UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4978
---------------------
Liberty - Stein Roe Funds Investment Trust
------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Jean S. Loewenberg, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
- ------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-426-3750
-------------------
Date of fiscal year end: September 30, 2003
------------------
Date of reporting period: March 31, 2003
-----------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Liberty Young InvestorSM
Fund
Semiannual Report
March 31, 2003
ELIMINATE CLUTTER IN TWO EASY STEPS.
POINT. CLICK. EDELIVERY
For more information about receiving your shareholder
reports electronically, call us at 800-345-6611.
To sign up for eDelivery, visit us online at
www.libertyfunds.com.
Liberty Young InvestorSM
Fund
Semiannual Report
March 31, 2003
ELIMINATE CLUTTER IN TWO EASY STEPS.
POINT. CLICK. EDELIVERY
To sign up for eDelivery, go to www.icsdelivery.com
Table of Contents
TO OUR SHAREHOLDERS ................................... 1
PORTFOLIO MANAGER'S REPORT ............................ 3
PERFORMANCE ........................................... 5
INVESTMENT PORTFOLIO .................................. 7
FINANCIAL STATEMENTS .................................. 9
NOTES TO FINANCIAL STATEMENTS ......................... 11
FINANCIAL HIGHLIGHTS .................................. 14
ACTIVITY PAGES ........................................I-VII
LOOK
FOR YOUR
NEWSLETTER
IN THIS REPORT!
- --------------------------------------------------------------------------------
DID YOU KNOW?
o Additional information about your fund's investments or a further
explanation of the concepts that are discussed in your report can be found
in a "Did You Know?" box. Keep an Eye out for these as you read your
shareholder report.
- --------------------------------------------------------------------------------
Not FDIC Insured
May Lose Value
No Bank Guarantee
TO OUR SHAREHOLDERS
Photo of: Joseph R. Palombo
Dear Shareholder:
In addition to reporting to you on the performance of the stock market and
Liberty Young Investor Fund, we have important changes to tell you about in this
semiannual report. The first -- and perhaps the most important -- is to announce
that we plan to make a change in the management of the portfolio. As of June 1,
2003, a team of portfolio managers will assume portfolio management
responsibilities under the leadership of Erik Gustafson and Greg Miller. Erik
has been the fund's co-manager since 1994 and Greg has been with the firm since
1985. Besides managing this fund, Greg manages or co-manages several other funds
within the organization. This change offers the opportunity to capitalize on the
strengths and nationwide resources of Columbia Management Group, Inc.
Also, as of June 1, 2003, the fund will also undergo a change in allocation that
we believe will help us create the level of consistency you are seeking as you
save for your child's long-term goals. We are balancing the growth strategy that
has been applied to the Young Investor Fund since its inception with an approach
that also includes value strategies within the fund. Although the fund will
continue to tilt toward growth and it will continue to invest in a range of
large, medium and small companies, we believe that the inclusion of value
strategies within the fund has the potential to improve consistency of
performance relative to the fund's benchmark. In addition to the change in
managers and in the fund's allocation, we are also committed to exploring ways
to reduce the fund's fees, which have an impact on fund performance. For
example, going forward you will receive semiannual and annual reports for the
fund instead of quarterly reports.
Later this year, we will relaunch younginvestor.com, which allows us to place
additional emphasis on electronic communications, in an effort to further reduce
the cost of paper, printing and postage while maintaining our commitment to
educate your child as a young investor. We know that you have been concerned
about fund performance in the extremely challenging market climate that has
existed for the past three years. We know that you're concerned about saving for
college. We want you to know that we are working hard to ensure that Liberty
Young Investor Fund can continue to play a significant role in helping you
achieve your goals.
I also want to announce that, effective April 1, 2003, six of the asset
management firms brought together when Columbia Management Group, Inc. was
formed were consolidated and renamed Columbia Management Advisors, Inc. This
consolidation does not affect the changes outlined
1
earlier, but is the next step in our efforts to create a consistent identity and
to streamline our organization. By consolidating these firms, we are able to
create a more efficient organizational structure and strengthen certain key
functions, such as research.
If you have questions about any of the changes in the fund, please call
Shareholder Services at 800-345-6611. For a recent copy of the fund's
prospectus, go to libertyfunds.com. As always, thank you for investing in
Liberty Young Investor Fund.
Sincerely,
/s/ Joseph R. Palombo
Joseph R. Palombo
MEET THE NEW PRESIDENT
Joseph R. Palombo, president and chairman of the Board of Trustees for Liberty
Funds, is also chief operating officer of Columbia Management Group, Inc. Mr.
Palombo has over 19 years of experience in the financial services industry.
Prior to joining Columbia Management, he was chief operating officer and chief
compliance officer for Putnam Mutual Funds. Prior to that, he was a partner at
Coopers & Lybrand. Mr. Palombo received his degree in economics/accounting from
the College of the Holy Cross, where he was a member of Phi Beta Kappa. He
earned his master's degree in taxation from Bentley College and participated in
the Executive Program at the Amos B. Tuck School at Dartmouth College.
NET ASSET VALUE PER SHARE as of 3/31/03 ($)
Class A 8.98
Class B 8.94
Class C 8.95
Class Z 15.65
Economic and market conditions frequently change. There is no assurance that the
trends described in this report will continue or commence.
2
Portfolio Manager's Report
Photo of: Mr. Gustafson
Mr. Gustafson, a senior vice president of Columbia Management Advisors, Inc.,
has been the fund's portfolio manager since 1994.
HOW DID THE MARKET AND FUND PERFORM DURING THE SIX-MONTH REPORTING PERIOD?
The market went up, but it definitely gave investors a bumpy ride. Technology
stocks led the market higher last fall as investors expected companies to spend
the money left in their budgets on technology purchases. But after a strong
start in January, the market turned down as worries about the war with Iraq and
the struggling US economy put a damper on investor confidence. During the
six-month period that ended March 31, 2003, the fund's class A shares returned
5.40% (this return was calculated before the sales charge was deducted). The
fund performed better than its benchmark. The S&P 500 Index returned 5.01%
during the same period. It also did better than other large-cap growth funds, as
measured by the Morningstar(R) Large Growth Category.1 The average return for
the fund's peer group was 3.54%.
WHY DID THE FUND DO SO WELL?
The fund benefited from diversification (see "Did You Know?" below). Our
investments in mid-sized growth companies did particularly well, because this
group enjoyed solid returns during the period. Investors favored mid-sized
companies because they have established businesses, which makes them somewhat
more predictable than small companies. Yet they have the potential to increase
their profits faster than larger companies. Small and mid-size companies were
also less susceptible to worries about war and the economy that tended to hurt
big companies. One strong performer during the period was Apollo Group, an
education company that runs the University of Phoenix, the largest private
university in the United States, as well as University of Phoenix Online2. As
more adults return to school to update their skills, Apollo Group's stock price
has risen.
DID THE FUND MAKE HEADWAY WITH ANY OTHER INVESTMENTS?
Financial and consumer-oriented stocks, such as retailers, hotels, restaurants
and entertainment companies, accounted for a large percentage of the fund's
investments by period end. Both areas did well during the six-month period and
that helped performance. Financial companies benefited from falling interest
rates, which helped in two ways. When interest rates fall, it costs financial
companies less to run their businesses. But because they continue to earn money
on loans that were made at higher interest rates,
- --------------------------------------------------------------------------------
DID YOU KNOW?
Diversification is an effective way to lower investment risk. You've probably
heard people say that it's not a good idea to "put all your eggs in one basket."
That's the thinking behind diversification. The idea is to spread your
investments across different asset classes--stocks, bonds and cash, for
example--and different industries--entertainment, technology and health care,
for example--and even companies of different sizes--small, medium or large. That
way, if one group does poorly, you won't be sunk because you won't have all your
eggs in one basket! You'll also have some investments in another group that may
do better.
- --------------------------------------------------------------------------------
1 (C)2003 by Morningstar, Inc. All rights reserved. The information contained
herein is the proprietary information of Morningstar, Inc., may not be
copied or redistributed for any purpose and may only be used for
noncommercial, personal purposes. The information contained herein is not
represented or warranted to be accurate, correct, complete or timely.
Morningstar, Inc. shall not be responsible for investment decisions,
damages or other losses resulting from the use of this information. Past
performance is no guarantee of future performance. Morningstar, Inc. has
not granted consent for it to be considered or deemed an "expert" under the
Securities Act of 1933.
3
- --------------------------------------------------------------------------------
DID YOU KNOW?
Microsoft is one of the two largest companies in the United States, with a
market capitalization of $263 billion. (To calculate market capitalization,
multiply Microsoft's stock price, which was $24.21 on March 31, 2003, times the
number of shares outstanding.) Microsoft grew by developing software that is
used in almost every desktop personal computer (or PC) on the planet! Most
likely the personal computers you use run with Microsoft's desktop operating
system, which is called Windows. Microsoft also makes many other software
products as well as gaming products such as X-Box. In case you're wondering,
General Electric is the other top name. The two swap positions from time to time
depending on their share prices. The fund owns stock in both companies.
- --------------------------------------------------------------------------------
they have the potential for higher profits. Two examples of financial companies
that did well were Citigroup, a global financial services leader, and SLM, a
student loan company.
In the consumer group, Mattel, the world's largest toy company, gained nicely,
thanks to a strong line-up of products that helped the company outshine the
competition. In addition, Mattel benefited by hiring a new management team that
has promised to be more straightforward in reporting to investors and also to
refocus its business. eBay, the online auctioneer, also did well. More people
and companies used its services, both in the United States and in Europe.
WHICH INVESTMENTS WERE DISAPPOINTING?
Food and drug retailers had a tough time. We owned Safeway, which is one of the
largest grocery chains in North America. It was hurt by increased competition
from Wal-Mart (which was not in the portfolio). We also owned Walgreen Co.,
which operates drug stores across the United States. The company suffered as the
weak economy hurt sales growth. In the pharmaceutical sector, Baxter
International tumbled as prices for its blood products fell, forcing the company
to lower its estimates for future profit growth.
DID YOU MAKE ANY CHANGES TO THE PORTFOLIO?
We didn't make any significant changes to the weighting of sectors and
industries in the fund. However, we did do some buying and selling. For example,
we purchased Carnival, the dominant company in the cruise business with its
well-known Carnival Cruise Lines. Since September 11, travel-related business
has dropped sharply as more people chose to stay closer to home. Carnival's
stock price tumbled, giving us an opportunity to buy this high-quality company
at a reasonable price. We expect Carnival's prospects to improve once the war
with Iraq ends, terrorism concerns ease and travel picks up. We also sold AT&T,
which is meeting more competition and losing profitability as long distance
prices decline.
HOW DO YOU EXPECT THE MARKET TO DO IN THE COMING SIX MONTHS?
We are cautiously optimistic that we are nearing the end of a terrible run for
stocks. As political tensions ease and the war with Iraq concludes, we expect
corporations to begin to invest in new equipment and to hire new employees. If
companies increase their spending, it could be just what the US economy needs to
get going again. And if companies start to report higher profits in a better
economic environment, investors may begin to feel more comfortable moving back
into the stock market. But no matter what happens to the market, we will
continue to focus on high quality companies of all sizes with demonstrated
financial strength, good management teams and leadership positions in their
respective markets.
An investment in the fund offers the potential for long-term growth, but also
involves certain risks. The fund may be affected by stock market fluctuations
that occur in response to economic and business developments. Since the fund is
actively managed, there can be no guarantee that the fund will continue to
maintain the holdings described in this report.
The price of small- and medium-sized companies may be more volatile than those
of larger, more established firms.
2 Holdings are disclosed as a percentage of net assets as of March 31, 2003
and are subject to change: Apollo Group (0.9%), Citigroup (3.1%), SLM
(1.9%), Mattel (3.0%), eBay (0.9%), Safeway (1.9%), Walgreen Co. (2.2%),
Baxter International (1.4%), Carnival (1.1%), Microsoft (4.5%), and General
Electric (2.8%).
4
PERFORMANCE
Top 10 holdings as of 3/31/03 (%)
Microsoft 4.5
Johnson & Johnson 3.8
Citigroup 3.1
Mattel 3.0
General Electric 2.8
Wells Fargo 2.6
Genentech 2.6
Texas Regional Bancshares 2.4
Moody's 2.4
AFLAC 2.3
Holdings are calculated as a percentage of net assets in the fund. Because the
fund is actively managed, there can be no guarantee the fund will continue to
maintain these holdings.
Sector breakdown as of 3/31/03 (%)
Consumer discretionary 20.6
Financials 18.5
Information technology 16.8
Health care 15.1
Industrials 9.4
Consumer staples 5.9
Materials 5.0
Short term/other 2.8
Energy 2.7
Utilities 2.6
Telecommunication services 0.6
Sector breakdowns are calculated as a percentage of net assets. Because the fund
is actively managed, there can be no guarantee that the fund will continue to
maintain this breakdown of these holdings in the future.
WHAT DO THE NUMBERS MEAN?
The AVERAGE ANNUAL TOTAL RETURN is given for the current reporting period and
periods equal to and greater than one year (for instance, the "five-year" and
"since inception" returns in the chart). This percentage represents the average
yearly return during the time period specified.
AVERAGE ANNUAL TOTAL RETURNS as of 3/31/03 (%)
Share class Class A Class B Class C Class Z
Inception 07/29/02 07/29/02 07/29/02 04/29/94
- --------------------------------------------------------------------------------------------------------------------
WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
SALES SALES SALES SALES SALES SALES SALES
CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE
- --------------------------------------------------------------------------------------------------------------------
6-month (cumulative) 5.40 -0.66 5.05 0.05 5.17 4.17 5.46
- --------------------------------------------------------------------------------------------------------------------
1-year -26.84 -31.03 -27.16 -30.80 -27.08 -27.81 -26.83
- --------------------------------------------------------------------------------------------------------------------
5-year -6.70 -7.80 -6.78 -7.10 -6.76 -6.76 -6.70
- --------------------------------------------------------------------------------------------------------------------
Since inception 8.34 7.63 8.29 8.29 8.30 8.30 8.34
- --------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE CANNOT PREDICT FUTURE INVESTMENT RESULTS. MUTUAL FUND
PERFORMANCE CHANGES OVER TIME. PLEASE VISIT LIBERTYFUNDS.COM FOR DAILY
PERFORMANCE UPDATES. The principal value and investment returns will fluctuate,
resulting in a gain or loss on sale. All results shown assume reinvestment of
distributions. The "with sales charge" returns include the maximum 5.75% sales
charge for class A shares, the appropriate class B contingent deferred sales
charge for the holding period after purchase as follows: first year - 5%, second
year - 4%, third year - 3%, fourth year - 3%, fifth year - 2%, sixth year - 1%,
thereafter - 0% and the class C contingent deferred sales charge of 1% for the
first year only. Performance results reflect any voluntary waivers or
reimbursement of fund expenses by the advisor or its affiliates. Absent these
waivers or reimbursement arrangements, performance results would have been
lower. Performance for different share classes varies based on differences in
sales charges and fees associated with each class.
Class A, B, and C share performance information includes returns for the fund's
class Z shares (the oldest existing fund class) for periods prior to the
inception of the newer class shares. These class Z share returns are not
restated to reflect any expense differential (e.g., Rule 12b-1 fees) between
class Z shares and the newer class shares. Had the expense differential been
reflected, the returns for the periods prior to the inception of the newer class
shares would have been lower.
ANSWERS TO INVESTING PUZZLER (PAGE 3 OF ACTIVITY PAGES)
Across: 1. Share, 5. Bull, 6. Fund, 8. CD, 9. Wall, 12. Dividend
Down: 1. Stock, 2. Return, 3. Profit, 4. Sell, 6. Fed, 7. Dow, 10. Load, 11. NAV
5
PERFORMANCE
- --------------------------------------------------------------------------------
DID YOU KNOW?
US stocks reached a high in March 2000 and have headed downhill since then. In
fact, the past three years have been among the worst in the stock market's
history. For the first time in 60 years, the S&P 500 posted losses for three
years in a row. The total value of US stocks plummeted from $17 trillion in
March 2000 to roughly $10 trillion by the end of 2002. No one knows when and how
fast stocks will recover. However, we do know that the market has always turned
around and, over long periods of time, the average annual return for the stock
market has been 10.1%.
Sources: Wall Street Journal, Jan. 2, 2003 and Ibbotson Associates.
- --------------------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT
4/29/94 - 3/31/03 ($)
WITHOUT WITH
SALES CHARGE SALES CHARGE
Class A 20,438 19,263
Class B 20,347 20,347
Class C 20,370 20,370
Class Z 20,439 n/a
Mountain chart:
Class A shares without sales charge: $20,438
Class A shares with sales charge: $19,263
S&P 500 Index: $22,045
Class A shares without sales charge S&P 500 Index Class A shares with sales charge
10000 10000 9425
10040 10163 9462.7
9699.64 9914.01 9141.91
9859.69 10239.2 9292.76
10299.4 10658 9707.21
10239.7 10397.9 9650.91
10659.5 10630.8 10046.6
10449.5 10243.9 9848.68
10737.9 10395.5 10120.5
10778.7 10664.7 10159
11031 11079.6 10396.7
11413.7 11406.4 10757.4
11545 11741.8 10881.2
11736.6 12210.3 11061.8
12723.7 12493.5 11992.1
13489.7 12907.1 12714
13661 12939.4 12875.5
14395.9 13485.4 13568.2
14103.7 13436.8 13292.7
14909 14025.4 14051.8
15010.4 14296.1 14147.3
15597.3 14782.1 14700.5
15806.3 14919.6 14897.5
16465.4 15062.8 15518.7
17575.2 15284.3 16564.6
18422.3 15677.1 17363
18777.9 15736.6 17698.2
17532.9 15041.1 16524.8
18318.4 15358.4 17265.1
19510.9 16221.6 18389
19782.1 16669.3 18644.6
20557.6 17927.8 19375.5
20278 17572.9 19112
21220.9 18669.4 20000.7
20669.2 18816.9 19480.7
19292.6 18045.4 18183.3
20158.8 19120.9 18999.7
21719.1 20289.2 20470.3
22759.5 21192.1 21450.8
24341.3 22876.8 22941.6
23506.4 21595.7 22154.7
24655.8 22777 23238.1
23940.8 22016.3 22564.2
24536.9 23035.6 23126.1
25606.7 23431.8 24134.4
25760.4 23689.6 24279.2
27826.4 25397.6 26226.3
28903.2 26698 27241.3
29232.7 26970.3 27551.9
28233 26506.4 26609.6
29847.9 27582.6 28131.7
28868.9 27290.2 27208.9
23513.7 23346.8 22161.7
24931.6 24843.3 23498
26646.9 26860.6 25114.7
28219.1 28488.3 26596.5
30123.8 30129.2 28391.7
31521.6 31388.6 29709.1
30405.7 30412.4 28657.4
32783.4 31628.9 30898.4
33616.1 32853 31683.2
32456.4 32077.6 30590.1
34043.5 33851.5 32086
32242.6 32798.8 30388.7
31588.1 32634.8 29771.8
30890 31740.6 29113.8
33435.3 33749.8 31512.8
35551.8 34434.9 33507.5
39665.1 36459.6 37384.4
38744.9 34629.4 36517.1
42293.9 33974.9 39862
43545.8 37297.6 41041.9
39953.3 36175 37656
36265.6 35433.4 34180.3
39620.2 36305 37342
38970.4 35738.7 36729.6
42871.3 37958 40406.2
40869.2 35953.9 38519.3
39516.5 35802.9 37244.3
34557.2 32981.6 32570.1
35680.3 33143.2 33628.6
37442.9 34319.8 35289.9
33590 31193.3 31658.6
30993.5 29218.7 29211.4
33931.7 31486.1 31980.6
33721.3 31697 31782.3
32480.4 30926.8 30612.7
30352.9 30623.7 28607.6
28304.1 28709.7 26676.6
24491.5 26392.9 23083.2
25326.7 26897 23870.4
27585.8 28960 25999.6
27834.1 29214.8 26233.6
27077 28788.3 25520.1
26359.5 28232.7 24843.8
27925.2 29294.2 26319.5
26227.4 27519 24719.3
25705.4 27318.1 24227.4
23864.9 25373 22492.7
21774.4 23396.5 20522.3
21661.1 23548.6 20415.6
19386.7 20991.2 18272
20957 22836.3 19752
22526.7 24179.1 21231.4
21001.7 22759.8 19794.1
20569 22165.7 19386.3
20250.2 21833.3 19085.8
20438 22045 19263
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale. The above illustration assumes a $10,000 investment made on April 29,
1994, and reinvestment of income and capital gains distributions. The S&P 500
Index is an unmanaged index that tracks the performance of 500 widely held,
large-capitalization US stocks. Unlike the fund, an index is not an investment,
does not incur fees and is not professionally managed. It is not possible to
invest directly in an index. Securities in the fund may not match those in the
index. Index performance is from April 30, 1994.
6
INVESTMENT PORTFOLIO
March 31, 2003 (Unaudited)
COMMON STOCKS-97.2% SHARES VALUE
- ----------------------------------------------------------
CONSUMER DISCRETIONARY - 20.6%
Auto Components - 2.0%
Gentex Corp. (a) 525,000 $ 13,356,000
------------
Hotels, Restaurants & Leisure - 5.3%
Carnival Corp. 325,000 7,835,750
Cedar Fair, L.P. 315,000 7,849,800
Leapfrog Enterprises, Inc. (a) 150,000 3,576,000
McDonald's Corp. 775,000 11,206,500
Panera Bread Co., Class A (a) 200,000 6,098,000
------------
36,566,050
------------
Internet & Catalog Retail - 0.9%
eBay, Inc. (a) 75,000 6,396,750
------------
Leisure Equipment & Products - 3.0%
Mattel, Inc. 900,000 20,250,000
------------
Media - 5.0%
Comcast Corp. (a) 350,000 9,621,500
Hispanic Broadcasting Corp. (a) 700,000 14,462,000
Viacom, Inc., Class B (a) 280,000 10,225,600
------------
34,309,100
------------
Motorcycle Manufacturers - 0.9%
Harley Davidson, Inc. 150,000 5,956,500
------------
Multi-Line Retail - 1.0%
Kohl's Corp. (a) 125,000 7,072,500
------------
Specialty Retail - 2.5%
Home Depot, Inc. 500,000 12,180,000
Tiffany & Co. 200,000 5,000,000
------------
17,180,000
------------
- ----------------------------------------------------------
CONSUMER STAPLES - 5.9%
Beverages - 1.8%
PepsiCo, Inc. 300,000 12,000,000
------------
Food & Drug Retailing - 4.1%
Safeway, Inc. (a) 700,000 13,251,000
Walgreen Co. 500,000 14,740,000
------------
27,991,000
------------
- ----------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------
ENERGY - 2.7%
Energy Equipment & Services - 2.7%
BJ Services Co. (a) 200,000 $ 6,878,000
GlobalSantaFe Corp. 550,000 11,357,500
------------
18,235,500
------------
- ----------------------------------------------------------
FINANCIALS - 18.5%
Banks - 5.0%
Texas Regional Bancshares,
Inc., Class A 539,000 16,272,410
Wells Fargo & Co. 400,000 17,996,000
------------
34,268,410
------------
Diversified Financials - 10.0%
Citigroup, Inc. 625,000 21,531,250
MBNA Corp. 600,000 9,030,000
Moody's Corp. 350,000 16,180,500
Providian Financial Corp. (a) 1,300,000 8,528,000
SLM Corp. 115,000 12,755,800
------------
68,025,550
------------
Insurance - 2.3%
AFLAC, Inc. 500,000 16,025,000
------------
Multi-Sector Holdings - 1.2%
iShares Russell 2000 Growth
Index Fund 100,000 3,825,000
S&P 500 Depositary Receipts 50,000 4,237,000
------------
8,062,000
------------
- ----------------------------------------------------------
HEALTH CARE - 15.1%
Biotechnology - 4.1%
Genentech, Inc. (a) 500,000 17,505,000
MedImmune, Inc. (a) 325,000 10,669,750
------------
28,174,750
------------
Health Care Equipment & Supplies - 3.7%
Baxter International, Inc. 525,000 9,786,000
Biomet, Inc. 500,000 15,325,000
------------
25,111,000
------------
See notes to investment portfolio.
7
Investment Portfolio (continued)
March 31, 2003 (Unaudited)
COMMON STOCKS(CONTINUED) SHARES VALUE
- ----------------------------------------------------------
HEALTH CARE (CONTINUED)
Pharmaceuticals - 7.3%
Johnson & Johnson 450,000 $ 26,041,500
Pfizer, Inc. 400,000 12,464,000
Wyeth 300,000 11,346,000
------------
49,851,500
------------
- ----------------------------------------------------------
INDUSTRIALS - 9.4%
Airlines - 1.5%
Southwest Airlines Co. 700,000 10,052,000
------------
Commercial Services & Supplies - 5.1%
Apollo Group, Inc. (a) 120,000 5,988,000
Fiserv, Inc. (a) 420,000 13,221,600
Paychex, Inc. 570,000 15,657,900
------------
34,867,500
------------
Industrial Conglomerates - 2.8%
General Electric Co. 750,000 19,125,000
------------
- ----------------------------------------------------------
INFORMATION TECHNOLOGY - 16.8%
Communications Equipment - 3.4%
Cisco Systems, Inc. (a) 1,000,000 12,980,000
Corning, Inc. (a) 1,050,000 6,132,000
Motorola, Inc. 500,000 4,130,000
------------
23,242,000
------------
Computers & Peripherals - 2.4%
Dell Computer Corp. (a) 300,000 8,193,000
Network Appliance, Inc. (a) 720,000 8,056,800
------------
16,249,800
------------
Internet Software & Services - 0.6%
Overture Services, Inc. (a) 300,000 4,551,000
------------
Semiconductor Equipment & Products - 2.8%
Maxim Integrated Products,
Inc. 380,000 13,725,600
Microchip Technology, Inc. 275,000 5,472,500
------------
19,198,100
- ----------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------
Software - 7.6%
BEA Systems, Inc. (a) 675,000 $ 6,878,250
Intuit, Inc. (a) 235,000 8,742,000
Microsoft Corp. 1,270,000 30,746,700
Oracle Corp. (a) 500,000 5,424,500
------------
51,791,450
------------
- ----------------------------------------------------------
MATERIALS - 5.0%
Chemicals - 3.0%
Minerals Technologies, Inc. 300,000 11,433,000
Sigma Aldrich Corp. 200,000 8,898,000
------------
20,331,000
------------
Metals & Mining - 2.0%
Alcoa, Inc. 700,000 13,566,000
------------
- ----------------------------------------------------------
TELECOMMUNICATION SERVICES - 0.6%
Diversified Telecommunication Services - 0.6%
Level 3 Communications,
Inc. (a) 850,000 4,386,000
------------
- ----------------------------------------------------------
UTILITIES - 2.6%
Gas Utilities - 2.3%
Kinder Morgan, Inc. 350,000 15,750,000
------------
Multi-Utilities & Unregulated Power - 0.3%
Calpine Corp. (a) 720,000 2,376,000
------------
TOTAL COMMON STOCKS
(cost of $689,039,349) 664,317,460
------------
SHORT-TERM OBLIGATION - 3.2% PAR
- ----------------------------------------------------------
Repurchase agreement with State
Street Bank & Trust, dated
03/31/03, due 04/01/03 at 1.240%,
collateralized by a U.S. Treasury
Bond maturing 11/15/26, market
value $22,456,400 (repurchase
proceeds $22,016,758)
(cost of $22,016,000) $22,016,000 22,016,000
------------
TOTAL INVESTMENTS - 100.4%
(cost of $711,055,349)(b) 686,333,460
------------
OTHER ASSETS & Liabilities, Net - (0.4)% (2,719,001
- ----------------------------------------------------------
NET ASSETS - 100.0% $683,614,459
============
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
See notes to financial statements.
8
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2003 (Unaudited)
ASSETS:
Investments, at cost $ 711,055,349
------------
Investments, at value $ 686,333,460
Cash 394
Receivable for:
Investments sold 56,472,535
Fund shares sold 142,213
Interest 758
Dividends 299,024
Expense reimbursement due from Advisor 18,709
Deferred Trustees' compensation plan 4,494
Other assets 26,054
------------
Total Assets 743,297,641
------------
LIABILITIES:
Payable for:
Investments purchased 57,094,522
Fund shares repurchased 625,873
Management fee 343,104
Administration fee 108,364
Transfer agent fee 1,485,565
Pricing and bookkeeping fees 21,161
Trustees' fee 99
Deferred Trustees' fee 4,494
------------
Total Liabilities 59,683,182
------------
NET ASSETS $ 683,614,459
============
COMPOSITION OF NET ASSETS:
Paid-in capital $ 999,936,565
Accumulated net investment loss (1,697,294)
Accumulated net realized loss (289,902,923)
Net unrealized depreciation on investments (24,721,889)
------------
NET ASSETS $ 683,614,459
============
CLASS A:
Net assets $ 84,037,024
Shares outstanding 9,353,677
------------
Net asset value per share $ 8.98(a)
============
Maximum offering price per share
($8.98/0.9425) $ 9.53(b)
============
CLASS B:
Net assets $ 6,273,585
Shares outstanding 701,506
============
Net asset value and offering price
per share $ 8.94(a)
============
CLASS C:
Net assets $ 521,531
Shares outstanding 58,291
------------
Net asset value and offering price
per share $ 8.95(a)
============
CLASS Z:
Net assets $ 592,782,319
Shares outstanding 37,876,147
------------
Net asset value, offering and redemption
price per share $ 15.65
============
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
STATEMENT OF OPERATIONS
For the Six Months Ended
March 31, 2003 (Unaudited)
INVESTMENT INCOME:
Dividends $ 3,654,229
Interest 179,890
------------
Total Investment Income 3,834,119
------------
EXPENSES:
Management fee 2,067,609
Administration fee 654,554
Distribution fee:
Class A 43,592
Class B 25,077
Class C 1,910
Service fee:
Class A 108,980
Class B 8,359
Class C 637
Pricing and bookkeeping fees 130,247 Transfer agent fee:
Class A 420,580
Class B 32,250
Class C 2,458
Class Z 2,099,538
Trustees' fee 11,961
Custody fee 4,749
Other expenses 218,755
------------
Total Expenses 5,831,256
Fees and expenses waived or
reimbursed by Advisor -
Classes A, B and C (285,047)
Fees waived by Distributor - Class A (21,796)
Custody earnings credit (289)
------------
Net Expenses 5,524,124
------------
Net Investment Loss (1,690,005)
------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (61,289,330)
Net change in unrealized appreciation/
depreciation on investments 99,345,696
------------
Net Gain 38,056,366
------------
Net Increase in Net Assets
from Operations $ 36,366,361
============
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
INCREASE (DECREASE) MARCH 31, SEPTEMBER 30,
IN NET ASSETS: 2003 2002 (a)
- ----------------------------------------------------------
OPERATIONS:
Net investment loss $ (1,690,005) $ (5,490,434)
Net realized loss on
investments (61,289,330) (120,567,041)
Net change in unrealized
appreciation/depreciation
on investments 99,345,696 (28,170,574)
-------------- --------------
Net Increase (Decrease)
from Operations 36,366,361 (154,228,049)
-------------- --------------
SHARE TRANSACTIONS:
Class A:
Subscriptions 4,916,733 1,197,794
Proceeds received in
connection with
mergers -- 88,782,053
Redemptions (8,009,267) (3,416,160)
-------------- --------------
Net Increase
(Decrease) (3,092,534) 86,563,687
-------------- --------------
Class B:
Subscriptions 336,021 159,375
Proceeds received in
connection with
mergers -- 7,418,537
Redemptions (896,841) (755,201)
-------------- --------------
Net Increase
(Decrease) (560,820) 6,822,711
-------------- --------------
Class C:
Subscriptions 92,580 34,864
Proceeds received in
connection with
mergers -- 488,343
Redemptions (88,016) (8,207)
-------------- --------------
Net Increase 4,564 515,000
-------------- --------------
Class Z:
Subscriptions 25,858,504 80,960,112
Proceeds received in
connection with
mergers -- 8,904,524
Redemptions (37,629,798) (113,567,847)
-------------- --------------
Net Decrease (11,771,294) (23,703,211)
-------------- --------------
Net Increase (Decrease)
from Share
Transactions (15,420,084) 70,198,187
-------------- --------------
Total Increase (Decrease)
in Net Assets 20,946,277 (84,029,862)
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
INCREASE (DECREASE) MARCH 31, SEPTEMBER 30,
IN NET ASSETS: 2003 2002 (A)
- ----------------------------------------------------------
NET ASSETS:
Beginning of period $662,668,182 $746,698,044
-------------- --------------
End of period (including
accumulated net
investment loss of
$(1,697,294) and
$(7,289), respectively) $683,614,459 $662,668,182
============== ==============
CHANGES IN SHARES:
Class A:
Subscriptions 533,324 115,387
Issued in connection
with mergers -- 9,930,878
Redemptions (870,342) (355,570)
-------------- --------------
Net Increase
(Decrease) (337,018) 9,690,695
-------------- --------------
Class B:
Subscriptions 36,546 16,534
Issued in connection
with mergers -- 829,814
Redemptions (99,327) (82,061)
-------------- --------------
Net Increase
(Decrease) (62,781) 764,287
-------------- --------------
Class C:
Subscriptions 10,225 3,642
Issued in connection
with mergers -- 54,624
Redemptions (9,285) (915)
-------------- --------------
Net Increase 940 57,351
-------------- --------------
Class Z:
Subscriptions 1,612,373 4,158,212
Issued in connection
with mergers -- 571,682
Redemptions (2,358,918) (5,908,823)
-------------- --------------
Net Decrease (746,545) (1,178,929)
-------------- --------------
(a) On July 29, 2002, the Stein Roe Young Investor Fund was redesignated Liberty
Young Investor Fund, Class Z shares. Class A, Class B and Class C shares
were initially offered on July 29, 2002.
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003 (UNAUDITED)
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Liberty Young Investor Fund (the "Fund"), formerly Stein Roe Young Investor
Fund, a series of Liberty-Stein Roe Funds Investment Trust (the "Trust"), is a
diversified portfolio of a Massachusetts business trust registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment goal is to seek long-term growth of capital. The
Fund also has an educational objective to teach investors, especially young
people, about basic economic principles and personal finance through a variety
of educational materials prepared and paid for by the Fund. The Fund may issue
an unlimited number of shares. The Fund currently offers four classes of shares:
Class A, Class B, Class C and Class Z. Prior to July 27, 2002, the Fund had a
single class of shares. On that date the outstanding shares of the Fund were
redesignated Class Z shares. On July 29, 2002, the Fund commenced offering Class
A, Class B and Class C shares. Class A shares are sold with a front-end sales
charge. A 1.00% contingent deferred sales charge is assessed to Class A shares
purchased without an initial sales charge on redemptions made within eighteen
months on an original purchase of $1 million to $25 million. Class B shares are
subject to a contingent deferred sales charge. Class B shares will convert to
Class A shares in three, four or eight years after purchase, depending on the
program under which shares were purchased. Class C shares are subject to a
contingent deferred sales charge on redemptions made within one year after
purchase. Class Z shares are offered continuously at net asset value. There are
certain restrictions on the purchase of Class Z shares, as described in the
Fund's prospectus.
On July 26, 2002, Liberty Growth Investor Fund ("LGIF") and Liberty Young
Investor Fund ("LYIF") merged as follows into Stein Roe Young Investor Fund,
which subsequently changed its name to Liberty Young Investor Fund:
Net Assets Unrealized
Shares Issued Received Depreciation1
------------- ----------- ------------
LGIF 1,692,409 $18,923,802 $(3,262,765)
LYIF 9,694,589 $86,669,655 $(14,588,637)
Net Assets of
Acquired Net Assets
Net Assets Funds of the Fund
of the Fund Immediately Immediately
Prior Prior to After
to Combination Combination Combination
-------------- ------------- ------------
$597,382,198 $105,593,457 $702,975,655
1 Unrealized depreciation is included in the Net Assets Received amount shown
above.
Prior to July 27, 2002, the Fund, LGIF and LYIF invested substantially all of
their assets in SR&F Growth Investor Portfolio (the "Portfolio") as part of a
master/feeder structure. The Portfolio allocated income, expenses, realized and
unrealized gains (losses) to each investor on a daily basis, based on methods
approved by the Internal Revenue Service. Prior to the completion of the above
mergers, the Portfolio transferred its assets to the Fund, LGIF and LYIF and
liquidated.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS:
Equity securities generally are valued at the last sale price or, in the case of
unlisted or listed securities for which there were no sales during the day, at
the current quoted bid price.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value under
procedures approved by the Board of Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS:
All income, expenses (other than Class A, Class B and Class C transfer agent,
service and distribution fees and Class Z transfer agent fees), and realized and
unrealized gains (losses) are allocated to each class proportionately on a daily
basis for purposes of determining the net asset value of each class.
Per share data and ratios are calculated by adjusting the expense and net
investment income (loss) per share data and ratios for the Fund for the period
by the transfer agent, service and distribution fees per share applicable to
Class A, Class B, Class C and Class Z shares.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2003 (UNAUDITED)
FEDERAL INCOME TAXES:
Consistent with the Fund's policy to qualify as a regulated investment company
and to distribute all of its taxable income, no federal income tax has been
accrued.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to shareholders are recorded on the ex-date.
OTHER:
Interest income is recorded on the accrual basis. Corporate actions and dividend
income are recorded on the ex-date (except for certain foreign securities which
are recorded as soon after ex-date as the Fund becomes aware of such), net of
non-reclaimable tax withholdings. Where a high level of uncertainty as to
collection exists, income on securities is recorded net of all tax withholdings
with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remain sufficient
to protect the Fund. The Fund may experience costs and delays in liquidating the
collateral if the issuer defaults or enters into bankruptcy.
NOTE 2. FEDERAL TAX INFORMATION
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for deferral of
losses on wash sales, post-October losses, capital loss carryforwards and
non-deductible expenses. Reclassification are made to the Fund's capital
accounts to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
The following capital loss carryforwards, determined as of September 30, 2002,
are available to reduce taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code:
Year of Capital Loss
Expiration Carryforward
---------- ------------
2007 $ 1,272,586
2008 273,885
2009 35,196,902
2010 72,558,985
------------
Total $109,302,358
============
Of these carryforwards, $25,802,098 (expiring 9/30/2009) and $10,941,275
($1,272,586 expiring 9/30/2007, $273,885 expiring 9/30/2008, and $9,394,804
expiring 9/30/2009) were obtained upon the Fund's mergers with Liberty Young
Investor Fund and Liberty Growth Investor Fund, respectively (See Note 1). In
addition, from November 1, 2001 through September 30, 2002 the Fund (including
amounts obtained upon the Fund's mergers with Liberty Young Investor Fund and
Liberty Growth Investor Fund) incurred $119,043,211 of net realized capital
losses. To the extent permitted by tax regulations, the Fund intends to elect to
defer these losses and treat them as arising in the fiscal year ended September
30, 2003.
Utilization of Liberty Young Investor Fund's and Liberty Growth Investor Fund's
losses could be subject to merger limitations imposed by the Internal Revenue
Code.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE:
Stein Roe & Farnham Incorporated (the "Advisor") is the investment Advisor of
the Fund and receives a monthly fee as follows:
Average Daily Net Assets Annual Fee Rate
------------------------ ----------------
First $500 million 0.60%
Next $500 million 0.55%
Over $1 billion 0.50%
ADMINISTRATION FEE:
The Advisor also provides accounting and other services for a monthly fee paid
by the Fund as follows:
Average Daily Net Assets Annual Fee Rate
------------------------ ----------------
First $500 million 0.200%
Next $500 million 0.150%
Over $1 billion 0.125%
PRICING AND BOOKKEEPING FEES:
The Advisor is responsible for providing pricing and bookkeeping services to the
Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the
"Outsourcing Agreement"), the Advisor has delegated those functions to State
Street Bank and Trust Company ("State Street"). The Advisor pays fees to State
Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, the Advisor receives
from the Fund an annual flat fee of $10,000, paid monthly, and in any month that
the Fund's average daily net assets are more than $50 million, a monthly fee
equal to the average daily net assets of the Fund for that month multiplied by a
fee rate that is calculated by taking into account the fees payable to State
Street under the Outsourcing Agreement. For the six months ended March 31, 2003,
the annualized net
12
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2003 (UNAUDITED)
asset based fee rate was 0.036%. The Fund also pays out-of-pocket costs for
pricing services.
TRANSFER AGENT FEE:
Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of the
Advisor, provides shareholder services for a monthly fee equal to 0.06% annually
of the aggregate of Class A, Class B and Class C's average daily net assets plus
charges based on the number of shareholder accounts and transactions for those
classes. This expense structure also applies to Class Z shares individually.
The Transfer Agent also receives reimbursement for certain out-of-pocket
expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of the
Advisor, is the Fund's principal underwriter. For the six month ended March 31,
2003, the Fund has been advised that the Distributor retained net underwriting
discounts of $55,938 on sales of the Fund's Class A shares and received
contingent deferred sales charges ("CDSC") of $31,708, $20,224 and $1 on Class
A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan (the "Plan"), which requires the payment of a
monthly service fee to the Distributor equal to 0.25% annually of the average
daily net assets attributable to Class A, Class B and Class C shares as of the
20th of each month. The Plan also requires the payment of a monthly distribution
fee to the Distributor equal to 0.10% annually of the average daily net assets
attributable to Class A shares and 0.75% annually of the average daily net
assets attributable to Class B and Class C shares. The Distributor has
voluntarily agreed to waive a portion of the Class A share distribution fee so
that it will not exceed 0.05% annually.
The CDSC and the fees received from the Plan are used principally as repayment
to the Distributor for amounts paid by the Distributor to dealers who sold such
shares.
EXPENSE LIMITS:
Effective July 29, 2002, the Advisor has voluntarily agreed to reimburse the
Fund for certain expenses so that the transfer agent fees (excluding
out-of-pocket expenses) for each of Class A, B and C shares will not exceed
0.10% annually of the Class's average daily net assets.
OTHER:
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor or its affiliates.
The Fund's Independent Trustees may participate in a deferred compensation plan
which may be terminated at any time. Obligations of the plan will be paid solely
out of the Fund's assets.
The Fund has an agreement with its custodian bank under which $289 of custody
fees were reduced by balance credits for the six months ended March 31, 2003.
The Fund could have invested a portion of the assets utilized in connection with
the expense offset arrangement in an income-producing asset if it had not
entered into such an agreement.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
For the six months ended March 31, 2003, purchases and sales of investments,
other than short-term obligations, were $184,398,937 and $192,887,979,
respectively.
Unrealized appreciation (depreciation) at March 31, 2003 based on cost of
investments for both financial statement and federal income tax purposes, was:
Gross unrealized appreciation $ 108,730,643
Gross unrealized depreciation (133,452,532)
-------------
Net unrealized depreciation $ (24,721,889)
-------------
OTHER:
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 5. LINE OF CREDIT
The Fund and other affiliated funds participate in a $350,000,000 credit
facility which is used for temporary or emergency purposes to facilitate
portfolio liquidity. Interest is charged to the Fund based on its borrowings. In
addition, the Fund has agreed to pay commitment fees on its pro-rata portion of
the line of credit. The commitment fee is included in "Other expenses" on the
Statement of Operations. Prior to April 26, 2003, the Fund participated in a
separate credit agreement with similar terms to its existing agreement. No
amounts were borrowed under this facility for the six months ended March 31,
2003.
NOTE 6. SUBSEQUENT EVENT
On April 1, 2003, the Advisor merged into Columbia Management Advisors, Inc.
("Columbia"), a direct subsidiary of Columbia Management Group, Inc. Columbia
subsequently became the investment advisor of the Fund. The merger will not
change the way the Fund is managed, the investment personnel assigned to manage
the Fund or the fees paid by the Fund to Columbia.
13
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30,
CLASS A SHARES 2003 2002 (a)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.52 $ 8.94
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.02) (0.01)
Net realized and unrealized gain (loss) on investments 0.48 (0.41)
--------- ---------
Total from Investment Operations 0.46 (0.42)
--------- ---------
NET ASSET VALUE, END OF PERIOD $ 8.98 $ 8.52
========= =========
Total return (c)(d)(e) 5.40% (4.70)%
========= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f)(g) 1.59% 1.67%
Net investment loss (f)(g) (0.50)% (0.49)%
Waiver/reimbursement (g) 0.65% 0.80%
Portfolio turnover rate 27%(e) 32%
Net assets, end of period (000's) $ 84,037 $ 82,564
(a) Class A shares were initially offered on July 29, 2002. Per share data
reflects activity from that date.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Had the Advisor and/or Distributor not waived or reimbursed a portion of
expenses, total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
14
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30,
CLASS B SHARES 2003 2002 (a)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.51 $ 8.94
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.06) (0.02)
Net realized and unrealized gain (loss) on investments 0.49 (0.41)
--------- ---------
Total from Investment Operations 0.43 (0.43)
--------- ---------
NET ASSET VALUE, END OF PERIOD $ 8.94 $ 8.51
========= =========
Total return (c)(d)(e) 5.05% (4.81)%
========= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f)(g) 2.29% 2.37%
Net investment loss (f)(g) (1.20)% (1.19)%
Waiver/reimbursement (g) 0.60% 0.75%
Portfolio turnover rate 27%(e) 32%
Net assets, end of period (000's) $ 6,274 $ 6,505
(a) Class B shares were initially offered on July 29, 2002. Per share data
reflects activity from that date.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total return
would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
15
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30,
CLASS C SHARES 2003 2002 (a)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.51 $ 8.94
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.06) (0.02)
Net realized and unrealized gain (loss) on investments 0.50 (0.41)
--------- ---------
Total from Investment Operations 0.44 (0.43)
--------- ---------
Net Asset Value, End of Period $ 8.95 $ 8.51
========= =========
Total return (c)(d)(e) 5.17% (4.81)%
========= =========
Ratios to Average Net Assets/Supplemental Data:
Expenses (f)(g) 2.29% 2.37%
Net investment loss (f)(g) (1.20)% (1.19)%
Waiver/reimbursement (g) 0.60% 0.75%
Portfolio turnover rate 27%(e) 32%
Net assets, end of period (000's) $ 522 $ 488
(a) Class C shares were initially offered on July 29, 2002. Per share data
reflects activity from that date.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total return
would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
16
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, -------------------------------------------------------------
CLASS Z SHARES 2003 2002 (a) 2001 2000 1999 1998
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.84 $ 18.76 $ 35.93 $ 27.42 $ 22.68 $ 22.75
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.04) (0.14)(c) (0.11)(c) (0.15)(c) (0.10)(c) (0.06)(c)
Net realized and unrealized gain
(loss) on investments 0.85 (3.78) (13.05) 8.98 5.44 0.31
--------- --------- --------- --------- --------- ---------
Total from Investment Operations 0.81 (3.92) (13.16) 8.83 5.34 0.25
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net realized gains -- -- (3.12) (0.32) (0.60) (0.32)
In excess of net realized gains -- -- (0.89) -- -- --
--------- --------- --------- --------- --------- ---------
Total Distributions Declared
to Shareholders -- -- (4.01) (0.32) (0.60) (0.32)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 15.65 $ 14.84 $ 18.76 $ 35.93 $ 27.42 $ 22.68
========= ========= ========= ========= ========= =========
Total return (d) 5.46%(e) (20.90)% (40.08)% 32.32% 23.89% 1.14%
========= ========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses 1.55%(f)(g) 1.58%(c)(f) 1.26%(c) 1.08%(c) 1.18%(c) 1.31%(c)
Net investment loss (0.46)%(f)(g) (0.71)%(c)(f)(0.41)%(c) (0.45)%(c) (0.37)%(c) (0.28)%(c)
Portfolio turnover rate 27%(e) 32% 23%(h) 72%(h) 45%(h) 45%(h)
Net assets, end of period (000's) $592,782 $573,111 $746,698 $1,215,809 $880,574 $686,024
(a) Class S shares were redesignated Class Z shares on July 29, 2002.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Per share amounts and ratios reflect income and expenses inclusive of the
Fund's proportionate share of the income and expenses of SR&F Growth
Investor Portfolio prior to the termination of their master/feeder fund
structure on July 26, 2002.
(d) Total return at net asset value assuming all distributions reinvested.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
(h) Portfolio turnover disclosed is for SR&F Growth Investor Portfolio.
17
TRANSFER AGENT
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Liberty Young Investor Fund is:
Liberty Funds Services, Inc.
P.O. Box 8081
Boston, MA 02266-8081
The fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call shareholder services at 800-345-6611 and
additional reports will be sent to you.
This report has been prepared for shareholders of Liberty Young Investor Fund.
This report may also be used as sales literature when preceded or accompanied by
the current prospectus which provides details of sales charges, investment
objectives and operating policies of the fund and with the most recent copy of
the Liberty Funds Performance Update.
Semiannual Report:
Liberty Young Investor Fund
ACTIVITY PAGES
A-MAZE-ING Race!
Sarah Saver's very rich Uncle Alfred just called. For Sarah's birthday, Uncle
Alfred has promised to match whatever money she can earn in one week by doing
chores at home. In the maze below, the correct path offers several chances for
Sarah to earn money. As you pass by each chore, color it in. Then write the
amount of money Sarah earned in the box to the right. When you reach the end of
the maze, add up all the money that Sarah earned. Then add in the birthday match
from Uncle Alfred to find the total amount Sarah will put in her piggybank. (You
can check your answer with the answer at the bottom of the page.)
[maze]
How much money for piggy?
Amount Sarah earned $ _________
from chores: $ _________
$ _________
$ _________
Total earned from chores $ _________
Birthday match from Uncle Alfred $_________
Total money for Sarah's piggybank $_________
Answers: $66.00
i
MISSING LINKS!
Here's a little brainteaser to test your math skills.
First, note that the number in the answer blank for Problem #1 has been copied
into the first blank for Problem #2. Find the answer for Problem #2 and put that
number in the first blank for Problem #3. Then use the answer for Problem #3 to
find the answer for Problem #4, and so on. When you finish all the problems,
check your answers with those at the bottom of the page.
[7 addition and subtraction problems]
Answers for Problems #2 through #7: 30, 42, 32, 40, 17, 74.
ii
INVESTING PUZZLER
How's your investing vocabulary? See if you can fill in the crossword puzzle
using the clues for investing terms below. (You can find the answers to the
puzzle on page 5 of your shareholder report.)
[crossword puzzle]
Across
- --------------------------------------------------------------------------------
1 Piece of a mutual fund that you own
5 A time when stock prices are rising is called a ______market
6 Mutual _______
8 Certificate of deposit (abbreviation)
9 __________ Street
12 Income that a company pays to stockholders from its profits
Down
- --------------------------------------------------------------------------------
1 Investment that makes you part owner of a company
2 Total ___________
3 A company's earnings (or revenues) minus its costs
4 To redeem an investment
6 Short for Federal Reserve Board
7 _______ Jones Industrial Average
10 Mutual fund sales charge
11 Net asset value (abbreviation)
iii
REBUS
[5 picture puzzles]
Answers:
A "Money doesn't grow on trees."
B "All that glitters is not gold."
C "Money makes the world go around."
D "A fool and his money are soon parted."
iv
NAME THAT STOCK!
As of March 31, 2003, the following stocks were in the Liberty Young Investor
Fund portfolio.
Using information on the websites for these companies, see if you can place the
appropriate letter for each company in the blank beside the piece of company
trivia. (Hint: In checking company websites, start with sections that have
titles like "About Us," "Company Overview" or "Investor Relations.") Answers
appear at the bottom of this page.
A Microsoft (www.microsoft.com) I Johnson & Johnson (www.jnj.com)
B Kohl's Corp. (www.kohls.com) J Viacom (www.viacom.com)
C Walgreen Co. (www.walgreens.com) K Biomet Inc. (www.biomet.com)
D Southwest Airlines (www.southwest.com) L eBay (www.ebay.com)
E Cedar Fair (www.cedarfair.com) M Overture Services (www.overture.com)
F Panera Bread (www.panerabread.com) N Corning Incorporated (www.corning.com)
G Minerals Technologies (www.mineralstech.com)
H Hispanic Broadcasting Company (www.hispanicbroadcasting.com)
1 Has its origins in 1851 Massachusetts glass company _____
2 Purchase of company by Univision announced in 2002 at a value
of $3.5 billion _____
3 First "stock split" occurred on September 19, 1963 _____
4 Stock first traded on June 18, 1999 _____
5 Stock symbol is "FUN" _____
6 Declared stock dividend on January 2, 2002, of $0.18 per share _____
7 Had revenue of $7.75 billion for the first quarter of fiscal
year 2003 (which ended September 30, 2002) _____
8 Made an announcement in third quarter of 2002 of program
to purchase up to $3 billion of its own stock _____
9 Ranked #1 in customer satisfaction among similar companies
in November 2002 by J.D. Power and Associates _____
10 Headquartered in Love Field, year-end results for 2002
marked the company's 30th consecutive year of profitability _____
11 Became a publicly traded company on October 23, 1992 _____
12 Had sales of $17,000 in its first year _____
13 Its initial public offering (IPO) price was $18 per share _____
14 Its stock is traded on Nasdaq under the symbol PNRA _____
Answers: 1. N; 2. H; 3. C; 4. M; 5. E; 6. I; 7. A; 8. J; 9. B; 10. D; 11. G; 12.
K; 13. L; 14. F
v
JOB SKILLS WORKSHEET
Summer's coming, and, if you have free time, this may be a good opportunity to
earn some money. To make the most of this opportunity, it may help to create a
list of your past work experience, other skills you may have and the skills
you'd like to learn. Matching this list with work that might be available in
your town may help you find a job that you'd do well and would really enjoy. The
worksheet below can guide you through this process.
Jobs I've had before - These can include both jobs for which you have been paid
and others that you did without pay.
What I liked What I didn't like
- --------------------------------------------------------------------------------
1 _________________________________________________________________________
2 _________________________________________________________________________
3 _________________________________________________________________________
4 _________________________________________________________________________
Other skills I have - These can include skills you've learned at school, at home
or as part of a sports or community group.
1 _________________________________________________________________________
2 _________________________________________________________________________
3 _________________________________________________________________________
4 _________________________________________________________________________
Skills I'd like to learn
1 _________________________________________________________________________
2 _________________________________________________________________________
3 _________________________________________________________________________
vi
WORKSHEET (CONT')
Job Match - Choose one type of job that you've already had, or a skill that
you'd like to develop or learn more about. Then fill in information about it
below to find the kind of work that might meet your needs. (For information you
don't know, ask your family, neighbors and friends.)
The type of work I want is ___________________________________________________
The number of hours I can spend on this work each week is about ______________
The amount of money I hope to earn per week is about _________________________
Places where I might look for this kind of work include: (Be specific)
1 _________________________________________________________________________
2 _________________________________________________________________________
3 _________________________________________________________________________
4 _________________________________________________________________________
Steps I should take to get the job include: (Be specific here, too. For
example, you may need to conduct an informational interview. That is, you
may want to set up a time to talk to some people and ask them how they got
their jobs and how they got the skills they need for their work. Your
parents might be able to suggest some people for you to contact.)
1 _________________________________________________________________________
2 _________________________________________________________________________
3 _________________________________________________________________________
4 _________________________________________________________________________
vii
Liberty Young Investor Fund Semiannual Report March 31, 2003
Logo: LibertyFunds
A Member of Columbia Management Group
(c) 2003 Liberty Funds Distributor, Inc.
AMember of Columbia Management Group
One Financial Center, Boston, MA 02111-2621
PRSRT STD
U.S. Postage
PAID
Holliston, MA
Permit NO. 20
756-03/441N-0303 (05/03) 03/1176
D
Liberty Growth
Stock Fund
Semiannual Report
March 31, 2003
Eliminate clutter in two easy steps.
Point. Click. eDelivery
For more information about receiving your shareholder reports electronically,
call us at 800-345-6611. To sign up for eDelivery, visit us online at
www.libertyfunds.com.
Liberty Growth
Stock Fund
Semiannual Report
March 31, 2003
Eliminate clutter in two easy steps.
Point. Click. eDelivery
To sign up for eDelivery, go to www.icsdelivery.com
PRESIDENT'S MESSAGE
Photo of: Joseph R. Palombo
Dear Shareholder:
Despite uncertainty about the economy at home and the growing threat of a war
with Iraq, the stock market managed to eke out modest gains for the six months
ended March 31, 2003. Management scandals and accounting irregularities at some
of the nation's highest profile companies had sent stock prices down
precipitously in the previous period, and many investors saw the opportunity for
gains among down-trodden sectors such as technology and communications. Growth
stocks were held back somewhat as a weak economy took its toll on companies that
rely on positive economic trends for their profits. However, the sector managed
to report a positive return for the six-month reporting period.
I am pleased to announce that, effective April 1, 2003, six of the asset
management firms brought together when Columbia Management Group, Inc. was
formed were consolidated and renamed Columbia Management Advisors, Inc. This
consolidation does not affect the management or investment objectives of your
fund and is the next step in our efforts to create a consistent identity and to
streamline our organization. By consolidating these firms, we are able to create
a more efficient organizational structure and strengthen certain key functions,
such as research. Although the name of the asset manager familiar to you has
changed, what hasn't changed is the commitment of our specialized investment
teams to a multi-disciplined approach to investing, focused on our goal of
offering shareholders the best products and services.
In the report that follows, portfolio manager Erik Gustafson discusses the
events of the period in more detail and the strategies that have been employed
to manage the fund. We hope that you will read on and that you will discuss any
questions you have with your financial advisor. As always, thank you for
choosing Liberty funds to help you reach your long-term financial goals.
Sincerely,
/s/ Joseph R. Palombo
Joseph R. Palombo
MEET THE NEW PRESIDENT
Joseph R. Palombo, president and chairman of the Board of Trustees for Liberty
Funds, is also chief operating officer of Columbia Management Group, Inc. Mr.
Palombo has over 19 years of experience in the financial services industry.
Prior to joining Columbia Management, he was chief operating officer and chief
compliance officer for Putnam Mutual Funds. Prior to that, he was a partner at
Coopers & Lybrand. Mr. Palombo received his degree in economics/accounting from
the College of the Holy Cross, where he was a member of Phi Beta Kappa. He
earned his master's degree in taxation from Bentley College and participated in
the Executive Program at the Amos B. Tuck School at Dartmouth College.
Net asset value per share as of 3/31/03 ($)
Class A 8.99
Class B 8.65
Class C 8.64
Class Z 21.62
Not FDIC Insured
May Lose Value
No Bank Guarantee
Economic and market conditions change frequently. There is no assurance that
trends described in this report will continue or commence.
PERFORMANCE INFORMATION
Value of a $10,000 investment
3/31/93 - 3/31/03
Performance of a $10,000 Investment
3/31/93 - 3/31/03 ($)
without sales with sales
charge charge
- ----------------------------------------
Class A 17,289 16,295
- ----------------------------------------
Class B 17,204 17,204
- ----------------------------------------
Class C 17,202 17,202
- ----------------------------------------
Class Z 17,399 n/a
- ----------------------------------------
Line Chart 3/1993 to 3/2003
Class A shares Class A shares S&P 500
without sales charge with sales charge Index
10000 9425 10000
9472 8927 9758
9804 9241 10019
9776 9214 10048
9680 9124 10007
9956 9384 10387
9956 9384 10307
10224 9636 10520
10076 9496 10420
10514 9909 10546
10807 10186 10905
10480 9877 10609
9907 9337 10148
9907 9337 10278
10096 9515 10445
9617 9064 10189
9850 9284 10523
10363 9767 10954
10165 9581 10687
10286 9695 10926
10015 9439 10528
10118 9536 10684
10227 9639 10961
10567 9959 11387
10851 10227 11723
11145 10504 12068
11375 10720 12549
11833 11153 12840
12267 11562 13265
12397 11684 13299
13031 12281 13860
12956 12211 13810
13580 12799 14415
13724 12934 14693
14015 13209 15193
14201 13384 15334
14371 13545 15481
14541 13705 15709
15166 14294 16112
15330 14449 16174
14393 13566 15459
14755 13906 15785
15774 14867 16672
16102 15176 17132
16989 16013 18426
16599 15644 18061
18051 17013 19188
17688 16671 19339
16558 15606 18546
17861 16834 19652
19015 17922 20853
19890 18746 21780
21425 20193 23512
19998 18848 22195
20998 19791 23409
20540 19359 22628
21017 19808 23675
21851 20595 24082
21775 20523 24347
23338 21996 26103
24358 22957 27439
24687 23267 27719
24415 23011 27242
25885 24397 28348
25531 24063 28048
21116 19902 23995
21984 20720 25533
23708 22345 27606
25462 23998 29279
27433 25855 30966
29751 28040 32260
28909 27247 31257
30739 28971 32507
30226 28488 33765
29416 27724 32968
31595 29779 34791
30587 28829 33709
30196 28460 33541
29897 28178 32622
31742 29916 34687
33192 31284 35391
37477 35322 37472
37545 35386 35591
41273 38900 34918
43390 40895 38333
41234 38863 37179
38059 35870 36417
41450 39066 37313
40049 37746 36731
43925 41400 39012
40372 38050 36952
37227 35086 36797
32131 30283 33897
33226 31316 34063
34329 32355 35273
30141 28408 32059
27896 26292 30030
30560 28802 32360
29738 28028 32577
28539 26898 31785
27146 25586 31474
25037 23598 29507
22816 21504 27126
23501 22150 27644
25416 23955 29764
25271 23818 30026
24516 23106 29588
23317 21976 29017
24371 22969 30108
22987 21665 28283
22552 21255 28077
20741 19549 26077
18935 17846 24046
18857 17773 24202
16990 16013 23655
17875 16847 25734
18914 17826 27247
17720 16701 25648
17412 16411 24979
16932 15958 24604
17289 16295 24843
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. PLEASE VISIT LIBERTYFUNDS.COM FOR
DAILY PERFORMANCE UPDATES.
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale. Results include reinvestment of distributions. The Standard &Poor's (S&P)
500 Index is an unmanaged index that tracks the performance of 500 widely held,
large-capitalization US stocks. Unlike the fund, an index is not an investment,
does not incur fees and is not professionally managed. It is not possible to
invest directly in an index. Securities in the fund may not match those in the
index.
Average annual total return as of 3/31/03 (%)
Share class A B C Z
Inception 7/15/02 7/15/02 7/15/02 7/1/58
- -------------------------------------------------------------------------------------------------------------------
without with without with without with without
sales sales sales sales sales sales sales
charge charge charge charge charge charge charge
- -------------------------------------------------------------------------------------------------------------------
6-month (cumulative) 1.81 4.06 1.53 -3.47 1.41 0.41 2.17
- -------------------------------------------------------------------------------------------------------------------
1-year -29.03 -33.11 -29.37 -32.91 -29.38 -30.09 -28.58
- -------------------------------------------------------------------------------------------------------------------
5-year -6.62 -7.72 -6.71 -7.01 -6.71 -6.71 -6.50
- -------------------------------------------------------------------------------------------------------------------
10-year 5.63 5.00 5.58 5.58 5.57 5.57 5.69
- -------------------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale. All results shown assume reinvestment of distributions. The "with sales
charge" returns include the maximum 5.75% sales charge for class A shares, the
appropriate class B contingent deferred sales charge (CDSC) for the holding
period after purchase as follows: first year - 5%, second year - 4%, third year
- - 3%, fourth year - 3%, fifth year - 2%, sixth year - 1%, thereafter - 0% and
the class C CDSC of 1% for the first year only.
Performance results reflect any voluntary waivers or reimbursements of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower. Performance for
different share classes varies based on differences in sales charges and fees
associated with each class.
Class A, B and C share performance includes returns for the fund's class Z
shares (the oldest existing fund class) for periods prior to their inception
date. These returns are not restated to reflect any expense differential (e.g.,
Rule 12b-1 fees and transfer agent fees) between class Z shares and the newer
class shares. Had the expense differential been reflected, the returns for the
periods prior to the inception of the newer class shares would have been
different.
1
PORTFOLIO MANAGER'S REPORT
Top 10 equity holdings as of 3/31/03 (%)
Microsoft 5.1
Procter & Gamble 5.0
Citigroup 4.8
Medtronic 4.7
Pfizer 4.6
Liberty Media, Class A 4.1
Johnson &Johnson 4.0
PepsiCo, Inc. 3.6
Cisco Systems 3.6
General Electric 3.6
Portfolio holdings are calculated as a percentage of net assets. Since the fund
is actively managed, there can be no guarantee the fund will continue to
maintain the same portfolio holdings in the future.
Bought
- --------------------------------------------------------------------------------
Amgen
We bought Amgen (2.4% of net assets), a worldwide biotechnology leader with a
profitable business. Growing demand for its core products, including those that
treat anemia and help the immune system fight viral infections, promising new
products in development and an aging population bode well for the company's
prospects.
Sold
- --------------------------------------------------------------------------------
Wyeth
We exited Wyeth, a large, diversified pharmaceutical company after it performed
well earlier in the period. We were concerned about pending litigation
surrounding some of the company's past products.
For the six-month period ended March 31, 2003, class A shares of Liberty Growth
Stock Fund returned 1.81% without sales charge. The fund lagged the S&P 500
Index and the Morningstar Large Growth Category average, which returned 5.01%
and 3.54%, respectively, for the same period.1
The fund's overweight stake in media and industrial stocks, which were poor
performers, hurt returns relative to the S&P 500 Index. We also believe that the
fund's below-average stake in technology compared to many of its competitors
caused the fund to trail its peer group. The fund's health care investments
contributed positively to overall performance.
VICIOUS BEAR MARKET
The stock market remained tumultuous during the six-month period, driven largely
by geopolitical concerns. In October and November, growth stocks led the market
higher, with beaten-down technology names posting exceptionally strong gains.
Technology stocks rebounded as investors anticipated a strong fourth quarter
fueled by corporations spending leftover budgets before year end. In December,
however, investors began worrying about the potential for war with Iraq.
Corporate spending and the economy remained weak, causing stocks to retreat in
the beginning of 2003. Growth stocks began moving into favor again in March, as
investors started looking past the war to better economic times.
LONG-TERM FOCUS ON QUALITY
Despite the market's volatility, we stayed with our strategy of investing in
what we believe are the finest businesses in the United States. The fund was
concentrated in about 35 high-quality, large-cap companies with strong long-term
earnings growth potential. Many of these
-------------------
1 (C)2003 by Morningstar, Inc. All rights reserved. The information contained
herein is the proprietary information of Morningstar, Inc., may not be
copied or redistributed for any purpose and may only be used for
noncommercial, personal purposes. The information contained herein is not
represented or warranted to be accurate, correct, complete or timely.
Morningstar, Inc. shall not be responsible for investment decisions,
damages or other losses resulting from the use of this information. Past
performance is no guarantee of future performance. Morningstar, Inc. has
not granted consent for it to be considered or deemed an "expert" under the
Securities Act of 1933.
2
stocks suffered more than the broader market as investors continued to sell
these more liquid names to raise cash.
The fund's largest sector emphasis was health care, where we targeted medical
device companies with the potential to benefit from an aging American population
and growing demand for new technologies that prolong life. Strong performers
included Boston Scientific, a new addition, and Johnson & Johnson (2.3% and 4.0%
of net assets, respectively).2 Both have new drug-coated stents that have shown
the potential to improve the treatment of blocked arteries. In addition, we
owned Medtronic (4.7% of net assets), which makes implantable medical devices.
The fund's information technology investments, including Microsoft, Dell
Computer, and Cisco Systems (5.1%, 2.9% and 3.6% of net assets, respectively),
also contributed positively to performance.
We built sizable stakes in the more economically-sensitive media and industrials
sectors, believing that once geopolitical tensions eased, spending on
advertising and capital goods would increase. In keeping with this outlook, we
added a position in Omnicom Group (2.3% of net assets), one of the largest
advertising firms worldwide. Unfortunately, the weak economy meant both media
companies and industrial companies, such as General Electric and Caterpillar
(3.6% and 2.4% of net assets, respectively), continued to struggle and our
strategy was not rewarded during the period.
CAUTIOUS OPTIMISM
We believe the stock market is nearing the end of what has been a brutal
three-year slide. As geopolitical concerns wane and the war with Iraq ends, we
expect corporations to begin spending again, reinvigorating the US economy. Once
the economic outlook improves, we believe growth stocks--which have been among
the weakest performers in recent years--have the potential to lead the market.
The fund is positioned to benefit if investors move toward liquid, high-quality
growth stocks in the early stages of a market recovery.
/s/ Erik P. Gustafson
Erik P. Gustafson
Erik P. Gustafson, a senior vice president of Columbia Management Advisors,
Inc., has managed the fund since 1994. He joined the advisor in 1992. As of
March 25, 2003, Erik became the fund's sole portfolio manager.
Top 5 sectors as of 3/31/03 (%)
Health care 24.4
Information technology 22.6
Consumer discretionary 14.1
Industrials 13.0
Financials 10.8
Sector breakdowns are calculated as a percentage of net assets. Since the fund
is actively managed, there can be no guarantee the fund will continue to
maintain the same sector breakdowns in the future.
------------------
2 Holdings are calculated as a percentage of net assets as of March 31, 2003,
and are subject to change.
An investment in the fund offers the potential for long-term growth, but
also involves certain risks, including stock market fluctuations due to
economic and business developments.
3
INVESTMENT PORTFOLIO
March 31, 2003 (Unaudited)
COMMON STOCKS - 98.1% SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 14.1%
MEDIA - 7.2%
Echostar Communications Corp. (a) 200,000 $ 5,776,000
Liberty Media Corp., Class A (a) 3,000,000 29,190,000
Omnicom Group, Inc. 300,000 16,251,000
------------
51,217,000
------------
MULTI-LINE RETAIL - 3.5%
Kohl's Corp. (a) 450,000 25,461,000
------------
SPECIALTY RETAIL - 3.4%
Home Depot, Inc. 1,000,000 24,360,000
------------
- --------------------------------------------------------------------------------
CONSUMER STAPLES - 8.6%
BEVERAGES - 3.6%
PepsiCo, Inc. 650,000 26,000,000
------------
HOUSEHOLD PRODUCTS - 5.0%
Procter & Gamble Co. 400,000 35,620,000
------------
- --------------------------------------------------------------------------------
ENERGY - 3.3%
Energy Equipment & Services - 3.3%
BJ Services Co. (a) 500,000 17,195,000
Patterson-UTI Energy, Inc. (a) 200,000 6,472,000
------------
23,667,000
------------
- --------------------------------------------------------------------------------
FINANCIALS - 10.8%
DIVERSIFIED FINANCIALS - 7.0%
Citigroup, Inc. 1,000,000 34,450,000
Merrill Lynch & Co., Inc. 450,000 15,930,000
------------
50,380,000
------------
INSURANCE - 3.8%
American International Group, Inc. 450,000 22,252,500
The St. Paul Companies, Inc. 150,000 4,770,000
------------
27,022,500
------------
- --------------------------------------------------------------------------------
HEALTH CARE - 24.4%
Biotechnology - 3.8%
Amgen, Inc. (a) 300,000 17,265,000
MedImmune, Inc. (a) 300,000 9,849,000
------------
27,114,000
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 7.0%
Boston Scientific Corp. (a) 400,000 16,304,000
Medtronic, Inc. 750,000 33,840,000
------------
50,144,000
------------
HEALTH CARE PROVIDERS & SERVICES - 3.5%
UnitedHealth Group, Inc. 275,000 25,209,250
------------
SHARES VALUE
- --------------------------------------------------------------------------------
PHARMACEUTICALS - 10.1%
Johnson & Johnson 500,000 $ 28,935,000
Pfizer, Inc. 1,050,000 32,718,000
Teva Pharmaceutical Industries
Ltd., ADR 250,000 10,412,500
------------
72,065,500
------------
- --------------------------------------------------------------------------------
INDUSTRIALS - 13.0%
AEROSPACE & DEFENSE - 5.3%
L-3 Communications Holdings, Inc. (a) 350,000 14,059,500
Lockheed Martin Corp. 500,000 23,775,000
------------
37,834,500
------------
COMMERCIAL SERVICES & SUPPLIES - 1.7%
Paychex, Inc. 450,000 12,361,500
------------
INDUSTRIAL CONGLOMERATES - 3.6%
General Electric Co. 1,000,000 25,500,000
------------
MACHINERY - 2.4%
Caterpillar, Inc. 350,000 17,220,000
------------
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 22.6%
Communications Equipment - 6.5%
Cisco Systems, Inc. (a) 2,000,000 25,960,000
Nokia Oyj, ADR 1,500,000 21,015,000
------------
46,975,000
------------
COMPUTERS & PERIPHERALS - 2.9%
Dell Computer Corp. (a) 750,000 20,482,500
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 4.8%
Maxim Integrated Products, Inc. 500,000 18,060,000
Texas Instruments, Inc. 1,000,000 16,370,000
------------
34,430,000
------------
SOFTWARE - 8.4%
BEA Systems, Inc. (a) 750,000 7,642,500
Microsoft Corp. 1,500,000 36,315,000
Oracle Corp. (a) 1,500,000 16,273,500
------------
60,231,000
------------
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 1.3%
Diversified Telecommunication Services - 1.3%
AT&T Corp. 500,000 8,100,000
------------
TOTAL COMMON STOCKS
(cost of $642,515,689) 701,394,750
------------
See notes to investment portfolio.
4
Investment Portfolio (continued)
March 31, 2003 (Unaudited)
SHORT-TERM OBLIGATION - 2.3% PAR VALUE
- --------------------------------------------------------------------------------
Repurchase agreement with State Street
Bank & Trust Co., dated 03/31/03,
due 04/01/03 at 1.240%, collateralized
by a U.S. Treasury Note maturing
12/31/04, market value $16,887,200
(repurchase proceeds $16,556,570)
(cost of $16,556,000) $16,556,000 $ 16,556,000
------------
TOTAL INVESTMENTS - 100.4%
(cost of $659,071,689)(b) 717,950,750
------------
OTHER ASSETS & LIABILITIES, NET - (0.4)% (2,880,886)
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $715,069,864
============
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
ACRONYM NAME
------- ---------------------------
ADR American Depositary Receipt
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2003 (Unaudited)
ASSETS:
Investments, at cost $ 659,071,689
------------------
Investments, at value $ 717,950,750
Cash 344
Receivable for:
Investments sold 5,721,931
Fund shares sold 412,540
Interest 570
Dividends 775,348
Expense reimbursement due from Advisor 13,044
Deferred Trustees' compensation plan 6,121
Other assets 146,633
------------------
Total Assets 725,027,281
------------------
LIABILITIES:
Payable for:
Investments purchased 7,712,820
Fund shares repurchased 1,424,117
Management fee 363,562
Administration fee 81,857
Transfer agent fee 310,293
Pricing and bookkeeping fees 58,647
Deferred Trustees' fee 6,121
------------------
Total Liabilities 9,957,417
------------------
NET ASSETS $ 715,069,864
==================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 1,250,462,511
Accumulated net investment loss (1,163,387)
Accumulated net realized loss (593,108,321)
Net unrealized appreciation on investments 58,879,061
------------------
NET ASSETS $ 715,069,864
==================
CLASS A:
Net assets $ 73,544,127
Shares outstanding 8,176,945
------------------
Net asset value per share $ 8.99(a)
==================
Maximum offering price per share
($8.99/0.9425) $ 9.54(b)
==================
CLASS B:
Net assets $ 279,451,622
Shares outstanding 32,307,495
------------------
Net asset value and offering price per share $ 8.65(a)
==================
CLASS C:
Net assets $ 25,870,244
Shares outstanding 2,992,948
------------------
Net asset value and offering price per share $ 8.64(a)
==================
CLASS Z:
Net assets $ 336,203,871
Shares outstanding 15,548,566
------------------
Net asset value, offering and redemption
price per share $ 21.62
==================
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 2003 (Unaudited)
INVESTMENT INCOME:
Dividends $ 4,673,398
Interest 112,091
-------------
Total Investment Income (net of
foreign taxes withheld of $66,900) 4,785,489
-------------
EXPENSES:
Management fee 2,245,300
Administration fee 544,293
Distribution fee:
Class A 39,962
Class B 1,130,593
Class C 104,862
Service fee:
Class A 99,904
Class B 382,474
Class C 34,954
Pricing and bookkeeping fees 147,624
Transfer agent fee:
Class A 188,891
Class B 715,433
Class C 66,124
Class Z 272,527
Trustees' fee 10,177
Custody fee 4,034
Other expenses 70,429
-------------
Total Operating Expenses 6,057,581
Fees waived by Advisor - Class Z (98,191)
Fees waived by Distributor - Class A (19,981)
Custody earnings credit (896)
-------------
Net Operating Expenses 5,938,513
Interest expense 786
-------------
Net Expenses 5,939,299
-------------
Net Investment Loss (1,153,810)
-------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (113,450,951)
Net change in unrealized
appreciation/depreciation
on investments 130,162,393
-------------
Net Gain 16,711,442
-------------
Net Increase in Net Assets
from Operations $ 15,557,632
=============
See notes to financial statements.
6
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, SEPTEMBER 30,
INCREASE (DECREASE) IN NET ASSETS: 2003 2002 (a)
==========================================================================================================
OPERATIONS:
Net investment loss $ (1,153,810) $ (581,498)
Net realized loss on investments (113,450,951) (59,950,621)
Net change in unrealized appreciation/depreciation on investments 130,162,393 (113,744,716)
------------- -------------
Net Increase (Decrease) from Operations 15,557,632 (174,276,835)
------------- -------------
SHARE TRANSACTIONS:
Class A:
Subscriptions 5,888,575 18,153,017
Proceeds received in connection with mergers -- 105,726,704
Redemptions (15,460,528) (29,250,762)
------------- -------------
Net Increase (Decrease) (9,571,953) 94,628,959
------------- -------------
Class B:
Subscriptions 11,980,337 5,229,203
Proceeds received in connection with mergers -- 373,573,179
Redemptions (44,031,754) (30,096,981)
------------- -------------
Net Increase (Decrease) (32,051,417) 348,705,401
------------- -------------
Class C:
Subscriptions 3,225,079 1,473,738
Proceeds received in connection with mergers -- 34,074,911
Redemptions (5,885,103) (3,599,977)
------------- -------------
Net Increase (Decrease) (2,660,024) 31,948,672
------------- -------------
Class Z:
Subscriptions 10,726,481 42,331,771
Proceeds received in connection with mergers -- 25,745,690
Redemptions (43,267,002) (144,221,190)
------------- -------------
Net Decrease (32,540,521) (76,143,729)
------------- -------------
Net Increase (Decrease) from Share Transactions (76,823,915) 399,139,303
------------- -------------
Total Increase (Decrease) in Net Assets (61,266,283) 224,862,468
NET ASSETS:
Beginning of period 776,336,147 551,473,679
------------- -------------
End of period (including accumulated net investment
loss of $(1,163,387) and $(9,577), respectively) $ 715,069,864 $ 776,336,147
============= =============
CHANGES IN SHARES:
Class A:
Subscriptions 635,353 1,818,260
Issued in connection with mergers -- 10,593,858
Redemptions (1,678,699) (3,191,827)
------------- -------------
Net Increase (Decrease) (1,043,346) 9,220,291
------------- -------------
Class B:
Subscriptions 1,337,939 532,527
Issued in connection with mergers -- 38,711,868
Redemptions (4,993,447) (3,281,392)
------------- -------------
Net Increase (Decrease) (3,655,508) 35,963,003
------------- -------------
Class C:
Subscriptions 356,282 152,704
Issued in connection with mergers -- 3,534,742
Redemptions (661,012) (389,768)
------------- -------------
Net Increase (Decrease) (304,730) 3,297,678
------------- -------------
Class Z:
Subscriptions 488,023 1,590,644
Issued in connection with mergers -- 1,079,484
Redemptions (1,963,207) (5,108,780)
------------- -------------
Net Decrease (1,475,184) (2,438,652)
------------- -------------
(a) On July 15, 2002, the Stein Roe Growth Stock Fund was redesignated Liberty
Growth Stock Fund, Class Z shares. Class A, Class B and Class C shares were
initially offered on July 15, 2002.
See notes to financial statements.
7
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 (Unaudited)
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Liberty Growth Stock Fund (the "Fund"), formerly Stein Roe Growth Stock Fund, a
series of Liberty-Stein Roe Funds Investment Trust (the "Trust"), is a
diversified portfolio of a Massachusetts business trust registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment goal is to seek long-term growth of capital. The
Fund may issue an unlimited number of shares. The Fund currently offers four
classes of shares: Class A, Class B, Class C and Class Z shares. Prior to July
15, 2002, the Fund had a single class of shares. On July 15, 2002, the
outstanding shares of the Fund were redesignated Class Z shares and the Fund
commenced offering Class A, Class B and Class C shares. Class A shares are sold
with a front end sales charge. A 1.00% contingent deferred sales charge is
assessed to Class A shares purchased without an initial sales charge on
redemptions made within eighteen months on an original purchase of $1 million to
$25 million. Class B shares are subject to a contingent deferred sales charge.
Class B shares will convert to Class A shares in three, four or eight years
after purchase, depending on the program under which shares were purchased.
Class C shares are subject to a contingent deferred sales charge on redemptions
made within one year after purchase. Class Z shares are offered continuously at
net asset value. There are certain restrictions on the purchase of Class Z
shares, as described in the Fund's prospectus.
On July 12, 2002, Liberty Growth Stock Fund ("LGSF") and Stein Roe Focus Fund
("SRFF") merged as follows into Stein Roe Growth Stock Fund, which subsequently
changed its name to Liberty Growth Stock Fund:
SHARES NET ASSETS UNREALIZED
ISSUED RECEIVED DEPRECIATION(1)
---------- ------------ --------------
LGSF 52,840,386 $513,373,974 $37,022,167
SRFF 1,079,566 25,746,510 12,502,383
1 Unrealized depreciation is included in the Net Assets Received amount shown
above.
TOTAL NET
ASSETS OF NET ASSETS
NET ASSETS ACQUIRED FUNDS OF THE FUND
OF THE FUND IMMEDIATELY IMMEDIATELY
PRIOR TO PRIOR TO AFTER
COMBINATION COMBINATION COMBINATION
------------ -------------- ------------
$397,820,249 $539,120,484 $936,940,733
Prior to July 13, 2002, the Fund and LGSF invested substantially all of their
assets in the SR&F Growth Stock Portfolio (the "Portfolio") as part of a
master/feeder structure. The Portfolio allocated income, expenses, realized and
unrealized gains (losses) to each investor on a daily basis, based on methods
approved by the Internal Revenue Service. Prior to the completion of the above
mergers, the Portfolio transferred its assets to the Fund and LGSF and
liquidated.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS:
Equity securities generally are valued at the last sale price or, in the case of
unlisted or listed securities for which there were no sales during the day, at
the current quoted bid price.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value under
procedures approved by the Board of Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
8
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 31, 2003 (Unaudited)
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS:
All income, expenses (other than Class A, Class B and Class C transfer agent,
service and distribution fees and Class Z transfer agent fees), and realized and
unrealized gains (losses) are allocated to each class proportionately on a daily
basis for purposes of determining the net asset value of each class.
Per share data and ratios are calculated by adjusting the expense and net
investment income (loss) per share data and ratios for the Fund for the period
by the transfer agent, service and distribution fees per share applicable to
Class A, Class B, Class C and Class Z shares.
FEDERAL INCOME TAXES:
Consistent with the Fund's policy to qualify as a regulated investment company
and to distribute all of its taxable income, no federal income tax has been
accrued.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to shareholders are recorded on the ex-date.
OTHER:
Interest income is recorded on the accrual basis. Corporate actions and dividend
income are recorded on the ex-date (except for certain foreign securities which
are recorded as soon after ex-date as the Fund becomes aware of such), net of
non-reclaimable tax withholdings. Where a high level of uncertainty as to
collection exists, income on securities is recorded net of all tax withholdings
with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters into bankruptcy.
NOTE 2. FEDERAL TAX INFORMATION
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from generally accepted accounting principles.
Reclassifications are made to the Fund's capital accounts to reflect income and
gains available for distribution (or available capital loss carryforwards) under
income tax regulations.
The following capital loss carryforwards, determined as of September 30, 2002,
are available to reduce taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code:
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
------------------ -------------------------
2008 $ 22,583,899
2009 201,991,560
------------
Total $224,575,459
============
Of these capital loss carryforwards, $219,806,550 ($22,583,899 expiring
9/30/2008 and $197,222,651 expiring 9/30/2009) and $4,768,909 (expiring
9/30/2009) were obtained upon the Fund's mergers with LGSF and SRFF,
respectively (See Note 1).
Utilization of the capital loss carryforwards above could be subject to merger
limitations imposed by the Internal Revenue Code.
NOTE 3. FEES AND COMPENSATION
PAID TO AFFILIATES
MANAGEMENT FEE:
Stein Roe & Farnham Incorporated (the "Advisor") is the investment advisor of
the Fund and receives a monthly fee as follows:
AVERAGE DAILY
NET ASSETS ANNUAL FEE RATE
------------------ ---------------
First $500 million 0.60%
Next $500 million 0.55%
Next $1 billion 0.50%
Over $2 billion 0.45%
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 31, 2003 (Unaudited)
ADMINISTRATION FEE:
The Advisor also provides accounting and other services for a monthly fee paid
by the Fund as follows:
AVERAGE DAILY
NET ASSETS ANNUAL FEE RATE
------------------ ---------------
First $500 million 0.150%
Next $500 million 0.125%
Over $1 billion 0.100%
PRICING AND BOOKKEEPING FEES:
The Advisor is responsible for providing pricing and bookkeeping services to the
Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the
"Outsourcing Agreement"), the Advisor has delegated those functions to State
Street Bank and Trust Company ("State Street"). The Advisor pays fees to State
Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, the Advisor receives
from the Fund an annual flat fee of $10,000, paid monthly, and in any month that
the Fund's average daily net assets are more than $50 million, a monthly fee
equal to the average daily net assets of the Fund for that month multiplied by a
fee rate that is calculated by taking into account the fees payable to State
Street under the Outsourcing Agreement. For the six months ended March 31, 2003,
the annualized net asset based fee rate was 0.036%. The Fund also pays
out-of-pocket costs for pricing services.
TRANSFER AGENT FEE:
Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of the
Advisor, provides shareholder services for a monthly fee equal to 0.06% annually
of the aggregate of Class A, Class B and Class C's average daily net assets plus
charges based on the number of shareholder accounts and transactions for those
classes. This expense structure also applies to Class Z shares individually. The
Transfer Agent also receives reimbursements for certain out-of-pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of the
Advisor, is the Fund's principal underwriter. For the six months ended March 31,
2003, the Fund has been advised that the Distributor retained net underwriting
discounts of $99,782 on sales of the Fund's Class A shares and received
contingent deferred sales charges ("CDSC") of $15,982, $725,261 and $2,282 on
Class A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a
monthly service fee to the Distributor equal to 0.25% annually of the average
daily net assets attributable to Class A, Class B and Class C shares as of the
20th of each month. The Plan also requires the payment of a distribution fee to
the Distributor equal to 0.10%, 0.75% and 0.75% annually of the average daily
net assets attributable to Class A, Class B and Class C shares, respectively.
The Distributor has voluntarily agreed to waive a portion of the Class A
distribution fee so that it will not exceed 0.05% annually.
The CDSC and the fees received from the Plan are used principally as repayment
to the Distributor for amounts paid by the Distributor to dealers who sold such
shares.
EXPENSE LIMIT:
The Advisor has voluntarily agreed, until further notice, to waive a portion of
the Class Z transfer agent fees (excluding out-of-pocket expenses) so that the
Class Z transfer agent expense will not exceed 0.05% annually of the Class Z
average daily net assets.
OTHER:
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor or its affiliates.
The Funds' Independent Trustees may participate in a deferred compensation plan
which may be terminated at any time. Obligations of the plan will be paid solely
out of the Fund's assets.
The Fund has an agreement with its custodian bank under which $896 of custody
fees were reduced by balance credits for the six months ended March 31, 2003.
The Fund could have invested a portion of the assets utilized in connection with
the expense offset arrangement in an income-producing asset if it had not
entered into such an agreement.
10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 31, 2003 (Unaudited)
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
During the six months ended March 31, 2003, purchases and sales of investments,
other than short-term obligations, were $281,650,259 and $337,612,413,
respectively.
Unrealized appreciation (depreciation) at March 31, 2003, based on cost of
investments for federal income tax purposes, was:
Gross unrealized appreciation $ 142,094,909
Gross unrealized depreciation (83,215,848)
-------------
Net unrealized appreciation $ 58,879,061
=============
OTHER:
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 5. LINE OF CREDIT
The Fund and other affiliated funds participate in a $350,000,000 credit
facility which is used for temporary or emergency purposes to facilitate
portfolio liquidity. Interest is charged to the Fund based on its borrowings. In
addition, the Fund has agreed to pay commitment fees on its pro-rata portion of
the line of credit. The commitment fee is included in "Other expenses" on the
Statement of Operations. Prior to April 26, 2003, the Fund participated in a
separate credit agreement with similar terms to its existing agreement. For the
six months ended March 31, 2003, the average daily loan balance outstanding on
days where borrowing existed was $1,791,356 at a weighted average interest rate
of 2.29%.
NOTE 6. SUBSEQUENT EVENT
On April 1, 2003, the Advisor merged into Columbia Management Advisors, Inc.
("Columbia"), a direct subsidiary of Columbia Management Group, Inc. Columbia
subsequently became the investment advisor of the Fund. The merger will not
change the way the Fund is managed, the investment personnel assigned to manage
the Fund or the fees paid by the Fund to Columbia.
11
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30,
CLASS A SHARES 2003 2002 (a)
===========================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.83 $ 9.98
-------- --------
Income from Investment Operations:
Net investment loss (b) (0.01) (0.01)
Net realized and unrealized (gain) loss on investments 0.17 (1.14)
-------- --------
Total from Investment Operations 0.16 (1.15)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 8.99 $ 8.83
======== ========
Total return (c)(d)(e) 1.81% (11.52)%
======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (f)(g) 1.56% 1.63%
Interest expense (g) --%(h) --%
Net expenses (f)(g) 1.56% 1.63%
Net investment loss (f)(g) (0.31)% (0.41)%
Waiver/reimbursement (g) 0.05% 0.05%
Portfolio turnover rate 38%(e) 71%
Net assets, end of period (000's) $73,544 $81,442
(a) Class A shares were initially offered on July 15, 2002. Per share data
reflects activity from that date.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
(h) Rounds to less than 0.01%.
12
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30,
CLASS B SHARES 2003 2002 (a)
==========================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.52 $ 9.65
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.04) (0.02)
Net realized and unrealized (gain) loss on investments 0.17 (1.11)
-------- --------
Total from Investment Operations 0.13 (1.13)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 8.65 $ 8.52
======== ========
Total return (c)(d) 1.53% (11.71)%
======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (e)(f) 2.26% 2.33%
Interest expense (f) --%(g) --%
Net expenses (e)(f) 2.26% 2.33%
Net investment loss (e)(f) (1.01)% (1.11)%
Portfolio turnover rate 38%(d) 71%
Net assets, end of period (000's) $279,452 $306,561
(a) Class B shares were initially offered on July 15, 2002. Per share data
reflects activity from that date.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(f) Annualized.
(g) Rounds to less than 0.01%.
13
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30,
CLASS C SHARES 2003 2002 (a)
===========================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.52 $ 9.64
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.04) (0.02)
Net realized and unrealized (gain) loss on investments 0.16 (1.10)
-------- --------
Total from Investment Operations 0.12 (1.12)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 8.64 $ 8.52
======== ========
Total return (c)(d) 1.41% (11.62)%
======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (e)(f) 2.26% 2.33%
Interest expense (f) --%(g) --%
Net expenses (e)(f) 2.26% 2.33%
Net investment loss (e)(f) (1.01)% (1.11)%
Portfolio turnover rate 38%(d) 71%
Net assets, end of period (000's) $ 25,870 $ 28,093
(a) Class C shares were initially offered on July 15, 2002. Per share data
reflects activity from that date.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(f) Annualized.
(g) Rounds to less than 0.01%.
14
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, -----------------------------------------------------------------------
CLASS Z SHARES 2003 2002 (a) 2001 2000 1999 1998
================================================================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $ 21.16 $ 28.34 $ 59.67 $ 47.20 $ 34.71 $ 35.29
--------- --------- --------- ---------- --------- ---------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (b) 0.04 0.02(c) (0.02)(c) (0.25)(c) (0.08)(c) (0.04)(c)
Net realized and unrealized
gain (loss) on investments 0.42 (7.20) (23.33) 16.16 12.57 1.61
--------- --------- --------- ---------- --------- ---------
Total from Investment Operations 0.46 (7.18) (23.35) 15.91 12.49 1.57
--------- --------- --------- ---------- --------- ---------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net realized gains -- -- (7.98) (3.44) -- (2.15)
--------- --------- --------- ---------- --------- ---------
NET ASSET VALUE,
END OF PERIOD $ 21.62 $ 21.16 $ 28.34 $ 59.67 $ 47.20 $ 34.71
========= ========= ========= ========== ========= =========
Total return (d) 2.17%(e)(f) (25.34)%(f) (43.48)% 35.04% 35.98% 4.69%
========= ========= ========= ========== ========= =========
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 0.88%(h) 0.88%(c) 0.95%(c) 0.95%(c) 0.97%(c)(i) 1.03%(c)
Interest expense --%(h)(j) --% --% --% --% --%
Net expenses (g) 0.88%(h) 0.88%(c) 0.95%(c) 0.95%(c) 0.97%(c)(i) 1.03%(c)
Net investment income (loss) (g) 0.36%(h) 0.08%(c) (0.05)%(c) (0.44)%(c) (0.18)%(c)(i) (0.10)%(c)
Waiver/reimbursement 0.05%(h) 0.01% --% --% --% --%
Portfolio turnover rate 38%(e) 71% 73%(k) 74%(k) 57%(k) 39%(k)
Net assets, end of period (000's) $336,204 $360,240 $551,474 $1,083,271 $831,338 $615,345
(a) On July 15, 2002, the Stein Roe Growth Stock Fund was redesignated Liberty
Growth Stock Fund, Class Z shares.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Per share amounts and ratios reflect income and expenses inclusive of the
Fund's proportionate share of the income and expenses of the SR&F Growth
Stock Portfolio prior to the termination of their master/feeder fund
structure on July 12, 2002.
(d) Total return at net asset value assuming all distributions reinvested.
(e) Not annualized.
(f) Had the Advisor not waived a portion of transfer agent expenses, total
return would have been reduced.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) During the year ended September 30, 1999, the Fund experienced a one-time
reduction in its expenses of three basis points as a result of expenses
accrued in a prior period. The Fund's ratios disclosed above reflect the
actual rate at which expenses were incurred throughout the fiscal year
ended September 30, 1999 without the reduction.
(j) Rounds to less than 0.01%.
(k) Portfolio turnover disclosed is for the SR&F Growth Stock Portfolio.
15
[THIS PAGE INTENTIONALLY LEFT BLANK]
TRANSFER AGENT
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Liberty Growth Stock Fund is:
Liberty Funds Services, Inc.
P.O. Box 8081
Boston, MA 02266-8081
The fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call shareholder services at 800-345-6611 and
additional reports will be sent to you.
This report has been prepared for shareholders of Liberty Growth Stock Fund.
This report may also be used as sales literature when preceded or accompanied by
the current prospectus which provides details of sales charges, investment
objectives and operating policies of the fund and with the most recent copy of
the Liberty Funds Performance Update.
Semiannual Report:
Liberty Growth Stock Fund
Liberty Growth Stock Fund Semiannual Report, March 31, 2003
Logo: LibertyFunds
A Member of Columbia Management Group
(C)2003 Liberty Funds Distributor, Inc.
A Member of Columbia Management Group
One Financial Center, Boston, MA 02111-2621
PRSRT STD
U.S. Postage
PAID
Holliston, MA
Permit NO. 20
755-03/438N-0303 (05/03) 03/1211
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEMS 4-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable at this time.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Not applicable at this time.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could affect these controls subsequent to the date of our
evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) in the exact form set forth below: Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Liberty-Stein Roe Funds Investment Trust
-----------------------------------------------------------
By (Signature and Title)* /s/ Joseph R. Palombo
----------------------------------------------
Joseph R. Palombo, President
Date May 27, 2003
-------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Joseph R. Palombo
----------------------------------------------
Joseph R. Palombo, President
Date May 27, 2003
-------------------------------------------------------------------
By (Signature and Title)* /s/ J. Kevin Connaughton
----------------------------------------------
J. Kevin Connaughton, Treasurer
Date May 27, 2003
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.