N-CSRS 1 file001.txt COLUMBIA FUNDS TRUST XI 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) Vincent Pietropaolo, 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: 1-617-772-3698 ------------------- Date of fiscal year end: September 30, 2004 ------------------ Date of reporting period: March 31, 2004 ----------------- 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 FUND SEMIANNUAL REPORT MARCH 31, 2004 logo: Columbia Funds COLUMBIAFUNDS A Member of Columbia Management Group Table of Contents Fund Profile .................................... 1 Performance Information ......................... 2 Economic Update ................................. 3 Portfolio Managers' Report ...................... 4 Financial Statements ............................ 6 Investment Portfolio ......................... 7 Statement of Assets and Liabilities ..........12 Statement of Operations ......................13 Statements of Changes in Net Assets ..........14 Notes to Financial Statements ................15 Financial Highlights .........................20 Important Information About This Report ...............................24 Columbia Funds ..................................25 Activity Pages .................................. I Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. Not FDIC Insured May Lose Value No Bank Guarantee TO OUR FELLOW SHAREHOLDERS Columbia Young Investor Fund DEAR SHAREHOLDER: We are pleased to let you know that FleetBoston Financial Corporation and Bank of America Corporation have merged, effective April 1, 2004. As a result of the merger, Columbia Management Group became part of the Bank of America family of companies. Looking ahead, we believe this merger will be a real benefit to our shareholders. Preserving and leveraging our strengths, the combined organization intends to deliver additional research and management capabilities, as well as new products to you. There are no immediate changes planned for fund names or customer service contacts. As always, we will provide you with updates at www.columbiafunds.com or through other communications, such as newsletters and shareholder reports. As you might know, on March 15, 2004, FleetBoston Financial announced an agreement in principle with the staff of the Securities and Exchange Commission ("SEC") and the New York Attorney General to settle charges involving market timing in Columbia Management mutual funds. (Bank of America came to a similar settlement in principle at the same time.) The agreement requires the final approval of the SEC. This action reflects our full cooperation with the investigation and our strong wish to put this regrettable situation behind us. Columbia Management has taken and will continue to take steps to strengthen policies, procedures and oversight to curb frequent trading of Columbia fund shares. We want you to know that all of the members of your fund's Board of Trustees are independent of the fund's advisor and its affiliates. In addition, the board has been energetic over the past year in strengthening its capacity to oversee the Columbia funds. Recently, the Board of Trustees: o appointed a chief compliance officer of the Columbia funds, who reports directly to each fund's audit committee. Trustees were also assigned to four separate investment oversight committees, each dedicated to monitoring performance of individual funds. o voted to double the required investment by each trustee in the Columbia funds -- to further align the interests of the trustees with those of our fund shareholders. At the same time, new policies were instituted requiring all investment personnel and trustees to hold their Columbia fund shares for a minimum of one year (unless extraordinary circumstances warrant an exception to be granted by senior executives of the advisor for investment personnel and by a designated committee for the board). Both your fund's trustees and Columbia Management are committed to serving the interests of our shareholders, and we will continue to work hard to help you achieve your financial goals. In the pages that follow, you'll find valuable information about the economic environment during the period and the performance of your Columbia fund. These discussions are followed by financial statements for your fund. We hope that you will take time to read this report and discuss it with your financial advisor if you have any questions. As always, thank you for choosing Columbia funds. It is a privilege to play a role in your financial future. Sincerely, /s/ Thomas C. Theobald /s/ J. Kevin Connaughton Thomas C. Theobald J. Kevin Connaughton Chairman, Board of Trustees President, Columbia Funds J. Kevin Connaughton was named president of Columbia Funds on February 27, 2004. Summary o For the six-month period ended March 31, 2004, the fund's class A shares returned 12.89% without sales charge. o The fund's return was lower than the Russell 3000 Index. It also trailed its peer group, the Morningstar(R) Large Blend Category. o The fund's investments in small- and mid-cap stocks and in value stocks helped the fund to a double-digit return. But the fund trailed its benchmark because it emphasized large companies with relatively predictable profit growth. Large companies did not return as much as the stocks of smaller, more speculative companies. Class A shares artwork: arrow up 12.89% Russell 3000 Index artwork: arrow up 14.94% Objective Seeks long-term growth of capital Total net assets $833.3 million artwork: Morningstar style box shaded box represents Style-Blend; Size-Large FUND PROFILE Columbia Young Investor Fund The information below gives you a snapshot of your fund at the end of the reporting period. Your fund is actively managed and the composition of its portfolio will change over time. Top 5 sectors as of 03/31/04 (%) Information technology 20.3 Financials 19.4 Consumer discretionary 14.3 Health care 13.9 Consumer staples 7.8 Top 10 holdings as of 03/31/04 (%) Exxon Mobil 2.5 Citigroup 2.4 American International Group 2.1 Microsoft 2.1 Pfizer 2.0 Wells Fargo 2.0 General Electric 1.7 Procter & Gamble 1.7 Viacom 1.7 Medtronic 1.5 Sector breakdowns and portfolio holdings are calculated as a percentage of net assets. (C)2004 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Morningstar Style BoxTM reveals a fund's investment strategy. For equity funds the vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend or growth). For fixed-income funds the vertical axis shows the average credit quality of the bonds owned, and the horizontal axis shows interest rate sensitivity as measured by a bond's duration (short, intermediate or long). All of these numbers are drawn from the data most recently provided by the fund and entered into Morningstar's database as of month-end. Although the data are gathered from reliable sources, Morningstar cannot guarantee completeness and accuracy. As of 03/31/2004. 1 Performance of a $10,000 investment 04/29/94 - 03/31/04 ($) sales charge: without with Class A 26,902 25,355 Class B 26,583 26,583 Class C 26,606 26,606 Class Z 26,877 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares may be worth more or less than original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. PERFORMANCE INFORMATION Columbia Young Investor Fund Value of a $10,000 investment 04/29/94 - 03/31/04 Line Chart:
Class A shares Class A shares Russell 3000 S&P 500 without with sales charge Index Index sales charge 4/1994 $9,425 $10,000 $10,000 $10,000 9,425 10,000 10,000 10,000 9,463 10,110 10,164 10,040 9,142 9,833 9,915 9,700 9,293 10,138 10,240 9,860 9,707 10,580 10,660 10,299 9,651 10,354 10,399 10,240 10,047 10,525 10,633 10,660 9,849 10,141 10,246 10,450 10,121 10,299 10,397 10,738 10,159 10,525 10,667 10,779 10,397 10,954 11,083 11,031 10,757 11,227 11,410 11,414 10,881 11,520 11,745 11,545 11,062 11,938 12,215 11,737 11,992 12,283 12,498 12,724 12,714 12,777 12,913 13,490 12,875 12,891 12,946 13,661 13,568 13,390 13,492 14,396 13,293 13,275 13,443 14,104 14,052 13,864 14,033 14,909 14,147 14,090 14,304 15,010 14,700 14,499 14,791 15,597 14,897 14,713 14,928 15,806 15,519 14,862 15,071 16,465 16,565 15,144 15,293 17,575 17,363 15,532 15,688 18,422 17,698 15,482 15,747 18,778 16,525 14,672 15,051 17,533 17,265 15,117 15,369 18,318 18,389 15,939 16,234 19,511 18,645 16,231 16,682 19,782 19,376 17,375 17,943 20,558 19,112 17,167 17,588 20,278 20,001 18,116 18,687 21,221 19,481 18,136 18,833 20,669 18,183 17,316 18,059 19,293 19,000 18,170 19,137 20,159 20,470 19,411 20,303 21,719 21,451 20,218 21,212 22,759 22,942 21,804 22,901 24,341 22,155 20,918 21,618 23,506 23,238 22,104 22,803 24,656 22,564 21,362 22,041 23,941 23,126 22,180 23,062 24,537 24,134 22,623 23,458 25,607 24,279 22,741 23,719 25,760 26,226 24,367 25,429 27,826 27,241 25,576 26,731 28,903 27,552 25,826 27,001 29,233 26,610 25,188 26,536 28,233 28,132 26,040 27,614 29,848 27,209 25,566 27,321 28,869 22,162 21,649 23,370 23,514 23,498 23,126 24,868 24,932 25,115 24,881 26,890 26,647 26,596 26,404 28,520 28,219 28,392 28,083 30,163 30,124 29,709 29,038 31,423 31,522 28,657 28,010 30,446 30,406 30,898 29,038 31,664 32,783 31,683 30,347 32,889 33,616 30,590 29,771 32,113 32,456 32,086 31,274 33,895 34,044 30,389 30,327 32,838 32,243 29,772 29,981 32,677 31,588 29,114 29,213 31,782 30,890 31,513 31,045 33,793 33,435 33,508 31,914 34,479 35,552 37,384 33,950 36,510 39,665 36,517 32,619 34,677 38,745 39,862 32,923 34,022 42,294 41,042 35,501 37,349 43,546 37,656 34,251 36,225 39,953 34,180 33,289 35,483 36,266 37,342 34,274 36,359 39,620 36,730 33,667 35,792 38,970 40,406 36,165 38,014 42,871 38,519 34,527 36,007 40,869 37,244 34,037 35,856 39,516 32,570 30,899 33,031 34,557 33,629 31,418 33,192 35,680 35,290 32,492 34,371 37,443 31,659 29,522 31,236 33,590 29,211 27,598 29,256 30,993 31,981 29,811 31,529 33,932 31,782 30,049 31,740 33,721 30,613 29,496 30,969 32,480 28,608 29,010 30,665 30,353 26,677 27,298 28,746 28,304 23,083 24,891 26,423 24,492 23,870 25,470 26,928 25,327 26,000 27,432 28,993 27,586 26,234 27,818 29,248 27,834 25,520 27,471 28,821 27,077 24,844 26,910 28,265 26,359 26,320 28,089 29,328 27,925 24,719 26,614 27,551 26,227 24,227 26,306 27,347 25,705 22,493 24,412 25,400 23,865 20,522 22,471 23,421 21,774 20,416 22,576 23,573 21,661 18,272 20,204 21,011 19,387 19,752 21,812 22,860 20,957 21,231 23,132 24,206 22,527 19,794 21,825 22,785 21,002 19,386 21,290 22,188 20,569 19,086 20,939 21,855 20,250 19,258 21,158 22,067 20,432 20,737 22,887 23,886 22,002 21,829 24,270 25,145 23,161 21,893 24,597 25,466 23,228 22,363 25,160 25,915 23,728 23,050 25,719 26,420 24,456 22,451 25,439 26,140 23,820 23,845 26,978 27,619 25,300 24,188 27,350 27,863 25,664 25,197 28,600 29,323 26,734 25,477 29,198 29,862 27,031 25,647 29,592 30,277 27,212 3/2004 25,355 29,243 29,809 26,902
The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. 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. As reported in the annual report dated September 30, 2003, the fund's previous benchmark was the S&P 500 Index. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Index performance is from April 29, 1994. WHAT DOES AVERAGE ANNUAL TOTAL RETURN MEAN? The average annual total return is given for periods greater than a year. Calculated as a percentage, this figure represents the average yearly return for the time period specified. The chart below includes average annual returns for the following periods: one year, five years and the life of the fund. Returns for periods less than one year are known as cumulative returns. A cumulative return is the percentage that the fund has grown or shrunk in the number of months indicated. Average annual total return as of 03/31/04 (%)
Share class A B C Z ---------------------------------------------------------------------------------------- Inception 7/29/02 7/29/02 7/29/02 4/29/94 ---------------------------------------------------------------------------------------- Sales charge without with without with without with without ======================================================================================== 6-month (cumulative) 12.89 6.39 12.42 7.42 12.51 11.51 12.71 ======================================================================================== 1-year 31.63 24.03 30.65 25.65 30.61 29.61 31.50 ======================================================================================== 5-year -3.88 -5.02 -4.11 -4.44 -4.09 -4.09 -3.90 ======================================================================================== Life 10.49 9.83 10.36 10.36 10.37 10.37 10.48 ========================================================================================
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: through 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 for different share classes varies based on differences in sales charges and fees associated with each class. 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. Class A, B, and C share (newer class shares) 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. 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. 2 Summary For the six-month period ended March 31, 2004 o Stock markets around the world benefited from a pick-up in economic growth and an increase in corporate profits. The S&P 500 Index and the MSCI EAFE Index posted double-digit returns this period. S&P 500 Index artwork: arrow up 14.08% MSCI EAFE Index artwork: arrow up 22.16% o Performance in the fixed-income universe was led by high-yield bonds. As measured by the Merrill Lynch US High Yield, Cash Pay Index, this sector posted a return more than five percentage points higher than the return for investment-grade bonds, as measured by the Lehman Brothers Aggregate Bond Index. Merrill Lynch Index artwork: arrow up 8.21% Lehman Index artwork: arrow up 2.98% The S&P 500 Index is an unmanaged index that tracks the performance of 500 widely held, large capitalization US stocks. The MSCI EAFE Index is an unmanaged, market-weighted index composed of companies representative of the market structure of 21 developed market countries in Europe, Australasia and the Far East. The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that tracks the performance of non-investment-grade corporate bonds. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues. ECONOMIC UPDATE Columbia Young Investor Fund The US economy moved ahead during the six-month reporting period that began October 1, 2003 and ended March 31, 2004. A burst of strength in the third quarter of 2003, for which annualized GDP was reported at 8.2%, was followed by fourth quarter growth of 4.1%. That was still comfortably ahead of the economy's long-term average growth rate of 3.0%. GDPgrowth for first quarter of 2004 was 4.2%. Although job growth was slow to catch on, the economy showed signs of improvement on all fronts. Consumer spending rose as a sizeable package of tax cuts, implemented in 2003, gave disposable income a boost. Low interest rates spurred a new round of mortgage refinancing late in the period. Consumer confidence slipped late in the period as the outlook for the labor market remained clouded despite a significant pick-up in the number of new jobs added in March. Nevertheless, housing and retail sales showed steady gains throughout the period. After two years of holding back, the business sector began to show signs of improvement late in 2003. Business spending on technology-related items rose as corporate profits improved. Spending on capital equipment also picked up. US STOCKS HEADED HIGHER The US stock market snapped a three-year losing streak in 2003, but its rate of return slowed early in 2004 in response to a mixed job outlook and renewed fears about terrorism. The S&P 500 Index returned 14.08% for this six-month period. Small company stocks were even stronger. The Russell 2000 Index, an unmanaged index that tracks the performance of 2,000 small US companies based on total market capitalizations, returned 21.69% for the period. INTERNATIONAL STOCK MARKETS REPORTED STRONG RETURNS A modest rebound in economic growth and a declining US dollar helped international stock markets post strong returns. The MSCI EAFE Index, a broad measure of performance of 21 developed equity markets in Europe, Australasia (which includes Australia and New Zealand) and the Far East, returned 22.16% for the period. European stock markets responded to improving economic data and relatively low interest rates. Japan's economy continued to report steady but modest growth, and its improvement was reflected in strong stock market returns. The stock markets of Korea, Malaysia and Taiwan scored double-digit gains during the period as did those of Colombia and Mexico. BONDS DELIVERED RESPECTABLE GAINS A growing economy continued to boost investor enthusiasm for high-yield bonds, which led the fixed-income markets during the period. The six-month return for the Merrill Lynch US High Yield, Cash Pay Index was 8.21%. However, high-yield bonds slipped in the second half of this reporting period. US Treasury bonds gained ground and other segments of the bond market also delivered respectable gains as interest rates declined. The Lehman Brothers Aggregate Bond Index, a broad measure of investment-grade bond performance, returned 2.98%. However, money market fund yields remained below 1%. 3 PORTFOLIO MANAGERS' REPORT Columbia Young Investor Fund HOW DID THE FUND PERFORM? During the six-month period ended March 31, 2004, the fund's class A shares returned 12.89%. This return was calculated before the sales charge was deducted. The fund didn't return as much as the Russell 3000 Index, which measures the performance of small-, medium- and large-company stocks. Its gain was 14.94%. The fund also came out behind the 13.54% average return of its peer group, the Morningstar(R) Large Blend Category.1 Small- and mid-cap stocks, as well as value stocks, were the fund's best performers. However, its investments in higher quality, large growth companies did not do as well. In addition, the fund's sizable stake in technology stocks lost ground early in 2004. Technology was a good performer in 2003, but recently investors have become concerned that stock prices have climbed too high, too fast. HOW WERE YOU INVESTED? We invested roughly one-third of the fund's assets in large-company growth stocks, one-third in large-company value stocks and one-third in the stocks of small- and mid-size companies. In the growth part of the portfolio, we concentrated on large companies with superior long-term growth and profit potential. In the value part of the portfolio, we targeted large companies whose stock prices were less than what we thought they were really worth. In the small- and mid-size portion of the portfolio, we used special computer programs to help us screen for stocks with higher quality financial characteristics, reasonable prices relative to their industry peers and improving business trends. HOW DID TECHNOLOGY STOCKS PERFORM? We found some of the best opportunities for rapid earnings and revenue growth in technology stocks. These companies create new products that appeal to both their existing and new customers. That's why we invested in Fairchild Semiconductor International, a small company that makes semiconductor chips for cell phones and DVD players. We also invested in Lexmark International, a mid-size company that makes printers. Both stocks generated profits that were higher than investors expected, and were among the fund's top performers. At the end of the period we sold Fairchild Semiconductor because of increased uncertainty about its future earnings. Unfortunately, some other tech investments were disappointing. Microsoft underperformed because investors were concerned about the outcome of lawsuits in the United States and Europe. Novellus Systems was another disappointment during the past few months, even though customer orders were improving. This company produces sophisticated equipment used to make computer chips. 1 (C)2004, 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. sidebar: Net asset value per share as of 03/31/04 ($) ========================================== Class A 11.82 ========================================== Class B 11.68 ========================================== Class C 11.69 ========================================== Class Z 10.29 Holdings discussed in this report as of 03/31/04 (%) ========================================== Lexmark International 1.3 ========================================== Microsoft 2.1 ========================================== Novellus Systems 0.9 ========================================== Citigroup 2.4 ========================================== American International Group 2.1 ========================================== GreenPoint Financial 0.9 ========================================== Comcast 0.9 ========================================== Viacom 1.7 ========================================== Cisco Systems 1.4 ========================================== Wendy's International 0.6 Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. DID YOU KNOW? Value investors tend to focus more on the present than on the future. Their biggest concern is what they're paying for a stock relative to measures such as the company's earnings. Think of them as bargain shoppers. But for us, value stocks have to be more than inexpensive. They also need to have the potential to improve--a new product launch, new management or a cost-cutting program that is expected to boost profits. We liked Wendy's International, the fast food restaurant, because its stock price seemed inexpensive relative to its competitors. We also saw no major issues that might keep the company from growing. Further, we liked that it has benefited from its emphasis on healthier food. 4 sidebar: 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 prices of small- and medium-sized companies may be more volatile than those of larger, more established firms. Value stocks are securities of companies that may have experienced adverse business or industry developments or may be subject to special risk that have caused the stocks to be out of favor. If the advisor's assessment of a company's prospects is wrong, the price of its stock may not approach the value the advisor has placed on it. A concentration of investments in a specific sector, such as technology, may cause a fund to experience increased volatility. -------------------------------------------------------------------------------- Columbia Young Investor Fund WHAT TYPES OF STOCKS DID THE BEST? Financial stocks were the best performers. They were helped by low interest rates, a growing economy and a pick-up in merger and acquisition activity. Higher prices translated into higher profits. Companies that depend on investor trading activity, such as stock brokers, also saw business improve. We owned a number of stocks that benefited from these trends: Citigroup, a global diversified financial services company; American International Group, a large insurance company and GreenPoint Financial, a mortgage and consumer lending company that was bought out during the period. Energy investments--a small part of the overall portfolio--helped performance as oil and natural gas prices rose during the period. WHICH STOCKS HURT THE FUND'S PERFORMANCE? Media stocks, such as Viacom had a difficult time because companies didn't increase their spending on advertising as rapidly as expected. In the cable industry, Comcast declined because investors weren't happy that the company was bidding to acquire The Walt Disney Company at a relatively high price. In health care, pharmaceutical companies encountered a difficult environment. Drug companies have been struggling to develop new products, but investors were worried there may not be enough products in development to replace the lost revenues from brand name drugs facing patent expirations. WHAT'S YOUR OUTLOOK? Going forward, we expect continued improvements in the economy and corporate profits to benefit stock returns. In each of the three disciplines we follow, we continue to find good investment opportunities. Our plan is to continue to invest in the best companies we can find. By dividing the fund's investments among all segments of the stock market--large, medium and small companies and both growth and value companies--we hope to be represented in the best-performing sectors, no matter which ones they may be. photos: Greg Miller; Michael A. Welhoelter; Paul A. Blaustein /s/ Greg Miller /s/ Michael A. Welhoelter /s/ Paul A. Blaustein Greg Miller, Michael A. Welhoelter, CFA, and Paul A. Blaustein, 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. Blaustein has been co-managing the fund since November 2003. 5 Financial Statements -------------------------------------------------------------------------------- March 31, 2004 Columbia Young Investor Fund A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS
----------------------------------------------------------------------------------------- INVESTMENT PORTFOLIO The investment portfolio details all of the fund's holdings and their market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset, industry, country or geographic region (if applicable) to demonstrate areas of concentration and diversification. ----------------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES This statement details the fund's assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all the fund's liabilities (including any unpaid expenses) from the total of the fund's investment and non-investment assets. The share price for each class is calculated by dividing net assets for that class by the number of shares outstanding in that class as of the last day of the reporting period. ----------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS This statement details income earned by the fund and the expenses accrued by the fund during the reporting period. The Statement of Operations also shows any net gain or loss the fund realized on the sales of its holdings during the period, as well as any unrealized gains or losses recognized over the period. The total of these results represents the fund's net increase or decrease in net assets from operations. ----------------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS This statement demonstrates how the fund's net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and dividend reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding. ----------------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS These notes disclose the organizational background of the fund, its significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies. ----------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS The financial highlights demonstrate how the fund's net asset value per share was affected by the fund's operating results. The financial highlights table also discloses the classes' performance and certain key ratios (e.g., class expenses and net investment income as a percentage of average net assets).
See notes to investment portfolio. 6 INVESTMENT PORTFOLIO -------------------------------------------------------------------------------- March 31, 2004 (unaudited) Columbia Young Investor Fund
COMMON STOCKS - 99.8% CONSUMER DISCRETIONARY - 14.3% SHARES VALUE ($) ------------------------------------------ ---------------------------------------------------------------------------- AUTO COMPONENTS - 0.3% Autoliv, Inc. 59,300 2,431,300 Auto Components Total 2,431,300 ---------------------------------------------------------------------------- AUTOMOBILES - 0.3% General Motors Corp. 52,745 2,484,289 Automobiles Total 2,484,289 ---------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE - 1.1% Cedar Fair LP 71,400 2,496,858 Starwood Hotels & Resorts Worldwide, Inc., Class B 49,400 2,000,700 Wendy's International, Inc. 118,600 4,825,834 Hotels, Restaurants & Leisure Total 9,323,392 ---------------------------------------------------------------------------- HOUSEHOLD DURABLES - 0.2% Applica, Inc. 166,900 1,875,956 Household Durables Total 1,875,956 ---------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS - 0.9% Marvel Enterprises, Inc. (a) 206,700 3,966,573 Mattel, Inc. 196,166 3,617,301 Leisure Equipment & Products Total 7,583,874 ---------------------------------------------------------------------------- MEDIA - 8.7% Clear Channel Communications, Inc. 71,982 3,048,438 Comcast Corp., Class A (a) 273,300 7,854,642 Gannett Co., Inc. 32,369 2,853,004 Getty Images, Inc. (a) 126,600 6,833,868 Lee Enterprises, Inc. 64,200 2,900,556 Liberty Media Corp., Class A (a) 449,700 4,924,215 McClatchy Co., Class A 76,100 5,406,144 McGraw-Hill Companies, Inc. 37,600 2,862,864 NetFlix, Inc. (a) 125,100 4,268,412 News Corp Ltd., ADR 127,600 4,591,048 NTL, Inc. (a) 53,300 3,168,685 Time Warner, Inc. (a) 394,800 6,656,328 Viacom, Inc., Class B 353,800 13,872,498 Westwood One, Inc. (a) 94,800 2,791,860 Media Total 72,032,562 ---------------------------------------------------------------------------- MULTILINE RETAIL - 1.1% May Department Stores Co. 66,300 2,292,654 Sears, Roebuck and Co. 141,600 6,083,136 Multiline Retail Total 8,375,790 ---------------------------------------------------------------------------- SPECIALTY RETAIL - 1.2% Home Depot, Inc. 123,200 4,602,752 Limited Brands 90,200 1,804,000 Lowe's Companies, Inc. 65,500 3,676,515 Specialty Retail Total 10,083,267 ---------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS - 0.5% Kellwood Co. 112,100 4,399,925 Textiles, Apparel & Luxury Goods Total 4,399,925 ----------- CONSUMER DISCRETIONARY TOTAL 118,590,355 CONSUMER STAPLES - 7.8% ------------------------------------------ ---------------------------------------------------------------------------- BEVERAGES - 0.8% PepsiCo, Inc. 123,300 6,639,705 Beverages Total 6,639,705 ---------------------------------------------------------------------------- FOOD & STAPLES RETAILING - 3.0% Costco Wholesale Corp. (a) 335,535 12,602,695 Wal-Mart Stores, Inc. 206,800 12,343,892 Food & Staples Retailing Total 24,946,587 ----------------------------------------------------------------------------
See notes to investment portfolio. 7 -------------------------------------------------------------------------------- March 31, 2004 (unaudited) Columbia Young Investor Fund COMMON STOCKS - (CONTINUED) CONSUMER STAPLES - (CONTINUED)
SHARES VALUE ($) ------------------------------------------ ---------------------------------------------------------------------------- FOOD PRODUCTS - 0.8% Chiquita Brands International, Inc. (a) 158,900 3,313,065 ConAgra Foods, Inc. 113,900 3,068,466 Food Products Total 6,381,531 ---------------------------------------------------------------------------- HOUSEHOLD PRODUCTS - 3.2% Clorox Co. 57,700 2,822,107 Colgate-Palmolive Co. 176,800 9,741,680 Procter & Gamble Co. 131,500 13,791,720 Household Products Total 26,355,507 ----------- CONSUMER STAPLES TOTAL 64,323,330 ENERGY - 7.3% ------------------------------------------ ---------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES - 1.6% Halliburton Co. 90,208 2,741,421 Schlumberger Ltd. 164,300 10,490,555 Energy Equipment & Services Total 13,231,976 ---------------------------------------------------------------------------- OIL & GAS - 5.7% BP PLC, ADR 118,392 6,061,670 ConocoPhillips 120,800 8,433,048 Exxon Mobil Corp. 503,500 20,940,565 Houston Exploration Co. (a) 47,500 2,124,675 Newfield Exploration Co. (a) 100,900 4,836,137 Stone Energy Corp. (a) 103,200 5,104,272 Oil & Gas Total 47,500,367 ----------- ENERGY TOTAL 60,732,343 FINANCIALS - 19.4% ------------------------------------------ ---------------------------------------------------------------------------- CAPITAL MARKETS - 4.0% A.G. Edwards, Inc. 176,300 6,896,856 Bank of New York Co., Inc. 162,500 5,118,750 JP Morgan Chase & Co. 145,200 6,091,140 Merrill Lynch & Co., Inc. 167,402 9,970,463 Morgan Stanley 96,800 5,546,640 Capital Markets Total 33,623,849 ---------------------------------------------------------------------------- COMMERCIAL BANKS - 4.3% Bank One Corp. 63,700 3,472,924 City National Corp. 66,000 3,953,400 Texas Regional Bancshares, Inc., Class A 60,700 2,582,785 U.S. Bancorp 203,700 5,632,305 UnionBanCal Corp. 59,900 3,138,161 Wells Fargo & Co. 301,300 17,074,671 Commercial Banks Total 35,854,246 ---------------------------------------------------------------------------- CONSUMER FINANCE - 0.4% MBNA Corp. 101,248 2,797,482 Consumer Finance Total 2,797,482 ---------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 2.4% Citigroup, Inc. 392,909 20,313,395 Diversified Financial Services Total 20,313,395 ---------------------------------------------------------------------------- INSURANCE - 5.8% AFLAC, Inc. 101,600 4,078,224 Ambac Financial Group, Inc. 99,400 7,333,732 American International Group, Inc. 241,328 17,218,753 MBIA, Inc. 116,200 7,285,740 Travelers Property Casualty Corp., Class B 251,400 4,341,678 Willis Group Holdings Ltd. 138,450 5,150,340 XL Capital Ltd., Class A 36,653 2,787,094 Insurance Total 48,195,561 ---------------------------------------------------------------------------- See notes to investment portfolio. 8 -------------------------------------------------------------------------------- March 31, 2004 (unaudited) Columbia Young Investor Fund COMMON STOCKS - (CONTINUED) FINANCIALS - (CONTINUED) SHARES VALUE ($) ------------------------------------------ ---------------------------------------------------------------------------- REAL ESTATE - 1.2% AvalonBay Communities, Inc., REIT 70,800 3,793,464 Kimco Realty Corp., REIT 114,300 5,827,014 Real Estate Total 9,620,478 ---------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE - 1.3% Freddie Mac 62,600 3,697,156 GreenPoint Financial Corp. 169,650 7,415,401 Thrifts & Mortgage Finance Total 11,112,557 ----------- FINANCIALS TOTAL 161,517,568 HEALTH CARE - 13.9% ------------------------------------------ ---------------------------------------------------------------------------- BIOTECHNOLOGY - 1.0% Amgen, Inc. (a) 149,800 8,713,866 Biotechnology Total 8,713,866 ---------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES - 2.6% Beckman Coulter, Inc. 66,200 3,610,548 Becton Dickinson & Co. 105,000 5,090,400 Medtronic, Inc. 266,900 12,744,475 Health Care Equipment & Supplies Total 21,445,423 ---------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 4.8% Aetna, Inc. 63,331 5,682,057 Cardinal Health, Inc. 154,100 10,617,490 CIGNA Corp. 130,300 7,690,306 Coventry Health Care, Inc. (a) 155,750 6,592,898 IMS Health, Inc. 328,600 7,643,236 Tenet Healthcare Corp. (a) 126,800 1,415,088 Health Care Providers & Services Total 39,641,075 ---------------------------------------------------------------------------- PHARMACEUTICALS - 5.5% Bradley Pharmaceuticals, Inc. (a) 195,400 4,920,172 Bristol-Myers Squibb Co. 101,100 2,449,653 Johnson & Johnson 184,500 9,357,840 Merck & Co, Inc. 65,200 2,881,188 Novartis AG, ADR 239,800 10,215,480 Pfizer, Inc. 464,100 16,266,705 Pharmaceuticals Total 46,091,038 ----------- HEALTH CARE TOTAL 115,891,402 INDUSTRIALS - 7.2% ------------------------------------------ ---------------------------------------------------------------------------- AEROSPACE & DEFENSE - 1.5% Honeywell International, Inc. 138,600 4,691,610 United Technologies Corp. 91,700 7,913,710 Aerospace & Defense Total 12,605,320 ---------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES - 2.7% Avery Dennison Corp. 69,100 4,298,711 Convergys Corp. (a) 96,000 1,459,200 Paychex, Inc. 159,200 5,667,520 Pitney Bowes, Inc. 120,400 5,130,244 Waste Management, Inc. 198,685 5,996,313 Commercial Services & Supplies Total 22,551,988 ---------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES - 2.3% 3M Co. 54,100 4,429,167 General Electric Co. 474,000 14,466,480 Industrial Conglomerates Total 18,895,647 ---------------------------------------------------------------------------- MACHINERY - 0.4% Briggs & Stratton Corp. 54,300 3,663,621 Machinery Total 3,663,621 See notes to investment portfolio. 9 -------------------------------------------------------------------------------- March 31, 2004 (unaudited) Columbia Young Investor Fund COMMON STOCKS - (CONTINUED) INDUSTRIALS - (CONTINUED) SHARES VALUE ($) ------------------------------------------ ---------------------------------------------------------------------------- MARINE - 0.3% Overseas Shipholding Group. 65,700 2,398,050 Marine Total 2,398,050 ----------- INDUSTRIALS TOTAL 60,114,626 INFORMATION TECHNOLOGY - 20.3% ------------------------------------------ ---------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 2.0% Cisco Systems, Inc. (a) 510,400 12,004,608 Scientific-Atlanta, Inc. 146,300 4,731,342 Communications Equipment Total 16,735,950 ---------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 3.1% Dell, Inc. (a) 252,200 8,478,964 International Business Machines Corp. 70,500 6,474,720 Lexmark International, Inc., Class A (a) 114,300 10,515,600 Computers & Peripherals Total 25,469,284 ---------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.6% Avnet, Inc. (a) 313,700 7,682,513 Benchmark Electronics, Inc. (a) 189,900 5,978,052 Electronic Equipment & Instruments Total 13,660,565 ---------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES - 0.4% United Online, Inc. (a) 182,400 3,038,784 Internet Software & Services Total 3,038,784 ---------------------------------------------------------------------------- IT SERVICES - 0.5% Accenture Ltd., Class A (a) 121,746 3,019,301 Electronic Data Systems Corp. 77,000 1,489,950 IT Services Total 4,509,251 ---------------------------------------------------------------------------- OFFICE ELECTRONICS - 0.5% Xerox Corp. (a) 142,900 2,082,053 Zebra Technologies Corp., Class A (a) 28,750 1,994,388 Office Electronics Total 4,076,441 ---------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 8.7% Altera Corp. (a) 453,100 9,265,895 Analog Devices, Inc. 136,000 6,529,360 Applied Materials, Inc. (a) 392,000 8,380,960 ASML Holding N.V., N.Y. Shares (a) 528,000 9,678,240 Intel Corp. 323,300 8,793,760 Maxim Integrated Products 65,200 3,070,268 Microchip Technology, Inc. 154,000 4,090,240 Novellus Systems, Inc. (a) 224,700 7,143,213 QLogic Corp. (a) 48,700 1,607,587 Texas Instruments, Inc. 89,400 2,612,268 Xilinx, Inc. (a) 291,000 11,058,000 Semiconductors & Semiconductor Equipment Total 72,229,791 ---------------------------------------------------------------------------- SOFTWARE - 3.5% Adobe Systems, Inc. 165,700 6,533,551 Microsoft Corp. 716,500 17,891,005 SAP AG, ADR 125,700 4,941,267 Software Total 29,365,823 ----------- INFORMATION TECHNOLOGY TOTAL 169,085,889 MATERIALS - 5.5% ------------------------------------------ ---------------------------------------------------------------------------- CHEMICALS - 2.6% Air Products & Chemicals, Inc. 82,882 4,154,046 Monsanto Co. 217,400 7,972,058 OM Group, Inc. (a) 90,500 2,751,200 PPG Industries, Inc. 60,600 3,532,980 Sigma-Aldrich Corp. 59,000 3,265,060 Chemicals Total 21,675,344 ---------------------------------------------------------------------------- See notes to investment portfolio. 10 -------------------------------------------------------------------------------- March 31, 2004 (unaudited) Columbia Young Investor Fund COMMON STOCKS - (CONTINUED) MATERIALS - (CONTINUED) SHARES VALUE ($) ------------------------------------------ ---------------------------------------------------------------------------- CONSTRUCTION MATERIALS - 0.4% Vulcan Materials Co. 67,700 3,211,688 Construction Materials Total 3,211,688 ---------------------------------------------------------------------------- CONTAINERS & PACKAGING - 0.9% Temple-Inland, Inc. 120,500 7,632,470 Containers & Packaging Total 7,632,470 ---------------------------------------------------------------------------- METALS & MINING - 0.6% Carpenter Technology Corp. 101,300 3,330,744 Southern Peru Copper Corp. 48,700 1,969,915 Metals & Mining Total 5,300,659 ---------------------------------------------------------------------------- PAPER & FOREST PRODUCTS - 1.0% Potlatch Corp. 46,900 1,911,175 Rayonier, Inc. 155,981 6,817,930 Paper & Forest Products Total 8,729,105 ----------- MATERIALS TOTAL 46,549,266 TELECOMMUNICATION SERVICES - 2.8% ------------------------------------------ ---------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES - 2.8% BellSouth Corp. 146,800 4,064,892 CenturyTel, Inc. 213,700 5,874,613 SBC Communications, Inc. 258,800 6,350,952 Verizon Communications, Inc. 195,000 7,125,300 Diversified Telecommunication Services Total 23,415,757 ----------- TELECOMMUNICATION SERVICES TOTAL 23,415,757 UTILITIES - 1.3% ------------------------------------------ ---------------------------------------------------------------------------- ELECTRIC UTILITIES - 1.0% Consolidated Edison, Inc. 126,100 5,561,010 Southern Co. 93,566 2,853,763 Electric Utilities Total 8,414,773 ---------------------------------------------------------------------------- MULTI-UTILITIES & UNREGULATED POWER - 0.3% Questar Corp. 74,500 2,714,780 Multi-Utilities & Unregulated Power Total 2,714,780 ----------- UTILITIES TOTAL 11,129,553 ----------- TOTAL COMMON STOCKS (cost of $701,673,789) 831,350,089 SHORT-TERM OBLIGATION - 0.6% ------------------------------------------ ---------------------------------------------------------------------------- PAR($) Repurchase agreement with State Street Bank & Trust Co., dated 03/31/04, due 04/01/04 at 0.960%, collateralized by U.S. Treasury Bonds with maturities to 11/15/27, market value of $5,125,232 (repurchase proceeds $5,012,134) (cost of $5,012,000) 5,012,000 5,012,000 TOTAL INVESTMENTS - 100.4% (COST OF $706,685,789) (b) 836,362,089 OTHER ASSETS & LIABILITIES, NET - (0.4)% (3,106,772) NET ASSETS - 100.0% 833,255,317 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for both financial statement and federal income tax purposes is the same. Acronym Name ------- ---- ADR American Depositary Receipt REIT Real Estate Investment Trust
See notes to financial statements. 11 STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------------------------------------------- March 31, 2004 (unaudited) Columbia Young Investor Fund
($) ------------------------------------------ ----------------------------------------------------------------------------- ASSETS Investments, at cost 706,685,789 ------------- Investments, at value 836,362,089 Receivable for: Investments sold 19,799,509 Fund shares sold 65,995 Interest 134 Dividends 726,469 Expense reimbursement due from Investment Advisor 117,465 Deferred Trustees' compensation plan 14,167 ------------- Total Assets 857,085,828 ----------------------------------------------------------------------------- LIABILITIES Payable to custodian bank 17,624 Payable for: Investments purchased 20,700,525 Fund shares repurchased 593,561 Investment advisory fee 409,718 Administration fee 126,490 Transfer agent fee 1,819,133 Pricing and bookkeeping fees 18,548 Distribution and service fees 35,057 Deferred Trustees' fees 14,167 Other liabilities 95,688 ------------- Total Liabilities 23,830,511 NET ASSETS 833,255,317 ----------------------------------------------------------------------------- COMPOSITION OF NET ASSETS Paid-in capital 922,893,645 Undistributed net investment income 583,709 Accumulated net realized loss (219,898,337) Net unrealized appreciation on investments 129,676,300 ------------- NET ASSETS 833,255,317 ----------------------------------------------------------------------------- CLASS A Net assets 102,001,617 Shares outstanding 8,631,023 Net asset value per share 11.82(a) Maximum offering price per share ($11.82/0.9425) 12.54(b) ----------------------------------------------------------------------------- CLASS B Net assets 7,079,983 Shares outstanding 606,069 Net asset value and offering price per share 11.68(a) ----------------------------------------------------------------------------- CLASS C Net assets 767,859 Shares outstanding 65,705 Net asset value and offering price per share 11.69(a) ----------------------------------------------------------------------------- CLASS Z Net assets 723,405,858 Shares outstanding 70,299,826 Net asset value, offering and redemption price per share 10.29
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See notes to financial statements. 12 STATEMENT OF OPERATIONS For the Six Months Ended March 31, 2004 (unaudited) Columbia Young Investor Fund --------------------------------------------------------------------------------
($) ------------------------------------------ ----------------------------------------------------------------------------- INVESTMENT INCOME Dividends 6,997,173 Interest 29,269 ----------------------------------------------------------------------------- Total Investment Income (net of foreign taxes withheld of $34,820) 7,026,442 ----------------------------------------------------------------------------- EXPENSES Investment advisory fee 2,430,231 Administration fee 753,699 Distribution fee: Class A 51,079 Class B 27,029 Class C 2,768 Service fee: Class A 127,681 Class B 9,010 Class C 923 Transfer agent fee: Class A 666,701 Class B 28,449 Class C 3,229 Class Z 2,781,095 Pricing and bookkeeping fees 113,963 Trustees' fees 8,098 Custody fee 10,235 Non-recurring costs (See Note 7) 5,685 Costs assumed by Investment Advisor (See Note 7) (5,685) Other expenses 243,670 ----------- Total Expenses 7,257,860 Fees and expenses waived or reimbursed by Investment Advisor: Class A (517,918) Class B (17,925) Class C (2,160) Fees waived by Distributor-- Class A (25,543) Custody earnings credit (738) ----------- Net Expenses 6,693,576 ----------- Net Investment Income 332,866 ----------------------------------------------------------------------------- NET REALIZED AND UNREALIZED Net realized gain on investments 53,062,325 GAIN (LOSS) ON INVESTMENTS Net change in unrealized appreciation/depreciation on investments 45,073,713 ----------- Net Gain 98,136,038 ----------- Net Increase in Net Assets from Operations 98,468,904
See notes to financial statements. 13 STATEMENTS OF CHANGES IN NET ASSETS March 31, 2004 Columbia Young Investor Fund --------------------------------------------------------------------------------
(UNAUDITED) SIX MONTHS ENDED YEAR ENDED MARCH 31, SEPTEMBER 30, INCREASE (DECREASE) IN NET ASSETS 2004 ($) 2003 ($) ------------------------------------------ ----------------------------------------------------------------------------- OPERATIONS Net investment income (loss) 332,866 (2,300,743) Net realized gain (loss) on investments 53,062,325 (56,715,298) Net change in unrealized appreciation/depreciation on investments 45,073,713 208,670,172 Net Increase from Operations 98,468,904 149,654,131 ----------------------------------------------------------------------------- SHARE TRANSACTIONS Class A Subscriptions 3,288,228 7,644,323 Redemptions (7,957,068) (14,032,114) --------------------------- Net Decrease (4,668,840) (6,387,791) Class B Subscriptions 371,231 771,614 Redemptions (998,330) (1,742,729) --------------------------- Net Decrease (627,099) (971,115) Class C Subscriptions 105,989 173,069 Redemptions (79,478) (116,948) --------------------------- Net Increase 26,511 56,121 Class Z Subscriptions 23,717,255 49,798,986 Redemptions (60,401,278) (78,078,650) --------------------------- Net Decrease (36,684,023) (28,279,664) Net Decrease from Share Transactions (41,953,451) (35,582,449) Total Increase in Net Assets 56,515,453 114,071,682 ------------------------------------------ ----------------------------------------------------------------------------- NET ASSETS Beginning of period 776,739,864 662,668,182 End of period (including undistributed net investment income of $583,709 and $250,843, respectively) 833,255,317 776,739,864 ----------------------------------------------------------------------------- CHANGES IN SHARES Class A Subscriptions 285,028 800,725 Redemptions (688,039) (1,457,386) --------------------------- Net Decrease (403,011) (656,661) Class B Subscriptions 32,449 79,511 Redemptions (87,889) (182,289) --------------------------- Net Decrease (55,440) (102,778) Class C Subscriptions 9,261 18,211 Redemptions (7,062) (12,056) --------------------------- Net Increase 2,199 6,155 Class Z Subscriptions (a) 2,360,871 5,931,393 Redemptions (a) (5,969,675) (9,268,147) --------------------------- Net Increase (Decrease) (3,608,804) (3,336,754) (a) Shares purchased prior to July 25, 2003 have been adjusted to reflect 2-for-1 split. See notes to financial statements. 14
NOTES TO FINANCIAL STATEMENTS March 31, 2004 (unaudited) Columbia Young Investor Fund -------------------------------------------------------------------------------- NOTE 1. ORGANIZATION Columbia Young Investor Fund (the "Fund"), a series of Columbia Funds Trust XI (the "Trust"), is a diversified portfolio. The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. INVESTMENT GOALS The Fund seeks 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. FUND SHARES The Fund may issue an unlimited number of shares and offers four classes of shares: Class A, Class B, Class C and Class Z. Each share class has its own sales charge and expense structure. Class A shares are subject to a maximum front-end sales charge of 5.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. On 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. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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 Equity securities are valued at the last sale price at the close of the principal exchange on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value. 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 as determined in good faith under consistently approved procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS The Fund may engage in repurchase agreement transactions with institutions that the Fund's investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to 15 March 31, 2004 (unaudited) Columbia Young Investor Fund -------------------------------------------------------------------------------- the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. INCOME RECOGNITION 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. DETERMINATION OF CLASS NET ASSET VALUES All income, expenses (other than class-specific expenses, as shown on the Statement of Operations), and realized and unrealized gains (losses), are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FEDERAL INCOME TAX STATUS The Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. NOTE 3. FEDERAL TAX INFORMATION Unrealized appreciation and depreciation at March 31, 2004, based on cost of investments for federal income tax purposes was: Unrealized appreciation $144,179,030 Unrealized depreciation (14,502,730) ---------------------------------------------------------- Net unrealized appreciation $129,676,300 The following capital loss carryforwards, determined as of September 30, 2003, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: Year of Capital Loss Expiration Carryforwards ---------------------------------------------------------- 2007 $ 1,272,589 2008 273,885 2009 35,196,902 2010 68,425,718 2011 124,610,311 ---------------------------------------------------------- Total $229,779,405 Of these carryforwards, $25,802,098 (expiring 9/30/2009) and $6,808,011 ($1,272,586 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 on July 26, 2002. 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 currency and capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As determined on September 30, 2003, post-October capital losses of $43,116,286 attributed to security transactions were deferred to October 1, 2003. NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES INVESTMENT ADVISORY FEE Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the Fund. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004, FleetBoston was acquired by Bank of America Corporation ("BOA"). Columbia receives a monthly investment advisory fee based on the Fund's average daily net assets as follows: 16 March 31, 2004 (unaudited) Columbia Young Investor Fund -------------------------------------------------------------------------------- Average Daily Net Assets Annual Fee Rate ------------------------------------------------------------- First $500 million 0.60% Next $500 million 0.55% Over $1 billion 0.50% For the six months ended March 31, 2004 the Fund's annualized effective investment advisory fee rate was 0.58%. ADMINISTRATION FEE Columbia provides accounting and other services to the Fund for a monthly administration fee based on the Fund's average daily net assets as follows: Average Daily Net Assets Annual Fee Rate ------------------------------------------------------------- First $500 million 0.200% Next $500 million 0.150% Over $1 billion 0.125% For the six months ended March 31, 2004, the Fund's annualized effective administration fee rate was 0.18%. 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 Corporation ("State Street"). Columbia pays the total fees collected 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 exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Fund also pays additional fees for pricing services. For the six months ended March 31, 2004, the Fund's annualized effective pricing and bookkeeping fee rate was 0.027%. TRANSFER AGENT FEE Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds Services, Inc., an indirect, wholly owned subsidiary of BOA, provides shareholder services to the Fund. For such services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $28.00 per open account per class. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. Columbia has voluntarily agreed to reimburse the Fund for a portion of transfer agency fees so that Class A, Class B and Class C transfer agent expenses (excluding out-of-pocket expenses) will not exceed 0.10% annually. Columbia, at its discretion, may revise or discontinue this arrangement any time. Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly transfer agent fee at the annual rate of 0.06% of the Fund's average daily net assets plus flat-rate charges based on the number of shareholder accounts and transactions. The Transfer Agent was also entitled to receive reimbursement for certain out-of-pocket expenses. UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES Columbia Funds Distributor, Inc. (the "Distributor"), formerly Liberty Funds Distributor, Inc., an indirect, wholly owned subsidiary of BOA, is the principal underwriter of the Fund. For the six months ended March 31, 2004, the Distributor has retained net underwriting discounts of $5,997 on sales of the Fund's Class A shares and received CDSC fees of $11,861, $9,400 and $14 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. CUSTODY CREDITS The Fund has an agreement with its custodian bank under which custody fees may be reduced by balance 17 March 31, 2004 (unaudited) Columbia Young Investor Fund -------------------------------------------------------------------------------- credits. 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. FEES PAID TO OFFICERS AND TRUSTEES The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's 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. NOTE 5. PORTFOLIO INFORMATION For the six months ended March 31, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $293,578,985 and $329,426,809, respectively. NOTE 6. 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 unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the six months ended March 31, 2004, the Fund did not borrow under this arrangement. NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS Columbia, the Distributor, and certain of their affiliates (collectively, "The Columbia Group") have received information requests and subpoenas from various regulatory and law enforcement authorities in connection with their investigations of late trading and market timing in mutual funds. The Columbia Group has not uncovered any instances where Columbia or the Distributor were knowingly involved in late trading of mutual fund shares. On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a civil complaint in the United States District Court for the District of Massachusetts against Columbia and the Distributor, alleging that they had violated certain provisions of the federal securities laws in connection with trading activity in mutual fund shares. Also on February 24, 2004, the New York Attorney General ("NYAG") filed a civil complaint in New York Supreme Court, County of New York against Columbia and the Distributor alleging that Columbia and the Distributor had violated certain New York anti-fraud statutes. If either Columbia or the Distributor is unsuccessful in its defense of these proceedings, it could be barred from serving as an investment advisor or distributor for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could prevent Columbia, the Distributor or any company that is an affiliated person of Columbia and the Distributor from serving as an investment advisor or distributor for any registered investment company, including your fund. Your fund has been informed by Columbia and the Distributor that, if these results occur, they will seek exemptive relief from the SEC to permit them to continue to serve as your fund's investment advisor and distributor. There is no assurance that such exemptive relief will be granted. On March 15, 2004, Columbia and the Distributor entered into agreements in principle with the SEC Division of Enforcement and NYAG in settlement of the charges. Under the agreements, Columbia and the Distributor agreed, inter alia, to the following conditions: payment of $70 million in disgorgement; payment of $70 million in civil penalties; an order requiring Columbia and the Distributor to cease and desist from violations of the antifraud provisions and other provisions of the federal securities laws; governance changes designed to maintain the independence of the mutual fund boards of trustees and ensure compliance with securities laws and their fiduciary duties; and retention of an independent consultant to review Columbia's and the Distributor's compliance policies and procedures. The agreement requires the final approval of the SEC. In a separate agreement with the NYAG, the Columbia Group has agreed to reduce mutual fund fees by $80 million over a five-year period. 18 March 31, 2004 (unaudited) Columbia Young Investor Fund -------------------------------------------------------------------------------- As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of fund shares, which could increase transaction costs or operating expenses, or have other adverse consequences for the funds. For the six months ended March 31, 2004, Columbia has assumed $5,685 of legal, consulting services and Trustees' fees incurred by the Fund in connection with these matters. NOTE 8. SUBSEQUENT EVENT On April 1, 2004, FleetBoston, including the Fund's investment advisor and distributor, was acquired by BOA. 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. NOTE 9. CAPITAL ACTIVITY On July 25, 2003, there was a 2-for-1 split on Class Z shares. The accompanying prior period financial highlights for Class Z have been restated to reflect the 2-for-1 split. 19 Financial Highlights -------------------------------------------------------------------------------- Columbia Young Investor Fund Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED) SIX MONTHS ENDED YEAR ENDED PERIOD ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, CLASS A SHARES 2004 2003 2002 (A) ========================================================================================================================= NET ASSET VALUE, BEGINNING OF PERIOD $ 10.47 $ 8.52 $ 8.94 ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (b) 0.01 (0.03) (0.01) Net realized and unrealized gain (loss) on investments 1.34 1.98 (0.41) -------- -------- -------- Total from Investment Operations 1.35 1.95 (0.42) ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 11.82 $ 10.47 $ 8.52 Total return (c)(d) 12.89%(e) 22.89% (4.70)%(e) ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 1.44%(g) 1.54% 1.67%(g) Net investment income (loss) (f) 0.24%(g) (0.35)% (0.49)%(g) Waiver/reimbursement 1.06%(g) 0.56% 0.80%(g) Portfolio turnover rate 35%(e) 128% 32% Net assets, end of period (000's) $102,002 $ 94,617 $ 82,564 -------------------------------------------------------------------------------------------------------------------------
(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 Investment 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. 20 -------------------------------------------------------------------------------- Columbia Young Investor Fund Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED) SIX MONTHS ENDED YEAR ENDED PERIOD ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, CLASS B SHARES 2004 2003 2002 (A) ========================================================================================================================= NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 8.51 $ 8.94 ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.03) (0.10) (0.02) Net realized and unrealized gain (loss) on investments 1.32 1.98 (0.41) -------- -------- -------- Total from Investment Operations 1.29 1.88 (0.43) ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 11.68 $ 10.39 $ 8.51 Total return (c)(d) 12.42%(e) 22.09% (4.81)%(e) ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 2.14%(g) 2.24% 2.37%(g) Net investment loss (f) (0.46)%(g) (1.05)% (1.19)%(g) Waiver/reimbursement 0.50%(g) 0.51% 0.75%(g) Portfolio turnover rate 35%(e) 128% 32% Net assets, end of period (000's) $ 7,080 $ 6,872 $ 6,505 -------------------------------------------------------------------------------------------------------------------------
(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 Investment 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. 21 -------------------------------------------------------------------------------- Columbia Young Investor Fund Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED) SIX MONTHS ENDE YEAR ENDED PERIOD ENDED MARCH 31, SEPTEMBER 30, SEPTEMBER 30, CLASS C SHARES 2004 2003 2002 (A) ========================================================================================================================= NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 8.51 $ 8.94 ------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.03) (0.10) (0.02) Net realized and unrealized gain (loss) on investments 1.33 1.98 (0.41) -------- -------- -------- Total from Investment Operations 1.30 1.88 (0.43) ------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 11.69 $ 10.39 $ 8.51 Total return (c)(d) 12.51%(e) 22.09% (4.81)%(e) ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 2.14%(g) 2.24% 2.37%(g) Net investment loss (f) (0.45)%(g) (1.05)% (1.19)%(g) Waiver/reimbursement 0.59%(g) 0.50% 0.75%(g) Portfolio turnover rate 35%(e) 128% 32% Net assets, end of period (000's) $ 768 $ 660 $ 488 -------------------------------------------------------------------------------------------------------------------------
(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 Investment 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. 22 -------------------------------------------------------------------------------- Columbia Young Investor Fund Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED) SIX MONTHS ENDED MARCH 31, YEAR ENDED SEPTEMBER 30, CLASS Z SHARES 2004 2003 (A) 2002 (A)(B) 2001 (A) 2000 (A) 1999 (A) =================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $ 9.13 $ 7.42 $ 9.38 $ 17.97 $ 13.71 $ 11.34 ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (c) --(d) (0.03) (0.07)(e) (0.06)(e) (0.07)(e) (0.05)(e) Net realized and unrealized gain (loss) on investments 1.16 1.74 (1.89) (6.52) 4.49 2.72 ------------ ------------ ------------ ------------ ------------ ------------ Total from Investment Operations 1.16 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 $ 10.29 $ 9.13 $ 7.42 $ 9.38 $ 17.97 $ 13.71 Total return (f) 12.71%(g) 23.05% (20.90)% (40.08)% 32.32% 23.89% ----------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.61%(i) 1.49% 1.58%(e) 1.26%(e) 1.08%(e) 1.18%(e) Net investment income (loss) (h) 0.06%(i) (0.30)% (0.71)%(e) (0.41)%(e) (0.45)%(e) (0.37)%(e) Portfolio turnover rate 35%(g) 128% 32% 23%(j) 72%(j) 45%(j) Net assets, end of period (000's) $723,406 $674,590 $573,111 $746,698 $1,215,809 $880,574 -----------------------------------------------------------------------------------------------------------------------------------
(a) Per share data has been restated to reflect a 2-for-1 stock split effective July 25, 2003. (b) Class S shares were redesignated Class Z on July 29, 2002. (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 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 the master feeder/fund structure on July 26, 2002. (f) Total return at net asset value assuming all distributions reinvested. (g) Not annualized. (h) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i) Annualized. (j) Portfolio turnover disclosed is for the SR&F Growth Investor Portfolio. 23 IMPORTANT INFORMATION ABOUT THIS REPORT -------------------------------------------------------------------------------- Columbia Young Investor Fund TRANSFER AGENT Columbia Funds Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800.345.6611 DISTRIBUTOR Columbia Funds Distributor, Inc. One Financial Center Boston MA 02111 INVESTMENT ADVISOR Columbia Management Advisors, Inc. 100 Federal Street Boston MA 02110 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. A description of the policies and procedures that the fund uses to determine how to vote proxies relating to its portfolio securities is available (i) without charge, upon request, by calling 800-345-6611 and (ii) on the Securities and Exchange Commissionwebsite at http://www.sec.gov. 24 COLUMBIA FUNDS -------------------------------------------------------------------------------- Columbia Young Investor Fund --------------------------------------------------- LARGE GROWTH Columbia Common Stock Columbia Growth Columbia Growth Stock Columbia Large Cap Growth Columbia Tax-Managed Growth Columbia Tax-Managed Growth II Columbia Young Investor --------------------------------------------------- LARGE VALUE Columbia Disciplined Value Columbia Growth & Income Columbia Large Cap Core Columbia Tax-Managed Value --------------------------------------------------- MIDCAP GROWTH Columbia Acorn Select Columbia Mid Cap Growth Columbia Tax-Managed Aggressive Growth --------------------------------------------------- MIDCAP VALUE Columbia Dividend Income Columbia Mid Cap Columbia Strategic Investor --------------------------------------------------- SMALL GROWTH Columbia Acorn Columbia Acorn USA Columbia Small Company Equity --------------------------------------------------- SMALL VALUE Columbia Small Cap Columbia Small Cap Value --------------------------------------------------- BALANCED Columbia Asset Allocation Columbia Balanced Columbia Liberty Fund --------------------------------------------------- SPECIALTY Columbia Real Estate Equity Columbia Technology Columbia Utilities --------------------------------------------------- TAXABLE FIXED-INCOME Columbia Contrarian Income Columbia Corporate Bond Columbia Federal Securities Columbia Fixed Income Securities Columbia High Yield Columbia High Yield Opportunities Columbia Income Columbia Intermediate Bond Columbia Intermediate Government Income Columbia Quality Plus Bond Columbia Short Term Bond Columbia Strategic Income --------------------------------------------------- FLOATING RATE Columbia Floating Rate Columbia Floating Rate Advantage --------------------------------------------------- TAX EXEMPT Columbia High Yield Municipal Columbia Intermediate Tax-Exempt Bond Columbia Managed Municipals Columbia National Municipal Bond Columbia Tax-Exempt Columbia Tax-Exempt Insured 25 -------------------------------------------------------------------------------- Columbia Young Investor Fund --------------------------------------------------- SINGLE STATE TAX EXEMPT Columbia California Tax-Exempt Columbia Connecticut Intermediate Municipal Bond Columbia Connecticut Tax-Exempt Columbia Florida Intermediate Municipal Bond Columbia Massachusetts Intermediate Municipal Bond Columbia Massachusetts Tax-Exempt Columbia New Jersey Intermediate Municipal Bond Columbia New York Intermediate Municipal Bond Columbia New York Tax-Exempt Columbia Oregon Municipal Bond Columbia Pennsylvania Intermediate Municipal Bond Columbia Rhode Island Intermediate Municipal Bond --------------------------------------------------- MONEY MARKET Columbia Money Market Columbia Municipal Money Market --------------------------------------------------- INTERNATIONAL/GLOBAL Columbia Acorn International Columbia Acorn International Select Columbia Europe Columbia Global Equity Columbia International Stock Columbia Newport Asia Pacific Columbia Newport Greater China Columbia Newport Tiger --------------------------------------------------- INDEX Columbia Large Company Index Columbia Small Company Index Columbia U.S. Treasury Index Please consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. Contact us at 800-345-6611 for a prospectus which contains this and other important information about the fund. Read it carefully before you invest. For complete product information on any Columbia fund, visit our website at www.columbiafunds.com. Columbia Management Group and Columbia Management refer collectively to the various investment advisory subsidiaries of Columbia Management Group, including Columbia Management Advisors, Inc., the registered investment advisor, and Columbia Funds Distributor, Inc. 26 artwork: hands on typewriter; text "eDelivery" Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. Columbia Young Investor Fund Semiannual Report, March 31, 2004 artwork: Columbia Funds logo COLUMBIA FUNDS A Member of Columbia Management Group (c) 2004 Columbia Funds Distributor, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 www.columbiafunds.com PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 756-03/635R-0304 (05/04) 04/1103 ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS Not applicable at this time. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The registrant has not filed Schedule 14A subsequent to the effective date of that Schedule's Item 7(d)(2)(ii)(G). However, it is the registrant's policy to consider candidates for the Board of Trustees/Directors who are recommend by shareholders. A Fund shareholder who wishes to nominate a candidate to the Board may send information regarding prospective candidates to the Fund's Governance Committee, care of the Fund's Secretary. The information should include evidence of the shareholder's Fund ownership, a full listing of the proposed candidate's education, experience, current employment, date of birth, names and addresses of at least three professional references, information as to whether the candidate is not an "interested person" under the 1940 Act and "independent" under NYSE Listing Standards in relation to the Fund, and such other information as may be helpful to the independent trustees/directors in evaluating the candidate. All satisfactorily completed information packages regarding a candidate will be forwarded to an independent trustee/director for consideration. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer, based on his evaluation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing of this report, has 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 11. EXHIBITS. (a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not applicable at this time. (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. (a)(3) Not applicable. (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 ------------------------------------------------------------------ By (Signature and Title) /s/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, President and Treasurer Date June 7, 2004 -------------------------------------------------------------------------- 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/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, President and Treasurer Date June 7, 2004 --------------------------------------------------------------------------