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
---------
Columbia Funds Trust XI
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Russell Kane, 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: 1-617-772-3363
--------------
Date of fiscal year end: 09/30/2003
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Date of reporting period: 09/30/2003
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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
COLUMBIA YOUNG INVESTOR(SM)
FUND
ANNUAL REPORT
SEPTEMBER 30, 2003
[PHOTO TWO BOYS PLAYING AT BEACH]
WE ARE COLUMBIA FUNDS!
Inside -- Management's Discussion of the changes effective as of October 13,
2003.
<Table>
Table of Contents
To Our Shareholders......... 1
Portfolio Managers' Report.. 2
Performance................. 5
Investment Portfolio........ 7
Financial Statements........ 11
Notes to Financial
Statements............... 13
Financial Highlights........ 17
Activity Pages.............. I-VI
</Table>
CHECK IT OUT
- HAVE YOU VISITED
WWW.YOUNGINVESTOR.COM RECENTLY?
Our updated website has the
information and tools available
to help kids and teens learn
about money and investing. Help
your young investors develop the
habits that will help them grow
into fiscally responsible
adults. You can start with an
online visit to
www.younginvestor.com.
- Additional information about
your fund's investments or a
further explanation of the
concepts discussed in this
report can be found in a "Did
You Know?" box. Keep an eye out
for these as you read your
shareholder report.
LOGO
<Table>
-----------------------------
Not FDIC May Lose Value
Insured ------------------
No Bank Guarantee
-----------------------------
</Table>
TO OUR SHAREHOLDERS
[Joseph R. Palombo Photo]
Dear Shareholder:
As you know, your fund has long been associated with a larger investment
management organization. In the 1990s, it was part of Liberty Financial, whose
affiliated asset management companies included Colonial, Stein Roe and Newport.
In 2001, these companies became part of the asset management division of
FleetBoston Financial Corp., which you know as Columbia Management Group (CMG).
Earlier this year, six of the asset management firms brought together under the
CMG umbrella were consolidated and renamed Columbia Management Advisors, Inc. On
October 13, 2003, we took the natural next step in this process by changing the
name of our funds from Liberty to Columbia. For example, Liberty Young Investor
Fund was changed to Columbia Young Investor Fund. We have also modified certain
fund names that existed under both the Liberty and Columbia brands.
A complete list of new fund names and other information related to these changes
are available online at www.columbiafunds.com, our new website address.
A consolidated identity
The consolidation of our management under a single organization and the renaming
of our funds are part of a larger effort to create a consistent identity. Having
taken these additional steps, we believe it will be easier for shareholders to
do business with us. All funds are now listed under "Columbia" in the mutual
fund listings section of your newspaper (depending on the newspaper's listing
requirements). All service inquires are now handled by Columbia Funds Services,
Inc., the new name of our shareholder service organization.
What has not changed is our commitment to our mutual fund shareholders. We
remain committed to providing the best possible customer service and to offering
a wide variety of mutual funds to help you achieve your long-term financial
goals. Should you have questions, please call Columbia Funds at 800-345-6611.
In the report that follows, the co-managers of the fund's investment team
discuss in depth the investment strategies and other factors that affected your
fund's performance during the period. We encourage you to read the report
carefully.
As always, we thank you for your business and we look forward to continuing to
serve your investment needs.
Sincerely,
/s/ JOSEPH R. PALOMBO
Joseph R. Palombo
President
Economic and market conditions frequently change. There is no assurance that
trends described in this report will continue or commence.
1
PORTFOLIO MANAGER'S REPORT
[Greg Miller Photo] [Michael Welhoelter Photo]
Greg Miller and Michael Welhoelter, CFA, lead the team of portfolio managers who
manage the portfolio of Columbia Young Investor Fund. Mr. Miller and Mr.
Welhoelter have been co-managing the fund since June 2003. Mr. Miller has been
with Columbia Management Advisors, Inc. (CMA) and its predecessors since 1985. A
member of CMA's Large Cap Equity Value Team, he also manages or co-manages other
investment products within the Columbia family of funds. Mr. Welhoelter has been
with CMA and its predecessors since 2001. He is also a senior portfolio manager
in CMA's Structured Equity Group.
On November 1, 2003, Paul Blaustein joined Mr. Miller and Mr. Welhoelter as a
co-manager. Mr. Blaustein has approximately 30 years of investment experience.
He is a senior portfolio manager and head of CMA's Concentrated Large Cap Growth
Team. Prior to joining CMA in October of 2003, Mr. Blaustein was the portfolio
manager of Atlantic Whitehall Growth Fund.
DID YOU KNOW?
Chances are you've used at least one product made by Procter & Gamble (P&G).
P&G is the largest maker of household goods in the United States. Among its
many well-known brands are Crest toothpaste, Pringles potato chips, Tide
detergent, Cover Girl and Max Factor cosmetics, Pampers diapers, Bounty paper
towels and Iams pet food. In total, P&G makes more than 300 brands that are
sold in over 160 countries to five billion consumers. The company reported $43
billion in revenues and over $5 billion in profits for the fiscal year ended
June 30, 2003. Despite its behemoth size, we think P&G still has room to grow,
thanks to smart management and the addition of new brands.
[Source: Procter & Gamble]
How did the fund perform during the 12-month reporting period?
During the year ended September 30, 2003, the fund's class A shares returned
22.89%. (This return was calculated before the sales charge was deducted.)
Although the fund had a strong return, it did not do quite as well as its
benchmarks. The S&P 500 Index, a common measure of stock market performance,
returned 24.40%. During the same period, the Russell 3000 Index, which measures
the performance of small-, medium-, and large-company stocks, returned 25.92%.
The fund came out behind the S&P 500 and Russell 3000 indices because it focused
on solid, well-known large companies during a time when smaller companies with
weaker financial conditions posted the biggest gains. We also had a few stocks
that were big losers and that hurt performance. The fund, however, did beat
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 22.62%.
On October 13, 2003, the fund's primary benchmark was changed to the Russell
3000 Index. We believe that this benchmark will provide shareholders with a more
useful comparison of the fund's relative performance than the previous
benchmark, which was the S&P 500 Index. During this reporting period, the S&P
500 Index was the fund's primary benchmark.
- --------------------------------------------------------
(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
What explains the fund's strong gainsduring the period?
The fund benefited from a more favorable stock market environment. Stocks
bounced around in the first half of the period without making much headway. But
in the spring, concerns over the war with Iraq started to ease and the economy
began to perk up. This combination set the stage for a solid recovery in the
stock market. The biggest gains came from lower quality and smaller-company
growth stocks, which had dropped in value when the economy was faltering. These
stocks did especially well because investors reasoned that they had the most to
gain once the economy showed signs of life. Our best returns came from
technology and financial stocks, as well as consumer stocks that represent
discretionary purchases rather than necessities.
Where was the fund focused?
The fund had investments in companies of all sizes, but with a tilt toward
large-company stocks. We thought investors who were returning to the market
would find large-company stocks particularly attractive because they are
typically the easiest to buy and sell. Large-company stocks also looked
reasonable when compared to what they were expected to earn. We focused on areas
that typically do well when the economy starts to grow at a solid pace,
including technology, retail and media. Some of our best performers were
Microsoft, Cisco Systems and eBay.(2) We also had a big stake in financial
stocks, including Citigroup. This large global financial company was our largest
investment and strongest contributor to return.
Were there areas you intentionally avoided?
Yes, we continued to avoid tobacco, alcohol and nursing home stocks. We were
also less enthusiastic about health care and consumer staples, an area of the
market that includes big ticket items such as appliances and autos. These
industries have less to gain when the economy is improving, because their
profits are not as closely tied to economic growth. Think about it: people tend
to see the doctor, fill their prescriptions and replace their refrigerators when
they need them. They don't tend to spend a whole lot more on these items if they
are feeling prosperous. As a result, investors tend to avoid them in a growing
economy, and that was the case during the past year. However, even after paring
back some of our health care investments, we still had a big stake in companies
such as Boston Scientific, which makes medical devices, and Amgen, a
biotechnology company. Both stocks generated strong returns during the period,
which benefited the fund.
What qualities do you look for incompanies you buy?
Our focus has always been on companies with good balance sheets, strong profit
growth and managers that we believe are capable of making their companies
stronger in a competitive market. Companies with these characteristics were
among our largest investments during the period. They included American
International Group, a global insurer; Pfizer, a pharmaceutical company; Exxon
Mobil, an oil company; and Procter & Gamble, which makes household goods. (For
more about the company, check out, "Did You Know?" on page 2.) When a company no
longer meets our strict investment criteria, we will not hesitate to get rid of
it. We sold Genentech, a biotechnology company, and Baxter International, which
makes blood plasma products, after losing confidence in company management.
Also, during the period, we reduced our position in Duke Energy, a North
Carolina energy provider. The company was relying on price increases to help
improve its profits, and there were concerns that it would not be able to raise
prices as originally expected.
(2) Holdings are disclosed as a percentage of net assets as of September 30,
2003 and are subject to change: Microsoft (2.7%), Cisco Systems (1.6%), eBay
(0.7%), Citigroup (4.2%), Boston Scientific (0.8%), Amgen (1.1%), American
International Group (2.1%), Pfizer (1.8%), Exxon Mobil (2.1%), Procter & Gamble
(2.1%), Duke Energy (0.3%).
3
What's your outlook for the economy and stock market?
It's impossible to predict what will happen in the economy and the stock market,
but we're optimistic that both are headed in the right direction. We think the
economy will benefit as families have more money to spend because their taxes
have been cut. We believe that the holiday season could be better than we've
seen in recent years because Americans are more optimistic about the future. If
profit growth leads companies to spend more on equipment and technology, we
think the job market could also pick up. All of these factors would be good for
stock prices. We plan to keep the portfolio focused on stocks that can benefit
from an improving economy, while downplaying our investment in sectors that are
less dependent on the economy's moves. We think that over time the high quality
companies we own will move back into favor with investors.
- --------------------------------------------------------
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.
- --------------------------------------------------------
<Table>
NET ASSET VALUE PER SHARE as of 9/30/03 ($)
Class A 10.47
Class B 10.39
Class C 10.39
Class Z 9.13
</Table>
DID YOU KNOW?
When stock prices are moving up and down a lot, investors often worry about
losing money. Some panic and sell when a stock's price is way down, then miss
out on the opportunity for future gains. Or they buy a stock when its price is
really high, just before it takes a fall. Some investors, however, avoid those
mistakes by using a strategy called dollar cost averaging. Here's how it
works: you invest a set amount of money each month in a stock or a mutual
fund. When the market is down, your investment buys more shares. When the
market is up, it buys fewer shares. But over time, your average cost is lower
than if you had tried to time the market or if you had bought shares all at
once. Dollar cost averaging won't ensure a profit or guard against a loss, and
you should be committed to investing over a long period of time. But the
beauty of dollar cost averaging is that you are less likely to miss out on
either the market's gains or the natural buying opportunities created by its
dips.
4
PERFORMANCE
Top 10 holdings as of 9/30/03 (%)
<Table>
<Caption>
Citigroup 4.2
Microsoft 2.7
American International Group 2.1
Exxon Mobil 2.1
Procter & Gamble 2.1
General Electric 1.9
Pfizer 1.8
Cisco Systems 1.6
Medtronic 1.6
Accenture 1.3
</Table>
Holdings are calculated as a percentage of net assets. Because the fund is
actively managed, there can be no guarantee the fund will continue to maintain
these holdings in the future.
Sector breakdowns as of 9/30/03 (%)
<Table>
<Caption>
Financials 21.2
Information technology 19.2
Consumer discretionary 15.4
Health care 13.0
Industrials 10.0
Energy 6.7
Consumer staples 4.8
Telecommunication services 3.5
Materials 3.1
Utilities 2.1
</Table>
Sector breakdowns are calculated as a percentage of net assets. Because the fund
is actively managed, there can be no guarantee the fund will continue to
maintain this breakdown 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 return as of 9/30/03 (%)
<Table>
<Caption>
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
---------------------------------------------------------------------------------------------------------------
1-year 22.89 15.82 22.09 17.09 22.09 21.09 23.05
---------------------------------------------------------------------------------------------------------------
5-year -0.91 -2.07 -1.06 -1.39 -1.06 -1.06 -0.89
---------------------------------------------------------------------------------------------------------------
Since inception 9.65 8.97 9.56 9.56 9.56 9.56 9.66
---------------------------------------------------------------------------------------------------------------
</Table>
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. PLEASE VISIT
WWW.COLUMBIAFUNDS.COM FOR DAILY PERFORMANCE UPDATES.
Past performance cannot predict 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
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.
5
PERFORMANCE
DID YOU KNOW?
On October 13, 2003, the Russell 3000 Index became your fund's benchmark. Your
fund's portfolio managers decided that it would be more useful to shareholders
to compare fund performance against this index than the S&P 500 Index, which
was the fund's former benchmark. For example, the Russell 3000 Index tracks
the performance of more companies than the S&P 500 Index, so it is likely to
include many of the companies that are part of the investment universe of
Columbia Young Investor Fund. There are other characteristics of the fund that
closely match those in the Russell 3000 Index. For more information, young
investors and their parents and financial mentors can visit online the "Fund
Portfolio Data" page for Columbia Young Investor Fund at
www.columbiafunds.com.
Performance of a $10,000 investment
4/29/94 - 9/30/03 ($)
<Table>
<Caption>
WITHOUT WITH
SALES CHARGE SALES CHARGE
Class A 23,829 22,459
Class B 23,647 23,647
Class C 23,647 23,647
Class Z 23,847 n/a
</Table>
(MOUNTAIN CHART)
<Table>
Class A without sales charge Class A with sales charge S&P 500 Index
04/1994 10000.00 9425.00 10000.00
10040.00 9462.70 10164.00
9699.64 9141.91 9914.98
9859.69 9292.76 10240.20
10299.40 9707.21 10660.00
09/1994 10239.70 9650.91 10398.90
10659.50 10046.60 10632.80
10449.50 9848.68 10245.80
10737.90 10120.50 10397.50
10778.70 10159.00 10666.70
11031.00 10396.70 11082.70
11413.70 10757.50 11409.70
11545.00 10881.20 11745.10
11736.60 11061.80 12214.90
12723.70 11992.10 12498.30
13489.70 12714.00 12913.30
13661.00 12875.50 12945.50
09/1995 14395.90 13568.20 13491.80
14103.70 13292.70 13443.30
14909.00 14051.80 14033.40
15010.40 14147.30 14304.30
15597.30 14700.50 14790.60
15806.30 14897.50 14928.20
16465.40 15518.70 15071.50
17575.20 16564.60 15293.00
18422.30 17363.10 15687.60
18777.90 17698.20 15747.20
17532.90 16524.80 15051.20
18318.40 17265.10 15368.80
09/1996 19510.90 18389.00 16234.00
19782.10 18644.60 16682.10
20557.60 19375.50 17943.30
20278.00 19112.00 17588.00
21220.90 20000.70 18687.20
20669.20 19480.70 18833.00
19292.60 18183.30 18059.00
20158.80 18999.70 19137.10
21719.10 20470.30 20302.50
22759.50 21450.80 21212.10
24341.30 22941.70 22900.60
23506.40 22154.80 21618.10
09/1997 24655.80 23238.10 22802.80
23940.80 22564.20 22041.20
24536.90 23126.10 23061.70
25606.70 24134.30 23458.40
25760.40 24279.20 23718.70
27826.40 26226.30 25428.90
28903.20 27241.30 26730.80
29232.70 27551.90 27000.80
28233.00 26609.60 26536.40
29847.90 28131.70 27613.80
28868.90 27208.90 27321.10
23513.70 22161.70 23370.40
09/1998 24931.60 23498.00 24868.50
26646.90 25114.70 26890.30
28219.10 26596.50 28519.80
30123.80 28391.70 30162.60
31521.60 29709.10 31423.40
30405.70 28657.40 30446.10
32783.40 30898.40 31664.00
33616.10 31683.20 32889.40
32456.40 30590.20 32113.20
34043.50 32086.00 33895.40
32242.60 30388.70 32837.90
31588.10 29771.80 32677.00
09/1999 30890.00 29113.80 31781.70
33435.30 31512.80 33793.40
35551.80 33507.60 34479.40
39665.10 37384.40 36510.30
38744.90 36517.10 34677.50
42293.90 39862.00 34022.10
43545.80 41041.90 37349.40
39953.30 37656.00 36225.20
36265.60 34180.30 35482.60
39620.20 37342.00 36359.00
38970.40 36729.60 35791.80
42871.30 40406.20 38014.50
09/2000 40869.20 38519.30 36007.30
39516.50 37244.30 35856.10
34557.10 32570.10 33030.60
35680.30 33628.60 33192.50
37442.90 35289.90 34370.80
33590.00 31658.60 31236.20
30993.50 29211.40 29255.80
33931.70 31980.60 31529.00
33721.30 31782.30 31740.20
32480.30 30612.70 30968.90
30352.90 28607.60 30665.40
28304.10 26676.60 28745.80
09/2001 24491.50 23083.30 26423.10
25326.70 23870.40 26927.80
27585.80 25999.60 28993.20
27834.10 26233.60 29248.30
27077.00 25520.10 28821.30
26359.40 24843.80 28265.00
27925.20 26319.50 29327.80
26227.30 24719.30 27550.50
25705.40 24227.40 27346.70
23864.90 22492.70 25399.60
21774.30 20522.30 23420.90
21661.10 20415.60 23573.20
09/2003 19386.70 18272.00 21010.80
20957.00 19752.00 22859.70
22526.70 21231.40 24206.20
21001.70 19794.10 22785.30
20569.00 19386.30 22188.30
20250.20 19085.80 21855.50
20432.40 19257.60 22067.50
22001.70 20736.60 23885.80
23161.20 21829.40 25144.60
23228.30 21892.70 25466.50
23727.70 22363.40 25914.70
24456.20 23049.90 26420.00
09/2003 23829.00 22459.00 26131.00
Russell 3000 Index
04/1994 10000.00
10110.00
9832.99
10137.80
10579.80
09/1994 10354.50
10525.30
10141.10
10299.30
10524.90
10954.30
11227.10
11520.10
11938.30
12283.30
12777.10
12890.80
09/1995 13389.70
13274.50
13863.90
14089.90
14498.50
14713.10
14861.70
15144.10
15531.80
15482.00
14672.30
15116.90
09/1996 15939.30
16231.00
17375.20
17166.70
18116.10
18136.00
17316.20
18169.90
19410.90
20218.40
21803.60
20918.30
09/1997 22104.40
21361.70
22179.80
22623.40
22741.10
24367.10
25575.70
25826.30
25188.40
26039.80
25565.80
21649.20
09/1998 23125.60
24880.90
26403.60
28082.80
29037.70
28009.70
29037.70
30347.30
29770.70
31274.10
30326.50
29980.80
09/1999 29213.30
31044.90
31914.20
33950.30
32619.50
32922.80
35500.70
34251.10
33288.60
34274.00
33667.30
36165.40
09/2000 34527.10
34036.80
30898.70
31417.70
32492.20
29522.40
27597.60
29810.90
30049.40
29496.50
29009.80
27298.20
09/2001 24890.50
25470.50
27431.70
27818.50
27470.70
26910.30
28089.00
26614.30
26305.60
24411.60
22470.90
22576.50
09/2003 20203.70
21811.90
23131.50
21824.60
21289.90
20938.60
21158.50
22887.10
24269.50
24597.20
25160.40
25719.00
09/2003 25442.00
</Table>
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 Russell
3000 Index is an unmanaged index that tracks the performance of 3000 of the
largest US companies, based on market capitalization. The Standard & Poor's
(S&P) 500 Index, also an unmanaged index, tracks the performance of 500 widely
held, large-capitalization US stocks. Unlike the fund, an index is not an
investment, does not incur fees or expenses, and is not professionally managed.
It is not possible to invest directly in an index. Securities in the fund may
not match those in an index. Benchmark performance is from April 29, 1994.
6
INVESTMENT PORTFOLIO
SEPTEMBER 30, 2003
<Table>
<Caption>
COMMON STOCKS - 99.0% SHARES VALUE
- --------------------------------------------------
CONSUMER DISCRETIONARY - 15.4%
AUTO COMPONENTS - 0.2%
Autoliv, Inc. 52,000 $ 1,568,840
------------
HOTELS, RESTAURANTS & LEISURE - 1.3%
Cedar Fair, L.P. 149,800 4,194,400
Starwood Hotels &
Resorts Worldwide,
Inc. 49,400 1,719,120
Wendy's International,
Inc. 118,800 3,837,240
------------
9,750,760
------------
HOUSEHOLD DURABLES - 0.8%
Applica, Inc. (a) 166,900 1,009,745
Beazer Homes USA, Inc. 58,400 4,928,960
------------
5,938,705
------------
INTERNET & CATALOG RETAIL - 1.6%
eBay, Inc. (a) 100,000 5,351,000
InterActiveCorp (a) 219,574 7,256,921
------------
12,607,921
------------
LEISURE EQUIPMENT & PRODUCTS - 0.4%
Marvel Enterprises, Inc.
(a) 136,500 3,037,125
------------
MEDIA - 6.2%
AOL Time Warner, Inc.
(a) 200,000 3,022,000
Clear Channel
Communications, Inc. 150,000 5,745,000
E.W. Scripps Co., Class
A 65,700 5,591,070
Gannett Co., Inc. 69,800 5,413,688
Getty Images, Inc. (a) 60,400 2,123,664
Lee Enterprises, Inc. 64,200 2,482,614
Liberty Media Corp.,
Class A (a) 500,000 4,985,000
McGraw-Hill Companies,
Inc. 43,300 2,690,229
Media General, Inc.,
Class A 28,000 1,710,800
NTL, Inc. (a) 44,800 2,110,976
Omnicom Group, Inc. 72,100 5,180,385
Viacom, Inc., Class B 117,900 4,515,570
Westwood One, Inc. (a) 94,800 2,862,012
------------
48,433,008
------------
</Table>
<Table>
<Caption>
COMMON STOCKS
(CONTINUED) SHARES VALUE
- --------------------------------------------------
MULTI-LINE RETAIL - 1.3%
Costco Wholesale Corp.
(a) 100,000 $ 3,108,000
May Department Stores
Co. 66,300 1,632,969
Wal-Mart Stores, Inc. 100,000 5,585,000
------------
10,325,969
------------
SPECIALTY RETAIL - 2.4%
AutoZone, Inc. (a) 75,000 6,714,750
Home Depot, Inc. 150,000 4,777,500
Limited Brands 90,200 1,360,216
Lowe's Companies, Inc. 111,100 5,766,090
------------
18,618,556
------------
TEXTILES, APPAREL & LUXURY GOODS - 1.2%
Coach, Inc. (a) 100,000 5,460,000
Kellwood Co. 112,100 3,749,745
------------
9,209,745
------------
- --------------------------------------------------
CONSUMER STAPLES - 4.8%
BEVERAGES - 1.2%
PepsiCo, Inc. 210,400 9,642,632
------------
FOOD PRODUCTS - 0.7%
Chiquita Brands
International, Inc.
(a) 158,900 2,812,530
ConAgra Foods, Inc. 116,600 2,476,584
------------
5,289,114
------------
HOUSEHOLD PRODUCTS - 2.9%
Clorox Co. 57,800 2,651,286
Kimberly-Clark Corp. 76,400 3,920,848
Procter & Gamble Co. 172,200 15,983,604
------------
22,555,738
------------
- --------------------------------------------------
ENERGY - 6.7%
ENERGY EQUIPMENT & SERVICES - 2.2%
Baker Hughes, Inc. 124,900 3,695,791
Schlumberger Ltd. 150,000 7,260,000
Smith International,
Inc. (a) 93,000 3,346,140
Transocean, Inc. (a) 150,000 3,000,000
------------
17,301,931
------------
OIL & GAS - 4.5%
Anadarko Petroleum Corp. 53,600 2,238,336
ConocoPhillips 125,600 6,876,600
Exxon Mobil Corp. 445,400 16,301,640
</Table>
See notes to investment portfolio.
7
INVESTMENT PORTFOLIO (CONTINUED)
SEPTEMBER 30, 2003
<Table>
<Caption>
COMMON STOCKS
(CONTINUED) SHARES VALUE
- --------------------------------------------------
OIL & GAS (CONTINUED)
Houston Exploration Co.
(a) 47,500 $ 1,667,250
Newfield Exploration Co.
(a) 100,900 3,891,713
Stone Energy Corp. (a) 103,200 3,640,896
------------
34,616,435
------------
- --------------------------------------------------
FINANCIALS - 21.2%
BANKS - 6.0%
Bank of America Corp. 133,500 10,418,340
Bank of New York Co.,
Inc. 166,300 4,840,993
Bank One Corp. 101,000 3,903,650
City National Corp. 66,000 3,363,360
GreenPoint Financial
Corp. 169,650 5,065,749
Texas Regional
Bancshares, Inc.,
Class A 118,100 3,990,599
U.S. Bancorp. 208,500 5,001,915
UnionBanCal Corp. 56,100 2,782,560
Wells Fargo & Co. 139,800 7,199,700
------------
46,566,866
------------
DIVERSIFIED FINANCIALS - 6.9%
American Express Co. 111,300 5,015,178
Citigroup, Inc. 723,100 32,908,281
Freddie Mac 64,100 3,355,635
J.P. Morgan Chase & Co. 171,700 5,894,461
Merrill Lynch & Co.,
Inc. 125,000 6,691,250
------------
53,864,805
------------
INSURANCE - 6.6%
AFLAC, Inc. 161,900 5,229,370
Ambac Financial Group,
Inc. 89,300 5,715,200
American International
Group, Inc. 288,400 16,640,680
Hartford Financial
Services Group, Inc. 113,600 5,978,768
MBIA, Inc. 116,700 6,414,999
MGIC Investment Corp. 100,700 5,243,449
Radian Group, Inc. 136,600 6,065,040
------------
51,287,506
------------
</Table>
<Table>
<Caption>
COMMON STOCKS
(CONTINUED) SHARES VALUE
- --------------------------------------------------
REAL ESTATE - 1.7%
Avalonbay Communities,
Inc. 92,900 $ 4,347,720
Boston Properties, Inc. 102,500 4,455,675
Kimco Realty Corp. 114,300 4,682,871
------------
13,486,266
------------
- --------------------------------------------------
HEALTH CARE - 13.0%
BIOTECHNOLOGY - 1.6%
Amgen, Inc. (a) 130,200 8,407,014
Gilead Sciences, Inc.
(a) 75,000 4,194,750
------------
12,601,764
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 3.4%
Beckman Coulter, Inc. 84,200 3,834,468
Becton, Dickinson & Co. 105,000 3,792,600
Boston Scientific Corp.
(a) 100,000 6,380,000
Medtronic, Inc. 260,300 12,213,276
------------
26,220,344
------------
HEALTH CARE PROVIDERS & SERVICES - 2.1%
Caremark Rx, Inc. (a) 150,000 3,390,000
CIGNA Corp. 37,200 1,660,980
IMS Health, Inc. 187,400 3,954,140
Tenet Healthcare Corp. 126,800 1,836,064
UnitedHealth Group, Inc.
(a) 100,000 5,032,000
------------
15,873,184
------------
PHARMACEUTICALS - 5.9%
Bradley Pharmaceuticals,
Inc. (a) 195,400 5,324,650
Bristol-Myers Squibb Co. 148,200 3,802,812
Johnson & Johnson 100,000 4,952,000
Medco Health Solutions,
Inc. (a) 11,071 287,071
Merck & Co., Inc. 91,800 4,646,916
Pfizer, Inc. 472,100 14,342,398
Teva Pharmaceutical
Industries Ltd., ADR 111,600 6,377,940
Watson Pharmaceuticals,
Inc. (a) 150,000 6,253,500
------------
45,987,287
------------
- --------------------------------------------------
</Table>
See notes to investment portfolio.
8
INVESTMENT PORTFOLIO (CONTINUED)
SEPTEMBER 30, 2003
<Table>
<Caption>
COMMON STOCKS
(CONTINUED) SHARES VALUE
- --------------------------------------------------
INDUSTRIALS - 10.0%
AEROSPACE & DEFENSE - 2.5%
Honeywell International,
Inc. 188,600 $ 4,969,610
Lockheed Martin Corp. 150,000 6,922,500
United Technologies
Corp. 97,600 7,542,528
------------
19,434,638
------------
COMMERCIAL SERVICES & SUPPLIES - 3.1%
Avery Dennison Corp. 97,600 4,930,752
Convergys Corp. (a) 96,000 1,760,640
First Data Corp. 167,400 6,689,304
Paychex, Inc. 186,000 6,310,980
Pitney Bowes, Inc. 120,700 4,625,224
------------
24,316,900
------------
INDUSTRIAL CONGLOMERATES - 2.9%
3M Co. 104,800 7,238,536
General Electric Co. 500,000 14,905,000
------------
22,143,536
------------
MACHINERY - 1.3%
Briggs & Stratton Corp. 54,300 3,190,668
Caterpillar, Inc. 100,000 6,884,000
------------
10,074,668
------------
MARINE - 0.2%
Overseas Shipholding
Group, Inc. 65,700 1,698,345
------------
- --------------------------------------------------
INFORMATION TECHNOLOGY - 19.2%
COMMUNICATIONS EQUIPMENT - 3.5%
Cisco Systems, Inc. (a) 650,800 12,716,632
Nokia Oyj, ADR 371,900 5,801,640
Scientific-Atlanta, Inc. 118,300 3,685,045
UTStarcom, Inc. (a) 150,000 4,771,500
------------
26,974,817
------------
COMPUTERS & PERIPHERALS - 3.0%
Dell, Inc. (a) 278,900 9,312,471
International Business
Machines Corp. 90,300 7,976,199
Lexmark International,
Inc. (a) 100,700 6,345,107
------------
23,633,777
------------
</Table>
<Table>
<Caption>
COMMON STOCKS
(CONTINUED) SHARES VALUE
- --------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.2%
Avnet, Inc. (a) 218,200 $ 3,604,664
Benchmark Electronics,
Inc. (a) 126,600 5,351,382
------------
8,956,046
------------
INFORMATION TECHNOLOGY CONSULTING & SERVICES -1.5%
Accenture Ltd., Class A
(a) 468,800 10,472,992
Electronic Data Systems
Corp. 77,000 1,555,400
------------
12,028,392
------------
INTERNET SOFTWARE & SERVICES - 0.5%
United Online, Inc. (a) 107,600 3,735,872
------------
OFFICE ELECTRONICS - 0.4%
Xerox Corp. (a) 142,900 1,466,154
Zebra Technologies
Corp., Class A (a) 35,550 1,833,313
------------
3,299,467
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 4.2%
Analog Devices, Inc. (a) 150,000 5,703,000
Applied Materials, Inc.
(a) 200,000 3,628,000
Fairchild Semiconductor
International, Inc.
(a) 376,300 6,239,054
Intel Corp. 200,000 5,502,000
QLogic Corp. (a) 48,700 2,289,387
Texas Instruments, Inc. 388,500 8,857,800
------------
32,219,241
------------
SOFTWARE - 4.9%
Adobe Systems, Inc. 166,000 6,517,160
Microsoft Corp. 761,600 21,164,864
Oracle Corp. (a) 200,000 2,244,000
SAP AG, ADR 150,000 4,561,500
VERITAS Software Corp.
(a) 111,600 3,504,240
------------
37,991,764
------------
- --------------------------------------------------
</Table>
See notes to investment portfolio.
9
INVESTMENT PORTFOLIO (CONTINUED)
SEPTEMBER 30, 2003
<Table>
<Caption>
COMMON STOCKS
(CONTINUED) SHARES VALUE
- --------------------------------------------------
MATERIALS - 3.1%
CHEMICALS - 1.9%
Monsanto Co. 269,000 $ 6,439,860
PPG Industries, Inc. 96,700 5,049,674
Sigma-Aldrich Corp. 59,000 3,064,460
------------
14,553,994
------------
CONSTRUCTION MATERIALS - 0.3%
Vulcan Materials Co. 67,700 2,701,907
------------
METALS & MINING - 0.6%
Alcoa, Inc. 100,000 2,616,000
Carpenter Technology
Corp. 90,600 1,942,464
------------
4,558,464
------------
PAPER & FOREST PRODUCTS - 0.3%
Rayonier, Inc. 63,000 2,557,800
------------
- --------------------------------------------------
TELECOMMUNICATION SERVICES - 3.5%
DIVERSIFIED TELECOMMUNICATION SERVICES - 3.5%
AT&T Corp. 100,000 2,155,000
BellSouth Corp. 150,300 3,559,104
CenturyTel, Inc. 177,000 5,998,530
SBC Communications, Inc. 320,300 7,126,675
Verizon Communications,
Inc. 254,100 8,243,005
------------
27,082,314
------------
- --------------------------------------------------
UTILITIES - 2.1%
ELECTRIC UTILITIES - 0.7%
Consolidated Edison,
Inc. 129,000 5,258,040
------------
GAS UTILITIES - 0.8%
Kinder Morgan, Inc. 112,800 6,092,328
------------
</Table>
<Table>
<Caption>
COMMON STOCKS
(CONTINUED) SHARES VALUE
- --------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER - 0.6%
Duke Energy Corp. 149,900 $ 2,669,719
Questar Corp. 74,500 2,295,345
------------
4,965,064
------------
TOTAL COMMON STOCKS
(cost of $684,459,288) 769,061,875
------------
SHORT-TERM OBLIGATION - 1.0% PAR
- --------------------------------------------------
Repurchase agreement
with State Street Bank
& Trust, dated
09/30/03, due 10/01/03
at 0.900%,
collateralized by a
U.S. Treasury Bond
maturing 02/15/27,
market value
$8,116,643 (repurchase
proceeds $7,940,199)
(cost of $7,940,000) $7,940,000 7,940,000
------------
TOTAL
INVESTMENTS - 100.0%
(cost of $692,399,288)
(b) 777,001,875
------------
OTHER ASSETS & LIABILITIES,
NET - 0.0% (262,011)
- --------------------------------------------------
NET ASSETS - 100.0% $776,739,864
============
</Table>
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Cost for federal income tax purposes is $692,201,988.
<Table>
<Caption>
ACRONYM NAME
- -----------------------------------------
ADR American Depositary Receipt
</Table>
See notes to investment portfolio.
10
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2003
<Table>
ASSETS:
Investments, at cost $ 692,399,288
-------------
Investments, at value $ 777,001,875
Cash 1,205,767
Receivable for:
Investments sold 1,212,961
Fund shares sold 85,841
Interest 199
Dividends 617,172
Expense reimbursement due from
Advisor 12,383
Deferred Trustees' compensation plan 11,086
-------------
Total Assets 780,147,284
-------------
LIABILITIES:
Payable for:
Investments purchased 1,204,232
Fund shares repurchased 179,760
Management fee 382,242
Administration fee 118,540
Transfer agent fee 1,219,594
Pricing and bookkeeping fees 22,640
Trustees' fees 342
Distribution and service fees 32,914
Deferred Trustees' fees 11,086
Other liabilities 236,070
-------------
Total Liabilities 3,407,420
-------------
NET ASSETS $ 776,739,864
=============
COMPOSITION OF NET ASSETS:
Paid-in capital $ 964,847,096
Undistributed net investment income 250,843
Accumulated net realized loss (272,960,662)
Net unrealized appreciation on
investments 84,602,587
-------------
NET ASSETS $ 776,739,864
=============
CLASS A:
Net assets $ 94,617,130
Shares outstanding 9,034,034
-------------
Net asset value per share $ 10.47(a)
=============
Maximum offering price per share
($10.47/0.9425) $ 11.11(b)
=============
CLASS B:
Net assets $ 6,872,372
Shares outstanding 661,509
-------------
Net asset value and offering price
per share $ 10.39(a)
=============
CLASS C:
Net assets $ 660,030
Shares outstanding 63,506
-------------
Net asset value and offering price
per share $ 10.39(a)
=============
CLASS Z:
Net assets $ 674,590,332
Shares outstanding 73,908,630
-------------
Net asset value, offering and
redemption price per share $ 9.13
=============
</Table>
(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 YEAR ENDED
SEPTEMBER 30, 2003
<Table>
INVESTMENT INCOME:
Dividends $ 8,536,290
Interest 262,535
------------
Total Investment Income (net of
foreign taxes withheld of
$1,560) 8,798,825
------------
EXPENSES:
Management fee 4,308,676
Administration fee 1,356,912
Distribution fee:
Class A 90,598
Class B 51,068
Class C 4,271
Service fee:
Class A 226,495
Class B 17,023
Class C 1,424
Transfer agent fee:
Class A 779,220
Class B 58,758
Class C 4,817
Class Z 3,821,525
Pricing and bookkeeping fees 231,999
Trustees' fees 26,194
Custody fee 17,774
Other expenses 651,630
------------
Total Operating Expenses 11,648,384
Fees and expenses waived or
reimbursed by Advisor:
Class A (465,036)
Class B (35,080)
Class C (2,872)
Fees waived by Distributor - Class
A (45,299)
Custody earnings credit (529)
------------
Net Operating Expenses 11,099,568
------------
Net Investment Loss (2,300,743)
------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investments (56,715,298)
Net change in unrealized
appreciation/ depreciation on
investments 208,670,172
------------
Net Gain 151,954,874
------------
Net Increase in Net Assets from
Operations $149,654,131
============
</Table>
See notes to investment portfolio.
11
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
INCREASE (DECREASE) ----------------------------
IN NET ASSETS: 2003 2002 (A)
- ---------------------------------------------------
OPERATIONS:
Net investment loss $ (2,300,743) $ (5,490,434)
Net realized loss on
investments (56,715,298) (120,567,041)
Net change in
unrealized
appreciation/
depreciation on
investments 208,670,172 (28,170,574)
------------ -------------
Net Increase
(Decrease) from
Operations 149,654,131 (154,228,049)
------------ -------------
SHARE TRANSACTIONS:
Class A:
Subscriptions 7,644,323 1,197,794
Proceeds received in
connection with
mergers -- 88,782,053
Redemptions (14,032,114) (3,416,160)
------------ -------------
Net Increase
(Decrease) (6,387,791) 86,563,687
------------ -------------
Class B:
Subscriptions 771,614 159,375
Proceeds received in
connection with
mergers -- 7,418,537
Redemptions (1,742,729) (755,201)
------------ -------------
Net Increase
(Decrease) (971,115) 6,822,711
------------ -------------
Class C:
Subscriptions 173,069 34,864
Proceeds received in
connection with
mergers -- 488,343
Redemptions (116,948) (8,207)
------------ -------------
Net Increase 56,121 515,000
------------ -------------
Class Z:
Subscriptions 49,798,986 80,960,112
Proceeds received in
connection with
mergers -- 8,904,524
Redemptions (78,078,650) (113,567,847)
------------ -------------
Net Decrease (28,279,664) (23,703,211)
------------ -------------
Net Increase
(Decrease) from
Share Transactions (35,582,449) 70,198,187
------------ -------------
Total Increase
(Decrease) in Net
Assets 114,071,682 (84,029,862)
</Table>
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
INCREASE (DECREASE) ----------------------------
IN NET ASSETS: 2003 2002 (A)
- ---------------------------------------------------
NET ASSETS:
Beginning of period $662,668,182 $ 746,698,044
------------ -------------
End of period
(including
undistributed net
investment income of
$250,843 and
accumulated net
investment loss of
$(7,289),
respectively) $776,739,864 $ 662,668,182
============ =============
CHANGES IN SHARES:
Class A:
Subscriptions 800,725 115,387
Issued in connection
with mergers -- 9,930,878
Redemptions (1,457,386) (355,570)
------------ -------------
Net Increase
(Decrease) (656,661) 9,690,695
------------ -------------
Class B:
Subscriptions 79,511 16,534
Issued in connection
with mergers -- 829,814
Redemptions (182,289) (82,061)
------------ -------------
Net Increase
(Decrease) (102,778) 764,287
------------ -------------
Class C:
Subscriptions 18,211 3,642
Issued in connection
with mergers -- 54,624
Redemptions (12,056) (915)
------------ -------------
Net Increase 6,155 57,351
------------ -------------
Class Z:
Subscriptions (b) 5,931,393 8,316,424
Issued in connection
with mergers (b) -- 1,143,364
Redemptions (b) (9,268,147) (11,817,646)
------------ -------------
Net Increase
(Decrease) (3,336,754) (2,357,858)
------------ -------------
</Table>
(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.
(b) Capital share activity prior to July 25, 2003 has been restated to reflect a
2-for-1 share split.
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Columbia Young Investor Fund (the "Fund"), a series of Columbia Funds Trust XI,
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 July 29, 2002, the outstanding
shares of the Fund were redesignated Class Z shares. On that date, the Fund also
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 ("CDSC")
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 CDSC. 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 CDSC
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. Effective July 25,
2003, there was a 2-for-1 share split on Class Z shares. All capital share
activity and per share data for Class Z have been restated to reflect the
2-for-1 share split.
Effective October 13, 2003, the Liberty Young Investor Fund was renamed Columbia
Young Investor Fund. Also on this date, the Liberty-Stein Roe Funds Investment
Trust was renamed Columbia Funds Trust XI.
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:
<Table>
<Caption>
Net Assets Unrealized
Shares Issued Received Depreciation(1)
------------- -------- ---------------
LGIF 2,264,091 $18,923,802 $ (3,262,765)
LYIF 9,694,589 $86,669,655 $(14,588,637)
</Table>
<Table>
<Caption>
Net Assets of
Net Asset Acquired Net Assets of
of the Fund Funds the Fund
Immediately Immediately Immediately
Prior to Prior to After
Combination Combination Combination
----------- ----------- -----------
$597,382,198 $105,593,457 $702,975,655
</Table>
(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 accounting principles
generally accepted in the United States of America 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 reported at the
close of the principal securities exchanges on which the investments are traded
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.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2003
DETERMINATION OF CLASS NET ASSET VALUES:
All income, expenses (other than class specific fees), and realized and
unrealized gains (losses) are allocated to each class proportionately on a daily
basis, based on net assets, for purposes of determining the net asset value of
each class.
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 accounting principles generally accepted
in the United States of America. These differences are primarily due to
differing treatments for deferral of losses from wash sales, capital loss
carryforwards, post-October losses and non-deductible expenses.
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.
For the year ended September 30, 2003, permanent items identified and
reclassified among the components of net assets are as follows:
<Table>
<Caption>
Undistributed Accumulated
Net Investment Net Realized Paid-In
Income Loss Capital
- -------------- ------------ ------------
$2,558,875 $12,368,229 $(14,927,104)
</Table>
Net investment income, net realized gains (losses) and net assets were not
affected by this reclassification.
As of September 30, 2003, the components of distributable earnings on a tax
basis were as follows:
<Table>
<Caption>
Undistributed Undistributed
Ordinary Long-Term Unrealized
Income Capital Gains Appreciation*
- ------------- ------------- -------------
$-- $-- $84,799,887
</Table>
* The difference between book-basis and tax-basis unrealized appreciation is
attributable primarily to the tax deferral of losses on wash sales and the
differing treatment of partnerships for tax.
The following capital loss carryforwards, determined as of September 30, 2003,
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:
<Table>
<Caption>
Capital Loss
Year of Expiration Carryforwards
- ------------------ -------------
2007 $ 1,272,589
2008 273,885
2009 35,196,902
2010 68,425,718
2011 124,610,311
------------
$229,779,405
============
</Table>
Of these carryforwards, $25,802,098 (expiring 9/30/2009) and $6,808,011
($1,272,589 expiring 9/30/2007, $273,885 expiring 9/30/2008, and $5,261,537
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).
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.
Expired capital loss carryforwards, if any, are recorded as a reduction of
paid-in capital.
Under current tax rules, certain capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal year.
As of September 30, 2003 for federal income tax purposes, post-October losses of
$43,116,286 attributable to security transactions, were deferred to October 1,
2003.
14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2003
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
On April 1, 2003, Stein Roe & Farnham Incorporated ("Stein Roe"), the investment
advisor to the Fund, merged into Columbia Management Advisors, Inc.
("Columbia"), formerly known as Columbia Management Co., an indirect,
wholly-owned subsidiary of FleetBoston Financial Corporation. At the time of the
merger, Columbia assumed the obligations of Stein Roe with respect to the Fund.
The merger did not change the way the Fund is managed, the investment personnel
assigned to manage the Fund or the fees paid by the Fund.
MANAGEMENT FEE:
Columbia is the investment advisor of the Fund and receives a monthly fee based
on the Fund's average daily net assets as follows:
<Table>
<Caption>
Average Daily Net Assets Annual Fee Rate
- ------------------------ ---------------
First $500 million 0.60%
Next $500 million 0.55%
Over $1 billion 0.50%
</Table>
ADMINISTRATION FEE:
Columbia also provides accounting and other services for a monthly fee paid by
the Fund as follows:
<Table>
<Caption>
Average Daily Net Assets Annual Fee Rate
- ------------------------ ---------------
First $500 million 0.200%
Next $500 million 0.150%
Over $1 billion 0.125%
</Table>
PRICING AND BOOKKEEPING FEES:
Columbia is responsible for providing pricing and bookkeeping services to the
Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Bank and Trust Company ("State Street"). Columbia pays fees to State Street
under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, Columbia 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 year ended September 30, 2003,
the net asset based fee rate was 0.030%. The Fund also pays out-of-pocket costs
for pricing services.
TRANSFER AGENT FEE:
Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia,
provides shareholder services for a monthly fee equal to 0.06% annually of the
Fund's average daily net assets plus charges based on the number of shareholder
accounts and transactions. The Transfer Agent also receives reimbursement for
certain out-of-pocket expenses. Effective October 13, 2003, Liberty Funds
Services, Inc. changed its name to Columbia Funds Services, Inc.
At a meeting held on October 8, 2003, the Board of Trustees approved the change
of transfer agent fees structure of the Fund. Effective November 1, 2003, the
Fund will be charged an annual $28.00 charge per open account for the transfer
agent fees.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia,
is the Fund's principal underwriter. Effective October 13, 2003, Liberty Funds
Distributor, Inc. changed its name to Columbia Funds Distributor, Inc.
For the year ended September 30, 2003, the Fund has been advised that the
Distributor retained net underwriting discounts of $4,443 on sales of the Fund's
Class A shares and received CDSC of $44,042, $30,536 and $7 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. 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, Columbia has voluntarily agreed to reimburse the Fund
for certain expenses so that the transfer agency fees (excluding out-of-pocket
expenses) for each of Class A, Class B and Class C will not exceed 0.10%
annually of the Class's average daily net assets.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2003
OTHER:
The Fund pays no compensation to its officers, all of whom are employees of
Columbia 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 $529 of custody
fees were reduced by balance credits for the year ended September 30, 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 year ended September 30, 2003, purchases and sales of investments, other
than short-term obligations, were $914,636,311 and $931,037,010, respectively,
of which $3,848,500 and $0 were U.S. Government securities, respectively.
Unrealized appreciation (depreciation) at September 30, 2003 based on cost of
investments for federal income tax purposes, was:
<Table>
Gross unrealized appreciation $100,000,188
Gross unrealized depreciation (15,200,301)
------------
Net unrealized appreciation $ 84,799,887
============
</Table>
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
year ended September 30, 2003, the Fund did not borrow under the agreements.
16
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows:
<Table>
<Caption>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 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) (0.03) (0.01)
Net realized and unrealized gain (loss) on investments 1.98 (0.41)
-------- --------
Total from Investment Operations 1.95 (0.42)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 10.47 $ 8.52
======== ========
Total return (c)(d) 22.89% (4.70)%(e)
======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f) 1.54% 1.67%(g)
Net investment loss (f) (0.35)% (0.49)%(g)
Waiver/reimbursement 0.56% 0.80%(g)
Portfolio turnover rate 128% 32%
Net assets, end of period (000's) $ 94,617 $ 82,564
</Table>
(a) Class A shares were initially offered on July 29, 2002. Per share data and
total return reflect 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 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.
17
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
<Table>
<Caption>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 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) (0.10) (0.02)
Net realized and unrealized gain (loss) on investments 1.98 (0.41)
-------- --------
Total from Investment Operations 1.88 (0.43)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 10.39 $ 8.51
======== ========
Total return (c)(d) 22.09% (4.81)%(e)
======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f) 2.24% 2.37%(g)
Net investment loss (f) (1.05)% (1.19)%(g)
Waiver/reimbursement 0.51% 0.75%(g)
Portfolio turnover rate 128% 32%
Net assets, end of period (000's) $ 6,872 $ 6,505
</Table>
(a) Class B shares were initially offered on July 29, 2002. Per share data and
total return reflect 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 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.
18
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
<Table>
<Caption>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 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) (0.10) (0.02)
Net realized and unrealized gain (loss) on investments 1.98 (0.41)
-------- --------
Total from Investment Operations 1.88 (0.43)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 10.39 $ 8.51
======== ========
Total return (c)(d) 22.09% (4.81)%(e)
======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f) 2.24% 2.37%(g)
Net investment loss (f) (1.05)% (1.19)%(g)
Waiver/reimbursement 0.50% 0.75%(g)
Portfolio turnover rate 128% 32%
Net assets, end of period (000's) $ 660 $ 488
</Table>
(a) Class C shares were initially offered on July 29, 2002. Per share data and
total return reflect 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 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.
19
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------
CLASS Z SHARES 2003 2002 (A)(B) 2001 (A) 2000 (A) 1999 (A)
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $ 7.42 $ 9.38 $ 17.97 $ 13.71 $ 11.34
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment loss (c) (0.03) (0.07)(d) (0.06)(d) (0.07)(d) (0.05)(d)
Net realized and unrealized gain
(loss) on investments 1.74 (1.89) (6.52) 4.49 2.72
---------- ---------- ---------- ---------- ----------
Total from Investment
Operations 1.71 (1.96) (6.58) 4.42 2.67
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net realized gains -- -- (1.56) (0.16) (0.30)
In excess of net realized gains -- -- (0.45) -- --
---------- ---------- ---------- ---------- ----------
Total Distributions Declared
to Shareholders -- -- (2.01) (0.16) (0.30)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.13 $ 7.42 $ 9.38 $ 17.97 $ 13.71
========== ========== ========== ========== ==========
Total return (e) 23.05% (20.90)% (40.08)% 32.32% 23.89%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (f) 1.49% 1.58%(d) 1.26%(d) 1.08%(d) 1.18%(d)
Net investment loss (f) (0.30)% (0.71)%(d) (0.41)%(d) (0.45)%(d) (0.37)%(d)
Portfolio turnover rate 128% 32% 23%(g) 72%(g) 45%(g)
Net assets, end of period
(000's) $ 674,590 $ 573,111 $ 746,698 $1,215,809 $ 880,574
</Table>
(a) Per share data has been restated to reflect a 2-for-1 share split effective
July 25, 2003.
(b) Effective July 29, 2002, the Class S shares were redesignated Class Z
shares.
(c) Per share data was calculated using average shares outstanding during the
period.
(d) Per share data and ratios reflect income and expenses inclusive of the
Fund's proportionate share of the income and expenses of the SR&F Growth
Investor Portfolio prior to the termination of their master/feeder fund
structure on July 26, 2002.
(e) Total return at net asset value assuming all distributions reinvested.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Portfolio turnover disclosed is for the SR&F Growth Investor Portfolio.
20
REPORT OF INDEPENDENT AUDITORS
TO THE TRUSTEES OF COLUMBIA FUNDS TRUST XI
AND THE SHAREHOLDERS OF COLUMBIA YOUNG INVESTOR FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Columbia Young Investor Fund (the
"Fund") (formerly Liberty Young Investor Fund) (a series of Columbia Funds Trust
XI) (formerly Liberty-Stein Roe Funds Investment Trust), at September 30, 2003
and the results of its operations, the changes in its net assets, and its
financial highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of portfolio positions at September 30, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 14, 2003
21
TRUSTEES
Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were
appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth
had been directors of 15 Columbia Funds and 12 funds in the CMG Fund Trust. Also
effective October 8, 2003, the incumbent trustees of the Fund were elected as
directors of the 15 Columbia Funds and as trustees of the 12 funds in the CMG
Fund Trust. The new combined Board of Trustees of the Fund now oversees 124
funds in the Columbia Funds complex (including the former Liberty Funds, former
Stein Roe Funds, Columbia Funds and CMG Funds). Several of those trustees also
serve on the Boards of other funds in the Columbia Funds complex.
The Trustees serve terms of indefinite duration. The names, addresses and ages
of the Trustees and officers of the Funds in the Columbia Funds complex, the
year each was first elected or appointed to office, their principal business
occupations during at least the last five years, the number of portfolios
overseen by each Trustee and other directorships they hold are shown below. Each
officer listed below serves as an officer of each Fund in the Columbia Funds
complex. The Statement of Additional Information (SAI) contains additional
information about the Trustees and is available without charge upon request by
calling the fund's distributor at 800-345-6611.
<Table>
<Caption>
Year first
Position elected or
with appointed Principal occupation(s)
Name, address and age Funds to office(1) during past five years
- --------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
Douglas A. Hacker (age 48) Trustee 1996 Executive Vice President-Strategy of United
P.O. Box 66100 Airlines (airline) since December, 2002 (formerly
Chicago, IL 60666 President of UAL Loyalty Services (airline) from
September, 2001 to December, 2002; Executive Vice
President and Chief Financial Officer of United
Airlines from March, 1993 to September, 2001;
Senior Vice President and Chief Financial Officer
of UAL, Inc. prior thereto).
Janet Langford Kelly (age 45) Trustee 1996 Chief Administrative Officer and Senior Vice
3100 West Beaver Road President, Kmart Holding Corporation since
Troy, MI 48084-3163 September, 2003 (formerly Executive Vice
President-Corporate Development and
Administration, General Counsel and Secretary,
Kellogg Company (food manufacturer), from
September, 1999 to August, 2003; Senior Vice
President, Secretary and General Counsel, Sara Lee
Corporation (branded, packaged, consumer-products
manufacturer) from January, 1995 to September,
1999).
Richard W. Lowry (age 67) Trustee 1995 Private Investor since August, 1987 (formerly
10701 Charleston Drive Chairman and Chief Executive Officer, U.S. Plywood
Vero Beach, FL 32963 Corporation (building products manufacturer)).
Charles R. Nelson (age 61) Trustee 1981 Professor of Economics, University of Washington,
Department of Economics since January, 1976; Ford and Louisa Van Voorhis
University of Washington Professor of Political Economy, University of
Seattle, WA 98195 Washington, since September, 1993; Director,
Institute for Economic Research, University of
Washington, since September, 2001; Adjunct
Professor of Statistics, University of Washington,
since September, 1980; Associate Editor, Journal
of Money Credit and Banking, since September,
1993; consultant on econometric and statistical
matters.
John J. Neuhauser (age 60) Trustee 1985 Academic Vice President and Dean of Faculties
84 College Road since August, 1999, Boston College (formerly Dean,
Chestnut Hill, MA 02467-3838 Boston College School of Management from
September, 1977 to September, 1999.
Patrick J. Simpson (age 58) Trustee 2000 Partner, Perkins Coie L.L.P. (formerly Partner,
1211 S.W. 5th Avenue Stoel Rives Boley Jones & Grey).
Suite 1500
Portland, OR 97204
Thomas E. Stitzel (age 67) Trustee 1998 Business Consultant since 1999 (formerly Professor
2208 Tawny Woods Place of Finance from 1975 to 1999 and Dean from 1977 to
Boise, ID 83706 1991, College of Business, Boise State
University); Chartered Financial Analyst.
<Caption>
Number of
portfolios in
Columbia Funds Other
Complex overseen directorships
Name, address and age by trustee held
- -----------------------------------
DISINTERESTED TRUSTEES
Douglas A. Hacker (age 48) 124 None
P.O. Box 66100
Chicago, IL 60666
Janet Langford Kelly (age 45) 124 None
3100 West Beaver Road
Troy, MI 48084-3163
Richard W. Lowry (age 67) 126(3) None
10701 Charleston Drive
Vero Beach, FL 32963
Charles R. Nelson (age 61) 124 None
Department of Economics
University of Washington
Seattle, WA 98195
John J. Neuhauser (age 60) 127(3,4) Saucony, Inc. (athletic
84 College Road footwear); SkillSoft Corp.
Chestnut Hill, MA 02467-3838 (e-learning)
Patrick J. Simpson (age 58) 124 None
1211 S.W. 5th Avenue
Suite 1500
Portland, OR 97204
Thomas E. Stitzel (age 67) 124 None
2208 Tawny Woods Place
Boise, ID 83706
</Table>
22
TRUSTEES (CONTINUED)
<Table>
<Caption>
Year first
Position elected or
with appointed Principal occupation(s)
Name, address and age Funds to office(1) during past five years
- --------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES (CONTINUED)
Thomas C. Theobald (age 66) Trustee 1996 Managing Director, William Blair Capital Partners
27 West Monroe Street, (private equity investing) since September, 1994
Suite 3500 (formerly Chief Executive Officer and Chairman of
Chicago, IL 60606 the Board of Directors, Continental Bank
Corporation prior thereto).
Anne-Lee Verville (age 58) Trustee 1998 Author and speaker on educational systems needs
359 Stickney Hill Road (formerly General Manager, Global Education
Hopkinton, NH 03229 Industry from 1994 to 1997, and President,
Applications Solutions Division from 1991 to 1994,
IBM Corporation (global education and global
applications)).
Richard L. Woolworth (age 62) Trustee 1991 Chairman and Chief Executive Officer, The Regence
100 S.W. Market Street Group (healthcare maintenance organization)
#1500 (formerly Chairman and Chief Executive Officer,
Portland, OR 97207 BlueCross BlueShield of Oregon; Certified Public
Accountant, Arthur Young & Company).
INTERESTED TRUSTEES
William E. Mayer(2) (age 63) Trustee 1994 Managing Partner, Park Avenue Equity Partners
399 Park Avenue (private equity) since February, 1999 (formerly
Suite 3204 Founding Partner, Development Capital LLC from
New York, NY 10022 November 1996 to February, 1999; Dean and
Professor, College of Business and Management,
University of Maryland from October, 1992 to
November, 1996).
Joseph R. Palombo(2) (age 50) Trustee, 2000 Executive Vice President and Chief Operating
One Financial Center Chairman of Officer of Columbia Management Group, Inc.
Boston, MA 02111 the Board (Columbia Management) since December, 2001 and
and Director, Executive Vice President and Chief
President Operating Officer of the Advisor since April, 2003
(formerly Chief Operations Officer of Mutual
Funds, Liberty Financial Companies, Inc. from
August, 2000 to November, 2001; Executive Vice
President of Stein Roe & Farnham Incorporated
(Stein Roe) from April, 1999 to April, 2003;
Director of Colonial Management Associates, Inc.
(Colonial) from April, 1999 to April, 2003;
Director of Stein Roe from September, 2000 to
April, 2003) President of Columbia Funds and
Galaxy Funds since February, 2003 (formerly Vice
President from September 2002 to February 2003);
Manager of Stein Roe Floating Rate Limited
Liability Company since October, 2000; (formerly
Vice President of the Columbia Funds from April,
1999 to August, 2000; Chief Operating Officer and
Chief Compliance Officer, Putnam Mutual Funds from
December, 1993 to March, 1999).
<Caption>
Number of
portfolios in
Columbia Funds Other
Complex overseen directorships
Name, address and age by trustee held
- -----------------------------------
DISINTERESTED TRUSTEES (CONTINUED)
Thomas C. Theobald (age 66) 124 Anixter International
27 West Monroe Street, (network support equipment
Suite 3500 distributor), Jones Lang
Chicago, IL 60606 LaSalle (real estate
management services) and
MONY Group (life
insurance).
Anne-Lee Verville (age 58) 125(4) Chairman of the Board of
359 Stickney Hill Road Directors, Enesco Group,
Hopkinton, NH 03229 Inc. (designer, importer
and distributor of
giftware and
collectibles).
Richard L. Woolworth (age 62) 124 NW Natural, a natural gas
100 S.W. Market Street service provider
#1500
Portland, OR 97207
INTERESTED TRUSTEES
William E. Mayer(2) (age 63) 126(3) Lee Enterprises (print
399 Park Avenue media), WR Hambrecht + Co.
Suite 3204 (financial service
New York, NY 10022 provider) and First Health
(healthcare).
Joseph R. Palombo(2) (age 50) 125(5) None
One Financial Center
Boston, MA 02111
</Table>
(1) In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds Complex.
(2) Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co. Mr. Palombo is an interested person as an employee of the Advisor.
(3) Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of
the All-Star Funds, currently consisting of 2 funds, which are advised by
an affiliate of the Advisor.
(4) Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
(5) Mr. Palombo also serves as an interested director of Columbia Management
Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor.
23
OFFICERS AND TRANSFER AGENT
<Table>
<Caption>
Year first
elected or
Position appointed
Name, address and age with Funds to office Principal occupation(s) during past five years
- ---------------------------------------------------------------------------------------------------------------------------
OFFICERS
Vicki L. Benjamin (Age 42) Chief Accounting 2001 Controller of the Columbia Funds and of the Liberty All-Star
One Financial Center Officer and Funds since May, 2002; Chief Accounting Officer of the
Boston, MA 02111 Controller Columbia Funds and the Liberty All-Star Funds since June,
2001; Controller and Chief Accounting Officer of the Galaxy
Funds since September, 2002 (formerly Vice President,
Corporate Audit, State Street Bank and Trust Company from
May, 1998 to April, 2001; Audit Manager from July, 1994 to
June, 1997; Senior Audit Manager from July, 1997 to May,
1998, Coopers & Lybrand, LLP).
J. Kevin Connaughton (Age 39) Treasurer 2000 Treasurer of the Columbia Funds and of the Liberty All-Star
One Financial Center Funds since December, 2000; Vice President of the Advisor
Boston, MA 02111 since April, 2003 (formerly Controller of the Liberty Funds
and of the Liberty All-Star Funds from February, 1998 to
October, 2000); Treasurer of the Galaxy Funds since
September 2002; Treasurer, Columbia Management
Multi-Strategy Hedge Fund, LLC since December, 2002
(formerly Vice President of Colonial from February, 1998 to
October, 2000 and Senior Tax Manager, Coopers & Lybrand, LLP
from April, 1996 to January, 1998).
</Table>
Important Information About This Report
The Transfer Agent for Columbia Young Investor Fund is:
Columbia Funds Services, Inc.
P.O. Box 8081
Boston, MA 02266-8081
Please note our new name as of October 13, 2003.
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 Columbia 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 Columbia Funds Performance Update.
Annual Report:
Columbia Young Investor Fund
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Young Investor Fund ANNUAL REPORT, SEPTEMBER 30, 2003 ---------------
PRSRT STD
U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
---------------
[LOGO COLUMBIA FUNDS]
A Member of Columbia Management Group
(C)2003 Columbia Funds Distributor, Inc.
One Financial Center, Boston, MA 02111-2621
800.345.6611 www.columbiafunds.com
756-02/580P-0903 (11/03) 03/3265
ACTIVITY PAGES
MORE FOR YOUR DOLLAR!
All of the following words appear on a one-dollar bill. Can you find each of
them in the word search below?
America United Great Seal Private
Trust Dollar Note One Secretary
States Legal Federal All Treasury
Tender Debts This Unum Reserve [GEORGE WASHINGTON
GRAPHIC]
[CROSSWORD PUZZLE GRAPHIC]
I
SMART SHOPPERS!
Ted and Tina Thrifty are shopping for new school supplies. They don't have a
lot of money, so they want to find the best deals they can. In the chart below,
pick the store (A, B or C) that offers the best value for each item. You can
use the scratch pad on this page to do the math. When you've finished, you can
check your answers with those at the bottom of the page.
<Table>
<Caption>
ITEM STORE A STORE B STORE C BEST VALUE
- ---- ------- ------- ------- ----------
1. Pencils 5 for $1.50 3 for $0.75 4 for $0.80
----------
2. Spiral notebooks 2 for $3.00 4 for $6.00 7 for $9.00
----------
3. Notebook paper 100 sheets for $2.00 50 sheets for $1.50 25 sheets for $1.00
----------
4. Colored markers 20 for $3.00 25 for $3.50 30 for $4.80
----------
5. Pens 8 for $1.60 5 for $1.25 3 for $1.05
----------
</Table>
[BACKPACK GRAPHIC]
[ANSWER KEY GRAPHIC]
II
WHAT'S IT WORTH TO YOU?
Want to know how much money you have in a mutual fund? The answer lies in a
calculation that includes your fund's "net asset value" (NAV).
NAV is the current price for one share of a fund. Multiply the NAV for a fund
by the number of shares you own and PRESTO! This is what your mutual fund
investment is worth. You can find the number of shares you have on a recent
account statement from the fund.
The first step a fund takes in calculating its NAV is to add up the value of
all the stocks, bonds and cash in the fund's portfolio. Any money that the fund
owes in expenses is then subtracted from the value of these investments. What's
left is divided by the total number of fund shares that are owned by all
investors.
Fortunately, there are easier ways for you to find a fund's NAV. For example,
many mutual fund companies, like Columbia Funds, list the NAVs of their funds
online at their respective websites. Also, many daily newspapers list the NAVs
of mutual funds in the business section. Your fund's NAV is also listed in your
shareholder report. This figure will be different from the fund's current NAV
because NAV changes daily. Some funds, including Columbia Young Investor Fund,
have different types of shares, which are known as "share classes." For these,
a separate NAV is listed for each share class. Your account statement will also
tell you what class of shares you own.
Here's what a newspaper listing might look like for the make-believe Blueberry
Stock Fund:
<Table>
<Caption>
BLUEBERRY NAV PER
STOCK FUND SHARE
Class A shares $11.50
Class B shares 11.55
Class C shares 11.45
</Table>
If you owned 10 Class A shares of the Blueberry Stock Fund, your investment
would be worth $115.00 (10 x $11.50 = $115.00). See if you can calculate what
the following investments in the Blueberry Stock Fund are worth, using
information in the box above. (You can check your math against the answers at
the bottom of the page.)
[STOCK CERTIFICATE GRAPHIC]
1. 20 Class A shares = $ ______________________________
2. 30 Class A shares = $ ______________________________
3. 10 Class B shares = $ ______________________________
4. 25 Class B shares = $ ______________________________
5. 35 Class C shares = $ ______________________________
6. 50 Class C shares = $ ______________________________
Now that you know how to make this calculation, let's do it for your investment
in Columbia Young Investor Fund. (You'll need a recent account statement and
NAV to determine the number of shares you own.)
Number of shares you own: ______________
Type of shares you own: ______________
Recent NAV for this class of shares: $______________
Total value of your investment
(NAV x # of shares),
as of ____________ date: $______________
III
[ANSWER KEY GRAPHIC]
FUNNY MONEY
See if you can answer the money riddles below. (You'll find answers and
explanations for these riddles at the bottom of the page.)
1. What coin is worth twice its value when you take away half?
2. Why did Julie put her money in the freezer?
3. Where do fish keep their money?
4. What did the pirate pay to have his ears pierced?
5. Where do Eskimos keep their money?
6. Which is cheaper: treating one friend to the movies twice or treating two
friends once?
7. Which are better, 2003 dollar bills or 2002 dollar bills?
(PIGGY BANK AND MONEY GRAPHIC)
IV (ANSWER KEY GRAPHIC)
TAKE THE TEMPERATURE
OF THE ECONOMY
One of the key factors in how well investments do is the health of the
US economy. Just as taking your temperature can show how healthy you are,
investors often judge economic health by taking certain measurements. These
include economic statistics such as the consumer price index, the unemployment
rate and the gross domestic product.
CONSUMER PRICE INDEX (CPI). Published each month by the Bureau of Labor
Statistics, the CPI measures changes in the prices of a certain "basket" of US
goods and services. Taken together, these price changes are commonly known as
"inflation."
The CPI is reported on both a monthly and a yearly basis. Sometimes the rate is
"seasonally adjusted," which takes out any price changes due to the weather or
other factors that only occur at certain times of the year. The economy usually
does best when inflation is low and people get more for the money they spend.
UNEMPLOYMENT RATE. The unemployment rate, also published monthly by the Bureau
of Labor Statistics, measures the percentage of people who want to work but
can't find jobs. It includes both adults and teenagers. Like the CPI, the
unemployment rate is often adjusted for seasonal changes. A low unemployment
rate is usually good for the economy, because people have more money to spend.
GROSS DOMESTIC PRODUCT (GDP). Published by the Bureau of Economic Analysis, GDP
measures changes in value of goods and services that US companies produce. New
GDP figures are available for each calendar quarter and show the amount of
growth (or decline) in the value of goods and services from the quarter before.
This is a "real" rate of growth, which means the change in value is shown after
subtracting inflation. The stronger the growth, the healthier the economy.
GDP is most commonly expressed as an "annualized" rate of change. An annualized
GDP rate of 3% in the first quarter of 2003, for example, means that the
economy would grow by 3% for 2003 as a whole if it kept up the pace of the
first quarter all year.
[THERMOMETER GRAPHIC]
To learn more about these economic thermometers, fill in the blanks for the
questions below. You can use the websites provided or look for the information
in your library.
* * * * * * * * * * * * * * * * * * *
CONSUMER PRICE INDEX
(www.bls.gov/bls/newsrels.htm)
1. How much did the CPI change in September of 2003 (without seasonal
adjustment)? _________________
2. How much did the CPI change in September of 2003 (with seasonal
adjustment)? _________________
3. How much did the CPI change from September of 2002 to September of 2003
(without adjustment)? _________________
4. Did inflation increase or decrease during those 12 months? ________________
* * * * * * * * * * * * * * * * * * *
UNEMPLOYMENT RATE
(www.bls.gov/bls/newsrels.htm)
5. What was the unemployment rate for September of 2003? _________________
6. What was the unemployment rate for August of 2003? _________________
7. Was the September rate higher or lower than the rate for the second quarter
of 2003? _________________
* * * * * * * * * * * * * * * * * * *
GROSS DOMESTIC PRODUCT
(www.bea.doc.gov/)
8. What was the estimated annual rate of GDP growth for the third quarter of
2003? _________________
9. What was the GDP growth rate for the second quarter of 2003? _____________
10. Did the economy strengthen or weaken from the first quarter to the second?
_________________
V
[COIN GRAPHIC] WHAT WILL COLLEGE COST? [COIN GRAPHIC]
If you're like most students, you'll be surprised by how much college can cost.
To meet this expense, you'll need a detailed plan -- starting with a good
estimate of what your tuition, room and board and other costs might be. Here's
an exercise that can get you started. You and your parents can find most of the
information online.
STEP #1 Pick a college that you might like to attend. Write the name of the
college here:
_____________________________________________________
STEP #2 Search for that college's website. For reference, write its web address
here:
_____________________________________________________
[COIN GRAPHIC]
STEP #3 Search the site for the following information: (1) tuition and fees and
(2) room and board. Write those numbers in the spaces below:
Tuition and fees: $_______ Room and board: $_______
STEP #4 With this information, you and your parents can go online to the
Columbia Funds website (www.columbiafunds.com) and use the Education Funding
Planner to calculate the amount of money you will need to save for college. In
addition, Columbia Funds provides a calculator under "How much aid will you
need?" that can help you and your parents calculate how much financial aid you
might need for one year of college. Both calculators are located at
www.columbiafunds.com. Click on "Investor Education" and then "College Savings."
[MONEY & STUDENT GRAPHIC]
VI
COLUMBIA GROWTH
STOCK FUND
ANNUAL REPORT
SEPTEMBER 30, 2003
[PHOTO DESCRIPTION: WOMAN READING]
WE ARE COLUMBIA FUNDS!
INSIDE--Management's discussion of the changes effective as of October 13, 2003.
PRESIDENT'S MESSAGE
[Joseph R. Palombo Photo]
Dear Shareholder:
As you know, the fund you invest in has long been associated with a larger
investment management organization. In the 1990s, it was part of Liberty
Financial, whose affiliated asset management companies included Colonial, Stein
Roe and Newport. In 2001, these companies became part of the asset management
division of FleetBoston Financial Corp., which you know as Columbia Management
Group (CMG).
Earlier this year, six of the asset management firms brought together under the
CMG umbrella were consolidated and renamed Columbia Management Advisors, Inc. On
October 13, 2003, we took the natural next step in this process by changing the
name of our funds from Liberty to Columbia. For example, Liberty Growth Stock
Fund was changed to Columbia Growth Stock Fund. We have also modified certain
fund names that existed under both the Liberty and Columbia brands. A complete
list of new fund names and other information related to these changes are
available online at www.columbiafunds.com, our new website address.
A consolidated identity
The consolidation of our management under a single organization and the renaming
of our funds are part of a larger effort to create a consistent identity. Having
taken these additional steps, we believe it will be easier for shareholders to
do business with us. All funds are now listed under "Columbia" in the mutual
fund listings section of your newspaper (depending on the newspaper's listing
requirements). All service inquiries are now handled by Columbia Funds Services,
Inc., the new name of our shareholder service organization.
What has not changed is our commitment to our mutual fund shareholders. We
remain committed to providing the best possible customer service and to offering
a wide variety of mutual funds to help you pursue your long-term financial
goals. Should you have questions, please call Columbia Funds at 800-345-6611.
In the report that follows, the lead manager of the fund's investment team talks
in depth about investment strategies and other factors that affected your fund's
performance during the period. We encourage you to read the report carefully.
As always, we thank you for your business and we look forward to continuing to
serve your investment needs.
Sincerely,
/s/ JOSEPH R. PALOMBO
Joseph R. Palombo
President
<Table>
NET ASSET VALUE PER SHARE as of 9/30/03 ($)
CLASS A 10.36
CLASS B 9.93
CLASS C 9.92
CLASS Z 8.32
</Table>
<Table>
-----------------------------
Not FDIC May Lose Value
Insured ------------------
No Bank Guarantee
-----------------------------
</Table>
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
10/1/93 - 9/30/03
<Table>
<Caption>
PERFORMANCE OF A $10,000 INVESTMENT
10/1/93 - 9/30/03 ($)
without with
sales sales
charge charge
- -----------------------------------
Class A 20,012 18,861
- -----------------------------------
Class B 19,837 19,837
- -----------------------------------
Class C 19,837 19,837
- -----------------------------------
Class Z 20,175 n/a
</Table>
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. PLEASE VISIT WWW.COLUMBIAFUNDS.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. The above illustration assumes a $10,000 investment made in October 1,
1993. Results include reinvestment of distributions. On October 13, 2003, the
fund's primary benchmark was changed to the Russell 1000 Growth Index. During
the reporting period, the fund's primary benchmark was the S&P 500 Index. The
Russell 1000 Growth Index is an unmanaged index that measures the performance of
those Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values. 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 9/30/03 (%)
<Table>
<Caption>
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
- -------------------------------------------------------------------------------------------------------------------
1-year 17.33 10.57 16.55 11.55 16.43 15.43 17.96
- -------------------------------------------------------------------------------------------------------------------
5-year -1.94 -3.10 -2.11 -2.42 -2.11 -2.11 -1.78
- -------------------------------------------------------------------------------------------------------------------
10-year 7.18 6.55 7.09 7.09 7.09 7.09 7.27
- -------------------------------------------------------------------------------------------------------------------
</Table>
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 the inception of
the newer classes of shares. 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 classes of 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.
[Performance Graph]
<Table>
<Caption>
CLASS A SHARES WITHOUT CLASS A SHARES WITH RUSSELL 1000 GROWTH
SALES CHARGE SALES CHARGE INDEX S&P 500 INDEX
---------------------- ------------------- ------------------- -------------
10/1/93 10000.00 9425.00 10000.00 10000.00
10269.00 9678.53 10278.00 10207.00
10120.10 9538.19 10209.10 10110.00
10560.30 9953.11 10384.70 10232.40
10855.00 10230.80 10625.70 10580.30
10526.00 9920.80 10431.20 10292.50
9950.28 9378.14 9927.38 9843.73
9950.28 9378.14 9973.05 9969.73
10140.30 9557.26 10124.60 10133.20
9659.68 9104.24 9824.95 9884.97
9893.44 9324.57 10161.00 10209.20
10408.90 9810.38 10726.90 10627.80
10210.10 9623.00 10582.10 10367.40
10331.60 9737.51 10830.80 10600.70
10058.80 9480.44 10483.10 10214.80
10162.40 9578.09 10659.20 10366.00
10272.20 9681.53 10887.30 10634.50
10613.20 10003.00 11343.50 11049.20
10898.70 10272.00 11674.80 11375.20
11194.10 10550.40 11930.40 11709.60
11424.70 10767.80 12345.60 12178.00
11885.10 11201.70 12822.20 12460.50
12321.30 11612.80 13355.60 12874.20
12451.90 11735.90 13370.30 12906.40
13088.20 12335.60 13986.60 13451.00
13013.60 12265.30 13996.40 13402.60
13639.50 12855.20 14540.90 13991.00
13784.10 12991.50 14623.80 14261.00
14076.30 13266.90 15112.20 14745.90
14263.50 13443.40 15388.70 14883.00
14434.70 13604.70 15408.80 15025.90
14605.00 13765.20 15814.00 15246.80
15233.00 14357.10 16365.90 15640.10
15397.60 14512.20 16388.80 15699.60
14456.80 13625.50 15428.40 15005.60
14819.60 13967.50 15826.50 15322.30
15843.70 14932.60 16978.70 16184.90
16173.20 15243.30 17080.50 16631.60
17064.40 16083.20 18363.30 17888.90
16671.90 15713.20 18003.30 17534.70
18130.70 17088.20 19265.40 18630.70
17766.20 16744.70 19134.40 18776.00
16631.00 15674.70 18099.20 18004.30
17939.80 16908.30 19301.00 19079.20
19098.80 18000.60 20694.50 20241.10
19977.30 18828.60 21522.30 21147.90
21519.50 20282.20 23424.90 22831.20
20086.30 18931.40 22054.50 21552.70
21090.70 19877.90 23139.60 22733.80
20630.90 19444.60 22283.40 21974.50
21109.50 19895.70 23230.50 22991.90
21947.60 20685.60 23490.70 23387.30
21870.70 20613.20 24193.10 23646.90
23441.10 22093.20 26012.40 25351.90
24465.40 23058.70 27050.30 26649.90
24795.70 23370.00 27423.60 26919.10
24523.00 23112.90 26644.70 26456.10
25999.30 24504.30 28275.40 27530.20
25643.10 24168.60 28088.80 27238.40
21209.40 19989.80 23872.60 23299.70
22081.10 20811.40 25706.10 24793.20
23812.20 22443.00 27772.80 26808.90
25574.30 24103.80 29886.30 28433.50
27553.80 25969.40 32582.10 30071.30
29882.10 28163.90 34494.70 31328.30
29036.40 27366.80 32918.30 30353.90
30874.40 29099.20 34653.00 31568.10
30358.80 28613.20 34698.10 32789.80
29545.20 27846.40 33632.90 32016.00
31734.50 29909.80 35987.20 33792.80
30722.20 28955.70 34842.80 32738.50
30328.90 28585.00 35410.70 32578.10
30028.70 28302.00 34667.10 31685.40
31881.40 30048.30 37284.40 33691.10
33338.40 31421.50 39297.80 34375.10
37642.40 35478.00 43384.80 36399.80
37710.20 35541.90 41350.00 34572.50
41454.80 39071.10 43372.10 33919.10
43581.40 41075.50 46477.50 37236.40
41415.40 39034.10 44265.20 36115.50
38226.40 36028.40 42034.20 35375.20
41632.40 39238.60 45220.40 36248.90
40225.30 37912.30 43334.70 35683.40
44119.10 41582.20 47256.50 37899.40
40549.80 38218.20 42786.00 35898.30
37391.00 35241.00 40762.20 35747.50
32272.20 30416.50 34753.90 32930.60
33372.60 31453.70 33655.70 33092.00
34480.60 32498.00 35981.30 34266.80
30274.00 28533.20 29871.70 31141.60
28018.60 26407.50 26621.60 29167.30
30694.30 28929.40 29989.30 31433.50
29868.70 28151.20 29548.40 31644.20
28665.00 27016.70 28862.90 30875.20
27266.10 25698.30 28141.30 30572.60
25147.50 23701.60 25839.30 28658.80
22916.90 21599.20 23260.60 26343.10
23604.50 22247.20 24481.80 26846.30
25528.20 24060.30 26834.50 28905.40
25382.70 23923.20 26783.50 29159.80
24623.80 23207.90 26309.40 28734.00
23419.70 22073.00 25217.60 28179.50
24478.20 23070.70 26090.10 29239.00
23087.90 21760.30 23961.20 27467.10
22651.50 21349.10 23381.30 27263.90
20832.60 19634.70 21218.50 25322.70
19018.10 17924.50 20051.50 23350.10
18940.10 17851.00 20111.70 23501.80
17065.00 16083.80 18026.10 20947.20
17954.10 16921.80 19679.10 22790.50
18997.30 17904.90 20747.60 24132.90
17798.50 16775.10 19314.00 22716.30
17488.80 16483.20 18844.70 22121.10
17006.10 16028.30 18758.00 21789.30
17373.50 16374.50 19106.90 22000.70
18707.80 17632.10 20518.90 23813.50
19596.40 18469.60 21542.80 25068.50
19672.80 18541.60 21840.00 25389.40
20329.90 19160.90 22383.90 25836.20
20697.80 19507.70 22941.20 26340.00
9/30/03 20011.60 18860.90 22694.00 26052.40
</Table>
1
TOP 10 HOLDINGS as of 9/30/03 (%)
<Table>
Microsoft 5.2
General Electric 4.9
Medtronic 4.1
Citigroup 4.0
Pfizer 3.4
Amgen 3.2
Intel 3.1
Cisco Systems 3.1
Dell 2.9
Schlumberger 2.9
</Table>
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.
PORTFOLIO MANAGER'S REPORT
For the 12-month period ended September 30, 2003, Columbia Growth Stock Fund
class A shares returned 17.33% without sales charge. The fund did not keep pace
with either the S&P 500 Index or the Russell 1000 Growth Index, which returned
24.40% and 25.92%, respectively, during the same period. It also fell behind the
Morningstar(R) Large Growth Category average, which returned 22.62%.(1) We
believe the fund's concentrated focus on high quality, large-cap growth stocks
somewhat hampered relative returns, as mid- and small-cap stocks and lower
quality stocks, especially in the technology sector, led the market rally. Weak
performance from selected investments in health care and defense also hurt
relative returns.
On October 13, 2003, the fund's primary benchmark was changed to the Russell
1000 Growth Index. We believe that this benchmark will provide shareholders with
a more useful comparison of the fund's relative performance than the previous
benchmark, which was the S&P 500 Index. During this reporting period, the S&P
500 Index was the fund's primary benchmark.
Rally lead by growth stocks
Growth stocks took off with a bang in the fourth quarter of 2002, but then
retreated as the drums of war beat louder in the first quarter of the new year
and economic uncertainty mounted. As concerns about the war later eased, U.S.
and global economies showed signs of strengthening, and new tax laws went into
effect, stocks again took off. Investors favored growth stocks, which offered
the most leverage to an improving economy. Smaller-cap, low quality stocks
bounced back from a protracted period of poor performance to produce the best
gains.
- -----------------
(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
The fund continued to focus on high-quality, large-cap growth companies with
credible management teams, demonstrated market share gains, healthy balance
sheets and strong profit margin growth. We stayed with our style, even as
investors favored lower quality names. We also took advantage of buying
opportunities, bringing the total number of stocks in the portfolio to 45, up
slightly from 35 six months ago.
Technology and consumer discretionary winners
Our biggest sector concentration was technology, where we had an above-average
stake relative to our benchmarks. We did this believing that tech stocks would
have the most to gain in an improving economy. Top contributors to performance
included Cisco Systems, followed by Microsoft, Dell, and Intel.(2)
Our consumer strategy also contributed nicely to performance. We emphasized
consumer discretionary companies with the most potential to benefit from the
economy's growth, while downplaying more stable, defensive consumer staples
companies. Strong performers included retailers such as Home Depot and Coach, as
well as media and Internet-related names such as Liberty Media and eBay.(2)
Disappointments in health care, defense
Certain stocks in which we had sizable positions declined. For example, Tenet
Healthcare detracted from performance, as the company's accounting practices
came under scrutiny. Concord EFS, a transaction processor, suffered from
management missteps that undermined investor confidence. When we realized that
neither of these companies continued to meet our strict investment criteria, we
sold them from the portfolio. We trimmed our stake in Lockheed Martin, a defense
company whose prospects weakened amid concerns budget deficits would constrain
defense spending.(2) We also eliminated our position in L-3 Communications
Holdings. This company, which makes x-ray equipment used for screening baggage
at airports, saw its stock price slide amid concerns over management practices.
Potential for improved economic outlook
We remain optimistic about the economy's prospects, which we think bodes well
for stock returns. In addition, we expect recent tax cuts to continue to ripple
through the economy, holiday buying to be up, corporate spending to increase and
job growth to move in the right direction. We plan to keep the portfolio tilted
toward growth stocks with an emphasis on technology and consumer discretionary
and a below-average stake in health care.
<Table>
/s/ ERIK P. GUSTAFSON
</Table>
Erik P. Gustafson has managed the fund since 1994. As of November 1, 2003, Paul
Blaustein became the fund's portfolio manager.
- --------------------------------------------------------
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.
- --------------------------------------------------------
[Top 5 Sectors bar graph]
<Table>
<Caption>
TOP 5 SECTORS AS OF 9/30/03 (%)
- -------------------------------
Information technology 27.40
Health care 22.20
Consumer discretionary 18.20
Industrials 12.90
Financials 7.80
</Table>
Sector breakdowns are calculated as a percentage of net assets. Because the fund
is actively managed, there is no guarantee the fund will continue to maintain
the sector breakdowns listed. The fund's sector breakdowns may change as market
conditions change.
- -----------------
(2) Holdings are disclosed as a percentage of net assets as of September 30,
2003 and are subject to change: Cisco Systems (3.1%), Microsoft (5.2%), Dell
(2.9%), Intel (3.1%), Home Depot (1.2%), Coach (1.9%), Liberty Media (1.6%),
eBay (1.3%), Lockheed Martin (1.7%).
3
INVESTMENT PORTFOLIO
September 30, 2003
<Table>
<Caption>
COMMON STOCKS - 98.3% SHARES VALUE
- -------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 18.2%
INTERNET & CATALOG RETAIL - 3.2%
eBay, Inc. (a) 200,000 $ 10,702,000
InterActiveCorp (a) 450,000 14,872,500
------------
25,574,500
------------
MEDIA - 5.9%
AOL Time Warner, Inc. (a) 1,000,000 15,110,000
Clear Channel Communications, Inc. 500,000 19,150,000
Liberty Media Corp., Class A (a) 1,250,000 12,462,500
------------
46,722,500
------------
MULTI-LINE RETAIL - 3.8%
Costco Wholesale Corp. (a) 450,000 13,986,000
Wal-Mart Stores, Inc. 300,000 16,755,000
------------
30,741,000
------------
SPECIALTY RETAIL - 3.4%
AutoZone, Inc. (a) 200,000 17,906,000
Home Depot, Inc. 300,000 9,555,000
------------
27,461,000
------------
TEXTILES, APPAREL & LUXURY GOODS - 1.9%
Coach, Inc. (a) 275,000 15,015,000
------------
- -------------------------------------------------------------------------
CONSUMER STAPLES - 2.9%
BEVERAGES - 0.6%
PepsiCo, Inc. 100,000 4,583,000
------------
HOUSEHOLD PRODUCTS - 2.3%
Procter & Gamble Co. 200,000 18,564,000
------------
- -------------------------------------------------------------------------
ENERGY - 4.8%
ENERGY EQUIPMENT & SERVICES - 4.8%
Schlumberger Ltd. 475,000 22,990,000
Smith International, Inc. (a) 425,000 15,291,500
------------
38,281,500
------------
- -------------------------------------------------------------------------
FINANCIALS - 7.8%
DIVERSIFIED FINANCIALS - 5.6%
Citigroup, Inc. 700,000 31,857,000
Merrill Lynch & Co., Inc. 250,000 13,382,500
------------
45,239,500
------------
INSURANCE - 2.2%
American International Group, Inc. 300,000 17,310,000
------------
- -------------------------------------------------------------------------
HEALTH CARE - 22.2%
BIOTECHNOLOGY - 5.0%
Amgen, Inc. (a) 400,000 25,828,000
Gilead Sciences, Inc. (a) 250,000 13,982,500
------------
39,810,500
------------
</Table>
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES - 6.1%
Boston Scientific Corp. (a) 250,000 $ 15,950,000
Medtronic, Inc. 700,000 32,844,000
------------
48,794,000
------------
HEALTH CARE PROVIDERS & SERVICES - 2.8%
Caremark Rx, Inc. (a) 550,000 12,430,000
UnitedHealth Group, Inc. 200,000 10,064,000
------------
22,494,000
------------
PHARMACEUTICALS - 8.3%
Pfizer, Inc. 900,000 27,342,000
Teva Pharmaceutical Industries Ltd., ADR 350,000 20,002,500
Watson Pharmaceuticals, Inc. (a) 450,000 18,760,500
------------
66,105,000
------------
- -------------------------------------------------------------------------
INDUSTRIALS - 12.9%
AEROSPACE & DEFENSE - 1.7%
Lockheed Martin Corp. 300,000 13,845,000
------------
COMMERCIAL SERVICES & SUPPLIES - 3.7%
First Data Corp. 400,000 15,984,000
Paychex, Inc. 400,000 13,572,000
------------
29,556,000
------------
INDUSTRIAL CONGLOMERATES - 4.9%
General Electric Co. 1,300,000 38,753,000
------------
MACHINERY - 2.6%
Caterpillar, Inc. 300,000 20,652,000
------------
- -------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 27.4%
COMMUNICATIONS EQUIPMENT - 6.6%
Cisco Systems, Inc. (a) 1,250,000 24,425,000
Nokia Oyj, ADR 1,000,000 15,600,000
UTStarcom, Inc. (a) 400,000 12,724,000
------------
52,749,000
------------
COMPUTERS & PERIPHERALS - 2.9%
Dell, Inc. (a) 700,000 23,373,000
------------
INFORMATION TECHNOLOGY CONSULTING
& SERVICES - 2.8%
Accenture Ltd., Class A (a) 1,000,000 22,340,000
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 7.7%
Analog Devices, Inc. (a) 400,000 15,208,000
Applied Materials, Inc. (a) 500,000 9,070,000
Intel Corp. 900,000 24,759,000
Texas Instruments, Inc. 550,000 12,540,000
------------
61,577,000
------------
</Table>
See notes to investment portfolio.
4
INVESTMENT PORTFOLIO (CONTINUED)
September 30, 2003
<Table>
<Caption>
COMMON STOCKS (CONTINUED) SHARES VALUE
- -------------------------------------------------------------------------
INFORMATION TECHNOLOGY (CONTINUED)
SOFTWARE - 7.4%
Microsoft Corp. 1,500,000 $ 41,685,000
SAP AG, ADR 300,000 9,123,000
VERITAS Software Corp. (a) 250,000 7,850,000
------------
58,658,000
------------
- -------------------------------------------------------------------------
MATERIALS - 1.6%
METALS & MINING - 1.6%
Alcoa, Inc. 500,000 13,080,000
------------
- -------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 0.5%
WIRELESS TELECOMMUNICATION SERVICES - 0.5%
Sprint Corp. (PCS Group) (a) 750,000 4,297,500
------------
TOTAL COMMON STOCKS
(cost of $643,381,345) 785,576,000
------------
<Caption>
SHORT-TERM OBLIGATION - 2.6% PAR
- -------------------------------------------------------------------------
Repurchase agreement with State Street Bank &
Trust Co., dated 09/30/03, due 10/01/03 at
0.900%, collateralized by a U.S. Treasury
Note maturing 08/15/19, market value
$20,915,350 (repurchase proceeds
$20,501,513) (cost of $20,501,000) $20,501,000 20,501,000
------------
TOTAL INVESTMENTS - 100.9%
(cost of $663,882,345) (b) 806,077,000
------------
OTHER ASSETS & LIABILITIES, NET - (0.9)% (7,367,113)
- -------------------------------------------------------------------------
NET ASSETS - 100.0% $798,709,887
============
</Table>
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Cost for federal income tax purposes is $671,152,887.
<Table>
<Caption>
ACRONYM NAME
- ------- ---------------------------
ADR American Depositary Receipt
</Table>
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2003
<Table>
ASSETS:
Investments, at cost $ 663,882,345
--------------
Investments, at value $ 806,077,000
Cash 658
Receivable for:
Investments sold 9,878,399
Fund shares sold 999,358
Interest 513
Dividends 398,750
Expense reimbursement due from Advisor 20,662
Deferred Trustees' compensation plan 13,736
--------------
Total Assets 817,389,076
--------------
LIABILITIES:
Payable for:
Investments purchased 16,701,295
Fund shares repurchased 602,719
Management fee 400,876
Administration fee 90,151
Transfer agent fee 484,474
Pricing and bookkeeping fees 55,442
Trustees' fees 842
Distribution and service fees 263,343
Deferred Trustees' fees 13,736
Other liabilities 66,311
--------------
Total Liabilities 18,679,189
--------------
NET ASSETS $ 798,709,887
==============
COMPOSITION OF NET ASSETS:
Paid-in capital $1,207,604,732
Accumulated net investment loss (14,274)
Accumulated net realized loss (551,075,226)
Net unrealized appreciation on investments 142,194,655
--------------
NET ASSETS $ 798,709,887
==============
CLASS A:
Net assets $ 81,967,162
Shares outstanding 7,910,978
--------------
Net asset value per share $ 10.36(a)
==============
Maximum offering price per share
($10.36/0.9425) $ 10.99(b)
==============
CLASS B:
Net assets $ 303,943,233
Shares outstanding 30,606,400
--------------
Net asset value and offering price per share $ 9.93(a)
==============
CLASS C:
Net assets $ 27,938,426
Shares outstanding 2,815,685
--------------
Net asset value and offering price per share $ 9.92(a)
==============
CLASS Z:
Net assets $ 384,861,066
Shares outstanding 46,252,212
--------------
Net asset value, offering and redemption
price per share $ 8.32
==============
</Table>
(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 Year Ended September 30, 2003
<Table>
INVESTMENT INCOME:
Dividends $ 7,838,396
Interest 193,560
------------
Total Investment Income (net of foreign
taxes withheld of $79,020) 8,031,956
------------
EXPENSES:
Management fee 4,599,766
Administration fee 1,113,583
Distribution fee:
Class A 86,014
Class B 2,288,351
Class C 212,125
Service fee:
Class A 215,033
Class B 768,394
Class C 70,708
Transfer agent fee:
Class A 383,139
Class B 1,376,306
Class C 127,257
Class Z 1,037,527
Pricing and bookkeeping fees 247,596
Trustees' fees 30,012
Custody fee 23,048
Other expenses 225,460
------------
Total Operating Expenses 12,804,319
Fees waived by Advisor -- Class Z (224,862)
Fees waived by Distributor -- Class A (43,007)
Custody earnings credit (1,002)
------------
Net Operating Expenses 12,535,448
Interest expense 833
------------
Net Expenses 12,536,281
------------
Net Investment Loss (4,504,325)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments (82,513,256)
Net change in unrealized
appreciation/depreciation on investments 213,477,987
------------
Net Gain 130,964,731
------------
Net Increase in Net Assets from Operations $126,460,406
============
</Table>
See notes to financial statements.
6
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
-----------------------------------
INCREASE (DECREASE) IN NET ASSETS: 2003 2002(A)
- ----------------------------------------------------------------------------------
OPERATIONS:
Net investment loss $ (4,504,325) $ (581,498)
Net realized loss on investments (82,513,256) (59,950,621)
Net change in unrealized
appreciation/depreciation on investments 213,477,987 (113,744,716)
------------- -------------
Net Increase (Decrease) from Operations 126,460,406 (174,276,835)
------------- -------------
SHARE TRANSACTIONS:
Class A:
Subscriptions 52,887,088 18,153,017
Proceeds received in connection with
mergers -- 105,726,704
Redemptions (67,933,556) (29,250,762)
------------- -------------
Net Increase (Decrease) (15,046,468) 94,628,959
------------- -------------
Class B:
Subscriptions 23,561,376 5,229,203
Proceeds received in connection with
mergers -- 373,573,179
Redemptions (72,246,627) (30,096,981)
------------- -------------
Net Increase (Decrease) (48,685,251) 348,705,401
------------- -------------
Class C:
Subscriptions 5,839,044 1,473,738
Proceeds received in connection with
mergers -- 34,074,911
Redemptions (10,240,886) (3,599,977)
------------- -------------
Net Increase (Decrease) (4,401,842) 31,948,672
------------- -------------
Class Z:
Subscriptions 36,268,004 42,331,771
Proceeds received in connection with
mergers -- 25,745,690
Redemptions (72,221,109) (144,221,190)
------------- -------------
Net Decrease (35,953,105) (76,143,729)
------------- -------------
Net Increase (Decrease) from Share
Transactions (104,086,666) 399,139,303
------------- -------------
Total Increase in Net Assets 22,373,740 224,862,468
NET ASSETS:
Beginning of period 776,336,147 551,473,679
------------- -------------
End of period (including accumulated net
investment loss of $(14,274) and $(9,577),
respectively) $ 798,709,887 $ 776,336,147
============= =============
CHANGES IN SHARES:
Class A:
Subscriptions 5,514,819 1,818,260
Issued in connection with mergers -- 10,593,858
Redemptions (6,824,132) (3,191,827)
------------- -------------
Net Increase (Decrease) (1,309,313) 9,220,291
------------- -------------
Class B:
Subscriptions 2,524,637 532,527
Issued in connection with mergers -- 38,711,868
Redemptions (7,881,240) (3,281,392)
------------- -------------
Net Increase (Decrease) (5,356,603) 35,963,003
------------- -------------
Class C:
Subscriptions 629,913 152,704
Issued in connection with mergers -- 3,534,742
Redemptions (1,111,906) (389,768)
------------- -------------
Net Increase (Decrease) (481,993) 3,297,678
------------- -------------
Class Z:
Subscriptions (b) 4,591,242 4,771,932
Issued in connection with mergers (b) -- 3,238,452
Redemptions (b) (9,410,280) (15,326,340)
------------- -------------
Net Increase (Decrease) (4,819,038) (7,315,956)
------------- -------------
</Table>
(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.
(b) Capital share activity prior to July 25, 2003 has been restated to reflect
a 3-for-1 share split.
See notes to financial statements.
7
NOTES TO FINANCIAL STATEMENTS
September 30, 2003
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Columbia Growth Stock Fund (the "Fund"), a series of Columbia Funds Trust XI, 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 ("CDSC")
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 CDSC. 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 CDSC
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. Effective July 25,
2003, there was a 3-for-1 share split on Class Z shares. All capital share
activity and per share data for Class Z have been restated to reflect the
3-for-1 share split.
Effective October 13, 2003, the Liberty Growth Stock Fund was renamed Columbia
Growth Stock Fund. Also on this date, the Liberty-Stein Roe Funds Investment
Trust was renamed Columbia Funds Trust XI.
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:
<Table>
<Caption>
SHARES NET ASSETS UNREALIZED
ISSUED RECEIVED DEPRECIATION(1)
------ -------- ---------------
LGSF 52,840,386 $513,373,974 $37,022,167
SRFF 3,238,534 25,746,510 12,502,383
</Table>
<Table>
<Caption>
NET
NET ASSETS ASSETS OF THE NET ASSETS
OF THE FUND ACQUIRED FUNDS OF THE FUND
IMMEDIATELY IMMEDIATELY IMMEDIATELY
PRIOR TO PRIOR TO AFTER
COMBINATION COMBINATION COMBINATION
----------- ----------- -----------
$397,820,249 $539,120,484 $936,940,733
</Table>
(1) Unrealized depreciation is included in the Net Assets Received
amount shown above.
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 accounting principles
generally accepted in the United States of America 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 reported at the
close of the principal securities exchanges on which the investments are traded
or, in the case of unlisted or listed securities for which there were no sales
during the day, at the closing bid price on such exchange.
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.
8
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2003
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:
All income, expenses (other than class specific fees), and realized and
unrealized gains (losses) are allocated to each class proportionately on a daily
basis, based on net assets, for purposes of determining the net asset value of
each class.
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 accounting principles generally accepted
in the United States of America. These differences are primarily due to
differing treatments for deferral of losses from wash sales, capital loss
carryforwards, post-October losses and non-deductible expenses.
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.
For the year ended September 30, 2003, permanent items identified and
reclassified among the components of net assets are as follows:
<Table>
<Caption>
ACCUMULATED ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN
LOSS LOSS CAPITAL
---- ---- -------
$4,499,628 $11,095,400 $(15,595,028)
</Table>
Net investment income, net realized gains (losses) and net assets were not
affected by this reclassification.
As of September 30, 2003, the components of distributable earnings on a tax
basis were as follows:
<Table>
<Caption>
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY LONG-TERM UNREALIZED
INCOME CAPITAL GAINS APPRECIATION*
------ ------------- -------------
$-- $-- $134,924,113
</Table>
* The difference between book-basis and tax-basis unrealized appreciation is
attributable primarily to the tax deferral of losses on wash sales.
The following capital loss carryforwards 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:
<Table>
<Caption>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARDS
---------- -------------
2008 $ 22,583,899
2009 201,991,560
2011 253,937,044
------------
$478,512,503
============
</Table>
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.
Expired capital loss carryforwards, if any, are recorded as a reduction of
paid-in capital.
Under current tax rules, certain capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal year.
As of September 30, 2003 for federal income tax purposes, post-October losses of
$65,292,181 attributable to security transactions were deferred to October 1,
2003.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2003
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
On April 1, 2003, Stein Roe & Farnham Incorporated ("Stein Roe"), the investment
advisor to the Fund, merged into Columbia Management Advisors, Inc.
("Columbia"), formerly known as Columbia Management Co., an indirect,
wholly-owned subsidiary of FleetBoston Financial Corporation. At the time of the
merger, Columbia assumed the obligations of Stein Roe with respect to the Fund.
The merger did not change the way the Fund is managed, the investment personnel
assigned to manage the Fund or the fees paid by the Fund.
MANAGEMENT FEE:
Columbia is the investment advisor of the Fund and receives a monthly fee based
on the Fund's average daily net assets as follows:
<Table>
<Caption>
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%
</Table>
Prior to July 15, 2002, the management fee was paid by the single share
Portfolio at the same rate.
ADMINISTRATION FEE:
Columbia also provides accounting and other services for a monthly fee based on
the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL FEE RATE
- ------------------------ ---------------
First $500 million 0.150%
Next $500 million 0.125%
Next $1 billion 0.100%
Over $2 billion 0.075%
</Table>
At a meeting held on October 8, 2003, the Board of Trustees approved a new
management fee structure to go into effect on November 1, 2003. Under the new
structure, Columbia will receive a monthly fee based on the Fund's average daily
net assets as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL FEE RATE
- ------------------------ ---------------
First $500 million 0.150%
Next $500 million 0.125%
Next $500 million 0.100%
Next $500 million 0.075%
Over $2 billion 0.050%
</Table>
PRICING AND BOOKKEEPING FEES:
Columbia is responsible for providing pricing and bookkeeping services to the
Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Bank and Trust Company ("State Street"). Columbia pays fees to State Street
under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, Columbia 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 year ended September 30, 2003,
the annualized net asset based fee rate was 0.029%. The Fund also pays
out-of-pocket costs for pricing services.
TRANSFER AGENT FEE:
Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia,
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.
Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to
Columbia Funds Services, Inc.
At a meeting held on October 8, 2003, the Board of Trustees approved the change
of transfer agent fees structure of the Fund. Effective November 1, 2003, the
Fund will be charged an annual $28.00 charge per open account for the transfer
agent fees.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia,
is the Fund's principal underwriter. Effective October 13, 2003, Liberty Funds
Distributor, Inc. changed its name to Columbia Funds Distributor, Inc.
For the year ended September 30, 2003, the Fund has been advised that the
Distributor retained net underwriting discounts of $20,117 on sales of the
Fund's Class A shares and received CDSC of $9,116, $1,166,405
10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2003
and $3,298 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. The Plan
also requires the payment of a monthly 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:
Columbia 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
Columbia 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 $1,002 of custody
fees were reduced by balance credits for the year ended September 30, 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 year ended September 30, 2003, purchases and sales of investments, other
than short-term obligations, were $837,633,798 and $920,574,037, respectively.
Unrealized appreciation (depreciation) at September 30, 2003, based on cost of
investments for federal income tax purposes, was:
<Table>
Gross unrealized appreciation $ 159,047,311
Gross unrealized depreciation (24,123,198)
-------------
Net unrealized appreciation $ 134,924,113
=============
</Table>
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
year ended September 30, 2003, the average daily loan balance outstanding on
days where borrowing existed was $1,692,436 at a weighted average interest rate
of 2.20%.
11
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows:
<Table>
<Caption>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 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) (0.05) (0.01)
Net realized and unrealized gain (loss) on investments 1.58 (1.14)
-------- --------
Total from Investment Operations 1.53 (1.15)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 10.36 $ 8.83
======== ========
Total return (c)(d) 17.33% (11.52)%(e)
======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (f) 1.54% 1.63%(g)
Interest expense --%(h) --
Net expenses (f) 1.54% 1.63%(g)
Net investment loss (f) (0.53)% (0.41)%(g)
Waiver/reimbursement 0.05% 0.05%(g)
Portfolio turnover rate 108% 71%
Net assets, end of period (000's) $ 81,967 $ 81,442
</Table>
(a) Class A shares were initially offered on July 15, 2002. Per share data and
total return reflect 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 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:
<Table>
<Caption>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 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) (0.11) (0.02)
Net realized and unrealized gain (loss) on investments 1.52 (1.11)
-------- --------
Total from Investment Operations 1.41 (1.13)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 9.93 $ 8.52
======== ========
Total return (c) 16.55% (11.71)%(d)
======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (e) 2.24% 2.33%(f)
Interest expense --%(g) --
Net expenses (e) 2.24% 2.33%(f)
Net investment loss (e) (1.23)% (1.11)%(f)
Portfolio turnover rate 108% 71%
Net assets, end of period (000's) $303,943 $306,561
</Table>
(a) Class B shares were initially offered on July 15, 2002. Per share data and
total return reflect 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 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:
<Table>
<Caption>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, 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) (0.11) (0.02)
Net realized and unrealized gain (loss) on investments 1.51 (1.10)
------- ---------
Total from Investment Operations 1.40 (1.12)
------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.92 $ 8.52
======= =========
Total return (c) 16.43% (11.62)%(d)
======= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (e) 2.24% 2.33%(f)
Interest expense --%(g) --
Net expenses (e) 2.24% 2.33%(f)
Net investment loss (e) (1.23)% (1.11)%(f)
Portfolio turnover rate 108% 71%
Net assets, end of period (000's) $27,938 $ 28,093
</Table>
(a) Class C shares were initially offered on July 15, 2002. Per share data and
total return reflect 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 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:
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
CLASS Z SHARES 2003 2002 (A)(B) 2001 (A) 2000 (A) 1999 (A)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.05 $ 9.45 $ 19.89 $ 15.73 $ 11.57
-------- --------- -------- ---------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (c) --(d) 0.01(e) (0.01)(e) (0.08)(e) (0.03)(e)
Net realized and unrealized gain (loss) on
investments 1.27 (2.41) (7.77) 5.39 4.19
-------- --------- -------- ---------- --------
Total from Investment Operations 1.27 (2.40) (7.78) 5.31 4.16
-------- --------- -------- ---------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized gains -- -- (2.66) (1.15) --
-------- --------- -------- ---------- --------
NET ASSET VALUE, END OF PERIOD $ 8.32 $ 7.05 $ 9.45 $ 19.89 $ 15.73
======== ========= ======== ========== ========
Total return (f) 17.96%(g) (25.34)%(g) (43.48)% 35.04% 35.98%
======== ========= ======== ========== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (h) 1.00% 0.88%(e) 0.95%(e) 0.95%(e) 0.97%(e)(i)
Interest expense --%(j) -- -- -- --
Net expenses (h) 1.00% 0.88%(e) 0.95%(e) 0.95%(e) 0.97%(e)(i)
Net investment income (loss) (h) 0.01% 0.08%(e) (0.05)%(e) (0.44)%(e) (0.18)%(e)(i)
Waiver/reimbursement 0.06% 0.01% -- -- --
Portfolio turnover rate 108% 71% 73%(k) 74%(k) 57%(k)
Net assets, end of period (000's) $384,861 $ 360,240 $551,474 $1,083,271 $831,338
</Table>
(a) Per share data has been restated to reflect a 3-for-1 share split effective
July 25, 2003.
(b) On July 15, 2002, the Stein Roe Growth Stock Fund was redesignated Liberty
Growth Stock Fund, Class Z shares.
(c) Per share data was calculated using average shares outstanding during the
period.
(d) Rounds to less than $0.01 per share.
(e) 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.
(f) Total return at net asset value assuming all distributions reinvested.
(g) Had the Advisor not waived a portion of expenses, total return would have
been reduced.
(h) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(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 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
REPORT OF INDEPENDENT AUDITORS
TO THE TRUSTEES OF COLUMBIA FUNDS TRUST XI
AND THE SHAREHOLDERS OF COLUMBIA GROWTH STOCK FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Columbia Growth Stock Fund (the
"Fund") (formerly Liberty Growth Stock Fund) (a series of Columbia Funds Trust
XI) (formerly Liberty-Stein Roe Funds Investment Trust), at September 30, 2003
and the results of its operations, the changes in its net assets, and its
financial highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of portfolio positions at September 30, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 14, 2003
16
TRUSTEES
Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were
appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth
had been directors of 15 Columbia Funds and 12 funds in the CMG Funds Trust.
Also effective October 8, 2003, the incumbent trustees of the Fund were elected
as directors of the 15 Columbia Funds and as trustees of the 12 funds in the CMG
Funds Trust. The new combined Board of Trustees of the Fund now oversees 124
funds in the Columbia Funds complex (including the former Liberty Funds, former
Stein Roe Funds, Columbia Funds and CMG Funds). Several of those trustees also
serve on the Boards of other funds in the Columbia Funds complex.
The Trustees serve terms of indefinite duration. The names, addresses and ages
of the Trustees and officers of the Funds in the Columbia Funds complex, the
year each was first elected or appointed to office, their principal business
occupations during at least the last five years, the number of portfolios
overseen by each Trustee and other directorships they hold are shown below. Each
officer listed below serves as an officer of each Fund in the Columbia Funds
complex. The Statement of Additional Information (SAI) contains additional
information about the Trustees and is available without charge upon request by
calling the Fund's distributor at 800-345-6611.
<Table>
<Caption>
Year first
Position elected or
with appointed Principal occupation(s)
Name, address and age Funds to office(1) during past five years
- --------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
Douglas A. Hacker (age 48) Trustee 1996 Executive Vice President -- Strategy of
P.O. Box 66100 United Airlines (airline) since December,
Chicago, IL 60666 2002 (formerly President of UAL Loyalty
Services (airline) from September, 2001 to
December, 2002; Executive Vice President
and Chief Financial Officer of United
Airlines from March, 1993 to September,
2001; Senior Vice President and Chief
Financial Officer of UAL, Inc. prior
thereto).
Janet Langford Kelly (age 45) Trustee 1996 Chief Administrative Officer and Senior
3100 West Beaver Road Vice President, Kmart Holding Corporation
Troy, MI 48084-3163 since September, 2003 (formerly Executive
Vice President-Corporate Development and
Administration, General Counsel and
Secretary, Kellogg Company (food
manufacturer), from September, 1999 to
August, 2003; Senior Vice President,
Secretary and General Counsel, Sara Lee
Corporation (branded, packaged,
consumer-products manufacturer) from
January, 1995 to September, 1999).
Richard W. Lowry (age 67) 10701 Trustee 1995 Private Investor since August, 1987
Charleston Drive (formerly Chairman and Chief Executive
Vero Beach, FL 32963 Officer, U.S. Plywood Corporation (building
products manufacturer)).
Charles R. Nelson (age 61) Trustee 1981 Professor of Economics, University of
Department of Economics Washington, since January, 1976; Ford and
University of Washington Louisa Van Voorhis Professor of Political
Seattle, WA 98195 Economy, University of Washington, since
September, 1993; Director, Institute for
Economic Research, University of
Washington, since September, 2001; Adjunct
Professor of Statistics, University of
Washington, since September, 1980;
Associate Editor, Journal of Money Credit
and Banking, since September, 1993;
consultant on econometric and statistical
matters.
John J. Neuhauser (age 60) Trustee 1985 Academic Vice President and Dean of
84 College Road Faculties since August, 1999, Boston
Chestnut Hill, MA College (formerly Dean, Boston College
02467-3838 School of Management from September, 1977
to September, 1999.
Patrick J. Simpson (age 58) Trustee 2000 Partner, Perkins Coie L.L.P. (formerly
1211 S.W. 5th Avenue Partner, Stoel Rives Boley Jones & Grey).
Suite 1500
Portland, OR 97204
Thomas E. Stitzel (age 67) Trustee 1998 Business Consultant since 1999 (formerly
2208 Tawny Woods Place Professor of Finance from 1975 to 1999 and
Boise, ID 83706 Dean from 1977 to 1991, College of
Business, Boise State University);
Chartered Financial Analyst.
<Caption>
Number of
portfolios in
Columbia Funds Other
Complex overseen directorships
Name, address and age by trustee held
- -----------------------------------
DISINTERESTED TRUSTEES
Douglas A. Hacker (age 48) 124 None
P.O. Box 66100
Chicago, IL 60666
Janet Langford Kelly (age 45) 124 None
3100 West Beaver Road
Troy, MI 48084-3163
Richard W. Lowry (age 67) 10701 126(3) None
Charleston Drive
Vero Beach, FL 32963
Charles R. Nelson (age 61) 124 None
Department of Economics
University of Washington
Seattle, WA 98195
John J. Neuhauser (age 60) 127(3,4) Saucony, Inc.
84 College Road (athletic footwear);
Chestnut Hill, MA SkillSoft Corp.
02467-3838 (e-Learning)
Patrick J. Simpson (age 58) 124 None
1211 S.W. 5th Avenue
Suite 1500
Portland, OR 97204
Thomas E. Stitzel (age 67) 124 None
2208 Tawny Woods Place
Boise, ID 83706
</Table>
17
TRUSTEES (CONTINUED)
<Table>
<Caption>
Year first
Position elected or
with appointed Principal occupation(s)
Name, address and age Funds to office(1) during past five years
- --------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES (CONTINUED)
Thomas C. Theobald (age 66) Trustee 1996 Managing Director, William Blair Capital
27 West Monroe Street, Partners (private equity investing) since
Suite 3500 September, 1994 (formerly Chief Executive
Chicago, IL 60606 Officer and Chairman of the Board of
Directors, Continental Bank Corporation
prior thereto).
Anne-Lee Verville (age 58) Trustee 1998 Author and speaker on educational systems
359 Stickney Hill Road needs (formerly General Manager, Global
Hopkinton, NH 03229 Education Industry from 1994 to 1997, and
President, Applications Solutions Division
from 1991 to 1994, IBM Corporation (global
education and global applications)).
Richard L. Woolworth (age 62) Trustee 1991 Chairman and Chief Executive Officer, The
100 S.W. Market Street Regence Group (healthcare maintenance
#1500 organization) (formerly Chairman and Chief
Portland, OR 97207 Executive Officer, BlueCross BlueShield of
Oregon; Certified Public Accountant, Arthur
Young & Company).
INTERESTED TRUSTEES
William E. Mayer(2) (age 63) Trustee 1994 Managing Partner, Park Avenue Equity
399 Park Avenue Partners (private equity) since February,
Suite 3204 1999 (formerly Founding Partner,
New York, NY 10022 Development Capital LLC from November 1996
to February, 1999; Dean and Professor,
College of Business and Management,
University of Maryland from October, 1992
to November, 1996).
Joseph R. Palombo(2) (age 50) Trustee, 2000 Executive Vice President and Chief
One Financial Center Chairman of Operating Officer of Columbia Management
Boston, MA 02111 the Board and Group, Inc. (Columbia Management) since
President December, 2001 and Director, Executive Vice
President and Chief Operating Officer of
the Advisor since April, 2003 (formerly
Chief Operations Officer of Mutual Funds,
Liberty Financial Companies, Inc. from
August, 2000 to November, 2001; Executive
Vice President of Stein Roe & Farnham
Incorporated (Stein Roe) from April, 1999
to April, 2003; Director of Colonial
Management Associates, Inc. (Colonial) from
April, 1999 to April, 2003; Director of
Stein Roe from September, 2000 to April,
2003) President of Columbia Funds and
Galaxy Funds since February, 2003 (formerly
Vice President from September 2002 to
February 2003); Manager of Stein Roe
Floating Rate Limited Liability Company
since October, 2000; (formerly Vice
President of the Columbia Funds from April,
1999 to August, 2000; Chief Operating
Officer and Chief Compliance Officer,
Putnam Mutual Funds from December, 1993 to
March, 1999).
<Caption>
Number of
portfolios in
Columbia Funds Other
Complex overseen directorships
Name, address and age by trustee held
- -----------------------------------
DISINTERESTED TRUSTEES (CONTINUED)
Thomas C. Theobald (age 66) 124 Anixter International
27 West Monroe Street, (network support equipment
Suite 3500 distributor), Jones Lang
Chicago, IL 60606 LaSalle (real estate
management services) and
MONY Group (life
insurance).
Anne-Lee Verville (age 58) 125(4) Chairman of the Board of
359 Stickney Hill Road Directors, Enesco Group,
Hopkinton, NH 03229 Inc. (designer, importer
and distributor of
giftware and
collectibles).
Richard L. Woolworth (age 62) 124 NW Natural, a natural gas
100 S.W. Market Street service provider
#1500
Portland, OR 97207
INTERESTED TRUSTEES
William E. Mayer(2) (age 63) 126(3) Lee Enterprises (print
399 Park Avenue media), WR Hambrecht + Co.
Suite 3204 (financial service
New York, NY 10022 provider) and First Health
(healthcare).
Joseph R. Palombo(2) (age 50) 125(5) None
One Financial Center
Boston, MA 02111
</Table>
(1) In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds Complex.
(2) Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co. Mr. Palombo is an interested person as an employee of the Advisor.
(3) Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of
the All-Star Funds, currently consisting of 2 funds, which are advised by
an affiliate of the Advisor.
(4) Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
(5) Mr. Palombo also serves as an interested director of Columbia Management
Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor.
18
OFFICERS AND TRANSFER AGENT
<Table>
<Caption>
Year first
elected or
Position with appointed
Name, address and age Columbia Funds to office Principal occupation(s) during past five years
- -------------------------------------------------------------------------------------------------------------------------
OFFICERS
Vicki L. Benjamin (Age 42) Chief 2001 Controller of the Columbia Funds and of the Liberty All-Star
One Financial Center Accounting Funds since May, 2002; Chief Accounting Officer of the
Boston, MA 02111 Officer and Columbia Funds and Liberty All-Star Funds since June, 2001;
Controller Controller and Chief Accounting Officer of Galaxy Funds
since September, 2002 (formerly Vice President, Corporate
Audit, State Street Bank and Trust Company from May, 1998 to
April, 2001; Audit Manager from July, 1994 to June, 1997;
Senior Audit Manager from July, 1997 to May, 1998, Coopers &
Lybrand, LLP).
J. Kevin Connaughton (Age 39) Treasurer 2000 Treasurer of Columbia Funds and of the Liberty All-Star
One Financial Center Funds since December, 2000; Vice President of the Advisor
Boston, MA 02111 since April, 2003 (formerly Controller of the Liberty Funds
and of the Liberty All-Star Funds from February, 1998 to
October, 2000); Treasurer of the of Galaxy Funds since
September 2002; Treasurer, Columbia Management
Multi-Strategy Hedge Fund, LLC since December, 2002
(formerly Vice President of Colonial from February, 1998 to
October, 2000 and Senior Tax Manager, Coopers & Lybrand, LLP
from April, 1996 to January, 1998).
</Table>
Important Information About This Report
The Transfer Agent for Columbia Growth Stock Fund is:
Columbia Funds Services, Inc.
P.O. Box 8081
Boston, MA 02266-8081
Please note our new name as of October 13, 2003.
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 Columbia 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 Columbia Funds Performance Update.
Annual Report:
Columbia Growth Stock Fund
-------------
Columbia Growth Stock Fund Annual Report, September 30, 2003 PRSRT STD
U.S. Postage
PAID
Holliston, MA
Permit NO. 20
-------------
[LOGO] COLUMBIA FUNDS
A Member of Columbia Management Group
(C)2003 Columbia Funds Distributor, Inc.
One Financial Center, Boston, MA 02111-2621
800.345.6611 www.columbiafunds.com
755-02/587P-0903 (11/03) 03/3264
Item 2. Code of Ethics.
(a) The registrant has, as of the end of the period covered by this
report, adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
the registrant or a third party.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any waivers
or implicit waivers to a provision of the code of ethics adopted in
2(a) above.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas
E. Stitzel and Anne-Lee Verville, each of whom are members of the registrant's
Board of Trustees and Audit Committee, each qualify as an audit committee
financial expert. Mr. Hacker, Mr. Stitzel and Ms. Verville are each independent
trustees, as defined in paragraph (a)(2) of this item's instructions. Mr.
Stitzel was appointed to the Audit Committee effective October 8, 2003.
Item 4. Principal Accountant Fees and Services.
Not applicable at this time.
Item 5. Audit Committee of Listed Registrants.
Not applicable at this time.
Item 6. Reserved.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Reserved.
Item 9. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer, based on their evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing of
this report, have concluded that such controls and procedures are
adequately designed to ensure that information required to be
disclosed by the registrant in Form N-CSR is accumulated and
communicated to the registrant's management, including the principal
executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last
fiscal half-year (the registrant's second fiscal half-year in the
case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 10. Exhibits.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR
attached hereto as Exhibit 99.CODE ETH
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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) Columbia Funds Trust XI
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By (Signature and Title) /s/ Joseph R. Palombo
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Joseph R. Palombo, President
Date November 25, 2003
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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
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Joseph R. Palombo, President
Date November 25, 2003
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By (Signature and Title) /s/ J. Kevin Connaughton
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J. Kevin Connaughton, Treasurer
Date November 25, 2003
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