior written notice, a
Fund may redeem all of your shares without your consent if:

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

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

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

The Funds also reserve the right to close a
shareholder account if the shareholder's actions are deemed to
be detrimental to the Fund or its shareholders, including,
without limitation, violating the exchange policy set forth in
its Prospectus. If a 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.

Processing Your Orders. Orders received by a Fund other than
the Columbia Daily Income Company will be processed the day
they are received. Since the Columbia Daily Income Company
invests in obligations normally requiring payment in federal
funds, purchase orders will not be processed unless received
in federal funds or until converted by the Fund into federal
funds. Checks or negotiable U.S. bank drafts require one day
to convert into federal funds. Checks drawn on banks that are
not members of the Federal Reserve System may take longer to
convert into federal funds. Prior to conversion into federal
funds, your money will not be invested or working for you.
Information about federal funds is available from any U.S.
bank that is a member of the Federal Reserve System.

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 Funds reserve the
right to reject any order.

50
<PAGE>

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

Redemptions. Each Fund reserves the right to redeem Fund
shares in cash or by payment-in-kind. Each Fund has elected,
however, to be governed by Rule 18f-1 under the Investment
Company Act pursuant to which a Fund is obligated to redeem,
during any 90-day period, shares of a shareholder solely for
cash up to the lesser of $250,000 or 1 percent of the net
asset value of the Fund. A shareholder who is redeemed in kind
may incur brokerage fees upon the sale of any securities
distributed upon redemption.

PRICING OF SHARES
-----------------

The net asset value ("NAV") per share of each Fund is determined by the
Adviser, under procedures approved by the directors, as of the close of regular
trading (normally 4:00 p.m. New York time) on each day the NYSE is open for
business and at other times determined by the directors. The NAV per share is
computed by dividing the value of all assets of the Fund, less its liabilities,
by the number of shares outstanding.

A Fund may suspend the determination of the NAV of a Fund and the right
of redemption for any period (1) when the NYSE is closed, other than customary
weekend and holiday closings, (2) when trading on the NYSE is restricted, (3)
when an emergency exists as a result of which sale of securities owned by the
Fund is not reasonably practicable or it is not reasonably practicable for the
Fund to determine the value of the Fund's assets, or (4) as the SEC may by order
permit for the protection of security holders, provided the Fund complies with
rules and regulations of the SEC, which govern as to whether the conditions
prescribed in (2) or (3) exist. The NYSE observes the following holidays: New
Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.

For purposes of calculating the NAV of a Fund's shares, the following
procedures are utilized whenever applicable. Each Fund's equity securities are
valued at the last sale price on the securities exchange or national securities
markets at which such securities primarily are traded. Securities not listed on
an exchange or national securities market, or securities in which there were no
transactions, are valued using the last bid price. Each Fund purchasing debt
securities uses market value to value such securities as quoted by dealers who
are market makers in these securities or by an independent pricing service,
unless the Adviser determines that a fair value determination should be made
using procedures and guidelines established by and under the general supervision
of the Fund's Board of Directors. Market values are based on the average of bid
and ask prices, or by reference to other securities with comparable ratings,
interest rates and maturities. Certain debt securities for which daily market
quotations are not readily available, or for which the Adviser believes the
quotations do not accurately value the security in question, may be valued by
the Adviser, pursuant to guidelines established by the Fund's Board of
Directors, with reference to fixed income securities whose prices are more
readily obtainable and whose durations are comparable to the securities being
valued.

Investments in the Columbia Daily Income Company and other temporary
cash investments are carried at values deemed best to reflect their fair values
as determined in good faith by the Adviser, under procedures adopted by the
Fund's Board of Directors. These values are based on cost, adjusted for
amortization of discount or premium and accrued interest, unless unusual
circumstances indicate that another method of determining fair value should be
used.

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<PAGE>
The value of assets or liabilities initially expressed in a foreign
currency will, on a daily basis, be converted into U.S. dollars. Foreign
securities will be valued based upon the most recent closing price on their
principal exchange, or based upon the most recent price obtained by the Fund, if
the security is not priced on an exchange, even if the close of that exchange or
price determination is earlier than the time of the Funds' NAV calculation. In
the case of such foreign security, if an event that is likely to affect
materially the value of a portfolio security occurs between the time the foreign
price is determined and the time the Fund's NAV is calculated, it may be
necessary to value the security in light of that event.

--------------------------------------------------------------------------------
CUSTODIANS
--------------------------------------------------------------------------------

U S Bank N.A. (a "Custodian"), 321 S.W. Sixth Avenue, Portland, Oregon
97208, acts as general custodian for each Fund, except the International Stock
Fund. The Custodian provides custody services to the International Stock Fund
with respect to domestic securities held by the Fund. Chase Manhattan Bank
("Chase" or a "Custodian"), One Pierrepont Plaza, Brooklyn, New York 11201, acts
as the general custodian for the International Stock Fund and provides custody
services to those Funds that invest in foreign securities. The Custodians hold
all securities and cash of the Funds, receive and pay for securities purchased,
deliver against payment securities sold, receive and collect income from
investments, make all payments covering expenses of the Funds, and perform other
administrative duties, all as directed by authorized officers of the Adviser.
The Custodians do not exercise any supervisory function in the purchase and sale
of portfolio securities or payment of dividends.

Portfolio securities purchased in the United States are maintained in
the custody of the Fund's custodian. Portfolio securities purchased outside the
United States by the Funds are maintained in the custody of foreign banks, trust
companies, or depositories that have sub-custodian arrangements with Chase (the
"foreign sub-custodians"). Each of the domestic and foreign custodial
institutions that may hold portfolio securities of the Funds has been approved
by the Board of Directors of the Funds or, in the case of foreign securities, at
the discretion of the Board, by Chase, as a delegate of the Board of Directors,
all in accordance with regulations under the 1940 Act.

The Adviser determines whether it is in the best interest of the Funds
and their shareholders to maintain a Fund's assets in each of the countries in
which the Fund invests ("Prevailing Market Risk"). The review of Prevailing
Market Risk includes an assessment of the risk of holding a Fund's assets in a
country, including risks of expropriation or imposition of exchange controls. In
evaluating the foreign sub-custodians, the Board of Directors, or its delegate,
will review the operational capability and reliability of the foreign
sub-custodian. With respect to foreign investments and the selection of foreign
sub-custodians, however, there is no assurance that the Funds, and the value of
their shares, will not be adversely affected by acts of foreign governments,
financial or operational difficulties of the foreign sub-custodians,
difficulties and cost of obtaining jurisdiction over, or enforcing judgements
against, the foreign sub-custodians, or the application of foreign law to a
Fund's foreign sub-custodial arrangement. Accordingly, an investor should
recognize that the risks involved in holding assets abroad are greater than
those associated with investing in the United States.

52
<PAGE>
--------------------------------------------------------------------------------
ACCOUNTING SERVICES AND FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

The financial statements of each Fund for the year ended December 31,
2000, the selected per share data and ratios under the caption "Financial
Highlights," and the report of PricewaterhouseCoopers LLP, independent
accountants, are included in the 2000 Annual Report to Shareholders of the
Funds. PricewaterhouseCoopers LLP, 1300 S.W. Fifth Avenue, Suite 3100, Portland,
Oregon 97201, in addition to examining the financial statements of the Funds,
assists in the preparation of the tax returns of the Funds and in certain other
matters.

--------------------------------------------------------------------------------
TAXES
--------------------------------------------------------------------------------

Federal Income Taxes

Each Fund intends and expects to meet continuously the tests for
qualification as a regulated investment company under Part I of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). Each Fund believes
it satisfies the tests to qualify as a regulated investment company.

To qualify as a regulated investment company for any taxable year, each
Fund must, among other things:

(a) derive at least 90 percent of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities, or foreign currencies, or other income
(including but not limited to gains from options, futures, or forward contracts)
derived with respect to its business of investing in such stock, securities, or
currencies (the "90 Percent Test"); and

(b) diversify its holdings so that, at the end of each quarter, (i) 50
percent or more of the value of the assets of the Fund is represented by cash,
government securities, and other securities limited, in respect of any one
issuer of such other securities, to an amount not greater than 5 percent of the
value of the assets of the Fund and 10 percent of the outstanding voting
securities of such issuer, and (ii) not more than 25 percent of the value of the
assets of the Fund is invested in the securities (other than government
securities) of any one issuer or of two or more issuers that the Fund "controls"
within the meaning of Section 851 of the Code and that meet certain requirements
(the "Diversification Test"). In addition, a Fund must file, or have filed, a
proper election with the Internal Revenue Service.

Part I of Subchapter M of the Code will apply to a Fund during a
taxable year only if it meets certain additional requirements. Among other
things, the Fund must: (a) have a deduction for dividends paid (without regard
to capital gain dividends) at least equal to the sum of 90 percent of its
investment company taxable income (computed without any deduction for dividends
paid) and 90 percent of its tax-exempt interest in excess of certain disallowed
deductions (unless the Internal Revenue Service waives this requirement), and
(b) either (i) have been subject to Part I of Subchapter M for all taxable years
ending after November 8, 1983 or (ii) as of the close of the taxable year have
no earnings and profits accumulated in any taxable year to which Part I of
Subchapter M did not apply.

A regulated investment company that meets the requirements described
above is taxed only on its "investment company taxable income," which generally
equals the undistributed portion of its ordinary net income and any excess of
net short-term capital gain over net long-term capital loss. In addition, any
excess of net long-term capital gain over net short-term capital loss that is
not distributed is taxed to a Fund at corporate

53
<PAGE>

capital gain tax rates. The policy of each Fund is to apply capital loss
carry-forwards as a deduction against future capital gains before making a
capital gain distribution to shareholders. Under rules that are beyond the scope
of this discussion, certain capital losses and certain net foreign currency
losses resulting from transactions occurring in November and December of a
taxable year may be taken into account either in that taxable year or in the
following taxable year.

If any net long-term capital gains in excess of net short-term capital
losses are retained by a Fund, requiring federal income taxes to be paid thereon
by the Fund, the Fund may elect to treat such capital gains as having been
distributed to shareholders. In the case of such an election, shareholders will
be taxed on such amounts as long-term capital gains, will be able to claim their
proportional share of the federal income taxes paid by the Fund on such gains as
credits against their own federal income tax liabilities, and generally will be
entitled to increase the adjusted tax basis of their shares in the Fund by the
differences between their pro rata shares of such gains and their tax credits.

Special Aspects of 90 Percent Test with Respect to Foreign Currency.
For purposes of the 90 Percent Test, foreign currency gains that are not
directly related to a Fund's principal business of investing in stocks or
securities (or options and futures with respect to stock or securities) may be
excluded from qualifying income by regulation. No such regulations, however,
have been issued.

Unless an exception applies, a Fund may be required to recognize some
income with respect to foreign currency contracts under the mark-to-market rules
of Section 1256 even though that income is not realized. Special rules under
Sections 1256 and 988 of the Code determine the character of any income, gain,
or loss on foreign currency contracts.

Two possible exceptions to marking-to-market relate to hedging
transactions and mixed straddles. A hedging transaction is defined for purposes
of Section 1256 as a transaction (1) that a Fund properly identifies as a
hedging transaction, and (2) that is entered into in the normal course of
business primarily to manage the risk of price changes or currency fluctuations
with respect to the Fund's investments. A mixed straddle is a straddle where (1)
at least one (but not all) of the straddle positions are Section 1256 contracts
and (2) the Fund properly identifies each position forming part of the straddle.
A straddle for these purposes generally is offsetting positions with respect to
personal property. A Fund holds offsetting positions generally if there is a
substantial diminution of the Fund's risk of loss from holding a position by
reason of its holding one or more other positions.

Oregon Municipal Bond Fund and National Municipal Bond Fund. In certain
cases, Subchapter M permits the character of tax-exempt interest received and
distributed by a regulated investment company to flow through for federal tax
purposes as tax-exempt interest to its shareholders, provided that 50 percent or
more of the value of its assets at the end of each quarter is invested in
municipal bonds. For purposes of this Statement of Additional Information, the
term "municipal bonds" refers to obligations that pay interest that is
tax-exempt under Section 103 of the Code. For purposes of this Statement of
Additional Information, the term "tax-exempt interest" refers to interest that
is not includable in gross income for federal income tax purposes. As discussed
below, however, tax-exempt interest may result in an increase in the taxes of
the recipient because of the alternative minimum tax, the environmental tax, the
branch profits tax, or under other provisions of the Code that are beyond the
scope of this Statement of Additional Information. The Oregon Municipal Bond
Fund and the National Municipal Bond Fund intend to have at least 50 percent of
the value of their total assets at the close of each quarter of their taxable
year consist of obligations the interest on which is not includable in gross
income for federal income tax purposes under Section 103 of the Code. As a
result, the Oregon Municipal Bond Fund's and the National Municipal Bond Fund's
dividends payable from net tax-exempt interest earned from municipal bonds
should qualify as exempt-interest dividends.

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<PAGE>

Distributions properly designated by the Oregon Municipal Bond Fund and
the National Municipal Bond Fund as representing net tax-exempt interest
received on municipal bonds (including municipal bonds of Guam, Puerto Rico, and
certain other issuers) will not be includable by shareholders in gross income
for federal income tax purposes (except for shareholders who are, or are related
to, "substantial users," as discussed below). Distributions representing net
taxable interest received by the Oregon Municipal Bond Fund and the National
Municipal Bond Fund from sources other than municipal bonds, representing the
excess of net short-term capital gain over net long-term capital loss, or
representing taxable accrued market discount on the sale or redemption of
municipal bonds, will be taxable to shareholders as ordinary income.

Any loss realized upon the redemption of shares of the Oregon Municipal
Bond Fund and the National Municipal Bond Fund six months or less from the date
of purchase of the shares and following receipt of an exempt-interest dividend
will be disallowed to the extent of such exempt-interest dividend. Section
852(b)(4) of the Code contains special rules on the computation of a
shareholder's holding period for this purpose.

Interest on indebtedness incurred or continued by shareholders to
purchase or carry shares of the Oregon Municipal Bond Fund and the National
Municipal Bond Fund will not be deductible for federal income tax purposes.
Under rules issued by the Internal Revenue Service, the purchase of such shares
may be considered to have been made with borrowed funds even though the borrowed
funds are not directly traceable to the purchase of shares. Special rules that
are beyond the scope of this Statement of Additional Information limit the
deduction of interest paid by financial institutions. Investors with questions
regarding these issues should consult their tax advisors.

Dividends attributable to interest on certain private activity bonds
issued after August 7, 1986 will be items of tax preference and must be included
in alternative minimum taxable income for the purpose of determining liability,
if any, for the 26-28% alternative minimum tax for individuals and the 20%
alternative minimum tax for corporations. Furthermore, the alternative minimum
taxable income for corporations includes an adjustment equal to 75 percent of
the excess of "adjusted current earnings" over the corporation's other federal
alternative minimum taxable income (computed without regard to "adjusted current
earnings" and without regard to any "alternative tax net operating loss"). See
Section 56(g) of the Code. For the purpose of alternative minimum tax for
corporations, all exempt-interest dividends, less any interest expense incurred
to purchase or carry shares paying exempt interest dividends, must be taken into
account as "adjusted current earnings." In addition, exempt-interest dividends
paid to corporate investors may be subject to tax under the environmental tax,
which applies at the rate of 0.12% on the excess of the "modified alternative
minimum taxable income" of the corporation over $2 million. See Section 59A of
the Code.

In some cases, exempt-interest dividends paid by the Oregon Municipal
Bond Fund and the National Municipal Bond Fund may indirectly affect the amount
of Social Security benefits or railroad retirement benefits that are taxable
income to an investor. See Section 86 of the Code.

Certain foreign corporations may be subject to the "branch profits tax"
under Section 884 of the Code. The receipt of dividends from the Oregon
Municipal Bond Fund and the National Municipal Bond Fund may increase the
liability of the foreign corporation under the branch profits tax, even if such
dividends are generally tax-exempt.

"Substantial users" (or persons related thereto) of facilities financed
by certain governmental obligations are not allowed to exclude from gross income
interest on such obligations. No investigation as to the substantial users of
the facilities financed by bonds in the Oregon Municipal Bond Fund's and the
National Municipal Bond Fund's portfolios will be made by the Oregon Municipal
Bond Fund and the National

55
<PAGE>

Municipal Bond Fund. Potential investors who may be, or may be related to,
substantial users of such facilities should consult their tax advisors before
purchasing shares of the Oregon Municipal Bond Fund or the National Municipal
Bond Fund.

At the respective times of issuance of the municipal bonds, opinions
relating to the validity thereof and to the exemption of interest thereon from
federal income tax generally were or will be rendered by bond counsel engaged by
the respective issuing authorities. The Oregon Municipal Bond Fund and the
National Municipal Bond Fund will not make any review of the issuance of the
municipal bonds or of the basis for such opinions. An opinion concerning
tax-exempt interest generally assumes continuing compliance with applicable
standards and restrictions. Certain circumstances or actions by an issuer after
the date of issuance can cause interest on municipal bonds to become includable
in gross income. In some cases, the interest on such bonds could become taxable
from the date of issuance. The Oregon Municipal Bond Fund and the National
Municipal Bond Fund will not monitor any issuers or any municipal bonds to
attempt to ensure that the interest remains tax-exempt.

If either the Oregon Municipal Bond Fund or the National Municipal Bond
Fund declares dividends attributable to taxable interest it has received, it
intends to designate as taxable the same percentage of the day's dividend that
the actual taxable income earned on that day bears to total income earned on
that day. Thus, the percentage of the dividend designated as taxable, if any,
may vary from day to day.

Shares of the Oregon Municipal Bond Fund and the National Municipal
Bond Fund generally would not be a suitable investment for a tax-exempt
institution, a tax-exempt retirement plan, or an individual retirement account.
To the extent that such an entity or account is tax-exempt, no additional
benefit would result from receiving tax-exempt dividends.

From time to time, proposals have been introduced before Congress to
restrict or eliminate the federal income tax exemption for interest on municipal
bonds. Similar proposals may be introduced in the future. If such a proposal
were enacted, the availability of municipal bonds for investment by the Oregon
Municipal Bond Fund and the National Municipal Bond Fund and the value of
portfolio securities held by the these Funds would be affected.

Other Funds. Shareholders of Funds other than the Oregon Municipal Bond
Fund and the National Municipal Bond Fund are taxed on distributions of net
investment income, or of any excess of net short-term capital gain over net
long-term capital loss, as ordinary income. Income distributions to corporate
shareholders from the Common Stock Fund, the Growth Fund, the International
Stock Fund, the Special Fund, and the Balanced Fund may qualify, in whole or
part, for the federal income tax dividends-received deduction, depending on the
amount of qualifying dividends received by the Fund. Qualifying dividends may
include those paid to a Fund by domestic corporations but do not include those
paid by foreign corporations. The dividends-received deduction equals 70 percent
of qualifying dividends received from a Fund by a shareholder. However,
distributions from the Columbia Daily Income Company, the Bond Fund, the Short
Term Bond Fund and the High Yield Fund are unlikely to so qualify because the
income of these Funds consists largely or entirely of interest rather than
dividends. In addition, to the extent the Real Estate Fund's income is derived
from interest and distributions from real estate investment trusts ("REITS"),
distributions from that Fund will not qualify for the dividends-received
deduction. Distributions of any excess of net long-term capital gain over net
short-term capital loss from a Fund are ineligible for the dividends-received
deduction.

General Considerations. Distributions properly designated by any Fund
as representing 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 shares of the Fund have been
held by shareholders.

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<PAGE>

For noncorporate taxpayers, the highest rate that applies to long-term capital
gains is lower than the highest rate that applies to ordinary income. Any loss
that is realized and allowed on redemption of shares of the Fund six months or
less from the date of purchase of the shares and following the receipt of a
capital gain dividend will be treated as a long-term capital loss to the extent
of the capital gain dividend. For this purpose, Section 852(b)(4) of the Code
contains special rules on the computation of a shareholder's holding period.

A portion of the income distributions from the Real Estate Fund will
include a tax return of capital because of the nature of the distributions
received by the Fund from its holdings in REITs. A tax return of capital is a
nontaxable distribution that reduces the tax cost basis of your shares in the
Real Estate Fund. The effect of a return of capital is to defer your tax
liability on that portion of your income distributions until you sell your
shares of the Real Estate Fund.

Distributions of taxable net investment income and net realized capital
gains will be taxable as described above, whether paid in shares or in cash.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. Within 60 days after the close of each calendar
year, each Fund issues to each shareholder a statement of the federal income tax
status of all distributions, including a statement of the prior calendar year's
distributions which the Fund has designated to be treated as long-term capital
gain and, in the case of the Oregon Municipal Bond Fund and the National
Municipal Bond Fund, as tax-exempt interest, or in the case of the Real Estate
Fund, as a tax return of capital.

A distribution may be taxable to a shareholder even if the distribution
reduces the net asset value of the shares held below their cost (and is in an
economic sense a return of the shareholder's capital). This tax result is most
likely when shares are purchased shortly before an annual distribution of
capital gains or other earnings. This tax result is extremely unlikely in the
case of the Columbia Daily Income Company, which distributes its earnings daily
and has few or no capital gains.

Each Fund is generally required to obtain from its shareholders a
certification of the shareholder's taxpayer identification number and certain
other information. Each Fund generally will not accept an investment to
establish a new account that does not comply with this requirement. If a
shareholder fails to certify such number and other information, or upon receipt
of certain notices from the Internal Revenue Service, the Fund may be required
to withhold 31 percent of any reportable interest or dividends, or redemption
proceeds, payable to the shareholder, and to remit such sum to the Internal
Revenue Service, for credit toward the shareholder's federal income taxes. A
shareholder's failure to provide a social security number or other tax
identification number may subject the shareholder to a penalty of $50 imposed by
the Internal Revenue Service. In addition, that failure may subject the Fund to
a separate penalty of $50. This penalty will be charged against the
shareholder's account, which will be closed. Closure of the account may result
in a capital gain or loss.

If a Fund declares a dividend in October, November, or December payable
to shareholders of record on a certain date in such a month and pays the
dividend during January of the following year, the shareholders will be taxed as
if they had received the dividend on December 31 of the year in which the
dividend was declared. Thus, a shareholder may be taxed on the dividend in a
taxable year prior to the year of actual receipt.

A special tax may apply to a Fund if it fails to make enough
distributions during the calendar year. The required distributions for each
calendar year generally equal the sum of (a) 98 percent of the ordinary income
for the calendar year plus (b) 98 percent of the capital gain net income for the
one-year period that ends on October 31 during the calendar year (or for the
calendar year itself if the Fund so elects), plus (c) an adjustment relating to
any shortfall for the prior taxable year. If the actual distributions are less
than the required distributions, a tax of 4 percent applies to the shortfall. A
Fund may utilize earnings and profits

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<PAGE>
distributed to shareholders on redemptions made during the year in determining
the actual distributions made to the shareholders for that year.

The Code allows the deduction by certain individuals, trusts, and
estates of "miscellaneous itemized deductions" only to the extent that such
deductions exceed 2 percent of adjusted gross income. The limit on miscellaneous
itemized deductions will not apply, however, with respect to the expenses
incurred by any "publicly offered regulated investment company." Each Fund
believes that it is a publicly offered regulated investment company because its
shares are continuously offered pursuant to a public offering (within the
meaning of Section 4 of the Securities Act of 1933, as amended). Therefore, the
limit on miscellaneous itemized deductions should not apply to expenses incurred
by any of the Funds.

The Funds may purchase zero coupon bonds and payment-in-kind ("PIK")
bonds. With respect to zero coupon bonds, a Fund recognizes
original-issue-discount income ratably over the life of the bond even though the
Fund receives no payments on the bond until the bond matures. With respect to
PIK bonds, a Fund recognizes interest income equal to the fair market value of
the bonds distributed as interest. Because a Fund must distribute 90 percent of
its income to remain qualified as a registered investment company, a Fund may be
forced to liquidate a portion of its portfolio to generate cash to distribute to
its shareholders with respect to original-issue-discount income from zero coupon
bonds and interest income from PIK bonds.

Foreign Income Taxes

The International Stock Fund invests in the securities of foreign
corporations and issuers. To a lesser extent, the Common Stock Fund, the Growth
Fund, the Special Fund, the Small Cap Fund, the Real Estate Fund, the Balanced
Fund, and the High Yield Fund may also invest in such foreign securities.
Foreign countries may impose income taxes, generally collected by withholding,
on foreign-source dividends and interest paid to a Fund. These foreign taxes
will reduce a Fund's distributed income and a Fund's return. The Funds generally
expect to incur, however, no foreign income taxes on gains from the sale of
foreign securities.

The United States has entered into income tax treaties with many
foreign countries to reduce or eliminate the foreign taxes on certain dividends
and interest received from corporations in those countries. The Funds intend to
take advantage of such treaties where possible. It is impossible to predict with
certainty in advance the effective rate of foreign taxes that will be paid by a
Fund since the amount invested in particular countries will fluctuate and the
amounts of dividends and interest relative to total income will fluctuate.

U.S. foreign tax credits or deductions for shareholders of the
International Stock Fund. Section 853 of the Code allows a regulated investment
company to make a special election relating to foreign income taxes if more than
50 percent of the value of the company's total assets at the close of its
taxable year consists of stock or securities in foreign corporations and the
company satisfies certain holding period requirements. The International Stock
Fund generally expects, if necessary, to qualify for and to make the election
permitted under Section 853 of the Code. Although the International Stock Fund
intends to meet the requirements of the Code to "pass through" such foreign
taxes, there can be no assurance that the Fund will be able to do so. The
International Stock Fund will elect under Section 853 of the Code only if it
believes that it is in the best interests of its shareholders to do so. None of
the other Columbia Funds that may invest in foreign securities will qualify
under Section 853 of the Code.

If the International Stock Fund elects pursuant to Section 853,
shareholders of that Fund will be required to include in income (in addition to
other taxable distributions) and will be allowed a credit or deduction for,
their pro rata portions of the qualifying income taxes paid by the Fund to
foreign countries. A shareholder's use of the credits resulting from the
election will be subject to limits of Section 904 of the Code.

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<PAGE>
In general, those limits will prevent a shareholder from using foreign tax
credits to reduce U.S. taxes on U.S. source income. Each shareholder should
discuss the use of foreign tax credits and the Section 904 limits with the
shareholder's tax adviser.

No deduction for foreign taxes may be claimed under the Code by
individual shareholders who do not elect to itemize deductions on their federal
income tax returns, although such a shareholder may claim a credit for foreign
taxes and in any event will be treated as having taxable income in the amount of
the shareholder's pro rata share of foreign taxes paid by the Fund.

Each year, the International Stock Fund will provide a statement to
each shareholder showing the amount of foreign taxes for which a credit or a
deduction may be available.

Investment in passive foreign investment companies. If a Fund invests
in an entity that is classified as a "passive foreign investment company"
("PFIC") for federal income tax purposes, the application of certain provisions
of the Code applying to PFICs could result in the imposition of certain federal
income taxes and interest charges on the Fund. It is anticipated that any taxes
on a Fund with respect to investments in PFICs would be insignificant.

Investments in Real Estate Investment Trusts that Invest in REMICs.

The Real Estate Fund may invest in REITs that hold residual interests
in real estate mortgage investment conduits ("REMICs"). Under Treasury
regulations that have not yet been issued, but may apply retroactively, a
portion of the Real Estate Fund's income from a REIT that is attributable to the
REIT's residual interest in a REMIC (referred to in the Code as an "excess
inclusion") will be subject to federal income tax in all events. These
regulations are also expected to provide that excess inclusion income of a
regulated investment company, such as the Real Estate Fund, will be allocated to
shareholders of the regulated investment company in proportion to the dividends
received by such shareholders, with the same consequences as if the shareholders
held the related REMIC residual interest directly. In general, excess inclusion
income allocated to shareholders (i) cannot be offset by net operating losses
(subject to a limited exception for certain thrift institutions), (ii) will
constitute unrelated business taxable income to entities (including a qualified
pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or
other tax-exempt entity) subject to tax on unrelated business income, thereby
potentially requiring such an entity that is allocated excess inclusion income,
and otherwise might not be required to file a tax return, to file a tax return
and pay tax on such income, and (iii) in the case of a foreign shareholder, will
not qualify for any reduction in U.S. federal withholding tax. In addition, if
at any time during any taxable year a "disqualified organization" (as defined in
the Code) is a record holder of a share in a regulated investment company, then
the regulated investment company will be subject to a tax equal to that portion
of its excess inclusion income for the taxable year that is allocable to the
disqualified organization, multiplied by the highest federal income tax rate
imposed on corporations. The Real Estate Fund does not intend to invest in
REITs, a substantial portion of the assets of which consists of residual
interests in REMICs.

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<PAGE>

State Income Taxes

National Municipal Bond Fund. Distributions from this Fund may be
exempt from the income tax of a state, if the distributions are derived from
tax-exempt interest paid on the municipal securities of that state or its
political subdivisions. Those distributions may not be exempt from another
state's income tax, however. In addition, distributions derived from capital
gains generally will be subject to state income tax. Shareholders of the
National Municipal Bond Fund should consult their tax advisors regarding whether
any portion of distributions received from that Fund is exempt from state income
tax, because exemption may depend upon whether the shareholder is an individual,
subject to tax in any given state, the residence of the individual, and the
particular state tax treatment of mutual funds.

Oregon Municipal Bond Fund. Individuals, trusts, and estates will not
be subject to the Oregon personal income tax on distributions from the Oregon
Municipal Bond Fund that are derived from tax-exempt interest paid on the
municipal bonds of Oregon and its political subdivisions and certain other
issuers (including Puerto Rico and Guam). However, individuals, trusts, and
estates that are subject to Oregon personal income tax also generally are
subject to the Oregon personal income tax on distributions from the Oregon
Municipal Bond Fund that are derived from other types of income, including
interest on the municipal bonds of states, other than Oregon. Furthermore, it is
expected that corporations subject to the Oregon corporation excise or income
tax will be subject to that tax on income from the Oregon Municipal Bond Fund,
including income that is exempt for federal purposes. Shares of the Oregon
Municipal Bond Fund will not be subject to Oregon property tax. Additional
discussion regarding local taxes, and the tax rules of states other than Oregon,
are beyond the scope of this discussion.

Oregon generally taxes corporations on interest income from municipal
bonds. The Oregon Municipal Bond Fund is a corporation. However, ORS 317.309(2)
provides that a regulated investment company may deduct from such interest
income the exempt-interest dividends that are paid to shareholders. The Oregon
Municipal Bond Fund expects to distribute its interest income so that it will
not be liable for Oregon corporation excise or income taxes.

The Oregon Municipal Bond Fund and the National Municipal Bond Fund
will report annually to its shareholders the percentage and source, on a
state-by-state basis, of interest income on municipal bonds received by the Fund
during the preceding year.

Short Term Bond Fund. Individuals, trusts, and estates will not be
subject to Oregon personal income tax on dividends properly designated by the
Short Term Bond Fund as derived from interest on U.S. government obligations.
See ORS 316.683. If a shareholder pays deductible interest on debt incurred to
carry shares of the Short Term Bond Fund, the amount of the tax-exempt dividends
for state tax purposes will be reduced. If a shareholder sells shares of the
Short Term Bond Fund at a loss after holding them for six months or less, the
loss will be disallowed for state purposes to the extent of any state tax-exempt
dividend received by the shareholder. Local taxes, and the tax rules of states
other than Oregon, are beyond the scope of this discussion.

General Information

Capital gains distributed to shareholders of both the Oregon Municipal
Bond Fund and the National Municipal Bond Fund will generally be subject to
state and local taxes. Further discussion regarding the state and local tax
consequences of investments in the Funds are beyond the scope of the tax
discussions in the Prospectus and this Statement of Additional Information.

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Additional Information

The foregoing summary and the summary included in the Prospectus under
"Distributions and Taxes" of tax consequences of investment in the Funds are
necessarily general and abbreviated. No attempt has been made to present a
complete or detailed explanation of tax matters. Furthermore, the provisions of
the statutes and regulations on which they are based are subject to change,
prospectively or retroactively, by legislative or administrative action. Local
taxes are beyond the scope of this discussion. Prospective investors in the
Funds are urged to consult their own tax advisors regarding specific questions
as to federal, state, or local taxes.

This discussion applies only to general U.S. shareholders. Foreign
investors and U.S. shareholders with particular tax issues or statuses should
consult their own tax advisors regarding the special rules that may apply to
them.

--------------------------------------------------------------------------------
YIELD AND PERFORMANCE
--------------------------------------------------------------------------------

The Funds will from time to time advertise or quote their respective
yields and total return performance. These figures represent historical data and
are calculated according to Securities and Exchange Commission ("SEC") rules
standardizing such computations. The investment return and principal value
(except, under normal circumstances, for the Columbia Daily Income Company) will
fluctuate so that shares when redeemed may be worth more or less than their
original cost.

The Columbia Daily Income Company

Current yield is calculated by dividing the net change in the value of
an account of one share during an identified seven-calendar-day period by the
value of the one share account at the beginning of the same period ($1.00) and
multiplying that base period return by 365/7, i.e.:

net change in value of account of one share x 365 = Current
------------------------------------------- --- Yield
value of account at beginning of period 7

The current yield for Columbia Daily Income Company for the seven days ended
December 31, 1999 was 5.43%.

Compounded effective yield is calculated by daily compounding of the
base period return referred to above. This calculation is made by adding 1 to
the base period return, raising the sum to a number equal to 365 divided by 7,
and subtracting 1 from the result, i.e.:

[(base period return + 1)365/7] -1 = Compounded Effective Yield

The compounded effective yield for the Columbia Daily Income Company for the
seven days ended December 31, 2000 was ____%.

The determination of net change in the value of an account for purposes
of the Columbia Daily Income Company yield calculations reflects the value of
additional shares purchased with income dividends from the original share and
income dividends declared on both the original share and the additional shares.
The determination of net change does not reflect realized gains or losses from
the sale of securities or unrealized appreciation or depreciation. The Columbia
Daily Income Company includes unrealized

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<PAGE>

appreciation or depreciation, as well as realized gains or losses, in the
determination of actual daily dividends. Therefore, the quoted yields as
calculated above may differ from the actual dividends paid.

The Real Estate Fund and the Bond Funds

Current yields of the Real Estate Fund, the Short Term Bond Fund, the
Bond Fund, the Oregon Municipal Bond Fund, the High Yield Fund, and the National
Municipal Bond Fund are calculated by dividing the net investment income per
share earned during an identified 30-day period by the maximum offering price
per share on the last day of the same period, according to the following
formula:

Yield = 2 [(a-b + 1)6 -1]
cd

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of reimbursement).

c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period.

The Funds use generally accepted accounting principles in determining
actual income paid, and these principles differ in some instances from SEC rules
for computing income for the above yield calculations. Therefore, the quoted
yields as calculated above may differ from the actual dividends paid. For the 30
day period ended December 31, 2000 the current yields for the Real Estate Fund,
the Short Term Bond Fund, the Bond Fund, the Oregon Municipal Bond Fund, the
High Yield Fund and the National Municipal Bond Fund were ___%, ___%, ___%,
____%, ____%, and ____%, respectively.

The Oregon Municipal Bond Fund may publish a tax equivalent yield for
Oregon shareholders that represents the yield that an investor must receive on a
fully taxable investment to achieve the same after-tax results at the highest
then existing marginal combined Oregon and federal income tax rates, calculated
according to the following formula:

Tax Equivalent Yield = a + c + e
1-b 1-d

Where: a = that portion of the current yield of the Fund that is exempt from
federal and Oregon income tax.

b = highest then-existing marginal combined Federal and Oregon income
tax rate.

c = that portion of the current yield of the Fund that is only exempt
from federal gross income tax.

d = highest then-existing federal income tax rate.

e = that portion of the current yield of the Fund that is not tax
exempt.

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<PAGE>

The National Municipal Bond Fund may also publish a tax equivalent
yield for nonresidents of Oregon that represents the yield that an investor must
receive on a fully taxable investment to achieve the same after-tax results of
the highest then-existing marginal federal income tax rate, calculated according
to the following formula:

Tax Equivalent Yield = a + c
1-b

Where: a = that portion of the current yield of the Fund that is exempt from
federal income tax.

b = highest then-existing marginal federal income tax rate.

c = that portion of the current yield of the Fund that is not tax
exempt.

The Short Term Bond Fund may publish a tax equivalent yield for Oregon
shareholders that represents the yield that an investor must receive on a fully
taxable investment to achieve the same after-tax results at the highest then
existing marginal Oregon income tax rate, calculated according to the following
formula:

Tax Equivalent Yield = a + c
1-b

Where: a = that portion of the current yield of the Fund that is exempt from
Oregon income tax.

b = highest then existing marginal Oregon income tax rate.

c = that portion of the current yield of the Fund that is not exempt
from Oregon income tax.

The Funds may also publish average annual total return quotations for
recent 1, 5, and 10-year periods (or a fractional portion thereof) computed by
finding the average annual compounded rates of return over the 1, 5, and 10-year
periods that would equate the initial amount invested to the ending redeemable
value, according to the following formula:

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $1000 payment made at
the beginning of the 1, 5, and 10-year periods (or fractional portion thereof)

Total return figures may also be published for recent 1, 5, and 10-year
periods where the total return figures represent the percentage return for the
1, 5, and 10-year periods that would equate the initial amount invested to the
ending redeemable value. If a Fund's registration statement under the Investment
Company Act of 1940 has been in effect less than 1, 5, or 10 years, the time
period during which the registration statement has been in effect will be
substituted for the periods stated. Total return figures for the Funds for

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<PAGE>
the applicable periods is set forth in the Funds' Prospectus in the Section
entitled "INFORMATION ABOUT THE COLUMBIA FUNDS."

The Funds may compare their performance to other mutual funds with
similar investment objectives and to the mutual fund industry as a whole, as
quoted by ranking services and publications of general interest. For example,
these services or publications may include Lipper Analytical Services, Inc.,
Schabacker's Total Investment Service, Barron's, Business Week, Changing Times,
The Financial Times, Financial World, Forbes, Investor's Daily, Money,
Morningstar, Inc., Personal Investor, The Economist, The Wall Street Journal,
and USA Today. These ranking services and publications rank the performance of
the Funds against all other funds over specified periods and against funds in
specified categories.

The Funds may also compare their performance to that of a recognized
stock or bond index including the Standard & Poor's 500, Standard & Poor's
Midcap 400, Dow Jones, Russell 2000, Nasdaq stock indices, the NAREIT Equity
Index, and the Shearson Lehman and Salomon bond indices, and the Merrill Lynch
1-3 Treasury Index or, with respect to the International Stock Fund, a suitable
international index, such as the Morgan Stanley Capital International Europe,
Australasia, Far East Index or the FT-S&P Actuaries Europe-Pacific Index. The
comparative material found in advertisements, sales literature, or in reports to
shareholders may contain past or present performance ratings. This is not to be
considered representative or indicative of future results or future performance.
Unmanaged indices may assume the reinvestment of dividends, but generally do not
reflect deductions for administrative and management costs and expenses.

In addition, the Funds may also compare their performance to other
income-producing securities such as (i) money market funds; (ii) various bank
products (based on average rates of bank and thrift institution certificates of
deposit, money market deposit accounts, and other accounts as reported by the
Bank Rate Monitor and other financial reporting services, including newspapers);
and (iii) U.S. treasury bills or notes. There are differences between these
income-producing alternatives and the Funds other than their yields, some of
which are summarized below.

The yields of the Funds are not fixed and will fluctuate. The principal
value of your investment in each Fund (except, under normal circumstances, the
Columbia Daily Income Company) at redemption may be more or less than its
original cost. In addition, your investment is not insured and its yield is not
guaranteed. Although the yields of bank money market deposit and other similar
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. Bank certificates of deposit offer
fixed or variable rates for a set term. Principal and fixed rates are guaranteed
and insured up to $100,000. There is no fluctuation in principal value.
Withdrawal of these deposits prior to maturity will normally be subject to a
penalty.

--------------------------------------------------------------------------------
FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

The Funds' most recent Annual Report to shareholders is a separate
document supplied with this Statement of Additional Information, and the
financial statements, accompanying notes and report of independent accountants
appearing in the Annual report are incorporated by reference into this Statement
of Additional Information.

64
<PAGE>
COLUMBIA SHORT TERM BOND FUND, INC.
PART C
OTHER INFORMATION

Item 23. Exhibits

(a1) Registrant's Articles of Incorporation.(1)

(a2) Articles of Merger.(1)

(a3) Articles of Amendment.*

(b) Restated Bylaws.(1)

(d) Investment Advisory Contract.(1)

(e) Distribution Agreement.(1)

(f) Not applicable.

(g) Custodian Contract with U S Bank N.A.(1)

(h) Transfer Agent Agreement.(1)

(i) Opinion of Counsel - Not applicable for this filing.

(j) Consent of Accountants - Not applicable for this filing.

(k) Omitted Financial Statements - Not applicable.

(l) Not applicable.

(m) 12b-1 Plan - Not applicable.

(n) Rule 18f-3 Plan - Not applicable.

(o) Not applicable.

(p) Code of Ethics.*

(q) Powers of Attorney for Messrs. George, Inskeep, Lunzer,
Simpson and Woolworth.*

(1) Incorporated herein by reference to Post-Effective Amendment No.
13 to Registrant's Registration Statement on Form N-1A, File No.
33-8843 filed February 23, 1998.

* Filed herewith.

C-1
<PAGE>

Item 24. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------

The Registrant is controlled by its Board of Directors, whose members
also serve as members of the Boards of Directors or Trustees of the following
investment companies: Columbia Common Stock Fund, Inc., Columbia Special Fund,
Inc., Columbia International Stock Fund, Inc., Columbia Growth Fund, Inc.,
Columbia Small Cap Fund, Inc., Columbia Daily Income Company, Columbia Fixed
Income Securities Fund, Inc., Columbia Oregon Municipal Bond Fund, Inc.,
Columbia Balanced Fund, Inc., Columbia Real Estate Equity Fund, Inc., Columbia
National Municipal Bond Fund, Inc., Columbia High Yield Fund, Inc., Columbia
Strategic Value Fund, Inc., Columbia Technology Fund, Inc. and CMC Fund Trust,
each of which, including the Registrant, is organized under the laws of the
State of Oregon. The Registrant and all of the other investment companies listed
above, except for CMC Fund Trust, have investment advisory contracts with
Columbia Funds Management Company, an Oregon corporation ("the Adviser"). Each
series of CMC Fund Trust has an investment advisory contract with Columbia
Management Co., an Oregon corporation ("CMC"). CMC, the Adviser, Columbia Trust
Company and Columbia Financial Center Incorporated are indirect wholly owned
subsidiaries of FleetBoston Financial Corporation, a publicly owned multibank
holding company registered under the Bank Holding Company Act of 1956. See
"Management" and "Investment Advisory and Other Fees paid to Affiliates" in the
Statement of Additional Information.

Item 25. Indemnification
--------------------------

Under the bylaws of the Registrant, any director or officer of the
Fund shall be indemnified by the Registrant against all expenses incurred by him
in connection with any claim, action, suit or proceeding, civil or criminal, by
reason of his being an officer, director, employee or agent of the Registrant,
to the fullest extent permitted under the Business Corporation Act of the State
of Oregon and the Investment Company Act of 1940 and related regulations and
interpretations of the Securities and Exchange Commission (including SEC Rel.
Nos. IC-11,330, IC-10,700 and IC-7,221).

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The Registrant's directors and officers are also named insureds under
an insurance policy issued by ICI Mutual Insurance Company.

Item 26. Business and Other Connections of Investment Advisor
---------------------------------------------------------------

Information regarding the businesses of the Advisor and its officers
and directors is set forth under "Management" in the Prospectus and under
"Management" and "Investment Advisory and Other Fees Paid to Affiliates" in the
Statement of Additional Information and is incorporated herein by reference.
Neither the Adviser nor any of its directors or officers has engaged in any
business, profession, vocation or employment other than that of providing
investment management services. Columbia Trust Company also acts as trustee
and/or agent for the investment of the assets of pension and profit sharing
plans in pooled accounts.

C-2
<PAGE>

Item 27. Principal Underwriters
---------------------------------

Pursuant to a distribution agreement with each of the Columbia Funds,
including the Registrant, Provident Distributors, Inc. is authorized to sell
shares of each fund to the public. No commission or other compensation is
received by Provident Distributors, Inc. in connection with the sale of shares
of the Columbia Funds. Certain information on each director and officer of
Provident Distributors, Inc. is set forth below:

Name and Principal Positions and Offices Positions and Offices
Business Address* with Provident Distributors with Registrant
--------------------- --------------------------- ---------------------

Philip H. Rinnander President and Treasurer None

Jane Haegele Director and Secretary None

Lisa M. Buono Vice President and Compliance Officer None

Jason A. Greim Vice President None

Barbara A. Rice Vice President None

Jennifer K. Rinnander Vice President None

*The principal business address for each director and officer of Provident
Distributors, Inc. is:

3200 Horizon Drive
King of Prussia, PA 19406

Item 28. Location of Accounts and Records
-------------------------------------------

The records required to be maintained under Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 to 31a-3 thereunder are
maintained by the Registrant, Columbia Funds Management Company, and Columbia
Trust Company at 1301 S.W. Fifth Avenue, Portland, Oregon 97201. Records
relating to the Registrant's portfolio securities are also maintained by U S
Bank N.A., 321 S.W. Sixth Avenue, Portland, Oregon 97208.

Item 29. Management Services
------------------------------

Not applicable.

Item 30. Undertakings
-----------------------

Not applicable.

C-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Portland
and State of Oregon on the 15th day of December, 2000.

COLUMBIA SHORT TERM BOND FUND, INC.

By JEFF B. CURTIS
---------------------------------------
Jeff B. Curtis
President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below on
the 15th day of December, 2000 by the following persons in the capacities
indicated.

(i) Principal executive officer:

JEFF B. CURTIS President
-----------------------------------------------
Jeff B. Curtis

(ii) Principal accounting and
financial officer:

JEFFREY L. LUNZER Vice President
----------------------------------------
Jeffrey L. Lunzer

(iii) Directors:

* JAMES C. GEORGE Director
----------------------------------------
James C. George

* PATRICK J. SIMPSON Director
----------------------------------------
Patrick J. Simpson

* J. JERRY INSKEEP, JR. Chairman and Director
----------------------------------------
J. Jerry Inskeep, Jr.

* RICHARD L. WOOLWORTH Director
------------------------------
Richard L. Woolworth

* By JEFF B. CURTIS
---------------------------------------
Jeff B. Curtis
as Attorney-in-fact

C-4
<PAGE>

COLUMBIA SHORT TERM BOND FUND, INC.

EXHIBIT INDEX
-------------

Exhibit Description
------- -----------

(a1) Registrant's Articles of Incorporation.(1)

(a2) Articles of Merger.(1)

(a3) Articles of Amendment.*

(b) Restated Bylaws.(1)

(d) Investment Advisory Contract.(1)

(e) Distribution Agreement.(1)

(f) Not applicable.

(g) Custodian Contract with U S Bank N.A.(1)

(h) Transfer Agent Agreement.(1)

(i) Opinion of Counsel - Not applicable for this filing.

(j) Consent of Accountants - Not applicable for this filing.

(k) Omitted Financial Statements - Not applicable.

(l) Not applicable.

(m) 12b-1 Plan - Not applicable.

(n) Rule 18f-3 Plan - Not applicable.

(o) Not applicable.

(p) Code of Ethics.*

(q) Powers of Attorney for Messrs. George, Inskeep, Lunzer,
Simpson and Woolworth.*

(1) Incorporated herein by reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A, File No. 33-8843 filed
February 23, 1998.

* Filed herewith.

C-5
<PAGE>
Exhibit A-3
ARTICLES OF AMENDMENT

COLUMBIA U.S. GOVERNMENT SECURITIES FUND, INC.

Pursuant to ORS 60.447, Columbia U.S. Government Securities Fund, Inc.
(the "Corporation") has adopted an amendment to its Articles of Incorporation.

1. The name of the Corporation is Columbia U.S. Government Securities
Fund, Inc.

2. Article I of the Articles of Incorporation of the Corporation is hereby
amended to read in its entirety as follows:

"The name of the Corporation is Columbia Short Term Bond Fund, Inc."

3. The amendment was adopted on September 15, 2000.

4. The Amendment was approved by shareholders with 2,221,380 votes cast
for the Amendment and 295,691 against the Amendment. 4,287,150 of the
outstanding shares and votes were entitled to vote on the Amendment.

EFFECTIVE DATE: November 1, 2000

COLUMBIA U.S. GOVERNMENT SECURITIES FUND, INC.

By: /s/ JEFF B. CURTIS
-----------------------------------
Name: Jeff B. Curtis
Title: President

<PAGE>
Exhibit p
CODE OF ETHICS
--------------

Effective: July 3, 2000

The following Code of Ethics (the "Code") is designed to comply with
Section 17(j) of the Investment Company Act of 1940 (the "1940 Act") and the
Insider Trading and Securities Fraud Enforcement Act of 1988 and has been
adopted by Columbia Management Co., Columbia Funds Management Company, Columbia
Trust Company, Columbia Financial Center Incorporated, and CMC Fund Trust and
each investment company managed by Columbia Funds Management Company
(collectively, "Columbia"). Each portfolio of CMC Fund Trust and each investment
company managed by Columbia Funds Management Company are referred to in this
Code as a "Columbia Fund."

1. Statement of General Principles

The specific standards and guidelines set forth in the Code must be
applied and followed in the context of the following general fiduciary
principles that govern personal investment activities. The Code is based on the
principle that officers, directors and employees of Columbia owe a fiduciary
duty to conduct their personal securities transactions in a manner that does not
interfere with portfolio transactions or take unfair advantage of their
relationship with Columbia. This fiduciary duty is owed to both Columbia
advisory clients and shareholders of the Columbia Funds. Columbia personnel must
adhere to this general principle as well as the specific requirements set forth
in this Code. Columbia officers, directors and employees should understand,
however, that technical compliance with the specific requirements of the Code
does not automatically insulate them from liability or a review of trades that
show a pattern of a breach of an individual's fiduciary duty.

Personnel should avoid situations that present actual as well as
potential conflicts of interest. As a general principle, it is imperative that
Columbia's officers, directors and employees also avoid any situation that might
compromise or call into question their exercise of independent judgment in the
interest of Columbia Fund shareholders and Columbia advisory clients. Areas of
concerns relating to independent judgment include, among others, unusual
investment opportunities, perks, and gifts of more than "de minimus" value from
persons doing or seeking to do business with Columbia.

Purchases or sales of securities shall be made only in accordance with
this Code and Columbia's Policy and Procedures Designed to Detect and Prevent
Insider Trading (the "Insider Trading Policy"). Although all employees and
disinterested directors/trustees of Columbia are covered by this Code and the
Insider Trading Policy, certain employees deemed under the Code to be "access
persons" are subject to greater trading restrictions and reporting obligations.
Disinterested directors/trustees, however, are generally subject to fewer
trading restrictions and reporting obligations because of their limited access
to current investment information.

2. Definitions

(a) "Access person" means (i) any director or officer of Columbia, (ii)
any employee of Columbia who, in connection with his or her regular
functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of a security by Columbia or whose
functions relate to the making of any

<PAGE>
recommendations with respect to such purchases or sales; and (iii) any
natural person in a control relationship to Columbia who obtains
information concerning recommendations made to Columbia with regard to
the purchase or sale of a security. The Ethics Committee shall maintain
a list of employees deemed to be access persons for purposes of this
Code. "Access person" does not include a disinterested director/trustee
of a Columbia Fund.

(b) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated or, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation.

(c) "Beneficial ownership" shall be interpreted in the same manner as
it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and the
rules and regulations thereunder, which states that the term
"beneficial owner" means "any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise, has or shares a direct or indirect pecuniary interest in" a
security. The term "pecuniary interest" is further defined to mean "the
opportunity, directly or indirectly, to profit or share in any profit
derived from a transaction in the subject securities." "Beneficial
ownership" includes accounts of a spouse, minor children and relatives
resident in the home of the access person, as well as accounts of
another person if the employee obtains therefrom benefits substantially
equivalent to those of ownership. For additional information, see
appendix A.

(d) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act.

(e) "Disinterested director/trustee" means a director/trustee of a
Columbia Fund who is not an "interested person" of the Columbia Fund
within the meaning of Section 2(a)(19) of the 1940 Act.

(f) "Employee" means any employee or officer of Columbia or any
Columbia Fund. Employee does not include a disinterested
director/trustee of a Columbia Fund.

(g) "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.

(h) "Security" shall have the meaning set forth in Section 2(a)(36) of
the Investment Company Act, except that it shall not include shares of
registered open-end investment companies, securities issued by the U.S.
Government or an instrumentality thereof, short-term debt securities
that are government securities within the meaning of Section 2(a)(16)
of the 1940 Act, bankers' acceptances, bank certificates of deposit,
commercial paper and other money market instruments. Any prohibition or
reporting obligation relating to a security shall also apply to any
option, warrant or right to purchase or sell such security and to any
security convertible or exchangeable for such security.

3. Pre-Clearance of Transactions

All access persons shall have all purchases or sales of any security in
which they have, or by reason of such purchase acquire, any direct or indirect
beneficial ownership

2
<PAGE>

approved in writing by the Columbia Trading Department or a member of the Ethics
Committee prior to effecting the transaction. Members of the Ethics Committee
are attached hereto as Appendix B.

NOTE: See the definition of security in Section 2(h) and the exemptions
in Section 5 to determine whether a transaction is subject to the pre-clearance
requirement. For example, transactions in an account over which an employee does
not have direct or indirect influence or control are exempt from this
pre-clearance requirement.

4. Prohibited Transactions

(a) General Restrictions:

(i) Prohibited Purchases and Sales. No employee or
disinterested director/trustee shall purchase or
sell, directly or indirectly, any security in which
he or she has, or by reason of such transactions
acquires, any direct or indirect beneficial ownership
and which to his or her knowledge at the time of such
purchase or sale (i) is being considered for purchase
or sale by Columbia or (ii) is being purchased or
sold by Columbia. In addition, all employees and
disinterested directors/trustees shall comply with
the Insider Trading Policy, which prohibits any
person from purchasing or selling a security while in
possession of material non-public information or
communicating such information in connection with a
transaction.

(ii) Initial Public Offerings. No employee shall purchase
or sell directly or indirectly, any equity security
issued in an initial public offering without the
written approval by the Columbia Trading Department
or a member of the Ethics Committee prior to the
transaction. A transaction by an access person in an
initial public offering will not be approved in any
circumstances.

(b) Restrictions Applicable only to Access Persons:

(i) Private Placements. No access person shall purchase any
securities issued in a private placement (as that term is generally
recognized as an exempt transaction from registration under the federal
securities laws) except pursuant to the prior written approval of the
Ethics Committee, which approval shall take into consideration, among
other factors, whether the investment opportunity should be reserved
for a Columbia Fund or Columbia advisory client and whether the
opportunity is being offered to the access person by virtue of his or
her position with Columbia. In addition, any access person who owns or
has been authorized to acquire securities in a private placement is
required to disclose that ownership if he or she plays a material role
in Columbia's subsequent investment decision regarding the same issuer
of the security. In that circumstance, Columbia's decision to purchase
such securities must be subject to an independent review by members of
the Columbia Investment Team with no personal interest in the issuer.

(ii) 7-Day Blackout Period. No access person shall purchase or
sell, directly or indirectly, any security in which he or she has, or
by reason of the transaction acquires, any direct or indirect
beneficial ownership within a period

3
<PAGE>

of seven calendar days before and after a purchase or sale by a
Columbia Fund or advisory client over which the access person exercises
investment discretion. For example, if a Columbia Fund trades a
security on day one (e.g., on Monday), the access person may not trade
until day nine (e.g., the following Tuesday). Any profits realized on
trades within the proscribed periods shall be disgorged to Columbia for
the benefit of the appropriate Columbia Fund or advisory client or,
alternatively, to a charitable organization (qualified under Section
501(c) of the Internal Revenue Code) of the access person's choice.

The black-out period restriction under this Section 4(b)(ii)
should not operate to the detriment of any Columbia Fund or advisory
client. Therefore, if an access person has executed a transaction in a
security for his or her account and within seven days thereafter
desires to purchase or sell that security for a Columbia Fund or
advisory client over which he or she exercises investment discretion,
the access person shall submit a written explanation to the Trading
Desk or Ethics Committee describing the circumstances relating to the
decision to trade the security for the Fund or client account. Based on
the specific circumstances and a determination that the access person
has not otherwise violated the Code of Ethics, including the Statement
of General Principles in Section 1, the Trading Desk or Ethics
Committee may approve the trade by the Fund or advisory client and, in
that case, the prior personal transaction by the access person shall
not be considered a violation of the seven day black-out period
restriction. A written record of the approval by the Trading Desk or
the Ethics Committee, as the case may be, shall be maintained by the
Ethics Committee.

(iii) Short-Term Trading. For the purpose of preventing the
unfair use of information that may be obtained by an access person, any
profit realized by an access person from any purchase and sale, or any
sale and purchase, of any security in which he or she has, or by reason
of the transaction acquires, any direct or indirect beneficial
ownership (other than an exempted security under this Code), within any
period of less than 60 days shall inure to and be recoverable by
Columbia for the benefit of a charitable organization (qualified under
Section 501(c) of the Internal Revenue Code) of his or her choice. This
prohibition shall not apply unless such access person was the
beneficial owner of the security or of an interest in the security both
at the time of the purchase and sale, or sale and purchase.

Exceptions to the short-term trading ban may be approved in
advance by the Ethics Committee where it is determined that no abuse is
involved and the equities of the situation strongly support an
exception to the ban. Circumstances that could provide the basis for an
exception under this paragraph may include for example, among other
things, an involuntary transaction that is the result of unforeseen
corporate activity, the disclosure of a previously nonpublic, material
corporate, economic or political event or activity that could cause a
reasonable person in like circumstances to sell a security even if
originally purchased as a long term investment, or the access person's
economic circumstances materially change in such a manner that
enforcement of the short-term trading ban would cause an extreme
hardship on the access person.

(iv) Exemption for Large Cap Trades. The prohibitions in
subsections 4(b)(ii) and (iii) shall not apply to the purchase or sale
by the access person of a security issued by a company with a market
capitalization greater

4
<PAGE>

than $10 billion if the number of shares in the transaction is less
than 1% of the average daily trading volume for the security for the
20-day trading period immediately prior to the transaction. This
exception to the black-out period and short-term trading prohibitions
recognizes that transactions by the access person or Columbia involving
securities of companies with high market capitalizations and high
average daily trading volumes are not likely to materially affect the
price of the security involved.

5. Exempted Transactions

In addition to any other exemptions in this Code and except as
otherwise noted below, the prohibitions of Section 4 and the pre-clearance
required by Section 3 of this Code shall not apply to:

(a) Purchases or sales effected in any account over which the employee
has no direct or indirect influence or control. Pre-approval of these
accounts may, at times, be required by the Ethics Committee. For
additional information see appendix A.

(b) Purchases or sales of securities that are not eligible for purchase
or sale by Columbia.

(d) Purchases which are part of an automatic dividend reinvestment
plan.

(e) Purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights so
acquired.

(f) Purchases and sales of financial futures or option contracts on
securities indexes traded on a national securities or commodities
exchange.

(g) Purchases and sales approved by the Ethics Committee if it is
determined after appropriate inquiry that the transaction is not
potentially harmful to a Columbia Fund or advisory client because it
would be very unlikely to affect a highly institutional market, or
because it clearly is not related economically to the securities to be
purchased, sold or held by Columbia, and that the purchase or sale does
not violate the Insider Trading and Securities Fraud Enforcement Act of
1988.

6. Prohibited Activities by Employees and Access Persons

(a) Gifts. Employees are prohibited from receiving, either directly or
indirectly, anything of value in excess of a "de minimus" amount from
any person or any employee of an entity that does or seeks to do
business with Columbia.

(b) Service as a Director. Access persons are prohibited from serving
on the boards of directors of publicly traded companies, absent a prior
authorization from the Ethics Committee based on a determination that
the board service would not be inconsistent with the interests of
Columbia or Columbia's

5
<PAGE>

advisory clients. This restriction shall not apply to access persons
serving on the board of directors or as a trustee of any Columbia Fund.

7. Reporting

(a) Duplicate Confirmations and Account Statements. All employees shall
cause every broker with whom he or she maintains an account to provide
duplicate confirmations to Columbia for all securities transactions by
the employee. The Trading Department shall compile summaries of all
trades entered and all transactions completed. Such reports shall
include the name of the security, date of transaction, quantity, price
and the broker-dealer through which the transaction was effected. The
obligation to provide duplicate confirmations and account statements
applies to all brokerage accounts even if a transaction is exempt from
the prohibitions under this Code. In addition, all access persons
(excluding disinterested directors/trustees) shall cause every such
broker to send all monthly, quarterly and annual statements of their
accounts to Columbia. The quarterly statements must be provided no
later than 10 days after the end of a calendar quarter. The quarterly
statements must contain with respect to any transaction during the
calendar quarter in a security beneficially owned by the access person
(1) the date of the transaction, the title, the interest rate and
maturity date (if applicable), the number of shares and the principal
amount of each security involved; (2) the nature of the transaction
(i.e., purchase, sale or any other type of acquisition or disposition);
(3) the price of the security at which the transaction was effected;
(4) the name of the broker, dealer or bank with or through which the
transaction was effected; and (5) the date that the report is submitted
by the access person.

(b) Disclosure of All Personal Holdings. Within 10 days of commencement
of employment or becoming an access person and on an annual basis
thereafter (which information must be current as of a date no more than
30 days before the report is submitted), each access person shall
provide or cause its broker(s) to provide Columbia the following
information: (1) the title, number of shares and principal amount of
each security beneficially owned by the access person; (2) the name of
any broker, dealer or bank from whom the access person maintains an
account in which any securities were beneficially owned by the access
person; and (3) the date the report is submitted by the access person.

(c) Disinterested Director/Trustee. A disinterested director/trustee is
required to report a purchase or sale transaction in a security only if
the disinterested director/trustee, at the time of the transaction,
knew or, in the ordinary course of fulfilling his or her duties as a
director/trustee of a Columbia Fund, should have known that, during the
15-day period immediately preceding or after the date of the
transaction, such security is or was purchased or sold by the Columbia
Fund or is or was being considered for purchase or sale.

(d) Review of Securities Transactions and Holding Reports. Columbia
shall maintain procedures to ensure that all securities transactions
and holdings reports submitted by employees and access persons are
reviewed by appropriate management or compliance personnel.

6
<PAGE>

8. Certification of Compliance

All employees and disinterested directors/trustees shall certify
annually, and access persons shall certify on a quarterly basis, that they have
read and understood the Code and are subject thereto, have complied with the
requirements of the Code and have disclosed or reported all personal securities
transactions as required by the Code.

9. Sanctions

Upon discovering a violation of this Code, Columbia may impose such
sanctions as it deems appropriate, including, among other things, a letter of
censure or suspension or termination of the employment of the violator.

10. Report to the Board of Directors.

On an annual basis, the Ethics Committee shall prepare a written report
to the management of Columbia and the Boards of Directors/Trustees of the
Columbia Funds and the other Columbia companies that (1) describes any issues
arising under the Code since the last report including, but not limited to,
information about material violations of the Code and sanctions imposed in
response to the material violations; and (2) certifies that Columbia has adopted
procedures reasonably necessary to prevent violations of the Code. Columbia
shall present any material change to the Code to the Board of Directors/Trustees
no later than six months after adoption of the material change.

7
<PAGE>

APPENDIX A - Beneficial Ownership

For purposes of the Code of Ethics, the term "beneficial ownership"
shall be interpreted in accordance with the definition of "beneficial owner" set
forth in Rule 16a-l(a)(2) under the Securities Exchange Act of 1934, as amended,
which states that the term "beneficial owner" means "any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares a direct or indirect pecuniary interest in" a security.
The term "pecuniary interest" is further defined to mean "the opportunity,
directly or indirectly, to profit or share in any profit derived from a
transaction in the subject securities."

The pecuniary interest standard looks beyond the record owner of
securities. As a result, the definition of beneficial ownership is extremely
broad and encompasses many situations which might not ordinarily be thought to
confer a "pecuniary interest" in or "beneficial ownership" of securities.

Securities Deemed to be "Beneficially Owned"

Securities owned "beneficially" would include not only securities held
by you for your own benefit, but also securities held (regardless of whether or
how they are registered) by others for your benefit in an account over which you
have influence or control, such as, for example, securities held for you by
custodians, brokers, relatives, executors, administrators, or trustees. The term
also includes securities held for your account by pledgees, securities owned by
a partnership in which you are a general partner, and securities owned by any
corporation that you control.

Set forth below are some examples of how beneficial ownership may arise
in different contexts.

Family Holdings. Securities held by members of your immediate family
sharing the same household are presumed to be beneficially owned by you. Your
"immediate family" includes any child, step-child, grandchild, parent,
step-parent, grandparent, spouse, significant other, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law
(but does not include aunts and uncles, or nieces and nephews). The definition
also includes adoptive relationships. You may also be deemed to be the
beneficial owner of securities held by an immediate family member not living in
your household if the family member is economically dependent upon you.

Partnership and Corporate Holdings. A general partner of a general or
limited partnership will generally be deemed to beneficially own securities held
by the partnership, as long as the partner has direct or indirect influence or
control over the management and affairs of the partnership. A limited partner
will generally not be deemed to beneficially own securities held by a limited
partnership, provided he or she does not own a controlling voting interest in
the partnership. If a corporation is your "alter ego" or "personal holding
company", the corporation's holdings of securities are attributable to you.

Trusts. Securities held by a trust of which you are a beneficiary and
over which you have any direct or indirect influence or control would be deemed
to be beneficially owned by you. An example would be where you as settlor have
the power to revoke the trust without the consent of another person, or have or
share investment control over the trust.

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Estates. Ordinarily, the term "beneficial ownership" would not include
securities held by executors or administrators in estates in which you are a
legatee or beneficiary unless there is a specific bequest to you of such
securities, or you are the sole legatee or beneficiary and there are other
assets in the estate sufficient to pay debts ranking ahead of such bequest.

Securities Deemed Not to be "Beneficially Owned"

For purposes of the Code of Ethics, the term "beneficial ownership"
excludes securities or securities accounts held by you for the benefit of
someone else if you do not have a pecuniary interest in such securities or
accounts. For example, securities held by a trust would not be considered
beneficially owned by you if neither you nor an immediate family member is a
beneficiary of the trust. Another example illustrating the absence of pecuniary
interest, and therefore also of beneficial ownership, would be securities held
by an immediate family member not living in the same household with you, and who
is not economically dependent upon you.

"Influence or Control"

Transactions over which you have "no direct or indirect influence or
control" are not subject to the pre-clearance requirements or prohibited
transaction rules in Sections 3 and 4 of the Code of Ethics. See Section 5(a).
To have "influence or control", you must have an ability to prompt, induce or
otherwise affect transactions in the account. Like "beneficial ownership, the
concept of influence or control encompasses a wide variety of factual
situations. An example of where influence or control exists would be where you,
as a beneficiary of a revocable trust, have significant ongoing business and
social relationships with the trustee of the trust. Examples of where influence
or control does not exist would be a true blind trust, or securities held by a
limited partnership in which your only participation is as a non-controlling
limited partner. The determining factor in each case will be whether you have
any direct or indirect influence or control over the securities account.
Employees with such blind trust or third party discretionary accounts shall have
their account agreement and/or governing documents forwarded to Ethics Committee
for review prior to trading pursuant to this exemption. The account will only be
exempt if the employee initially, and on an annual basis thereafter, certifies
that he or she maintains no control or influence over the account.

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APPENDIX B - Members of Ethics Committee

Thomas L. Thomsen
Alexander S. Macmillan
Jeff B. Curtis
Mark A. Wentzien
Rich S. Mettler

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Exhibit q

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and
appoints Jeff B. Curtis as the undersigned's true and lawful attorney and agent,
with full power of substitution and resubstitution for and in the name, place
and stead of the undersigned, in any and all capacities, to sign the
Registration Statement on Form N-1A for the registration of shares of Columbia
Common Stock Fund, Inc., Columbia Special Fund, Inc., Columbia International
Stock Fund, Inc., Columbia Growth Fund, Inc., Columbia Small Cap Fund, Inc.,
Columbia Daily Income Company, Columbia Fixed Income Securities Fund, Inc.,
Columbia Oregon Municipal Bond Fund, Inc., Columbia Balanced Fund, Inc.,
Columbia Real Estate Equity Fund, Inc., Columbia National Municipal Bond Fund,
Inc., Columbia High Yield Fund, Inc., and Columbia Short Term Bond Fund, Inc.,
and any and all amendments (including post-effective amendments) thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each
attorney and agent full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that the attorney and agent, or his substitute, may lawfully do or cause to be
done by virtue hereof.

Dated: December 15, 2000

/s/ PATRICK J. SIMPSON
---------------------------
Patrick J. Simpson

<PAGE>

POWER OF ATTORNEY

Dated: December 15, 2000

/s/ J. JERRY INSKEEP, JR.
---------------------------
J. Jerry Inskeep, Jr.

<PAGE>
POWER OF ATTORNEY

Dated: December 15, 2000

/s/ RICHARD L. WOOLWORTH
---------------------------
Richard L. Woolworth

<PAGE>
POWER OF ATTORNEY

Dated: December 15, 2000

/s/ JAMES C. GEORGE
---------------------------
James C. George

<PAGE>
POWER OF ATTORNEY

Dated: December 15, 2000

/s/ JEFFREY L. LUNZER
---------------------------
Jeffrey L. Lunzer