COLUMBIA INTERNATIONAL STOCK FUND INC, 485APOS, 1998-12-07

COLUMBIA INTERNATIONAL STOCK FUND INC
485APOS, 1998-12-07

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Reg. Nos. 33-48994/811-7024
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. 7 [ X ]
-----
and/or

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

Amendment No. 9 [ X ]
-----
(Check appropriate box or boxes.)

COLUMBIA INTERNATIONAL STOCK FUND, INC.
(Exact Name of Registrant as Specified in Charter)

1301 SW Fifth Avenue, PO 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.
1301 SW Fifth Avenue, PO 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 (Check appropriate box)

immediately upon filing pursuant to paragraph (b)
---
on pursuant to paragraph (b)
--- ----------
X 60 days after filing pursuant to paragraph (a)(1)
---
on pursuant to paragraph (a)
--- ----------
75 days after filing pursuant to paragraph (a)(2)
---
on pursuant to paragraph (a)(2) of Rule 485
--- ----------

If appropriate, check the following box:
this post-effective amendment designates a new effective date for
--- a previously filed post-effective amendment.

Please forward copies of communications to:

Robert J. Moorman
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2600
Portland, Oregon 97204

<PAGE>
PROSPECTUS
February x, 1999

Columbia Funds is a family of no load mutual 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 U.S. Government Securities Fund
Columbia Fixed Income Securities Fund
Columbia National Municipal Bond Fund
Columbia Municipal Bond Fund
Columbia High Yield Fund
Columbia Balanced Fund
Columbia Daily Income Company

As with all mutual funds, the Securities and Exchange Commission has not judged
whether these funds are good investments or whether the information in this
prospectus is adequate and accurate. Anyone who indicates otherwise is
committing a federal crime.

<PAGE>
February xx, 1999

TABLE OF CONTENTS

Introduction
Information about Columbia Funds
Stock Fund Investing
Columbia Common Stock Fund
Columbia Growth Fund
Columbia International Stock Fund
Columbia Special Fund
Columbia Small Cap Fund
Columbia Real Estate Equity Fund
Bond Fund Investing
Columbia U.S. Government Securities Fund
Columbia Fixed Income Securities Fund
Columbia National Municipal Bond Fund
Columbia Municipal Bond Fund
Columbia High Yield Fund
Columbia Balanced Fund
Columbia Daily Income Company
Management
Investor Services
Purchasing Shares
Selling Shares
Instructions for Accounts
Important Fund Policies
Distributions and Taxes
More About the Funds
Portfolio Securities
More about Risks
Financial Highlights

2
<PAGE>
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:

o goal and strategy [icon]
o investment risks [icon]
o who should invest in the fund [icon]
o historical performance [icon]
o expenses [icon]

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.

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, profit
margins, sales trends, and price/earnings and price/book ratios. In the small
cap, high yield bond and real estate investment trust sectors, this fundamental
analysis is even more critical to uncovering companies whose products or
services offer 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 type of debt instrument
based on its 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

3
<PAGE>
disclosure carefully before investing. The following descriptions of each Fund
contain a discussion of their principal investment risks. For additional
information about the risks of investment, see "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 small companies tend to use excess earnings to help fund growth.
There are three widely accepted categories for market capitalization, which is
the total value of a company's outstanding stock. Large-cap generally refers to
companies with $5 billion or more in outstanding stock, mid-cap is considered to
have $1 to $5 billion and small-cap is considered to have less than $1 billion.
Generally, the smaller a company's market cap, the more volatile its stock is
likely to be.

Generally, stock fund returns fluctuate more than bond and money market fund
returns, but stocks historically have offered investors the most long-term
growth. Columbia's stock funds vary in their level of risk or volatility,
depending upon the types and average market capitalization of the stocks they
hold. The chart below helps illustrate the expected volatility for each of the
Columbia stock funds, listed in order from least to most volatile.

Stock Volatility chart

Columbia Common Stock Fund
icon
Goal and Strategy
- -----------------
The Fund seeks capital appreciation and dividend income 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
- ----------------
The principal risk associated with this Fund is stock market risk, which means
the stocks held by the Fund may decline in value in response to the activities
and financial prospects of an individual company or in response to general
market and economic conditions. You could lose money as a result of your
investment.

icon
Who should invest in the Fund?
- ------------------------------
This Fund is most appropriate for:
o long-term investors
o those seeking a diversified core equity fund
o those willing to accept short-term price fluctuations in their investment

4
<PAGE>
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 (compared to a broad-based
market index). 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.

Bar chart
Best Quarter Worst Quarter
Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
S&P 500 Index

icon
Expenses
- --------
As a Columbia shareholder, you pay no shareholder transaction fees, such as
sales loads, redemption fees or exchange fees when you purchase or sell shares.
The table below describes the annual fund operating expenses you may pay as a
shareholder of the Fund. These operating expenses are considered indirect
shareholder costs, since they are deducted from Fund assets prior to the
calculation of total returns.

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

<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 in this Fund?
- -------------------------------
This fund is most appropriate for:
o long-term investors
o those investors seeking a Fund with a growth investment strategy
o those willing to accept short-term price fluctuations in their investment

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 (compared to a broad-based
market index). 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.

Bar chart
Best Quarter Worst Quarter
Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
S&P 500 Index

icon
Expenses
- --------
As a Columbia shareholder, you pay no shareholder transaction fees, such as
sales loads, redemption fees or exchange fees when you purchase or sell shares.
The table below

6
<PAGE>
describes the annual fund operating expenses you may pay as a shareholder of the
Fund. These operating expenses are considered indirect shareholder costs, since
they are deducted from Fund assets prior to the calculation of total returns.

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

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 United States. While the Fund's investments
are not limited by market capitalization, the Fund intends to invest at least
75% of its assets in companies with at least $500 million in market cap, which -
in foreign markets - is generally considered large and well established.

icon
Investment Risks
- ----------------
The principal risks associated with this Fund are 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 in
response to the activities and financial prospects of an individual company or
in response to general market and economic conditions.

7
<PAGE>
Foreign investment risk means the stocks held by the Fund may decline in value
due to the risks associated with international investing. This is because
foreign securities:
o are affected by changes in currency exchange rates
o may be subject to foreign taxes that could reduce returns
o are subject to potential political or economic instability of the
country
of issuer, especially in emerging or developing countries
o are generally not subject to uniform accounting, auditing, and
financial reporting standards, with less governmental regulation
and oversight than U.S. securities
o tend to be less liquid than domestic securities
o generally have less public information available about them than do
U.S. securities

icon
Who Should Invest in this Fund?
- -------------------------------
This Fund is appropriate for:
o long-term investors
o those seeking stock market diversification outside the United States
o those willing to accept substantial fluctuation in the value of their
investment

Bar chart
Best Quarter Worst Quarter
Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
Morgan Stanley Capital
International Europe,
Australia, and Far East Index

8
<PAGE>
These operating expenses are considered indirect shareholder costs, since they
are deducted from Fund assets prior to the calculation of total returns.

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

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 Stock Index. The Fund
intends to invest primarily in small- and mid-cap companies, but also may invest
in special situations such as new issues; companies that may benefit from
technological or product developments or new management; and companies involved
in tender offers, leveraged buy-outs or mergers.

In addition, the small- to mid-cap stocks held by the Fund are subject to
greater risk than large-cap stocks because smaller companies:
o may have limited operating histories, fewer financial resources, and
inexperienced management
o may be dependent on a small number of products or services

9
<PAGE>
o may have low trading volumes, which may make it difficult for the Fund
to sell a security and result in erratic or abrupt price movements
o may also be involved in special, more risky situations such as major
corporate changes and a high degree of market uncertainty

icon
Who Should Invest in this Fund?
- -------------------------------
This Fund is appropriate for:
o long-term, aggressive growth investors
o those looking to diversify their large-cap stock portfolios with small- to
mid-cap stock investments
o those willing to accept substantial fluctuations in the value of their
investment

Bar chart
Best Quarter Worst Quarter

Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
S&P Midcap Index

10
<PAGE>
- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

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 with a market
capitalization below $1 billion at the time of investment.

In addition, the small-cap stocks held by the Fund are subject to greater
volatility than large-cap stocks because small companies:

o may have limited operating histories, fewer financial resources, and
inexperienced management
o may be dependent on a small number of products or services
o may have low trading volumes, which may make it difficult for the Fund
to sell a security and result in erratic or abrupt price movements
o may also be involved in special, more risky situations, such as major
corporate changes and a high degree of market uncertainty

11
<PAGE>
icon
Who Should Invest in this Fund?
- -------------------------------
This Fund is appropriate for:
o long-term, aggressive growth investors
o those looking to diversify their mid- and large-cap stock portfolios
with small cap stock investments
o those willing to accept substantial fluctuation in the value of their
investment

Bar chart
Best Quarter Worst Quarter
Average Annual Total Returns
1 year 3 years 5 years 10 years

Fund Name
Russell 2000 Index

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

12
<PAGE>
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
$ $ $ $
------- ------- ------- -------

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 equity securities 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, such
as real estate investment trusts ("REITs"). The Fund does not invest directly in
real estate.

icon
Investment Risks
- ----------------
The principal risks associated with this Fund are stock market risk and real
estate risk. You could lose money as a result of your investment.

Real estate risk means the Fund may be subject to the same types of risks
associated with direct ownership of real estate, such as:
o declines in the value of real estate related to general, local and regional
economic conditions
o overbuilding and extended vacancies of properties
o increased property taxes
o casualty or condemnation losses
o changes in zoning laws
o environmental clean up costs

To the extent that the Fund's investments are concentrated in a particular
geographic region, real estate risk may be even more significant.

icon
Who Should Invest in this Fund?
- -------------------------------
This Fund is appropriate for:
o long-term investors

13
<PAGE>
o those looking for an income-oriented equity fund that invests in real estate
securities
o those seeking to balance their equity portfolio with an investment expected
to provide less volatility and higher income than the S&P 500
o those willing to accept short-term price fluctuations in their investment

Bar chart
Best Quarter Worst Quarter

Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
NAREIT Index

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

14
<PAGE>
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
$ $ $ $
------- ------- ------- -------

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 is 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.

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, an investment in a bond fund does
not have a maturity date and does not earn a fixed interest rate. Consequently,
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
a fund's average maturity. Generally, the longer the average maturity of a bond
fund, the more sensitive its value to changes in interest rates.

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

While bond returns have not generated as high an investment return as stocks
over time, their returns are generally less volatile. The chart below helps
illustrate the expected volatility for each Columbia Bond Fund, listed in order
from least to most volatile.

Bond Volatility chart

Columbia U.S. Government Securities Fund

icon
Goal and Strategy
- -----------------
The Fund seeks preservation of capital and a high level of income by investing
principally in direct obligations of the U.S. Government with a maximum maturity
of three years. Securities will be selected based on an assessment of interest
rate trends. Generally, securities purchased will be of a shorter maturity when
interest rates are expected to rise and of longer maturity when interest rates
are expected to decline.

15
<PAGE>
icon
Investment Risks
- ----------------
The principal risk associated with this Fund is interest rate risk, which refers
to the possibility that your investment may go down in value when interest rates
rise. In addition, while direct obligations of the U.S. Government are
guaranteed as to the payment of principal and interest, the value of the Fund's
shares is not guaranteed by the U.S. Government. You could lose money as a
result of your investment.

icon
Who Should Invest in this Fund?
- -------------------------------
This Fund is appropriate for:
o risk-averse, short-term investors
o those willing to accept a small amount of volatility
o those focused on the preservation of assets rather than the appreciation of
assets
o those looking to diversify a balanced portfolio with a short-term,
income-earning investment

Bar chart
Best Quarter Worst Quarter

Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
Merrill Lynch 1-3
Treasury Index

16
<PAGE>
- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

Columbia Fixed Income Securities Fund

icon
Goal and Strategy
- -----------------
The Fund seeks a high level of income by investing in a broad range of high
quality bonds with intermediate to long-term maturities. The Fund intends to
invest 95% of its assets, under normal market conditions, in investment-grade
debt securities, 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
- ----------------
The principal risks associated with this Fund are 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
make interest and principal payments 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.

17
<PAGE>
icon
Who Should Invest in this Fund?
- -------------------------------
This Fund is appropriate for:
o longer-term, income-oriented investors
o investors willing to accept greater price fluctuation than is generally
associated with short-term bonds
o those looking to diversify their stock portfolio with a fund investing in
high quality bonds

Bar chart
Best Quarter Worst Quarter

Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
Lehman Aggregate
Bond Index

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

18
<PAGE>
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
$ $ $ $
------- ------- ------- -------

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% 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. Under normal market conditions, the Fund will invest in
municipal securities rated investment grade by a securities rating agency or, if
unrated, determined by Columbia to be of equivalent investment quality. Although
the Fund's average maturity may be adjusted in accordance with anticipated
changes in interest rates, the Fund intends to maintain an average portfolio
maturity of approximately 10 to 12 years.

icon
Risk Factors
- ------------
The principal risks associated with this Fund are 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 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
make interest and principal payments when due.

Political risk refers to the chance that a significant change in federal income
tax rates or even serious discussions on the topic in Congress could cause
municipal bond prices to fall. The demand for municipal bonds is strongly
influenced by the value of tax-exempt income to investors. A reduction in
federal income tax rates would reduce the advantage of owning municipal bonds.

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

19
<PAGE>
o investors willing to accept greater price fluctuation than in a
shorter-term bond fund

icon
Historical Performance
- ----------------------
Since the Fund is new, it has no historical performance.

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%(1)

Total Fund Operating Expenses ___%(1)

(1) "Other expenses" are based on the estimated expenses that the Fund
expects to incur in its first year of operation.

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

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

Columbia Municipal Bond Fund

icon
Goal and Strategy
- -----------------
The Fund seeks a high level of income exempt from federal and State of Oregon
income tax by investing up to 100% of its assets in municipal securities issued
by the State of Oregon and its political subdivisions, agencies, authorities and
instrumentalities. Under normal market conditions, the Fund will invest in
municipal securities of the State of Oregon rated investment grade by a
securities rating agency or, if unrated, determined by Columbia to be of
equivalent investment quality. Although the Fund's average maturity may

20
<PAGE>
be adjusted in accordance with anticipated changes in interest rates, the Fund
intends to maintain an average portfolio maturity of approximately 10 to 12
years. The Fund is non-diversified, which means the Fund may invest a greater
percentage of its assets in one issuer.

Interest rate risk refers to the possibility 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
make interest and principal payments when due.

Political risk refers to the chance that a significant change in federal income
tax rates, or even serious discussions on the topic in Congress could cause
municipal bond prices to fall. The demand for municipal bonds is strongly
influenced by the value of income to tax exempt investors. A reduction in
federal income tax rates would reduce the advantage of owning municipal bonds.

Geographic risk refers to the fact that the Fund's concentration in Oregon
tax-exempt bonds may cause it to be exposed to special risks that do not apply
to other bond funds, such as:

o lack of active trading market in municipal bonds of most Oregon issuers
o unfavorable economic conditions in Oregon
o legal and legislative changes affecting the ability of Oregon municipalities
to issue bonds

icon
Who Should Invest in this Fund?
- -------------------------------
This Fund is appropriate for:
o conservative, long-term investors nearing or in retirement
o investors residing in Oregon seeking income exempt from federal and State
of Oregon personal income tax.
o investors willing to accept greater price fluctuation than a shorter-term
bond fund

21
<PAGE>
Bar chart
Best Quarter Worst Quarter

Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
Lehman General
Obligation Bond Index

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

Columbia High Yield Fund

icon
Goal and Strategy
- -----------------
The Fund seeks a high level of income, with capital appreciation as a secondary
objective, by investing in non-investment grade corporate debt securities,
commonly referred to as "junk bonds." Normally, the Fund will invest at least
80% of its assets in high

22
<PAGE>
yield bonds rated Ba or B by Moody's Investors Services, Inc. ("Moody's") or BB
or B by Standard and Poor's Corporation ("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. By
concentrating on the highest quality non-investment grade bonds, the Fund seeks
to provide investors with access to higher yielding bonds without assuming all
the risk associated with the broader "junk bond" market.

icon
Investment Risks
- ----------------
The principal risks associated with this Fund are 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 value may go
down when interest rates rise.

Credit risk refers to the possibility that the issuing company may not be able
to make interest and principal payments when due. The Fund generally invests in
lower-rated bonds that are subject to greater risk of default than higher-rated,
lower yielding bonds. High yield bonds may be issued in connection with
corporate restructurings, such as leveraged buyouts, mergers, acquisitions, debt
recapitalizations, or similar events. Also, high yield bonds are often issued by
smaller, less creditworthy companies or by companies with substantial debt.
Since the price of a high yield bond is generally very sensitive to the
financial condition of the issuer, the market for high yield bonds can behave
more like the equity market. Adverse changes in economic conditions, an issuer's
financial condition, and increases in interest rates may negatively affect
lower-rated debt securities more than higher-rated debt securities. In addition,
the secondary markets for lower-rated securities may be less liquid and less
active than those for higher-rated securities, the effect of which may limit the
ability of the Fund to sell lower-rated securities at their expected value.

icon
Who Should Invest in this Fund
- ------------------------------
This Fund is appropriate for:
o long-term investors
o those willing to accept substantial fluctuation in the value of their
investment
o investors seeking to boost the overall yield potential of their bond
portfolio

23
<PAGE>
Bar chart
Best Quarter Worst Quarter
Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
Salomon BB Index

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

Columbia Balanced Fund

icon
Goal and Strategy
- -----------------
The Fund seeks a high total return by investing in a combination of large cap
common stocks and high quality fixed income securities. Normally, 35% to 65% of
the portfolio will be allocated to stocks and 35% to 65% will be allocated to
bonds. Many of the stocks selected by the Fund will have a history of paying
level or rising dividends, and will be expected to continue paying dividends in
the future. The Fund also intends to invest in

24
<PAGE>
investment-grade debt securities, 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 Risk
- ---------------
The principal risks associated with this Fund are stock market risk, 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 that the issuing company may not be able
to make interest and principal payments 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 in this Fund?
- -------------------------------
This Fund is appropriate for:
o long-term investors seeking to balance the higher volatility of stock
returns with the greater stability of income generating bonds.
o Investors seeking moderate growth
o Investors seeking moderate income

Bar chart
Best Quarter Worst Quarter

Average Annual Total Returns

1 year 3 years 5 years 10 years

Fund Name
50/50 S&P 500 Index/
Lehman Aggregate Index

25
<PAGE>
icon
Expenses
- --------
As a Columbia shareholder, you pay no shareholder transaction fees, such as
sales loads, redemption fees or exchange fees when you purchase or sell shares.
The table below describes the annual fund operating expenses you may pay as a
shareholder of the Fund. These operating expenses are considered indirect
shareholder costs, since they are deducted from Fund assets prior to the
calculation of total returns.

- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

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 in the following high
quality money market securities:

o Securities issued by the U. S. Government and its agencies and
instrumentalities, whose principal and interest are guaranteed
o Commercial paper which, if rated by Standard & Poor's or Moody's, is rated
A-1 by Standard & Poor's and Prime 1 by Moody's or, if not rated, is
determined to be of comparable quality by the Fund
o Other high quality corporate debt with average maturities of less than
12 months

All of 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.

26
<PAGE>
icon
Investment Risk
- ---------------
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 as a
result of your investment in the Fund. Additionally, there is a chance that the
returns of this Fund may not keep pace with the rate of inflation over the long
term.

icon
Who Should Invest in this Fund
- ------------------------------
This Fund is appropriate for:
o Short-term, risk averse investors
o Investors focused on the preservation of assets rather than the
appreciation of assets
o Investors seeking liquidity

Bar chart
Best Quarter Worst Quarter
Average Annual Total Returns
1 year 3 years 5 years 10 years
Fund Name
Consumer Price Index

27
<PAGE>
- -------------------------------------------------------------------------------
Fee Table

Annual Fund Operating Expenses (expenses that
are paid out of Fund assets)

Management Fees ___%
Distribution and/or Service (12b-1) Fees None
Other Expenses ___%

Total Fund Operating Expenses ___%

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

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

28
<PAGE>
Management

The Funds' investment adviser is Columbia Funds Management Company, 1300 S.W.
Sixth Avenue, P.O. Box 1350, Portland, Oregon 97207-1350 ("Columbia"). Columbia
is responsible for managing the Funds' portfolios (including placement of
brokerage orders) and its business affairs, subject to the Funds' Boards of
Directors. Columbia or its predecessor has acted as an investment adviser since
1969.

For the year ended December 31, 1998, 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
Columbia Growth Fund
Columbia International Stock Fund
Columbia Special Fund
Columbia Small Cap Fund
Columbia Real Estate Equity Fund
Columbia U.S. Government Securities Fund
Columbia Fixed Income Securities Fund
Columbia National Municipal Bond Fund*
Columbia Municipal Bond Fund
Columbia High Yield Fund
Columbia Balanced Fund
Columbia Daily Income Company

*Fund Commenced Operations March __, 1999

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 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 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

29
<PAGE>
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 IDS International, Inc. (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). A 1980 graduate of Occidental College, 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 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 of Northwestern University in 1984.

U.S. Government Securities Fund -- Jeffrey L. Rippey (since 1987). 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.

Fixed Income Securities Fund -- Leonard A. Aplet and Jeffrey L. Rippey (since
1989). A Vice President of Columbia and a Chartered Financial Analyst, Mr. Aplet
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.

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.

Municipal Bond Fund -- Greta R. Clapp (since 1992).

High Yield Fund -- Jeffrey L. Rippey (since 1993).

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

30
<PAGE>
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.

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. For more
information on the Code of Ethics and specific trading restrictions, see the
Funds' Statement of Additional Information.

Investor Services
This section is designed to acquaint you with the different services and
policies associated with an investment in Columbia Funds.

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. A Fund's share price, or
NAV, is determined each business day at the close of regular trading on the New
York Stock Exchange ("NYSE"), typically 4 p.m. Eastern Time. 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 delay in your investment of up to two days.

Inset: Investment Minimums
First Time Fund Investment: $1,000 Minimum for all but Columbia Special and
Small Cap Funds, which is $2,000
Subsequent Fund Investment: $100 for all Funds
Automatic Investment Plan: $50 for all Funds

When investing in the Funds, please keep these important points in mind:
o Personal checks for investment should be drawn on U.S. banks, must meet
Fund investment minimum requirements and be made payable to Columbia Funds
o Columbia will not accept cash investments
o Columbia reserves the right to reject any investment
o 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
o The Funds may reject any third party checks submitted for investment

Inset: 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

31
<PAGE>
its flow of new money. If a Fund does close, existing Fund shareholders may
continue to invest in that Fund. But once a shareholder's account in that Fund
is closed, no new investments will be accepted.

Selling Shares
- --------------
You can sell shares any day the 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. This means you pay no fees to sell shares.

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

Normally, your redemption proceeds will be transmitted the day after the
effective date of the redemption. Proceeds transmitted by way of ACH (Automated
Clearing House) are usually credited to your bank account on the second business
day following the request. Except as provided by rules of the Securities and
Exchange Commission, redemption proceeds will be transmitted to you within seven
days of the redemption date.

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.

Inset When is a Signature Guarantee Necessary?
To protect against fraud, a signature guarantee is required for each of the
following written redemption requests:
o Redemption requests over $50,000
o Redemption checks that are made payable to someone other than those
registered on the account
o A request to send proceeds to an address or account other than those of
record
o 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.

Draftwriting in Columbia Daily Income Company
- ---------------------------------------------
Columbia Daily Income Company shareholders 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, and drafts may be written for not less
than $500.

32
<PAGE>
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.

Instructions for Accounts
- -------------------------

Opening a New Account
- ---------------------

Regular Mail Overnight Carrier
By Mail Columbia Financial Center Columbia Financial Center
Icon P.O. Box 1350 1301 S.W. Fifth Avenue
Portland, OR 97207-1350 Portland, OR 97201-5601
Complete an application and send it to the address above
with your check for at least the minimum fund investment.
You can download an application and prospectus from our website
at www.columbiafunds.com.

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

Automatically You can open an account with a minimum of $50, provided you
Icon establish an automatic investment plan (AIP), which means that
investments are transferred automatically from your bank account
to the Columbia Fund(s) of your choice on the 5th, 20th, or both,
of each month. Set up AIP on the application.

7:30-5:00 PST
In Person Columbia Financial Center
Icon 1301 SW Fifth Avenue
Portland, OR
Visit Columbia Funds, conveniently located in downtown Portland.

Buying Shares
- -------------

Regular Mail Overnight Carrier
By Mail Columbia Financial Center Columbia Financial Center
Icon P.O. Box 1350 1301 S.W. Fifth Avenue
Portland, OR 97207-1350 Portland, OR 97201-5601
Send your investment to the address shown above. Be sure to
enclose an investment slip from the bottom of your shareholder
statement.

By Telephone: 1-800-547-1707
Icon Wire: Invest using federal funds wire from your bank. Since
each Fund has different wire number, call us for
instructions.

Exchange: You may use the proceeds from the redemption of one
Fund's shares to purchase shares of another Fund with
the same account number. To exchange shares, just call
us.

Televest: Provided the service is already set up on your account
(use the application or call us for a form) you can
request a transfer of funds from your bank for
investment in the Columbia Fund(s) of your choice.

33
<PAGE>
Automatically Arrange to have investments transferred automatically from your
Icon bank account to the Columbia Fund(s) of your choice on the 5th,
20th, or both, of each month. Set Up AIP on the application or
call us for a form. AIP investment minimum is $50 per Fund.

7:30- 5:00 PST
In Person Columbia Financial Center
Icon 1301 SW Fifth Avenue
Portland, OR
Visit Columbia Funds, conveniently located in downtown Portland.

Selling Shares
- --------------
Regular Mail Overnight Carrier
By Mail Columbia Financial Center Columbia Financial Center
Icon P.O. Box 1350 1301 S.W. Fifth Avenue
Portland, OR 97207-1350 Portland, OR 97201-5601
Send your redemption request to the address shown above.
Redemption requests must be signed by each shareholder required
to sign on the account. Accounts in the names of corporation,
fiduciaries, and intermediaries may require additional
documentation. A signature guarantee may be required.

By Telephone: 1-800-547-1707
Icon Call us to redeem shares by phone (unless you have
declined this service by checking the appropriate box
on the application.) Proceeds from telephone redemptions
may be mailed only to the account owner at the address
of record or transferred to a bank designated on the
application. A maximum of $50,000 may be redeemed by
telephone and mailed to your address of record. For
redemptions transferred directly to your bank, you may
redeem any amount.

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

Exchange: You may use the proceeds from the redemption of one
Fund's shares to purchase shares of another Fund with
the same account number. To exchange shares, just call
us.

Automatically Provided your account value is at least $5,000, you can receive
Icon withdrawals of $50 or more automatically either as a fixed amount
or based on your income and capital gain distributions. If your
withdrawals exceed income earned, your share balance will be
reduced.

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

Inset: Tax-Advantaged Investing with a Columbia IRA or Retirement Plan
Traditional An Individual Retirement Account allowing you to invest a
IRA maximum of $2,000 with tax-deferred returns. Your
contributions to a Traditional IRA 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.

34
<PAGE>
Early withdrawals also may be subject to penalties. You may also
choose to roll over retirement plan proceeds into an IRA in order
to prolong tax-deferred savings.

Roth IRA An Individual Retirement Account allowing you to invest a
maximum of $2,000 each year, the returns on which are
tax-free. Your contributions are not 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, are a
first time homebuyer, or satisfy other requirements.

Education IRA An account allowing 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 deductible. Your ability to invest in
an Education IRA may be limited if your income exceeds a
certain level.

Retirement A number of retirement plan options are available for small- to
Plans mid-size businesses. Contact Columbia for further information.

Important Fund Policies
- -----------------------

How Shares are Priced
- ---------------------
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, but may use fair value
estimates if reliable market prices are unavailable. Debt securities with
remaining maturities of less than 60 days will generally be valued based on
amortized cost.

Trading of securities on many foreign securities exchanges and over-the-counter
markets is completed at various times before the close of the NYSE or on days
the NYSE is not open for business. Currently, the calculation of a Fund's NAV
may take place at a time that is different than when Fund portfolio security
prices are determined. 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.

Financial Intermediaries
- ------------------------
If you invest through a third-party (rather than directly with Columbia), the
policies and fees 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. 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

35
<PAGE>
servicing fee. All 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 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
- ---------
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.

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 instructions.

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

36
<PAGE>
recurring activity - such as an automatic investment or withdrawal plan, all
transactions in your account will be confirmed with a statement. Financial
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 financial
report and the Fund's annually updated prospectus will be mailed to accounts
with the same Tax Identification Number. In addition, shareholders or multiple
accounts at the same mailing address can eliminate duplicate enclosures for
statements mailed to that address by filing a SAVMAIL form with the 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.

Inset: 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:
o .75% on the first $500,000
o .50% on the next $500,000, and
o .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.

Distributions and Taxes
- -----------------------

Income and Capital Gains Distributions
- --------------------------------------

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 (realized
on the sale of a security by a Fund) are distributed as follows.

37
<PAGE>
Fund Net Investment Income Net Realized Long Term
- ---- --------------------- ----------------------
Capital Gains
-------------------------- ----------------------
Growth Fund Declared and paid in Declared and paid in
International Stock Fund December December
Special Fund
Small Cap Fund
- --------------------------- -------------------------- ----------------------
Common Stock Fund Declared and paid each Declared and paid in
Real Estate Fund calendar quarter December
Balanced Fund
- --------------------------- -------------------------- ----------------------
Bond Funds Declared daily and paid Declared and paid in
monthly December
- --------------------------- -------------------------- ----------------------
Money Market Fund Declared and paid daily Declared and paid daily
(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.

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)

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 amount of
net investment income and capital gains distributed in the prior year.

38
<PAGE>
"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 earnings 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 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 the 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.

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.

Municipal Bond Fund: Individuals, trusts, and estates will not pay Oregon
- ------------------- personal income tax on distributions from the 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 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.

39
<PAGE>
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.

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: Austria, Belgium, Brazil, Denmark, Finland,
France, Germany, Italy, India, The Netherlands, Norway, Spain, Sweden,
Switzerland, the United Kingdom, Australia, Hong Kong, Japan, New Zealand,
Singapore, Canada, and Mexico. "Equity securities" refers to 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 particularly 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.

40
<PAGE>
The Fund may also invest into 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.

At the date of this Prospectus, Columbia considers any company with an aggregate
market valuation of less than $1 billion to be "small cap." Upon notice to
shareholders, however, the definition of small cap may change if Columbia
determines, based on changes in market levels and accepted industry definitions,
that a different market capitalization is more appropriate. 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 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.

In addition to investing in equity securities of companies principally engaged
in the real estate industry, 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.

41
<PAGE>
Columbia Fixed Income Securities Fund and Balanced Fund
- -------------------------------------------------------
The Fixed Income Securities Fund and the Balanced Fund may invest in a variety
of debt securities such as bonds, debentures, notes, equipment trust
certificates, 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.

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 its 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 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.

42
<PAGE>
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 Municipal Bond 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 short-term trades result
in gains or securities held one year or less, shareholders will be subject to
taxes at ordinary income rates. See "INFORMATION ABOUT YOUR INVESTMENT,
Distributions and Taxes." Historical portfolio turnover rates for all Funds are
- ----------------------- shown in the "FINANCIAL HIGHLIGHTS" section.

More about Risks

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

Real Estate Investment Trusts
- -----------------------------
The Real Estate Fund will, and the other Stock Funds as part of their principal
investment strategy may, invest in real estate investment trusts (REITs).
Investment in REITs carries with it many of the same risks associated with
direct ownership in real estate.

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. Additionally, 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

43
<PAGE>
delays in enforcing its rights as mortgagee or lessor and may incur substantial
costs associated with protection of its investments.

Credit Risk The fixed income securities in the Funds' portfolios are subject to
- ----------- credit risk. Credit risk refers to the possibility 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, which
both 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:

Rating Agency Long-Term Debt Security Short-Term Debt Security
- ------------- ----------------------- ------------------------
S&P At least BBB At least A-3 or SP-2
Moody's At least Baa At least Prime-3 or MIG 4/VMIG 4

The Funds may also invest in securities unrated by these agencies, if determined
by Columbia 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.

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 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'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.

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 cash-coupon payments.
Instead, the issuer sells the security at a substantial discount from its
maturity value. The interest equivalent

44
<PAGE>
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")
- ----------------------------------------------------------------------------
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 the
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. Additionally, the Fund may agree to purchase or sell these
securities with payment and delivery taking place at a future date.

Asset-Backed Securities
- -----------------------
In addition to prepayment risk, asset-backed securities do not usually benefit
from a complete security interest in the related collateral.

Year 2000
- ---------
Many of the services provided to the Funds by Columbia and other service
providers depend on the proper functioning of their computer software systems
and those of their outside service providers. Many computer software systems in
use today cannot distinguish the year 2000 from the year 1900 because of the way
dates are encoded and calculated. Such an event could have a negative impact on
handling securities trades, payments of interest and dividends, pricing and
account services. Although, at this time, there is no assurance that there will
be no adverse impact on the Funds, Columbia has informed the Funds that it has
been actively working on necessary changes to its computer systems to prepare
for the year 2000 and expects that its systems, and those of the Funds' outside
service providers, will be ready for the year 2000.

Euro Currency Conversion
- ------------------------
On January 1, 1999 the European Monetary Union ("EMU") introduced a new single
currency, the Euro, to replace the national currency of participating member
nations. To the extent a Fund holds investments in nations replaced by the Euro,
the investment process, including trading, foreign exchange, payments,
settlements, cash accounts, custody and accounting, will be impacted. Although
it is not possible to predict the ongoing impact of the Euro on the Funds, the
transition and the elimination of currency risk among nations participating in
the EMU may change the economic environment and behavior of investors,
particularly in European markets.

The adoption of the Euro does not reduce the currency risk presented by
fluctuations in value of the U.S. dollar to other currencies, and, in fact,
currency exchange risk may be

45
<PAGE>
magnified. Also increased market volatility may result. Additional risks that
may result include the fact that European issuers in which a Fund invests may
face substantial conversion costs, which may not be accurately anticipated and
may impact issuer profitability and creditworthiness.

Financial Highlights
[to be filed by post-effective amendment]

46
<PAGE>
For Your Information
- --------------------
You can find additional information on the Funds' structure and performance in
the following documents:

o Annual and Semiannual Reports. While the Prospectus describes the
Funds' potential investments, these reports detail the Funds' actual
investments as of the report date. Reports include a discussion by
Fund management of recent market conditions, economic trends, and Fund
strategies that significantly affected the Fund's performance during
the reporting period.

o Statement of Additional Information ("SAI"). The SAI supplements the
Prospectus and contains further information about each Fund and its
investment restrictions, risks and polices.

A current SAI for the Funds is on file with the Securities and Exchange
Commission and is incorporated by reference in, and is therefore legally 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 Fund at:

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

You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, D.C. (telephone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, D.C.
20549-6009. Reports and other information regarding the Funds are also on the
SEC's Internet website at http://www.sec.gov.

SEC file number: 811-6341 (CCSF)
811-1449 (CGF)
811-7024 (CISF)
811-4362 (CSF)
811-7671 (CSCF)
811-8256 (CREF)
811-4842 (CUSG)
811-3581 (CFIS)
811-7832 (CNBF)
811-3983 (CMBF)
811-7834 (CHYF)
811-6338 (CBF)
811-2507 (CDIC)

47
<PAGE>
Part B-I
- -------------------------------------------------------------------------------

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 U.S. GOVERNMENT SECURITIES FUND, INC.
COLUMBIA FIXED INCOME SECURITIES FUND, INC.
COLUMBIA NATIONAL MUNICIPAL BOND FUND, INC
COLUMBIA MUNICIPAL BOND FUND, INC.
COLUMBIA HIGH YIELD FUND, INC.
COLUMBIA BALANCED FUND, INC.
COLUMBIA DAILY INCOME COMPANY
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

Columbia Funds
1300 SW Sixth Avenue
PO 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"),
Columbia Growth Fund, Inc. (the "Growth Fund"), Columbia International Stock
Fund, Inc. (the "International Stock Fund"), Columbia Special Fund, Inc. (the
"Special Fund"), Columbia Small Cap Fund, Inc. (the "Small Cap Fund"), Columbia
Real Estate Equity Fund, Inc. (the "Real Estate Fund"), Columbia U.S. Government
Securities Fund, Inc. (the "Government Bond Fund"), Columbia Fixed Income
Securities Fund, Inc. (the "Bond Fund"), Columbia National Municipal Bond Fund,
Inc. (the "National Municipal Bond Fund"), Columbia Municipal Bond Fund, Inc.
(the "Municipal Bond Fund"), Columbia High Yield Fund, Inc. (the "High Yield
Fund"), Columbia Balanced Fund, Inc. (the "Balanced Fund"), and Columbia Daily
Income Company (the "Money Market Fund") (each a "Fund" and together the
"Funds").

This Statement of Additional Information is not a Prospectus. It relates to
a Prospectus dated February xx, 1999 (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 and Semi-Annual Report to shareholders
are separate documents supplied with this Statement of Additional Information,
and the financial statements, accompanying notes and report of independent
auditors appearing in the Annual report are incorporated by reference into this
Statement of Additional Information.

<PAGE>
TABLE OF CONTENTS

Description of the Funds.................................................
Investment Restrictions..................................................
Management...............................................................
Investment Advisory and Other Fees Paid to Affiliates....................
Portfolio Transactions...................................................
Capital Stock and Other Securities.......................................
Purchase, Redemption and Pricing of Shares...............................
Custodians...............................................................
Accounting Services and Financial Statements.............................
Taxes....................................................................
Yield and Performance....................................................

February xx, 1999
- -------------------------------------------------------------------------------

2
<PAGE>
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------

Each of the Funds is an open-end, management investment company. Each Fund,
other than the 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 __ and __ of
this Statement of Additional Information.

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

The following is a description of the bond 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 bonds 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.

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.

3
<PAGE>
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.

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 payment.

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.

4
<PAGE>
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.

Certificates of Deposit
- -----------------------

Certificates of deposit are receipts issued by a U.S. bank in exchange for
the deposit of funds. The bank agrees to pay the amount deposited, plus
interest, to the bearer of the receipt on the date specified on the certificate.
Because the certificate is negotiable, it can be traded in the secondary market
before maturity. Under current FDIC regulations, $100,000 is the maximum
insurance payable on certificates of deposit issued to a Fund by any one bank.
Therefore, certificates of deposit purchased by a Fund may not be fully insured.

Bankers' Acceptances
- --------------------

Time drafts are drawn on a U.S. bank by an exporter or importer to obtain
funds to pay for specific merchandise or, less frequently, foreign exchange. The
draft is then "accepted" by the U.S. bank (the drawee), which in effect
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The face of the instrument specifies the dollar amount involved,
the maturity date, and the nature of the underlying transaction.

Letters of Credit
- -----------------

Letters of Credit are issued by banks and authorize the beneficiary to draw
drafts upon such banks for acceptance and payment under specified conditions.

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 requirement; (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

5
<PAGE>
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.

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 which are
secured with collateral consisting of mortgage-backed securities (see
"Collateralized Mortgage Obligations"), and in other types of mortgage-related
securities.

6
<PAGE>
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 life 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
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 and

7
<PAGE>
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/services 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

8
<PAGE>
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 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 bear current interest.
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

9
<PAGE>
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 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.

10
<PAGE>
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, 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
- ------------------------------------------

Certain of the 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

11
<PAGE>
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
only write call options that 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. A Fund expects, 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

12
<PAGE>
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.

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 Securities
- ------------------

Foreign securities include common stock and preferred stock, including
securities convertible into equity securities, American Depository Receipts
("ADR's") and Global Depository Receipts ("GDR's"). Foreign 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.

13
<PAGE>
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.

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.

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

14
<PAGE>
market 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 uses this hedging
technique in an attempt to insulate itself against possible losses and gains
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 which 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 Board of Directors of each Fund. There is no limit on
the portion of the Fund's assets that may be invested in repurchase agreements
with maturities of seven days or less.

Illiquid Securities
- -------------------

"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 the 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

15
<PAGE>
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 the Fund may invest that are
not readily marketable.

The International Stock Fund, the Small Cap Fund, the High Yield Fund and
the Real Estate 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 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, the 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

16
<PAGE>
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 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
as security coupled with an agreement to repurchase. Like all borrowings, a
dollar roll involves

17
<PAGE>
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 issuers 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.

Eurodollar and Yankee Obligations
- ---------------------------------

Eurodollar bank obligations are dollar-denominated certificates of deposit
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. Eurodollar and
Yankee obligations are subject to the same risks that pertain to domestic
issues, notably credit risk and interest rate risk. Additionally, Eurodollar
(and to a limited extent, Yankee) obligations are subject to many of the same
risks as investing in foreign securities.

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 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

18
<PAGE>
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 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.

19
<PAGE>
<TABLE>
Securities and Investment Practices

<CAPTION>
CCSF CGF CISF CSF CSCF CREF

<S> <C> <C> <C> <C> <C> <C>
Investment Grade Securities (Baa * * * * * O
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

Certificates of Deposit * * * * * *

Banker's Acceptances * * * * * *

Letters of Credit * * * * * *

Commercial Paper * * * * * *

U.S. Government Securities * * * * * *

Mortgage Backed Securities X X X X X O

CMO's X X X X X O

Asset Backed Securities X X X X X O

Floating or Variable Rate X X X X X O

Loan Transactions X X X X X O

Options & Financial Futures + + + + + +

Foreign Equities

Developed Countries 33.3%, + 10%, + + 33.3%, + 25%, + 20%, O

Emerging Countries X X + X X X

ADR's 33.3%, + 10%, + + 33.3%, + 25%, + X

Currency Contracts

Hedging X X 25% X X X

Speculation X X X X X X

Spot Basis + + + + + O

Repurchase Agreements * * * * * *

Restricted/Illiquid 5%, + 5%, + 10%, + 10%, + 10%, + 10%, +

Convertible Securities/Warrants O O + + + +

Unseasoned/less than three years 5%, O 5%, O 5%, + 10%, + 10%, + 5%, O

Small Companies O O O + + +

Dollar Roll Transactions X X X X X X

When Issued Securities + + + + + +

Eurodollar/Yankee Obligations X X X X X O

Zero Coupon/Pay in Kind X X X X X X

Real Estate X X X X X X

REIT's + + + + + +

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

Municipal Bonds X X X X X X

+ Permitted - Currently is being used and/or may be used in future
X Fundamental Policy/Not Permitted
O Permitted - Currently not in use and Fund does not intend to use in future
* Temporary Investment or cash management purposes
% Percentage of total or net assets that Fund may invest
</TABLE>

20
<PAGE>
<TABLE>
<CAPTION>
CUSG CFIS CMBF CNMBF CHYF CBF CDIC
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Grade Securities (Baa X + X X 35% 65% X
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 5% X X + 5% X

Certificates of Deposit X + * * * + +

Banker's Acceptances X + * * * + +

Letters of Credit X + * * * + +

Commercial Paper * * * * * * +

U.S. Government Securities + + 20% 20% * + +

Mortgage Backed Securities X + X X O + X

CMO's X + X X O + X

Asset Backed Securities X + X X O + X

Floating or Variable Rate X + X X O + X

Loan Transactions X O O X O X X

Options & Financial Futures X X X X + + X

Foreign Equities

Developed Countries X X X X X 33.3%, + X

Emerging Countries X X X X X X X

ADR's X X X X X 33.3%, + X

Currency Contracts

Hedging X X X X X X X

Speculation X X X X X X X

Spot Basis X X X X X + X

Repurchase Agreements * * * * * * *

Restricted/Illiquid X 10%, + X X 10%, + 5%, + X

Convertible Securities/Warrants X O X X + O X

Unseasoned/less than three years X 5%, O X X 5%, + 5%, O X

Small Companies X X X X O X X

Dollar Roll Transactions X + X X X + X

When Issued Securities + + + + + + +

Eurodollar/Yankee Obligations X X X X 10%, + X X

Zero Coupon/Pay in Kind X X X X O X X

Real Estate X X X X X X X

REIT's X X X X O X X

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

Municipal Bonds X X + + X X X

21
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- -------------------------------------------------------------------------------

The Prospectus sets forth the investment objectives and certain
restrictions 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).

22
<PAGE>
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.

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.

23
<PAGE>
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.

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 of continuous operation and equity securities which are not
readily marketable.

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

24
<PAGE>
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 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.

25
<PAGE>
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.

26
<PAGE>
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.

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.

27
<PAGE>
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.

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.

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.

28
<PAGE>
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.

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.

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

29
<PAGE>
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 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

30
<PAGE>
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, 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 of 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

31
<PAGE>
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 U.S. Government Securities Fund, Inc.

The Government Bond Fund may not:

1. Issue senior securities, bonds, or debentures.

2. Buy securities on margin, make short sales, or write put or call
options.

3. Borrow money in excess of five percent of its net asset value. Any
borrowing must only be temporarily from banks or other lending institutions for
extraordinary or emergency purposes.

4. Pledge, hypothecate, or transfer in any manner, as security for
indebtedness, any securities owned by the Fund, except as necessary in
connection with borrowings described in subparagraph 3 above. Any such pledge,
hypothecation, or transfer may not exceed 10 percent of the Fund's total assets,
at the lesser of cost or market value.

5. Underwrite securities of other issuers or acquire securities that must
be registered under the Securities Act of 1933, as amended, before they may be
sold to the public.

6. Purchase securities that are other than direct obligations of the U.S.
Government and repurchase agreements with respect to those obligations.

7. Invest more than 10 percent of total assets in repurchase agreements.

32
<PAGE>
8. Purchase or sell real estate or real estate contracts, including futures
contracts.

9. Purchase or sell commodities or commodities contracts, including futures
contracts.

10. Purchase securities with maturities in excess of three years from the
date of purchase.

11. Make loans to other persons except by purchase of debt obligations in
which the Fund may invest and repurchase agreements with respect to those
obligations.

12. Purchase securities of other investment companies.

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 (C/D's) and bankers' acceptances with maturities not
greater than one year. C/D's 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.

33
<PAGE>
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.

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. 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.

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.

34
<PAGE>
15. Buy any securities or other property on margin, or purchase or sell
puts or calls, or combinations thereof.

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.

35
<PAGE>
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.

Columbia Municipal Bond Fund, Inc.

The 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.

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.

36
<PAGE>
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.

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 (CD's) and bankers' acceptances with maturities not
greater than one year. CD's and banker's acceptances will be limited to domestic
banks which 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.

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.

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

37
<PAGE>
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.

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

38
<PAGE>
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 Balanced Fund, Inc.

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.

39
<PAGE>
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 assets 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.

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 Daily Income Company

The Money Market Fund 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

40
<PAGE>
exceed 33 1/3 percent of total assets and will be repaid from the proceeds
of sales of the Money Market 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 United States 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.

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.

41
<PAGE>
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 Money Market Fund 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 Standard & Poor's Corporation
("S&P") or Moody's Investor Services, Inc. ("Moody's"), is rated A-1 by S&P and

42
<PAGE>
Prime 1 by Moody's or, if not rated, is determined to be of comparable quality
by the Board of Directors of the Fund.

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 Money Market Fund to be of
comparable quality to the obligations described in paragraphs 2 or 3 above.
Currently these obligations are certificates of deposit, bankers' acceptances,
and letters of credit.

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

Each Fund is managed under the supervision of its Board of Directors, which
has responsibility for overseeing decision 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 polices, 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 Real Estate Fund, and the Small Cap Fund and the Columbia National Municipal
Bond Fund have been held since January 1994, August 1996, and January 1998
respectively, and except as otherwise indicated.

J. JERRY INSKEEP, JR.,*+ Chairman, President, and Director of each Fund;
Chairman, President, and Trustee of CMC Fund Trust ("CMC Trust"); Consultant to
Fleet Financial Group, Inc. ("Fleet") (since December 1997); formerly Chairman
and a Director of Columbia Funds Management Company (the "Adviser"), Columbia
Management Co., and Columbia Trust Company (the "Trust Company"); 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, Director of each Fund (since June 1994); Trustee of CMC Trust
(since December 1997). Mr. George, the former Investment Manager 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.

43
<PAGE>
THOMAS R. MACKENZIE, Director of each Fund; Trustee of CMC Trust (since December
1997); Founder and Director of Group Mackenzie (architecture, planning, interior
design, engineering). Mr. Mackenzie's business address is 0690 S.W. Bancroft
Street, Portland, Oregon 97201.

ROBERT J. MOORMAN, *Secretary of each Fund and CMC Trust (since January 1998);
Attorney with Stoel Rives LLP. Mr. Moorman's business address is 900 S.W. Fifth
Avenue, Suite 2600, Portland, Oregon 97204-1268.

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

*Mr. Inskeep and Mr. Moorman are "interested persons" as defined by the
Investment Company Act of 1940 and receive no directors fees or salaries from
the Funds.

+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.

The following table sets forth compensation received by the disinterested
directors for 1998. No officer of the Funds received any compensation from the
Funds in 1998.

COMPENSATION TABLE

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

Thomas R. Mackenzie Common Stock Fund
James C. George Growth Fund
International Stock Fund
Special Fund
Small Cap Fund
Real Estate Fund
Balanced Fund
Money Market Fund
Government Bond Fund
Bond Fund
Municipal Bond Fund
High Yield Fund

44
<PAGE>
Richard L. Woolworth** Common Stock Fund
Growth Fund
International Stock Fund
Special Fund
Small Cap Fund
Real Estate Fund
Balanced Fund
Money Market Fund
Government Bond Fund
Bond Fund
Municipal Bond Fund
High Yield Fund

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

***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.

Provident Distributors, Inc. ("PDI"), a registered securities broker and a
member of the National Association of Securities Dealers, Inc., 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, 1999, officers and directors of each of the respective Funds
owned of record or beneficially the aggregate number of shares of each of the
respective Funds as set forth below.

45
<PAGE>
Percentage of
Total Shares
Fund Shares Outstanding
---- ------ -------------

Common Stock Fund To be completed by amendment
Growth Fund
International Stock Fund
Special Fund
Small Cap Fund
Real Estate Fund
Government Bond Fund
Bond Fund
Municipal Bond Fund
National Municipal Bond Fund
High Yield Fund
Balanced Fund
Money Market Fund

At January 31, 1999, 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: [to be completed by Amendment]

- -------------------------------------------------------------------------------
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 what 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, broker's commissions, transaction
expenses, cost of stock certificates and any other expenses (including clerical
expenses) of issue, sale, repurchase, or redemption of its shares, expenses of
registering or qualifying its shares for sale, transfer taxes, 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:

46
<PAGE>
<TABLE>
<CAPTION>
Fund 1998 1997 1996
- ---- ---- ---- ----
<S> <C> <C> <C>
Common Stock Fund $ 4,158,273 $ 2,686,585
Growth Fund $ 7,019,161 $ 5,711,080
International Stock Fund $ 1,504,787 $ 1,157,227
Special Fund $12,373,140 $12,880,541
Small Cap Fund $ 547,892 $ 40,273
Real Estate Fund $ 864,343 $ 232,413
Government Bond Fund $ 194,230 $ 206,591
Bond Fund $ 1,821,809 $ 1,668,004
Municipal Bond Fund $ 1,952,213 $ 1,881,542
National Municipal Bond Fund --- ---
High Yield Fund $ 211,632 $ 150,432
Balanced Fund $ 3,826,628 $ 2,935,512
Money Market Fund $ 4,296,685 $ 4,009,904
</TABLE>

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 SW 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 1998, 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 First Data Investor Services Group, Inc. ("First Data") 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 First Data.

Fees paid to the Trust Company for services performed in 1998 under each
transfer agent agreement were $______ for the Common Stock Fund, $______ for the

47
<PAGE>
Growth Fund, $______ for the International Stock Fund, $______ for the Special
Fund, $______ for the Small Cap Fund, $______ for the Real Estate Fund, $______
for the U.S. Government Fund, $______ for the Bond Fund, $______ for the
Municipal Bond Fund, $______ for the High Yield Fund, $______ or the Balanced
Fund, and $______ for the Money Market Fund.

The Adviser, the Trust Company and CMC are indirect wholly owned
subsidiaries of Fleet Financial Group, Inc. ("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

48
<PAGE>
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.

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

49
<PAGE>
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:

<TABLE>
<CAPTION>
Fund 1998 1997 1996
- ---- ---- ---- ----
<S> <C> <C> <C>
Common Stock Fund $1,328,730 $1,266,686
Growth Fund $2,168,003 $1,606,969
International Stock Fund $ 864,293 $ 724,559
Special Fund $6,140,893 $4,280,666
Small Cap Fund $ 225,828 $ 19,164
Real Estate Fund $ 194,113 $ 114,020
Municipal Bond Fund
National Municipal Bond Fund
Balanced Fund $ 737,793 $ 572,539
</TABLE>

No brokerage commissions were paid by the Money Market Fund, the Government
Bond Fund, the Bond Fund or the High Yield Fund during the last three years. Of
the commissions paid in 1998, the Common Stock Fund paid $_______, the Growth
Fund paid $_______, the Special Fund paid $_______, the Small Cap Fund paid
$_______, the Real Estate Fund paid $_______, and the Balanced 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 place agency transactions with affiliated
broker-dealers, if the commissions are fair and reasonable and comparable to
commissions charged by non-affiliated qualified brokerage firms.

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

50
<PAGE>
of all their employees. The purpose of the Code is 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.

51
<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
Government Bond Fund 1986
Bond Fund 1983
National Municipal Bond Fund 1999
Municipal Bond Fund 1984
High Yield Fund 1993
Balanced Fund 1991
Money Market Fund 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.

52
<PAGE>
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 Money Market
Fund account is subject to the rules and regulations of the Money
Market Fund's commercial bank. These arrangements do not establish a
checking or other account between you and the bank for the purpose of
Federal Deposits Insurance or otherwise. The agreements and procedures
followed by the Money Market Fund relates solely to the bank's
intermediary status for redemption of investments in the Money Market
Fund.

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

53
<PAGE>
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 Money Market Fund
shares recently purchased by check, the redemption will not be
effective and proceeds will not be transmitted, unless the purchase of
these shares has cleared. 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 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.

54
<PAGE>
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
exchanges 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 Money
---------------------- Market Fund will be processed the day they are
received. Since the Money Market Fund 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.

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.

55
<PAGE>
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, Washington's Birthday, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.

For purposes of calculating the NAV of the 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 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 Money Market Fund 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 directors.
These values are based on cost, adjusted for amortization of discount or premium
and accrued interest,

56
<PAGE>
unless unusual circumstances indicate that another method of determining fair
value should be used.

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 price 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
- -------------------------------------------------------------------------------

United States National Bank of Oregon ("USNB" or "Custodian"), 321 SW Sixth
Avenue, Portland, Oregon 97208, acts as general custodian for each Fund, except
the International Stock Fund. USNB 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

57
<PAGE>
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.

- -------------------------------------------------------------------------------
ACCOUNTING SERVICES AND FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

The financial statements of each Fund for the year ended December 31, 1998,
the selected per share data and ratios under the caption "Financial Highlights,"
and the report of PricewaterhouseCoopers LLP, independent accountants, are
included in the 1998 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

58
<PAGE>
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 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.

59
<PAGE>
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, (2) that is entered into in the normal course of business primarily
to reduce the risk of price changes or currency fluctuations with respect to the
Fund's investments, and (3) results in ordinary income or loss. 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.

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 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
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.

Distributions properly designated by the 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 Municipal Bond

60
<PAGE>
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 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 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 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 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.

61
<PAGE>
"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 Municipal Bond Fund's and the National
Municipal Bond Fund's portfolio will be made by the Municipal Bond Fund and the
National 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 Municipal Bond Fund and 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 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 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 Municipal Bond Fund and 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 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
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 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

62
<PAGE>
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 Money Market Fund,
the Bond Fund, the Government 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. 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 6 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 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.

63
<PAGE>
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 Money Market Fund, 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.

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.

64
<PAGE>
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. 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

65
<PAGE>
distributions) and will be allowed a credit or deduction for, their pro rata
portions of the 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. 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
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

66
<PAGE>
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.

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.

Municipal Bond Fund. Individuals, trusts, and estates will not be subject
to the Oregon personal income tax on distributions from the 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, these individuals, trusts, and estates that are subject to
Oregon personal income tax also generally will be subject to the Oregon personal
income tax on distributions from the 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 Municipal Bond Fund, including income that is exempt for federal
purposes. Shares of the 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 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
Municipal Bond Fund expects to distribute its interest income so that it will
not be liable for Oregon corporation excise or income taxes.

The 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.

67
<PAGE>
Government Bond Fund. Individuals, trusts, and estates will not be subject
to Oregon personal income tax on dividends properly designated by the Government
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 Government Bond Fund, the amount of the tax-exempt dividends for
state tax purposes will be reduced. If a shareholder sells shares of the
Government 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 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.

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 Money Market Fund) will fluctuate
so that shares when redeemed may be worth more or less than their original cost.

68
<PAGE>
The Money Market Fund

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

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 determination of net change in the value of an account for purposes of
the Money Market Fund 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 Money Market Fund
includes unrealized 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 Common Stock Fund, the Real Estate Fund, the Balanced Fund,
and the Bond Funds

Current yields of the Common Stock Fund, the Real Estate Fund, the Balanced
Fund, the Government Bond Fund, the Bond Fund, the Municipal Bond Fund, and the
High Yield 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:

6
Yield = 2 [(a-b + 1) - 1]
---
cd

69
<PAGE>
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.

The 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.

The 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

70
<PAGE>
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 Government 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:

n
P(1+T) = 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.

71
<PAGE>
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.

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, Dow Jones, Russell, and
Nasdaq stock indices, the NAREIT Equity Index, and the Shearson Lehman and
Salomon bond indices, or, with respect to the International Stock Fund, a
suitable international index, such as the Morgan Stanley Capital International
Europe, Australia, 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
Money Market Fund) 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.

72
<PAGE>
COLUMBIA INTERNATIONAL STOCK FUND, INC.

PART C

OTHER INFORMATION

Item 23. Exhibits
--------

(a) Registrant's Articles of Incorporation.(1)

(b) Restated Bylaws.(1)

(d) Investment Advisory Contract.(1)

(e) Distribution Agreement.(1)

(f) Not applicable.

(g1) Custodian Contract with U S Bank N.A.(1)

(g2) Custodian Agreement with Morgan Stanley Trust Company.(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) Financial Data Schedule - To be filed by Post-Effective Amendment.

(o) Plan Adopting Multiple Classes of Shares - Not applicable.

(p) All Powers of Attorney.(1)

(1) Incorporated herein by reference to Post-Effective Amendment No. 6
to Registrant's Registration Statement on Form N-1A, File No. 33-48994
filed February 23, 1998.

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 Balanced Fund, Inc., Columbia Growth Fund, Inc., Columbia Small
Cap Fund, Inc., Columbia Daily Income Company, Columbia Fixed Income Securities
Fund, Inc., Columbia Municipal Bond Fund, Inc., Columbia U.S. Government
Securities Fund, Inc., Columbia Real Estate Equity Fund, Inc., Columbia National
Municipal Bond Fund, Inc., Columbia High Yield 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"). Fleet Financial Group, Inc.
("Fleet") is a publicly owned multibank holding company registered under the
Bank Holding Company Act of 1956. CMC, the Adviser, Columbia Trust Company and
Columbia Financial Center Incorporated are indirect wholly owned subsidiaries of
Fleet. See "Management" and "Investment Advisory and Other Fees paid to
Affiliates" in the Statement of Additional Information.

Item 25. Indemnification
---------------

Oregon law and the articles of incorporation and bylaws of the Registrant
provide that any director or officer of the Registrant may 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 not
prohibited by the Oregon Business Corporation Act and the Investment Company Act
of 1940 and related regulations and interpretations of the Securities and
Exchange Commission.

Insofar as reimbursement or indemnification for expenses incurred by a
director or officer in legal proceedings arising under the Securities Act of
1933 may be permitted by the above provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
reimbursement or indemnification is against public policy as expressed in the
Act and therefore unenforceable. In the event that any claim for indemnification
under the above provisions is asserted by an officer or director in connection
with the securities being registered, the Registrant, unless in the opinion of
its counsel the matter has already been settled by controlling precedent, will
(except insofar as such claim seeks reimbursement of expenses paid or incurred
by an officer or director in the successful defense of any such action, suit, or
proceeding or claim, issue, or matter therein) submit to a court of appropriate
jurisdiction the question whether 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.
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 by
Provident Distributors, Inc. is set forth below:

Name and Principal Positions and Offices Positions and Offices
Business Address with Provident Distributors with Registrant
- ------------------ --------------------------- ----------------------

Monroe J. Haegele CEO and Director None
Four Falls Corporate Center
6th Floor
West Conshohocken, PA 19428

Jane Haegele President None
Four Falls Corporate Center
6th Floor
West Conshohocken, PA 19428

Philip H. Rinnander Secretary None
Four Falls Corporate Center
6th Floor
West Conshohocken, PA 19428

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 and Chase Manhattan Bank, One Pierrepont
Plaza, Brooklyn, New York 11201.

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 this City of Portland
and State of Oregon on the 7th day of December, 1998.

COLUMBIA INTERNATIONAL STOCK FUND, INC.

By J. JERRY INSKEEP, JR.
-----------------------------
J. Jerry Inskeep, Jr.
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 7th day of December, 1998 by the following persons in the capacities
indicated.

(i) Principal executive officer:

J. JERRY INSKEEP, JR. President, Chairman, and Director
- ---------------------------------------
J. Jerry Inskeep, Jr.

(ii) Principal accounting and
financial officer:

J. JERRY INSKEEP, JR. President, Chairman, and Director
- ---------------------------------------
J. Jerry Inskeep, Jr.

(iii) Directors:

* JAMES C. GEORGE Director
- ---------------------------------------
James C. George

* THOMAS R. MACKENZIE Director
- ---------------------------------------
Thomas R. Mackenzie

* RICHARD L. WOOLWORTH Director
- ---------------------------------------
Richard L. Woolworth

* By J. JERRY INSKEEP, JR.
--------------------------------
J. Jerry Inskeep, Jr.
as Attorney-in-fact

C-4