N-30D 1 file001.txt LIBERTY ACORN FAMILY OF FUNDS [GRAPHIC OMITTED] Liberty Acorn Family of Funds Class Z Shares Annual Report 4 December 31, 2001 Managed by Liberty Wanger Asset Management, L.P. Liberty Acorn Family of Funds Annual Report 2001 Table of Contents The Liberty Acorn Family of Funds Performance At A Glance 1 Squirrel Chatter: Imposture Arraigned 2 Liberty Acorn Fund In a Nutshell 4 At a Glance 5 Major Portfolio Changes 14 Statement of Investments 16 Liberty Acorn International In a Nutshell 6 At a Glance 7 Major Portfolio Changes 24 Statement of Investments 26 Portfolio Diversification 30 Liberty Acorn USA In a Nutshell 8 At a Glance 9 Major Portfolio Changes 31 Statement of Investments 32 Liberty Acorn Foreign Forty In a Nutshell 10 At a Glance 11 Major Portfolio Changes 35 Statement of Investments 36 Portfolio Diversification 38 Liberty Acorn Twenty In a Nutshell 12 At a Glance 13 Major Portfolio Changes 39 Statement of Investments 40 Liberty Acorn Family of Funds Statements of Assets and Liabilities 42 Statements of Operations 43 Statements of Changes in Net Assets 44 Financial Highlights 48 Notes to Financial Statements 51 Report of Independent Auditors 55 Special Notice 58 Liberty Acorn Family of Funds Information 59 Management of Acorn 60 >2001 Year-End Distributions The following table details the funds' year-end distributions. The record date was December 7, 2001 and the payable date was December 14, 2001.
Liberty Liberty Acorn Liberty Liberty Acorn Liberty Acorn Fund International Acorn USA Foreign Forty Acorn Twenty ------------------------------------------------------------------------------------------------------------------- Long-term Capital Gains $0.07 None $0.13 $0.08 $0.03 ------------------------------------------------------------------------------------------------------------------- Short-term Capital Gains None None $0.11 None None ------------------------------------------------------------------------------------------------------------------- Ordinary Income $0.02 None None None None -------------------------------------------------------------------------------------------------------------------
The Liberty Acorn Family of Funds >Performance At A Glance Class Z Average Annual Total Returns through 12/31/01
4th* 1 3 5 10 Life Quarter year years years years of Fund --------------------------------------------------------------------------------------------------------------- Liberty Acorn Fund (6/10/70) 19.49% 6.14% 15.93% 15.60% 16.61% 16.55% --------------------------------------------------------------------------------------------------------------- S&P 500 10.69% -11.89% -1.03% 10.70% 12.94% 12.93% --------------------------------------------------------------------------------------------------------------- Russell 2000 21.09% 2.49% 6.42% 7.52% 11.51% NA --------------------------------------------------------------------------------------------------------------- Lipper Mid Cap Core Funds Index 18.03% -4.90% 9.01% 11.28% 12.43% NA --------------------------------------------------------------------------------------------------------------- Lipper Small Cap Core Funds Index 21.81% 7.13% 11.24% 10.15% 12.61% NA --------------------------------------------------------------------------------------------------------------- Liberty Acorn International (9/23/92) 12.83% -21.11% 4.18% 5.51% -- 11.01% --------------------------------------------------------------------------------------------------------------- EMI Global ex-US 9.24% -14.66% -2.22% -1.57% -- 3.51% --------------------------------------------------------------------------------------------------------------- EMI World ex-US 8.25% -15.70% -2.26% -1.05% -- 4.17% --------------------------------------------------------------------------------------------------------------- EAFE 6.97% -21.44% -5.03% 0.90% -- 5.78% --------------------------------------------------------------------------------------------------------------- IFCI Composite 28.51% 1.77% 5.09% -5.05% -- 3.06% --------------------------------------------------------------------------------------------------------------- Lipper Int'l Small Cap Funds Index 7.11% -17.87% 4.58% 3.60% -- NA --------------------------------------------------------------------------------------------------------------- Liberty Acorn USA (9/4/96) 12.53% 19.25% 10.12% 13.32% -- 15.73% --------------------------------------------------------------------------------------------------------------- Russell 2000 21.09% 2.49% 6.42% 7.52% -- 8.79% --------------------------------------------------------------------------------------------------------------- Lipper Small Cap Core Funds Index 21.81% 7.13% 11.24% 10.15% -- 11.13% --------------------------------------------------------------------------------------------------------------- S&P MidCap 400 17.99% -0.60% 10.24% 16.12% -- 17.27% --------------------------------------------------------------------------------------------------------------- S&P 500 10.69% -11.89% -1.03% 10.70% -- 12.71% --------------------------------------------------------------------------------------------------------------- Liberty Acorn Foreign Forty (11/23/98) 15.58% -29.05% 3.74% -- -- 6.83% --------------------------------------------------------------------------------------------------------------- EAFE 6.97% -21.44% -5.03% -- -- -3.62% --------------------------------------------------------------------------------------------------------------- SSB World ex-US Cap Range $2-10B 7.97% -15.49% -0.64% -- -- 0.45% --------------------------------------------------------------------------------------------------------------- Lipper Int'l Funds Index 8.44% -19.33% -1.76% -- -- -1.03% --------------------------------------------------------------------------------------------------------------- Liberty Acorn Twenty (11/23/98) 17.57% 8.00% 15.97% -- -- 17.95% --------------------------------------------------------------------------------------------------------------- S&P MidCap 400 17.99% -0.60% 10.24% -- -- 13.66% --------------------------------------------------------------------------------------------------------------- Lipper Mid Cap Core Funds Index 18.03% -4.90% 9.01% -- -- 11.99% --------------------------------------------------------------------------------------------------------------- Russell 2000 21.09% 2.49% 6.42% -- -- 8.57% --------------------------------------------------------------------------------------------------------------- S&P 500 10.69% -11.89% -1.03% -- -- 0.82% ---------------------------------------------------------------------------------------------------------------
* Quarterly numbers are not annualized. Past performance does not guarantee future results. Mutual fund performance changes over time. Please visit libertyfunds.com for daily performance updates. The investment return and principal value of an investment in any Liberty Acorn Fund will fluctuate so that fund shares, when redeemed, may be worth more or less than their original cost. Description of indexes: S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. S&P MidCap 400 is a broad market-weighted index of 400 stocks that are in the next size/tier down from the S&P 500. Russell 2000 is an unmanaged, market-weighted index of 2000 smaller U.S. companies, formed by taking the largest 3,000 companies and eliminating the largest 1,000. EMI Global ex-US is an index of the bottom 20% of institutionally investable capital of developed and emerging countries, selected by index sponsor, outside the U.S. EMI World ex-US is an index of the bottom 20% of institutionally investable capital of developed countries, selected by index sponsor, outside the U.S. EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged, widely recognized international benchmark that comprises 20 major markets in proportion to world stock market capitalization. SSB World Ex-US Cap Range $2-$10 billion is a subset of Salomon Smith Barney's Broad Market Index, representing a mid-cap developed market index excluding the U.S. IFCI Composite is an index of 31 emerging markets which weights securities according to their market capitalization after adjusting for shares held by other constituents in the index. Lipper Indexes include the largest funds tracked by Lipper, Inc. in the named category. Lipper Mid Cap Core Funds Index -- 30 mid-cap core funds; Lipper International Funds Index -- 30 largest non-U.S. funds, not including non-U.S. small cap funds; Lipper International Small Cap Funds Index -- 10 largest non-U.S. funds investing in small cap companies, including Liberty Acorn International; Lipper Small Cap Core Funds Index -- 30 largest small cap core funds, including Liberty Acorn Fund. All indexes are unmanaged and returns include reinvested distributions. A more complete description of each index is included in the Liberty Acorn Funds statement of additional information. It is not possible to invest directly in an index. 1 >Squirrel Chatter: Imposture Arraigned [PHOTO OMITTED] The Third Earl of Shaftesbury wrote of imposture in 1711, advice that was disregarded by the gullible in the South Sea Bubble of 1720. Today, his comments could easily be applied to Enron. "It is only in a free nation, such as ours, that imposture has no privilege and that neither the credit of a court, the power of a nobility, or the awfulness of a church can give her protection or hinder her from being arraigned in every shape and appearance." - 1711, Anthony Ashley Cooper, Third Earl of Shaftesbury(1) This has been a bad season for impostors. In recent weeks, Global Crossing, McLeod USA and Kmart have joined Enron in bankruptcy. These are four of the largest failures in financial history. Fund managers have gotten extraordinarily skittish about the companies they follow. Many portfolio managers have seen their results clobbered when one of their big holdings dribbles away to nothing, so the slightest hint of aggressive accounting causes them to dump a stock. After all, you might be excused for holding one stock that collapses, but more than that could be a career ender. As the fearsome Lady Bracknell put it, "To lose one parent, Mr. Worthing, may be regarded as a misfortune; to lose both looks like carelessness."(2) Of the latest cohort of corporate calamities, the failure of Kmart affects more consumers, employees and suppliers than the others. Why has Enron hogged the spotlight? The answer seems to be the speed of the collapse, the alleged improper activity of the company management and auditor, the suicide of a former top executive and the widespread political contributions Enron made. As everyone now knows, Enron made many side deals in the form of partnerships. No one of them by itself was significant enough to be forbidden but as a group these deals were of overwhelming importance. It's like termites in your floor; one doesn't eat much but a bunch will make your house collapse. If you see one termite, you have a herd of them. By putting losses and debt into suspicious outside partnerships, Enron made its own figures look better than they really were. Some of the flimflam was detectable. Our energy analyst Jason Selch identified some fuzzy accounting when looking at one of Enron's subsidiaries. Following is an excerpt from a letter Jason wrote on November 2, 2000. It was sent to a reporter with Dow Jones who covered Enron. He is writing about a water utility controlled by Enron called Azurix. At the time, Azurix was planning to repurchase its public shares using a loan from Enron. "Analysts who have been told that Enron's exposure to Azurix is $487 million ($762 million book value less $275 million proceeds) should know its exposure is double that amount at $1.072 billion. Enron will have to explain its late '98 transaction [formation of Marlin Water Trust, another side deal] which enabled Enron to 1) hide $1.024 billion of debt with a current outstanding balance of $860 million and 2) to account for its investment in Azurix under the equity method and not under the consolidated method." "... it is possible that other parties such as the SEC or Enron's auditors might look through the late '98 transaction and require that Enron restate its financial statements for 1998, 1999, and 2000 ..." Most investors don't have the experience that Jason has. As an owner of a Liberty Acorn Fund, you can rely on our 19 analysts to do the research for you. The prospectus of the Liberty Acorn Funds warns about the risks of smaller companies,(3) and there certainly are some, but small companies are generally less complex than larger organizations. When making a decision whether or not to invest, we sit down with company management, look at company fundamentals and talk to the competition. We do our homework before putting our money into any stock. Our research is thorough and is designed to help us avoid a potential hot potato like Enron. Congress and the media have portrayed Enron's management as fools or knaves. They are accused of deliberately deceiving their employees and investors. They'll get a chance in court to explain their operating plan. Accountants and accounting standards are also receiving intense scrutiny. Some of the partnerships that Enron set up, if they passed the accounting tests, did so by being designed to match the letter of the law, just barely, while violating the spirit of the law egregiously. 2 2001 Scarlet A Winners Our analysts do great work on companies, as Jason's example shows. However, the original stock idea often comes from analysts or brokers outside our company. It is these individuals - individuals whose keen eye and professionalism have kept them from falling victim to imposture - that we honor each year with a Scarlet A certificate (A for "Acorn," of course). To be considered for 2001, the recommended domestic stock had to increase more than 68% and gain more than $15 million during the year. On the international side, a 32% increase was required and an $8 million gain. Two of our retail stocks, clothing retailer Christopher & Banks and craft store giant Michaels, were among the top performers for the year. Our thanks to Jack Nielsen, currently of HD Brous & Co., Inc., for bringing us Christopher & Banks. The stock increased more than 180% for the year. Michaels was another big winner. Brent Rystrom of Piper Jaffray deserves kudos for finding Michaels early. In 2001, it was up 150%. Helen of Troy, up 158%, is a developer and marketer of personal care products such as hair care appliances. Our thanks to Ted Andrews of Scudder Investments who brought this stylin' choice to his brother, Acorn analyst Ben Andrews. Keep up the shoptalk at those family gatherings guys! THQ, a developer of entertainment software, increased 99% in 2001 and earned a Scarlet A for James Lin of Jefferies & Co. Chuck McQuaid credits James with providing him with the confidence to build the position when it dipped in mid-2000. Security firm Wackenhut benefited in 2001 from the heightened emphasis on security following the September attacks. The stock increased 121% for the year. Our thanks to Jim MacDonald of First Analysis for the insight he has provided on the stock. Also at First Analysis, David Hess earns a Scarlet A for ITT Educational Services. The stock made the grade in 2001 with a 68% annual return. Our thanks to Matthew Kempler of Sidoti & Co. who earns the A for suggesting Kronos, a developer of software and hardware products used to manage employee scheduling and activity. The stock increased 135%. Based in the Netherlands, investment management firm Kempen & Co. (now Dexia) increased 32% in the year winning a Scarlet A for Nils Geenen, of Dexia Securities USA, and Marc DeNatris, currently with Fortis Financial Services and a Scarlet A winner for a second consecutive year. /s/ Ralph Wanger Ralph Wanger Chief Investment Officer, Liberty Wanger Asset Management, L.P. Lead Portfolio Manager, Liberty Acorn Fund Finding Your Fund Some shareholders have told us that they don't know where to find the Liberty Acorn Funds in the newspaper. If you received this report in the mail, you own the Liberty Acorn Funds Class Z shares. In the Wall Street Journal, the Funds are listed as a group under "Liberty Acorn Fds Z." Local papers use a number of different rules in their fund listings. Many newspapers group our funds with all Liberty Funds under the "Liberty" heading. Liberty Acorn Foreign Forty is not listed in most newspapers because its total assets are below the lower limit required by many papers. -------------------------------------------------------------------------------- None of the Liberty Acorn Funds held shares in Global Crossing, McLeod USA, Kmart or Enron. (1) From Characteristicks of Men, Manners, Opinions, Times, Etc., 1711. (2) Wilde, Oscar, "The Importance of Being Earnest," 1895. (3) Smaller companies and mid-capitalization companies are more likely than larger companies to have limited product lines, operating histories, market or financial resources. They may depend heavily on a small management team. Stocks of smaller companies and mid-capitalization companies may trade less frequently, may trade in smaller volumes and may fluctuate more sharply in price than stocks of larger companies. In addition, they may not be widely followed by the investment community, which can lower the demand for their stock. 3 Liberty Acorn Fund >In a Nutshell [PHOTOS OMITTED] Liberty Acorn Fund rose 6.14% in 2001, outperforming its benchmarks but underperforming the Lipper Small Cap Core Index. (see Page 1 for performance data). During the fourth quarter, Liberty Acorn Fund jumped 19.49%, outperforming the large-cap S&P 500 and providing returns similar to the small- and mid-cap indexes. In 2001 and in the previous year, Liberty Acorn Fund was up while market averages went down. We are very pleased to have made you a little money in a very difficult period. Liberty Acorn Fund, as always, buys small-cap company stocks. Because of our successful long-term investment process, many of the Fund's small-cap stocks have grown to mid caps. We don't sell stocks just because the company is doing well. This caused Lipper to reclassify the Fund as a mid-cap core fund, so we've added that index into our comparisons. We will continue to run the Fund in the same way we always have, for the shareholders' long-term benefit. The Fund's outperformance for the year was due in large part to stocks in our "downstream from technology" theme. International Game Technology acquired another Liberty Acorn Fund holding, Anchor Gaming. Our combined investment went up $70 million for the year. National Data and its two spinouts Global Payments (credit card processing) and NDCHealth (health care claims processing), had a combined gain of over 70%. Employee time clock systems vendor Kronos punched in a 135% gain. As we have for more than 30 years, we continue to seek out what we believe are reasonably priced small caps that dominate a market niche and that have solid, long-term growth prospects. Most recently, we have been adding to our weighting in software stocks thanks to analyst Ben Andrews. Ben induced us to overweight his software and services group, as the stocks appeared to be cheap and long-term growth in software spending seems likely. For example, JD Edwards, Kronos and JDA Software all had big gains in the fourth quarter. On the consumer side, analyst Susie Hultquist combined fine stock recommendations with a belief that the retail industry was ripe for improving fundamentals. Three of her stocks rose more than 60% in the quarter: Michaels Stores, Christopher & Banks and Furniture Brands International. /s/ Ralph Wanger /s/ Charles P. McQuaid Ralph Wanger Charles P. McQuaid Lead Portfolio Manager Co-Portfolio Manager -------------------------------------------------------------------------------- Clocking Gains -------------------------------------------------------------------------- Any small-cap company that replaces electromechanical devices with computer chips is a candidate for Liberty Acorn Fund as part of our "downstream from technology" theme. We first bought Kronos in 1992, recognizing that its computerized payroll clock was superior to conventional motorized models because it provided data more quickly and accurately. Kronos grew earnings as it rapidly gained market share. As it has grown, the company has emphasized software and service and now provides labor analysis and data via the Internet. Kronos is also working to deliver more human resources and payroll functions. The stock rose 135% in 2001 and is up over ten-fold from the Fund's average cost. -------------------------------------------------------------------------------- Small-cap stocks are often more volatile and less liquid than the stocks of larger companies. Small companies may have a shorter history of operations than larger companies and may have a less diversified product line, making them more susceptible to market pressure. Investments in foreign securities have special risks, including political or economic instability, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. As of 12/31/01, the Fund's positions in the holdings mentioned were: International Game Technology, 4.0%; Global Payments, 1.0%; NDCHealth, 1.3%; Kronos, 0.9%; JD Edwards, 1.1%; JDA Software, 0.5%; Michaels Stores, 0.6%; Christopher & Banks, 1.1%; Furniture Brands International, 0.4%. A 4 Liberty Acorn Fund >At a Glance Ticker Symbol: ACRNX Pretax and After-tax Average Annual Total Returns (Class Z) -------------------------------------------------------------------------------- >through December 31, 2001 --------------------------------- 1 year 5 years 10 years --------------------------------- Returns before taxes 6.14% 15.60% 16.61% -------------------------------------------------------- Returns after taxes 5.64 12.97 14.17 on distributions -------------------------------------------------------- Returns after taxes 4.13 12.41 13.47 on distributions and sale of fund shares -------------------------------------------------------- Russell 2000 (pretax) 2.49 7.52 11.51 -------------------------------------------------------- S&P 500 (pretax) -11.89 10.70 12.94 -------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. -------------------------------------------------------------------------------- Liberty Acorn Fund Portfolio Diversification -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2001 [PIE CHART] 26.5% Information Software & Services 14.6% Computer Related Hardware 7.8% Media 2.4% Telecommunications 1.7% 4.8% Real Estate 8.5% Energy/Minerals 8.8% Health Care 17.9% Consumer Goods/Services 16.6% Finance 8.9% Industrial Goods/Services 8.0% Other* *Other includes cash and other assets less liabilities of 6.7%. Foreign equities within the portfolio were 7.2% diversified by country as follows: 5.2% Europe; 1.1% Canada; 0.6% Asia without Japan; 0.3% Japan. -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Fund -------------------------------------------------------------------------------- >June 10, 1970 through December 31, 2001 This graph compares the results of $10,000 invested in the Liberty Acorn Fund on June 10, 1970 (the date the Fund shares were first offered to the public) to the S&P 500 Stock Index. The S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. The index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The line graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Performance changes over time. Visit libertyfunds.com for daily updates. Liberty Acorn Fund NAV on 12/31/01: $17.88 Total Net Assets: $4,963.3 million [The following was represented by a line graph in the printed material.] LINE CHART: ACORN S&P 500 6/30/70 9,694.96 9,819.82 7/31/70 10,517.24 10,574.99 8/31/70 11,223.08 11,081.08 9/30/70 12,022.83 11,481.19 10/31/70 11,916.20 11,385.80 11/30/70 12,169.45 11,962.11 12/31/70 13,586.67 12,676.21 1/31/71 14,953.38 13,224.70 2/28/71 15,837.72 13,378.38 3/31/71 17,020.50 13,905.67 4/30/71 18,230.49 14,446.21 5/31/71 17,275.94 13,881.82 6/30/71 17,397.32 13,928.19 7/31/71 17,289.43 13,388.98 8/31/71 17,640.07 13,908.32 9/30/71 17,571.46 13,846.05 10/31/71 16,516.36 13,304.19 11/30/71 15,677.69 13,306.84 12/31/71 17,828.47 14,489.93 1/31/72 18,652.50 14,788.02 2/29/72 19,648.78 15,197.40 3/31/72 20,119.24 15,323.26 4/30/72 20,672.73 15,426.60 5/31/72 20,824.93 15,731.32 6/30/72 20,562.03 15,425.28 7/31/72 19,521.45 15,498.15 8/31/72 19,129.91 16,070.48 9/30/72 18,962.10 16,029.41 10/31/72 18,920.15 16,218.87 11/30/72 19,745.20 17,000.53 12/31/72 19,367.63 17,241.65 1/31/73 18,270.13 16,984.63 2/28/73 16,883.49 16,385.80 3/31/73 16,563.49 16,399.05 4/30/73 15,054.95 15,373.61 5/31/73 13,637.84 15,515.37 6/30/73 13,637.84 15,453.10 7/31/73 15,214.59 16,081.08 8/31/73 14,555.09 15,532.59 9/30/73 16,825.01 16,196.34 10/31/73 17,469.17 16,222.84 11/30/73 14,877.17 14,423.69 12/31/73 14,769.81 14,708.53 1/31/74 15,110.61 14,603.87 2/28/74 15,188.10 14,593.27 3/31/74 15,017.62 14,293.85 4/30/74 13,824.27 13,781.13 5/31/74 12,925.38 13,365.13 6/30/74 12,506.93 13,212.77 7/31/74 11,718.21 12,366.19 8/31/74 10,621.59 11,176.47 9/30/74 9,697.29 9,888.71 10/31/74 12,015.87 11,551.40 11/30/74 11,436.22 10,987.02 12/31/74 10,684.25 10,816.11 1/31/75 12,371.50 12,191.31 2/28/75 12,895.58 12,969.00 3/31/75 13,022.63 13,298.89 4/30/75 13,642.00 13,975.89 5/31/75 14,928.38 14,642.29 6/30/75 15,944.78 15,341.81 7/31/75 15,106.09 14,353.47 8/31/75 14,224.10 14,100.42 9/30/75 13,646.80 13,660.57 10/31/75 14,159.96 14,553.52 11/30/75 14,224.10 14,964.23 12/31/75 13,951.49 14,842.34 1/31/76 16,285.66 16,649.44 2/29/76 17,970.94 16,509.01 3/31/76 18,959.43 17,065.45 4/30/76 18,943.22 16,932.96 5/31/76 19,461.77 16,744.83 6/30/76 20,498.87 17,486.75 7/31/76 19,796.27 17,403.29 8/31/76 19,861.60 17,371.49 9/30/76 20,727.28 17,819.29 10/31/76 19,926.94 17,488.08 11/30/76 21,217.29 17,416.53 12/31/76 23,046.65 18,394.28 1/31/77 24,091.14 17,523.85 2/28/77 23,235.44 17,204.56 3/31/77 23,910.12 17,024.38 4/30/77 24,486.07 17,094.59 5/31/77 24,979.75 16,759.41 6/30/77 26,608.86 17,587.44 7/31/77 26,441.52 17,368.84 8/31/77 25,777.99 17,070.75 9/30/77 25,628.70 17,097.24 10/31/77 24,666.59 16,430.84 11/30/77 26,740.11 16,950.19 12/31/77 27,171.40 17,077.37 1/31/78 25,528.78 16,096.98 2/28/78 25,780.54 15,771.07 3/31/78 26,754.03 16,234.76 4/30/78 28,919.19 17,698.73 5/31/78 30,094.08 17,861.69 6/30/78 30,094.08 17,616.59 7/31/78 32,149.92 18,643.35 8/31/78 35,492.16 19,203.76 9/30/78 34,745.67 19,142.82 10/31/78 28,519.27 17,473.50 11/30/78 30,826.60 17,848.44 12/31/78 31,776.68 18,199.52 1/31/79 33,357.02 19,006.36 2/28/79 32,583.84 18,395.60 3/31/79 36,376.09 19,492.58 4/30/79 36,504.95 19,617.12 5/31/79 37,057.22 19,189.19 6/30/79 40,131.51 20,023.85 7/31/79 41,505.15 20,292.79 8/31/79 44,852.34 21,463.96 9/30/79 45,298.63 21,555.38 10/31/79 42,063.02 20,174.88 11/30/79 45,614.76 21,134.08 12/31/79 47,790.43 21,585.85 1/31/80 50,478.17 22,927.93 2/29/80 50,602.40 22,926.60 3/31/80 42,258.39 20,696.87 4/30/80 44,556.61 21,654.74 5/31/80 47,393.16 22,768.95 6/30/80 49,111.66 23,489.67 7/31/80 52,126.68 25,123.21 8/31/80 54,232.81 25,377.58 9/30/80 56,696.98 26,124.80 10/31/80 57,876.41 26,653.42 11/30/80 61,793.81 29,492.58 12/31/80 62,594.14 28,602.28 1/31/81 61,405.12 27,405.94 2/28/81 61,124.84 27,881.56 3/31/81 65,118.86 28,997.09 4/30/81 65,445.86 28,436.67 5/31/81 66,637.06 28,509.54 6/30/81 64,184.59 28,330.68 7/31/81 61,688.06 28,388.98 8/31/81 57,933.55 26,750.13 9/30/81 54,131.51 25,431.90 10/31/81 57,600.87 26,804.45 11/30/81 58,955.35 27,910.70 12/31/81 58,004.84 27,195.28 1/31/82 55,855.47 26,840.22 2/28/82 54,397.10 25,339.16 3/31/82 53,546.39 25,206.68 4/30/82 55,247.82 26,346.05 5/31/82 54,299.88 25,447.80 6/30/82 53,692.23 25,066.24 7/31/82 52,745.55 24,619.77 8/31/82 55,713.27 27,608.64 9/30/82 56,586.13 27,953.10 10/31/82 62,596.38 31,169.85 11/30/82 67,559.20 32,429.78 12/31/82 68,207.61 33,053.79 1/31/83 71,999.11 34,283.25 2/28/83 75,490.61 35,068.89 3/31/83 77,580.23 36,364.60 4/30/83 80,463.36 39,228.93 5/31/83 85,065.81 38,888.45 6/30/83 87,777.18 40,401.43 7/31/83 85,603.55 39,209.06 8/31/83 83,886.11 39,798.62 9/30/83 85,388.87 40,347.11 10/31/83 82,356.51 39,880.76 11/30/83 85,254.69 40,722.05 12/31/83 85,388.87 40,510.07 1/31/84 82,835.92 40,283.52 2/29/84 79,613.73 38,865.92 3/31/84 80,298.09 39,538.95 4/30/84 80,212.54 39,913.88 5/31/84 77,304.02 37,705.35 6/30/84 79,416.93 38,524.11 7/31/84 78,263.87 38,045.84 8/31/84 87,574.82 42,248.28 9/30/84 87,718.95 42,257.55 10/31/84 87,978.39 42,420.51 11/30/84 87,401.86 41,946.21 12/31/84 89,044.97 43,051.14 1/31/85 98,794.38 46,405.67 2/28/85 100,452.21 46,974.03 3/31/85 99,746.10 47,004.50 4/30/85 99,838.20 46,960.78 5/31/85 105,732.71 49,674.09 6/30/85 107,107.02 50,451.78 7/31/85 108,624.73 50,378.91 8/31/85 107,664.55 49,948.33 9/30/85 103,142.39 48,386.33 10/31/85 107,695.52 50,621.36 11/30/85 114,788.49 54,092.47 12/31/85 117,142.49 56,710.39 1/31/86 119,847.97 57,027.03 2/28/86 126,520.80 61,289.08 3/31/86 132,667.70 64,708.53 4/30/86 134,935.80 63,979.86 5/31/86 139,176.17 67,383.41 6/30/86 141,428.67 68,522.79 7/31/86 134,782.15 64,689.98 8/31/86 138,981.69 69,487.28 9/30/86 132,004.50 63,742.71 10/31/86 134,914.42 67,417.86 11/30/86 136,501.65 69,096.45 12/31/86 136,843.05 67,294.65 1/31/87 147,564.32 76,356.65 2/28/87 157,863.86 79,373.34 3/31/87 160,298.29 81,664.02 4/30/87 155,054.89 80,938.00 5/31/87 158,912.54 81,640.17 6/30/87 164,942.45 85,763.12 7/31/87 170,979.84 90,107.31 8/31/87 179,877.58 93,469.79 9/30/87 180,518.52 91,420.24 10/31/87 135,087.27 71,731.58 11/30/87 133,089.05 65,826.71 12/31/87 142,922.51 70,828.03 1/31/88 147,022.39 73,807.63 2/29/88 158,881.16 77,248.28 3/31/88 159,366.10 74,860.89 4/30/88 163,642.31 75,688.92 5/31/88 161,393.99 76,343.40 6/30/88 169,946.42 79,847.64 7/31/88 171,143.95 79,544.25 8/31/88 167,856.14 76,844.20 9/30/88 173,543.17 80,117.91 10/31/88 174,831.64 82,348.97 11/30/88 172,343.56 81,175.15 12/31/88 178,370.18 82,591.41 1/31/89 185,924.92 88,639.37 2/28/89 189,702.28 86,430.84 3/31/89 192,253.23 88,447.27 4/30/89 200,936.27 93,039.22 5/31/89 208,098.55 96,803.13 6/30/89 204,223.07 96,254.64 7/31/89 215,944.73 104,944.36 8/31/89 221,421.95 106,996.56 9/30/89 226,493.46 106,562.00 10/31/89 213,358.26 104,088.50 11/30/89 217,567.61 106,210.92 12/31/89 222,681.33 108,761.26 1/31/90 208,257.89 101,459.99 2/28/90 210,852.03 102,766.30 3/31/90 217,233.62 105,490.20 4/30/90 210,955.80 102,857.71 5/31/90 226,001.83 112,886.86 6/30/90 229,685.52 112,125.07 7/31/90 226,379.41 111,766.03 8/31/90 195,903.25 101,664.02 9/30/90 175,081.35 96,715.69 10/31/90 170,958.72 96,303.66 11/30/90 177,742.80 102,529.15 12/31/90 183,674.24 105,385.53 1/31/91 194,614.61 109,974.83 2/28/91 210,517.63 117,839.16 3/31/91 219,033.08 120,692.90 4/30/91 226,082.29 120,979.07 5/31/91 236,740.69 126,197.67 6/30/91 226,533.44 120,416.00 7/31/91 237,001.03 126,029.41 8/31/91 245,976.62 129,014.31 9/30/91 246,203.85 126,856.12 10/31/91 253,986.48 128,561.21 11/30/91 246,771.93 123,381.03 12/31/91 270,640.85 137,492.05 1/31/92 285,157.09 134,929.78 2/29/92 295,550.72 136,683.89 3/31/92 293,460.39 134,018.28 4/30/92 284,576.44 137,954.43 5/31/92 285,795.81 138,630.10 6/30/92 278,828.01 136,567.30 7/31/92 289,312.86 142,146.26 8/31/92 284,680.57 139,238.21 9/30/92 289,723.32 140,877.05 10/31/92 305,027.46 141,360.63 11/30/92 322,837.34 146,173.82 12/31/92 336,210.38 147,927.93 1/31/93 350,677.58 149,205.09 2/28/93 349,705.00 151,238.74 3/31/93 368,609.61 154,428.99 4/30/93 359,370.06 150,696.87 5/31/93 388,973.10 154,728.40 6/30/93 393,410.52 155,181.51 7/31/93 391,412.72 154,556.17 8/31/93 417,245.71 160,421.30 9/30/93 429,427.62 159,193.16 10/31/93 445,772.20 162,484.10 11/30/93 428,937.90 160,935.35 12/31/93 444,888.87 162,881.56 1/31/94 447,121.29 168,418.12 2/28/94 441,699.70 163,847.38 3/31/94 420,332.28 156,703.76 4/30/94 423,840.37 158,713.57 5/31/94 419,056.61 161,318.23 6/30/94 404,705.36 157,363.54 7/31/94 417,780.95 162,531.80 8/31/94 437,059.21 169,194.49 9/30/94 431,587.92 165,056.97 10/31/94 429,978.72 168,765.24 11/30/94 413,243.02 162,619.24 12/31/94 411,750.28 165,031.80 1/31/95 404,013.14 169,311.08 2/28/95 417,132.63 175,910.17 3/31/95 423,187.78 181,100.95 4/30/95 427,897.35 186,433.49 5/31/95 441,016.84 193,884.47 6/30/95 458,845.90 198,387.65 7/31/95 481,142.57 204,966.88 8/31/95 486,243.02 205,482.25 9/30/95 496,103.89 214,154.74 10/31/95 475,362.06 213,388.98 11/30/95 488,963.26 222,755.70 12/31/95 497,406.80 227,046.90 1/31/96 505,453.08 234,774.77 2/29/96 525,203.06 236,951.51 3/31/96 535,443.79 239,231.58 4/30/96 563,971.53 242,759.67 5/31/96 584,087.25 249,019.61 6/30/96 572,749.30 249,969.53 7/31/96 543,209.20 238,926.87 8/31/96 563,987.69 243,966.61 9/30/96 584,766.19 257,697.40 10/31/96 581,797.83 264,805.25 11/30/96 598,123.79 284,821.14 12/31/96 609,569.17 279,177.27 1/31/97 631,049.99 296,618.97 2/28/97 622,944.02 298,944.09 3/31/97 594,573.12 286,661.37 4/30/97 597,815.50 303,774.51 5/31/97 645,235.45 322,269.48 6/30/97 674,822.25 336,707.74 7/31/97 709,392.44 363,497.62 8/31/97 712,680.47 343,134.61 9/30/97 767,343.97 361,926.34 10/31/97 744,738.76 349,839.69 11/30/97 744,738.76 366,034.71 12/31/97 761,852.26 372,319.82 1/31/98 748,399.90 376,438.79 2/28/98 803,106.18 403,589.03 3/31/98 853,328.34 424,256.76 4/30/98 865,883.88 428,524.11 5/31/98 833,149.80 421,159.25 6/30/98 850,977.75 438,265.77 7/31/98 802,766.29 433,599.63 8/31/98 656,312.61 370,910.17 9/30/98 684,966.59 394,671.44 10/31/98 719,533.30 426,775.30 11/30/98 749,096.93 452,640.43 12/31/98 807,685.20 478,724.17 1/31/99 807,205.86 498,742.71 2/28/99 770,776.14 483,241.92 3/31/99 778,924.89 502,575.52 4/30/99 842,676.90 522,038.95 5/31/99 856,098.38 509,711.18 6/30/99 901,843.77 537,999.47 7/31/99 914,942.10 521,200.32 8/31/99 888,260.33 518,622.15 9/30/99 883,409.10 504,403.82 10/31/99 910,090.86 536,323.53 11/30/99 974,612.23 547,225.76 12/31/99 1,077,255.41 579,455.48 1/31/00 1,051,094.32 550,341.81 2/29/00 1,128,996.23 539,924.48 3/31/00 1,081,906.27 592,744.17 4/30/00 1,044,699.39 574,910.97 5/31/00 1,022,607.81 563,115.53 6/30/00 1,062,104.69 576,998.01 7/31/00 1,066,422.19 567,977.21 8/31/00 1,144,137.16 603,256.76 9/30/00 1,163,257.52 571,408.85 10/31/00 1,133,651.81 568,992.98 11/30/00 1,074,005.42 524,133.94 12/31/00 1,185,608.29 526,699.13 1/31/01 1,207,653.30 545,385.93 2/28/01 1,177,341.41 495,656.73 3/31/01 1,124,295.60 464,256.76 4/30/01 1,223,498.15 500,334.39 5/31/01 1,275,166.15 503,686.41 6/30/01 1,293,235.57 491,427.40 7/31/01 1,268,729.21 486,589.69 8/31/01 1,218,316.13 456,128.38 9/30/01 1,053,073.26 419,294.91 10/31/01 1,097,884.88 427,290.41 11/30/01 1,182,606.87 460,066.24 12/31/01 1,258,355.97 464,096.71 Average Annual Total Return ------------------------------------------------------------- 1 Year 5 Years 10 Years Life of Fund 6.14% 15.60% 16.61% 16.55% Liberty Acorn Fund $1,258,356 S&P 500 $464,097 -------------------------------------------------------------------------------- Liberty Acorn Fund Top 10 Holdings -------------------------------------------------------------------------------- 1. International Game Technology 4.0% Slot Machines & Progressive Jackpots 2. AmeriCredit 2.8% Auto Lending 3. SEI Investments 2.0% Mutual Fund Administration & Investment Management 4. XTO Energy 2.0% Natural Gas Producer 5. Harley-Davidson 1.6% Motorcycles & Related Merchandise 6. Expeditors International of Washington 1.6% International Freight Forwarder 7. Affiliated Managers Group 1.6% Mutual Fund & Pension Manager 8. First Health Group 1.5% PPO Network 9. NDCHealth 1.3% Health Claim Processing & Drug Marketing Services 10. Christopher & Banks 1.1% Specialty Women's Retailer The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. -------------------------------------------------------------------------------- 5 A Liberty Acorn International >In a Nutshell [PHOTO OMITTED] The last quarter of 2001 once again proved how hard it is to forecast markets. There was worldwide panic after the September 11 attacks but equities rallied around the globe in the ensuing three months. Liberty Acorn International posted a 12.83% gain for the quarter as larger Fund positions regained their footing at year end. By comparison, Fund benchmarks the EMI Global ex-US and EMI World ex-US rose 9.24% and 8.25%, respectively, and the EAFE increased 6.97%. The strong showing in the fourth quarter enabled Liberty Acorn International to improve its Lipper International Small-Cap Funds percentile ranking, finishing nicely above the median for the year.* But annual performance for the Fund, most of its benchmarks and peers were all in the red (see Page 1 for performance data). The Fund was off 21.11% for the year while the EMI Global ex-US declined 14.66% and the EMI World ex-US fell 15.70%. Currency was a net drag on performance for the third year in a row as the dollar strengthened against foreign currencies. The total currency effect on the Fund in 2001 was a loss of $88.9 million. The yen was particularly weak this year, down 6% in December alone, finishing the year at a three-year low. The strong rally in the fourth quarter helped our portfolio. Technology and consumer cyclical stocks rebounded strongly. In Liberty Acorn International, computer/IT service provider Systex (Taiwan), up 59%, and contract manufacturer Venture Manufacturing (Singapore), up 45%, contributed some of the largest gains in the quarter. In the consumer cyclical sector, TVB (Hong Kong) and tollway restaurant operator Autogrill (Italy) finished the quarter up 59% and 39%, respectively. For the year, the worst performers in the Fund included telecom services company Teleca (Sweden), ERG, a manufacturer and distributor of smartcards (Australia), and temporary services firm Hays (UK). All three were sold out of the Fund. With the low interest rate environment and down markets, we decided this was a good time to invest the Fund's cash. We reduced our cash position from 12% to 5%. We cannot say when the recovery phase of this investment cycle will begin in earnest but we do feel this is a stock-pickers market. To assist us in finding new investment opportunities, we added four new members to the team in 2001. Their knowledge of international investing and unique expertise will be focused on enhancing the research process and deepening our knowledge of the companies in the portfolio. /s/ Leah Joy Zell Leah Joy Zell Lead Portfolio Manager -------------------------------------------------------------------------------- Cheil Ads Up Gains -------------------------------------------------------------------------- Cheil Communications is the largest advertising agency in Korea. The company's 16% market share, debt-free balance sheet, 96% client retention rate and low trading multiple are superior to comparable advertising stocks. With the company's heavy reliance on media buying, it has minimal capital expenditure requirements. The shares have doubled in the past year and were up 45% in the fourth quarter. Cheil Communications should also be a major beneficiary of both a cyclical recovery in advertising and some major promotional events in 2002. Samsung Electronics, its largest client, is an official sponsor of the Winter Olympic Games in Salt Lake City. Three major events in Korea - The World Cup, Asian Games and presidential election - are expected to increase domestic ad spending. -------------------------------------------------------------------------------- * Liberty Acorn International was in the 41st percentile for the 1-year period ranking 35 of 86 funds in the Lipper International Small-Cap Funds category through 12/31/01. For the 3-year period, the Fund ranked 26 of 63 funds (42nd percentile), and for the 5-year period the Fund ranked 15 of 25 funds (60th percentile). Investments in foreign securities have special risks, including political or economic instability, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. Small-cap stocks are often more volatile and less liquid than the stocks of larger companies. Small companies may have a shorter history of operations than larger companies and may have a less diversified product line, making them more susceptible to market pressure. As of 12/31/01, the Fund's positions in the holdings mentioned were: Systex, 0.6%; Venture Manufacturing, 0.9%; TVB, 1.6%; Autogrill, 1.7%; Cheil Communications, 0.5%. I 6 Liberty Acorn International >At a Glance Ticker Symbol: ACINX Pretax and After-tax Average Annual Total Returns (Class Z) -------------------------------------------------------------------------------- >through December 31, 2001 ---------------------------------- Life of 1 year 5 years Fund ---------------------------------- Returns before taxes -21.11% 5.51% 11.01% -------------------------------------------------------- Returns after taxes -21.40 3.97 10.04 on distributions -------------------------------------------------------- Returns after taxes -12.52 4.51 9.39 on distributions and sale of fund shares -------------------------------------------------------- SSB EMI Global -14.66 -1.57 3.51 ex-US (pretax) -------------------------------------------------------- SSB EMI World -15.70 -1.05 4.17 ex-US (pretax) -------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. -------------------------------------------------------------------------------- Liberty Acorn International Portfolio Diversification -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2001 [PIE CHART] 16.3% Industrials 0.5% Computer Hardware 0.7% Telecommunication 1.0% Computer Software 2.5% Technology Services 10.0% Broadcasting & Media Content 12.1% Financials 14.0% Business Services 13.3% Consumer Goods & Services 12.5% Health Care 12.4% Other Industries 4.7% Other* * Cash and other assets less liabilities. -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn International -------------------------------------------------------------------------------- >September 23, 1992 through December 31, 2001 This graph compares the results of $10,000 invested in Liberty Acorn International on September 23, 1992 (the date Fund shares were first offered to the public) with the EMI Global ex-U.S. and the EMI World ex-U.S. The EMI Global ex-U.S. is Salomon Smith Barney's index of the bottom 20% of institutionally investable capital of developed and emerging countries, as selected by Salomon, excluding the U.S. The EMI World ex-U.S. is Salomon's index of the bottom 20% of institutionally investable capital of developed countries outside the U.S. The indexes are unmanaged and returns for the index and Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The line graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Performance changes over time. Visit libertyfunds.com for daily updates. Liberty Acorn International NAV as of 12/31/01: $18.47 Total Net Assets: $1,670.4 million [The following was represented by a line graph in the printed material.] LINE CHART: ACORN INTERNATIONAL EMI GLOBAL EMI WORLD 9/30/92 10,010.00 10,000.00 10,052.68 10/31/92 10,380.00 9,383.91 9,434.07 11/30/92 10,570.00 9,403.64 9,454.11 12/31/92 10,690.00 9,537.99 9,589.81 1/31/93 10,780.00 9,623.14 9,674.17 2/28/93 11,460.00 9,965.42 10,017.73 3/31/93 12,000.00 10,968.72 11,027.83 4/30/93 12,450.00 11,975.88 12,041.59 5/31/93 12,910.00 12,611.24 12,680.54 6/30/93 12,920.00 12,126.87 12,193.33 7/31/93 12,920.00 12,500.36 12,569.49 8/31/93 13,760.00 13,145.38 13,216.49 9/30/93 13,910.00 12,871.06 12,940.72 10/31/93 14,560.00 12,825.71 12,894.60 11/30/93 14,620.00 11,753.47 11,815.28 12/31/93 15,940.00 12,508.74 12,575.94 1/31/94 16,630.00 13,759.70 13,833.83 2/28/94 16,570.00 13,855.89 13,930.32 3/31/94 15,850.00 13,629.22 13,701.64 4/30/94 15,960.00 14,036.94 14,113.12 5/31/94 15,870.00 13,834.01 13,911.21 6/30/94 15,550.00 14,122.63 14,203.30 7/31/94 15,980.00 14,289.36 14,365.63 8/31/94 16,481.42 14,451.92 14,518.48 9/30/94 16,491.49 14,040.47 14,098.22 10/31/94 16,521.67 14,277.78 14,359.49 11/30/94 15,606.04 13,454.41 13,462.95 12/31/94 15,334.37 13,537.59 13,644.40 1/31/95 14,640.09 12,974.16 13,201.09 2/28/95 14,549.54 12,760.27 13,007.97 3/31/95 14,811.15 13,250.60 13,562.50 4/30/95 15,263.93 13,662.71 13,969.27 5/31/95 15,505.42 13,487.73 13,724.69 6/30/95 15,726.78 13,338.72 13,555.76 7/31/95 16,582.19 14,086.05 14,346.38 8/31/95 16,411.03 13,752.70 13,983.33 9/30/95 16,823.83 13,845.26 14,084.50 10/31/95 16,300.28 13,431.41 13,686.84 11/30/95 16,068.72 13,547.03 13,831.82 12/31/95 16,703.01 14,056.19 14,362.14 1/31/96 17,357.44 14,387.96 14,617.95 2/29/96 17,880.98 14,555.97 14,845.41 3/31/96 18,203.16 14,862.82 15,187.30 4/30/96 18,787.11 15,629.24 15,987.38 5/31/96 19,340.86 15,506.84 15,857.57 6/30/96 19,592.56 15,499.60 15,859.95 7/31/96 18,967.86 14,897.89 15,259.26 8/31/96 19,240.41 15,045.70 15,414.03 9/30/96 19,361.55 15,129.60 15,499.93 10/31/96 19,553.35 15,033.27 15,438.99 11/30/96 20,088.37 15,292.76 15,691.41 12/31/96 20,152.94 14,905.94 15,402.90 1/31/97 20,635.96 14,691.41 15,069.93 2/28/97 20,892.88 14,986.39 15,323.23 3/31/97 20,584.57 14,800.13 15,120.21 4/30/97 20,286.54 14,599.15 14,894.44 5/31/97 21,170.35 15,460.09 15,849.60 6/30/97 21,807.52 15,852.56 16,208.18 7/31/97 21,951.07 15,699.61 15,962.54 8/31/97 20,788.10 15,012.49 15,281.36 9/30/97 21,660.33 15,252.54 15,553.16 10/31/97 20,486.98 14,513.08 14,938.27 11/30/97 20,268.92 13,840.66 14,271.05 12/31/97 20,190.28 13,552.76 13,955.19 1/31/98 20,475.73 13,978.17 14,537.28 2/28/98 22,122.58 15,035.12 15,622.00 3/31/98 23,857.25 15,762.14 16,356.17 4/30/98 24,351.30 15,889.61 16,480.66 5/31/98 24,768.50 16,024.60 16,788.18 6/30/98 24,334.71 15,459.87 16,297.97 7/31/98 24,491.42 15,362.16 16,185.57 8/31/98 21,368.43 13,343.32 14,199.96 9/30/98 20,428.17 13,047.55 13,829.58 10/31/98 21,110.98 13,946.61 14,806.63 11/30/98 22,308.68 14,427.09 15,281.18 12/31/98 23,304.90 14,732.83 15,650.88 1/31/99 23,842.19 14,630.14 15,602.95 2/28/99 23,125.81 14,356.05 15,299.95 3/31/99 23,573.55 14,977.98 15,874.94 4/30/99 24,983.93 15,891.57 16,734.80 5/31/99 25,140.64 15,500.93 16,295.60 6/30/99 27,222.29 16,103.95 16,851.57 7/31/99 28,190.89 16,623.47 17,482.03 8/31/99 29,001.82 16,915.99 17,752.42 9/30/99 29,486.12 16,839.15 17,710.62 10/31/99 30,758.82 16,685.55 17,533.62 11/30/99 35,365.32 17,285.70 18,132.64 12/31/99 41,761.14 18,462.29 19,329.70 1/31/00 41,607.48 18,110.39 18,851.22 2/29/00 48,297.77 18,807.14 19,641.25 3/31/00 46,808.41 18,890.64 19,720.09 4/30/00 41,359.25 17,650.24 18,516.19 5/31/00 38,285.97 17,281.11 18,195.50 6/30/00 40,170.93 18,330.81 19,375.30 7/31/00 39,669.10 17,723.45 18,710.26 8/31/00 40,562.60 18,230.90 19,285.96 9/30/00 38,494.08 17,294.82 18,354.72 10/31/00 35,629.97 16,248.39 17,341.57 11/30/00 32,730.08 15,532.36 16,627.53 12/31/00 33,402.33 16,139.41 17,333.83 1/31/01 34,914.89 16,439.94 17,504.15 2/28/01 32,407.96 15,801.17 16,816.70 3/31/01 29,284.81 14,577.35 15,486.59 4/30/01 30,419.23 15,531.47 16,592.30 5/31/01 30,223.16 15,500.30 16,552.02 6/30/01 28,746.52 14,974.45 15,957.45 7/31/01 27,590.95 14,535.34 15,539.34 8/31/01 27,034.56 14,496.04 15,487.55 9/30/01 23,353.87 12,608.14 13,498.62 10/31/01 24,466.64 13,120.43 14,054.83 11/30/01 25,850.46 13,659.83 14,588.99 12/31/01 26,349.78 13,773.40 14,612.00 Average Annual Total Return ---------------------------------------------- 1 Year 5 Years Life of Fund -21.11% 5.51% 11.01% Liberty Acorn International $26,350 EMI World ex-US $14,612 EMI Global ex-US $13,773 -------------------------------------------------------------------------------- Liberty Acorn International Top 10 Holdings -------------------------------------------------------------------------------- 1. Rhoen-Klinikum (Germany) 3.4% Hospital Management 2. Serco Group (United Kingdom) 2.2% Facilities Management 3. Capita Group (United Kingdom) 2.1% Outsourcing Services 4. Smith & Nephew (United Kingdom) 1.9% Medical Equipment & Supplies 5. Autogrill (Italy) 1.7% Restaurants & Catering for Travelers 6. Power Financial (Canada) 1.6% Life Insurance & Mutual Funds 7. TVB (Hong Kong) 1.6% Television Broadcasting 8. Orix (Japan) 1.5% Leasing & Other Financial Services 9. SSL International (United Kingdom) 1.4% Medical & Footcare Products 10. Li & Fung (Hong Kong) 1.3% Sourcing of Consumer Goods The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 7 I Liberty Acorn USA >In a Nutshell [PHOTO OMITTED] Liberty Acorn USA ended the year up 19.25%, strongly outperforming the Russell 2000's 2.49% gain for the year. While it was an outstanding year for the Fund, the fourth quarter was not as good as the benchmark. Several stocks that had powered gains early in the year fell back in the last quarter. The Fund was up 12.53% in the quarter while the Russell 2000 gained 21.09%. The year's outperformance can be largely attributed to a strong showing from technology stocks. Our tech stocks increased roughly 30% in 2001 vs. the Russell 2000 tech component, which fell 21%. JDA Software, a software and services provider for retailers (see box for more on this stock), was up 71% for the 12 months. Micros Systems, a provider of hotel and restaurant software and systems, increased 38%. The hospitality industry was stunned by the September 11 atrocities. The industry is now recovering and Micros Systems ended up with a good gain for the year. Health claim and credit card processors NDCHealth (formerly, National Data) and Global Payments had strong years. These stocks tend to move with the technology sector and benefit from having strong recurring revenues. September 11 caused most stocks to drop sharply. One exception was Wackenhut, a security company that more than doubled in 2001 as the nation's heightened emphasis on security fueled interest in the stock. ITT Educational Services ended the year up 68%, overcoming news of competitor DeVry's missed earnings. AmeriCredit was strong in the first half of the year but weakened in the second half, as the market grew nervous about the prospects for sub-prime lenders in a weak economy. The stock finished the year up 16%. We believe AmeriCredit remains attractively valued and the credit quality fears are overblown. On the downside for the year: Tektronix, a manufacturer of analytical instruments, fell in half as its main customer base, the semiconductor industry, had its own problems. We sold out of the stock in the third quarter. Novoste, a developer of radiated stents used in heart surgery, declined as drug-coated stents stole market share. Jason Selch, our energy analyst, was onto the problems at Enron but liked Dynegy, a competitor of Enron's in the energy trading business. Even though Dynegy did not engage in funny-money accounting, the stock suffered collateral damage when Enron collapsed. The end for Enron leaves Dynegy as the major player in the energy trading business. Liberty Acorn USA, like our other funds, invests for the long term. We don't try to jump in and out of the latest hot sector. Looking at companies one at a time, paying close attention to valuations, allowed us to do well in technology even though tech had a down year. /s/ Robert A. Mohn Robert A. Mohn Lead Portfolio Manager -------------------------------------------------------------------------------- JDA Software Soared -------------------------------------------------------------------------- JDA Software provides systems used by retailers that help with such things as merchandising, purchasing and warehousing. It is the leading systems provider for the roughly 3,000 retailers in the $100 million to $5 billion annual revenue range. In recent years, JDA Software has purchased companies with expertise in merchandising, space planning and inventory optimization - great additional services to offer its existing customer base. We started building a position in the stock in early 2000 when, despite its strong business fundamentals and healthy balance sheet, the stock was ignored because it was not an Internet play. As the tech sector lurched through 2000, we took advantage of further slides in price to add to the Fund's position. By the end of 2001, we had more than doubled our average investment. -------------------------------------------------------------------------------- Small-cap stocks are often more volatile and less liquid than the stocks of larger companies. Small companies may have a shorter history of operations than larger companies and may have a less diversified product line, making them more susceptible to market pressure. As of 12/31/01, the Fund's positions in the holdings mentioned were: JDA Software, 4.4%; Micros Systems, 4.6%; NDCHealth, 3.2%; Global Payments, 2.5%; ITT Educational Services, 4.2%; Wackenhut, 2.8%; AmeriCredit, 6.0%; Novoste, 1.0%; Dynegy, 0.7%. U 8 Liberty Acorn USA >At a Glance Ticker Symbol: AUSAX Pretax and After-tax Average Annual Total Returns (Class Z) -------------------------------------------------------------------------------- >through December 31, 2001 --------------------------------- Life of 1 year 5 years Fund --------------------------------- Returns before taxes 19.25% 13.32% 15.73% -------------------------------------------------------- Returns after taxes 18.77 12.16 14.62 on distributions -------------------------------------------------------- Returns after taxes 11.88 10.75 12.90 on distributions and sale of fund shares -------------------------------------------------------- Russell 2000 (pretax) 2.49 7.52 8.79 -------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. -------------------------------------------------------------------------------- Liberty Acorn USA Portfolio Diversification -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2001 [PIE CHART] 33.6% Information Software & Services 21.7% Telecommunications 5.2% Media 4.8% Computer Related Hardware 1.9% 7.2% Industrial Goods/Services 7.8% Energy/Minerals 17.6% Health Care 11.4% Consumer Goods/Services 10.3% Finance 12.1% Other* * Other includes cash and other assets less liabilities of 7.4%. -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn USA -------------------------------------------------------------------------------- >September 4, 1996 through December 31, 2001 This graph compares the results of $10, 000 invested in Liberty Acorn USA on September 4, 1996 (the date Fund shares were first offered to the public) to the Russell 2000 Index. The Russell 2000 is a market-weighted index of 2,000 smaller U.S. companies formed by taking the largest 3,000 U.S. companies and eliminating the largest 1,000. The index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The line graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Performance changes over time. Visit libertyfunds.com for daily updates. Liberty Acorn USA NAV as of 12/31/01: $17.52 Total Net Assets: $290.7 million [The following was represented by a line graph in the printed material.] LINE CHART: ACORN LIBERTY USA Russell 200 9/30/96 10,720.00 10,359.91 10/31/96 10,810.00 10,200.25 11/30/96 11,260.00 10,620.51 12/31/96 11,650.00 10,898.86 1/31/97 12,210.00 11,116.70 2/28/97 11,920.00 10,847.14 3/31/97 11,480.00 10,335.31 4/30/97 11,420.00 10,364.11 5/31/97 12,510.00 11,517.11 6/30/97 13,320.00 12,010.71 7/31/97 14,000.00 12,569.59 8/31/97 14,350.00 12,857.21 9/30/97 15,340.00 13,798.27 10/31/97 15,140.00 13,192.12 11/30/97 15,170.00 13,106.76 12/31/97 15,413.10 13,336.21 1/31/98 15,076.70 13,125.72 2/28/98 16,320.35 14,096.30 3/31/98 17,400.90 14,677.68 4/30/98 17,992.15 14,758.85 5/31/98 17,227.61 13,963.98 6/30/98 17,525.05 13,993.35 7/31/98 16,591.88 12,860.52 8/31/98 13,935.95 10,363.30 9/30/98 14,151.30 11,174.30 10/31/98 14,653.77 11,630.06 11/30/98 15,402.36 12,239.36 12/31/98 16,305.06 12,996.71 1/31/99 15,776.24 13,169.44 2/28/99 14,894.89 12,102.77 3/31/99 15,016.08 12,291.72 4/30/99 16,095.73 13,393.17 5/31/99 16,734.72 13,588.82 6/30/99 17,650.22 14,203.28 7/31/99 18,047.85 13,813.60 8/31/99 16,821.83 13,302.33 9/30/99 16,866.01 13,305.23 10/31/99 17,860.08 13,359.12 11/30/99 18,809.97 14,156.81 12/31/99 20,059.03 15,759.36 1/31/00 19,053.08 15,506.27 2/29/00 19,867.42 18,066.90 3/31/00 19,819.52 16,875.75 4/30/00 17,568.12 15,860.25 5/31/00 16,526.24 14,935.89 6/30/00 16,834.02 16,237.87 7/31/00 16,748.25 15,715.45 8/31/00 17,765.16 16,914.55 9/30/00 17,642.64 16,417.42 10/31/00 17,654.89 15,684.55 11/30/00 16,625.73 14,074.51 12/31/00 18,255.23 15,283.26 1/31/01 19,406.90 16,078.96 2/28/01 19,370.15 15,023.95 3/31/01 18,904.58 14,289.04 4/30/01 21,195.67 15,406.86 5/31/01 22,384.10 15,785.56 6/30/01 23,008.94 16,330.63 7/31/01 23,253.98 15,446.66 8/31/01 22,616.88 14,947.76 9/30/01 19,345.64 12,935.60 10/31/01 19,394.65 13,692.60 11/30/01 20,546.32 14,752.63 12/31/01 21,770.22 15,663.22 Average Annual Total Return ---------------------------------------------- 1 Year 5 Years Life of Fund 19.25% 13.32% 15.73% Liberty Acorn USA $21,770 Russell 2000 $15,663 -------------------------------------------------------------------------------- Liberty Acorn USA Top 10 Holdings -------------------------------------------------------------------------------- 1. AmeriCredit 6.0% Auto Lending 2. Micros Systems 4.6% Information Systems for Restaurants & Hotels 3. JDA Software 4.4% Applications/Software & Services for Retailers 4. ITT Educational Services 4.2% Technology-oriented Post-secondary Degree Programs 5. Conectiv 4.2% Electric Utility in New Jersey, Delaware & Maryland 6. Telephone and Data Systems 3.2% Cellular & Telephone Services 7. NDCHealth 3.2% Health Claims Processing & Drug Marketing Services 8. Wackenhut 2.8% Prison Management 9. Salem Communications 2.6% Radio Stations for Religious Programming 10. Edwards Lifesciences 2.6% Heart Valves The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 9 U Liberty Acorn Foreign Forty >In a Nutshell [PHOTOS OMITTED] Liberty Acorn Foreign Forty finished the year on a positive note, up 15.58% for the quarter. The Fund outperformed its benchmark index, nearly doubling the 7.97% increase of the SSB World ex-US $2-$10B Index and finishing well ahead of the 6.97% gain of the EAFE Index. While the quarter provided some relief, the year was difficult for the Fund and for the markets in general. The Fund finished 2001 down 29.05% vs. a 15.49% decline for the SSB World ex-US $2-$10B and a 21.44% decline for the EAFE. Liberty Acorn Foreign Forty reached its three-year anniversary during the fourth quarter and received a four star overall Morningstar Rating.* The three-year annualized Fund return was 3.74% vs. a 0.64% decline of the SSB World ex-US $2-$10B and a 5.03% decline of the EAFE. In 2001 recession crippled global economies. The economic slowdown caused corporate profits to tumble and global equity markets to plunge. Technology, media and telecommunication stocks had a debacle. Liberty Acorn Foreign Forty's worst performers reflected this market activity as tech, media and telecom stocks littered the Fund's laggard list. An overweighting in these sectors caused the Fund's underperformance for the year. Dimension Data, a network integration company based in the UK, was off 80%. Australian smart card system developer ERG declined 69% and RTL Group, a Belgian broadcaster, declined 50%. The year's winners came from more diverse sectors. The UK's Smith & Nephew, a medical equipment supplier, was up more than 28%. Two stocks from the financial sector, Investors Group (Canada) and Anglo Irish Bank (Ireland), were among the winners for the year. Canada's Talisman Energy and Italy's Saipem, both operating in the energy sector, also ranked among the Fund's top performers. During the fourth quarter, the market clouds lifted as technology and consumer cyclical stocks rebounded from their September lows. United Microelectronics (see box for more on this stock) increased 79% in the final quarter of 2001 on a general rally in tech stocks. Italy's Autogrill, a manager of restaurants at airports and on roadways, increased 35% as hospitality stocks rebounded from the third quarter drop. Rhoen-Klinikum, a German hospital management company, increased 27% in the quarter as the market responded favorably to a recent hospital acquisition. We believe this is still an environment where valuation matters. We took advantage of the fourth quarter bounce in technology stocks to reduce our tech weighting to a more neutral level vs. the benchmark. We eliminated Fund positions in telecom services company Comverse Technology (Israel) and Sky Perfect Communications, a satellite broadcasting company (Japan). We moved the money into stocks that we believe represent better values. /s/ Todd M. Narter /s/ Christopher J. Olson Todd M. Narter Christopher J. Olson Co-Portfolio Manager Co-Portfolio Manager -------------------------------------------------------------------------------- United Microelectronics' -------------------------------------------------------------------------- Custom Business Taiwan's United Microelectronics (UMC) offers custom-made semiconductors to its customers. The customers provide the design and UMC manufactures the chip. The company ranks 2 worldwide in the semiconductor manufacturing business with a 30% market share. Currently, less than 20% of global semiconductor production is outsourced but this number is on the rise, and for good reason. Customers get better technology at a lower price without tying up their own capital when they opt to have their semiconductors manufactured elsewhere. We pared back our position in UMC at the end of the fourth quarter, taking advantage of a year-end rally that caused the stock to jump 79% in the quarter. We will keep an eye on the stock and will likely rebuild our position when the price reaches an attractive buy level. -------------------------------------------------------------------------------- *Overall and three-year Morningstar ratings among 1,349 international stock funds as of 12/31/01. Morningstar proprietary ratings of U.S. domiciled funds reflect historical, risk-adjusted performance as of 12/31/01 and are subject to change every month. Past performance does not guarantee future results. Morningstar ratings are based on a fund's 3-year (and when available 5- and 10-year) average annual total returns in excess of 90-day Treasury Bill returns, with adjustments for fees and a risk factor that measures fund performance below 90-day Treasury Bill returns. The top 10% of funds in an investment category receive 5 stars; the next 22.5% receive 4 stars; the next 35% receive 3 stars; and the next 22.5% receive 2 stars. As of 11/23/01 Liberty Acorn Foreign Forty became a diversified fund. Prior to that, Liberty Acorn Foreign Forty was a non-diversified fund, meaning that the performance of its holdings would have a greater impact on its total return, and could make the Fund's returns more volatile than a more diversified fund. Mid-cap stocks tend to be more volatile and may be less liquid than the stocks of larger companies. Investments in foreign securities have special risks, including political or economic instability, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. As of 12/31/01, the Fund's positions in the holdings mentioned were: RTL Group, 2.1%; Smith & Nephew, 2.9%; Investors Group, 3.1%; Anglo Irish Bank, 1.5%; Talisman Energy, 2.9%; Saipem, 1.6%; United Microelectronics, 0.5%; Autogrill, 4.0%; Rhoen-Klinikum, 5.1%. F40 10 Liberty Acorn Foreign Forty >At a Glance Ticker Symbol: ACFFX Pretax and After-tax Average Annual Total Returns (Class Z) -------------------------------------------------------------------------------- >through December 31, 2001 --------------------------------- Life of 1 year 3 years Fund --------------------------------- Returns before taxes -29.05% 3.74% 6.83% -------------------------------------------------------- Returns after taxes -29.15 3.56 6.66 on distributions -------------------------------------------------------- Returns after taxes -17.59 2.97 5.50 on distributions and sale of fund shares -------------------------------------------------------- SSB World ex-US -15.49 -0.64 0.45 $2-$10B (pretax) -------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty Portfolio Diversification -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2001 [PIE CHART] 2.1% Media 2.8% Computer Related Hardware 4.5% Energy & Minerals 10.8% Software & Services 17.3% Health Care 25.1% Consumer Goods/Services 19.6% Finance 18.0% Industrial Goods -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Foreign Forty -------------------------------------------------------------------------------- >November 23, 1998 through December 31, 2001 This graph compares the results of $10,000 invested in Liberty Acorn Foreign Forty on November 23, 1998 (the date Fund shares were first offered to the public) to the SSB World ex-US $2-$10B Index. The SSB World ex-US $2-$10B Index is a subset of Salomon Smith Barney's Broad Market Index, representing a mid-cap developed market index excluding the U.S. The index and Fund returns include reinvested dividends and capital gains. It is not possible to invest directly in an index. The line graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Performance changes over time. Visit libertyfunds.com for daily updates. Liberty Acorn Foreign Forty NAV on 12/31/01: $12.09 Total Net Assets: $45.8 million [The following was represented by a line graph in the printed material.] LINE CHART: ACORN FOREIGN FORTY SSB $2-$10B 11/30/98 10,140.00 10,045.10 12/31/98 11,000.00 10,338.75 1/31/99 11,790.00 10,309.79 2/28/99 11,590.00 10,051.80 3/31/99 11,980.00 10,449.20 4/30/99 12,240.00 11,032.36 5/31/99 12,170.00 10,566.63 6/30/99 13,109.84 10,952.66 7/31/99 13,510.75 11,361.95 8/31/99 13,771.35 11,489.64 9/30/99 13,621.00 11,529.74 10/31/99 14,132.17 11,535.09 11/30/99 16,998.69 11,864.36 12/31/99 19,975.47 12,771.71 1/31/00 19,664.76 12,154.33 2/29/00 24,245.19 12,310.70 3/31/00 23,092.56 12,679.68 4/30/00 21,258.39 12,171.73 5/31/00 18,923.07 11,975.76 6/30/00 19,852.53 12,610.84 7/31/00 19,469.01 12,203.07 8/31/00 20,266.34 12,586.32 9/30/00 19,236.87 12,168.04 10/31/00 18,479.91 11,791.03 11/30/00 16,128.29 11,439.81 12/31/00 17,309.15 11,998.19 1/31/01 17,874.35 11,938.61 2/28/01 15,825.51 11,505.01 3/31/01 13,706.02 10,607.46 4/30/01 14,412.52 11,390.59 5/31/01 14,382.24 11,293.20 6/30/01 13,763.22 10,999.42 7/31/01 13,062.36 10,723.39 8/31/01 12,777.96 10,626.16 9/30/01 10,624.60 9,391.94 10/31/01 11,305.14 9,769.16 11/30/01 11,924.74 10,118.32 12/31/01 12,280.25 10,140.15 Average Annual Total Return ---------------------------------------------- 1 Year 5 Years Life of Fund -29.05% 3.74% 6.83% Liberty Acorn Foreign Forty $12,280 SSB World ex-US $2-$10B: $10,140 -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty Top 10 Holdings -------------------------------------------------------------------------------- 1. Rhoen-Klinikum (Germany) 5.1% Hospital Management 2. Synthes Stratec (Switzerland) 4.4% Products for Orthopedic Surgery 3. Pargesa (Switzerland) 4.2% Industrial & Media Conglomerate 4. Nintendo (Japan) 4.1% Entertainment Software & Hardware 5. Autogrill (Italy) 4.0% Restaurants & Catering for Travelers 6. Oriental Land (Japan) 3.9% Disney Theme Park Operator 7. Technip (France) 3.9% Global Oil Engineering & Construction 8. TNT Post Group (Netherlands) 3.9% Postal Service & Parcel Delivery 9. Irish Life & Permanent (Ireland) 3.5% Life Insurance 10. Fortis (Netherlands) 3.5% Financial Services Conglomerate The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 11 F40 Liberty Acorn Twenty >In a Nutshell [PHOTO OMITTED] Liberty Acorn Twenty increased 17.57% in the quarter, finishing in line with Fund benchmark the S&P MidCap 400's 17.99% gain but ahead of the S&P 500's 10.69% increase. The strong fourth quarter pulled the Fund into positive territory for the year, up 8.00% vs. a 0.60% loss for the S&P MidCap 400 and an 11.89% loss for the S&P 500. We are happy when we can produce a positive investment return for you in a down year. Fortunately, the Fund's best stocks during the year were also its biggest positions. H&R Block, the Fund's second biggest investment, was up 120% in 2001 as strong results from its core tax preparation business and mortgage operations caught investors' attention. Boston Scientific, the Fund's biggest position, returned 75% as positive results from its drug-coated stent trial raised hopes for higher growth in the future. We bought Immunex mid-year and it's now the Fund's fourth largest position. In December, Immunex agreed to sell out to Amgen, giving the portfolio a nice shot in the arm. The Fund did suffer losses from a number of its smaller positions. Waters declined on earnings warnings made mid-year but rebounded as its business improved. Dynegy fell 34% as a victim of its association with Enron. We believe the stock represents good value today and have added to our position. Finally, Tektronix fell 25% in a tough year for technology stocks. Liberty Acorn Twenty celebrated its three-year anniversary on November 23, 2001 with a five star overall rating from Morningstar.* After a fund has been in business for three years Morningstar has enough data to put the Fund in its ranking system. More important than the actual rating, the Fund's risk profile was characterized as low compared to its peer group when looking at volatility of returns+. This result underscores the importance of picking the right stock and credit must be given to the entire Acorn domestic research team. I must thank Ralph Wanger, Chuck McQuaid, Rob Mohn, Jason Selch, Ben Andrews, Susie Hultquist, Harold Lichtenstein, Grant McKay, Rob Chalupnik and Todd Griesbach. In addition, new trader Mike Olah joined Deb Wolfe and Shelley Maish in providing exceptional trading throughout the year. Finally, we thank you, our fellow shareholders, for your continued support of Liberty Acorn Twenty. /s/ John H. Park John H. Park Lead Portfolio Manager -------------------------------------------------------------------------------- An Enbrel-la for -------------------------------------------------------------------------- A Rainy Day Enbrel is Immunex's blockbuster drug for rheumatoid arthritis (RA). Prior to Enbrel's introduction in 1998, patients afflicted with RA received toxic, anti-cancer drugs to control the disease but suffered severe side effects. Because Enbrel inhibits the inflammatory cascade associated with RA early on, it is much more efficacious and significantly less toxic than the standard anti-cancer drug therapies. The drug is expected to hit $1 billion in sales in 2002 and could eventually hit $3 to $4 billion by 2005. Immunex's stock fell from $83 in 2000 to $17 when Liberty Acorn Twenty first bought it in August of 2001. The company was suffering from manufacturing constraints that limited the supply of the drug. Because supply couldn't keep up with demand, revenue and earnings projections were scaled back. We believed that the company's supply problems were short-term and that patient investors would be rewarded over time. In fact, the stock returned 60% for the Fund in the four months before Amgen, the large biotechnology company, agreed to acquire Immunex in December. -------------------------------------------------------------------------------- * Overall and three-year Morningstar ratings among 4,811 domestic stock funds as of 12/31/01. + The Morningstar(R) Category Rating(TM) is a quantitative measure of risk-adjusted returns. The three-year rating shows how well a fund has balanced risk and return relative to other funds in the same Morningstar category. The rating uses the same methodology as the Morningstar Risk-Adjusted Star Rating except it does not reflect front-end or deferred sales charges. As with the Star Rating, 5 is the best and 1 is the worst. Morningstar proprietary ratings of U.S. domiciled funds reflect historical, risk-adjusted performance as of 12/31/01 and are subject to change every month. Past performance does not guarantee future results. Morningstar ratings are based on a fund's 3-year (and when available 5- and 10-year) average annual total returns in excess of 90-day Treasury Bill returns, with adjustments for fees and a risk factor that measures fund performance below 90-day Treasury Bill returns. The top 10% of funds in an investment category receive 5 stars; the next 22.5% receive 4 stars; the next 35% receive 3 stars; and the next 22.5% receive 2 stars. Liberty Acorn Twenty is a non-diversified fund. The performance of each of its holdings will have a greater impact on the Fund's total return, and may make the Fund's returns more volatile than a more diversified fund. Mid-cap stocks tend to be more volatile and may be less liquid than the stocks of larger companies. As of 12/31/01, the Fund's positions in the holdings mentioned were: H&R Block, 7.4%; Boston Scientific, 9.7%; Immunex, 5.1%; Waters, 2.9%; Dynegy, 2.4%; Tektronix, 2.5%. 20 12 Liberty Acorn Twenty >At a Glance Ticker Symbol: ACTWX Pretax and After-tax Average Annual Total Returns (Class Z) -------------------------------------------------------------------------------- >through December 31, 2001 --------------------------------- Life of 1 year 3 years Fund --------------------------------- Returns before taxes 8.00% 15.97% 17.95% -------------------------------------------------------- Returns after taxes 7.96 15.04 17.04 on distributions -------------------------------------------------------- Returns after taxes 4.91 12.81 14.51 on distributions and sale of fund shares -------------------------------------------------------- S&P MidCap 400 (pretax) -0.60 10.24 13.66 -------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. -------------------------------------------------------------------------------- Liberty Acorn Twenty Portfolio Diversification -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2001 [PIE CHART] 35.4% Information Computer Related Hardware 7.1% Media 8.3% Software & Services 17.6% Telecommunications 2.4% 2.4% Energy/Minerals 5.1% Industrial Goods/Services 11.9% Consumer Goods/Services 15.8% Finance 22.4% Health Care 7.0% Other* * Cash and other assets less liabilities. -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Twenty -------------------------------------------------------------------------------- >November 23, 1998 through December 31, 2001 This graph compares the results of $10,000 invested in Liberty Acorn Twenty on November 23, 1998 (the date Fund shares were first offered to the public) to the S&P MidCap 400. The S&P MidCap 400 is a broad, market-weighted index of 400 stocks that are in the next size/tier down from the S&P 500. The Index is unmanaged and returns for the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The line graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Performance changes over time. Visit libertyfunds.com for daily updates. Liberty Acorn Twenty NAV on 12/31/01: $15.23 Total Net Assets: $99.7 million LINE CHART: ACORN TWENTY S&P 400 11/30/98 10,030.00 9,911.29 12/31/98 10,710.00 11,108.89 1/31/99 11,000.00 10,676.22 2/28/99 10,710.00 10,117.24 3/31/99 11,480.00 10,399.86 4/30/99 12,710.00 11,220.20 5/31/99 12,730.00 11,268.84 6/30/99 13,040.00 11,872.18 7/31/99 13,190.00 11,619.89 8/31/99 12,060.00 11,221.68 9/30/99 12,110.00 10,875.08 10/31/99 12,970.00 11,429.28 11/30/99 13,250.00 12,029.15 12/31/99 13,847.99 12,744.12 1/31/00 13,474.00 12,385.15 2/29/00 13,554.86 13,251.99 3/31/00 14,171.45 14,361.10 4/30/00 13,463.89 13,859.63 5/31/00 13,100.00 13,686.69 6/30/00 14,319.79 13,887.71 7/31/00 13,931.31 14,107.10 8/31/00 15,431.28 15,682.19 9/30/00 15,798.17 15,574.83 10/31/00 15,927.67 15,046.66 11/30/00 14,381.64 13,910.89 12/31/00 15,465.19 14,975.10 1/31/01 15,913.93 15,308.61 2/28/01 14,983.61 14,434.98 3/31/01 14,403.53 13,361.77 4/30/01 15,454.24 14,835.78 5/31/01 16,297.00 15,181.30 6/30/01 16,023.38 15,120.01 7/31/01 15,870.15 14,894.77 8/31/01 15,125.90 14,407.59 9/30/01 14,206.52 12,615.47 10/31/01 14,512.98 13,173.52 11/30/01 16,023.38 14,153.50 12/31/01 16,702.51 14,884.66 Average Annual Total Return ---------------------------------------------- 1 Year 5 Years Life of Fund 8.00% 15.97% 17.95% Liberty Acorn Twenty $16,703 S&P MidCap 400 $14,885 -------------------------------------------------------------------------------- Liberty Acorn Twenty Top 10 Holdings -------------------------------------------------------------------------------- 1. Boston Scientific 9.7% Stents & Catheters 2. H&R Block 7.4% Tax Preparation 3. Associated Banc-Corp 5.3% Midwest Bank 4. Immunex 5.1% Drugs for Autoimmune Diseases, Cancer 5. Expeditors International of Washington 5.1% International Freight Forwarder 6. Harley-Davidson 4.6% Motorcycles & Related Merchandise 7. First Health Group 4.5% PPO Network 8. Cablevision Systems 4.2% NYC Area CATV Franchises 9. Markel 4.1% Specialty Insurance 10. Liberty Media, AT&T 4.1% CATV Programming & Media Company Holdings The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 20 13 Liberty Acorn Fund >Major Portfolio Changes in the Fourth Quarter
Number of Shares ---------------------------------- 09/30/01 12/31/01 Additions ------------------------------------------------------------------------------------------- Information Actel 180,000 261,000 Activision 470,000 705,000 Advanced Digital Information 0 445,000 Analysts International 1,006,000 2,100,000 AnswerThink Consulting 0 600,000 Asyst Technologies 549,000 664,000 Avid Technology 0 1,493,000 Axcelis Technologies 755,000 825,000 Bsquare 1,350,000 3,200,000 Celestica (Canada) 0 50,000 Ciber 2,236,000 2,700,000 Concord EFS 604,000 1,208,000 Cumulus Media, Cl. A 100,000 520,000 Excel Technologies 300,000 360,000 Igate Capital 2,409,000 3,351,000 Independent News &Media (Ireland) 0 2,500,000 Indus International 1,200,000 1,250,000 InfoUSA 2,500,000 2,684,000 International Game Technology 2,100,000 2,880,000 JDA Software Group 1,102,000 1,158,000 JD Edwards 2,800,000 3,200,000 MAPICS 1,500,000 1,661,000 Martha Stewart Living Omnimedia 0 645,000 MCSI 0 225,000 Mediacom Communications 1,000,000 1,500,000 Multex.Com 2,780,000 3,100,000 Navigant Consulting 2,100,000 2,200,000 New Horizons Worldwide 300,000 493,000 Novell 5,434,000 5,750,000 Pemstar 468,000 718,000 RSA Security 150,000 700,000 Shuffle Master 1,050,000 1,562,000 SPSS 100,000 280,000 Sybase 0 130,000 Time Warner Telecom 0 400,000 TVB (Hong Kong) 0 1,140,000 Universal Electronics 0 283,000 Zebra Technologies 100,000 140,000 ------------------------------------------------------------------------------------------- Health Care Aclara Biosciences 0 1,040,000 Alliance Unichem (United Kingdom) 0 600,000 Arena Pharmaceuticals 0 555,000 Ciphergen Biosystems 0 144,000 First Health Group 3,006,000 3,073,000 Incyte Genomics 0 135,000 Maxygen 325,000 365,000 Medquist 0 179,000 Novoste 1,055,000 1,495,000 Protein Design Labs 109,000 218,000 Rhoen-Klinikum (Germany) 0 100,000 ------------------------------------------------------------------------------------------- Consumer Goods/Services Bally Total Fitness 1,580,000 1,780,000 Chico's Fas 0 415,000 Christopher & Banks 1,275,000 1,575,000 (includes the effect of a 3 for 2 stocksplit) Coach 627,000 752,000 Furniture Brands International 568,000 688,000 Hagemeyer (Netherlands) 0 360,000 Hokuto (Japan) 0 84,000 Hot Topic 0 237,000 Hugo Boss Designs (Germany) 0 155,000 Mohawk Industries 470,000 525,000 Monaco Coach 966,000 1,120,000 Princeton Review 0 610,000 Scotts Company 0 220,000 Six Flags 400,000 1,150,000 Skechers USA 575,000 650,000 Speedway Motors 0 250,000 Zale 480,000 536,000 ------------------------------------------------------------------------------------------- Finance AmeriCredit 3,983,000 4,431,000 Anchor Bancorp Wisconsin 495,000 797,000 Anglo Irish Bank (Ireland) 2,300,000 2,900,000 Eaton Vance 320,000 450,000 Glacier Bancorp 315,000 664,000 Leucadia National 486,000 826,000 Markel 116,000 138,000 RLI 360,000 446,000
A 14
Number of Shares ---------------------------------- 09/30/01 12/31/01 Additions, continued ------------------------------------------------------------------------------------------- Industrial Goods/Services Applied Industrial Technologies 560,000 700,000 Ametek 450,000 546,000 Clark/Bardes Consulting 0 700,000 Cuno 0 344,000 Esco Technologies 0 96,000 Givauden (Switzerland) 0 16,500 Li & Fung (Hong Kong) 11,200,000 12,000,000 Maruichi Steel Tube (Japan) 0 500,000 Mine Safety Applicances 0 118,000 Meitec (Japan) 0 180,000 Northwest Pipe Company 97,000 271,000 Technip (France) 30,000 45,000 USX- US Steel 250,000 400,000 UTI Worldwide 0 360,000 Xstrata (Switzerland) 0 50,000 Zardoya Otis (Spain) 0 550,000 ------------------------------------------------------------------------------------------- Energy/Minerals Aquila 635,000 1,270,000 Dynegy 1,356,000 1,456,000 Enerflex Systems (Canada) 350,000 500,000 FMC Technologies 650,000 1,000,000 Tipperary 1,050,000 1,750,000 Ultra Petroleum 1,000,000 1,670,000 ------------------------------------------------------------------------------------------- Other Industries Forest City Enterprises, Cl. B 466,000 699,000 General Growth Properties 450,000 505,000 Tetra Tech 300,000 575,000 Red Electrica (Spain) 0 600,000 Unisource Energy 1,000,000 1,100,000 Sales ------------------------------------------------------------------------------------------- Information Anchor Gaming 780,000 0 Aristocrat Leisure (Australia) 1,791,800 0 Kronos 1,050,000 900,000 (includes the effect of a 3 for 2 stocksplit) Solectron 340,000 0 ------------------------------------------------------------------------------------------- Health Care Microcide Pharmaceuticals 795,000 0 Serologicals 1,100,000 550,000 ------------------------------------------------------------------------------------------- Consumer Goods/Services Airtours (United Kingdom) 3,567,000 3,000,000 Borders Group 1,700,000 1,450,000 Isle of Capri Casinos 1,170,000 0 Whole Foods Market 750,000 500,000 ------------------------------------------------------------------------------------------- Finance Edinburgh Fund Managers (United Kingdom) 1,375,000 1,360,000 ------------------------------------------------------------------------------------------- Industrial Goods/Services Labor Ready 2,588,000 2,400,000 ------------------------------------------------------------------------------------------- Energy/Minerals Canadian Hunter Exploration (Canada) 560,000 0 Carbo Ceramics 550,000 450,000 Louis Dreyfus Natural Gas 500,000 0 Maverick Tube 1,165,000 0 Parker Drilling 1,200,000 0 Precision Drilling (Canada) 950,000 600,000 Newpark Resources 3,500,000 3,300,000 Saipem (Italy) 4,210,000 3,500,000 Stone Energy 200,000 0 Tesoro Petroleum 1,939,000 1,320,000
15 A Liberty Acorn Fund >Statement of Investments December 31, 2001
Number of Shares Value (000) ------------------------------------------------------------------------------------------------ Common Stocks and Other Equity-Like Securities: 93.3% ------------------------------------------------------------------------------------------------ Information: 26.5% Media >Broadcasting: 0.2% 300,000 Young Broadcasting (b) $5,385 Television Stations 1,140,000 TVB (Hong Kong) 4,941 Television Broadcasting ------------------------------------------------------------------------------------------------ 10,326 >Radio: 0.6% 850,000 Salem Communications (b) 19,550 Radio Stations for Religious Programming 520,000 Cumulus Media, Cl. A (b) 8,414 Radio Stations in Small Cities ------------------------------------------------------------------------------------------------ 27,964 >Television Programming/CATV: 1.7% 2,500,000 Liberty Media Group, AT&T (b) 35,000 CATV Programming & Media Company Holdings 1,500,000 Mediacom Communications (b) 27,390 Cable Television Franchises 900,000 Corus Entertainment (Canada) (b) 17,920 Television Programming & Radio Stations 200,000 Insight Communications (b) 4,832 CATV Franchises in Midwest ------------------------------------------------------------------------------------------------ 85,142 Telecommunications >Telecommunications/Wireline Communications: 0.7% 600,000 Commonwealth Telephone (b) 27,300 Rural Phone Franchises & CLEC 400,000 Time Warner Telecom (b) 7,076 Facilities Based End-to-End CLEC 400,000 NTL (United Kingdom) (b) 376 Voice, Video & Data Services 176,000 Startec Global Communications (b) 7 International Telecomm & ISP's ------------------------------------------------------------------------------------------------ 34,759 >Mobile Communications: 1.0% 450,000 Telephone & Data Systems 40,388 Cellular & Telephone Services 533,000 COMARCO (b)(c) 8,128 Wireless Network Testing ------------------------------------------------------------------------------------------------ 48,516 Computer Related Hardware >Computer Hardware/Related Systems: 1.3% 400,000 Seachange International (b) 13,648 Systems for Video on Demand Broadcast & Ad Insertion 427,000 Avocent (b) 10,355 Computer Control Switches 331,900 Neopost (France) (b) 9,676 Postage Meters 140,000 Zebra Technologies (b) 7,771 Bar Code Printing Hardware, Supplies & Software 445,000 Advanced Digital Information (b) 7,138 Data Storage Products Prinicipal Amount or Number of Shares Value (000) ------------------------------------------------------------------------------------------------ 360,000 Excel Technologies (b) $6,264 Laser Systems & Electro-Optical Components 370,000 American Power Conversion (b) 5,350 Uninterruptable Power Systems 283,000 Universal Electronics (b) 4,870 Remote Control Devices for Digital Cable TV $3,000,000 Tidel Technologies, 6.0% Note Due 9/8/04 (b) 600 63,158 Tidel Technologies (b) -- ATM Machines ------------------------------------------------------------------------------------------------ 65,672 >Gaming Equipment: 4.4% 2,880,000 International Game Technology (b) 196,704 Slot Machines & Progressive Jackpots 1,562,000 Shuffle Master (b)(c) 24,477 Card Shufflers, Casino Games & Slot Machines ------------------------------------------------------------------------------------------------ 221,181 >Contract Manufacturing: 0.4% 718,000 Pemstar (b) 8,616 Electronic Manufacturing Services 338,000 Jabil Circuit (b) 7,679 Electronic Manufacturing Services 50,000 Celestica (Canada) (b) 2,010 Electronic Manufacturing Services ------------------------------------------------------------------------------------------------ 18,305 >Instrumentation: 0.8% 310,000 Mettler Toledo (b) 16,073 Laboratory Equipment 351,000 Dionex (b) 8,954 Ion & Liquid Chromatography 227,000 Varian (b) 7,364 Analytical Instruments 1,020,000 Spectris (United Kingdom) 7,054 Electronic Instrumentation & Controls ------------------------------------------------------------------------------------------------ 39,445 >Semiconductors/Related Equipment: 0.9% 590,000 Integrated Circuit Systems (b) 13,328 Silicon Timing Devices 825,000 Axcelis Technologies (b) 10,634 Ion Implantation Tools 664,000 Asyst Technologies 8,473 Semiconductor Fab Automation Equipment 219,000 Microsemi (b) 6,504 Analog/Mixed Signal Semiconductors 261,000 Actel (b) 5,197 Semiconductors - Field Programmable Gate Arrays ------------------------------------------------------------------------------------------------ 44,136 Software/Services >Business Software: 5.8% 3,200,000 JD Edwards (b) 52,640 Mid-market ERP & Supply Chain Software 900,000 Kronos (b) 43,542 Labor Management Solutions 5,750,000 Novell (b) 26,392 Directory, Identity Management & Authorization Software 1,158,000 JDA Software (b) 25,881 Applications/Software & Services for Retailers
A 16
Number of Shares Value (000) ------------------------------------------------------------------------------------------------ >Business Software--continued 925,000 Micros Systems (b)(c) $23,217 Information Systems for Restaurants & Hotels 1,800,000 Systems & Computer Technology (b)(c) 18,612 Enterprise Software & Services 1,493,000 Avid Technology (b)(c) 18,140 Digital Nonlinear Editing Software & Systems 3,100,000 Multex.Com (b)(c) 13,950 Provider Of Investment Info To Institutions & Individuals 3,200,000 Bsquare (b)(c) 13,344 Software To Help Design Mobile Devices 650,000 Hyperion Solutions (b) 12,909 Analytical Application Software 460,000 MRO Software (b) 10,755 Enterprise Management Software 1,661,000 MAPICS (b)(c) 10,232 Mid-market ERP Software 1,250,000 Indus International (b) 9,125 Enterprise Asset Management Software 280,000 SPSS (b) 4,970 Statistical Analysis Software 130,000 Sybase (b) 2,049 Database Software 1,400,000 ClickSoftware Technologies (b)(c) (Israel) 1,778 Service Chain Optimization Software 35,000 Group 1 Software 544 Address Verification Software ------------------------------------------------------------------------------------------------ 288,080 >Consumer Software: 1.1% 700,000 THQ (b) 33,929 Entertainment Software 705,000 Activision (b) 18,337 Entertainment Software 150,000 Konami (Japan) 4,431 Entertainment Software ------------------------------------------------------------------------------------------------ 56,697 >Computer Services: 1.7% 2,700,000 Ciber 25,515 Software Services & Staffing 3,351,000 Igate Capital (b)(c) 13,739 Technology Staffing Services 700,000 American Management Systems (b) 12,656 Software Development Services 2,100,000 Analysts International (c) 8,673 Technology Staffing Services 500,000 Pomeroy Computer Resources (b) 6,750 Network Integration Services 493,000 New Horizons Worldwide (b) 5,669 Computer Training Services 600,000 AnswerThink Consulting (b) 3,918 IT Integrator for Fortune 2000 1,750,000 WM Data Nordic (Sweden) 4,405 Computer Services/Consulting 140,000 Vitalstream (b) 700 580,000 Vitalstream, Series C (b) 290 Streaming Services for the Internet ------------------------------------------------------------------------------------------------ 82,315 >Business Information/Marketing Services/Publishing: 2.7% 562,000 Choicepoint (b) 28,488 Fraud Protection Information 1,200,000 Getty Images (b) 27,576 Photographs for Publications & Electronic Media 700,000 Information Holdings (b) 19,817 Scientific & Medical Publications, Patent Information 2,684,000 InfoUSA (b)(c) 18,627 Business Data for Sales Leads 2,200,000 Navigant Consulting (b)(c) 12,100 Consulting Firm 645,000 Martha Stewart Living Omnimedia (b) 10,610 Magazines, Merchandise & TV Programs 240,000 Proquest (b) 8,138 Information Services for Education & Automotive Markets 1,400,000 PRIMEDIA (b) 6,090 Specialty Magazines & Other Publications 2,500,000 Independent News & Media (Ireland) (b) 4,678 Leading International Newspaper Publisher ------------------------------------------------------------------------------------------------ 136,124 >Internet: 0.3% 700,000 RSA Security (b) 12,222 Enterprise Security Software 2,683 Bigfoot International, Series A (b)(c) 134 778,294 Bigfoot International (b) 2 Internet Direct Marketing 250,000 NeoPlanet, Series A (b) 125 53,376 NeoPlanet, Series B (b) 27 Web Browser ------------------------------------------------------------------------------------------------ 12,510 >Electronics Distribution: 0.6% 540,000 Avnet 13,754 Electronic Components Distribution 985,000 Pioneer-Standard Electronics 12,509 Component & Computer Distribution 225,000 MCSI (b) 5,276 A/V Products Distribution & Installation ------------------------------------------------------------------------------------------------ 31,539 >Transaction Processors: 2.3% 1,422,000 Global Payments 48,917 Credit Card Processor 1,208,000 Concord EFS (b) 39,598 Credit Card Processor 200,000 Cubic 10,272 Smart Card Systems for Public Transportation & Defense Systems 229,000 Deutsche Boerse (Germany) 9,080 Trading, Clearing & Settlement Services for Financial Markets 180,000 Euronext (France) (b) 3,408 Operates Amsterdam, Brussels & Paris Stock Exchanges ------------------------------------------------------------------------------------------------ 111,275 --------- Information: Total 1,313,986
17 A Liberty Acorn Fund >Statement of Investments, continued
Number of Shares Value (000) ------------------------------------------------------------------------------------------------ Health Care: 8.8% >Biotechnology/Drug Delivery: 2.1% 426,000 NPS Pharmaceuticals (b) $16,316 Small Molecule Drugs 598,000 Inhale Therapeutic Systems (b) 11,093 Pulmonary Drug Delivery 160,000 Myriad Genetics (b) 8,422 Gene Discovery & Diagnostic Products 1,258,000 Corvas International (b) 8,240 Rational Drug Design 1,875,000 Locus Discovery, Series D. Pfd. 7,500 High Throughput Rational Drug Design 218,000 Protein Design Labs (b) 7,150 Computer Designed Monoclonal Antibodies 555,000 Arena Pharmaceuticals (b) 6,677 Novel Drug Targeting Technology 365,000 Maxygen (b) 6,413 Molecular Breeding 416,000 Diversa (b) 5,886 Molecular Breeding 1,040,000 Aclara Biosciences (b) 5,273 Microfluidic Systems for Drug Development 1,249,999 Perlegen Sciences (b) 4,500 Large Scale Gene Sequencing 210,000 Gene Logic (b) 3,956 Gene Expression Database 316,000 Guilford Pharmaceuticals (b) 3,792 Drug Delivery & Neurology Drugs 461,000 SYRRX, Series C (b) 2,997 X-ray Crystallography 325,000 Genzyme Molecular Oncology Division (b) 2,600 Gene Expression Technology & Cancer Drugs 135,000 Incyte Genomics (b) 2,641 Bioinformatics & Drug Delivery 144,000 Ciphergen Biosystems (b) 1,152 Protein Chips used for Drug Target Discovery 124,000 Atherogenic (b) 750 Drugs for Atherosclerosis, Rheumatoid Arthritis, Asthma 326,000 Microdose (b) 326 Drug Inhalers 45,000 Synaptic Pharmaceutical (b) 271 Receptor Targeted Drug Design ------------------------------------------------------------------------------------------------ 105,955 >Medical Equipment: 2.1% 583,000 Orthofix International (b) 21,631 Bone Fixation & Stimulation Devices 670,000 Edwards Lifesciences (b) 18,512 Heart Valves 858,000 Steris (b) 15,676 Sterilization Devices 1,495,000 Novoste (b)(c) 13,066 Radiation Catheters for In-stent Restenosis 2,000,000 Smith & Nephew (United Kingdom) 12,077 Medical Equipment & Supplies 350,000 Haemonetics (b) 11,872 Blood & Plasma Collection Equipment 682,000 Visx (b) 9,037 Laser Eye Surgery Equipment ------------------------------------------------------------------------------------------------ 101,871 >Pharmaceuticals: 0.1% 600,000 Alliance Unichem (United Kingdom) 4,533 Pharmaceutical Distribution ------------------------------------------------------------------------------------------------ >Hospital Management: 0.1% 100,000 Rhoen-Klinikum (Germany) 5,146 Hospital Management ------------------------------------------------------------------------------------------------ >Medical Supplies: 0.2% 650,000 Owens & Minor 12,025 Distribution of Medical Supplies ------------------------------------------------------------------------------------------------ >Services: 4.2% 3,073,000 First Health Group (b) 76,026 PPO Network 1,812,000 NDCHealth (formerly known as National Data) (c) 62,605 Health Claims Processing & Drug Marketing Services 1,060,000 Lincare Holdings (b) 30,369 Home Health Care Services 472,000 Syncor International (b) 13,518 Nuclear Pharmacy for Radiopharmaceuticals 550,000 Serologicals (b) 11,825 Blood Collection & Antibody Production 1,100,000 Beverly Enterprises (b) 9,460 Nursing Homes 179,000 Medquist (b) 5,236 Medical Transcription Services ------------------------------------------------------------------------------------------------ 209,039 --------- Health Care: Total 438,569 Consumer Goods/Services: 17.9% Goods >Leisure Vehicles: 2.3% 1,500,000 Harley-Davidson 81,465 Motorcycles & Related Merchandise 1,120,000 Monaco Coach (b) 24,494 Recreational Vehicles 6,100,000 Ducati Motor (Italy) (b) 9,838 Motorcycles & Related Merchandise ------------------------------------------------------------------------------------------------ 115,797 >Furniture/Textiles: 1.6% 525,000 Mohawk Industries (b) 28,812 Carpet & Flooring Manufacturer 688,000 Furniture Brands International (b) 22,030 Furniture Manufacturer 660,000 Herman Miller 15,616 Office Furniture 500,000 Hon Industries 13,825 Office Furniture & Fireplaces ------------------------------------------------------------------------------------------------ 80,283 >Food & Beverages: 0.3% 250,000 Nutreco Holdings (Netherlands) 7,997 Farm Raised Salmon 23,000 Binding-Brauerei (Germany) 3,586 Brewery
A 18
Number of Shares Value (000) ------------------------------------------------------------------------------------------------ >Food & Beverages--continued 84,000 Hokuto (Japan) $2,896 Mushroom Production ------------------------------------------------------------------------------------------------ 14,479 >Nondurables: 0.9% 2,300,000 Helen of Troy (b)(c) 28,543 Personal Care Products 220,000 Scotts Company (b) 10,472 Consumer Lawn & Garden Products 601,000 First Years (c) 7,693 Infant & Toddler Products ------------------------------------------------------------------------------------------------ 46,708 >Durable Goods: 0.7% 1,000,000 Callaway Golf 19,150 Premium Golf Clubs & Balls 560,000 Hunter Douglas (Netherlands) 15,034 Window Shades & Venetian Blinds ------------------------------------------------------------------------------------------------ 34,184 >Apparel: 2.0% 1,230,000 Jones Apparel (b) 40,799 Women's Apparel 752,000 Coach (b) 29,313 Designer & Retailer of Branded Leather Accessories 880,000 Nautica Enterprises (b) 11,255 Casual Apparel 650,000 Skechers USA (b) 9,503 Footwear Designer & Marketer 347,000 Steven Madden (b) 4,882 Wholesaler/Retailer of Fashion Footwear 155,000 Hugo Boss Designs (Germany) 3,232 Fashion Apparel ------------------------------------------------------------------------------------------------ 98,984 Services >Retail: 4.6% 1,575,000 Christopher & Banks (b)(c) 53,944 Specialty Women's Retailer at Moderate Price Levels 940,000 Michaels Stores (b) 30,973 Craft & Hobby Specialty Retailer 1,450,000 Borders Group (b) 28,768 Bookstores 536,000 Zale (b) 22,448 Specialty Retailer of Jewelry 500,000 Whole Foods Market (b) 21,780 Natural Food Supermarkets 1,100,000 Pier 1 Imports 19,074 Imported Furniture & Tchotchkes 415,000 Chico's Fas (b) 16,475 Women's Specialty Retail 750,000 Gadzooks (b)(c) 10,305 Teen Apparel Retailer 1,067,000 Autogrill (Italy) 9,897 Tollway Restaurants 237,000 Hot Topic (b) 7,439 Music Inspired Retailer of Apparel, Accessories & Gifts 300,000 Gaiam (b) 6,540 Healthy Living Catalog & E-Commerce ------------------------------------------------------------------------------------------------ 227,643 >Travel: 1.0% 860,000 Intrawest (Canada) 14,855 Owner/Operator of Ski Resorts 800,000 Vail Resorts (b) 14,184 Owner/Operator of Ski Resorts 3,000,000 Airtours (United Kingdom) 10,824 Tour Operator 30,000 Kuoni Reisen (Switzerland) 7,974 Tour Operator ------------------------------------------------------------------------------------------------ 47,837 >Consumer Services: 1.8% 1,300,000 ITT Educational Services (b)(c) 47,931 Technology Oriented Post-secondary Degree Programs 1,780,000 Bally Total Fitness (b)(c) 38,377 National Chain of Fitness Centers 610,000 Princeton Review (b) 4,667 College Preparation Courses ------------------------------------------------------------------------------------------------ 90,975 >Entertainment: 0.5% 1,150,000 Six Flags (b) 17,687 Worldwide Theme Park Operator 250,000 Speedway Motors (b) 6,320 Motorsport Racetrack Owner & Operator ------------------------------------------------------------------------------------------------ 24,007 >Casinos: 0.7% 2,250,000 Station Casinos (b) 25,178 Casinos & Riverboats 535,000 Monarch Casino & Resort (b)(c) 4,280 Casino/Hotel in Reno 700,000 Pinnacle Entertainment (b) 4,221 Casinos in Secondary Markets & Card Clubs 113,000 Lakes Gaming (b) 701 Hotel & Casino in Biloxi & Gulfport ------------------------------------------------------------------------------------------------ 34,380 >Cruise Lines: 1.5% 1,400,000 Carnival 39,312 Largest Cruise Line 1,060,000 Steiner Leisure (b)(c) 22,525 Spas & Hair/Skin Products on Cruise Ships 32,000,000 Star Cruises (Singapore) (b) 12,000 Cruising/Casino Operations ------------------------------------------------------------------------------------------------ 73,837 -------- Consumer Goods/Services: Total 889,114
19 A Liberty Acorn Fund >Statement of Investments, continued
Number of Shares Value (000) ------------------------------------------------------------------------------------------------ Finance: 16.6% >Banks: 3.2% 1,026,000 TCF Financial $49,227 Great Lakes Bank 803,000 Texas Regional Bancshares 30,394 Tex-Mex Bank 800,000 Associated Banc-Corp 28,232 Midwest Bank 605,000 Chittenden 16,698 Vermont & Western Massachusetts Bank 664,000 Glacier Bancorp 13,824 Montana & Idaho Banks 2,900,000 Anglo Irish Bank (Ireland) 11,240 Small Corporate Lending & Private Banking 675,000 Republic 9,349 Michigan Bank 59,000 Umpqua Holdings 797 Oregon Bank ------------------------------------------------------------------------------------------------ 159,761 >Savings & Loans: 1.2% 1,338,000 Peoples Bank Bridgeport 28,446 Connecticut Savings & Loan 824,000 Commonwealth Bancorp (c) 18,252 Philadelphia Savings & Loan 797,000 Anchor Bancorp Wisconsin 14,139 Wisconsin Thrift ------------------------------------------------------------------------------------------------ 60,837 >Insurance: 3.2% 995,000 Protective Life 28,785 Life Insurance 706,000 Philadelphia Consolidated Holding (b) 26,623 Specialty Insurance 900,000 HCC Insurance Holdings 24,795 Aviation Insurance 138,000 Markel (b) 24,792 Specialty Insurance 826,000 Leucadia National 23,847 Insurance Holding Company 446,000 RLI 20,070 Specialty Insurance 210,000 StanCorp Financial 9,923 Group Life, Disability & 401K ------------------------------------------------------------------------------------------------ 158,835 >Money Management: 5.4% 2,170,000 SEI Investments 97,889 Mutual Fund Administration & Investment Management 1,105,000 Affiliated Managers Group (b) 77,880 Mutual Fund & Pension Manager 1,050,000 Neuberger Berman 46,095 Major Asset Management Company 450,000 Eaton Vance 15,997 Mutual Funds 1,360,000 Edinburgh Fund Managers (United Kingdom) 9,742 Investment Management 1,000,000 Banca Fideuram (Italy) 8,010 Life Insurance & Mutual Funds 240,000 BKF Capital Group (b) 6,888 Institutional Money Manager 18,000 Julius Baer Holdings 6,076 Private Banking, Brokerage & Mutual Funds 200,000 The Investment Company of China (China) 616 Closed-End Fund ------------------------------------------------------------------------------------------------ 269,193 >Finance Companies: 3.6% 4,431,000 AmeriCredit (b)(c) 139,798 Auto Lending 850,000 DVI Health Services (b)(c) 14,620 Leases for Big Medical Equipment 1,820,000 World Acceptance (b)(c) 13,286 Personal Loans 1,375,000 Capital Trust (b)(c) 7,920 Mortgage Loans ------------------------------------------------------------------------------------------------ 175,624 -------- Finance: Total 824,250 ------------------------------------------------------------------------------------------------ Industrial Goods/Services: 8.9% >Steel: 0.6% 840,000 Gibraltar Steel (c) 14,717 Steel Processing 400,000 USX- US Steel 7,244 Steel Producer 500,000 Maruichi Steel Tube (Japan) 5,076 Processed Steel 370,000 Atchison Casting (b) 651 Steel Foundries ------------------------------------------------------------------------------------------------ 27,688 >Industrial Goods: 1.2% 1,300,000 Clarcor (c) 35,295 Mobile & Industrial Filters 700,000 Applied Industrial Technologies 13,055 Industrial Components Distribution 254,000 Intermagnetics General (b) 6,579 Superconducting Wire Manufacturer 118,000 Mine Safety Appliances (b) 4,738 Safety Equipment 400,000 Advanced Lighting Technologies (b) 600 Metal Halide Lighting & Fiber Optic Coatings ------------------------------------------------------------------------------------------------ 60,267 >Construction: 0.3% 45,000 Technip (France) 6,014 Global Engineering & Construction 200,000 Insituform Technologies (b) 5,116 Rehabilitation & Repair of Gas, Sewer & Water Pipelines 271,000 Northwest Pipe Company (b) 4,431 Water Transmission Pipe ------------------------------------------------------------------------------------------------ 15,561 >Specialty Chemicals & Industrial Materials: 0.7% 1,100,000 Spartech 22,605 Plastics Distribution & Compounding
A 20
Number of Shares Value (000) ------------------------------------------------------------------------------------------------ >Specialty Chemicals & Industrial Materials--continued 347,000 SYMYX (b) $7,370 Materials & Chemicals 16,500 Givaudan (Switzerland) 5,032 Industrial Fragrances & Flavors ------------------------------------------------------------------------------------------------ 35,007 >Machinery: 0.7% 546,000 Ametek 17,412 Aerospace/Industrial Instruments 344,000 Cuno (b) 10,492 Filtration & Fluids Clarification 550,000 Zardoya Otis (Spain) 5,106 Elevator Manufacturer & Service Provider 96,000 Esco Technologies (b) 3,311 Filtration & Test Equipment ------------------------------------------------------------------------------------------------ 36,321 >Outsourcing Services & Training: 0.7% 12,000,000 Li & Fung (Hong Kong) 13,464 Sourcing of Consumer Goods 2,400,000 Labor Ready (b)(c) 12,264 Temporary Manual Labor 180,000 Meitec (Japan) 4,374 Staffing Company Specializing in Engineers 600,000 GP Strategies (b) 2,280 Training Programs ------------------------------------------------------------------------------------------------ 32,382 Industrial Suppliers: 0.1% 50,000 Xstrata (Switzerland) (b) 6,155 Smelting ------------------------------------------------------------------------------------------------ >Logistics: 2.5% 1,400,000 Expeditors International of Washington 79,730 International Freight Forwarder 700,000 Forward Air (b) 23,744 Freight Transportation Between Airports 759,000 Hub Group (b)(c) 7,954 Truck & Rail Freight Forwarder 360,000 UTI Worldwide (b) 7,045 International Freight Forwarder 600,000 Airnet Systems (b)(c) 4,944 Check & Other Small Package Shipment ------------------------------------------------------------------------------------------------ 123,417 >Other Industrial Services: 2.1% 1,526,000 Wackenhut, Cl. B (b) 29,055 Prison Management 6,100,000 Serco Group (United Kingdom) 31,972 Facilities Management 520,000 Mobile Mini (b) 20,342 Leases Portable Storage Units 700,000 Clark/Bardes Consulting (b)(c) 17,661 Executive Compensation & Benefits Consulting 360,000 Hagemeyer (Netherlands) 6,736 Maintenance, Repair & Operating Supply Distribution ------------------------------------------------------------------------------------------------ 105,766 -------- Industrial Goods/Services: Total 442,564 Energy/Minerals: 8.5% >Independent Power: 0.4% 500,000 Orion Power (b) 13,050 Wholesale Electric Generator 900,000 Covanta Energy (b) 4,068 Electric Power Developer 720,000 Millennium Cell (b) 3,758 Fuel Cell Technology ------------------------------------------------------------------------------------------------ 20,876 >Oil/Gas Producers: 2.7% 5,550,000 XTO Energy 97,125 Natural Gas Producer 630,000 Evergreen Resources (b) 24,324 Coal Seam Gas Producer 1,670,000 Ultra Petroleum (b) 10,170 Natural Gas Producer 1,750,000 Tipperary (b)(c) 2,835 Coal Seam Gas Producer ------------------------------------------------------------------------------------------------ 134,454 >Distribution/Marketing/Refining: 2.8% 1,400,000 Equitable Resources 47,698 Natural Gas Utility & Producer 1,456,000 Dynegy 37,128 Energy Trading & Generation 1,270,000 Aquila (b) 21,717 Energy Trading 1,320,000 Tesoro Petroleum (b) 17,305 Oil Refinery/Gas Producer 761,000 Atmos Energy 16,171 Natural Gas Utility ------------------------------------------------------------------------------------------------ 140,019 >Other Resources: 0.3% 1,350,000 Waste Recycling Group (United Kingdom) 8,550 Landfills 600,000 Cadiz (b) 4,812 Farming & Water Resources in California ------------------------------------------------------------------------------------------------ 13,362 >Oil Services: 2.3% 3,300,000 Newpark Resources (b) 26,070 Oilfield Fluid Management & Equipment Rental 450,000 Carbo Ceramics 17,622 Natural Gas Well Stimulants 3,500,000 Saipem (Italy) 17,152 Offshore Construction & Drilling 1,000,000 FMC Technologies (b) 16,450 Deep Water Oil & Gas Well Head Manufacturer 600,000 Precision Drilling (Canada) (b) 15,474 Oil & Gas Driller 614,000 Chiles Offshore (b) 12,212 Oil & Gas Driller 500,000 Enerflex Systems (Canada) 6,202 Natural Gas Compressor Manufacturer ------------------------------------------------------------------------------------------------ 111,182 -------- Energy/Minerals: Total 419,893
21 A Liberty Acorn Fund >Statement of Investments, continued
Number of Shares Value (000) ------------------------------------------------------------------------------------------------ Other Industries: 6.1% >Real Estate: 4.8% 1,000,000 The Rouse Company $29,290 Regional Shopping Malls 699,000 Forest City Enterprises, Cl. B 27,366 Diversified Properties 875,000 SL Green Realty 26,871 Manhattan Office Buildings 700,000 Manufactured Home Communities 21,847 Manufactured Home Communities 675,000 First Industrial Realty Trust 20,992 Industrial Properties 505,000 General Growth Properties 19,594 Regional Shopping Malls 625,000 Macerich Company 16,625 Regional Shopping Malls 650,000 Amli Residential 16,393 Midwestern Apartments 903,125 Security Capital European Realty (b) 16,256 Strategic Real Estate Investments 450,000 BRE Properties 13,932 Apartments 520,000 Summit Properties 13,010 Southeastern Apartments 1,099,000 LaSalle Hotel Properties (c) 12,902 Upscale/Full Service Hotels 190,000 Consolidated Tomoka 3,777 16,000 Acres of Florida Land ------------------------------------------------------------------------------------------------ 238,855 >Waste Management: 0.2% 575,000 Tetra Tech (b) 11,448 Resource Management & Infrastructure Consulting ------------------------------------------------------------------------------------------------ >Regulated Utilities: 1.1% 1,100,000 Unisource Energy 20,009 Electric Utility in Arizona 700,000 Conectiv 17,143 Number of Shares Principal Amount (000) Value (000) ------------------------------------------------------------------------------------------------ Electric Utility in New Jersey, Delaware & Maryland 200,000 CH Energy $8,694 Electric Utility in New York 600,000 Red Electrica (Spain) 5,587 Spanish Power Grid ------------------------------------------------------------------------------------------------ 51,433 ---------- Other Industries - Total 301,736 Total Common Stocks and Other Equity-Like Securities: 93.3% ---------- (Cost: $3,007,366) 4,630,112 Short-Term Obligations: 6.2% Yield 1.75% - 2.57% Due 1/02 - 1/11/02 $ 42,704 Nestle's Capital 42,685 38,171 Texaco 38,165 34,920 GMAC 34,887 32,745 Qwest 32,731 28,666 Equillon 28,663 28,465 Ford Motor Puerto Rico 28,451 25,152 SBC Communications 25,139 25,000 Ford Motor Credit 24,977 24,950 IBM Credit 24,949 20,019 Eaton 20,012 10,000 US Treasury Bill 9,996 ------------------------------------------------------------------------------------------------ (Amortized Cost: $310,655) 310,655 Total Investments: 99.5% ---------- (Cost: $3,318,021)(a) 4,940,767 Cash and Other Assets Less Liabilities: 0.5% 22,597 ---------- Total Net Assets: 100% $4,963,364 ================================================================================================
A 22 -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2001, for federal income tax purposes cost of investments is $3,318,176 and net unrealized appreciation was $1,622,591, consisting of gross unrealized appreciation of $1,881,543 and gross unrealized depreciation of $258,952. (b) Non-income producing security. (c) On December 31, 2001, the fund held the following percentages of the outstanding voting shares of the companies listed below: Hub Group 9.83% World Acceptance 9.70% Multex.Com 9.56% Bsquare 9.28% Novoste 9.23% Analysts International 8.68% Shuffle Master 8.64% MAPICS 8.27% Gadzooks 8.23% Helen of Troy 8.19% COMARCO 7.74% Commonwealth Bancorp 7.74% Capital Trust 7.34% Tipperary 6.96% Gibraltar Steel 6.67% First Years 6.54% Bigfoot International, Series A 6.53% Igate Capital 6.51% Christopher & Banks 6.34% Bally Total Fitness 6.13% Steiner Leisure Ltd 6.01% LaSalle Hotel Properties 5.96% DVI Health Services 5.93% Labor Ready 5.92% Airnet Systems 5.92% Avid Technology 5.73% Monarch Casino & Resort 5.67% Navigant Consulting 5.51% ITT Educational Services 5.49% Clark/Bardes Consulting 5.46% Systems & Computer Technology 5.44% ClickSoftware Technologies 5.35% NDC Health 5.32% InfoUSA 5.31% Micros Systems 5.29% Clarcor 5.28% AmeriCredit 5.25% The aggregate cost and value of these companies at December 31, 2001, was $618,194,000 and $846,511,000 respectively. Investments in affiliate companies represent 17.06% of total net assets at December 31, 2001. Investment activity and income amounts relating to affiliates during the year ended December 31, 2001 were as follows: Dividend Income $2,742,000 Net realized gain or loss $(49,710,000) Change in unrealized gain or loss $108,992,000 Purchases $153,224,000 Proceeds from sales $134,381,000 In addition, additional purchases of existing portfolio holdings that were not considered affiliates in prior years, resulted in the fund owning more than 5% of the outstanding shares of certain issues at December 31, 2001. Therefore, the cost and market value affiliate disclosure amounts include both acquisitions of new investments in affiliates during the year, as well as prior year investment holdings that became affiliates during the current year. (d) On December 31, 2001, the market value of foreign securities (in thousands) represents 7.18% of total net assets. The Fund's foreign portfolio was diversified as follows: Value Percent ===================================================================== United Kingdom $85,128 1.72% Canada $56,461 1.14% Italy $44,897 0.90% Netherlands $29,767 0.60% Germany $21,044 0.42% Switzerland $19,161 0.39% France $19,098 0.38% Hong Kong $18,405 0.37% Japan $16,777 0.34% Ireland $15,918 0.32% Singapore $12,000 0.24% Spain $10,693 0.22% Sweden $4,405 0.09% Israel $1,778 0.04% China $616 0.01% --------- ------- Total $ 356,148 7.18% ========= ======= 23 A Liberty Acorn International >Major Portfolio Changes in the Fourth Quarter
Number of Shares ------------------------------------ 09/30/01 12/31/01 Additions ------------------------------------------------------------------------------------------- Europe >Germany GFK 262,000 400,000 Hugo Boss Designs 295,000 500,000 >Sweden Observer 830,000 990,000 >France/Belgium Euronext 285,000 395,000 Penauille Polyservice 200,000 270,000 RTL Group (Belgium) 297,900 300,000 >United Kingdom/Ireland Aberdeen Asset Management 965,000 1,000,000 Anglo Irish Bank (Ireland) 5,320,000 5,400,000 Aggreko 1,060,000 1,900,000 Independent News & Media (Ireland) 0 2,500,000 Jardine Lloyd Thompson 235,000 600,000 Nestor Healthcare 421,000 700,000 St. James Place Capital 500,000 860,000 Tullow Oil 0 3,500,000 Waterford Wedgewood (Ireland) 0 12,000,000 >Switzerland Geberit International 0 20,000 Kuoni Reisen 40,000 50,000 Xstrata 0 50,000 >Spain Zardoya Otis 550,000 900,000 >Netherlands Hagemeyer 0 565,000 IM Tech 200,000 460,000 OCE 500,000 550,000 OPG Groep 29,600 260,000 Pinkroccade 220,000 300,000 United Services Group 260,000 400,000 ------------------------------------------------------------------------------------------- Asia >Hong Kong Global Bio-Chem Technology Group 0 28,000,000 Hang Lung Properties 0 3,550,000 Hong Kong Exchanges & Clearing 0 5,760,000 JCG Holding 0 5,290,000 Jiangsu Express 0 14,500,000 SCMP Group 0 10,000,000 Tingyi Holding 0 15,500,000 Wing Hang Bank 0 1,600,000 Zhejiang Expressway 0 17,000,000 >Japan ARRK 20,000 140,000 Daiseki 7,300 125,000 Eneserve 24,000 120,000 Fuji Seal 2,600 59,000 Goldcrest 0 100,000 Kawasumi Laboratories 10,000 250,000 Maruichi Steel Tube 17,000 475,000 Nissin Healthcare Food Services 0 30,000 Paramount Bed 0 200,000 >Taiwan Ase Test 400,000 535,000 >South Korea Halla Climate Control 0 140,000 >Singapore Sembcorp Logistics 3,800,000 5,860,000 Singapore Technical Engineering 3,500,000 6,500,000 Venture Manufacturing 1,735,000 2,085,000 Want Want Holdings 0 2,340,000 ------------------------------------------------------------------------------------------- Latin America >Mexico Consorcio ARA 6,000 2,200,000 >Brazil Banco Itau 152,000,000 152,700,000 ------------------------------------------------------------------------------------------- Other Countries >Canada Moore 200,000 500,000 >Israel Amdocs 300,000 480,000
I 24
Number of Shares ------------------------------------ 09/30/01 12/31/01 Sales ------------------------------------------------------------------------------------------- Europe >Germany Techem 170,000 0 Teleplan International 565,000 430,000 >Denmark ISS International Service Systems 250,000 0 >Sweden Autoliv 500,000 0 Poolia 600,000 0 >United Kingdom/Ireland Dimension Data 1,200,000 0 Euro Money Institutional Investor (formerly known as Euro Money Publications) 1,600,000 1,440,000 Expro International 877,000 630,000 Incepta 8,100,000 7,300,000 Informa Group 1,650,000 0 Irish Life & Permanent (Ireland) 2,600,000 2,100,000 >Switzerland Cie Fin Richemont 1,250,000 1,000,000 (includes the effect of a 100 for 1 stocksplit) >Italy Saipem 3,625,000 3,000,000 ------------------------------------------------------------------------------------------- Asia >Japan Otsuka Kagu 107,100 0 THK 200,000 0 >Taiwan Systex 13,250,000 10,000,000 >South Korea Cheil Communications 140,000 80,000 ------------------------------------------------------------------------------------------- Latin America >Mexico Corp Interamericana de Entretenimiento 3,400,000 0 ------------------------------------------------------------------------------------------- Other Countries >Canada Canadian Hunter 325,000 0 Canadian Natural Resources 450,000 300,000 Precision Drilling 500,000 300,000 Talisman Energy 400,000 300,000
25 I Liberty Acorn International >Statement of Investments December 31, 2001
Number of Shares Value (000) ------------------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 95.3% ------------------------------------------------------------------------------------------- Europe: 61.5% >Germany/Austria: 10.7% 600,000 Rhoen-Klinikum Pfd. $30,873 500,000 Rhoen-Klinikum 26,062 Hospital Management 1,000,000 Stinnes 20,671 Logistics 350,000 Deutsche Boerse 13,877 Trading, Clearing & Settlement Services for Financial Markets 150,000 Fresenius, Pfd. 12,419 Dialysis Equipment & Hospital Management 200,000 Henkel 11,227 Chemicals, Detergents & Non-Food Consumer Brands 500,000 Hugo Boss Designs 10,425 Fashion Apparel 360,000 Flughafen Wien (Austria) 9,623 Vienna Airport Authority 485,000 Jenoptik 9,075 Clean Room Construction & Electrical Components 250,000 Pfeiffer Vacuum Technologies 7,841 Vacuum Pump Manufacturer 400,000 GFK 6,896 Market Research Services 430,000 Teleplan International (b) 6,475 After-Sale Warranty Repair Services 1,000,000 Takkt 5,168 Mail Order Retailer of Office & Warehouse Durables 100,000 Beru 4,366 Auto Parts & Electronics 200,000 Lion Bioscience 3,252 Bioinformatics ------------------------------------------------------------------------------------------- 178,250 >Denmark: 0.4% 100,000 Kobenhavns Lufthavne 6,481 Copenhagen Airport Authority ------------------------------------------------------------------------------------------- >Finland: 2.3% 400,000 TietoEnator 10,443 Computer Services/Consulting 350,000 Amer Group 8,925 Branded Outdoor Sporting Goods 200,000 KCI Konecranes International 5,104 Crane Manufacturer & Service Provider 350,000 Jaakko Poyry 4,958 Engineering Consultants in Forestry, Energy 625,000 Fiskars, Series A 4,733 Scissors & Gardening Tools 900,000 Talentum 3,689 Trade Journals ------------------------------------------------------------------------------------------- 37,852 >Sweden: 0.9% 990,000 Observer (b) 6,537 Media Monitoring & Communications 1,750,000 WM Data Nordic 4,405 Computer Services/Consulting 751,200 Metro International, Series B (b) 3,055 160,000 Metro International, Series A (b) 551 Free Subway Newspapers 213,875 Sigma (b) 360 Technical Consulting ------------------------------------------------------------------------------------------- 14,908 >France/Belgium: 6.4% 500,000 Fininfo 14,702 Data Feeds for French Banks & Brokers 100,000 Technip 13,365 Global Oil Engineering & Construction 650,000 NRJ 12,127 Radio Network 300,000 RTL Group (Belgium) 11,788 TV & Radio Broadcaster 400,000 Neopost (b) 11,661 Postage Meter Machines 270,000 Penauille Polyservice 9,503 Industrial Cleaning/Airport Services 300,000 Essilor International 9,075 Eyeglass Lenses 230,000 Euler 8,710 Insurance of Accounts Receivable 395,000 Euronext (b) 7,479 Trading, Clearing & Settlement Services for Financial Markets 750,000 Telindus Group (Belgium) 5,346 Network Integration Services 83,000 Coface 3,505 Credit Insurance ------------------------------------------------------------------------------------------- 107,261 >United Kingdom/Ireland: 19.5% 7,100,000 Serco Group 37,213 Facilities Management 5,000,000 Capita Group 35,568 Outsourcing Services 5,380,000 Smith & Nephew 32,488 Medical Equipment & Supplies 3,000,000 SSL International 23,695 Medical & Footcare Products 2,100,000 Irish Life & Permanent (Ireland) 21,331 Savings Products 5,400,000 Anglo Irish Bank (Ireland) 20,930 Corporate Lending & Private Banking 1,900,000 Spectris 13,140 Electronic Instruments & Controls 1,900,000 Aggreko 10,097 Provider of Temporary Power & Temperature Control Services 3,200,000 Holmes Place 10,017 Health Clubs 1,300,000 Alliance Unichem 9,822 Pharmaceutical Wholesaler & Retailer 12,000,000 Waterford Wedgwood (Ireland) 9,409 Crystal, Tableware & Cookware 3,000,000 FKI 8,064 Materials Handling Equipment 4,100,000 First Choice Holidays 7,534 Tour Operator
I 26
Number of Shares Value (000) ------------------------------------------------------------------------------------------- >United Kingdom/Ireland - continued 1,300,000 Amey $7,038 Facilities Management 2,500,000 Taylor Nelson 7,025 Market Research Services 1,300,000 Hit Entertainment 6,880 Television Shows for Children 1,440,000 Euro Money Institutional Investors (formerly known as Euro Money Publications) 6,814 Financial Publications 1,000,000 Waste Recycling Group 6,333 Landfills 575,000 Torex 6,128 Application Software for Hospital Management & Retail 1,000,000 Aberdeen Asset Management 5,700 Asset Management 700,000 Nestor Healthcare 5,554 Supplier Of Outsourced Health Care Staffing Solutions 600,000 Jardine Lloyd Thompson (b) 5,371 Business Insurance Broker 7,300,000 Incepta 5,101 Business Information & Marketing Services 800,000 First Technology 4,694 Auto Electronic Sensors 2,500,000 Independent News & Media (Ireland) (b) 4,678 Newspaper Publisher in U.K. & Commonwealth Countries 860,000 St. James Place Capital 4,407 Life Insurance & Investment Product Distributor 3,500,000 Tullow Oil (b) 3,852 Oil & Gas Producer 630,000 Expro International 3,607 Offshore Oil Field Services 400,000 Charles Taylor Consulting 2,201 Mutual Insurance Management 600,000 NTL (b) 564 Voice, Video & Data Services Via Cable Networks 75,000 RPS Group 157 Environmental Consulting ------------------------------------------------------------------------------------------- 325,412 >Switzerland: 8.1% 1,000,000 Cie Fin Richemont 18,594 Luxury Goods 60,000 Givaudan 18,299 Industrial Fragrances & Flavors 60,500 Kaba Holdings 14,951 Building Security Systems 7,000 Pargesa 13,839 Industrial & Media Conglomerate 40,000 Julius Baer 13,501 Private Banking, Brokerage & Mutual Funds 50,000 Kuoni Reisen 13,290 Tour Operator 200,000 Bachem 11,452 Peptides 4,000 Sarasin & Cie Bank 7,775 Private Banking 10,800 Synthes-Stratec 7,525 Products for Orthopedic Surgery 50,000 Xstrata (b) 6,155 Smelting 90,000 Bon Appetit 6,021 Wholesale Food Distributor and Specialty Restaurant/Retailer 20,000 Geberit International 4,478 Plumbing Supplies ------------------------------------------------------------------------------------------- 135,880 >Italy: 3.7% 3,000,000 Autogrill 27,826 Restaurants & Catering for Travelers 3,000,000 Saipem 14,702 Offshore Oil Construction & Drilling 1,675,000 Banca Fideuram 13,417 Life Insurance & Mutual Funds 1,000,000 Interpump Group 3,876 HIGH Pressure Pumps & Pistons 850,000 Class Editori 2,689 Newspapers & On-Line Financial Data ------------------------------------------------------------------------------------------- 62,510 >Spain: 4.5% 1,610,000 Red Electrica 14,991 Spanish Power Grid 1,000,000 Aguas de Barcelona 12,474 Water Utility 875,000 Prosegur 11,804 Security Guards 900,000 Zardoya Otis 8,356 Elevator Manufacturer & Service Provider 1,200,000 Abengoa 7,388 Engineering & Construction 700,000 NH Hoteles (b) 6,967 Business Hotel 1,000,000 Cortefiel 5,640 Apparel Retailer 1,100,000 Transportes Azkar 5,332 Package Delivery & Logistics 200,000 Aldeasa 3,051 Airport Retail Management ------------------------------------------------------------------------------------------- 76,003 >Netherlands: 5.0% 500,000 Hunter Douglas 13,423 Decorative Window Coverings 565,000 Hagemeyer 10,572 B2B Distributor to Industrial & Construction End Markets 260,000 OPG Groep 8,981 Pharmaceutical Wholesaler & Retailer 460,000 IM Tech 8,615 Technical Engineering 180,000 Fugro 8,035 Survey & GPS Services 400,000 United Services Group 7,787 Temporary Staffing Services 450,000 Vopak 7,297 Oil Storage & Chemical Distribution 220,000 Nutreco Holdings 7,037 Salmon, Animal Feeds 300,000 Pinkroccade 6,362 Computer Services/Outsourcing
27 I Liberty Acorn International >Statement of Investments, continued
Number of Shares Value (000) ------------------------------------------------------------------------------------------- >Netherlands - continued 550,000 OCE $5,523 Manufacturer of High Speed Copiers ------------------------------------------------------------------------------------------- 83,632 ---------- Europe: Total 1,028,189 ------------------------------------------------------------------------------------------- Asia: 23.0% >Hong Kong: 5.7% 6,000,000 TVB 26,005 Television Broadcasting 20,000,000 Li & Fung 22,440 Sourcing of Consumer Goods 28,000,000 Global Bio-Chem Technology Group 9,784 Corn-Based Food Products 5,760,000 Hong Kong Exchanges & Clearing 8,752 Trading, Clearing & Settlement Services for Financial Markets 10,000,000 SCMP Group 6,283 English Language Newspaper in Hong Kong 1,600,000 Wing Hang Bank 5,129 Consumer & Commercial Banking 17,000,000 Zhejiang Expressway 4,185 Toll Road Builder & Operator 3,550,000 Hang Lung Properties 3,664 Property Manager 5,290,000 JCG Holding (b) 3,290 Consumer Finance 14,500,000 Jiangsu Express 3,179 Toll Road Builder & Operator 15,500,000 Tingyi Holding 2,604 Instant Noodles ------------------------------------------------------------------------------------------- 95,315 >Japan: 11.0% 280,000 Orix 24,962 Leasing & Other Financial Services 120,000 Nintendo 20,913 Entertainment Software & Hardware 40,000 Bellsystem24 14,883 Call Centers 250,000 Aeon Credit Service 14,238 Credit Card Issuer 775,000 Olympus Optical 11,093 Medical Equipment & Cameras 150,000 Funai Electric 11,037 Consumer Electronics 700,000 Banyu Pharmaceutical 10,365 Ethical Drug Producer 600,000 Toppan Forms 10,001 Business Forms & Printing Services 260,000 Konami 7,680 Entertainment Software 317,000 Uni-Charm 6,596 Infant Hygiene & Feminine Care Products 180,000 Hokuto 6,205 Mushroom Production 140,000 ARRK 5,932 Prototypes & Molds for New Product Development 165,000 Aderans 4,849 Hair Pieces 475,000 Maruichi Steel Tube 4,822 Processed Steel 310,000 Daito Trust Construction 4,720 Apartment Builder 190,000 Meitec 4,617 Staffing Company Specializing in Engineers 120,000 Eneserve (b) 4,283 Sells & Maintains In-House Power Generators 200,000 Paramount Bed 3,698 Manufacturer of Adjustable Beds 100,000 Goldcrest 3,690 Apartment Developer 250,000 Kawasumi Laboratories 2,468 Medical Supplies 59,000 Fuji Seal 2,038 Packaging Materials & Machinery 125,000 Daiseki 1,784 Waste Disposal & Recycling 200,000 Wilson Learning 1,154 Corporate Training 30,000 Nissin Healthcare Food Service (b) 1,048 Hospital Catering ------------------------------------------------------------------------------------------- 183,076 >Taiwan: 2.1% 4,875,000 Advantech 12,541 Computer Based Industrial Automation 10,000,000 Systex (b) 10,519 Systems Integrator & Internet Services 535,000 Ase Test (b) 7,453 Semiconductor Packaging & Test Services 5,750,000 Chroma Ate 4,306 Test & Measurement Instruments ------------------------------------------------------------------------------------------- 34,819 >South Korea: 1.3% 750,000 S1 Corporation 10,110 Security Services 80,000 Cheil Communications 8,225 Advertising 140,000 Halla Climate Control (b) 3,839 Auto Parts Manufacturer ------------------------------------------------------------------------------------------- 22,174 >Singapore: 2.9% 40,000,000 Star Cruises (b) 15,000 Cruise Line 2,085,000 Venture Manufacturing 15,018 Electronic Manufacturing Services 6,500,000 Singapore Technical Engineering 8,272 Defense Supplier 5,860,000 Sembcorp Logistics 5,712 Logistic Services for Marine Transport 2,340,000 Want Want Holdings 4,446 Snack Foods ------------------------------------------------------------------------------------------- 48,448 ---------- Asia: Total 383,832
I 28
Number of Shares Value (000) ------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------- Latin America: 1.9% >Mexico: 0.7% 475,000 Grupo Aeroportuario (b) $7,315 Mexican Airport Authority 2,200,000 Consorcio ARA (b) 3,916 Low/Medium Income House Builder ------------------------------------------------------------------------------------------- 11,231 >Brazil: 0.9% 152,700,000 Banco Itau 11,629 Universal Bank 130,000 Embraer Empresa Brasileira 2,877 Mid Size Jets for Regional Airlines ------------------------------------------------------------------------------------------- 14,506 >Argentina: 0.3% 380,000 Siderca 5,510 Seamless Pipes for Oil Wells ------------------------------------------------------------------------------------------- ----------- Latin America: Total 31,247 ------------------------------------------------------------------------------------------- Other Countries: 8.9% >Australia/New Zealand: 1.7% 5,000,000 Computershare 13,479 Financial Software/Services 520,000 Perpetual Trustees 11,661 Investment Management 1,000,000 United Networks Limited (New Zealand) 3,418 New Zealand Electric Grid ------------------------------------------------------------------------------------------- 28,558 >Canada: 5.5% 1,150,000 Power Financial 27,520 Life Insurance & Mutual Funds 900,000 Corus Entertainment (b) 17,920 Television Programming & Radio Stations 300,000 Talisman Energy 11,400 Oil & Gas Producer 200,000 Celestica (b) 8,040 Electronic Manufacturing Services 450,000 Intrawest 7,773 Owner/Operator of Ski Resorts 300,000 Precision Drilling (b) 7,737 Oil & Gas Well Driller 300,000 Canadian Natural Resources 7,219 Oil & Gas Producer 500,000 Moore 4,805 Commercial Printing ------------------------------------------------------------------------------------------- 92,414 >Israel: 1.0% 480,000 Amdocs (b) 16,306 Telecommunications Billing & Customer Care Software ------------------------------------------------------------------------------------------- >Russia: 0.3% 11,500 Khanty Mansiysk 4,190 $1,500,000 Khanty Mansiysk 1% Notes Due 10/14/02 (b) 1,500 Oil Production in Russia ------------------------------------------------------------------------------------------- 5,690 >United States: 0.4% 830,000 MIH (b) 6,059 Pay-TV & Interactive TV Technology ------------------------------------------------------------------------------------------- Other: Total 149,027 Total Common Stocks and Other Equity-Like Securities: 95.3% ----------- (Cost: $1,524,928) $1,592,295 Short-Term Obligations: 4.8% Foreign Time Deposits Yield 3.0% Due 1/02/02 71,000 Euro State Street Bank 63,261 11,000 GBP State Street Bank 16,016 ------------------------------------------------------------------------------------------- (Amortized Cost: $79,277) 79,277 ----------- Total Investments: 100.1% 1,671,572 (Cost: $1,604,205)(a) Cash and Other Assets Less Liabilities: (0.1%) (1,136) ----------- Total Net Assets: 100% $1,670,436 ===========================================================================================
-------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2001, for federal income tax purposes cost of investments is $1,613,787 and net unrealized appreciation was $57,785 consisting of gross unrealized appreciation of $323,905 and gross unrealized depreciation of $266,120. (b) Non-income producing security. (c) On December 31, 2001, $601,851 or 36.0% of the Fund's net assets was denominated in the Euro currency. 29 I Liberty Acorn International >Portfolio Diversification At December 31, 2001, the Fund's portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent ---------------------------------------------------------------------------------------- >Computer Hardware Semiconductors $7,453 0.5% ---------------------------------------------------------------------------------------- 7,453 0.5 >Computer Software Telephone Related 16,306 1.0 ---------------------------------------------------------------------------------------- 16,306 1.0 >Technology Services Full Service 27,338 1.7 Network/ SI 10,519 0.6 Internet/ Web Consulting 3,689 0.2 Embedded Systems 360 0.0 ---------------------------------------------------------------------------------------- 41,906 2.5 >Telecommunications ISP's 6,059 0.4 Alternative Provider 5,346 0.3 Cable 564 0.0 ---------------------------------------------------------------------------------------- 11,969 0.7 >Broadcasting & Media Content Media Content Providers 76,068 4.5 Radio & TV Broadcasting 49,920 3.0 Hybrid Internet 27,811 1.7 Market Research 13,921 0.8 ---------------------------------------------------------------------------------------- 167,720 10.0 >Health Care Devices & Consumable 92,658 5.5 Services 80,545 4.8 Biotech 26,365 1.6 Drugs 9,822 0.6 ---------------------------------------------------------------------------------------- 209,390 12.5 >Business Services BPO 115,020 6.9 Business Services 78,682 4.7 Logistics 38,190 2.3 Consumer Services 1,154 0.1 ---------------------------------------------------------------------------------------- 233,046 14.0 >Financials Lending Institutions $80,178 4.8% Insurance 65,133 3.9 Asset Management 56,624 3.4 ---------------------------------------------------------------------------------------- 201,935 12.1 >Consumer Goods & Services Branded Goods 109,759 6.6 Leisure 65,007 3.9 Retail Outlets 42,538 2.5 Distribution/ E-Commerce 5,168 0.3 ---------------------------------------------------------------------------------------- 222,472 13.3 >Industrials Goods 182,805 10.9 EMS 34,095 2.0 Electronic Manufacturing 16,847 1.0 Construction 15,630 0.9 R&D Design Firms 13,140 0.8 Distribution 10,572 0.7 ---------------------------------------------------------------------------------------- 273,089 16.3 >Other Industries Energy 98,300 5.9 Utilities 64,140 3.8 Real Estate 30,730 1.9 Conglomerate 13,839 0.8 ---------------------------------------------------------------------------------------- 207,009 12.4 Total Common Stocks and Other Equity-Like Securities: ---------- ------ 1,592,295 95.3 Short-term Obligations: $79,277 4.8 ---------- ------ Total Investments: 1,671,572 100.1 Cash and Other Assets Less Liabilities: (1,136) (0.1) ---------- ------ Net Assets: $1,670,436 100.0% ========================================================================================
I 30 Liberty Acorn USA >Major Portfolio Changes in the Fourth Quarter
Number of Shares ------------------------------------ 09/30/01 12/31/01 Additions -------------------------------------------------------------------------------------------- Information Analysts International 0 256,600 Information Holdings 48,600 108,600 -------------------------------------------------------------------------------------------- Health Care Novoste 160,000 345,000 -------------------------------------------------------------------------------------------- Consumer Goods/Services Christopher & Banks 70,500 85,500 (includes the effect of a 3 for 2 stocksplit) Hot Topic 0 40,000 -------------------------------------------------------------------------------------------- Finance AmeriCredit 450,500 551,500 Markel 0 7,000 -------------------------------------------------------------------------------------------- Industrial Goods/Services Clark/Bardes Consulting 0 75,000 Cuno 0 32,900 Spartech 0 95,000 -------------------------------------------------------------------------------------------- Energy/Minerals Aquila 0 115,000 Newpark Resources 476,000 551,000 Sales -------------------------------------------------------------------------------------------- Information Pomeroy Computer Resources 125,300 0 PRIMEDIA 95,000 0 -------------------------------------------------------------------------------------------- Health Care Serologicals 208,900 108,900
31 U Liberty Acorn USA >Statement of Investments December 31, 2001
Number of Shares Value (000) ------------------------------------------------------------------------------------------- Common Stocks: 92.6% ------------------------------------------------------------------------------------------- Information: 33.6% >Broadcasting: 2.6% 333,100 Salem Communications (b) $7,661 Radio Stations for Religious Programming ------------------------------------------------------------------------------------------- >Radio: 0.4% 80,000 Cumulus Media, Cl. A (b) 1,294 Radio Stations in Small Cities ------------------------------------------------------------------------------------------- >Television Programmimg: 1.8% 285,000 Mediacom Communications (b) 5,204 Cable Television Franchises ------------------------------------------------------------------------------------------- >Telecommunications/Wireline Communications: 1.0% 66,000 Commonwealth Telephone (b) 3,003 Rural Phone Franchises & CLEC ------------------------------------------------------------------------------------------- >Mobile Communications: 4.2% 105,000 Telephone & Data Systems 9,424 Cellular & Telephone Services 182,700 Comarco (b) 2,786 Wireless Network Testing ------------------------------------------------------------------------------------------- 12,210 >Computer Services: 3.3% 232,000 American Management Systems (b) 4,195 Software Development Services 786,000 RCM Technologies (b) 3,694 Technology Staffing Services 256,600 Analysts International 1,060 Technology Staffing Services 60,000 New Horizons Worldwide (b) 690 Computer Training Services ------------------------------------------------------------------------------------------- 9,639 >Business Software: 12.5% 527,600 Micros Systems (b) 13,243 Information Systems for Restaurants & Hotels 578,000 JDA Software (b) 12,918 Applications/Software & Services for Retailers 765,000 Novell (b) 3,511 Directory, Identity Management & Authorization Software 132,000 MRO Software (b) 3,086 Enterprise Management Software 80,000 SPSS (b) 1,420 Statistical Analysis Software 80,000 JD Edwards (b) 1,316 Mid Market ERP & Supply Chain Software 50,000 Group 1 Software (b) 778 Address Verification Software ------------------------------------------------------------------------------------------- 36,272 >Transaction Processors: 3.7% 214,640 Global Payments 7,384 Credit Card Processor 189,000 Euronet Services (b) 3,421 ATM Processor ------------------------------------------------------------------------------------------- 10,805 >Gaming Equipment: 0.2% 35,000 Shuffle Master (b) $548 Card Shufflers, Casino Games & Slot Machines ------------------------------------------------------------------------------------------- >Business Information/Marketing Services/Publishing: 2.2% 108,600 Information Holdings (b) 3,074 Scientific & Medical Publications, Patent Information 102,800 Getty Images (b) 2,362 Photographs for Publications & Electronic Media 50,000 Martha Stewart Living Omnimedia (b) 823 Magazines, Merchandise & TV Programs ------------------------------------------------------------------------------------------- 6,259 >Semiconductors/Related Equipment: 1.7% 235,000 Axcelis Technologies (b) 3,029 Ion Implantation Tools 80,000 Integrated Circuit Systems (b) 1,807 Silicon Timing Devices ------------------------------------------------------------------------------------------- 4,836 ------------------------------------------------------------------------------------------- Information: Total 97,731 ------------------------------------------------------------------------------------------- Health Care: 17.6% >Biotechnology/Drug Delivery: 1.0% 375,000 Locus Discovery, Series D. Pfd. (b) 1,500 High Throughput Rational Drug Design 154,000 SYRRX, Series C (b) 1,001 X-ray Crystallography 363,636 Metabolex, Series F (b) 582 Drugs for Diabetes ------------------------------------------------------------------------------------------- 3,083 >Medical Equipment: 4.2% 274,000 Edwards Lifesciences (b) 7,571 Heart Valves 345,000 Novoste (b) 3,015 Radiation Catheters for In-Stent Restenosis 129,000 Visx (b) 1,709 Laser Eye Surgery ------------------------------------------------------------------------------------------- 12,295 >Services: 12.4% 268,300 NDCHealth (formerly known as National Data) 9,270 Health Claims Processing & Drug Marketing Services 246,800 Lincare Holdings (b) 7,071 Home Health Care Services 856,100 Magellan Health Services (b) 5,436 Mental Health Services 184,000 First Health Group (b) 4,552 PPO Network 515,000 Beverly Enterprises (b) 4,429 Nursing Homes 108,900 Serologicals (b) 2,341 Blood Collection & Antibody Production 80,000 Syncor International (b) 2,291 Nuclear Pharmacy for Radiopharmaceuticals 18,000 Medquist (b) 527 Medical Transcription Services ------------------------------------------------------------------------------------------- 35,917 --------- Health Care: Total 51,295
U 32
Number of Shares Value (000) ------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------- Consumer Goods/Services: 11.4% >Consumer Services: 4.5% 333,000 ITT Educational Services $12,278 Technology-oriented Post-secondary Degree Programs 43,000 Bally Total Fitness (b) 927 National Chain of Fitness Centers ------------------------------------------------------------------------------------------- 13,205 >Apparel: 1.3% 132,200 Steven Madden (b) 1,860 Wholesaler/Retailer of Fashion Footwear 30,000 Coach (b) 1,169 Designer & Retailer of Branded Leather Accessories 60,000 Skechers USA (b) 877 Footwear Designer & Marketer ------------------------------------------------------------------------------------------- 3,906 >Retail: 5.6% 310,000 Callaway Golf 5,937 Premium Golf Clubs & Balls 347,000 Gadzooks (b) 4,768 Teen Apparel Retailer 85,500 Christopher & Banks (b) 2,928 Specialty Women's Retailer at Moderate Price Levels 65,000 Borders Group (b) 1,290 Bookstores 40,000 Hot Topic (b) 1,256 Music Inspired Retailer of Apparel, Accessories & Gifts ------------------------------------------------------------------------------------------- 16,179 --------- Consumer Goods/Services: Total 33,290 ------------------------------------------------------------------------------------------- Finance: 10.3% >Banks: 1.5% 158,125 Chittenden 4,364 Vermont & West Massachusetts Bank ------------------------------------------------------------------------------------------- >Finance Companies: 7.5% 551,500 AmeriCredit (b) 17,400 Auto Lending 590,000 World Acceptance (b) 4,307 Personal Loans ------------------------------------------------------------------------------------------- 21,707 >Savings & Loan: 0.1% 17,800 Anchor Bancorp Wisconsin 316 Wisconsin Thrift ------------------------------------------------------------------------------------------- >Insurance: 1.2% 40,000 Leucadia National 1,155 Insurance Holding Company 7,000 Markel (b) 1,258 Specialty Insurance 40,000 HCC Insurance Holdings 1,102 Aviation Insurance ------------------------------------------------------------------------------------------- 3,515 --------- Finance: Total 29,902 ------------------------------------------------------------------------------------------- Industrial Goods/Services: 7.2% >Industrial Materials: 1.2% 95,000 Spartech $1,952 Plastics Distribution & Compounding 53,000 Clarcor 1,439 Mobile & Industrial Filters ------------------------------------------------------------------------------------------- 3,391 >Machinery: 0.3% 32,900 Cuno (b) 1,003 Filtration & Fluids Clarification ------------------------------------------------------------------------------------------- >Industrial Services: 5.7% 422,500 Wackenhut, Cl. B (b) 8,044 Prison Management 346,000 Hub Group (b) 3,626 Truck & Rail Freight Forwarder 206,900 Insurance Auto Auctions (b) 3,002 Auto Salvage Services 75,000 Clark/Bardes Consulting (b) 1,892 Executive Compensation & Benefits Consulting ------------------------------------------------------------------------------------------- 16,564 --------- Industrial Goods/Services: Total 20,958 ------------------------------------------------------------------------------------------- Energy/Minerals: 7.8% >Oil Services: 1.9% 551,000 Newpark Resources (b) 4,353 Oilfield Fluid Management 70,000 FMC Technologies (b) 1,152 Deep Water Oil & Gas Well Head Manufacturer ------------------------------------------------------------------------------------------- 5,505 >Distribution/Marketing/Refining: 5.9% 360,800 Tesoro Petroleum (b) 4,730 Oil Refinery/Gas Reserves 122,600 Equitable Resources 4,177 Natural Gas Utility & Producer 193,000 Atmos Energy 4,101 Natural Gas Utility 80,400 Dynegy 2,050 Natural Gas & Electric Processing, Production & Marketing 115,000 Aquila (b) 1,967 Energy Trading ------------------------------------------------------------------------------------------- 17,025 --------- Energy/Minerals: Total 22,530 ------------------------------------------------------------------------------------------- Other Industries: 4.7% >Real Estate: 0.5% 47,000 The Rouse Company 1,377 Regional Shopping Malls ------------------------------------------------------------------------------------------- >Regulated Utilities: 4.2% 498,000 Conectiv 12,196 Electric Utility in New Jersey, Delaware & Maryland --------- Other Industries: Total 13,573 Total Common Stocks (Cost: $227,153): 92.6% 269,279
33 U Liberty Acorn USA >Statement of Investments, continued
Principal Amount (000) Value (000) ------------------------------------------------------------------------------------------- Short-Term Obligations: 7.0% Yield 1.70% - 1.85% Due 1/02 - 1/03/02 $ 10,463 Amgen Financial $10,462 979 Prudential Funding 9,769 ------------------------------------------------------------------------------------------- (Amortized Cost: $20,231) 20,231 Total Investments (Cost: $247,384)(a): 99.6% 289,510 Cash and Other Assets Less Liabilities: 0.4% 1,200 --------- Total Net Assets: 100% $290,710 ===========================================================================================
>Notes to Statement of Investments (a) At December 31, 2001, for federal Income tax purposes cost of investments is $247,596 and net unrealized appreciation was $41,914 consisting of gross unrealized appreciation of $71,597 and gross unrealized depreciation of $29,683. (b) Non-income producing security. U 34 Liberty Acorn Foreign Forty >Major Portfolio Changes in the Fourth Quarter
Number of Shares ----------------------------------- 09/30/01 12/31/01 Additions ------------------------------------------------------------------------------------------- Europe >United Kingdom Alliance Unichem 0 150,000 >Switzerland Givaudan 0 3,300 Sales ------------------------------------------------------------------------------------------- Asia >Japan Kao 75,000 40,000 ------------------------------------------------------------------------------------------- Other Countries >Canada Precision Drilling 80,000 0
35 F40 Liberty Acorn Foreign Forty >Statement of Investments December 31, 2001
Number of Shares Value (000) ------------------------------------------------------------------------------------------- Common Stocks: 100.2% ------------------------------------------------------------------------------------------- Europe: 64.7% >Germany: 8.9% 45,000 Rhoen-Klinikum $2,346 Hospital Management 39,000 Deutsche Boerse 1,546 Trading, Clearing & Settlement Services for Financial Markets 3,500 Henkel 197 Chemicals, Detergents & Non-Food Consumer Brands ------------------------------------------------------------------------------------------- 4,089 >Norway: 1.8% 49,000 Orkla 831 Consumer Goods & Chemicals Holding Company ------------------------------------------------------------------------------------------- >France/Belgium: 8.2% 13,500 Technip 1,804 Global Oil Engineering & Construction 24,800 RTL Group (Belgium) 975 TV & Radio Broadcaster 10,000 AGF 480 Life & Health Insurance 25,000 Euronext (b) 473 Trading, Clearing & Settlement Services for Financial Markets ------------------------------------------------------------------------------------------- 3,732 >United Kingdom/Ireland: 16.6% 160,000 Irish Life & Permanent (Ireland) 1,625 Life Insurance 210,000 Capita Group 1,494 Outsourcing Services 220,000 Smith & Nephew 1,329 Medical Equipment & Supplies 150,000 Alliance Unichem 1,133 Pharmaceutical Wholesaler & Retailer 170,000 Serco Group 891 Facilities Management 175,000 Anglo Irish Bank (Ireland) 678 Corporate Lending & Private Banking 10,000 Elan (Ireland) (b) 451 Specialty Drug Discovery And Delivery ------------------------------------------------------------------------------------------- 7,601 >Switzerland: 13.9% 2,920 Synthes-Stratec 2,035 Products for Orthopedic Surgery 965 Pargesa 1,908 Industrial & Media Conglomerate 3,300 Givaudan 1,006 Industrial Fragrances & Flavors 45,000 Cie Fin Richemont 837 Luxury Goods, Tobacco & Pay TV 1,700 Julius Baer Holding 574 Private Banking, Brokerage & Mutual Funds ------------------------------------------------------------------------------------------- 6,360 >Italy: 7.9% 200,000 Autogrill 1,855 Restaurants & Catering for Travelers 130,000 Banca Fideuram 1,041 Life Insurance & Mutual Funds 150,000 Saipem $735 Offshore Oil Construction & Drilling ------------------------------------------------------------------------------------------- 3,631 >Netherlands: 7.4% 82,921 TNT Post Group 1,795 Postal Service & Parcel Delivery 61,000 Fortis 1,582 Financial Services Conglomerate ------------------------------------------------------------------------------------------- 3,377 ---------- Europe: Total 29,621 ------------------------------------------------------------------------------------------- Asia: 22.1% >Hong Kong: 2.5% 1,000,000 Li & Fung 1,122 Sourcing of Consumer Goods ------------------------------------------------------------------------------------------- >Japan: 16.1% 10,800 Nintendo 1,882 Entertainment Software & Hardware 26,400 Oriental Land 1,806 Disney Theme Park Operator 17,500 Orix 1,560 Finance Leasing 40,000 KAO 828 Consumer Products 45,000 Banyu Pharmaceutical 666 Ethical Drug Producer 22,000 Konami 650 Entertainment Software ------------------------------------------------------------------------------------------- 7,392 >Tawain: 0.5% 25,000 United Microelectronics (b) 240 Semiconductor Foundry ------------------------------------------------------------------------------------------- >Singapore: 3.0% 2,122,200 Star Cruises (b) 796 Cruise Line 80,000 Venture Manufacturing 576 Electronic Manufacturing Services ------------------------------------------------------------------------------------------- 1,372 ---------- Asia: Total 10,126 ------------------------------------------------------------------------------------------- Other Countries: 13.4% >Australia: 3.4% 568,000 Computershare 1,531 Financial Software/Services ------------------------------------------------------------------------------------------- >Canada: 7.0% 89,100 Investors Group 1,427 Mutual Funds 34,600 Talisman Energy 1,315 Oil & Gas Producer 12,000 Celestica (b) 482 Electronic Manufacturing Services ------------------------------------------------------------------------------------------- 3,224
F40 36
Number of Shares Value (000) ------------------------------------------------------------------------------------------- >Israel: 3.0% 41,000 Amdocs (b) $1,393 Telecommunications Billing & Customer Care Software ---------- Other: Total 6,148 ---------- Total Common Stocks (Cost: $47,218)(a): 100.2% 45,895 Cash and Other Assets Less Liabilities: (0.2%) (90) ---------- Total Net Assets: 100% $45,805
-------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2001, for federal income tax purposes cost of investments is $48,682 and net unrealized depreciation was $2,787, consisting of gross unrealized appreciation of $5,423 and gross unrealized depreciation of $8,210. (b) Non-income producing security. (c) At December 31, 2001, $17,583 or 38.4% of the Fund's net assets was denominated in Euro currency. 37 F40 Liberty Acorn Foreign Forty >Portfolio Diversi/cation At December 31, 2001, the Fund's portfolio of investments as a percent of net assets was diversified as follows:
Including Cash Value (000) Percent ----------------------------------------------------------------------------------------- >Software & Services Transaction Processors $3,551 7.8% Business Software 1,393 3.0 ----------------------------------------------------------------------------------------- 4,944 10.8 >Computer Related Hardware Semiconductors and Related Equipment 240 0.5 Contract Manufacturing 1,058 2.3 ----------------------------------------------------------------------------------------- 1,298 2.8 >Media Television Broadcasting 975 2.1 ----------------------------------------------------------------------------------------- 975 2.1 >HealthCare Medical Equipment 3,363 7.3 Hospital Management 2,346 5.1 Pharmaceuticals 2,250 4.9 ----------------------------------------------------------------------------------------- 7,959 17.3 >Consumer Goods/Services Int'l Consumer Software 2,532 5.5 Nondurables 1,862 4.1 Restaurants 1,855 4.0 Furniture and Textiles 1,806 4.0 Other Consumer Services 1,795 3.9 Food 831 1.8 Cruise Lines 796 1.8 ----------------------------------------------------------------------------------------- 11,477 25.1 >Finance Insurance $3,687 8.1% Money Management 3,042 6.6 Other Finance Companies 1,560 3.4 Banks 678 1.5 ----------------------------------------------------------------------------------------- 8,967 19.6 >Industrial Goods/Services Outsourcing & Training Services 3,507 7.7 Conglomerates 1,908 4.2 Construction 1,804 3.9 Specialty Chemicals 1,006 2.2 ----------------------------------------------------------------------------------------- 8,225 18.0 >Energy/Minerals Oil/Gas Producers 1,315 2.9 Oil Services 735 1.6 ----------------------------------------------------------------------------------------- 2,050 4.5 Total Common Stocks and ------------------------------- Other Equity-Like Securities 45,895 100.2 Cash and Other Assets Less Liabilities (90) (0.2) ------------------------------- Net Assets $45,805 100.0% =========================================================================================
F40 38 Liberty Acorn Twenty >Major Portfolio Changes in the Fourth Quarter
Number of Shares ------------------------------------- 09/30/01 12/31/01 Additions ------------------------------------------------------------------------------------------- Information Cablevision Systems 0 89,000 Choicepoint 45,000 62,000 Comverse Technology 0 105,000 JD Edwards 0 225,000 Solectron 0 150,000 ------------------------------------------------------------------------------------------- Finance Markel 0 23,000 SEI Investments 42,000 53,000 ------------------------------------------------------------------------------------------- Industrial Goods/Services Expeditors International of Washington 85,000 90,000 Sales ------------------------------------------------------------------------------------------- Information Telephone & Data Systems 20,000 0 ------------------------------------------------------------------------------------------- Consumer Goods/ Services Callaway Golf 180,000 0 ------------------------------------------------------------------------------------------- Finance AmeriCredit 60,000 0
39 20 Liberty Acorn Twenty >Statement of Investments December 31, 2001
Number of Shares Value (000) ------------------------------------------------------------------------------------------- Common Stocks: 93.0% ------------------------------------------------------------------------------------------- Information: 35.4% >Television Programming: 8.3% 89,000 Cablevision Systems (b) $4,223 NYC Area CATV Franchises 290,000 Liberty Media Group, AT&T (b) 4,060 CATV Programming & Media Company Holdings ------------------------------------------------------------------------------------------- 8,283 >Instrumentation: 5.4% 75,000 Waters (b) 2,906 Chromatography, Mass Spectrometry, Thermal Analysis 95,000 Tektronix (b) 2,449 Analytical Instruments ------------------------------------------------------------------------------------------- 5,355 >Telecommunications: 2.4% 105,000 Comverse Technology (b) 2,349 Voicemail & Related Systems ------------------------------------------------------------------------------------------- >Contract Manufacturing: 1.7% 150,000 Solectron (b) 1,692 Electronic Manufacturing Services ------------------------------------------------------------------------------------------- >Gaming Equipment: 3.4% 50,000 International Game Technology (b) 3,415 Slot Machines & Progressive Jackpots ------------------------------------------------------------------------------------------- >Business Software: 3.7% 225,000 JD Edwards (b) 3,701 Mid Market ERP & Supply Chain Software ------------------------------------------------------------------------------------------- >Business Information: 10.5% 165,000 H & R Block 7,376 Tax Preparation 62,000 Choicepoint (b) 3,143 Fraud Protection Information ------------------------------------------------------------------------------------------- 10,519 ---------- Information: Total 35,314 ------------------------------------------------------------------------------------------- Health Care: 22.4% >Medical Equipment: 9.7% 400,000 Boston Scientific (b) 9,648 Stents & Catheters ------------------------------------------------------------------------------------------- >Pharmaceuticals: 5.1% 185,000 Immunex (b) 5,126 Drugs For Autoimmune Diseases, Cancer ------------------------------------------------------------------------------------------- >Hospital/Laboratory Supplies: 3.1% 84,000 Techne (b) 3,096 Cytokines, Antibodies, Other Reagents for Life Sciences ------------------------------------------------------------------------------------------- >Services: 4.5% 180,000 First Health Group (b) $4,453 PPO Network ---------- Health Care: Total 22,323 ------------------------------------------------------------------------------------------- Consumer Goods/Services: 11.9% >Leisure Vehicles: 4.6% 85,000 Harley-Davidson 4,616 Motorcycles & Related Merchandise ------------------------------------------------------------------------------------------- >Furniture & Manufacturers: 7.3% 105,000 Jones Apparel (b) 3,483 Women's Apparel 160,000 Herman Miller 3,786 Office Furniture ------------------------------------------------------------------------------------------- 7,269 ---------- Consumer Goods/Services: Total 11,885 ------------------------------------------------------------------------------------------- Finance: 15.8% >Banks: 9.3% 150,000 Associated Banc-Corp 5,293 Midwest Bank 82,000 TCF Financial 3,934 Great Lakes Bank ------------------------------------------------------------------------------------------- 9,227 >Insurance: 4.1% 23,000 Markel (b) 4,132 Specialty Insurance ------------------------------------------------------------------------------------------- >Money Management: 2.4% 53,000 SEI Investments 2,391 Mutual Fund Administration & Investment Management ---------- Finance: Total 15,750 ------------------------------------------------------------------------------------------- Industrial Goods/Services: 5.1% >Logistics: 5.1% 90,000 Expeditors International of Washington 5,126 International Freight Forwarder ---------- Industrial Goods/Services: Total 5,126 ------------------------------------------------------------------------------------------- Energy/Minerals: 2.4% >Distribution/Marketing/Refining: 2.4% 92,000 Dynegy 2,346 Energy Trading & Generation ---------- Energy/Minerals: Total 2,346 ---------- Total Common Stocks (Cost: $69,698): 93.0% 92,744
20 40
Number of Shares Value (000) ------------------------------------------------------------------------------------------- Short-Term Obligations: 6.7% Yield 1.70% - 1.85% Due 1/2 - 1/3/02 $ 3,674 Prudential Funding $3,674 2,237 Amgen Financial 2,236 802 Amgen 802 ------------------------------------------------------------------------------------------- (Amortized Cost: $ 6,712) 6,712 ---------- Total Investments: 99.7% 99,456 (Cost: $76,410)(a) Cash and Other Assets Less Liabilities: 0.3% $273 ---------- Total Net Assets: 100% $99,729 ===========================================================================================
-------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2001, for federal income tax purposes cost of investments is $76,412 and net unrealized appreciation was $23,044, consisting of gross unrealized appreciation of $24,502 and gross unrealized depreciation of $1,458. (b) Non-income producing security. 41 20 Liberty Acorn Family of Funds >Statements of Assets and Liabilities
Liberty Liberty Liberty Acorn Acorn Acorn December 31, 2001 Fund International USA ------------------------------------------------------------------------------------------------------------ (in thousands) Assets Investments, at value (cost: Acorn Fund $3,318,021; Acorn International $1,604,205; Acorn USA $247,384; Acorn Foreign Forty $47,218; Acorn Twenty $76,410) $4,940,767 $1,671,572 $289,510 Cash 3,742 -- 1 -- Foreign currency (cost: Acorn International $19,054) -- 17,157 -- Receivable for: Investments sold 7,689 608 -- Fund shares sold 25,587 4,221 1,781 Dividends and interest 2,250 3,092 12 Expense reimbursement due for Class A, B and C from Advisor -- -- -- Deferred Trustees' Compensation Plan 725 401 52 Other assets 49 20 3 ------------------------------------------------------------------------------------------------------------ Total Assets 4,980,809 1,697,071 291,359 Liabilities Foreign currency (cost: Acorn Fund $487; Acorn Forty $395) 420 -- -- Payable for: Investments purchased 7,619 5,309 -- Fund shares repurchased 7,913 12,306 520 Custodian -- 7,973 -- Management fee 21 -- -- Administration fee 2 -- -- Deferred Trustees' Fees 725 401 52 Transfer agent fee 432 106 29 Other liabilities 313 540 48 ------------------------------------------------------------------------------------------------------------ Total Liabilities 17,445 26,635 649 ------------------------------------------------------------------------------------------------------------ Net Assets $4,963,364 $1,670,436 $290,710 ============================================================================================================ Composition of Net Assets Paid in capital $3,342,933 $1,744,998 $250,601 Undistributed net investment income (Accumulated net investment loss or Overdistributed net investment income) (420) 5,051 (52) Accumulated net realized gain (loss) (1,962) (137,074) (1,965) Net unrealized appreciation (depreciation) on: Investments (net of unrealized PFIC gains of $8,026 for Liberty Acorn International and $385 for Liberty Acorn Foreign Forty) 1,622,746 59,340 42,126 Foreign currency transactions 67 (1,879) -- ------------------------------------------------------------------------------------------------------------ Net Assets $4,963,364 $1,670,436 $290,710 ============================================================================================================ Net asset value and redemption price per share - Class A (a) $17.80 $18.35 $17.50 (net assets/shares) ($306,405/17,215) ($25,587/1,394) ($20,455/1,169) Maximum offering price per share - Class A (b) $18.89 $19.47 $18.57 (net assets/shares) ($17.80/.9425) ($18.35/.9425) ($17.50/.9425) Net asset value and offering price per share - Class B (a) $17.67 $18.22 $17.40 (net assets/shares) ($286,422/16,211) ($17,235/946) ($27,722/1,593) Net asset value and offering price per share - Class C (a) $17.66 $18.21 $17.40 (net assets/shares) ($150,727/8,533) ($14,327/787) ($13,049/750) Net asset value, offering price and redemption price per share - Class Z $17.88 $18.47 $17.52 (net assets/shares) ($4,219,810/235,941) ($1,613,287/87,323) ($229,484/13,096) Liberty Liberty Acorn Acorn December 31, 2001 Foreign Forty Twenty ---------------------------------------------------------------------------------- (in thousands) Assets Investments, at value (cost: Acorn Fund $3,318,021; Acorn International $1,604,205; Acorn USA $247,384; Acorn Foreign Forty $47,218; Acorn Twenty $76,410) $45,895 $99,456 Cash 3,742 -- Foreign currency (cost: Acorn International $19,054) -- -- Receivable for: Investments sold 3,506 -- Fund shares sold 317 1,304 Dividends and interest 99 32 Expense reimbursement due for Class A, B and C from Advisor -- 41 Deferred Trustees' Compensation Plan -- -- Other assets -- 7 ---------------------------------------------------------------------------------- Total Assets 49,817 100,840 Liabilities Foreign currency (cost: Acorn Fund $487; Acorn Forty $395) 401 -- Payable for: Investments purchased 1,741 712 Fund shares repurchased 1,126 358 Custodian 700 -- Management fee -- -- Administration fee -- -- Deferred Trustees' Fees -- -- Transfer agent fee 8 12 Other liabilities 36 29 ---------------------------------------------------------------------------------- Total Liabilities 4,012 1,111 ---------------------------------------------------------------------------------- Net Assets $45,805 $99,729 ================================================================================== Composition of Net Assets Paid in capital $78,214 $76,736 Undistributed net investment income (Accumulated net investment loss or Overdistributed net investment income) (16) (9) Accumulated net realized gain (loss) (30,689) (44) Net unrealized appreciation (depreciation) on: Investments (net of unrealized PFIC gains of $8,026 for Liberty Acorn International and $385 for Liberty Acorn Foreign Forty) (1,708) 23,046 Foreign currency transactions 4 -- ---------------------------------------------------------------------------------- Net Assets $45,805 $99,729 ================================================================================== Net asset value and redemption price per share - Class A (a) $12.07 $15.17 (net assets/shares) ($2,861/237) ($11,900/785) Maximum offering price per share - Class A (b) $12.81 $16.10 (net assets/shares) ($12.07/.9425) ($15.17/.9425) Net asset value and offering price per share - Class B (a) $11.96 $15.05 (net assets/shares) ($2,069/173) ($13,358/887) Net asset value and offering price per share - Class C (a) $11.97 $15.05 (net assets/shares) ($3,885/325) ($4,945/329) Net asset value, offering price and redemption price per share - Class Z $12.09 $15.23 (net assets/shares) ($36,990/3,060) ($69,526/4,566)
(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 accompanying notes to financial statements A I U F40 20 42 Liberty Acorn Family of Funds >Statements of Operations For the Year Ended December 31, 2001
Liberty Liberty Liberty Liberty Liberty Acorn Acorn Acorn Acorn Acorn (in thousands) Fund International USA Foreign Forty Twenty ---------------------------------------------------------------------------------------------------------------------------------- Investment Income: Dividend income $33,146 $25,494 $1,220 $909 $481 Interest income 14,157 11,394 591 243 279 ---------------------------------------------------------------------------------------------------------------------------------- 47,303 36,888 1,811 1,152 760 Foreign taxes withheld (401) (2,816) -- (107) -- Total Investment Income 46,902 34,072 1,811 1,045 760 Expenses: Management fees 29,187 16,504 2,382 877 748 Administration fee 2,141 1,017 127 46 42 12b-1 Service & Distribution fees 2,270 320 183 80 135 Custody fees 535 1,580 22 85 8 Transfer agent fee 2,355 1,501 240 128 166 Trustees' fee 347 177 29 4 3 Registration and blue sky 203 113 91 109 98 Legal and audit 209 159 50 40 35 Reports to shareholders 527 284 79 60 61 Other expenses 313 386 18 28 13 ---------------------------------------------------------------------------------------------------------------------------------- Total expenses 38,087 22,041 3,221 1,457 1,309 Less custodian fees paid indirectly (16) (12) (1) (2) -- Less reimbursement of expenses by advisor -- -- -- (36) (53) ---------------------------------------------------------------------------------------------------------------------------------- Net Expenses 38,071 22,029 3,220 1,419 1,256 Net Investment Income (Loss) 8,831 12,043 (1,409) (374) (496) Net Realized and Unrealized Gain (Loss) on Portfolio Positions: Net realized gain (loss) on: Investments 25,222 (139,971) 7,406 (30,354) 823 Closed futures 455 -- -- -- -- Foreign currency transactions 23 (663) -- (80) -- ---------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) 25,700 (140,634) 7,406 (30,434) 823 ================================================================================================================================== Net change in net unrealized appreciation/ depreciation on: Investments 243,958 (373,782) 31,876 (9,203) 6,110 Foreign currency transactions 55 (1,548) -- 68 -- ---------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation/depreciation 244,013 (375,330) 31,876 (9,135) 6,110 ================================================================================================================================== Net realized and unrealized gain (loss) 269,713 (515,964) 39,282 (39,569) 6,933 ---------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets resulting from Operations $278,544 $(503,921) $37,873 $(39,943) $6,437 ==================================================================================================================================
See accompanying notes to financial statements 43 A I U F40 20 Liberty Acorn Family of Funds >Statements of Changes in Net Assets
Liberty Liberty Acorn Acorn Fund International Year ended Year ended Year ended Year ended Increase (Decrease) in Net Assets December 31, December 31, December 31, December 31, ------------------------------------------------------------------------------------------------------------------------------ (in thousands) 2001 2000 (a) 2001 2000 (a) Operations: Net investment income (loss) $8,831 $21,303 $12,043 $516 Net realized gain (loss) on investments, forward foreign currency contracts, futures and foreign currency transactions 25,700 509,888 (140,634) 496,680 Change in net unrealized appreciation (depreciation) of investments, forward foreign currency contracts and foreign currency transactions 244,013 (159,291) (375,330) (1,142,570) ------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) from Operations 278,544 371,900 $(503,921) (645,374) Distribution to Shareholders From: Net investment income - Class A -- (13) -- -- Net realized gain - Class A (2,844) (386) (398) (293) Net investment income - Class B -- (16) -- -- Net realized gain - Class B (2,637) (470) (273) (212) Net investment income - Class C -- (7) -- -- Net realized gain - Class C (1,296) (207) (230) (135) Net investment income - Class Z (8,940) (23,731) -- (57,949) Net realized gain - Class Z (80,989) (604,477) (38,229) (377,896) In excess of net investment income - Class Z -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------ Total Distribution to Shareholders (96,706) (629,307) (39,130) (436,485) Share Transactions: Subscriptions - Class A 307,484 18,736 239,039 22,009 Distributions reinvested - Class A 2,629 386 334 281 Redemptions - Class A (37,092) (1,351) (220,639) (11,648) ------------------------------------------------------------------------------------------------------------------------------ Net Increase - Class A 273,021 17,771 18,734 10,642 Subscriptions - Class B 273,803 15,388 18,727 5,846 Distributions reinvested - Class B 2,424 424 231 193 Redemptions - Class B (15,884) (224) (3,880) (53) ------------------------------------------------------------------------------------------------------------------------------ Net Increase - Class B 260,343 15,588 15,078 5,986 Subscriptions - Class C 151,838 8,646 46,327 6,240 Distributions reinvested - Class C 1,220 186 199 105 Redemptions - Class C (16,911) (588) (33,605) (2,205) ------------------------------------------------------------------------------------------------------------------------------ Net Increase - Class C 136,147 8,244 12,921 4,140 Subscriptions - Class Z 634,962 679,209 855,561 1,638,922 Distributions reinvested - Class Z 81,436 570,322 35,680 402,800 Redemptions - Class Z (630,511) (928,438) (1,203,599) (1,369,722) ------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class Z 85,887 321,093 (312,358) 672,000 Net Increase (Decrease) from Share Transactions 755,398 362,696 (265,625) 692,768 Total Increase (Decrease) in Net Assets 937,236 105,289 (808,676) (389,091) Net Assets: Beginning of period 4,026,128 3,920,839 2,479,112 2,868,203 ------------------------------------------------------------------------------------------------------------------------------ End of period $4,963,364 $4,026,128 $1,670,436 $2,479,112 ============================================================================================================================== Undistributed Net Investment Income (Accumulated Net Investment Loss or Overdistributed Net Investment Income) $(420) -- $5,051 ($332) ============================================================================================================================== Liberty Liberty Acorn Acorn USA Foreign Forty Year ended Year ended Year ended Year ended Increase (Decrease) in Net Assets December 31, December 31, December 31, December 31, -------------------------------------------------------------------------------------------------------------------------------- (in thousands) 2001 2000 (a) 2001 2000 (a) Operations: Net investment income (loss) $(1,409) $(968) $(374) $(595) Net realized gain (loss) on investments, forward foreign currency contracts, futures and foreign currency transactions 7,406 (2,868) (30,434) 5,790 Change in net unrealized appreciation (depreciation) of investments, forward foreign currency contracts and foreign currency transactions 31,876 (37,432) (9,135) (30,276) ------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) from Operations 37,873 (41,268) (39,943) (25,081) Distribution to Shareholders From: Net investment income - Class A -- -- (3) -- Net realized gain - Class A (155) -- (23) -- Net investment income - Class B -- -- (2) -- Net realized gain - Class B (181) -- (13) -- Net investment income - Class C -- -- (5) -- Net realized gain - Class C (90) -- (30) -- Net investment income - Class Z -- (150) (66) (221) Net realized gain - Class Z (3,172) (7,066) (441) (765) In excess of net investment income - Class Z -- -- -- (43) ------------------------------------------------------------------------------------------------------------------------------ Total Distribution to Shareholders (3,598) (7,216) (583) (1,029) Share Transactions: Subscriptions - Class A 32,901 824 56,509 3,394 Distributions reinvested - Class A 144 -- 23 -- Redemptions - Class A (13,214) (81) (55,501) (142) ------------------------------------------------------------------------------------------------------------------------------ Net Increase - Class A 19,831 743 1,031 3,252 Subscriptions - Class B 31,389 1,145 2,027 1,583 Distributions reinvested - Class B 155 -- 13 -- Redemptions - Class B (4,458) (474) (778) (24) ------------------------------------------------------------------------------------------------------------------------------ Net Increase - Class B 27,086 671 1,262 1,559 Subscriptions - Class C 14,042 670 8,387 3,545 Distributions reinvested - Class C 84 -- 11 -- Redemptions - Class C (1,321) (352) (6,283) (201) ------------------------------------------------------------------------------------------------------------------------------ Net Increase - Class C 12,805 318 2,115 3,344 Subscriptions - Class Z 83,357 92,331 146,755 258,241 Distributions reinvested - Class Z 3,020 7,066 450 971 Redemptions - Class Z (113,912) (199,825) (202,928) (210,962) ------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class Z (27,535) (100,428) (55,723) 48,250 Net Increase (Decrease) from Share Transactions 32,187 (98,696) (51,315) 56,405 Total Increase (Decrease) in Net Assets 66,462 (147,180) (91,841) 30,295 Net Assets: Beginning of period 224,248 371,428 137,646 107,351 ------------------------------------------------------------------------------------------------------------------------------ End of period $290,710 $224,248 $45,805 $137,646 ============================================================================================================================== Undistributed Net Investment Income (Accumulated Net Investment Loss or Overdistributed Net Investment Income) $(52) ($42) $(16) $76 ============================================================================================================================== Liberty Acorn Twenty Year ended Year ended Increase (Decrease) in Net Assets December 31, December 31, ------------------------------------------------------------------------------------------------------ (in thousands) 2001 2000 (a) Operations: Net investment income (loss) $(496) $(344) Net realized gain (loss) on investments, forward foreign currency contracts, futures and foreign currency transactions 823 1,280 Change in net unrealized appreciation (depreciation) of investments, forward foreign currency contracts and foreign currency transactions 6,110 5,498 ------------------------------------------------------------------------------------------------------ Net Increase (Decrease) from Operations 6,437 6,434 Distribution to Shareholders From: Net investment income - Class A -- -- Net realized gain - Class A (21) (11) Net investment income - Class B -- -- Net realized gain - Class B (23) (18) Net investment income - Class C -- -- Net realized gain - Class C (9) (6) Net investment income - Class Z -- -- Net realized gain - Class Z (135) (4,826) In excess of net investment income - Class Z -- -- ------------------------------------------------------------------------------------------------------ Total Distribution to Shareholders (188) (4,861) Share Transactions: Subscriptions - Class A 11,048 3,774 Distributions reinvested - Class A 19 9 Redemptions - Class A (3,166) (585) ------------------------------------------------------------------------------------------------------ Net Increase - Class A 7,901 3,198 Subscriptions - Class B 10,371 4,172 Distributions reinvested - Class B 21 19 Redemptions - Class B (2,066) (16) ------------------------------------------------------------------------------------------------------ Net Increase - Class B 8,326 4,175 Subscriptions - Class C 3,892 1,053 Distributions reinvested - Class C 8 5 Redemptions - Class C (389) (3) ------------------------------------------------------------------------------------------------------ Net Increase - Class C 3,511 1,055 Subscriptions - Class Z 11,389 16,851 Distributions reinvested - Class Z 128 4,613 Redemptions - Class Z (12,911) (24,799) ------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class Z (1,394) (3,335) Net Increase (Decrease) from Share Transactions 18,344 5,093 Total Increase (Decrease) in Net Assets 24,593 6,666 Net Assets: Beginning of period 75,136 68,470 ------------------------------------------------------------------------------------------------------ End of period $99,729 $75,136 ====================================================================================================== Undistributed Net Investment Income (Accumulated Net Investment Loss or Overdistributed Net Investment Income) $(10) ($6) ======================================================================================================
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. See accompanying notes to financial statements 44 & 45 A I U F40 20 Liberty Acorn Family of Funds >Statements of Changes in Net Assets continued
Liberty Liberty Acorn Acorn Fund International Year ended Year ended Year ended Year ended Changes in Shares of Beneficial Interest: December 31, December 31, December 31, December 31, -------------------------------------------------------------------------------------------------------------------------------- (in thousands) 2001 2000 (a) 2001 2000 (a) Number of Fund Shares of Beneficial Interest: Subscriptions - Class A 18,209 1,120 12,434 903 Shares issued in reinvestment and capital gains - Class A 146 24 16 11 Less shares redeemed - Class A (2,202) (82) (11,489) (481) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class A 16,153 1,062 961 433 Subscriptions - Class B 16,110 916 900 232 Shares issued in reinvestment and capital gains - Class B 135 27 11 8 Less shares redeemed - Class B (963) (14) (203) (2) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class B 15,282 929 708 238 Subscriptions - Class C 8,969 519 2,305 249 Shares issued in reinvestment and capital gains - Class C 68 13 10 5 Less shares redeemed - Class C (1,000) (36) (1,695) (87) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class C 8,037 496 620 167 Subscriptions - Class Z 37,199 37,462 42,524 49,035 Shares issued in reinvestment and capital gains - Class Z 4,491 34,165 1,705 15,422 Less shares redeemed - Class Z (37,172) (51,822) (60,018) (42,523) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 4,518 19,805 (15,789) 21,934 -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 43,990 22,292 (13,500) 22,772 -------------------------------------------------------------------------------------------------------------------------------- Liberty Liberty Acorn Acorn USA Foreign Forty Year ended Year ended Year ended Year ended Changes in Shares of Beneficial Interest: December 31, December 31, December 31, December 31, -------------------------------------------------------------------------------------------------------------------------------- (in thousands) 2001 2000 (a) 2001 2000 (a) Number of Fund Shares of Beneficial Interest: Subscriptions - Class A 1,880 59 4,477 193 Shares issued in reinvestment and capital gains - Class A 9 -- 2 -- Less shares redeemed - Class A (774) (5) (4,427) (8) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class A 1,115 54 52 185 Subscriptions - Class B 1,815 81 145 92 Shares issued in reinvestment and capital gains - Class B 9 -- 1 -- Less shares redeemed - Class B (277) (35) (64) (1) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class B 1,547 46 82 91 Subscriptions - Class C 800 48 652 210 Shares issued in reinvestment and capital gains - Class C 5 -- 1 -- Less shares redeemed - Class C (78) (25) (526) (12) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class C 727 23 127 198 Subscriptions - Class Z 4,826 6,133 10,085 12,956 Shares issued in reinvestment and capital gains - Class Z 179 509 32 48 Less shares redeemed - Class Z (6,839) (13,882) (14,609) (10,839) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z (1,834) (7,240) (4,492) 2,165 -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 1,555 (7,117) (4,231) 2,639 -------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn Twenty Year ended Year ended Changes in Shares of Beneficial Interest: December 31, December 31, --------------------------------------------------------------------------------------------- (in thousands) 2001 2000 (a) Number of Fund Shares of Beneficial Interest: Subscriptions - Class A 778 272 Shares issued in reinvestment and capital gains - Class A 1 1 Less shares redeemed - Class A (225) (42) --------------------------------------------------------------------------------------------- Net Increase - Class A 554 231 Subscriptions - Class B 736 301 Shares issued in reinvestment and capital gains - Class B 1 1 Less shares redeemed - Class B (151) (1) --------------------------------------------------------------------------------------------- Net Increase - Class B 586 301 Subscriptions - Class C 281 76 Shares issued in reinvestment and capital gains - Class C 1 1 Less shares redeemed - Class C (29) (1) --------------------------------------------------------------------------------------------- Net Increase - Class C 253 76 Subscriptions - Class Z 812 1,239 Shares issued in reinvestment and capital gains - Class Z 9 346 Less shares redeemed - Class Z (965) (1,871) --------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z (144) (286) --------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 1,249 322 ---------------------------------------------------------------------------------------------
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. See accompanying notes to financial statements 46 & 47 A I U F40 20 Liberty Acorn Family of Funds >Financial Highlights
Liberty Acorn Fund Class Z Years ended December 31, --------------------------------------------------------------------------------------------------------------------------------- Selected data for a share outstanding throughout each period 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Period $17.21 $18.53 $16.85 $16.99 $15.04 Income from Investment Operations Net investment income (a) .05 .10 .09 .04 .15 Net realized and unrealized gain 1.01 1.55 5.22 .91 3.57 --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 1.06 1.65 5.31 .95 3.72 Less Distributions Declared to Shareholders From net investment income (.04) (.11) (.09) (.03) (.16) From net realized gains (.35) (2.86) (3.54) (1.06) (1.61) ================================================================================================================================= Total Distributions Declared to Shareholders (.39) (2.97) (3.63) (1.09) (1.77) Net Asset Value, End of Period $17.88 $17.21 $18.53 $16.85 $16.99 ================================================================================================================================= Total Return (b) 6.14% 10.06% 33.40% 6.00% 25.00% ================================================================================================================================= Ratios to Average Net Assets Expenses (c) .82% .83% .85% .84% .56% Net investment income (c) .28% .55% .49% .30% .75% Portfolio turnover rate 20% 29% 34% 24% 32% Net assets at end of period (in millions) $4,220 $3,983 $3,921 $3,549 $3,681
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) The benefits derived from custody fees paid indirectly had no impact.
Liberty Acorn International Class Z Years ended December 31, --------------------------------------------------------------------------------------------------------------------------------- Selected data for a share outstanding throughout each period 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Period $23.85 $35.33 $20.82 $18.39 $19.61 Income from Investment Operations Net investment income (a) .12 .01 .83 .17 .40 Net realized and unrealized gain (loss) (5.11) (6.73) 15.45 2.68 (.34) --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations (4.99) (6.72) 16.28 2.85 .06 Less Distributions Declared to Shareholders From net investment income -- (.66) (.22) (.15) (.38) From net realized gains (.39) (4.10) (1.55) (.27) (.90) ================================================================================================================================= Total Distributions Declared to Shareholders (.39) (4.76) (1.77) (.42) (1.28) Net Asset Value, End of Period $18.47 $23.85 $35.33 $20.82 $18.39 ================================================================================================================================= Total Return (b) (21.11)% (20.02)% 79.20% 15.40% 0.20% ================================================================================================================================= Ratios to Average Net Assets Expenses (c) 1.06% 1.05% 1.11% 1.12% 1.19% Net investment income (c) .62% .02% .12% .86% .58% Portfolio turnover rate 45% 63% 46% 37% 39% Net assets at end of period (in millions) $1,613 $2,459 $2,868 $1,725 $1,623
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) The benefits derived from custody fees paid indirectly had no impact.
Liberty Acorn USA Class Z Years ended December 31, --------------------------------------------------------------------------------------------------------------------------------- Selected data for a share outstanding throughout each period 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Period $14.90 $16.75 $14.80 $15.12 $11.65 Income from Investment Operations Net investment income (loss) (a) (.08) (.05) .00(b) (.07) (.07) Net realized and unrealized gain (loss) 2.94 (1.48) 3.32 .87 3.83 --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.86 (1.53) 3.32 .80 3.76 Less Distributions Declared to Shareholders From net investment income -- (.00)(b) -- -- -- From net realized gains (.24) (.32) (1.37) (1.12) (.29) ================================================================================================================================= Total Distributions Declared to Shareholders (.24) (.32) (1.37) (1.12) (.29) Net Asset Value, End of Period $17.52 $14.90 $16.75 $14.80 $15.12 ================================================================================================================================= Total Return (c) 19.25% (8.99%) 23.00% 5.80% 32.30% ================================================================================================================================= Ratios to Average Net Assets Expenses (d) 1.17% 1.15% 1.15% 1.20% 1.35% Net investment income (loss)(d) (.46)% (.32%) .00%(e) (.42%) (.49%) Portfolio turnover rate 24% 45% 49% 42% 33% Net assets at end of period (in millions) $229 $222 $371 $281 $185
(a) Per share was based upon the average shares outstanding during each period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) The benefits derived from custody fees paid indirectly had no impact. (e) Rounds to less than 0.01%. See accompanying notes to financial statements 48 & 49 A I U F40 20 Liberty Acorn Family of Funds >Financial Highlights
Inception November 23 through Liberty Acorn Foreign Forty Class Z Years ended December 31, December 31, -------------------------------------------------------------------------------------------------------------------------------- Selected data for a share outstanding throughout each period 2001 2000 1999 1998 Net Asset Value, Beginning of Period $17.15 $19.93 $11.00 $10.00 Income from Investment Operations Net investment loss (a) (.05) (.11) (.02) (.01) Net realized and unrealized gain (loss) (4.92) (2.53) 8.98 1.01 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations (4.97) (2.64) 8.96 1.00 Less Distributions Declared to Shareholders From net investment income (.01) (.04) -- -- From net realized gains (.08) (.10) (.03) -- -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (.09) (.14) (.03) -- Net Asset Value, End of Period $12.09 $17.15 $19.93 $11.00 ================================================================================================================================ Total Return (b) (29.05)%(c) (13.35)% 81.60%(c) 10.00%(c)(d) ================================================================================================================================ Ratios to Average Net Assets Expenses 1.45%(e) 1.33%(e) 1.48%(f) 1.73%(f)(g) Net investment loss (.32%)(e) (.42%)(e) (.17%)(f) (.78%)(f)(g) Reimbursement .01% -- .09% .97%(g) Portfolio turnover rate 82% 79% 60% 90%(g) Net assets at end of period (in millions) $37 $130 $107 $16
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Had the Advisor not reimbursed a portion of expenses, total return would have been reduced. (d) Not annualized. (e) The benefits derived from custody fees paid indirectly had no impact. (f) In accordance with a requirement of the Securities and Exchange Commission, the ratios reflect total expenses prior to the reduction of custody fees for cash balances it maintains with the custodian ("custody fees paid indirectly"). The ratios of expenses to average daily net assets net investment income to average daily net assets net of custody fees paid indirectly would have been 1.45% and (0.14%), respectively for the year ended December 31, 1999, and 1.45% and (0.50%), respectively for the period ended December 31, 1998. (g) Annualized.
Inception November 23 through Liberty Acorn Twenty Class Z Years ended December 31, December 31, -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- Selected data for a share outstanding throughout each period 2001 2000 1999 1998 Net Asset Value, Beginning of Period $14.13 $13.70 $10.71 $10.00 Income from Investment Operations Net investment income (loss) (a) (.05) (.07) (.08) 0.00(g) Net realized and unrealized gain 1.18 1.59 3.21 .71 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 1.13 1.52 3.13 .71 Less Distributions Declared to Shareholders From net investment income -- (.01) -- -- From net realized gains (.03) (1.08) (.14) -- -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (.03) (1.09) (.14) -- Net Asset Value, End of Period $15.23 $14.13 $13.70 $10.71 ================================================================================================================================ Total Return (b) 8.00%(c) 11.68% 29.30%(c) 7.10%(c)(d) ================================================================================================================================ Ratios to Average Net Assets Expenses 1.35% 1.34%(e) 1.37%(e) 1.41%(e)(f) Net investment income (loss) (.44%) (.52%)(e) (.62%)(e) .22%(e)(f) Reimbursement .03% -- .04% .42%(f) Portfolio turnover rate 82% 116% 101% 173%(f) Net assets at end of period (in millions) $70 $67 $68 $34
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Had the Advisor not reimbursed a portion of expenses, total return would have been reduced. (d) Not annualized. (e) In accordance with a requirement of the Securities and Exchange Commission, the ratios reflect total expenses prior to the reduction of custody fees for cash balances it maintains with the custodian ("custody fees paid indirectly"). The ratios of expenses to average daily net assets and net investment income to average daily net assets net of custody fees paid indirectly would have been 1.32% and (0.50%), respectively for the year ended December 31, 2000, 1.35% and (0.60%), respectively for the year ended December 31, 1999, and 1.35% and 0.28% for the period ended December 31, 1998. (f) Annualized. (g) Rounds to less than $0.01 per share. See accompanying notes to financial statements A I U F40 20 50 Liberty Acorn Family of Funds >Notes to Financial Statements 1. Nature of Operations Liberty Acorn Fund (formerly Acorn Fund), Liberty Acorn International (formerly Acorn International), Liberty Acorn USA (formerly Acorn USA), Liberty Acorn Foreign Forty (formerly Acorn Foreign Forty) and Liberty Acorn Twenty (formerly Acorn Twenty) (the "Funds") are series of Liberty Acorn Trust (the "Trust"), an open-end management investment company organized as a Massachusetts business trust. The investment objective of each Fund is to seek long-term growth of capital. The Funds may issue an unlimited number of shares. Effective October 16, 2000, the Funds began offering Class A, Class B and Class C shares. The Funds offer four classes of shares: Class A, Class B, Class C and Class Z. Class A shares are sold with a front-end sales charge. A contingent deferred sales charge is assessed to Class A shares purchased without an initial sales charge on redemptions made within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to an annual distribution fee and a contingent deferred sales charge. Class B shares will convert to Class A shares in three, four or eight years after purchase, depending on the program under which shares are purchased. Class C shares are subject to a contingent deferred sales charge on redemptions made within one year after purchase and an annual distribution fee. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares. The financial highlights for Class A, Class B and Class C shares are presented in a separate annual report. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are borne pro rata on the basis of the relative net assets of all classes, except each class bears certain expenses unique to that class such as distribution services, transfer agent, and certain other class specific expenses. Differences in class expenses may result in payment of different dividend distributions for each class. All the share classes of the Trust have equal rights with respect to voting subject to class specific arrangements. 2. Significant Accounting Policies >Security valuation Investments are stated at current value. Securities traded on securities exchanges or in over-the-counter markets in which transaction prices are reported are valued at the last sales price at the time of valuation. Securities for which there are no reported sales on the valuation date are valued at the latest bid quotation. Money market instruments having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis. Securities for which quotations are not available and any other assets are valued at a fair value as determined in good faith by the Board of Trustees. >Foreign currency translations Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and dividend and interest income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The gain or loss resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate. >Security transactions and investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information is available to the Funds. Interest income is recorded on the accrual basis and includes amortization of discounts on money market instruments and long-term debt instruments when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. >Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. >Financial instruments Each Fund may purchase or sell exchange-traded financial futures contracts, which are contracts that obligate that Fund to make or take delivery of a financial instrument or the cash value of a securities index at a specified future date at a specified price. The Funds enter into such contracts to hedge a portion of their portfolio. Gains and losses are reflected as "Net Realized Gain (Loss) on Futures" in the Statements of Operations. Additionally, each Fund may engage in portfolio hedging with respect to changes in foreign currency exchange rates by entering into forward foreign currency contracts to purchase or sell foreign currencies. The Statements of Operations reflect gains and losses as realized for closed forward foreign 51 A I U F40 20 currency contracts and unrealized for open contracts. The Funds bear the market risk that arises from changes in the value of financial instruments and securities indices (futures contracts) or from changes in foreign currency rates (forward foreign currency contracts) and the credit risk should a counterparty fail to perform under such contracts. None of the Funds had futures or forward foreign currency contracts open at December 31, 2001. >Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange on each day the Exchange is open for trading. All income, expenses (other than the Class A, Class B and Class C 12b-1 service and distribution fees, and Class A, Class B, Class C and Class Z shares Transfer Agent fee) and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. >Custody fees Custody fees are reduced based on each Fund's cash balances maintained with the custodian. The amount is disclosed as a reduction of total expenses in the Statement of Operations. >Federal income taxes The Funds have complied with the special provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distribute all their taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. For the period October 31, 2001 to December 31, 2001, the Funds incurred net realized capital losses for which each Fund intends to treat as having been incurred in the following fiscal year, in accordance with federal income tax regulations: Amount -------------------------------------------------------------------------------- (in thousands) Liberty Acorn Fund $1,500 Liberty Acorn International 24,039 Liberty Acorn USA 1,754 Liberty Acorn Foreign Forty 6,526 Liberty Acorn Twenty 41 -------------------------------------------------------------------------------- Liberty Acorn International and Liberty Acorn Foreign Forty have elected to mark-to-market their investments in Passive Foreign Investment Companies ("PFIC's") for federal income tax purposes. Gains and losses relating to PFIC's are treated as ordinary income for federal income tax purposes. A summary of transactions relating to PFIC's is as follows (in thousands): Liberty Acorn International -------------------------------------------------------------------------------- Cumulative unrealized appreciation on PFIC's recognized in prior years at December 31, 2000 $8,026 Unrealized appreciation (depreciation) on PFIC's recognized for federal income tax purposes during 2001 -- Unrealized appreciation recognized in prior years on PFIC's sold during 2001 -- ---------- Cumulative unrealized appreciation on PFIC's carried forward at December 31, 2001 $8,026 ---------- Liberty Acorn Foreign Forty -------------------------------------------------------------------------------- Cumulative unrealized appreciation on PFIC's recognized in prior years at December 31, 2000 $385 Unrealized appreciation (depreciation) on PFIC's recognized for federal income tax purposes during 2001 -- Unrealized appreciation recognized in prior years on PFIC's sold during 2001 -- ---------- Cumulative unrealized appreciation on PFIC's carried forward at December 31, 2001 $385 ---------- >Distributions to Shareholders Distributions to shareholders are recorded on the ex-date. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. The following reclassifications have been made to the financial statements: Increase (Decrease) ------------------- Undistrib- Accumul- uted Net ated Net Investment Realized Paid Income Gain in Capital (Loss) (Loss) ---------- ------ ------ Liberty Acorn Fund $3,915 $(311) $(3,604) Liberty Acorn International -- (6,660) 6,660 Liberty Acorn USA 1,116 1,399 (2,515) Liberty Acorn Foreign Forty (465) 358 107 Liberty Acorn Twenty 184 493 (677) A I U F40 20 52 Net investment income, net realized gains (losses) and net assets were not affected by these reclassifications. The tax character of distributions paid during 2001 was as follows: Liberty Acorn Fund -------------------------------------------------------------------------------- (in thousands) Ordinary Income $8,940 Long-Term Capital Gains 87,766 -------------------------------------------------------------------------------- Liberty Acorn International -------------------------------------------------------------------------------- (in thousands) Ordinary Income $ -- Long-Term Capital Gains 39,130 -------------------------------------------------------------------------------- Liberty Acorn USA -------------------------------------------------------------------------------- (in thousands) Ordinary Income $1,475 Long-Term Capital Gains 2,123 -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty -------------------------------------------------------------------------------- (in thousands) Ordinary Income $76 Long-Term Capital Gains 507 -------------------------------------------------------------------------------- Liberty Acorn Twenty -------------------------------------------------------------------------------- (in thousands) Ordinary Income $ -- Long-Term Capital Gains 188 -------------------------------------------------------------------------------- At year-end, there were no significant differences between the book basis and tax basis components of net assets, other than differences in net unrealized appreciation (depreciation) in the value of investments attributable to the tax deferral of losses on certain securities (wash sales), recognition of unrealized gains on certain foreign investments (PFIC's), and foreign currency transactions. In addition, Liberty Acorn International Fund had undistributed net investment income at December 31, 2001 due to a current year spillback requirement of $5,451,367. 3. Transactions with Affiliates The Funds' investment advisor, Liberty Wanger Asset Management, L.P. ("WAM") furnishes continuing investment supervision to the Funds and is responsible for the overall management of the Funds' business affairs. On November 1, 2001, Liberty Financial Companies, Inc., the former parent of WAM, completed the sale of its asset management business, including WAM, to Fleet National Bank ("Fleet"). This transaction resulted in a change of control of WAM and, therefore, an assignment of WAM's investment advisory contract by the Trust to Fleet. Each Fund had obtained approval of a new investment advisory contract by the Trust's Board of Trustees and shareholders, which became effective upon completion of the sale. The new contract is identical to the prior contract in all material respects except for its effective and termination dates. Under the Funds' investment management agreement, fees are accrued daily and paid monthly to WAM at the annual rates shown in the table below for each fund. Liberty Acorn Fund -------------------------------------------------------------------------------- Net asset value: For the first $700 million .75% Next $1.300 billion .70% Net assets in excess of $2 billion .65% Liberty Acorn International -------------------------------------------------------------------------------- Net asset value: For the first $100 million 1.20% Next $400 million .95% Net assets in excess of $500 million .75% Liberty Acorn USA -------------------------------------------------------------------------------- Net asset value: For the first $200 million .95% Net assets in excess of $200 million .90% Liberty Acorn Foreign Forty -------------------------------------------------------------------------------- On average daily net assets: .95% Liberty Acorn Twenty -------------------------------------------------------------------------------- On average daily net assets: .90% >Expense Limit The Advisor has voluntarily agreed to reimburse the Funds to the extent that annual expenses exceed 1.45% for Liberty Acorn Foreign Forty and 1.35% for Liberty Acorn Twenty of average daily net assets. WAM has also contracted to provide administrative services to each Fund at an annual rate of .05% of average daily net assets. Liberty Funds Distributor, Inc. (the Distributor), an affiliate of the Advisor, is each Fund's principal underwriter and receives no compensation on the sale of Class Z shares. Each Fund has adopted a 12b-1 plan which requires it to pay the Distributor a service and distribution fee on the net assets attributable to Class A, Class B and Class C shares. Certain officers and trustees of the Trust are also principals of WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with WAM. Trustees' 53 A I U F40 20 Liberty Acorn Family of Funds >Notes to Financial Statements continued fees and expenses for the year ended December 31, 2001 is as follows: ------------------------------------------------------------------------------ (in thousands) 2001 Liberty Acorn Fund $347 Liberty Acorn International 177 Liberty Acorn USA 29 Liberty Acorn Foreign Forty 4 Liberty Acorn Twenty 3 -------- $560 ======== The Trust provides deferred compensation and retirement plans for its trustees. Under this deferred compensation plan, trustees may elect to defer all or a portion of their compensation. Amounts deferred are retained by the Trust and to the extent permitted by the 1940 Act, as amended, may be invested in Class Z shares of those funds selected by the trustees. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund. Benefits under the retirement plan are payable upon retirement based upon each trustee's years of service. WAM advanced Liberty Acorn USA $107,000 in connection with the organization and initial registration of the Fund. These costs were amortized and reimbursed to WAM over the period September 1996 through August 2001. During the year ended December 31, 2001, the Funds engaged in purchases and sales transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions complied with Rule 17a-7 under the Investment Company Act of 1940 and were as follows: Funds Purchases Sales ------------------------------------------------------------------------------- (in thousands) Liberty Acorn Fund $58,587 $5,655 Liberty Acorn International 6,088 7,981 Liberty Acorn USA 1,815 22 Liberty Acorn Twenty -- 3,800 Liberty Acorn Foreign Forty -- 13,400 4. Borrowing Arrangements The trust participates in a $150,000,000 credit facility which was entered into to facilitate portfolio liquidity. No amounts were borrowed under this facility for the year ended December 31, 2001. 5. Investment Transactions Investment Transactions (excluding money market instruments) for each of the Funds are as follows: Liberty Acorn Fund -------------------------------------------------------------------------------- (in thousands) 2001 Investment securities Purchases $1,338,594 Proceeds from sales 780,413 ================================================================================ Liberty Acorn International -------------------------------------------------------------------------------- (in thousands) 2001 Investment securities Purchases $ 794,599 Proceeds from sales 871,232 ================================================================================ Liberty Acorn USA -------------------------------------------------------------------------------- (in thousands) 2001 Investment securities Purchases $ 78,376 Proceeds from sales 56,364 ================================================================================ Liberty Acorn Foreign Forty -------------------------------------------------------------------------------- (in thousands) 2001 Investment securities Purchases $ 71,173 Proceeds from sales 118,482 ================================================================================ Liberty Acorn Twenty -------------------------------------------------------------------------------- (in thousands) 2001 Investment securities Purchases $ 77,991 Proceeds from sales 62,716 ================================================================================ 6. Capital Loss Carryforwards At December 31, 2001, capital loss carryforwards available (to the extent provided in regulations) to offset future realized gains were as follows: Year of Capital Loss Expiration Carryforward ------------------------------------------------------------------------------- (in thousands) Liberty Acorn International 2009 $111,479 Liberty Foreign Forty 2009 $23,084 FEDERAL INCOME TAX INFORMATION (unaudited) For the fiscal year ended December 31, 2001, the Funds designated long-term capital gain dividends as follows: Liberty Acorn Fund $25,509 Liberty Acorn USA 2,816 Liberty Acorn Twenty 865 Ordinary income distributed during the year ended December 31, 2001 qualifying for the corporate dividends received deduction was as follows: Fund % of Ordinary Income ------------------------------------------------------------------------------- Liberty Acorn Fund 99.26% Liberty Acorn USA 60.74 A I U F40 20 54 Report of Independent Auditors To the Board of Trustees and Shareholders of Liberty Acorn Trust We have audited the accompanying statements of assets and liabilities, including the statements of investments of Liberty Acorn Fund, Liberty Acorn International, Liberty Acorn USA, Liberty Acorn Twenty and Liberty Acorn Foreign Forty, comprising the Liberty Acorn Trust, as of December 31, 2001, the related statements of operations, changes in net assets, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of investments owned as of December 31, 2001, by correspondence with the custodian and brokers or other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds of the Liberty Acorn Trust as of December 31, 2001, the results of their operations and changes in their net assets and financial highlights for the periods indicated therein, in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Chicago, Illinois February 8, 2002 55 A I U F40 20 Notes 56 Notes 57 The Liberty Acorn -------------------------------------------------------------------------------- Family of Funds SPECIAL NOTICE At a special meeting held on October 24, 2001, shareholders of each of the Funds voted to approve an investment advisory agreement between the Trust and Liberty Wanger Asset Management, L.P. (WAM). The record date share position of each Fund and the total share position voted of each Fund were respectively: Liberty Acorn Fund 257,154,592.868 and 177,213,483.177; Liberty Acorn International 99,332,984.985 and 65,031,604.813; Liberty Acorn USA 16,082,590.448 and 8,832,581.890; Liberty Acorn Twenty 6,261,947.183 and 4,209,847.189; and Liberty Acorn Foreign Forty 5,256,028.813 and 3,733,482.950. The outcome of the votes were as follows: Approval of Investment Advisory Agreement.
FOR AGAINST ABSTAIN Liberty Acorn Fund 168,252,001.736 5,596,029.337 3,365,452.104 Liberty Acorn International 61,754,289.201 2,158,972.223 1,118,343.389 Liberty Acorn USA 8,524,546.546 200,383.680 107,651.664 Liberty Acorn Twenty 4,026,722.802 136,197.223 46,927.164 Liberty Acorn Foreign Forty 3,581,915.152 121,372.940 30,194.858
58 A I U F40 20 Liberty Acorn Family of Funds Class Z Share Information Minimum Initial Investment For All Funds $1,000 $1,000 for an IRA Minimum Subsequent Investment $100 Exchange Fee None ----------------------------------------------------------------------------- Liberty Acorn Fund ACRNX ----------------------------------------------------------------------------- Management Fee 0.68% 12b-1 Fee None Other Expenses 0.14% --------- Expense Ratio 0.82% ----------------------------------------------------------------------------- Liberty Acorn International ACINX ----------------------------------------------------------------------------- Management Fee 0.81% 12b-1 Fee None Other Expenses 0.25% --------- Expense Ratio 1.06% ----------------------------------------------------------------------------- Liberty Acorn USA AUSAX ----------------------------------------------------------------------------- Management Fee 0.94% 12b-1 Fee None Other Expenses 0.23% --------- Expense Ratio 1.17% ----------------------------------------------------------------------------- Liberty Acorn Foreign Forty ACFFX ----------------------------------------------------------------------------- Management Fee 0.95% 12b-1 Fee None Other Expenses 0.50% --------- Net Expense Ratio 1.45% ----------------------------------------------------------------------------- Liberty Acorn Twenty ACTWX ----------------------------------------------------------------------------- Management Fee 0.90% 12b-1 Fee None Other Expenses 0.45% --------- Net Expense Ratio 1.35% Fees and expenses are for the fiscal year ended December 31, 2001 and for Liberty Acorn Foreign Forty and Liberty Acorn Twenty, include the effect of Liberty Wanger Asset Management's undertaking to reimburse those funds for any ordinary operating expenses, net of custody fees paid indirectly, exceeding 1.45% and 1.35% of their average net assets, respectively. These expense limitations are voluntary and can be terminated by either the Funds or Liberty Wanger Asset Management on 30 days' notice to the other. 59 A I U F40 20 Management of Acorn The board of trustees serve indefinite terms of unlimited duration provided that a majority of trustees always has been elected by shareholders. The trustees appoint their own successors, provided that at least two-thirds of the trustees, after such appointment, have been elected by shareholders. Shareholders may remove a trustee, with or without cause, upon the vote of two-thirds of Acorn's outstanding shares at any meeting called for that purpose. A trustee may be removed, with or without cause, upon the vote of a majority of the trustees. The names of the trustees and officers of Acorn, the date each was first elected or appointed to office, their principal business occupations and other directorships they have held during at least the last five years, are shown below. Each trustee serves in such capacity for each of the five series of Acorn. Mr. Wanger also serves as a trustee for each of the four series of the Wanger Advisors Trust.
------------------------------------------------------------------------------------------------------------------------------------ Year First Name, Position(s) Elected or with Appointed Acorn and Age at to Principal Occupation(s) during Other Directorships January 1, 2002 Office Past Five Years ------------------------------------------------------------------------------------------------------------------------------------ Trustees who are not interested persons of Acorn: ------------------------------------------------------------------------------------------------------------------------------------ Irving B. Harris, 91, 1970 Chairman, The Irving Harris Foundation (charitable None. Trustee foundation). ------------------------------------------------------------------------------------------------------------------------------------ Leo A. Guthart, 65, 1994 Executive vice president, Honeywell International AptarGroup, Inc. (producer of dispensing Trustee (home and building control); Chairman, Cylink valves, pumps and closures); Symbol Corporation (supplier of encryption equipment); Technologies, Inc. former chairman of the board of trustees, Hofstra University; chairman and chief executive officer, Topspin Partners, L.P. ------------------------------------------------------------------------------------------------------------------------------------ Jerome Kahn, Jr., 67, 1987 Former president, William Harris Investors, None. Trustee Inc.(investment adviser). ------------------------------------------------------------------------------------------------------------------------------------ Steven N. Kaplan, 43, 1999 Neubauer Family Professor of Entrepreneurship and None. Trustee Finance, Graduate School of Business, University of Chicago. ------------------------------------------------------------------------------------------------------------------------------------ David C. Kleinman, 66, 1972 Adjunct professor of strategic management, Irex Corporation (insulation contractor); Trustee University of Chicago Graduate School of Business; Sonic Foundry, Inc. (software); AT&T Latin Business consultant. America; Wisconsin Paper & Products (paper merchant); Plymouth Tube Company (seamless and welded metal tubing); Member of the advisory board, DSC Logistics Company (warehousing and logistics services). ------------------------------------------------------------------------------------------------------------------------------------ Allan B. Muchin, 66, 1998 Partner, Katten, Muchin & Zavis (law firm). Alberto-Culver Company (toiletries). Trustee ------------------------------------------------------------------------------------------------------------------------------------ Robert E. Nason, 66, 1998 Consultant and private investor since 1998; from Fruit of the Loom, Ltd. (apparel Trustee and chairman 1990-1998, executive partner and chief executive manufacturer). officer, member of the executive committee of Grant Thornton, LLP (public accounting firm) and member of the policy board of Grant Thornton International. ------------------------------------------------------------------------------------------------------------------------------------ Trustees who are an interested person of Acorn: ------------------------------------------------------------------------------------------------------------------------------------ Ralph Wanger, 67, 1994 President, Chief Investment Officer and portfolio Wanger Advisors Trust. Trustee and President* manager, Liberty WAM and WAM since 1992; principal, WAM from July 1992 until September 29, 2000; president, WAM Ltd. from July 1992 to September 29, 2000; president and director, WAM Acquisition GP, Inc. since September 29, 2000; president, Wanger Advisors Trust; director, Wanger Investment Company plc. ------------------------------------------------------------------------------------------------------------------------------------ Charles P. McQuaid, 48 1994 Portfolio manager and director of research, Liberty None. Trustee and Senior Vice WAM and WAM since July 1992; Principal, WAM from President July 1992 to September 29, 2000; senior vice president, Wanger Advisors Trust. ------------------------------------------------------------------------------------------------------------------------------------ Officers of Acorn: ------------------------------------------------------------------------------------------------------------------------------------ J. Kevin Connaughton, 2001 Treasurer of the Liberty Funds and of the Liberty None. 37, All-Star Funds since December, 2000 (formerly Assistant Treasurer controller of the Liberty Funds and of the Liberty All-Star Funds from February 1998 to October 2000); Treasurer of the Stein Roe Funds since February 2001 (formerly controller from May 2000 to February 2001); senior vice president of Liberty Funds Group since January 2001 (formerly vice president of Colonial Management Associates from February 1998 to October 2000); Senior Tax Manager, Coopers & Lybrand, LLP from April 1996 to January 1998. ------------------------------------------------------------------------------------------------------------------------------------ Diane M. Dustin, 33, 2001 Blue sky administrator, Liberty Funds Group. None. Assistant Secretary ------------------------------------------------------------------------------------------------------------------------------------ Maureen E. Dustin, 42, 2001 Blue sky administrator, Liberty Funds Group. None. Assistant Secretary ------------------------------------------------------------------------------------------------------------------------------------ Kevin S. Jacobs, 40, 2001 Assistant vice president, Liberty Funds Group since None. Assistant Secretary June 2000; senior legal product manager, First Union Corp. September 1999 to June 2000; prior thereto, senior legal product manager, Colonial Management Associates. ------------------------------------------------------------------------------------------------------------------------------------ Kenneth A. Kalina, 42, 1995 Chief financial officer, Liberty WAM and WAM since None. Assistant Treasurer April 2000; assistant treasurer, Wanger Advisors Trust; fund controller, Liberty WAM and WAM since September 1995; prior thereto, treasurer of the Stein Roe Mutual Funds; director, New Americas Small Cap Fund. ------------------------------------------------------------------------------------------------------------------------------------ Bruce H. Lauer, 44, 1995 Chief operating officer, Liberty WAM and WAM since None. Vice President, Assistant April 1995; principal, WAM from January 2000 to Secretary and Treasurer September 29, 2000; vice president, treasurer and assistant secretary, Wanger Advisors Trust; director, Wanger Investment Company plc and New Americas Small Cap Fund. ------------------------------------------------------------------------------------------------------------------------------------ Robert A. Mohn, 40, 1997 Analyst and portfolio manager, Liberty WAM and WAM None. Vice President since August 1992; principal, WAM from 1995 to September 29, 2000; vice president, Wanger Advisors Trust. ------------------------------------------------------------------------------------------------------------------------------------ Todd Narter, 37, 2001 Analyst and portfolio manager, Liberty WAM and WAM None. Vice President since June 1997; vice president, Wanger Advisors Trust; prior thereto, product manager for Teradyne (1990-1997). ------------------------------------------------------------------------------------------------------------------------------------ Christopher Olson, 38 2001 Analyst and portfolio manager, Liberty WAM since None. Vice President January 2001; vice president, Wanger Advisors Trust; prior thereto, director and portfolio strategy analyst with UBS Asset Management/Brinson Partners. ------------------------------------------------------------------------------------------------------------------------------------ John H. Park, 34, 1998 Analyst and portfolio manager, Liberty WAM and WAM None. Vice President since July 1993; principal, WAM from 1998 to September 29, 2000; vice president, Wanger Advisors Trust. ------------------------------------------------------------------------------------------------------------------------------------ Vincent P. Pietropaolo, 2001 Vice president and Counsel, Liberty Funds Group since None. 36, Assistant Secretary December 1999; Associate, Morgan Lewis & Bockius, October 1998 to December 1999; product manager, Putnam Investments April 1997 to October 1998; contracting attorney May 1996 to April 1997. ------------------------------------------------------------------------------------------------------------------------------------ Leah J. Zell, 52, 1994 Analyst, and portfolio manager, Liberty WAM and WAM None. Vice President* since July 1992; vice president, Wanger Advisors Trust; director and managing member of trust committee, Chai Trust Company. ------------------------------------------------------------------------------------------------------------------------------------
The address for Messrs. Wanger, McQuaid, Kalina, Lauer, Mohn, Narter, Olson, Park, and Ms. Zell is Liberty Wanger Asset Management, L.P., 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606. The address for Messrs. Harris and Kahn is Two North LaSalle Street, Suite 400, Chicago, Illinois 60602. The address for Messrs. Kaplan and Kleinman is 1101 East 58th Street, Chicago, Illinois 60637. The address for Mr. Guthart is 165 Eileen Way, Syosset, New York 11791. The address for Mr. Muchin is 525 W. Monroe Street, Suite 1600, Chicago, Illinois 60661-3693. The address for Mr. Nason is 567 Rockefeller Road, Lake Forest, Illinois 60045. The address for Messrs. Connaughton, Jacobs, Pietropaolo, and Mesdames Diane Dustin and Maureen Dustin is Liberty Funds Distributor, Inc., One Financial Center, Boston, MA 02111. Acorn's Statement of Additional Information includes additional information about Acorn's trustees and officers. You may obtain a free copy of the Statement of Additional Information, or request any other information and discuss your questions about us, by writing or calling toll-free: Liberty Funds Distributor, Inc. One Financial Center Boston, MA 02111-2621 1-800-426-3750 www.libertyfunds.com * Mr. Wanger and Ms. Zell are married to each other. 60 The Liberty Acorn -------------------------------------------------------------------------------- Family of Funds Investment Advisor Liberty Wanger Asset Management, L.P. 227 West Monroe Street, Suite 3000 Chicago, Illinois 60606 1-800-922-6769 Distributor Liberty Funds Distributor, Inc. One Financial Center Boston, Massachusetts 02111-2621 Transfer Agent, Dividend Disbursing Agent and Custodian Liberty Funds Services, Inc. P.O. Box 1722 Boston, Massachusetts 02105-1722 1-800-962-1585 Outside Legal Counsel Bell, Boyd & Lloyd LLC Chicago, Illinois Independent Auditors Ernst & Young LLP Chicago, Illinois This report, including the schedules of investments, is submitted for the general information of the shareholders of Liberty Acorn Trust. This report is not authorized for distribution unless preceded or accompanied by a prospectus. Our e-mail address is: acorn@wanger.com Find out what's new - visit our web site at: www.acornfunds.com [GRAPHIC OMITTED] The Liberty Acorn -------------------------------------------------------------------------------- Family of Funds Liberty Funds Distributor, Inc. One Financial Center Boston, MA02111-2621 ACN-02/475I-0102 (01/02) 02/216 [GRAPHIC OMITTED] The Liberty Acorn -------------------------------------------------------------------------------- Family of Funds PRESORTED FIRST-CLASS MAIL U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 Liberty Funds Distributor, Inc. One Financial Center Boston, MA02111-2621 ACN-02/475I-0102 (01/02) 02/216