-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H1+6GTyFWvR15/Ck1U+tSe0lp4WmGdCYdBgUPIhNV33UH1nPIXYQFjN2iPwog7Xm SGJZX/k8ZWHJr6zq/2cSYQ== 0000891804-02-001580.txt : 20020821 0000891804-02-001580.hdr.sgml : 20020821 20020821121855 ACCESSION NUMBER: 0000891804-02-001580 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY ACORN TRUST CENTRAL INDEX KEY: 0000002110 IRS NUMBER: 362692100 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01829 FILM NUMBER: 02744489 BUSINESS ADDRESS: STREET 1: 227 W MONROE STE 3000 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126349200 MAIL ADDRESS: STREET 1: 227 W MONROE STE 3000 CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: ACORN FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ACORN INVESTMENT TRUST DATE OF NAME CHANGE: 19940204 N-30D 1 wang27102.txt ACORN FAMILY OF FUNDS [GRAPHIC OMITTED] Liberty Acorn Family of Funds Class Z Shares Semiannual Report 2 June 30, 2002 Managed by Liberty Wanger Asset Management, L.P. Liberty Acorn Family of Funds Semiannual Report 2002 Table of Contents Liberty Acorn Family of Funds Performance At A Glance 1 Squirrel Chatter: The Zit Indicator 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 25 Statement of Investments 27 Portfolio Diversification 31 Liberty Acorn USA In a Nutshell 8 At a Glance 9 Major Portfolio Changes 32 Statement of Investments 33 Liberty Acorn Foreign Forty In a Nutshell 10 At a Glance 11 Major Portfolio Changes 36 Statement of Investments 37 Portfolio Diversification 39 Liberty Acorn Twenty In a Nutshell 12 At a Glance 13 Major Portfolio Changes 40 Statement of Investments 41 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 52 Liberty Acorn Family of Funds Information 58 Trustees, Officers and Contact Information 59 >2002 Mid-Year Distributions There were no mid-year distributions for any of the Liberty Acorn Funds except Liberty Acorn International. The record date was June 11, 2002 and the payable date was June 14, 2002. Liberty Acorn International - -------------------------------------------------------------------------------- Long-term Capital Gains None - -------------------------------------------------------------------------------- Short-term Capital Gains None - -------------------------------------------------------------------------------- Ordinary Income $0.07 - -------------------------------------------------------------------------------- The discussion in this report of portfolio companies is for illustration only and is not a recommendation of individual stocks. The information is believed to be accurate, but the information and the views of the portfolio managers may change at any time without notice. Liberty Acorn Family of Funds >Performance At A Glance Class Z Average Annual Total Returns through 6/30/02
2nd* Year to* 1 3 5 10 Life Quarter Date year years years years of Fund - ------------------------------------------------------------------------------------------------------------------ Liberty Acorn Fund (6/10/70) -8.10% -3.52% -6.13% 10.42% 12.46% 15.85% 16.15% - ------------------------------------------------------------------------------------------------------------------ S&P 500 -13.40% -13.16% -17.99% -9.18% 3.66% 11.43% 12.22% - ------------------------------------------------------------------------------------------------------------------ Russell 2000 -8.35% -4.70% -8.60% 1.67% 4.44% 10.96% NA - ------------------------------------------------------------------------------------------------------------------ Lipper Small-Cap Core Funds Index -8.67% -5.42% -4.94% 7.26% 6.76% 12.18% NA - ------------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Core Funds Index -10.61% -7.31% -11.56% 3.78% 7.54% 12.59% NA - ------------------------------------------------------------------------------------------------------------------ Liberty Acorn International (9/23/92) -1.23% 1.12% -7.31% -0.71% 4.09% -- 10.55% - ------------------------------------------------------------------------------------------------------------------ EMI Global ex US 1.24% 7.66% -0.99% -2.72% -1.33% -- 4.11% - ------------------------------------------------------------------------------------------------------------------ EAFE -2.12% -1.62% -9.49% -6.84% -1.55% -- 5.30% - ------------------------------------------------------------------------------------------------------------------ Lipper Int'l Small Cap Funds Index 2.62% 6.91% -4.23% 1.25% 3.56% -- NA - ------------------------------------------------------------------------------------------------------------------ Liberty Acorn USA (9/4/96) -9.95% -4.45% -9.60% 5.63% 9.32% -- 13.41% - ------------------------------------------------------------------------------------------------------------------ Russell 2000 -8.35% -4.70% -8.60% 1.67% 4.44% -- 7.12% - ------------------------------------------------------------------------------------------------------------------ Lipper Small-Cap Core Funds Index -8.67% -5.42% -4.94% 7.26% 6.76% -- 9.09% - ------------------------------------------------------------------------------------------------------------------ S&P MidCap 400 -9.31% -3.21% -4.72% 6.66% 12.58% -- 15.04% - ------------------------------------------------------------------------------------------------------------------ S&P 500 -13.40% -13.16% -17.99% -9.18% 3.66% -- 8.89% - ------------------------------------------------------------------------------------------------------------------ Liberty Acorn Foreign Forty (11/23/98) 1.11% -1.90% -12.47% -2.78% -- -- 5.30% - ------------------------------------------------------------------------------------------------------------------ EAFE -2.12% -1.62% -9.49% -6.84% -- -- -3.57% - ------------------------------------------------------------------------------------------------------------------ SSB World ex US Cap Range $2-10B 1.42% 5.64% -2.61% -0.74% -- -- 1.93% - ------------------------------------------------------------------------------------------------------------------ Lipper International Funds Index -1.89% 0.52% -7.29% -3.75% -- -- -0.74% - ------------------------------------------------------------------------------------------------------------------ Liberty Acorn Twenty (11/23/98) -4.30% -4.99% -0.96% 6.76% -- -- 13.68% - ------------------------------------------------------------------------------------------------------------------ S&P MidCap 400 -9.31% -3.21% -4.72% 6.66% -- -- 10.67% - ------------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Growth Index -14.95% -17.37% -25.50% -6.48% -- -- 2.23% - ------------------------------------------------------------------------------------------------------------------ Russell 2000 -8.35% -4.70% -8.60% 1.67% -- -- 5.93% - ------------------------------------------------------------------------------------------------------------------ S&P 500 -13.40% -13.16% -17.99% -9.18% -- -- -3.16% - ------------------------------------------------------------------------------------------------------------------
* Quarterly and year-to-date 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 Mid Cap 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. 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. Lipper Indexes include the largest funds tracked by Lipper, Inc. in the named category. Lipper Mid-Cap Growth 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: The Zit Indicator [PHOTO OMITTED] The top of the U.S. market was signaled by lots of different indicators. One of the most significant, and probably the funniest, was on September 21, 2000 when the SEC settled its market manipulation case against Mr. Jonathan Lebed of Cedar Grove, New Jersey. Mr. Lebed agreed to pay a fine to the SEC of $285,000, although he had made $800,000 in the preceding year. The partial disgorgement of profits made sense because it was unclear whether Mr. Lebed could have been convicted in a jury trial. Furthermore, a trial would have seriously disrupted Mr. Lebed's homework schedule. In September 2000, Mr. Lebed was 15 years old. At age 12, Jonathan entered a CNBC stock-picking contest for children. His team finished fourth in the nation, enough to make the local newspaper. At 13, he started trading with real money in an account his mom opened for him on E-Trade. He was an avid contributor to the Yahoo! Finance chat room. He frequently put his stock recommendations on the chat room wire, complete with optimistic forecasts of future success for the subject company with lots of exclamation points included in the copy. He found that making his reports vivid had a better impact on his audience than more conservative writing. Michael Lewis, author of a recent book that shares Jonathan's tale,(1) thinks the SEC was smart to settle for $285 grand. After all, Mr. Lebed was doing neither more nor less than was being done by thousands of other people, both amateur and "professional." The amateurs were reading and writing chat room touts while some professionals were plugging the same stocks with little more factual basis than Mr. Lebed was using. If the SEC had tried to make an example of Jonathan, they might have been accused of picking on a little kid. Jonathan's example does not mark the first time a youngster took on the market with great success. In 1968, Adam Smith wrote about kids running money in his book titled The Money Game.(2) "My boy," said the Great Winfield(3) over the phone, "Our trouble is that we are too old for this market. The best players in this kind of market have not passed their twenty-ninth birthday ... My solution to the current market, Kids. This is a kid's market. This is Billy the Kid, Johnny the Kid, and Sheldon the Kid ... Billy the Kid started with five thousand dollars and has run it up over half a million in the last six months." "Wow!" I said. I asked Billy the Kid how he did it. "Computer leasing stocks, sir!" He said, like a cadet being quizzed by an upperclassman. "I buy the convertibles, bank them, and buy some more ... I put up five percent cash." I asked Billy the Kid why these computer leasing stocks are so good. "The need for computers is practically infinite," said Billy the Kid. "Leasing has proved to be the only way to sell them, and computer companies themselves do not have the capital. Therefore, earnings will be up a hundred percent this year, will double next year, and will double again the year after ..." "Look at the skepticism on the face of this dirty old man," said the Great Winfield, pointing at me [Smith] ... "He's going to ask what makes a finance company worth fifty times earnings. Right?" Billy the Kid smiled tolerantly, well aware that the older generation has trouble figuring out the New Math, the New Economics, and the New Market. I asked how much it costs to rent a kid. "A buck fifty an hour, room, board, no baby-sitting, only one day's lawn-mowing a week, and half the trading profits," said the Great Winfield. Nostalgic memories of the computer leasing play of long ago return when I read this passage, including Dearborn Computer, a computer leasing company a friend of mine started some 30 years ago. The computer-leasing scheme was fallacious from the start, but Dearborn managed to buy a real company for stock, and so bootstrapped itself into becoming a profitable business. In 1929, the first great popular stock market boom, kids showed up for the first time. One article complained that investing was "becoming a children's crusade, not an adventure for a few hard-boned knights; a place for the butcher, the barber and the candle-stick maker."(4) Other non-kid sources of investment wisdom in 1929 included Evangeline Adams, an astrologer, and Pat Bologna, shoe shiner to J.P. Morgan partners and Joe Kennedy. It seems that every time the market gets near a peak, the kids take over. Therefore, I would like to contribute another market indicator to the financial literature. I call it the zit indicator. You know the market has reached the top when a kid with Oxy 10 instead of shaving cream in his medicine cabinet is knocking down big bucks in the market. A proper world is supposed to be divided into professionals and outsiders. The outsiders are supposed to be content to give respect and fees to insiders for advice. The information on companies and markets available on the Internet made it apparently very easy for anyone, pre- or post-adolescence, to feel knowledgeable about stocks and the market. E-Trade made it possible for them to execute their trades from home. In a once in a lifetime runaway bull market such as 1999, anybody with a Yahoo! connection could be a stock market genius. For those of us who were paid a lot of money to be professional stock market geniuses, this was somewhere between inconvenient and embarrassing. Jonathan Lebed may have described the market mentality of the time better than anyone: "People who trade stocks, trade based on what they feel will move and they can trade for profit. Nobody makes investment decisions based on reading financial filings. Whether a company is making millions or losing millions it has no impact on the price of the stock. Whether it is analysts, brokers, advisors, Internet traders, or the companies, everybody is manipulating the market. If it wasn't for everybody manipulating the market, there wouldn't be a stock market at all."(5) 2 What did the grown-ups in Mr. Lebed's life do or say when he was speculating vigorously and making $100,000 per month? His parents apparently had no idea what was going on. However, his teachers at school did know that Jonathan was speculating outrageously in the market. As a result, they continually badgered him for stock tips. At one point, a teacher called Mr. Lebed out of an exam to ask him if he had ideas about the five stocks in the teacher's portfolio. The Internet has flattened the difference between profes sional and outsider. Even though many Internet stocks have vanished, the Internet itself is alive and well. It is a great leveler. For instance, it allows anyone in the world to post material that anyone anywhere else in the world can read. This is not what dictators like to see. Those who are against free speech are furious. Robert Mugabe, dictator of Zimbabwe, has put a journalist on trial for an article that was posted on the Internet. The Internet will go a long way toward reducing the number of dictators in the world. There is an enormous amount of material on the Internet about the stock market.(6) The problem for the user, of course, is to figure out which websites offer useful, interesting, well-reasoned opinions and which are the rantings of a sex-crazed adolescent (excuse the redundancy). The related effect of the Internet is to deflate the value of all expertise and authority. The SEC is a competent, serious agency. As long as most stock reports were published by a couple of dozen banks, investment advisors and brokerage firms, it wasn't too hard for the Feds to keep track of what was going on and discipline anyone who violated standards. The AIMR(7) tests and licenses people who call themselves CFAs, a designation that implies that the holder has the technical skills and ethics to make reasonable comments on stocks. If anybody and everybody can put their opinion on Internet chat rooms, and other people decide to take action based on these dubious communications, then SEC and AIMR alike have far less control over the veracity of the information reaching investors. Everyone is a brave soldier while drinking beer with buddies. Combat turns out to be different from barroom conversation, I am told. I have never been in combat but at least I understand half of the metaphor. In a runaway bull market, a 14-year-old kid and his teacher can both make money. The market of the last two years is likely to have returned both of them to the classroom to write an essay on the meaning of Darwinian struggle. Any period of giddy enthusiasm such as 1998-99 is bound to end badly. It is highly likely that the high prices of 1999 (S&P 500 at 1,550) represented levels that will not be exceeded before Jonathan has earned his MBA. This doesn't mean that the stock market will be a terrible place even if returns of 15% or 20% per year will be exceedingly hard to come by. We had such a period from 1969 to 1982 and, even though the market was no higher at the end of the period than it had been at the beginning, there were still lots of inter esting and profitable things to do. For instance, retailing saw the decline of department stores and the emergence of discounters including Wal-Mart and Home Depot. In technology, Digital Equipment, Cray Research and Storage Technology were great companies and great stocks (no longer the case for these three). The oil and gas industry was a leading sector with many exciting small companies succeeding or failing due to their exploration skills/luck. I still remember Houston Oil & Minerals with great fondness. There is no reason to think one should give up in this kind of market but it is highly likely that experienced professionals will do better than enthusiastic adolescents on balance, although some of these kids will prove to be the investment pros of the future. Stock Market Update July 24, 2002 You and I both recognize that the stock market has crashed. The drop in June and July has been as steep and sharp as market declines go (S&P 500 down 25%(8)). The decline has affected all stocks: large and small, U.S. and foreign. While there is no sign that the bear market that we've been in since March of 2000 is over, enough damage has been done for us to start looking for signs of a bottom. We believe some of the factors causing the declines, such as a loss in confidence in corporate management and accounting fiddles, are likely to be transitory. We keep one important precept in mind: One should not get too optimistic when the markets are high and one also should not abandon all hope when the markets come down. /s/ Ralph Wanger Ralph Wanger Chief Investment Officer, Liberty Wanger Asset Management, L.P Lead Portfolio Manager, Liberty Acorn Trust - -------------------------------------------------------------------------------- (1) Lewis, Michael, Next: The Future Just Happened, W.W. Norton & Company, New York, NY, 2002. (2) Chapter 17: "Losers and Winners: Poor Grenville, Charley, and the Kids," Smith, Adam, The Money Game, Random House, New York, NY, 1967 and 1968. (3) The Great Winfield, as described by Smith, "is a friend of mine who is a tape-reader, a super-speculator, and most recently, Marlboro-commercial rancher." (4) Harper's Magazine, April 1929. Quoted in Thomas and Morgan-Witts, The Day the Bubble Burst, Doubleday, Garden City, NY, 1979. (5) Lewis, op. cit. (6) "325,000 financial websites," says Maria Bartiromo in a book she co-authored called Use The News. (HarperBusiness, New York, NY, 2001) She also writes about the Lebed case, giving the SEC's point of view. However, the book as a whole is not great. (7) Association for Investment Management and Research. (8) June 1, 2002 through July 23, 2002. 3 Liberty Acorn Fund >In a Nutshell [PHOTOS OMITTED] Liberty Acorn Fund fell 8.10% in the second quarter, down slightly less than the small-cap indexes and substantially less than the 13.40% drop in the large-cap S&P 500. During the first half of 2002, Liberty Acorn Fund dropped 3.52%, again outperforming its benchmark indexes. See Page 1 for comparative performance data. Picking good stocks, limiting exposure to tough industries and largely avoiding companies with questionable accounting practices were keys to the Fund's performance. Christopher & Banks, a growing mall-based clothing retailer, expanded 29% and was Liberty Acorn Fund's biggest dollar winner in the quarter. First Health Group, America's largest PPO, and Lincare Holdings, the largest provider of home respiratory services, had healthy results and inflated more than 15%. Telecom stocks continued to tumble, joined by technology and biotech names. Each group was off 25% or more in the quarter. We bought a few shares of telecom stocks on the decline but the group has continued to drop. We remain underweight in technology and the Fund's stocks in that sector dropped less than technology benchmarks. We also are underweight in biotech, though the Fund's biotech stocks dropped sharply, in line with the industry. Non-bank financial stocks also were hard hit in the quarter. AmeriCredit stock reversed from being the Fund's biggest dollar winner in the first quarter to being the biggest dollar loser this quarter, sliding 26%. Though AmeriCredit reported fine earnings, there are fears that its loan portfolio will go bad. We don't believe that will happen. Money managers SEI Investments and Neuberger Berman fell 34% and 22%, respectively, because stock market declines hurt them directly. Liberty Acorn Fund's biggest percentage loser during the quarter was Dynegy. The stock, which was still selling at $30 a share two months ago, is now just over a buck per share. The company's business was better than Enron's but not enough better to keep it from getting destroyed. As mentioned in the sidebar, we added to real estate holdings in the quarter. We also purchased special situations and increased the Fund's emphasis on filtration and water-related companies. Tough markets can create better values, which we are working to exploit. /s/ Ralph Wanger /s/ Charles P. McQuaid Ralph Wanger Charles P. McQuaid Lead Portfolio Manager Co-Portfolio Manager - -------------------------------------------------------------------------------- Why own REITs? -------------------------------------------------------------------------- Liberty Acorn Fund has owned real estate stocks for a long time - The Rouse Company and General Growth Properties were initiated in the 1970s. In early 2000, we boosted real estate holdings because the stocks were selling at unusually large discounts to their asset values, while many other stocks seemed overpriced. We expected the combination of healthy dividend yields and eventually narrowing discounts to provide fine profits. Last quarter, we mentioned finding relative values in REITs (real estate investment trusts). The stocks generally were no longer trading at discounts but seemed attractive fundamentally. We like companies that can pay dividends equal to 6-7% of their stock prices plus reinvest additional free cash flow. Furthermore, because few areas were substantially overbuilt and the companies were well funded, we thought their risk was low. We again bought real estate stocks in the second quarter, expanding the group to 6% of Liberty Acorn Fund. The Fund made money in real estate stocks during an otherwise tough quarter. - -------------------------------------------------------------------------------- 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 insta bility, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. As of 6/30/02, the Fund's positions in the holdings mentioned were: Christopher & Banks, 1.4%; First Health Group, 1.7%; Lincare Holdings, 1.1%; AmeriCredit, 2.1%; SEI Investments, 1.0%; Neuberger Berman, 0.7%; Dynegy, 0.2%; The Rouse Company, 0.7%; General Growth Properties, 0.5%. The Fund has never owned Enron stock. A 4 Liberty Acorn Fund >At a Glance Ticker Symbol: ACRNX Pretax and After-tax Average Annual Total Returns (Class Z) - -------------------------------------------------------------------------------- >through June 30, 2002 ----------------------------------------------------- Year to date* 1 year 5 years 10 years ----------------------------------------------------- Returns before taxes -3.52% -6.13% 12.46% 15.85% - -------------------------------------------------------------------------------- Returns after taxes -3.52 -6.24 9.90 13.43 on distributions - -------------------------------------------------------------------------------- Returns after taxes -2.16 -3.69 9.77 12.81 on distributions and sale of fund shares - -------------------------------------------------------------------------------- Russell 2000 (pretax) -4.70 -8.60 4.44 10.96 - -------------------------------------------------------------------------------- S&P 500 (pretax) -13.16 -17.99 3.66 11.43 - -------------------------------------------------------------------------------- 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. * Year to date data not annualized. - -------------------------------------------------------------------------------- Liberty Acorn Fund Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of June 30, 2002 [PIE CHART] 22.6% Information Software & Services 12.9% Computer Related Hardware 6.5% Media 1.9% Telecommunications 1.3% 5.9% Real Estate 6.5% Energy/Minerals 9.3% Health Care 20.3% Consumer Goods/Services 15.5% Finance 11.5% Industrial Goods/Services 8.4% Other* *Other includes cash and other assets less liabilities of 7.6%. Foreign equities within the portfolio were 9.0% diversified by country as follows: 6.1% Europe; 1.1% Canada; 1.1% Asia without Japan; 0.1% Australia; 0.4% Japan; 0.1% Emerging Markets; 0.1% Latin America. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Fund (Class Z) - -------------------------------------------------------------------------------- >June 10, 1970 through June 30, 2002 This graph compares the results of $10,000 invested in the Liberty Acorn Fund at inception on June 10, 1970 to the S&P 500 Stock Index, 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 graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale 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 6/30/02: $17.25 Total Net Assets: $5,905.1 million [THE FOLLOWING WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Liberty Acorn Fund S&P 500 6/10/70 10000.0 10000.0 6/30/70 9695.0 9819.8 9/30/70 12022.8 11481.2 12/31/70 13586.7 12676.2 3/31/71 17020.5 13905.7 6/30/71 17397.3 13928.2 9/30/71 17571.5 13846.1 12/31/71 17828.5 14489.9 3/31/72 20119.2 15323.3 6/30/72 20562.0 15425.3 9/30/72 18962.1 16029.4 12/31/72 19367.6 17241.7 3/31/73 16563.5 16399.0 6/30/73 13637.8 15453.1 9/30/73 16825.0 16196.3 12/31/73 14769.8 14708.5 3/31/74 15017.6 14293.9 6/30/74 12506.9 13212.8 9/30/74 9697.3 9888.7 12/31/74 10684.3 10816.1 3/31/75 13022.6 13298.9 6/30/75 15944.8 15341.8 9/30/75 13646.8 13660.6 12/31/75 13951.5 14842.3 3/31/76 18959.4 17065.4 6/30/76 20498.9 17486.8 9/30/76 20727.3 17819.3 12/31/76 23046.6 18394.3 3/31/77 23910.1 17024.4 6/30/77 26608.9 17587.4 9/30/77 25628.7 17097.2 12/31/77 27171.4 17077.4 3/31/78 26754.0 16234.8 6/30/78 30094.1 17616.6 9/30/78 34745.7 19142.8 12/31/78 31776.7 18199.5 3/31/79 36376.1 19492.6 6/30/79 40131.5 20023.8 9/30/79 45298.6 21555.4 12/31/79 47790.4 21585.9 3/31/80 42258.4 20696.9 6/30/80 49111.7 23489.7 9/30/80 56697.0 26124.8 12/31/80 62594.1 28602.3 3/31/81 65118.9 28997.1 6/30/81 64184.6 28330.7 9/30/81 54131.5 25431.9 12/31/81 58004.8 27195.3 3/31/82 53546.4 25206.7 6/30/82 53692.2 25066.2 9/30/82 56586.1 27953.1 12/31/82 68207.6 33053.8 3/31/83 77580.2 36364.6 6/30/83 87777.2 40401.4 9/30/83 85388.9 40347.1 12/31/83 85388.9 40510.1 3/31/84 80298.1 39539.0 6/30/84 79416.9 38524.1 9/30/84 87718.9 42257.6 12/31/84 89045.0 43051.1 3/31/85 99746.1 47004.5 6/30/85 107107.0 50451.8 9/30/85 103142.4 48386.3 12/31/85 117142.5 56710.4 3/31/86 132667.7 64708.5 6/30/86 141428.7 68522.8 9/30/86 132004.5 63742.7 12/31/86 136843.0 67294.6 3/31/87 160298.3 81664.0 6/30/87 164942.4 85763.1 9/30/87 180518.5 91420.2 12/31/87 142922.5 70828.0 3/31/88 159366.1 74860.9 6/30/88 169946.4 79847.6 9/30/88 173543.2 80117.9 12/31/88 178370.2 82591.4 3/31/89 192253.2 88447.3 6/30/89 204223.1 96254.6 9/30/89 226493.5 106562.0 12/31/89 222681.3 108761.3 3/31/90 217233.6 105490.2 6/30/90 229685.5 112125.1 9/30/90 175081.4 96715.7 12/31/90 183674.2 105385.5 3/31/91 219033.1 120692.9 6/30/91 226533.4 120416.0 9/30/91 246203.9 126856.1 12/31/91 270640.8 137492.1 3/31/92 293460.4 134018.3 6/30/92 278828.0 136567.3 9/30/92 289723.3 140877.1 12/31/92 336210.4 147927.9 3/31/93 368609.6 154429.0 6/30/93 393410.5 155181.5 9/30/93 429427.6 159193.2 12/31/93 444888.9 162881.6 3/31/94 420332.3 156703.8 6/30/94 404705.4 157363.5 9/30/94 431587.9 165057.0 12/31/94 411750.3 165031.8 3/31/95 423187.8 181101.0 6/30/95 458845.9 198387.7 9/30/95 496103.9 214154.7 12/31/95 497406.8 227046.9 3/31/96 535443.8 239231.6 6/30/96 572749.3 249969.5 9/30/96 584766.2 257697.4 12/31/96 609569.2 279177.3 3/31/97 594573.1 286661.4 6/30/97 674822.2 336707.7 9/30/97 767344.0 361926.3 12/31/97 761852.3 372319.8 3/31/98 853328.3 424256.8 6/30/98 850977.8 438265.8 9/30/98 684966.6 394671.4 12/31/98 807685.2 478724.2 3/31/99 778924.9 502575.5 6/30/99 901843.8 537999.5 9/30/99 883409.1 504403.8 12/31/99 1077255.4 579455.5 3/31/00 1081906.3 592744.2 6/30/00 1062104.7 576998.0 9/30/00 1163257.5 571408.9 12/31/00 1185608.3 526699.1 3/31/01 1124295.6 464256.8 6/30/01 1293235.6 491427.4 9/30/01 1053073.3 419294.9 12/31/01 1258356.0 464096.7 3/31/02 1320992.0 465372.0 6/30/02 1214018.0 403024.0 Average Annual Total Return - ------------------------------------------------------------- 1 Year 5 Years 10 Years Life of Fund - -6.13% 12.46% 15.85% 16.15% Liberty Acorn Fund $1,214,018 S&P 500 $403,024 - -------------------------------------------------------------------------------- Liberty Acorn Fund Top 10 Holdings (as a % of net assets) - -------------------------------------------------------------------------------- 1. International Game Technology 2.8% Slot Machines & Progressive Jackpots 2. AmeriCredit 2.1% Auto Lending 3. XTO Energy 1.8% Natural Gas Producer 4. First Health Group 1.7% PPO Network 5. Expeditors International of Washington 1.6% International Freight Forwarder 6. Christopher & Banks 1.4% Specialty Women's Retailer at Moderate Price Levels 7. Harley-Davidson 1.3% Motorcycles & Related Merchandise 8. Affiliated Managers Group 1.2% Mutual Fund & Pension Manager 9. Lincare Holdings 1.1% Home Health Care Services 10. SEI Investments 1.0% Mutual Fund Administration & Investment Management 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] Liberty Acorn International slid 1.23% in the second quarter, wiping out about half of its first quarter gain. For the six-month period, the Fund rose 1.12% - not a great return, but respectable in the current environment for equities. As has been the case all year, the Fund's performance fell between the returns posted by the benchmarks. This makes intuitive sense, as the companies we own are small cap by comparison to the EAFE Index, and about twice the size of those in the EMI Global ex US Index (our median market capitalization is $789 million vs. $343 for the EMI). The big story for international equities this quarter was the dollar. After a six-year, gravity-defying climb, the U.S. dollar lost 13.8% of its value vs. the euro, and 9.9% vs. the yen. Price swings of this magnitude are not uncommon when multi-year trends reverse. Dollar strength has been a drag on the performance of funds holding international equities for years, because of the need to mark portfolios down for currency depreciation. On fundamentals, the dollar has looked overvalued for a while but markets are known to overshoot, and assets can stay mispriced for extended periods. Even with the recent move, the dollar has retraced less than one-third of its gain against a trade-weighted basket of foreign currencies since 1995. If the return ride approaches a 'round trip,' there could be substantial weakness for the dollar ahead. The other big story has been small-cap resilience. Conventional wisdom says that large-cap stocks outperform small-cap stocks during market declines because they are more defensive. But that hasn't happened in this cycle, as discussed in the first quarter report at length. One angle not covered relates to the effect index funds and similar passive investment strategies have had on market behavior worldwide. During the boom, the popularity of index funds pushed up the prices of stocks included in the major indexes at the expense of those left out. Smaller companies lost sponsorship, as institutional shareholders focused on tracking their benchmarks. With the market decline, the absence of institutional sponsorship suddenly turned into an advantage, as selling pressure targeted those stocks in the major indexes disproportionately. This is not to say that we have escaped the bear market. Stocks of all types are being marked down wholesale, despite evidence that economic conditions are improving. The portfolio now has a current yield of 1.9%. Dividend plays are one type of stock that we find attractive. Smaller companies in Europe with strong balance sheets, solid franchises, and modest valuations are another. Finally, we have been slowly raising the Fund's exposure to Asia. Equity values there took a severe beating in the 1997-1998 crisis, and the consumer is coming back after a long period of retrenchment. Having led the world into the bear market, Asia may well be first to recover when the cycle turns. /s/ Leah Joy Zell Leah Joy Zell Lead Portfolio Manager - -------------------------------------------------------------------------------- Stinnes Delivers Gains -------------------------------------------------------------------------- Stinnes is a dominant European transport company with a large chemical distribution services business. It was spun-out of German energy giant Veba (now called E.on) in mid-1999. The Fund first bought the stock in the spring of 2000, then added to the position opportunistically, as management delivered on its promise to reorient the group toward higher margin businesses. The value of the company was ultimately recognized, and the Fund's patience rewarded, when Deutsche Bahn, a German rail company, offered to buy Stinnes at a 25% premium to the market price. We believe the deal is good for Deutsche Bahn, good for Stinnes, and good for Liberty Acorn International shareholders. - -------------------------------------------------------------------------------- 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 06/30/02, the Fund's position in Stinnes was 1.7%. I 6 Liberty Acorn International >At a Glance Ticker Symbol: ACINX Pretax and After-tax Average Annual Total Returns (Class Z) - -------------------------------------------------------------------------------- >through June 30, 2002 --------------------------------------------------- Year Life of to date* 1 year 5 years Fund --------------------------------------------------- Returns before taxes 1.12% -7.31% 4.09% 10.55% - -------------------------------------------------------------------------------- Returns after taxes 0.98 -7.44 2.54 9.62 on distributions - -------------------------------------------------------------------------------- Returns after taxes 0.69 -4.48 3.30 8.99 on distributions and sale of fund shares - -------------------------------------------------------------------------------- EMI Global 7.66 -0.99 -1.33 4.11 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. * Year to date data not annualized. - -------------------------------------------------------------------------------- Liberty Acorn International Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of June 30, 2002 [PIE CHART] 17.0% Consumer Goods & Services 1.7% Technology Services 3.1% Utilities 3.2% Real Estate 7.0% Energy 7.9% Broadcasting & Media Content 9.1% Business Services 17.4% Industrials 10.8% Financials 11.4% Health Care 3.0% Other Industries 8.4% Other* * Cash and other assets less liabilities. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn International (Class Z) - -------------------------------------------------------------------------------- >September 23, 1992 through June 30, 2002 This graph compares the results of $10,000 invested in Liberty Acorn International at inception on September 23, 1992 with the EMI Global ex-U.S., 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 index is 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 graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale 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 6/30/02: $18.61 Total Net Assets: $1,683.9 million [THE FOLLOWING WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Liberty Acorn EMI Global International ex-U.S. 9/23/92 10000.0 10000.0 9/30/92 10010.0 10000.0 12/31/92 10690.0 9538.0 3/31/93 12000.0 10968.7 6/30/93 12920.0 12126.9 9/30/93 13910.0 12871.1 12/31/93 15940.0 12508.7 3/31/94 15850.0 13629.2 6/30/94 15550.0 14122.6 9/30/94 16491.5 14040.5 12/31/94 15334.4 13537.6 3/31/95 14811.1 13250.6 6/30/95 15726.8 13338.7 9/30/95 16823.8 13845.3 12/31/95 16703.0 14056.2 3/31/96 18203.2 14862.8 6/30/96 19592.6 15499.6 9/30/96 19361.6 15129.6 12/31/96 20152.9 14905.9 3/31/97 20584.6 14800.1 6/30/97 21807.5 15852.6 9/30/97 21660.3 15252.5 12/31/97 20190.3 13552.8 3/31/98 23857.2 15762.1 6/30/98 24334.7 15459.9 9/30/98 20428.2 13047.6 12/31/98 23304.9 14732.8 3/31/99 23573.5 14978.0 6/30/99 27222.3 16103.9 9/30/99 29486.1 16839.1 12/31/99 41761.1 18462.3 3/31/00 46808.4 18890.6 6/30/00 40170.9 18330.8 9/30/00 38494.1 17294.8 12/31/00 33402.3 16139.4 3/31/01 29284.8 14577.4 6/30/01 28746.5 14974.4 9/30/01 23353.9 12608.1 12/31/01 26349.8 13772.3 3/31/02 26977.5 14645.1 6/30/02 26646.0 14827.0 Average Annual Total Return - ------------------------------------------------- 1 Year 5 Years Life of Fund - -7.31% 4.09% 10.55% Liberty Acorn International $26,646 EMI Global ex-U.S. $14,827 - -------------------------------------------------------------------------------- Liberty Acorn International Top 10 Holdings (as a % of net assets) - -------------------------------------------------------------------------------- 1. Rhoen-Klinikum (Germany) 2.7% Hospital Management 2. Stinnes (Germany) 1.7% Logistics Services 3. Autogrill (Italy) 1.6% Restaurants & Catering for Travelers 4. Orix (Japan) 1.3% Leasing & Other Financial Services 5. TVB (Hong Kong) 1.3% Television Programming & Broadcasting 6. Smith & Nephew (United Kingdom) 1.3% Medical Equipment & Supplies 7. Power Financial (Canada) 1.2% Life Insurance & Mutual Funds 8. Julius Baer (Switzerland) 1.1% Private Banking, Brokerage & Mutual Funds 9. Neopost (France) 1.1% Postage Meter Machines 10. Nintendo (Japan) 1.1% Entertainment Software & Hardware 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 second quarter down 9.95% vs. an 8.35% decline of the Russell 2000. For the six-month period ended June 30, 2002, the Fund fell 4.45% while the index dropped 4.70%. Accounting scandals, earnings disappointments and telecom meltdowns have caused the stock market to decline sharply in 2002. Even in tough markets, however, there are always companies that prosper. The Fund's second quarter and six-month performance benefited from the strength of niche holdings such as retailer Christopher & Banks. The company is seeing strong sales of its clothing, designed to appeal to female baby boomers. Micros Systems posted gains when most software names froze up thanks to its dominant niche position in hotel and restaurant software. Lincare Holdings, a provider of home respiratory care, also posted positive returns. Demand for its services is strong and Lincare is dominant in its niche. It is prospering while several of its competitors have gone out of business. The Fund's big losers were stocks of companies that are highly leveraged. Magellan Health Services, for example, has roughly $20-a-share of debt on its books making the equity piece extremely volatile. Leverage has the effect of magnifying the upside and the downside. Heavy debt also was an issue with Western Wireless. The company is less leveraged than many cellular phone companies but, again, the magnified impact of leverage drove the stock down sharply. Mediacom Communications, a cable television franchise, also dropped largely due to its highly leveraged status. The tumble in telecoms provided another performance hurdle. In addition to Mediacom and Western Wireless, the Fund holds Telephone and Data Systems and Seachange International, two additional telecom names that were among the Fund's losers. Telecom sank as overcapacity in the sector drove prices down. Fear is the current market fad. The papers are loaded with stories predicting prolonged bear market conditions and new scandals seem to be popping up each day. In response, investors are taking money out of the market. Like those investors who jumped in at the high in 1999 just in time to catch the ride down, investors who jump out now may miss out on some terrific deals. I would argue that this may be a better time to invest than any time in the last two years. /s/ Robert A. Mohn Robert A. Mohn Lead Portfolio Manager - -------------------------------------------------------------------------------- Sizing Up -------------------------------------------------------------------------- Christopher & Banks Christopher & Banks is a mall-based retailer that offers moderate-priced apparel designed to appeal to female baby boomers. Its customers traditionally shopped at department stores but as those stores began focusing more on junior sizes, they alienated this customer base. Christopher & Banks has also responded to a need for larger-sized options among its target customer, launching a plus-size concept called CJ Banks. Christopher & Banks gets 100% of its merchandise overseas - as do many retailers - but the company has developed exclusive relationships with its suppliers and is able to buy direct as opposed to paying an agent. The franchise is posting strong same-store sales and was up 29% for the quarter and 25% year-to-date. - -------------------------------------------------------------------------------- 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 6/30/02, the Fund's positions in the holdings mentioned were: Christopher & Banks, 1.6%; Micros Systems, 4.5%; Lincare Holdings, 2.5%; Magellan Health Services, 0.3%; Western Wireless, 0.7%; Mediacom Communications, 1.3%; Telephone and Data Systems, 1.8%; Seachange International, 1.1%. U 8 Liberty Acorn USA >At a Glance Ticker Symbol: AUSAX Pretax and After-tax Average Annual Total Returns (Class Z) - -------------------------------------------------------------------------------- >through June 30, 2002 -------------------------------------------- Year Life of to date* 1 year 5 years Fund -------------------------------------------- Returns before taxes -4.45% -9.60% 9.32% 13.41% - -------------------------------------------------------------------------------- Returns after taxes -4.45 -9.96 8.21 12.41 on distributions - -------------------------------------------------------------------------------- Returns after taxes -2.73 -5.76 7.37 10.99 on distributions and sale of fund shares - -------------------------------------------------------------------------------- Russell 2000 (pretax) -4.70 -8.60 4.44 7.12 - -------------------------------------------------------------------------------- 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. * Year to date data not annualized. - -------------------------------------------------------------------------------- Liberty Acorn USA Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of June 30, 2002 [PIE CHART] 33.3% Information Software & Services 21.0% Telecommunications 5.8% Media 3.8% Computer Related Hardware 2.7% 4.6% Industrial Goods & Services 5.3% Energy & Minerals 11.7% Finance 18.3% Health Care 14.5% Other* 12.3% Consumer Goods & Services * Other includes cash and other assets less liabilities of 10.1%. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn USA (Class Z) - -------------------------------------------------------------------------------- >September 4, 1996 through June 30, 2002 This graph compares the results of $10,000 invested in Liberty Acorn USA at inception on September 4, 1996 to the Russell 2000 Index, 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 graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale 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 6/30/02: $16.74 Total Net Assets: $325.0 million [THE FOLLOWING WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Liberty Acorn USA Russell 2000 9/4/96 10000.0 10000.0 9/30/96 10720.0 10359.9 10/31/96 10810.0 10200.2 11/30/96 11260.0 10620.5 12/31/96 11650.0 10898.9 1/31/97 12210.0 11116.7 2/28/97 11920.0 10847.1 3/31/97 11480.0 10335.3 4/30/97 11420.0 10364.1 5/31/97 12510.0 11517.1 6/30/97 13320.0 12010.7 7/31/97 14000.0 12569.6 8/31/97 14350.0 12857.2 9/30/97 15340.0 13798.3 10/31/97 15140.0 13192.1 11/30/97 15170.0 13106.8 12/31/97 15413.1 13336.2 1/31/98 15076.7 13125.7 2/28/98 16320.4 14096.3 3/31/98 17400.9 14677.7 4/30/98 17992.1 14758.8 5/31/98 17227.6 13964.0 6/30/98 17525.0 13993.4 7/31/98 16591.9 12860.5 8/31/98 13936.0 10363.3 9/30/98 14151.3 11174.3 10/31/98 14653.8 11630.1 11/30/98 15402.4 12239.4 12/31/98 16305.1 12996.7 1/31/99 15776.2 13169.4 2/28/99 14894.9 12102.8 3/31/99 15016.1 12291.7 4/30/99 16095.7 13393.2 5/31/99 16734.7 13588.8 6/30/99 17650.2 14203.3 7/31/99 18047.9 13813.6 8/31/99 16821.8 13302.3 9/30/99 16866.0 13305.2 10/31/99 17860.1 13359.1 11/30/99 18810.0 14156.8 12/31/99 20059.0 15759.4 1/31/00 19053.1 15506.3 2/29/00 19867.4 18066.9 3/31/00 19819.5 16875.8 4/30/00 17568.1 15860.3 5/31/00 16526.2 14935.9 6/30/00 16834.0 16237.9 7/31/00 16748.3 15715.4 8/31/00 17765.2 16914.5 9/30/00 17642.6 16417.4 10/31/00 17654.9 15684.5 11/30/00 16625.7 14074.5 12/31/00 18255.2 15283.3 1/31/01 19406.9 16079.0 2/28/01 19370.1 15023.9 3/31/01 18904.6 14289.0 4/30/01 21195.7 15406.9 5/31/01 22384.1 15785.6 6/30/01 23008.9 16330.6 7/31/01 23254.0 15446.7 8/31/01 22616.9 14947.8 9/30/01 19345.6 12935.6 10/31/01 19394.6 13692.6 11/30/01 20546.3 14752.6 12/31/01 21770.2 15663.2 1/31/02 22031.2 15500.3 2/28/02 21285.6 15075.5 3/31/02 23099.8 16287.1 4/30/02 23447.7 16435.6 5/31/02 22130.6 15706.1 6/30/02 20801.0 14926.8 Average Annual Total Return - ---------------------------------------------- 1 Year 5 Years Life of Fund - -9.60% 9.32% 13.41% Liberty Acorn USA $20,801 Russell 2000 $14,927 - -------------------------------------------------------------------------------- Liberty Acorn USA Top 10 Holdings (as a % of net assets) - -------------------------------------------------------------------------------- 1. JDA Software 5.0% Applications/Software & Services for Retailers 2. Micros Systems 4.5% Information Systems for Restaurants & Hotels 3. AmeriCredit 4.3% Auto Lending 4. Conectiv 4.0% Electric Utility in New Jersey, Delaware & Maryland 5. ITT Educational Services 3.8% Technology Oriented Postsecondary Degree Programs 6. Beverly Enterprises 3.0% Nursing Homes 7. Markel 2.6% Specialty Insurance 8. Salem Communications 2.5% Radio Stations for Religious Programming 9. Lincare Holdings 2.5% Home Health Care Services 10. Edwards Lifesciences 2.4% 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 rose 1.11% for the second quarter, performing better than the EAFE and slightly worse than its benchmark. The SSB World ex US Cap Range $2-$10B gained 1.42% and the EAFE Index fell 2.12% during the same time period. Year-to-date, the Fund is down 1.90% while the SSB World ex US $2-$10B is up 5.64%. The relative underperformance for the six-month period can be largely attributed to the weakness in the Fund's UK and Japanese holdings in the early months of the year. The Fund's top performers for the quarter were two Irish financial names: Irish Life & Permanent, up 17%, and Anglo Irish Bank, up 38%. European financial stocks have benefited from low interest rates and tame inflation. Irish Life is a major player in one of the fastest growing life assurance markets in Europe. The company has managed to gain considerable market share by cutting costs, developing a multi-channel network for its products, and improving customer service. Anglo Irish Bank has exceptional asset quality and has earned the loyalty of its customers. As a result, loan growth has outpaced its peers and the share price has followed. Another winner for the quarter was Givaudan, a Swiss-based manufacturer of flavors and fragrances. The stock gained nearly 28% in the quarter on news that the company would not go ahead with a potentially expensive acquisition. Japanese holdings were good performers for the Fund as well, helped in part by the weakening dollar. The yen strengthened 10% against the U.S. dollar during the quarter. Located in Tokyo, Oriental Land is the world's largest Disney theme park. The stock increased 15% in the quarter. Other Japanese winners included KAO, a maker of soap and cosmetics, which rose 26%, and Fuji TV, which rose 18%. On the downside, two blow-ups dominated the quarter's losses. Amdocs, a software provider to the telecommunications industry, crashed when management pre-announced weak earnings for the quarter. Since the bulk of its business is based on long-term contracts, Amdocs' management has historically been able to set aggressive growth targets and achieve them. The stock's decline mirrors the general malaise in software and telecom stocks worldwide. French engineering and construction company Technip was off 21% in the quarter. Management preannounced a very weak quarter and the new revenue and earnings targets were below analyst expectations. The investment environment both at home and abroad has been a tough one for investors. Given the breadth of corporate problems around the world, and the lack of a sustained economic recovery, we believe volatility will continue to be high and investor confidence will continue to be tested. Against this backdrop, stock prices have been marked down a lot, which should lead to a number of higher-quality names selling at bargain-basement prices. In a weak U.S. market, the euro and the yen may continue to strengthen against the U.S. dollar. /s/ Todd M. Narter /s/ Christopher J. Olson Todd M. Narter Christopher J. Olson Co-Portfolio Manager Co-Portfolio Manager - -------------------------------------------------------------------------------- Essilor's Clear Vision -------------------------------------------------------------------------- Based in France, Essilor International is a global leader in eyeglass lens manufacturing. As the world population ages, Essilor stands to benefit from a larger percentage of the population wearing glasses and demanding higher performing technology (polycarbonate lenses, bifocals, photochromic lenses). Essilor has established a strong customer base throughout the world; its initiative to buy up laboratories in the United States has taken the competition by surprise and is firming up market share gains. In Japan, its joint venture with Nikon broke even in 2001, after 18 months in operation. The company's second quarter results, reported in mid-July, confirmed an acceleration of organic growth on the back of the success of its photo chromic and polycarbonate lenses. Added to the Fund in the second quarter, Essilor is outperforming its market and the index. - -------------------------------------------------------------------------------- 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 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. 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 6/30/02, the Fund's positions in the holdings mentioned were: Irish Life & Permanent, 3.5%; Anglo Irish Bank, 2.4%; Givaudan, 3.2%; Oriental Land, 4.6%; KAO, 0.0%; Fuji TV, 0.0%; Amdocs, 0.5%; Technip, 2.1%; Essilor International, 2.4%. F40 10 Liberty Acorn Foreign Forty >At a Glance Ticker Symbol: ACFFX Pretax and After-tax Average Annual Total Returns (Class Z) - -------------------------------------------------------------------------------- >through June 30, 2002 -------------------------------------------------- Year Life of to date* 1 year 3 years Fund -------------------------------------------------- Returns before taxes -1.90% -12.47% -2.78% 5.30% - -------------------------------------------------------------------------------- Returns after taxes -1.90 -12.47 -2.91 5.16 on distributions - -------------------------------------------------------------------------------- Returns after taxes -1.17 -7.66 -2.23 4.26 on distributions and sale of fund shares - -------------------------------------------------------------------------------- SSB World ex US 5.64 -2.61 -0.74 1.93 Cap Range $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. * Year to date data not annualized. - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of June 30, 2002 [PIE CHART] 7.4% Energy & Minerals 9.9% Information Technology 10.1% Industrial Goods/Services 23.0% Finance 21.0% Health Care 9.3% Other* 19.3% Consumer Goods/Services * Other includes cash and other assets less liabilities of 5.6%. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Foreign Forty (Class Z) - -------------------------------------------------------------------------------- >November 23, 1998 through June 30, 2002 This graph compares the results of $10,000 invested in Liberty Acorn Foreign Forty at inception on November 23, 1998 to the SSB World ex US Cap Range $2-$10B Index, 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 graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale 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 6/30/02: $11.86 Total Net Assets: $41.2 million [THE FOLLOWING WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] SSB World Liberty Acorn ex US Cap Foreign 40 Range $2-$10B 11/23/98 10000.0 10000.0 11/30/98 10140.0 10045.1 12/31/98 11000.0 10338.8 1/31/99 11790.0 10309.8 2/28/99 11590.0 10051.8 3/31/99 11980.0 10449.2 4/30/99 12240.0 11032.4 5/31/99 12170.0 10566.6 6/30/99 13109.8 10952.7 7/31/99 13510.8 11362.0 8/31/99 13771.3 11489.6 9/30/99 13621.0 11529.7 10/31/99 14132.2 11535.1 11/30/99 16998.7 11864.4 12/31/99 19975.5 12771.7 1/31/00 19664.8 12154.3 2/29/00 24245.2 12310.7 3/31/00 23092.6 12679.7 4/30/00 21258.4 12171.7 5/31/00 18923.1 11975.8 6/30/00 19852.5 12610.8 7/31/00 19469.0 12203.1 8/31/00 20266.3 12586.3 9/30/00 19236.9 12168.0 10/31/00 18479.9 11791.0 11/30/00 16128.3 11439.8 12/31/00 17309.1 11998.2 1/31/01 17874.3 11938.6 2/28/01 15825.5 11505.0 3/31/01 13706.0 10607.5 4/30/01 14412.5 11390.6 5/31/01 14382.2 11293.2 6/30/01 13763.2 10999.4 7/31/01 13062.4 10723.4 8/31/01 12778.0 10626.2 9/30/01 10624.6 9391.9 10/31/01 11305.1 9769.2 11/30/01 11924.7 10118.3 12/31/01 12280.2 10140.2 1/31/02 11650.5 9840.8 2/28/02 11508.3 9990.6 3/31/02 11914.6 10562.2 4/30/02 12290.4 10755.6 5/31/02 12432.6 11097.3 6/30/02 12046.6 10712.1 Average Annual Total Return - ------------------------------------------- 1 Year 3 Years Life of Fund - -12.47% -2.78% 5.30% Liberty Acorn Foreign Forty $12,047 SSB World ex-US $2-$10B $10,140 - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty Top 10 Holdings (as a % of net assets) - -------------------------------------------------------------------------------- 1. Rhoen-Klinikum (Germany) 4.8% Hospital Management 2. Oriental Land (Japan) 4.6% Disney Theme Park Operator 3. Kerry Group (Ireland) 4.5% Food Ingredients 4. DNB Holding (Norway) 4.3% Universal Bank 5. Synthes-Stratec (Switzerland) 4.1% Products for Orthopedic Surgery 6. Pargesa Holdings (Switzerland) 3.6% Industrial & Media Conglomerate 7. Irish Life & Permanent (Ireland) 3.5% Life Insurance & Savings Products 8. Alliance Unichem (United Kingdom) 3.4% Pharmaceutical Wholesaler & Retailer 9. Orix (Japan) 3.4% Finance Leasing 10. Givaudan (Switzerland) 3.2% Industrial Fragrances & Flavors 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 declined 4.30% during the quarter, beating the 9.31% fall of the S&P MidCap 400 and the 13.40% drop in the large-cap S&P 500. For the six-month period ended June 30, 2002, Liberty Acorn Twenty fell 4.99% vs. a 3.21% loss for the S&P MidCap 400 and a 13.16% decline for the S&P 500. Although we are always dissatisfied when losing money, we are pleased with the Fund's relative outperformance during a particu larly challenging quarter for the equity markets and the subsequent improvement for the year-to-date return relative to the Fund's benchmark. A new purchase, Fidelity National Financial, topped the Fund's winners' list for the quarter with a gain of 21% from the Fund's purchase price. Fidelity National is the country's largest title insurance company and has enjoyed a boom in business from new home purchases and mortgage refinancings. Lincare Holdings, Boston Scientific, and First Health Group were all up 16% to 19% due to strong growth in the health care industry, which has generally been insulated from the economic downturn. By far the Fund's biggest losing position in 2002 has been Dynegy. A competitor to Enron in the energy trading business, Dynegy has been closely scrutinized. Our assessment of the stock for Liberty Acorn Twenty led to our selling it and buying a different security that offered a more attractive risk/reward profile. This new stock, Moody's Investor Services, returned 15% during the quarter from the Fund's purchase price. Moody's Investor Services provides rating services for credit obligations. Because of the increased market volatility, we are analyzing a growing number of investment candidates. Should prices drop to favorable levels, we will swap into these stocks in an effort to upgrade the quality of the Fund's portfolio. In addition, we are carefully managing the Fund to attempt to minimize any taxable distributions this year. /s/ John H. Park John H. Park Lead Portfolio Manager - -------------------------------------------------------------------------------- Valuing Fidelity -------------------------------------------------------------------------- National Financial Fidelity National Financial (FNF) is the largest title insurance company in the country. Its business has benefited from the strong growth of home purchases and mortgage refinancings. While this business is tied to the interest rate cycle, we like the stock's long-term prospects given the company's dominant position, high switching costs, low level of losses, conservative reserves and generous cash flow generation. In addition, FNF is undervalued because it owns two publicly traded subsidiaries in related businesses: Fidelity National Information Services (FNIS) and Micro General (MGEN). By stripping out the per share value of its two subsidiaries, FNF was trading at its book value and we felt it was worth 1.6-times book value. Since our purchase, the stock has appreciated 21%. - -------------------------------------------------------------------------------- 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 6/30/02, the Fund's positions in the holdings mentioned were: Fidelity National Financial, 3.0%; Lincare Holdings, 4.1%; Boston Scientific, 5.0%; First Health Group, 6.3%; Dynegy, 0.0%; Moody's Investor Services, 2.2%. 20 12 Liberty Acorn Twenty >At a Glance Ticker Symbol: ACTWX Pretax and After-tax Average Annual Total Returns (Class Z) - -------------------------------------------------------------------------------- >through June 30, 2002 ------------------------------------------- Year Life of to date* 1 year 3 years Fund ------------------------------------------- Returns before taxes -4.99% -0.96% 6.76% 13.68% - -------------------------------------------------------------------------------- Returns after taxes -4.99 -1.00 5.91 12.92 on distributions - -------------------------------------------------------------------------------- Returns after taxes -3.06 -0.55 5.22 11.04 on distributions and sale of fund shares - -------------------------------------------------------------------------------- S&P MidCap 400 -3.21 -4.72 6.66 10.67 (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. * Year to date data not annualized. - -------------------------------------------------------------------------------- Liberty Acorn Twenty Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of June 30, 2002 [PIE CHART] 21.7% Health Care 4.7% Media 5.6% Industrial Goods/Services 10.4% Consumer Goods/Services 12.4% Computer Related Hardware 19.7% Software & Services 18.0% Finance 7.5% Other* * Cash and other assets less liabilities. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Twenty (Class Z) - -------------------------------------------------------------------------------- >November 23, 1998 through June 30, 2002 This graph compares the results of $10,000 invested in Liberty Acorn Twenty at inception on November 23, 1998 to the S&P MidCap 400, 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 graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale 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 6/30/02: $14.47 Total Net Assets: $117.7 million [THE FOLLOWING WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Liberty Acorn Twenty S&P MidCap 400 11/23/98 10000.0 10000.0 11/30/98 10030.0 9911.3 12/31/98 10710.0 11108.9 1/31/99 11000.0 10676.2 2/28/99 10710.0 10117.2 3/31/99 11480.0 10399.9 4/30/99 12710.0 11220.2 5/31/99 12730.0 11268.8 6/30/99 13040.0 11872.2 7/31/99 13190.0 11619.9 8/31/99 12060.0 11221.7 9/30/99 12110.0 10875.1 10/31/99 12970.0 11429.3 11/30/99 13250.0 12029.2 12/31/99 13848.0 12744.1 1/31/00 13474.0 12385.2 2/29/00 13554.9 13252.0 3/31/00 14171.5 14361.1 4/30/00 13463.9 13859.6 5/31/00 13100.0 13686.7 6/30/00 14319.8 13887.7 7/31/00 13931.3 14107.1 8/31/00 15431.3 15682.2 9/30/00 15798.2 15574.8 10/31/00 15927.7 15046.7 11/30/00 14381.6 13910.9 12/31/00 15465.2 14975.1 1/31/01 15913.9 15308.6 2/28/01 14983.6 14435.0 3/31/01 14403.5 13361.8 4/30/01 15454.2 14835.8 5/31/01 16297.0 15181.3 6/30/01 16023.4 15120.0 7/31/01 15870.2 14894.8 8/31/01 15125.9 14407.6 9/30/01 14206.5 12615.5 10/31/01 14513.0 13173.5 11/30/01 16023.4 14153.5 12/31/01 16702.5 14884.7 1/31/02 16373.5 14807.3 2/28/02 16022.6 14825.6 3/31/02 16581.9 15885.4 4/30/02 15682.6 15811.1 5/31/02 16143.2 15544.4 6/30/02 15869.0 14406.7 Average Annual Total Return - ---------------------------------------------- 1 Year 5 Years Life of Fund - -0.96% 6.76% 13.68% Liberty Acorn Twenty $15,869 S&P MidCap 400 $14,407 - -------------------------------------------------------------------------------- Liberty Acorn Twenty Top 10 Holdings (as a % of net assets) - -------------------------------------------------------------------------------- 1. H&R Block 8.2% Tax Preparation 2. First Health Group 6.3% PPO Network 3. Synopsys 6.1% Software for Designing Semiconductor Chips 4. Expeditors International of Washington 5.6% International Freight Forwarder 5. Associated Banc-Corp 5.3% Midwest Bank 6. Markel 5.0% Specialty Insurance 7. Boston Scientific 5.0% Stents & Catheters 8. International Game Technology 4.8% Slot Machines & Progressive Jackpots 9. Liberty Media Group, AT&T 4.7% CATV Programming & Media Company Holdings 10. Jones Apparel 4.5% Women's Apparel 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. - -------------------------------------------------------------------------------- 13 20 Liberty Acorn Fund >Major Portfolio Changes in the Second Quarter (Unaudited) Number of Shares ---------------------- 03/31/02 06/30/02 Additions - -------------------------------------------------------------------------------- Information Advanced Digital Information 525,000 615,000 American Management Systems 700,000 775,000 AnswerThink Consulting 853,000 2,040,000 Aspect Communications 600,000 1,200,000 Avid Technology 1,500,000 1,850,000 Avnet 540,000 585,000 Avocent 427,000 517,000 Bsquare 3,200,000 3,300,000 Celestica (Canada) 200,000 260,000 Ciber 2,800,000 3,100,000 Commonwealth Telephone 780,000 800,000 Crown Castle International 1,000,000 2,000,000 Cumulus Media, Cl. A 520,000 575,000 Dionex 431,000 475,000 E.Piphany 758,000 3,250,000 Igate Capital 3,959,000 4,100,000 Indus International 1,400,000 2,350,000 Insight Communications 200,000 1,400,000 Integrated Circuit Systems 590,000 785,000 JD Edwards 3,225,000 3,350,000 JDA Software Group 1,275,000 1,375,000 Kronos 1,100,000 1,238,000 MAPICS 1,700,000 1,743,000 Mediacom Communications 1,600,000 2,000,000 Mettler Toledo 510,000 700,000 Microsemi 339,000 519,000 Novell 6,550,000 7,000,000 RealNetworks 0 700,000 RSA Security 1,000,000 1,609,000 Smart Force 0 4,060,000 THQ 1,275,000 1,500,000 (includes the effect of a 3 for 2 stock split) TietoEnator (Finland) 255,000 350,000 Torex (United Kingdom) 0 600,000 Travelsky Technology (Hong Kong) 0 7,000,000 Trimble Navigation 0 485,000 Western Wireless 1,200,000 1,700,000 Witness Systems 0 343,000 Zebra Technologies 140,000 193,000 - -------------------------------------------------------------------------------- Health Care Ciphergen Biosystems 806,000 1,080,000 Dendrite International 0 1,000,000 Edwards Lifesciences 670,000 984,000 First Health Group 3,323,000 3,508,000 Inhale Therapeutic Systems 745,000 1,583,000 Kensy Nash 150,000 536,000 Lincare Holdings 1,835,000 2,096,000 Martek Biosciences 0 160,000 Medarex 280,000 355,000 Nestor Healthcare (United Kingdom) 0 700,000 Rhoen-Klinikum (Germany) 100,000 210,000 Sangamo Biosciences 78,000 500,000 Sola International 127,000 600,000 Steris 858,000 1,055,000 Synaptic Pharmaceutical 260,000 598,000 Syncor International 557,000 737,000 Techne 0 360,000 Visx 682,000 770,000 Yuhan (South Korea) 0 80,000 - -------------------------------------------------------------------------------- Consumer Goods/Services Alliance Gaming 190,000 1,660,000 (includes the effect of a 2 for 1 stock split) Cheesecake Factory 0 108,000 Chico's Fas 788,000 1,130,000 Coach 872,000 1,012,000 Columbia Sportswear 120,000 250,000 Furniture Brands International 738,000 970,000 Genesco 150,000 250,000 Hon Industries 624,000 725,000 International Speedway Motors 0 255,000 Kerry Group (Ireland) 650,000 1,000,000 LaQuinta 384,000 2,150,000 Lion Nathan (Australia) 0 2,000,000 Magna Entertainment, Cl. A (Canada) 0 1,750,000 Michaels Stores 940,000 1,115,000 Mohawk Industries 556,000 670,000 NH Hoteles (Spain) 0 430,000 Orkla (Norway) 413,500 551,500 Princeton Review 610,000 1,250,000 Scotts Company 370,000 570,000 SCP Pool 0 450,000 Six Flags 1,450,000 1,900,000 Steiner Leisure 1,060,000 1,253,000 Steven Madden 448,000 503,000 Tweeter Home Entertainment 200,000 400,000 Uni-Charm (Japan) 205,000 255,000 A 14 Number of Shares ---------------------- 03/31/02 06/30/02 Additions, continued - -------------------------------------------------------------------------------- Finance Aeon Credit Service (Japan) 0 60,000 Anchor Bancorp Wisconsin 962,000 1,008,000 Associated Banc-Corp 1,125,000 1,608,000 Eaton Vance 450,000 470,000 First Federal Capital 13,000 200,000 Glacier Bancorp 673,000 795,000 HCC Insurance Holdings 1,000,000 1,200,000 Knight Trading 720,000 2,624,000 Neuberger Berman 1,050,000 1,100,000 Peoples Bank Bridgeport 1,981,000 2,163,000 Scottish Annuity & Life (Bermuda) 0 225,000 Umpqua Holdings 227,000 284,000 - -------------------------------------------------------------------------------- Industrial Goods/Services Ametek 698,000 850,000 Cadiz 600,000 1,800,000 Clark/Bardes Consulting 887,000 1,500,000 Cuno 344,000 600,000 Donaldson 225,000 550,000 Esco Technologies 266,000 750,000 Expeditors International of Washington 2,814,000 2,900,000 (includes the effect of a 2 for 1 stock split) Grafton Group (Ireland) 0 1,300,000 Hagemeyer (Netherlands) 576,600 675,000 Insituform Technologies 200,000 850,000 Jenoptik (Germany) 0 250,000 Mobile Mini 520,000 825,000 Nuco2 48,000 434,000 Pall 0 600,000 Sembcorp Logistics (Singapore) 980,000 4,500,000 Spartech 1,100,000 1,600,000 Tetra Tech 1,100,000 2,000,000 Toppan Forms (Japan) 325,000 390,000 UTI Worldwide 400,000 500,000 Watsco 543,000 1,000,000 - -------------------------------------------------------------------------------- Energy/Minerals Gamesa (Spain) 340,000 495,000 Harmony Gold (South Africa) 0 200,000 Southwestern Energy 0 700,000 - -------------------------------------------------------------------------------- Other Industries Chelsea Properties Group 0 400,000 Consorcio (Mexico) 263,000 2,800,000 Federal Realty Investment Trust 0 380,000 General Growth Properties 505,000 615,000 Glimcher Realty Trust 0 525,000 Keystone Property Trust 0 680,000 Mills 0 425,000 The Rouse Company 1,000,000 1,160,000 Sales - -------------------------------------------------------------------------------- Information Independent News & Media (Ireland) 3,320,000 2,688,000 Konami (Japan) 265,000 0 Martha Stewart Living Omnimedia 700,000 500,000 Pemstar 818,000 0 Peregrine Systems 200,000 0 Telephone & Data Systems 380,000 350,000 Choicepoint 556,000 463,000 (includes the effect of a 4 for 3 stock split) - -------------------------------------------------------------------------------- Consumer Goods/Services Hot Topic 693,000 648,000 Pier 1 Imports 900,000 600,000 ITT Educational Services 2,600,000 2,400,000 (includes the effect of a 2 for 1 stock split) - -------------------------------------------------------------------------------- Finance AmeriCredit 4,466,000 4,341,000 Anglo Irish Bank (Ireland) 3,000,000 2,827,000 Banca Fideuram (Italy) 1,000,000 0 - -------------------------------------------------------------------------------- Industrial Goods/Services Sero Group (United Kingdom) 5,100,000 4,000,000 Wackenhut, Cl. B 1,526,000 0 - -------------------------------------------------------------------------------- Energy/Minerals Enerflex Systems (Canada) 600,000 572,900 Hanover Compressor 840,000 800,000 Tesoro Petroleum 1,120,000 870,000 - -------------------------------------------------------------------------------- Other Industries AMB Property 0 540,000 Sierra Pacific Resources 300,000 0 15 A Liberty Acorn Fund >Statement of Investments (Unaudited) June 30, 2002 Number of Shares Value (000) - -------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 92.4% - -------------------------------------------------------------------------------- Information: 22.6% Media >Broadcasting: 0.2% 2,300,000 TVB (Hong Kong) $ 9,790 Television Programming & Broadcasting 200,000 Young Broadcasting (b) 3,556 Television Stations - -------------------------------------------------------------------------------- 13,346 >Radio: 0.5% 850,000 Salem Communications (b) 21,140 Radio Stations for Religious Programming 575,000 Cumulus Media, Cl. A 7,923 Radio Stations in Small Cities - -------------------------------------------------------------------------------- 29,063 >Television Programming/CATV: 1.2% 2,500,000 Liberty Media Group, AT&T (b) 25,000 CATV Programming & Media Company Holdings 1,400,000 Insight Communications (b) 16,422 CATV Franchises in MidWest 900,000 Corus Entertainment (Canada) (b) 15,976 CATV Programming & Radio Stations 2,000,000 Mediacom Communications (b) 15,580 Cable Television Franchises - -------------------------------------------------------------------------------- 72,978 Telecommunications >Telecommunications/Wireline Communications: 0.6% 800,000 Commonwealth Telephone (b) 32,192 Rural Phone Franchises & CLEC 700,000 Time Warner Telecom (b) 1,176 Facilites Based End-to-End CLEC - -------------------------------------------------------------------------------- 33,368 >Mobile Communications: 0.7% 350,000 Telephone & Data Systems 21,193 Cellular & Telephone Services 2,000,000 Crown Castle International (b) 7,860 Communication Towers in USA & UK 1,700,000 Western Wireless (b) 5,440 Rural Cellular Phone Franchises 533,000 COMARCO (b)(c) 4,200 Wireless Network Testing - -------------------------------------------------------------------------------- 38,693 Computer Related Hardware >Computer Hardware/Related Systems: 1.2% 1,925,000 Seachange International (b)(c) 16,902 Systems for Video on Demand & Ad Insertion 331,900 Neopost (France) (b) 13,263 Postage Meters 193,000 Zebra Technologies (b) 9,306 Bar Code Printing Hardware, Supplies & Software 517,000 Avocent (b) 8,231 Computer Control Switches 360,000 Excel Technologies (b) 7,560 Laser Systems & Electro-Optical Components 365,000 Universal Electronics (b) 5,460 Remote Control Devices for Consumer Electronics Prinicipal Amount (000) or Number of Shares Value (000) - -------------------------------------------------------------------------------- 615,000 Advanced Digital Information (b) $ 5,184 Data Storage Products 370,000 American Power Conversion (b) 4,673 Uninterruptable Power Systems 230,000 Applied Films (b) 2,567 Thin-Film Glass Coating Equipment $3,000 Tidel Technologies, 6% Note Due 9/8/04 (b) 600 63,158 Tidel Technologies (b) 0 ATM Machines - -------------------------------------------------------------------------------- 73,746 >Gaming Equipment: 3.2% 2,880,000 International Game Technology (b) 163,296 Slot Machines & Progressive Jackpots 1,562,000 Shuffle Master (b)(c) 28,694 Card Shufflers, Casino Games & Slot Machines - -------------------------------------------------------------------------------- 191,990 >Contract Manufacturing: 0.2% 338,000 Jabil Circuit (b) 7,135 Electronic Manufacturing Services 260,000 Celestica (Canada) (b) 5,873 Electronic Manufacturing Services - -------------------------------------------------------------------------------- 13,008 >Instrumentation: 1.0% 700,000 Mettler Toledo (b) 25,809 Laboratory Equipment 475,000 Dionex (b) 12,725 Ion & Liquid Chromatography 1,320,000 Spectris (United Kingdom) 7,872 Electronic Instrumentation & Controls 485,000 Trimble Navigation (b) 7,518 GPS-Based Guidance, Positioning & Navigation Systems 227,000 Varian (b) 7,480 Analytical Instruments - -------------------------------------------------------------------------------- 61,404 >Semiconductors/Related Equipment: 0.9% 785,000 Integrated Circuit Systems (b) 15,849 Silicon Timing Devices 664,000 Asyst Technologies (b) 13,512 Semiconductor Fab Automation Equipment 825,000 Axcelis Technologies (b) 9,322 Ion Implantation Tools 261,000 Actel (b) 5,486 Field Programmable Gate Arrays 519,000 Microsemi (b) 3,425 Analog/Mixed Signal Semiconductors 583,000 IXYS (b) 3,137 Power Semiconductors - -------------------------------------------------------------------------------- 50,731 Software/Services >Business Software: 5.2% 3,350,000 JD Edwards (b) 40,703 Mid Market ERP & Supply Chain Software 1,375,000 JDA Software Group (b) 38,858 Applications/Software & Services for Retailers 1,238,000 Kronos (b)(c) 37,745 Labor Management Solutions 1,025,000 Micros Systems (b)(c) 28,403 Information Systems for Restaurants & Hotels A 16 Number of Shares Value (000) - -------------------------------------------------------------------------------- >Business Software--continued 1,950,000 Systems & Computer Technology (b)(c) $ 26,345 Enterprise Software & Services 7,000,000 Novell (b) 22,470 Directory, Identity Management & Authorization Software 1,850,000 Avid Technology (b)(c) 17,131 Digital Nonlinear Editing Software & Systems 3,250,000 E.Piphany (b) 14,267 CRM Software 3,200,000 Multex.Com (b)(c) 13,056 Provider Of Investment Info To Institutions & Individuals 650,000 Hyperion Solutions (b) 11,854 Analytical Application Software 1,000,000 MRO Software (b) 11,380 Enterprise Management Software 1,743,000 MAPICS (b)(c) 9,743 Mid Market ERP Software 3,300,000 Bsquare (b)(c) 7,458 Software To Help Design Mobile Devices 2,350,000 Indus International (b)(c) 5,617 Enterprise Asset Management Software 330,000 SPSS (b)(c) 5,128 Statistical Analysis Software 1,200,000 Aspect Communications (b) 3,840 Call Center Software 600,000 Actuate (b) 2,700 Information Delivery Software & Solutions 200,000 Radiant Systems (b) 2,606 Point of Sale Systems for Convenience Stores 343,000 Witness Systems (b) 2,531 Customer Experience Management Software 130,000 Sybase (b) 1,372 Database Software 1,400,000 ClickSoftware Technologies (Israel) (b)(c) 616 Service Chain Optimization Software 35,000 Group 1 Software (b) 485 Address Verification Software - -------------------------------------------------------------------------------- 304,308 >Consumer Software: 1.1% 1,500,000 THQ (b) 44,730 Entertainment Software 705,000 Activision (b) 20,487 Entertainment Software - -------------------------------------------------------------------------------- 65,217 >Computer Services: 1.7% 3,100,000 Ciber (b)(c) 22,475 Software Services & Staffing 4,100,000 Igate Capital (b)(c) 18,942 Technology Staffing Services 775,000 American Management Systems (b) 14,810 Software Development Services 2,175,000 Analysts International (c) 9,244 Technology Staffing Services 350,000 TietoEnator (Finland) 8,676 Computer Services/Consulting 2,040,000 AnswerThink Consulting (b) 7,732 IT Integrator for Fortune 2000 500,000 Pomeroy Computer Resources (b) 7,290 Network Integration Services 600,000 Torex (United Kingdom) 5,576 Application Software for Hospital Management & Retail 511,000 New Horizons Worldwide (b) 5,207 Computer Training Services 1,051,031 Sensar, Cl. B (b) 246 421,620 Sensar, Cl. C (b) 88 Streaming Services for the Internet - -------------------------------------------------------------------------------- 100,286 >Business Information/Marketing Services/Publishing: 2.1% 1,200,000 Getty Images (b) 26,124 Photographs for Publications & Electronic Media 463,000 Choicepoint (b) 21,053 Fraud Protection Information 700,000 Information Holdings (b) 17,080 Scientific & Medical Publications, Patent Information 2,200,000 Navigant Consulting (b)(c) 15,378 Consulting Firm 2,685,000 InfoUSA (b)(c) 14,690 Business Data for Sales Leads 240,000 Proquest (b) 8,520 Information Services for Education & Automotive Markets 500,000 Martha Stewart Living Omnimedia (b) 5,735 Magazines, Merchandise & TV Programs 500,000 Moore (Canada) (b) 5,734 Commercial Printing 2,688,000 Independent News & Media (Ireland) 5,331 Leading International Newspaper Publisher 1,400,000 PRIMEDIA 1,708 Specialty Magazines & Other Publications - -------------------------------------------------------------------------------- 121,353 >Internet: 0.4% 4,060,000 Smart Force (b)(c) 13,804 Leading Provider of Integrated E-Learning Solutions 1,609,000 RSA Security (b) 7,739 Enterprise Security Software 700,000 RealNetworks (b) 2,849 Streaming Software & Content 250,000 NeoPlanet, Series A (b) 29 53,376 NeoPlanet, Series B (b) 11 Web Browser 2,683 Bigfoot International, Series A (b)(c) 1 778,294 Bigfoot International (b) 1 Internet Direct Marketing - -------------------------------------------------------------------------------- 24,434 >Electronics Distribution: 0.4% 585,00 Avnet 12,864 Electronic Components Distribution 985,000 Pioneer-Standard Electronics 10,234 Component & Computer Distribution - -------------------------------------------------------------------------------- 23,098 17 A Liberty Acorn Fund >Statement of Investments (Unaudited), continued Number of Shares Value (000) - -------------------------------------------------------------------------------- >Transaction Processors: 2.0% 1,397,000 Global Payments $ 41,561 Credit Card Processor 1,208,000 Concord EFS (b) 36,409 Credit Card Processor 600,000 Cubic 14,220 Smart Card Systems for Public Transportation & Defense Systems 175,000 Deutsche Boerse (Germany) 7,418 Trading, Clearing & Settlement Services for Financial Markets 4,200,000 Hong Kong Exchanges & Clearing (Hong Kong) 6,919 Trading, Clearing & Settlement Services for Financial Markets 280,000 Euronext (France) 5,275 Operates Amsterdam, Brussels & Paris Stock Exchanges 7,000,000 Travelsky Technology (Hong Kong) 4,801 Online Air Travel Bookings in China - -------------------------------------------------------------------------------- 116,603 ---------- Information: Total 1,333,626 - -------------------------------------------------------------------------------- Health Care: 9.3% >Biotechnology/Drug Delivery: 1.6% 1,583,000 Inhale Therapeutic Systems (b) 15,023 Pulmonary Drug Delivery 1,875,000 Locus Discovery, Series D, Pfd. (b) 7,500 High Throughput Rational Drug Design 426,000 NPS Pharmaceuticals (b) 6,526 Small Molecule Drugs 555,000 Arena Pharmaceuticals (b) 4,662 Novel Drug Targeting Technology 304,000 Alexion Pharmaceuticals (b) 4,606 Monoclonal Antibodies 1,249,999 Perlegen Sciences (b) 4,500 Large Scale Gene Sequencing 365,000 Maxygen (b) 4,372 Molecular Breeding 386,000 Protein Design Labs (b) 4,192 Computer Designed Monoclonal Antibodies 416,000 Diversa (b) 4,139 Molecular Breeding 1,080,000 Ciphergen Biosystems (b) 3,812 Protein Chips used for Drug Target Discovery 598,000 Synaptic Pharmaceutical (b)(c) 3,498 Receptor Targeted Drug Design 160,000 Martek Biosciences (b) 3,347 Fatty Acids for Baby Formula & Other Foods 160,000 Myriad Genetics (b) 3,254 Gene Discovery & Diagnostic Products 461,000 SYRRX, Series C (b) 2,997 X-Ray Crystallography 210,000 Gene Logic (b) 2,940 Gene Expression Database 500,000 Sangamo Biosciences (b) 2,940 Theraputics & Diagnostics for Cancer & Cardiovascular Disease 389,000 Atherogenic (b) 2,789 Drugs for Atherosclerosis, Rheumatoid Arthritis, Asthma 1,258,000 Corvas International (b) 2,705 Rational Drug Design 355,000 Medarex (b) 2,634 Humanized Antibodies 316,000 Guilford Pharmaceuticals (b) 2,383 Drug Delivery & Neurology Drugs 528,000 Pharmacyclics (b) 2,344 Light Activated Drugs for Cancer & Vascular Diseases 320,000 Incyte Genomics (b) 2,326 Bioinformatics & Drug Development 1,320,000 Aclara Biosciences (b) 2,270 Microfluidic Systems for Drug Development 325,000 Genzyme Molecular Oncology Division (b) 819 Gene Expression Technology & Cancer Drugs 326,000 Microdose (b) 163 Drug Inhalers - -------------------------------------------------------------------------------- 96,741 >Medical Equipment: 2.1% 984,000 Edwards Lifesciences (b) 22,829 Heart Valves 583,000 Orthofix International (b) 20,492 Bone Fixation & Stimulation Devices 1,055,000 Steris (b) 20,161 Sterilization Devices 2,000,000 Smith & Nephew (United Kingdom) 11,129 Medical Equipment & Supplies 350,000 Haemonetics (b) 10,220 Blood & Plasma Collection Equipment 536,000 Kensy Nash (b) 8,683 Angioplasty Closure & Other Medical Devices 770,000 Visx (b) 8,393 Laser Eye Surgery Equipment 1,495,000 Novoste (b)(c) 6,907 Radiation Catheters for In-stent Restenosis 600,000 Sola International (b) 6,900 Specialty Eyeglass Lenses 155,000 Essilor International (France) 6,327 Eyeglass Lenses - -------------------------------------------------------------------------------- 122,041 >Pharmaceuticals: 0.2% 900,000 Alliance Unichem (United Kingdom) 8,509 Pharmaceutical Distribution 80,000 Yuhan (South Korea) 3,630 Ethical Drug Producer - -------------------------------------------------------------------------------- 12,139 >Hospital Management: 0.2% 210,000 Rhoen-Klinikum (Germany) 8,943 Hospital Management - -------------------------------------------------------------------------------- >Medical Supplies: 0.4% 650,000 Owens & Minor 12,844 Distribution of Medical Supplies 360,000 Techne (b) 10,159 Cytokines, Antibodies, Other Reagents For Life Sciences - -------------------------------------------------------------------------------- 23,003 A 18 Number of Shares Value (000) - -------------------------------------------------------------------------------- >Services: 4.8% 3,508,000 First Health Group (b) $ 98,364 PPO Network 2,096,000 Lincare Holdings (b) 67,701 Home Health Care Services 1,812,000 NDCHealth (c) 50,555 Health Claims Processing & Drug Marketing Services 737,000 Syncor International (b) 23,216 Nuclear Pharmacy for Radiopharmaceuticals 1,800,000 Beverly Enterprises (b) 13,698 Nursing Homes 550,000 Serologicals (b) 10,060 Blood Collection & Antibody Production 1,000,000 Dendrite International (b) 9,670 Software for Pharmaceutical Sales Force 193,000 Medquist (b) 5,140 Medical Transcription Services 700,000 Nestor Healthcare (United Kingdom) 4,930 Supplier Of Outsourced Health Care Staffing Solutions - -------------------------------------------------------------------------------- 283,334 --------- Health Care: Total 546,201 - -------------------------------------------------------------------------------- Consumer Goods/Services: 20.3% Goods >Leisure Vehicles: 1.9% 1,500,000 Harley-Davidson 76,905 Motorcycles & Related Merchandise 1,110,000 Monaco Coach (b) 23,643 Recreational Vehicles 6,500,000 Ducati Motor (Italy) (b) 10,312 Motorcycles & Related Merchandise - -------------------------------------------------------------------------------- 110,860 >Furniture/Textiles: 1.7% 670,000 Mohawk Industries (b) 41,225 Carpet & Flooring Manufacturer 970,000 Furniture Brands International (b) 29,343 Furniture Manufacturer 725,000 Hon Industries 19,735 Office Furniture & Fireplaces 490,000 Herman Miller 9,947 Office Furniture - -------------------------------------------------------------------------------- 100,250 >Food & Beverages: 0.8% 1,000,000 Kerry Group (Ireland) 14,873 Food Ingredients 551,500 Orkla (Norway) 10,664 Diversified Consumer Goods 253,623 Nutreco Holdings (Netherlands) 8,671 Farm Raised Salmon 23,077 Binding-Brauerei (Germany) 5,666 Brewery 2,000,000 Lion Nathan (Australia) 5,466 Beer Brewer/Distributor - -------------------------------------------------------------------------------- 45,340 >Nondurables: 1.2% 2,300,000 Helen of Troy (b)(c) 26,772 Personal Care Products 570,000 Scotts Company (b) 25,878 Consumer Lawn & Garden Products 255,000 Uni-Charm (Japan) 9,596 Infant Hygiene & Feminine Care Products 601,000 First Years (c) 6,485 Infant & Toddler Products - -------------------------------------------------------------------------------- 68,731 >Durable Goods: 0.9% 580,740 Hunter Douglas (Netherlands) 17,966 Window Shades & Venetian Blinds 1,000,000 Callaway Golf 15,840 Premium Golf Clubs & Balls 450,000 SCP Pool (b) 12,492 Distributor of Swimming Pool Supplies & Equipment 9,000,000 Waterford Wedgwood (Ireland) 5,354 Crystal, Tableware & Cookware - -------------------------------------------------------------------------------- 51,652 >Apparel: 2.6% 1,012,000 Coach (b) 55,559 Designer & Retailer of Branded Leather Accessories 1,230,000 Jones Apparel (b) 46,125 Women's Apparel 790,000 Skechers USA (b) 17,072 Footwear Designer & Marketer 880,000 Nautica Enterprises (b) 11,431 Casual Apparel 503,000 Steven Madden (b) 9,974 Wholesaler/Retailer of Fashion Footware 250,000 Columbia Sportswear (b) 8,000 Active Outdoor Apparel, Footware & Accessories 345,000 Hugo Boss Designs (Germany) 6,294 Fashion Apparel - -------------------------------------------------------------------------------- 154,455 Services >Retail: 5.1% 1,910,000 Christopher & Banks (b)(c) 80,793 Specialty Women's Retailer at Moderate Price Levels 1,115,000 Michaels Stores (b) 43,485 Craft & Hobby Specialty Retailer 1,130,000 Chico's Fas (b) 41,042 Women's Specialty Retail 1,400,000 Borders Group (b) 25,760 Bookstores 500,000 Whole Foods Market (b) 24,110 Natural Food Supermarkets 536,000 Zale (b) 19,430 Specialty Retailer of Jewelry 648,000 Hot Topic (b) 17,308 Music Inspired Retailer of Apparel, Accessories & Gifts 600,000 Pier 1 Imports 12,600 Imported Furniture & Tchotchkes 1,067,000 Autogrill (Italy) 12,452 Restaurants & Catering for Travelers 750,000 Gadzooks (b)(c) 9,443 Teen Apparel Retailer 19 A Liberty Acorn Fund >Statement of Investments (Unaudited), continued Number of Shares Value (000) - -------------------------------------------------------------------------------- >Retail--continued 400,000 Tweeter Home Entertainment (b) $ 6,536 Consumer Electronics Retailer 250,000 Genesco (b) 6,088 Multi-Concept Branded Footware Retailer 300,000 Gaiam (b) 4,392 Healthly Living Catalog & E-Commerce 17,000 Aeropostale (b) 465 Mall Based Teen Retailer - -------------------------------------------------------------------------------- 303,904 >Travel: 1.2% 1,285,000 Intrawest (Canada) 21,547 Owner/Operator of Ski Resorts 2,150,000 LaQuinta 15,588 Owner/Franchiser of Mid-Priced Hotels 850,000 Vail Resorts (b) 14,535 Owner/Operator of Ski Resorts 30,000 Kuoni Reisen (Switzerland) (b) 8,507 Tour Operator 3,000,000 MyTravel (United Kingdom) 6,951 Tour Operator 430,000 NH Hoteles (Spain) (b) 5,415 Business Hotel 31,000 Navigant International (b) 480 Corporate Travel Agency - -------------------------------------------------------------------------------- 73,023 >Consumer Services: 1.6% 2,400,000 ITT Educational Services (b)(c) 52,320 Technology Oriented Postsecondary Degree Programs 1,780,000 Bally Total Fitness (b)(c) 33,304 National Chain of Fitness Centers 1,250,000 Princeton Review (b) 11,425 College Preparation Courses - -------------------------------------------------------------------------------- 97,049 >Entertainment: 1.0% 1,900,000 Six Flags 27,455 Worldwide Theme Park Operator 1,750,000 Magna Entertainment, Cl. A (Canada) (b) 12,233 Owner/Operator Thoroughbred Racetracks 255,000 International Speedway Motors 10,226 Largest Motorsport Racetrack Owner & Operator 265,000 Speedway Motors (b) 6,739 Motorsport Racetrack Owner & Operator - -------------------------------------------------------------------------------- 56,653 >Casinos: 1.1% 1,550,000 Station Casinos (b) 27,668 Casinos & Riverboats 1,660,000 Alliance Gaming (b) 20,717 Diversified Gaming Company 535,000 Monarch Casino & Resort (b)(c) 7,934 Casino/Hotel in Reno 700,000 Pinnacle Entertainment (b) 7,441 Casinos in Secondary Markets & Card Clubs 113,000 Lakes Gaming (b) 764 Hotel & Casino in Biloxi & Gulfport - -------------------------------------------------------------------------------- 64,524 >Restaurants: 0.1% 108,000 Cheesecake Factory (b) 3,832 Casual Dining Restaurant - -------------------------------------------------------------------------------- >Cruise Lines: 1.1% 1,400,000 Carnival 38,766 Largest Cruise Line 1,253,000 Steiner Leisure (b)(c) 18,169 Spas & Hair/Skin Products on Cruise Ships 26,800,000 Star Cruises (Singapore) (b) 10,854 Cruising/Casino Operations - -------------------------------------------------------------------------------- 67,789 ---------- Consumer Goods/Services: Total 1,198,062 - -------------------------------------------------------------------------------- Finance: 15.5% >Banks: 3.9% 1,608,000 Associated Banc-Corp 60,638 Midwest Bank 1,026,000 TCF Financial 50,377 Great Lakes Bank 803,000 Texas Regional Bancshares 39,074 Tex-Mex Bank 1,400,000 Republic 20,916 Michigan Bank 795,000 Glacier Bancorp 19,478 Montana & Idaho Banks 2,827,000 Anglo Irish Bank (Ireland) 18,304 Small Corporate Lending & Private Banking 605,000 Chittenden 17,533 Vermont & Western Massachusetts Bank 284,000 Umpqua Holdings 5,248 Oregon Bank - -------------------------------------------------------------------------------- 231,568 >Savings & Loans: 2.0% 2,163,000 Peoples Bank Bridgeport 56,476 Connecticut Savings & Loan 824,000 Commonwealth Bancorp (c) 24,448 Philadelphia Savings & Loan 1,008,000 Anchor Bancorp Wisconsin 24,303 Wisconsin Thrift 400,000 Housing Development Finance (India) 5,332 Leading Provider of Mortgages in India 200,000 First Federal Capital 4,420 Wisconsin Thrift 50,000 Superior Financial 958 Arkansas Thrift - -------------------------------------------------------------------------------- 115,937 >Insurance: 3.2% 995,000 Protective Life 32,935 Life Insurance 706,000 Philadelphia Consolidated Holding (b) 32,010 Specialty Insurance 1,200,000 HCC Insurance Holdings 31,620 Aviation Insurance 138,000 Markel (b) 27,186 Specialty Insurance A 20 Number of Shares Value (000) - -------------------------------------------------------------------------------- >Insurance--continued 826,000 Leucadia National $ 26,151 Insurance Holding Company 456,000 RLI 23,256 Specialty Insurance 210,000 StanCorp Financial 11,655 Group Life, Disability & 401K 225,000 Scottish Annuity & Life (Bermuda) 4,293 Life Reinsurer - -------------------------------------------------------------------------------- 189,106 >Money Management: 3.4% 1,105,000 Affiliated Managers Group 67,957 Mutual Fund & Pension Manager 2,170,000 SEI Investments 61,129 Mutual Fund Administration & Investment Management 1,100,000 Neuberger Berman 40,260 Major Asset Management Company 470,000 Eaton Vance 14,664 Mutual Funds 240,000 BKF Capital Group (b) 6,840 Institutional Money Manager 1,360,000 Edinburgh Fund Managers (United Kingdom) 5,658 Investment Management 18,000 Julius Baer (Switzerland) 5,195 Private Banking, Brokerage & Mutual Funds 200,000 The Investment Company of China (China) 502 Closed-End Fund - -------------------------------------------------------------------------------- 202,205 >Brokerage: 0.2% 2,624,000 Knight Trading (b) 13,750 Equity Market Maker - -------------------------------------------------------------------------------- >Finance Companies: 2.8% 4,341,000 AmeriCredit (b)(c) 121,765 Auto Lending 850,000 DVI Health Services (b)(c) 16,405 Leases for Big Medical Equipment 1,820,000 World Acceptance (b)(c) 15,288 Personal Loans 1,375,000 Capital Trust (b)(c) 7,150 Mortgage Loans 60,000 Aeon Credit Service (Japan) 3,592 Credit Card Issuer - -------------------------------------------------------------------------------- 164,200 -------- Finance: Total 916,766 - -------------------------------------------------------------------------------- Industrial Goods/Services: 11.5% >Steel: 0.7% 945,000 Gibraltar Steel (c) 20,970 Steel Processing 600,000 USX- US Steel 11,934 Steel Producer 600,000 Maruichi Steel Tube (Japan) 6,804 Processed Steel 370,000 Atchison Casting (b) 92 Steel Foundries - -------------------------------------------------------------------------------- 39,800 >Industrial Goods: 1.9% 1,300,000 Clarcor (c) 41,145 Mobile & Industrial Filters 550,000 Donaldson 19,272 Industrial Air Filtration 1,000,000 Watsco 18,250 HVAC Distributor 700,000 Applied Industrial Technologies 13,650 Industrial Components Distribution 201,000 Mine Safety Appliances 8,040 Safety Equipment 304,000 Intermagnetics General (b) 6,141 Superconducting Wire Manufacturer 1,300,000 Grafton Group (Ireland) 5,672 DIY & Wholesaling of Construction Materials - -------------------------------------------------------------------------------- 112,170 >Construction: 0.3% 90,000 Technip (France) 9,513 Global Engineering & Construction 395,000 Northwest Pipe Company (b)(c) 9,247 Water Transmission Pipe - -------------------------------------------------------------------------------- 18,760 >Specialty Chemicals & Industrial Materials: 1.1% 1,600,000 Spartech (c) 43,568 Plastics Distribution & Compounding 19,500 Givaudan (Switzerland) 7,900 Industrial Fragrances & Flavors 434,000 Nuco2 (b) 6,076 Bulk CO2 Gas Distribution to Restaurants 347,000 SYMYX (b) 4,830 Materials & Chemicals - -------------------------------------------------------------------------------- 62,374 >Machinery: 1.5% 850,000 Ametek 31,662 Aerospace/Industrial Instruments 750,000 Esco Technologies (b)(c) 26,250 Filtration & Test Equipment 600,000 Cuno (b) 21,708 Filtration & Fluids Clarification 550,000 Zardoya Otis (Spain) 7,307 Elevator Manufacturer & Service Provider - -------------------------------------------------------------------------------- 86,927 >Outsourcing Services & Training: 0.6% 12,000,000 Li & Fung (Hong Kong) 16,154 Sourcing of Consumer Goods 2,400,000 Labor Ready (b)(c) 14,040 Temporary Manual Labor 600,000 GP Strategies (b) 2,790 Training Programs - -------------------------------------------------------------------------------- 32,984 21 A Liberty Acorn Fund >Statement of Investments (Unaudited), continued Number of Shares Value (000) - -------------------------------------------------------------------------------- >Conglomerates: 0.1% 2,500 Pargesa Holdings (Switzerland) $ 5,175 Industrial & Media Holdings 250,000 Jenoptik (Germany) 4,747 Clean Room Construction & Electrical Components - -------------------------------------------------------------------------------- 9,922 >Industrial Suppliers: 0.2% 900,000 Xstrata (United Kingdom) (b) 11,576 Smelting - -------------------------------------------------------------------------------- >Waste Management: 0.1% 1,350,000 Waste Recycling Group (United Kingdom) 8,475 Landfills - -------------------------------------------------------------------------------- >Logistics: 2.5% 2,900,000 Expeditors International of Washington 96,164 International Freight Forwarder 700,000 Forward Air (b) 22,946 Freight Transportation Between Airports 500,000 UTI Worldwide 9,885 International Freight Forwarder 759,000 Hub Group (b)(c) 7,021 Truck & Rail Freight Forwarder 4,500,000 Sembcorp Logistics (Singapore) 5,627 Logistic Services for Marine Transport 600,000 Airnet Systems (c) 5,100 Check & Other Small Package Shipment - -------------------------------------------------------------------------------- 146,743 >Water: 1.2% 2,000,000 Tetra Tech (b) 29,400 Resource Management & Infrastructure Consulting 850,000 Insituform Technologies (b) 18,003 Rehabilitation & Repair of Gas, Sewer & Water Pipelines 1,800,000 Cadiz (b) 15,298 Farming & Water Resources in California 600,000 Pall 12,450 Filtration & Fluids Clarification - -------------------------------------------------------------------------------- 75,151 >Other Industrial Services: 1.3% 1,500,000 Clark/Bardes Consulting (b)(c) 34,260 Executive Compensation & Benefits Consulting 825,000 Mobile Mini (b)(c) 14,108 Leases Portable Storage Units 4,000,000 Serco Group (United Kingdom) 12,188 Facilities Management 675,000 Hagemeyer (Netherlands) 9,370 Maintenance, Repair & Operating Supply Distribution 390,000 Toppan Forms (Japan) 6,604 Business Forms & Printing Services - -------------------------------------------------------------------------------- 76,530 -------- Industrial Goods/Services: Total 681,412 - -------------------------------------------------------------------------------- Energy/Minerals: 6.5% >Independent Power: 0.2% 495,000 Gamesa (Spain) (b) 8,687 Spanish Wind Turbines 300,000 Fuelcell Energy (b) 3,087 Electrochemical Technology Development 720,000 Millennium Cell (b) 2,232 Fuel Cell Technology 500,000 Covanta Energy 7 Electric Power Developer - -------------------------------------------------------------------------------- 14,013 >Oil/Gas Producers: 2.8% 5,250,000 XTO Energy 108,150 Natural Gas Producer 630,000 Evergreen Resources (b) 26,775 Coal Seam Gas Producer 1,860,000 Ultra Petroleum (b) 14,117 Natural Gas Producer 700,000 Southwestern Energy (b) 10,633 Oil & Gas Exploration/Production 2,025,000 Tipperary (b)(c) 3,443 Coal Seam Gas Producer - -------------------------------------------------------------------------------- 163,118 >Distribution/Marketing/Refining: 1.5% 1,400,000 Equitable Resources 48,020 Natural Gas Utility & Producer 761,000 Atmos Energy 17,838 Natural Gas Utility 1,556,000 Dynegy 11,203 Energy Trading & Generation 870,000 Tesoro Petroleum (b) 6,743 Oil Refinery/Gas Producer 1,270,000 Aquila 6,306 Energy Trading - -------------------------------------------------------------------------------- 90,110 >Non-Ferrous Metals: 0.0% 200,000 Harmony Gold (South Africa) 2,706 Gold Mining - -------------------------------------------------------------------------------- >Oil Services: 2.0% 3,500,000 Saipem (Italy) 25,265 Offshore Construction & Drilling 3,400,000 Newpark Resources (b) 24,990 Oilfield Fluid Management & Equipment Rental 1,000,000 FMC Technologies (b) 20,760 Deep Water Oil & Gas Well Head Manuacturer 402,000 Carbo Ceramics 14,854 Natural Gas Well Stimulants 514,000 Chiles Offshore (b) 12,464 Oil & Gas Driller 800,000 Hanover Compressor (b) 10,800 Natural Gas Compressor Rental 572,900 Enerflex Systems (Canada) 6,048 Natural Gas Compressor Manufacturer - -------------------------------------------------------------------------------- 115,181 -------- Energy/Minerals: Total 385,128 - -------------------------------------------------------------------------------- A 22 Number of Shares Value (000) - -------------------------------------------------------------------------------- Other Industries: 6.7% >Real Estate: 5.9% 1,160,000 The Rouse Company $ 38,280 Regional Shopping Malls 615,000 General Growth Properties 31,365 Regional Shopping Malls 875,000 SL Green Realty 31,194 Manhattan Office Buildings 699,000 Forest City Enterprises, Cl. B 24,954 Diversified Properties 700,000 Manufactured Home Communities 24,570 Manufactured Home Communities 675,000 First Industrial Realty Trust 22,174 Industrial Properties 625,000 Macerich Company 19,375 Regional Shopping Malls 1,099,000 LaSalle Hotel Properties (c) 17,309 Upscale/Full Service Hotels 903,125 Security Capital European Realty (b) 17,159 Strategic Real Estate Investments 650,000 Amli Residential 16,900 Midwestern Apartments 540,000 AMB Property 16,740 Industrial Properties 450,000 BRE Properties 13,999 Apartments 400,000 Chelsea Properties Group 13,380 Outlet Malls 425,000 Mills 13,175 Regional Shopping Malls 520,000 Summit Properties 12,142 Southeastern Apartments 680,000 Keystone Property Trust 10,792 Industrial Properties 380,000 Federal Realty Investment Trust 10,529 Shopping Centers 525,000 Glimcher Realty Trust 9,712 Regional Malls & Community Shopping Centers 2,800,000 Consorcio (Mexico) (b) 4,081 Low/Medium Income House Builder 190,000 Consolidated Tomoka 3,809 16,000 Acres of Florida Land - -------------------------------------------------------------------------------- 351,639 >Regulated Utilities: 0.8% 1,100,000 Unisource Energy 20,460 Electric Utility in Arizona 700,000 Conectiv 18,067 Electric Utility in New Jersey, Delaware & Maryland 700,000 Red Electrica (Spain) 7,600 Spanish Power Grid - -------------------------------------------------------------------------------- 46,127 ---------- Other Industries: Total 397,766 Total Common Stocks and Other ---------- Equity-Like Securities: 92.4% 5,458,961 (Cost: $4,113,007) Short-Term Obligations: 7.6% Yield 1.60% - 1.82% Due 7/01/02 - 8/22/02 $50,069 AON 50,042 39,712 Prudential Funding 39,694 37,422 Citigroup 37,420 35,258 Coca Cola Enterprises 35,247 35,000 US Treasury Bills 34,972 33,383 Baxter International 33,346 32,925 Johnson & Johnson 32,911 30,431 Wyeth 30,399 29,528 Motive Enterprises 29,527 25,990 AmGen Financial 25,990 25,000 Monsanto 24,990 24,182 Exxon 24,166 20,925 GE Capital 20,910 14,319 Bell South 14,318 12,855 General Electric 12,845 - -------------------------------------------------------------------------------- (Amortized Cost: $446,777) 446,777 ---------- Total Investments: 100.0% 5,905,738 (Cost: $4,559,784) Cash and Other Assets Less Liabilities: (0.0%) (612) ---------- Total Net Assets: 100% $5,905,126 ================================================================================ 23 A - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At June 30, 2002, for federal income tax purposes cost of investments is the same and net unrealized appreciation was $1,345,954, consisting of gross unrealized appreciation of $1,805,794 and gross unrealized depreciation of $459,840. (b) Non-income producing security. (c) On June 30, 2002, the fund held the following percentages of the outstanding voting shares of the companies listed below: Hub Group 9.85% Multex.Com 9.79% Mapics 9.50% World Acceptance 9.46% Novoste 9.16% Bsquare 9.02% Analysts International 8.99% Clark/Bardes Consulting 8.90% Shuffle Master 8.70% Commonwealth Bancorp 8.31% Gadzooks 8.19% Helen of Troy 8.17% Igate Capital 7.99% COMARCO 7.64% Capital Trust 7.51% Christopher & Banks 7.48% First Years 7.34% Seachange International 7.23% Smart Force 7.12% Avid Technology 7.05% Steiner Leisure 7.04% Indus International 6.70% Bigfoot International, Series A 6.53% Kronos 6.29% Northwest Pipe Company 6.03% Gibraltar Steel 6.00% Esco Technologies 5.96% Spartech 5.94% Airnet Systems 5.92% Lasalle Hotel Properties 5.88% Systems & Computer Technology 5.88% Labor Ready 5.87% Micros Systems 5.85% DVI Health Services 5.85% Mobile Mini 5.79% Monarch Casino & Resort 5.67% Navigant Consulting 5.64% Synaptic Pharmaceutical 5.49% Bally Total Fitness 5.42% Clicksoftware Technologies 5.33% NDCHealth 5.30% InfoUSA 5.27% ITT Educational Services 5.24% Clarcor 5.23% Tipperary 5.20% Ciber 5.10% AmeriCredit 5.08% The aggregate cost and value of these companies (in thousands) at June 30, 2002, was $817,360 and $1,004,189 respectively. Investments in affiliate companies represent 17.01% of total net assets at June 30, 2002. Investment activity and income amounts relating to affiliates during the six months ended June 30, 2002 were as follows: Dividend Income $ 1,135 Net realized gain or loss $ 4,939 Change in unrealized gain or loss $(41,488) Purchases $147,315 Proceeds from sales $ 14,107 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 June 30, 2002. 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 June 30, 2002, the market value of foreign securities (in thousands) represents 9.03% of total net assets. The Fund's foreign portfolio was diversified as follows: Value Percent ======================================================================= United Kingdom $82,864 1.40% Canada 67,411 1.14 Ireland 49,534 0.84 Italy 48,029 0.81 Hong Kong 37,664 0.64 Netherlands 36,007 0.61 France 34,378 0.58 Germany 33,068 0.56 Spain 29,009 0.49 Switzerland 26,777 0.45 Japan 26,596 0.45 Value Percent ======================================================================= Singapore $ 16,481 0.28% Norway 10,664 0.18 Finland 8,676 0.15 Australia 5,466 0.09 India 5,332 0.09 Bermuda 4,293 0.07 Mexico 4,081 0.07 South Korea 3,630 0.06 South Africa 2,706 0.05 Israel 616 0.01 China 502 0.01 -------- ---- Total $533,784 9.03% ======== ==== A 24 Liberty Acorn International >Major Portfolio Changes in the Second Quarter (Unaudited) Number of Shares ------------------------- 03/31/02 06/30/02 Additions - -------------------------------------------------------------------------------- Europe >Germany Hugo Boss Designs 600,000 622,000 Kali & Salz 0 100,000 Software AG 275,000 475,000 >Norway Orkla 472,000 581,000 >Sweden Intrum Justitia 0 500,000 >France/Belgium Bacou Dalloz 0 90,000 Cie Generale de Geophysique 0 130,000 Grandvision 0 300,000 IPSO 0 75,000 Technip 100,000 120,000 >United Kingdom/Ireland Expro International 630,000 1,030,000 Galen Holdings 0 400,000 Grafton Group (Ireland) 0 1,400,000 Kerry Group (Ireland) 800,000 1,000,000 Tullow Oil 3,500,000 5,500,000 >Switzerland Geberit International 27,000 36,000 >Spain NH Hoteles 850,000 1,400,000 >Netherlands Hagemeyer 596,400 780,000 IM Tech 460,000 558,000 Pinkroccade 300,000 415,000 Ses Global (Luxembourg) 0 500,000 United Services Group 400,000 520,000 Vopak 450,000 600,000 - -------------------------------------------------------------------------------- Asia >Hong Kong Global Bio-Chem Technology Group 28,000,000 33,600,000 Hong Kong Exchanges & Clearing 8,000,000 9,000,000 Jiangsu Express 17,000,000 19,000,000 >Japan Aderans 265,000 325,000 BML 0 130,000 Daiei OMC 0 1,150,000 Daiseki 125,000 225,000 Fuji Seal 100,000 170,000 Kawasumi Laboratories 250,000 450,000 Maruichi Steel Tube 475,000 1,000,000 NIFCO 0 500,000 Tenma 0 360,000 Yakult Honsha 600,000 875,000 >South Korea Samsung Fire & Marine 46,000 100,000 Yuhan 0 100,000 >Singapore Sembcorp Logistics 6,300,000 8,000,000 Venture Manufacturing 800,000 1,180,000 >India Dr. Reddy's Laboratories 0 200,000 Hero Honda Motors 0 500,000 Housing Development Finance 550,000 680,000 - -------------------------------------------------------------------------------- Other Countries >Australia/New Zealand Lion Nathan 0 2,500,000 The Warehouse Group (New Zealand) 0 450,000 >Canada Altagas Services 0 825,000 Canadian 88 0 2,344,000 Martinrea International 0 450,000 (formerly known as Royal Laser Tech) >Israel Amdocs 640,000 730,000 >South Africa Harmony Gold 0 400,000 25 I Liberty Acorn International >Major Portfolio Changes (Unaudited), continued Number of Shares ------------------------- 03/31/02 06/30/02 Sales - -------------------------------------------------------------------------------- Europe >Germany Fresenius, Pfd. 150,000 123,000 Henkel 164,000 0 Pfeiffer Vacuum Technologies 117,000 0 Rhoen-Klinikum Pfd. 600,000 550,000 Rhoen-Klinikum 500,000 445,000 Teleplan International 210,000 150,000 >Finland Fiskars, Series A 625,000 0 >United Kingdom/Ireland Aberdeen Asset Management 1,000,000 0 Amey 2,100,000 1,700,000 Anglo Irish Bank (Ireland) 5,500,000 2,200,000 Capita Group 5,000,000 1,500,000 First Choice Holidays 4,100,000 3,100,000 Incepta 2,580,000 0 Independent News & Media (Ireland) 3,320,000 2,680,000 Irish Life & Permanent (Ireland) 2,100,000 900,000 Jardine Lloyd Thompson 600,000 0 Serco Group 3,000,000 2,250,000 Smith & Nephew 4,395,000 3,800,000 SSL International 2,200,000 2,000,000 St. James Place Capital 860,000 475,000 Taylor Nelson 2,500,000 1,000,000 >Switzerland Cie Fin Richemont 1,000,000 0 Givaudan 60,000 35,000 Xstrata 755,000 700,000 >Italy Autogrill 3,000,000 2,300,000 Banca Fideuram 1,675,000 0 Saipem 3,000,000 2,000,000 - -------------------------------------------------------------------------------- Asia >Hong Kong Li & Fung 13,500,000 10,500,000 TVB 6,000,000 5,300,000 Tingyi Holding 30,000,000 25,000,000 >Japan Konami 260,000 0 Uni-Charm 317,000 267,000 >Singapore Star Cruises 33,500,000 25,000,000 Want Want Holdings 4,000,000 2,400,000 (includes the effect of a 2 for 1 stock split) - -------------------------------------------------------------------------------- Other Countries >Australia/New Zealand Perpetual Trustees 400,000 350,000 United Networks Limited (New Zealand) 1,000,000 0 >Canada Power Financial 1,150,000 750,000 I 26 Liberty Acorn International >Statement of Investments (Unaudited) June 30, 2002 Number of Shares Value (000) - -------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 91.6% - -------------------------------------------------------------------------------- Europe: 56.4% >Germany/Austria: 9.7% 1,000,000 Stinnes $ 28,953 Logistics Services 550,000 Rhoen-Klinikum Pfd. 23,423 445,000 Rhoen-Klinikum 21,621 Hospital Management 350,000 Deutsche Boerse 14,836 Trading, Clearing & Settlement Services for Financial Markets 770,000 Jenoptik 14,621 Clean Room Construction & Electrical Components 360,000 Flughafen Wien (Austria) 12,422 Vienna Airport Authority 622,000 Hugo Boss Designs 11,348 Fashion Apparel 500,000 GFK 9,172 Market Research Services 475,000 Software AG 6,405 Database Software 123,000 Fresenius, Pfd. 6,220 Dialysis Equipment & Hospital Management 1,000,000 Takkt 5,801 Mail Order Retailer of Office & Warehouse Durables 70,000 Beru 3,783 Auto Parts & Electronics 100,000 Kali & Salz (b) 2,117 Potash Products, Fertilizers, Salt & Waste Management 150,000 Teleplan International (b) 942 After-Sale Warranty Repair Services 200,000 Lion Bioscience (b) 833 Bioinformatics 4,000 Norddeutsche Affinerie 55 Copper Smelter/Copper Products - -------------------------------------------------------------------------------- 162,552 >Denmark: 0.5% 10,000 Kobenhavns Lufthavne 7,742 Copenhagen Airport Authority - -------------------------------------------------------------------------------- >Norway: 0.7% 581,000 Orkla 11,235 Diversified Consumer Goods - -------------------------------------------------------------------------------- >Finland: 2.0% 350,000 Amer Group 11,452 Branded Outdoor Sporting Goods 400,000 TietoEnator 9,916 Computer Services/Consulting 200,000 KCI Konecranes International 6,743 Crane Manufacturer & Service Provider 350,000 Jaakko Poyry 6,347 Engineering Consultants in Forestry, Energy - -------------------------------------------------------------------------------- 34,458 >Sweden: 0.6% 290,000 Cardo 6,619 Industrial Doors, Pumps & Railbraking Systems 500,000 Intrum Justitia (b) 2,894 Receivables Management & Debt Collection - -------------------------------------------------------------------------------- 9,513 >France/Belgium: 8.4% 450,000 Neopost (b) 17,982 Postage Meter Machines 400,000 Essilor International 16,329 Eyeglass Lenses 250,000 Coface 14,960 Credit Insurance 500,000 Fininfo 13,857 Data Feeds for French Banks & Brokers 120,000 Technip 12,684 Global Oil Engineering & Construction 650,000 NRJ 11,833 Radio Network 250,000 RTL Group (Belgium) 9,916 TV & Radio Broadcaster 90,000 Bacou Dalloz 9,816 Safety Equipment 425,000 Euronext 8,007 Trading, Clearing & Settlement Services for Financial Markets 270,000 Penauille Polyservice (b) 5,756 Industrial Cleaning/Airport Services 75,000 IPSOS 5,243 Market Research 300,000 Grandvision 5,057 European Eyeglass Retailer 805,000 Telindus Group (Belgium) 4,550 Network Integration Services 130,000 Cie Generale de Geoshysique (b) 4,447 Oil Services 9,000 Groupe Bourbon 652 Food Retailer - -------------------------------------------------------------------------------- 141,089 >United Kingdom/Ireland: 14.0% 3,800,000 Smith & Nephew 21,145 Medical Equipment & Supplies 1,600,000 Alliance Unichem 15,128 Pharmaceutical Wholesaler & Retailer 1,000,000 Kerry Group (Ireland) 14,873 Food Ingredients 2,200,000 Anglo Irish Bank (Ireland) 14,245 Corporate Lending & Private Banking 900,000 Irish Life & Permanent (Ireland) 13,074 Life Insurance & Savings Products 1,900,000 Spectris 11,331 Electronic Instruments & Controls 2,000,000 SSL International 10,952 Medical & Footcare Products 1,400,000 Nestor Healthcare 9,861 Health Care Staffing Solutions 700,000 Xstrata (b) 9,004 Smelting 950,000 Torex 8,829 Application Software for Hospital Management & Retail 5,500,000 Tullow Oil (b) 8,131 Oil & Gas Producer 1,030,000 Expro International 7,333 Offshore Oil Field Services 1,500,000 Capita Group 7,189 Outsourcing Services 27 I Liberty Acorn Fund >Statement of Investments (Unaudited), continued Number of Shares Value (000) - -------------------------------------------------------------------------------- >United Kingdom/Ireland--continued 12,000,000 Waterford Wedgwood (Ireland) $ 7,139 Crystal, Tableware & Cookware 2,250,000 Serco Group 6,856 Facilities Management 3,600,000 Holmes Place 6,752 Health Clubs 1,550,000 Hit Entertainment 6,313 Television Shows for Children 1,000,000 Waste Recycling Group 6,278 Landfills 1,360,000 Euro Money Institutional Investors 6,247 Financial Publications 1,400,000 Grafton Group (Ireland) (b) 6,108 DIY & Wholesaling of Construction Materials 800,000 First Technology 5,482 Auto Electronic Sensors 2,680,000 Independent News & Media (Ireland) 5,315 Newspaper Publisher in U.K. & Commonwealth Countries 1,900,000 Aggreko 5,238 Provider of Temporary Power & Temperature Control Services 3,100,000 First Choice Holidays 4,913 Tour Operator 1,050,000 Homestyle Group 4,855 Soft Furnishings Retailer 1,700,000 Amey 4,672 Facilities Management 1,000,000 Taylor Nelson 2,940 Market Research Services 400,000 Galen Holdings 2,887 Women's Health Care 400,000 Charles Taylor Consulting 2,481 Mutual Insurance Management 475,000 St. James Place Capital 1,331 Life Insurance & Investment Product Distributor - -------------------------------------------------------------------------------- 236,902 >Switzerland: 6.7% 65,000 Julius Baer 18,761 Private Banking, Brokerage & Mutual Funds 7,500 Pargesa Holdings 15,526 Industrial & Media Conglomerate 35,000 Givaudan 14,179 Industrial Fragrances & Flavors 50,000 Kuoni Reisen (b) 14,179 Tour Operator 60,500 Kaba Holdings 13,071 Building Security Systems 200,000 Bachem 12,153 Peptides 36,000 Geberit International (b) 10,209 Plumbing Supplies 90,000 Bon Appetit 7,657 Wholesale Food Distributor and Speciality Restaurant/Retailer 11,000 Synthes-Stratec 6,759 Products for Orthpaedic Surgery - -------------------------------------------------------------------------------- 112,494 >Italy: 2.4% 2,300,000 Autogrill 26,842 Restaurants & Catering for Travelers 2,000,000 Saipem 14,437 Offshore Oil Construction & Drilling - -------------------------------------------------------------------------------- 41,279 Spain: 5.2% 1,400,000 NH Hoteles (b) 17,630 Business Hotel 1,610,000 Red Electrica 17,481 Spanish Power Grid 905,000 Prosegur 12,796 Security Guards 900,000 Zardoya Otis 11,958 Elevator Manufacturer & Service Provider 1,200,000 Abengoa 8,746 Engineering & Construction 422,000 Gamesa (b) 7,406 Wind Turbines 1,000,000 Cortefiel 6,108 Apparel Retailer 1,100,000 Transportes Azkar 6,108 Package Delivery & Logistics - -------------------------------------------------------------------------------- 88,233 >Netherlands/Luxembourg: 6.2% 518,518 Hunter Douglas 16,041 Decorative Window Coverings 558,000 IM Tech 11,757 Technical Engineering 600,000 Vopak (b) 11,387 Oil Storage & Chemical Distribution 260,000 OPG Groep 11,202 Pharmaceutical Wholesaler & Retailer 780,000 Hagemeyer 10,828 B2B Distributor to Industrial & Construction End Markets 520,000 United Services Group 10,364 Temporary Staffing Services 184,736 Fugro 10,166 Survey & GPS services 225,000 Nutreco Holdings 7,692 Salmon, Animal Feeds 650,000 OCE 7,605 Manufacturer of High Speed Copiers 500,000 Ses Global (Luxembourg) 4,958 Satellite Broadcasting Services 415,000 Pinkroccade 3,370 Computer Services/Outsourcing - -------------------------------------------------------------------------------- 105,370 ---------- Europe: Total 950,867 - -------------------------------------------------------------------------------- Asia: 26.1% >Hong Kong: 6.7% 5,300,000 TVB 22,559 Television Programming & Broadcasting 9,000,000 Hong Kong Exchanges & Clearing 14,827 Trading, Clearing & Settlement Services for Financial Markets I 28 Number of Shares Value (000) - -------------------------------------------------------------------------------- >Hong Kong--continued 10,500,000 Li & Fung $ 14,135 Sourcing of Consumer Goods 33,600,000 Global Bio-Chem Technology Group 12,600 Corn-Based Food Products 25,000,000 Tingyi Holding 7,612 Instant Noodles 2,000,000 Wing Hang Bank 6,628 Consumer & Commercial Banking 11,000,000 SCMP Group 6,382 English Language Newspaper in Hong Kong 10,000,000 JCG Holding 5,962 Consumer Finance 8,500,000 Travelsky Technology 5,830 Online Air Travel Bookings in China 17,000,000 Zhejiang Expressway 5,776 Toll Road Builder & Operator 19,000,000 Jiangsu Express 5,176 Toll Road Builder & Operator 3,500,000 Hang Lung Properties 3,994 Property Manager 390,000 Aeon Credit Service 152 Credit Card Issuer 250,000 Linmark (b) 74 Apparel/Hard Goods Sourcing Agent - -------------------------------------------------------------------------------- 111,707 >Japan: 12.4% 280,000 Orix 22,642 Leasing & Other Financial Services 120,000 Nintendo 17,711 Entertainment Software & Hardware 250,000 Aeon Credit Service 14,968 Credit Card Issuer 40,000 Bellsystem24 14,032 Call Centers 920,000 Banyu Pharmaceutical 11,894 Ethical Drug Producer 1,000,000 Maruichi Steel Tube 11,339 Processed Steel 450,000 Nissin Healthcare Food Service 10,649 Hospital Catering 325,000 Aderans 10,219 Hair Pieces 600,000 Toppan Forms 10,160 Business Forms & Printing Services 267,000 Uni-Charm 10,047 Infant Hygiene & Feminine Care Products 875,000 Yakult Honsha 10,002 Dairy Based Foods 170,000 Fuji Seal 7,350 Packaging Materials & Machinery 140,000 ARRK 6,322 Prototypes & Molds for New Product Development 310,000 Daito Trust Construction 5,820 Apartment Builder 216,000 Hokuto 5,636 Mushroom Production 120,000 Eneserve 5,409 Sells & Maintains In-House Power Generators 500,000 NIFCO 4,971 Industrial Fasteners 140,000 Goldcrest 4,308 Developer/Seller of Apartment 1,150,000 Daiei OMC (b) 4,299 Credit Card Issuer 200,000 Paramount Bed 4,214 Manufacturer of Adjustable Beds 450,000 Kawasumi Laboratories 4,196 Medical Supplies 360,000 Tenma 4,088 Molded Plastic Products 130,000 BML 3,674 Clinical Testing 225,000 Daiseki 3,650 Waste Disposal & Recycling 155,000 Wilson Learning 1,037 Corporate Training - -------------------------------------------------------------------------------- 208,637 >Taiwan: 1.2% 4,875,000 Advantech 10,725 Computer Based Industrial Automation 600,000 Ase Test (b) 5,820 Semiconductor Packaging & Test Services 5,750,000 Chroma Ate 4,165 Test & Measurement Instruments - -------------------------------------------------------------------------------- 20,710 >South Korea: 2.5% 750,000 S1 Corporation 14,613 Home/Business Security Services 100,000 Samsung Fire & Marine 6,162 Non-Life Insurance 250,000 Hyundai Mobis 5,287 Auto Parts 109,000 Halla Climate Control 4,892 Auto Parts Manufacturer 100,000 Yuhan 4,538 Ethical Drug Producer 40,000 Cheil Communications 4,197 Advertising 250,000 Samyoung Heat Exchange 2,862 Power Plant Related Machinery - -------------------------------------------------------------------------------- 42,551 >Singapore: 2.3% 25,000,000 Star Cruises (b) 10,125 Cruise Line 8,000,000 Sembcorp Logistics 10,003 Logistic Services for Marine Transport 1,180,000 Venture Manufacturing 9,414 Electronic Manufacturing Services 6,500,000 Singapore Technical Engineering 7,098 Defense Supplier 2,400,000 Want Want Holdings 2,316 Snack Foods 100,000 Comfort Group 42 Singapore Taxi Service - -------------------------------------------------------------------------------- 38,998 29 I Liberty Acorn International >Statement of Investments (Unaudited), continued Number of Shares Value (000) - -------------------------------------------------------------------------------- >India: 1.0% 680,000 Housing Development Finance $ 9,064 Mortgage Loan Provider in India 200,000 Dr. Reddy's Laboratories 3,871 Pharmaceuticals 500,000 Hero Honda Motors 3,156 Motorcycle Manufacturer - -------------------------------------------------------------------------------- 16,091 -------- Asia: Total 438,694 - -------------------------------------------------------------------------------- Latin America: 1.6% >Mexico: 0.8% 625,000 Grupo Aeroportuario 8,063 Mexican Airport Authority 3,500,000 Consorcio ARA (b) 5,101 Low/Medium Income House Builder - -------------------------------------------------------------------------------- 13,164 >Brazil: 0.5% 1,000,000 Cia De Consessoes Rodoviaria (b) 4,969 Brazilian Tollroads 50,000,000 Banco Itau 2,839 Universal Bank - -------------------------------------------------------------------------------- 7,808 >Argentina: 0.3% 350,000 Siderca 5,533 Seamless Pipes for Oil Wells - -------------------------------------------------------------------------------- Latin America: Total 26,505 - -------------------------------------------------------------------------------- Other Countries: 7.5% >Australia/New Zealand: 1.4% 350,000 Perpetual Trustees 8,462 Investment Management 2,500,000 Lion Nathan 6,833 Australian Beer Brewer/Distributor 5,000,000 Computershare 6,199 Financial Software/Services 450,000 The Warehouse Group (New Zealand) 1,622 Warehouse Club - -------------------------------------------------------------------------------- 23,116 >Canada: 5.0% 750,000 Power Financial 19,599 Life Insurance & Mutual Funds 900,000 Corus Entertainment (b) 15,976 CATV Programming & Radio Stations 300,000 Talisman Energy 13,511 Oil & Gas Producer 450,000 Intrawest 7,546 Owner/Operator of Ski Resorts 320,000 Celestica (b) 7,228 Electronic Manufacturing Services 825,000 Altagas Services 5,924 Natural Gas Gatherer & Processor Number of Shares or Principal Amount (000) Value (000) - -------------------------------------------------------------------------------- 500,000 Moore (b) $ 5,735 Commercial Printing 2,344,000 Canadian 88 (b) 4,223 Oil & Gas Producer 260,000 Martinrea International (b) 2,293 190,000 Martinrea International (formerly known as Royal Laser Tech) (b) 1,593 Auto Parts - -------------------------------------------------------------------------------- 83,628 >Israel: 0.3% 730,000 Amdocs (b) 5,512 Telecommunications Billing & Customer Care Software - -------------------------------------------------------------------------------- >Russia: 0.3% 11,666 Khanty Mansiysk (b) 3,750 $1,500 Khanty Mansiysk 1% Notes Due 10/14/02 (b) 1,500 Oil Production in Russia - -------------------------------------------------------------------------------- 5,250 >South Africa: 0.3% 400,000 Harmony Gold 5,533 Gold Mining - -------------------------------------------------------------------------------- >United States: 0.2% 830,000 MIH (b) 3,469 Pay-TV & Interactive TV Technology - -------------------------------------------------------------------------------- Other: Total 126,508 Total Common Stocks and Other Equity-Like Securities: 91.6% 1,542,574 (Cost: $1,502,934) Short-Term Obligations: 6.5% Yield 1.62% - 1.76% due 7/1/02 - 7/9/02 $32,000 GE Capital 31,989 31,997 Toyota Motor 31,985 23,046 Prudential Funding 23,045 22,998 American General 22,998 - -------------------------------------------------------------------------------- (Amortized Cost: $110,017) 110,017 ---------- Total Investments: 98.1% 1,652,591 (Cost: $1,612,951) Cash and Other Assets Less Liabilities: 1.9% 31,331 ---------- Total Net Assets: 100% $1,683,922 ================================================================================ - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At June 30, 2002, for federal income tax purposes cost of investments is $1,620,977 and net unrealized appreciation was $31,614 consisting of gross unrealized appreciation of $279,159 and gross unrealized depreciation of $247,545. (b) Non-income producing security. (c) On June 30, 2002, $633,157 or 37.6% of the Fund's net assets was denominated in the Euro currency. I 30 Liberty Acorn International >Portfolio Diversification At June 30, 2002, the Fund's portfolio investments as a percent of net assets was diversified as follows: Value (000) Percent - -------------------------------------------------------------------------------- >Computer Hardware Semiconductors $ 5,820 0.3% - -------------------------------------------------------------------------------- 5,820 0.3 >Computer Software Internet 6,405 0.4 Telephone Related 5,512 0.3 - -------------------------------------------------------------------------------- 11,917 0.7 >Technology Services Full Service 22,115 1.3 Embedded Systems 5,830 0.4 - -------------------------------------------------------------------------------- 27,945 1.7 >Telecom Cable 4,958 0.3 Alternative Provider 4,550 0.3 ISP's 3,469 0.2 - -------------------------------------------------------------------------------- 12,977 0.8 >Broadcasting & Media Content Media Content Providers 50,627 3.0 Radio & TV Broadcasting 50,621 3.0 Hybrid Internet 20,104 1.2 Market Research 12,112 0.7 - -------------------------------------------------------------------------------- 133,464 7.9 >Health Care Services 82,436 4.9 Devices & Consumable 69,054 4.1 Drugs 26,424 1.6 Biotech 12,986 0.8 - -------------------------------------------------------------------------------- 190,900 11.4 >Business Services Business Services 57,232 3.4 BPO 49,112 2.9 Logistics 46,006 2.7 Consumer Services 1,037 0.1 - -------------------------------------------------------------------------------- 153,387 9.1 >Financials Lending Institutions 89,589 5.3 Asset Management 50,057 3.0 Insurance 42,647 2.5 - -------------------------------------------------------------------------------- 182,293 10.8 >Consumer Goods & Services Branded Goods 162,923 9.7 Leisure 58,373 3.5 Retail Outlets 53,192 3.2 Distribution/E-Commerce 10,844 0.6 - -------------------------------------------------------------------------------- 285,332 17.0 >Industrials Goods 227,461 13.5 EMS 16,642 1.0 Electronic Manufacturing 14,890 0.9 Construction 12,529 0.7 R&D Design Firms 11,331 0.7 Distribution 10,828 0.6 - -------------------------------------------------------------------------------- 293,681 17.4 >Other Industries Energy 118,308 7.0 Real Estate 53,463 3.2 Utilities 51,986 3.1 Conglomerate 15,526 0.9 Not-Classified 5,575 0.3 - -------------------------------------------------------------------------------- 244,858 14.5 Total Common Stocks and Other Equity-Like Securities: ------------------------- 1,542,574 91.6 Short-Term Obligations: 110,017 6.5 ------------------------- Total Investments: 1,652,591 98.1 Cash and Other Assets Less Liablilities: 31,331 1.9 ------------------------- Total Net Assets: $1,683,922 100.0% ================================================================================ 31 I Liberty Acorn USA >Major Portfolio Changes in the Second Quarter (Unaudited) Number of Shares ------------------------ 03/31/02 06/30/02 Additions - -------------------------------------------------------------------------------- Information Commonwealth Telephone 86,800 177,800 Crown Castle International 170,000 565,000 E.Piphany 0 505,000 Kronos 0 35,000 MRO Software 171,600 292,000 Western Wireless 501,100 730,000 - -------------------------------------------------------------------------------- Health Care Beverly Enterprises 1,155,000 1,278,000 First Health Group 184,000 214,000 Inhale Therapeutic Systems 0 396,400 Techne 0 50,000 - -------------------------------------------------------------------------------- Consumer Goods/Services Coach 30,000 46,000 Scotts Company 0 25,000 - -------------------------------------------------------------------------------- Finance HCC Insurance Holdings 0 140,000 - -------------------------------------------------------------------------------- Industrial Goods/Services Esco Technologies 0 49,000 - -------------------------------------------------------------------------------- Energy/Minerals Southwestern Energy 0 70,000 Sales - -------------------------------------------------------------------------------- Information Euronet Services 169,000 0 Global Payments 214,640 191,640 - -------------------------------------------------------------------------------- Health Care Serologicals 108,900 0 - -------------------------------------------------------------------------------- Consumer Goods/Services Hot Topic 80,000 0 ITT Educational Services 666,000 570,000 (includes the effect of a 2 for 1 stock split) - -------------------------------------------------------------------------------- Finance AmeriCredit 551,500 501,500 Leucadia National 40,000 0 - -------------------------------------------------------------------------------- Industrial Goods/Services Clarcor 53,000 0 Wackenhut, Cl. B 422,500 0 - -------------------------------------------------------------------------------- Energy/Minerals Tesoro Petroleum 340,000 275,000 U 32 Liberty Acorn USA >Statement of Investments (Unaudited) June 30, 2002 Number of Shares Value (000) - -------------------------------------------------------------------------------- Common Stocks: 89.9% - -------------------------------------------------------------------------------- Information: 33.3% >Broadcasting: 2.5% 333,100 Salem Communications (b) $ 8,284 Radio Stations for Religious Programming - -------------------------------------------------------------------------------- >Television Programmimg: 1.3% 535,000 Mediacom Communications (b) 4,168 Cable Television Franchises - -------------------------------------------------------------------------------- >Telecommunications/Wireline Communications: 2.2% 177,800 Commonwealth Telephone (b) 7,155 Rural Phone Franchises & CLEC - -------------------------------------------------------------------------------- >Mobile Communications: 3.6% 94,000 Telephone and Data Systems 5,692 Cellular & Telephone Services 730,000 Western Wireless (b) 2,336 Rural Cellular Phone Franchises 565,000 Crown Castle International (b) 2,220 Communication Towers in USA & UK 182,700 COMARCO (b) 1,440 Wireless Network Testing - -------------------------------------------------------------------------------- 11,688 >Computer Services: 2.9% 232,000 American Management Systems (b) 4,433 Software Development Services 786,000 RCM Technologies (b) 3,930 Technology Staffing Services 256,600 Analysts International 1,091 Technology Staffing Services - -------------------------------------------------------------------------------- 9,454 >Business/Consumer Software: 14.5% 578,000 JDA Software (b) 16,334 Applications/Software & Services for Retailers 527,600 Micros Systems (b) 14,620 Information Systems for Restaurants & Hotels 1,330,000 Novell (b) 4,269 Directory, Identity Management & Authorization Software 292,000 MRO Software (b) 3,323 Enterprise Management Software 505,000 E.Piphany (b) 2,217 CRM Software 105,000 SPSS (b) 1,632 Statistical Analysis Software 120,000 JD Edwards (b) 1,458 Mid Market ERP & Supply Chain Software 37,500 THQ (b) 1,118 Entertainment Software 35,000 Kronos (b) 1,067 Labor Management Solutions 50,000 Group 1 Software (b) 692 Address Verification Software 100,000 Multex.Com (b) 408 Provider Of Investment Info To Institutions & Individuals - -------------------------------------------------------------------------------- 47,138 >Transaction Processors: 1.8% 191,640 Global Payments 5,701 Credit Card Processor - -------------------------------------------------------------------------------- >Business Information/Marketing Services/Publishing: 1.8% 108,600 Information Holdings (b) 2,650 Scientific & Medical Publications, Patent Information 102,800 Getty Images (b) 2,238 Photographs for Publications & Electronic Media 115,300 Navigant Consulting (b) 806 Consulting Firm - -------------------------------------------------------------------------------- 5,694 >Computer Hardware/Semiconductors/ Related Equipment: 2.7% 415,700 Seachange International (b) 3,650 Systems for Video on Demand & Ad Insertion 235,000 Axcelis Technologies (b) 2,655 Ion Implantation Tools 100,000 Integrated Circuit Systems (b) 2,019 Silicon Timing Devices 95,900 IXYS (b) 516 Power Semiconductors - -------------------------------------------------------------------------------- 8,840 -------- Information: Total 108,122 - -------------------------------------------------------------------------------- Health Care: 18.3% >Biotechnology/Drug Delivery: 2.0% 396,400 Inhale Therapeutic Systems (b) 3,762 Pulmonary Drug Delivery 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) 291 Drugs for Diabetes - -------------------------------------------------------------------------------- 6,554 >Medical Equipment: 5.2% 335,000 Edwards Lifesciences (b) 7,772 Heart Valves 314,000 Steris (b) 6,000 Sterilization Devices 345,000 Novoste (b) 1,594 Radiation Catheters for In-stent Restenosis 135,600 Visx (b) 1,478 Laser Eye Surgery - -------------------------------------------------------------------------------- 16,844 >Medical Supplies: 0.4% 50,000 Techne (b) 1,411 Cytokines, Antibodies, Other Reagents For Life Sciences - -------------------------------------------------------------------------------- >Services: 10.7% 1,278,000 Beverly Enterprises (b) 9,726 Nursing Homes 246,800 Lincare Holdings (b) 7,972 Home Health Care Services 33 U Liberty Acorn USA >Statement of Investments (Unaudited), continued Number of Shares Value (000) - -------------------------------------------------------------------------------- >Services -- continued 268,300 NDCHealth $ 7,486 Health Claims Processing & Drug Marketing Services 214,000 First Health Group (b) 6,001 PPO Network 80,000 Syncor International (b) 2,520 Nuclear Pharmacy for Radiopharmaceuticals 856,100 Magellan Health Services (b) 856 Mental Health Services 1,300 Medquist (b) 35 Medical Transcription Services - -------------------------------------------------------------------------------- 34,596 -------- Health Care: Total 59,405 - -------------------------------------------------------------------------------- Consumer Goods/Services: 12.3% >Consumer Services: 4.1% 570,000 ITT Educational Services (b) 12,426 Technology Oriented Postsecondary Degree Programs 43,000 Bally Total Fitness (b) 805 National Chain of Fitness Centers - -------------------------------------------------------------------------------- 13,231 >Apparel: 3.0% 157,200 Steven Madden (b) 3,117 Wholesaler/Retailer of Fashion Footware 46,000 Coach (b) 2,525 Designer & Retailer of Branded Leather Accessories 108,000 Skechers USA (b) 2,334 Footwear Designer & Marketer 53,000 Columbia Sportswear (b) 1,696 Active Outdoor Apparel, Footware & Accessories - -------------------------------------------------------------------------------- 9,672 >Nondurables: 0.3% 25,000 Scotts Company (b) 1,135 Consumer Lawn & Garden Products - -------------------------------------------------------------------------------- >Retail: 4.9% 125,500 Christopher & Banks (b) 5,309 Specialty Women's Retailer at Moderate Price Levels 310,000 Callaway Golf 4,910 Premium Golf Clubs & Balls 347,000 Gadzooks (b) 4,369 Teen Apparel Retailer 85,000 Tweeter Home Entertainment (b) 1,389 Consumer Electronics Retailer 1,700 Aeropostale (b) 46 Mall Based Teen Retailer - -------------------------------------------------------------------------------- 16,023 -------- Consumer Goods/Services: Total 40,061 - -------------------------------------------------------------------------------- Finance: 11.7% >Banks: 1.4% 158,125 Chittenden 4,582 Vermont & West Massachusetts Bank - -------------------------------------------------------------------------------- >Finance Companies: 5.9% 501,500 AmeriCredit (b) 14,067 Auto Lending 590,000 World Acceptance (b) 4,956 Personal Loans - -------------------------------------------------------------------------------- 19,023 >Savings & Loan: 0.7% 96,400 Anchor Bancorp Wisconsin 2,324 Wisconsin Thrift - -------------------------------------------------------------------------------- >Insurance: 3.7% 43,000 Markel (b) 8,471 Specialty Insurance 140,000 HCC Insurance Holdings 3,689 Aviation Insurance - -------------------------------------------------------------------------------- 12,160 -------- Finance: Total 38,089 - -------------------------------------------------------------------------------- Industrial Goods/Services: 4.6% >Industrial Materials: 0.8% 95,000 Spartech 2,587 Plastics Distribution & Compounding - -------------------------------------------------------------------------------- >Machinery: 0.9% 49,000 Esco Technologies (b) 1,715 Filtration & Test Equipment 35,000 Cuno (b) 1,266 Filtration & Fluids Clarification - -------------------------------------------------------------------------------- 2,981 >Industrial Services: 2.9% 206,900 Insurance Auto Auctions (b) 4,034 Auto Salvage Services 346,000 Hub Group (b) 3,200 Truck & Rail Freight Forwarder 95,000 Clark/Bardes Consulting (b) 2,170 Executive Compensation & Benefits Consulting - -------------------------------------------------------------------------------- 9,404 -------- Industrial Goods/Services: Total 14,972 - -------------------------------------------------------------------------------- Energy/Minerals: 5.3% >Oil Services: 1.3% 551,000 Newpark Resources (b) 4,050 Oilfield Fluid Management - -------------------------------------------------------------------------------- >Oil & Gas Producers: 0.3% 70,000 Southwestern Energy (b) 1,063 Oil & Gas Exploration/Production - -------------------------------------------------------------------------------- >Distribution/Marketing/Refining: 3.7% 193,000 Atmos Energy 4,524 Natural Gas Utility 122,600 Equitable Resources 4,205 Natural Gas Utility & Producer 275,000 Tesoro Petroleum (b) 2,131 Oil Refinery/Gas Reserves U 34 Liberty Acorn USA >Statement of Investments (Unaudited), continued Number of Shares Value (000) - -------------------------------------------------------------------------------- >Distribution/Marketing/Refining -- continued 80,400 Dynegy $ 579 Natural Gas & Electric Processing, Production & Marketing 115,000 Aquila 572 Energy Trading - -------------------------------------------------------------------------------- 12,011 -------- Energy/Minerals: Total 17,124 - -------------------------------------------------------------------------------- Other Industries: 4.4% >Real Estate: 0.5% 47,000 The Rouse Company 1,551 Regional Shopping Malls - -------------------------------------------------------------------------------- >Regulated Utilities: 3.9% 498,000 Conectiv 12,853 Electric Utility in New Jersey, Delaware & Maryland -------- Other Industries: Total 14,404 Total Common Stocks (Cost: $280,164): 89.9% 292,177 Principal Amount (000) Value (000) - -------------------------------------------------------------------------------- Short-Term Obligations: 9.1% Yield 1.55% - 1.70% Due 7/1/02 - 7/3/02 $11,072 Toyota Motor $ 11,071 9,502 Prudential Funding 9,502 8,892 AmGen Financial 8,892 - -------------------------------------------------------------------------------- (Amortized Cost: $29,465) 29,465 Total Investments: (Cost: $309,629) 99.0% 321,642 Cash and Other Assets Less Liabilities: 1.0% 3,343 -------- Total Net Assets: 100% $324,985 ================================================================================ - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At June 30, 2002, for federal Income tax purposes cost of investments is the same and net unrealized appreciation was $12,013 consisting of gross unrealized appreciation of $66,577 and gross unrealized depreciation of $54,564. (b) Non-income producing security. 35 U Liberty Acorn Foreign Forty >Major Portfolio Changes in the Second Quarter (Unaudited) Number of Shares --------------------------- 03/31/02 06/30/02 Additions - -------------------------------------------------------------------------------- Europe >United Kingdom/Ireland Standard Chartered 0 100,000 - -------------------------------------------------------------------------------- Other Countries >Australia Lion Nathan 0 400,000 Sales - -------------------------------------------------------------------------------- Europe >United Kingdom/Ireland Capita Group 210,000 0 >Switzerland Xstrata 76,000 0 >Italy Banca Fideuram 130,000 0 F40 36 Liberty Acorn Foreign Forty >Statement of Investments (Unaudited) June 30, 2002 Number of Shares Value (000) - -------------------------------------------------------------------------------- Common Stocks: 94.4% - -------------------------------------------------------------------------------- Europe: 64.2% >Germany: 7.7% 41,000 Rhoen-Klinikum $ 1,992 Hospital Management 28,000 Deutsche Boerse 1,187 Trading, Clearing & Settlement Services for Financial Markets - -------------------------------------------------------------------------------- 3,179 >Denmark: 1.6% 26,000 Jyske Bank 652 Retail & Corporate Banking - -------------------------------------------------------------------------------- >Norway: 6.9% 327,000 DNB Holding 1,784 Universal Bank 54,950 Orkla 1,063 Diversified Consumer Goods - -------------------------------------------------------------------------------- 2,847 >France: 9.6% 45,000 Suez 1,205 Regulated Utilities 24,000 Essilor International 980 Eyeglass Lenses 8,000 Technip 846 Global Oil Engineering & Construction 25,000 Euronext 471 Trading, Clearing & Settlement Services for Financial Markets 10,000 AGF 461 Life & Health Insurance - -------------------------------------------------------------------------------- 3,963 >United Kingdom/Ireland: 23.6% 125,000 Kerry Group (Ireland) 1,859 Food Ingredients 100,000 Irish Life & Permanent (Ireland) 1,453 Life Insurance & Savings Products 150,000 Alliance Unichem 1,418 Pharmaceutical Wholesaler & Retailer 220,000 Smith & Nephew 1,224 Medical Equipment & Supplies 100,000 Standard Chartered 1,071 International Banking Group 150,000 Anglo Irish Bank (Ireland) 971 Corporate Lending & Private Banking 250,000 Wood Group (b) 805 Oil Services 65,000 Galen Holdings 469 Women's Health Care 60,000 Hanson Trust 428 Global Supplier of Construction Material - -------------------------------------------------------------------------------- 9,698 >Switzerland: 12.2% 2,780 Synthes-Stratec 1,708 Products for Orthopedic Surgery 715 Pargesa Holdings 1,480 Industrial & Media Conglomerate 3,300 Givaudan 1,337 Industrial Fragrances & Flavors 1,700 Julius Baer 491 Private Banking, Brokerage & Mutual Funds - -------------------------------------------------------------------------------- 5,016 >Italy: 2.6% 85,000 Autogrill 992 Restaurants & Catering for Travelers 10,000 Saipem 72 Offshore Oil Construction & Drilling - -------------------------------------------------------------------------------- 1,064 ------- Europe: Total 26,419 - -------------------------------------------------------------------------------- Asia: 20.1% >Hong Kong: 2.8% 100,000 TVB 426 Television Programming & Broadcasting 300,000 Li & Fung 404 Sourcing of Consumer Goods 290,000 Hang Lung Properties 331 Property Manager - -------------------------------------------------------------------------------- 1,161 >Japan: 15.1% 26,400 Oriental Land 1,892 Disney Theme Park Operator 17,500 Orix 1,415 Finance Leasing 7,000 Nintendo 1,033 Entertainment Software & Hardware 14,000 Hoya 1,021 Opto-Electrical Components & Eyeglasses 65,000 Terumo 871 Medical Supplies - -------------------------------------------------------------------------------- 6,232 >Singapore: 2.2% 450,000 Singapore Technical Engineering 491 Defense Supplier 50,000 Venture Manufacturing 399 Electronic Manufacturing Services - -------------------------------------------------------------------------------- 890 ------- Asia: Total 8,283 - -------------------------------------------------------------------------------- Other Countries: 10.1% >Australia: 2.6% 400,000 Lion Nathan 1,093 Beer Brewer/Distributor - -------------------------------------------------------------------------------- >Canada: 7.0% 29,600 Talisman Energy 1,333 Oil & Gas Producer 65,000 Investors Group 1,190 Mutual Funds 15,500 Celestica (b) 350 Electronic Manufacturing Services - -------------------------------------------------------------------------------- 2,873 37 F40 Liberty Acorn Foreign Forty >Statement of Investments (Unaudited), continued Number of Shares Value (000) - ------------------------------------------------------------------------------- >Israel: 0.5% 28,000 Amdocs (b) $ 211 Telecommunications Billing & Customer Care Software ------- Other: Total 4,177 ------- Total Common Stocks: 94.4% 38,879 (Cost: $36,161) Principal Amount (000) Value (000) - ------------------------------------------------------------------------------- Short-Term Obligations: 10.8% Yield 1.63% - 1.79% Due 7/1/02 - 7/2/02 $2,011 Toyota Motor $ 2,011 1,230 AmGen Financial 1,230 1,200 Prudential Funding 1,200 - ------------------------------------------------------------------------------- (Amortized Cost: $4,441) 4,441 ------- Total Investments: 105.2% 43,320 (Cost: $40,602) Cash and Other Assets Less Liabilities: (5.2%) (2,146) ------- Total Net Assets: 100% $41,174 =============================================================================== - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At June 30, 2002, for federal income tax purposes cost of investments is $40,987 and net unrealized appreciation was $2,333, consisting of gross unrealized appreciation of $4,799 and gross unrealized depreciation of $2,466. (b) Non-income producing security. (c) At June 30, 2002, $12,488 or 30.3% of the Fund's net assets was denominated in Euro currency. F40 38 Liberty Acorn Foreign Forty >Portfolio Diversication At June 30, 2002, the Fund's portfolio investments as a percent of net assets was diversified as follows: Value (000) Percent - -------------------------------------------------------------------------------- >Information Technology Transaction Processors $ 1,658 4.0% Semiconductors and Related Equipment 1,021 2.5 Contract Manufacturing 749 1.8 Television Broadcasting 426 1.1 Business Software 211 0.5 - -------------------------------------------------------------------------------- 4,065 9.9 >HealthCare Medical Equipment 4,783 11.6 Hospital Management 1,992 4.8 Pharmaceuticals 1,887 4.6 - -------------------------------------------------------------------------------- 8,662 21.0 >Consumer Goods/Services Beverage 2,922 7.1 Other Entertainment 1,892 4.6 Food 1,093 2.7 Consumer Software 1,033 2.5 Restaurants 992 2.4 - -------------------------------------------------------------------------------- 7,932 19.3 >Finance Banks 4,479 10.9 Insurance 1,914 4.6 Money Management 1,681 4.1 Other Finance Companies 1,415 3.4 - -------------------------------------------------------------------------------- 9,489 23.0 >Industrial Goods/Services Conglomerates 1,480 3.6 Speciality Chemicals 1,337 3.2 Other Industrial Services 491 1.2 Construction 428 1.1 Outsourcing and Training Services 404 1.0 - -------------------------------------------------------------------------------- 4,140 10.1 >Energy/Minerals Oil Services 1,722 4.2 Oil/Gas Producers 1,333 3.2 - -------------------------------------------------------------------------------- 3,055 7.4 >Other Regulated Utilities 1,205 2.9 Real Estate 331 0.8 - -------------------------------------------------------------------------------- 1,536 3.7 ----------------------- Total Common Stocks: 38,879 94.4 Short-Term Obligations: 4,441 10.8 ----------------------- Total Investments: 43,320 105.2 Cash and Other Assets Less Liabilities: (2,146) (5.2) ----------------------- Net Assets $ 41,174 100.0% ================================================================================ 39 F40 Liberty Acorn Twenty >Major Portfolio Changes in the Second Quarter (Unaudited) Number of Shares ---------------------- 03/31/02 06/30/02 Additions - -------------------------------------------------------------------------------- Information Moody's Investor Services 0 52,000 - -------------------------------------------------------------------------------- Health Care First Health Group 243,000 265,000 - -------------------------------------------------------------------------------- Consumer Goods/Services International Speedway Motors 0 65,000 - -------------------------------------------------------------------------------- Finance Fidelity National Financial 0 110,000 - -------------------------------------------------------------------------------- Industrial Goods/Services Expeditors International of Washington 180,000 200,000 (includes the effect of a 2 for 1 stock split) Sales - -------------------------------------------------------------------------------- Energy/Minerals Dynegy 150,000 0 20 40 Liberty Acorn Twenty >Statement of Investments (Unaudited) June 30, 2002 Number of Shares Value (000) - -------------------------------------------------------------------------------- Common Stocks: 92.5% - -------------------------------------------------------------------------------- Information: 36.8% >Television Programming: 4.7% 550,000 Liberty Media Group, AT&T (b) $ 5,500 CATV Programming & Media Company Holdings - ------------------------------------------------------------------------------- >Instrumentation: 7.6% 110,000 Mettler Toledo (b) 4,056 Laboratory Equipment 108,000 Waters (b) 2,884 Chromatography, Mass Spectrometry, Thermal Analysis 108,000 Tektronix (b) 2,021 Analytical Instruments - ------------------------------------------------------------------------------- 8,961 >Gaming Equipment: 4.8% 100,000 International Game Technology (b) 5,670 Slot Machines & Progressive Jackpots - ------------------------------------------------------------------------------- >Business Software: 9.3% 130,000 Synopsys (b) 7,125 Software for Designing Semiconductor Chips 310,000 JD Edwards (b) 3,766 Mid Market ERP & Supply Chain Software - ------------------------------------------------------------------------------- 10,891 >Business Information: 10.4% 210,000 H & R Block 9,691 Tax Preparation 52,000 Moody's Investor Services 2,587 Ratings Service for Credit Obligations - ------------------------------------------------------------------------------- 12,278 -------- Information: Total 43,300 - ------------------------------------------------------------------------------- Health Care: 21.7% >Medical Equipment: 5.0% 200,000 Boston Scientific (b) 5,864 Stents & Catheters - ------------------------------------------------------------------------------- >Hospital/Laboratory Supplies: 2.6% 110,000 Techne (b) 3,104 Cytokines, Antibodies, Other Reagents for Life Sciences - ------------------------------------------------------------------------------- >Services: 14.1% 265,000 First Health Group (b) 7,431 PPO Network 240,000 IMS Health 4,308 Prescription Data Group for Pharmaceutical Industry 150,000 Lincare Holdings (b) 4,845 Home Health Care Services - ------------------------------------------------------------------------------- 16,584 -------- Health Care : Total 25,552 - ------------------------------------------------------------------------------- Consumer Goods/Services: 10.4% >Leisure Vehicles: 3.7% 85,000 Harley-Davidson 4,358 Motorcycles & Related Merchandise - ------------------------------------------------------------------------------- Number of Shares or Principal Amount (000) Value (000) - -------------------------------------------------------------------------------- >Entertainment: 2.2% 65,000 International Speedway Motors $ 2,606 Largest Motorsport Racetrack Owner & Operator - ------------------------------------------------------------------------------- >Furniture & Manufacturers: 4.5% 140,000 Jones Apparel (b) 5,250 Women's Apparel -------- Consumer Goods/Services: Total 12,214 - ------------------------------------------------------------------------------- Finance: 18.0% >Banks: 8.7% 165,000 Associated Banc-Corp 6,222 Midwest Bank 82,000 TCF Financial 4,026 Great Lakes Bank - ------------------------------------------------------------------------------- 10,248 >Insurance: 7.9% 30,000 Markel (b) 5,910 Specialty Insurance 110,000 Fidelity National Financial 3,476 Title Insurance & Other Services - ------------------------------------------------------------------------------- 9,386 >Money Management: 1.4% 58,000 SEI Investments 1,634 Mutual Fund Administration & Investment Management -------- Finance: Total 21,268 - ------------------------------------------------------------------------------- Industrial Goods/Services: 5.6% >Logistics: 5.6% 200,000 Expeditors International of Washington 6,632 International Freight Forwarder -------- Industrial Goods/Services: Total 6,632 -------- Total Common Stocks (Cost: $91,043): 92.5% 108,966 Short-Term Obligations: 7.5% Yield 1.55% - 1.70% Due 7/1/02 - 7/3/02 $4,406 Toyota Motor 4,406 2,632 AmGen Financial 2,632 1,758 Prudential Funding 1,758 - ------------------------------------------------------------------------------- (Amortized Cost: $8,796) 8,796 -------- Total Investments (Cost: $99,839): 100.0% 117,762 Cash and Other Assets Less Liabilities: (0.0%) (23) -------- Total Net Assets: 100% $117,739 =============================================================================== - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At June 30, 2002, for federal income tax purposes cost of investments is the same and net unrealized appreciation was $17,923, consisting of gross unrealized appreciation of $22,519 and gross unrealized depreciation of $4,596. (b) Non-income producing security. 41 20 Liberty Acorn Family of Funds >Statements of Assets and Liabilities (Unaudited)
Liberty Liberty Liberty Acorn Acorn Acorn June 30, 2002 Fund International USA - ----------------------------------------------------------------------------------------------------------------- (in thousands) Assets Investments, at value (cost: Liberty Acorn Fund $4,559,784; Liberty Acorn International $1,612,951; Liberty Acorn USA $309,629; Liberty Acorn Foreign Forty $40,602; Liberty Acorn Twenty $99,839) $ 5,905,738 $ 1,652,591 $ 321,642 Cash -- -- 1 Foreign currency (cost: Liberty Acorn Fund $3,138; Liberty Acorn International $17,946; Liberty Acorn Foreign Forty $1,438) 3,139 18,603 -- Net unrealized appreciation on forward foreign currency contracts -- 25 -- Receivable for: Investments sold 3,086 46,101 3,952 Fund shares sold 24,685 10,114 660 Dividends and interest 3,819 3,985 18 Expense reimbursement due for Class A, B and C from Advisor -- -- -- Deferred Trustees' Compensation Plan 775 412 56 Other assets 21 9 1 - ----------------------------------------------------------------------------------------------------------------- Total Assets 5,941,263 1,731,840 326,330 Liabilities Payable for: Investments purchased 25,909 34,641 244 Fund shares redeemed 5,377 10,943 710 Custodian 26 55 1 Management fee 3,254 1,152 250 Administration fee 242 70 13 Trustees' fee 51 43 5 Deferred Trustees' fees 775 412 56 Transfer agent fee 171 205 18 Other liabilities 332 397 48 - ----------------------------------------------------------------------------------------------------------------- Total Liabilities 36,137 47,918 1,345 - ----------------------------------------------------------------------------------------------------------------- Net Assets $ 5,905,126 $ 1,683,922 $ 324,985 ================================================================================================================= Composition of Net Assets Paid in capital $ 4,526,121 $ 1,745,596 $ 302,244 Undistributed net investment income (Accumulated net investment loss or Overdistributed net investment income) (1,409) 10,558 (1,451) Accumulated net realized gain (loss) 34,412 (104,793) 12,179 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) 1,345,954 31,614 12,013 Forward foreign currency contracts -- 25 -- Foreign currency transactions 48 922 -- - ----------------------------------------------------------------------------------------------------------------- Net Assets $ 5,905,126 $ 1,683,922 $ 324,985 ================================================================================================================= Net asset value and redemption price per share -- Class A (a) $17.12 $18.49 $16.67 (Net assets/shares) ($627,289/36,645) ($35,652/1,928) ($36,920/2,215) Maximum offering price per share -- Class A (b) $18.16 $19.62 $17.69 (Net asset value and redemption price per share/front-end sales charge) ($17.12/.9425) ($18.49/.9425) ($16.67/.9425) Net asset value and offering price per share -- Class B (a) $16.94 $18.30 $16.52 (Net assets/shares) ($582,219/34,372) ($23,400/1,279) ($46,396/2,809) Net asset value and offering price per share -- Class C (a) $16.94 $18.29 $16.52 (Net assets/shares) ($332,527/19,633) ($16,129/882) ($21,127/1,279) Net asset value, offering price and redemption price per share -- Class Z $17.25 $18.61 $16.74 (Net assets/shares) ($4,363,091/252,937) ($1,608,741/86,458) ($220,542/13,177) Liberty Liberty Acorn Acorn June 30, 2002 Foreign Forty Twenty - ---------------------------------------------------------------------------------------- (in thousands) Assets Investments, at value (cost: Liberty Acorn Fund $4,559,784; Liberty Acorn International $1,612,951; Liberty Acorn USA $309,629; Liberty Acorn Foreign Forty $40,602; Liberty Acorn Twenty $99,839) $ 43,320 $ 117,762 Cash 1 -- Foreign currency (cost: Liberty Acorn Fund $3,138; Liberty Acorn International $17,946; Liberty Acorn Foreign Forty $1,438) 1,443 -- Net unrealized appreciation on forward foreign currency contracts -- -- Receivable for: Investments sold 96 -- Fund shares sold 47 164 Dividends and interest 155 34 Expense reimbursement due for Class A, B and C from Advisor 16 -- Deferred Trustees' Compensation Plan -- -- Other assets 5 7 - ---------------------------------------------------------------------------------------- Total Assets 45,083 117,967 Liabilities Payable for: Investments purchased 2,974 -- Fund shares redeemed 839 97 Custodian 2 -- Management fee 34 86 Administration fee 2 5 Trustees' fee 1 -- Deferred Trustees' fees -- -- Transfer agent fee 18 13 Other liabilities 39 27 - ---------------------------------------------------------------------------------------- Total Liabilities 3,909 228 - ---------------------------------------------------------------------------------------- Net Assets $ 41,174 $ 117,739 ======================================================================================== Composition of Net Assets Paid in capital $ 74,265 $ 100,399 Undistributed net investment income (Accumulated net investment loss or Overdistributed net investment income) 109 (531) Accumulated net realized gain (loss) (35,540) (52) 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) 2,333 17,923 Forward foreign currency contracts -- -- Foreign currency transactions 7 -- - ---------------------------------------------------------------------------------------- Net Assets $ 41,174 $ 117,739 ======================================================================================== Net asset value and redemption price per share -- Class A (a) $11.81 $14.38 (Net assets/shares) ($2,823/239) ($17,488/1,216) Maximum offering price per share -- Class A (b) $12.53 $15.26 (Net asset value and redemption price per share/front-end sales charge) ($11.81/.9425) ($14.38/.9425) Net asset value and offering price per share -- Class B (a) $11.67 $14.23 (Net assets/shares) ($2,183/187) ($24,596/1,729) Net asset value and offering price per share -- Class C (a) $11.68 $14.22 (Net assets/shares) ($3,760/322) ($7,096/499) Net asset value, offering price and redemption price per share -- Class Z $11.86 $14.47 (Net assets/shares) ($32,408/2,733) ($68,559/4,739)
(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 (Unaudited) For the Six Months Ended June 30, 2002
Liberty Liberty Liberty Liberty Liberty Acorn Acorn Acorn Acorn Acorn (in thousands) Fund International USA Foreign Forty Twenty - --------------------------------------------------------------------------------------------------------------------------------- Investment Income: Dividend income $ 22,894 $ 21,837 $ 641 $ 513 $ 257 Interest income 4,410 736 261 18 80 - --------------------------------------------------------------------------------------------------------------------------------- 27,304 22,573 902 531 337 Foreign taxes withheld (477) (2,008) -- (53) -- - --------------------------------------------------------------------------------------------------------------------------------- Total Investment Income 26,827 20,565 902 478 337 Expenses: Management fees 18,712 6,936 1,522 208 489 Administration fees 1,388 421 82 11 27 12b-1 Service & Distribution fees 4,276 231 347 36 151 Custody fees 154 332 5 16 3 Transfer agent fee 2,537 740 228 59 106 Trustees' fee 176 87 14 2 1 Registration and blue sky 113 54 38 39 35 Reports to shareholders 174 126 35 29 33 Other expenses 286 104 30 16 16 - --------------------------------------------------------------------------------------------------------------------------------- Total expenses 27,816 9,031 2,301 416 861 Less reimbursement of expenses by advisor -- -- -- (63) (2) - --------------------------------------------------------------------------------------------------------------------------------- Net Expenses 27,816 9,031 2,301 353 859 - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) (989) 11,534 (1,399) 125 (522) Net Realized and Unrealized Gain (Loss) on Portfolio Positions: Net realized gain (loss) on: Investments 36,343 36,997 14,144 (4,851) (8) Forward foreign currency contracts -- (2,222) -- -- -- Foreign currency transactions 31 (2,494) -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) 36,374 32,281 14,144 (4,851) (8) ================================================================================================================================= Net change in net unrealized appreciation/depreciation on: Investments (276,792) (27,726) (30,113) 4,041 (5,123) Forward foreign currency contracts -- 25 -- -- -- Foreign currency transactions (19) 2,801 -- 3 -- - --------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation/depreciation (276,811) (24,900) (30,113) 4,044 (5,123) ================================================================================================================================= Net realized and unrealized gain (loss) (240,437) 7,381 (15,969) (807) (5,131) - --------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets resulting from Operations $(241,426) $ 18,915 $(17,368) $ (682) $(5,653) =================================================================================================================================
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 (Unaudited) (Unaudited) Six months Year ended Six months Year ended Increase (Decrease) in Net Assets ended June 30, December 31, ended June 30, December 31, - -------------------------------------------------------------------------------------------------------------------------------- (in thousands) 2002 2001 2002 2001 Operations: Net investment income (loss) $ (989) $ 8,831 $ 11,534 $ 12,043 Net realized gain (loss) on investments, forward foreign currency contracts, futures and foreign currency transactions 36,374 25,700 32,281 (140,634) Change in net unrealized appreciation (depreciation) of investments, forward foreign currency contracts and foreign currency transactions (276,811) 244,013 (24,900) (375,330) - -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) from Operations (241,426) 278,544 18,915 (503,921) Distribution to Shareholders From: Net investment income -- Class A -- -- -- -- Net realized gain -- Class A -- (2,844) -- (398) Net investment income -- Class B -- -- -- -- Net realized gain -- Class B -- (2,637) -- (273) Net investment income -- Class C -- -- -- -- Net realized gain -- Class C -- (1,296) -- (230) Net investment income -- Class Z -- (8,940) (6,027) -- Net realized gain -- Class Z -- (80,989) -- (38,229) - -------------------------------------------------------------------------------------------------------------------------------- Total Distribution to Shareholders -- (96,706) (6,027) (39,130) Share Transactions: Subscriptions -- Class A 400,777 307,484 142,742 239,039 Distributions reinvested -- Class A -- 2,629 -- 334 Redemptions -- Class A (50,373) (37,092) (133,428) (220,639) - -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class A 350,404 273,021 9,314 18,734 Subscriptions -- Class B 342,973 273,803 8,641 18,727 Distributions reinvested -- Class B -- 2,424 -- 231 Redemptions -- Class B (18,233) (15,884) (2,449) (3,880) - -------------------------------------------------------------------------------------------------------------------------------- Net Increase -- Class B 324,740 260,343 6,192 15,078 Subscriptions -- Class C 215,092 151,838 22,896 46,327 Distributions reinvested -- Class C -- 1,220 -- 199 Redemptions -- Class C (16,632) (16,911) (21,280) (33,605) - -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class C 198,460 136,147 1,616 12,921 Subscriptions -- Class Z 536,971 634,962 315,948 855,561 Distributions reinvested -- Class Z -- 81,436 5,593 35,680 Redemptions -- Class Z (227,387) (630,511) (338,065) (1,203,599) - -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class Z 309,584 85,887 (16,524) (312,358) - -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) from Share Transactions 1,183,188 755,398 598 (265,625) - -------------------------------------------------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets 941,762 937,236 13,486 (808,676) Net Assets: Beginning of period 4,963,364 4,026,128 1,670,436 2,479,112 - -------------------------------------------------------------------------------------------------------------------------------- End of period $ 5,905,126 $ 4,963,364 $ 1,683,922 $ 1,670,436 ================================================================================================================================ Undistributed Net Investment Income (Accumulated Net Investment Loss or Overdistributed Net Investment Income) $ (1,409) $ (420) $ 10,558 $ 5,051 ================================================================================================================================ Liberty Liberty Acorn Acorn USA Foreign Forty (Unaudited) (Unaudited) Six months Year ended Six months Year ended Increase (Decrease) in Net Assets ended June 30, December 31, ended June 30, December 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2002 2001 2002 2001 Operations: Net investment income (loss) $ (1,399) $ (1,409) $ 125 $ (374) Net realized gain (loss) on investments, forward foreign currency contracts, futures and foreign currency transactions 14,144 7,406 (4,851) (30,434) Change in net unrealized appreciation (depreciation) of investments, forward foreign currency contracts and foreign currency transactions (30,113) 31,876 4,044 (9,135) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) from Operations (17,368) 37,873 (682) (39,943) 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 -- -- -- (66) Net realized gain -- Class Z -- (3,172) -- (441) - ------------------------------------------------------------------------------------------------------------------------------------ Total Distribution to Shareholders -- (3,598) -- (583) Share Transactions: Subscriptions -- Class A 25,832 32,901 50,162 56,509 Distributions reinvested -- Class A -- 144 -- 23 Redemptions -- Class A (7,072) (13,214) (50,331) (55,501) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) -- Class A 18,760 19,831 (169) 1,031 Subscriptions -- Class B 25,799 31,389 1,203 2,027 Distributions reinvested -- Class B -- 155 -- 13 Redemptions -- Class B (4,155) (4,458) (1,031) (778) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase -- Class B 21,644 27,086 172 1,262 Subscriptions -- Class C 11,332 14,042 3,755 8,387 Distributions reinvested -- Class C -- 84 -- 11 Redemptions -- Class C (1,962) (1,321) (3,801) (6,283) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) -- Class C 9,370 12,805 (46) 2,115 Subscriptions -- Class Z 37,392 83,357 24,030 146,755 Distributions reinvested -- Class Z -- 3,020 -- 450 Redemptions -- Class Z (35,523) (113,912) (27,936) (202,928) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) -- Class Z 1,869 (27,535) (3,906) (55,723) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) from Share Transactions 51,643 32,187 (3,949) (51,315) - ------------------------------------------------------------------------------------------------------------------------------------ Total Increase (Decrease) in Net Assets 34,275 66,462 (4,631) (91,841) Net Assets: Beginning of period 290,710 224,248 45,805 137,646 - ------------------------------------------------------------------------------------------------------------------------------------ End of period $ 324,985 $ 290,710 $ 41,174 $ 45,805 ==================================================================================================================================== Undistributed Net Investment Income (Accumulated Net Investment Loss or Overdistributed Net Investment Income) $ (1,451) $ (52) $ 109 $ (16) ==================================================================================================================================== Liberty Acorn Twenty (Unaudited) Six months Year ended Increase (Decrease) in Net Assets ended June 30, December 31, - -------------------------------------------------------------------------------------------- 2002 2001 Operations: Net investment income (loss) $ (522) $ (496) Net realized gain (loss) on investments, forward foreign currency contracts, futures and foreign currency transactions (8) 823 Change in net unrealized appreciation (depreciation) of investments, forward foreign currency contracts and foreign currency transactions (5,123) 6,110 - -------------------------------------------------------------------------------------------- Net Increase (Decrease) from Operations (5,653) 6,437 Distribution to Shareholders From: Net investment income -- Class A -- -- Net realized gain -- Class A -- (21) Net investment income -- Class B -- -- Net realized gain -- Class B -- (23) Net investment income -- Class C -- -- Net realized gain -- Class C -- (9) Net investment income -- Class Z -- -- Net realized gain -- Class Z -- (135) - -------------------------------------------------------------------------------------------- Total Distribution to Shareholders -- (188) Share Transactions: Subscriptions -- Class A 9,349 11,048 Distributions reinvested -- Class A -- 19 Redemptions -- Class A (2,992) (3,166) - -------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class A 6,357 7,901 Subscriptions -- Class B 13,970 10,371 Distributions reinvested -- Class B -- 21 Redemptions -- Class B (1,749) (2,066) - -------------------------------------------------------------------------------------------- Net Increase -- Class B 12,221 8,326 Subscriptions -- Class C 3,050 3,892 Distributions reinvested -- Class C -- 8 Redemptions -- Class C (569) (389) - -------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class C 2,481 3,511 Subscriptions -- Class Z 7,657 11,389 Distributions reinvested -- Class Z -- 128 Redemptions -- Class Z (5,053) (12,911) - -------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class Z 2,604 (1,394) - -------------------------------------------------------------------------------------------- Net Increase (Decrease) from Share Transactions 23,663 18,344 - -------------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets 18,010 24,593 Net Assets: Beginning of period 99,729 75,136 - -------------------------------------------------------------------------------------------- End of period $ 117,739 $ 99,729 ============================================================================================ Undistributed Net Investment Income (Accumulated Net Investment Loss or Overdistributed Net Investment Income) $ (531) $ (9) ============================================================================================
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 (Unaudited) (Unaudited) Six months Year ended Six months Year ended Changes in Shares of Beneficial Interest: ended June 30, December 31, ended June 30, December 31, - --------------------------------------------------------------------------------------------------------------------------------- (in thousands) 2002 2001 2002 2001 Subscriptions -- Class A 22,261 18,209 7,669 12,434 Shares issued in reinvestment and capital gains -- Class A -- 146 -- 16 Less shares redeemed -- Class A (2,831) (2,202) (7,135) (11,489) - --------------------------------------------------------------------------------------------------------------------------------- Net Increase -- Class A 19,430 16,153 534 961 Subscriptions -- Class B 19,196 16,110 466 900 Shares issued in reinvestment and capital gains -- Class B -- 135 -- 11 Less shares redeemed -- Class B (1,035) (963) (133) (203) - --------------------------------------------------------------------------------------------------------------------------------- Net Increase -- Class B 18,161 15,282 333 708 Subscriptions -- Class C 12,046 8,969 1,243 2,305 Shares issued in reinvestment and capital gains -- Class C -- 68 -- 10 Less shares redeemed -- Class C (946) (1,000) (1,148) (1,695) - --------------------------------------------------------------------------------------------------------------------------------- Net Increase -- Class C 11,100 8,037 95 620 Subscriptions -- Class Z 29,646 37,199 16,841 42,524 Shares issued in reinvestment and capital gains -- Class Z -- 4,491 290 1,705 Less shares redeemed -- Class Z (12,650) (37,172) (17,996) (60,018) - --------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class Z 16,996 4,518 (865) (15,789) - --------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 65,687 43,990 97 (13,500) - --------------------------------------------------------------------------------------------------------------------------------- Liberty Liberty Acorn Acorn USA Foreign Forty (Unaudited) (Unaudited) Six months Year ended Six months Year ended Changes in Shares of Beneficial Interest: ended June 30, December 31, ended June 30, December 31, - ------------------------------------------------------------------------------------------------------------------------------------ (in thousands) 2002 2001 2002 2001 Subscriptions -- Class A 1,447 1,880 4,302 4,477 Shares issued in reinvestment and capital gains -- Class A -- 9 -- 2 Less shares redeemed -- Class A (401) (774) (4,300) (4,427) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase -- Class A 1,046 1,115 2 52 Subscriptions -- Class B 1,455 1,815 103 145 Shares issued in reinvestment and capital gains -- Class B -- 9 -- 1 Less shares redeemed -- Class B (239) (277) (89) (64) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase -- Class B 1,216 1,547 14 82 Subscriptions -- Class C 640 800 322 652 Shares issued in reinvestment and capital gains -- Class C -- 5 -- 1 Less shares redeemed -- Class C (111) (78) (325) (526) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase -- Class C 529 727 (3) 127 Subscriptions -- Class Z 2,084 4,826 2,046 10,085 Shares issued in reinvestment and capital gains -- Class Z -- 179 -- 32 Less shares redeemed -- Class Z (2,003) (6,839) (2,373) (14,609) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) -- Class Z 81 (1,834) (327) (4,492) - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) in Shares of Beneficial Interest 2,872 1,555 (314) (4,231) - ------------------------------------------------------------------------------------------------------------------------------------ Liberty Acorn Twenty (Unaudited) Six months Year ended Changes in Shares of Beneficial Interest: ended June 30, December 31, - -------------------------------------------------------------------------------------------------- (in thousands) 2002 2001 Subscriptions -- Class A 636 778 Shares issued in reinvestment and capital gains -- Class A -- 1 Less shares redeemed -- Class A (205) (225) - -------------------------------------------------------------------------------------------------- Net Increase -- Class A 431 554 Subscriptions -- Class B 963 736 Shares issued in reinvestment and capital gains -- Class B -- 1 Less shares redeemed -- Class B (121) (151) - -------------------------------------------------------------------------------------------------- Net Increase -- Class B 842 586 Subscriptions -- Class C 210 281 Shares issued in reinvestment and capital gains -- Class C -- 1 Less shares redeemed -- Class C (40) (29) - -------------------------------------------------------------------------------------------------- Net Increase -- Class C 170 253 Subscriptions -- Class Z 519 812 Shares issued in reinvestment and capital gains -- Class Z -- 9 Less shares redeemed -- Class Z (346) (965) - -------------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class Z 173 (144) - -------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 1,616 1,249 - --------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 46 & 47 A I U F40 20 Liberty Acorn Family of Funds >Financial Highlights
(Unaudited) Six Months Liberty Acorn Fund Class Z Ended June 30, Years Ended December 31, - ------------------------------------------------------------------------------------------------------------------------------------ Selected data for a share outstanding throughout each period 2002 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Period $17.88 $17.21 $18.53 $16.85 $16.99 $15.04 Income from Investment Operations Net investment income (a) .01 .05 .10 .09 .04 .15 Net realized and unrealized gain (loss) (.64) 1.01 1.55 5.22 .91 3.57 - ------------------------------------------------------------------------------------------------------------------------------------ Total from Investment Operations (.63) 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 $17.25 $17.88 $17.21 $18.53 $16.85 $16.99 ==================================================================================================================================== Total Return (b) (3.52)%(c) 6.14% 10.06% 33.40% 6.00% 25.00% ==================================================================================================================================== Ratios to Average Net Assets Expenses .80%(d) .82%(e) .83%(e) .85%(e) .84%(e) .56%(e) Net investment income .17%(d) .28%(e) .55%(e) .49%(e) .30%(e) .75%(e) Portfolio turnover rate 5%(c) 20% 29% 34% 24% 32% Net assets at end of period (in millions) $4,363 $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) Not annualized. (d) Annualized. (e) The benefits derived from custody fees paid indirectly had no impact.
(Unaudited) Six Months Liberty Acorn International Class Z Ended June 30, Years Ended December 31, - ------------------------------------------------------------------------------------------------------------------------------------ Selected data for a share outstanding throughout each period 2002 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Period $18.47 $ 23.85 $ 35.33 $20.82 $18.39 $19.61 Income from Investment Operations Net investment income (a) .13 .12 .01 .83 .17 .40 Net realized and unrealized gain (loss) .08 (5.11) (6.73) 15.45 2.68 (.34) - ------------------------------------------------------------------------------------------------------------------------------------ Total from Investment Operations .21 (4.99) (6.72) 16.28 2.85 .06 - ------------------------------------------------------------------------------------------------------------------------------------ Less Distributions Declared to Shareholders From net investment income (.07) -- (.66) (.22) (.15) (.38) From net realized gains -- (.39) (4.10) (1.55) (.27) (.90) - ------------------------------------------------------------------------------------------------------------------------------------ Total Distributions Declared to Shareholders (.07) (.39) (4.76) (1.77) (.42) (1.28) ==================================================================================================================================== Net Asset Value, End of Period $18.61 $ 18.47 $ 23.85 $35.33 $20.82 $18.39 ==================================================================================================================================== Total Return (b) 1.12%(c) (21.11)% (20.02)% 79.20% 15.40% .20% ==================================================================================================================================== Ratios to Average Net Assets Expenses 1.03%(d) 1.06%(e) 1.05%(e) 1.11%(e) 1.12%(e) 1.19%(e) Net investment income 1.41%(d) .62%(e) .02%(e) .12%(e) .86%(e) .58%(e) Portfolio turnover rate 23%(c) 45% 63% 46% 37% 39% Net assets at end of period (in millions) $1,609 $ 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) Not annualized. (d) Annualized. (e) The benefits derived from custody fees paid indirectly had no impact.
(Unaudited) Six Months Liberty Acorn USA Class Z Ended June 30, Years Ended December 31, - ------------------------------------------------------------------------------------------------------------------------------------ Selected data for a share outstanding throughout each period 2002 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Period $17.52 $14.90 $16.75 $14.80 $15.12 $11.65 Income from Investment Operations Net investment income (loss) (a) (.05) (.08) (.05) .00(b) (.07) (.07) Net realized and unrealized gain (loss) (.73) 2.94 (1.48) 3.32 .87 3.83 - ------------------------------------------------------------------------------------------------------------------------------------ Total from Investment Operations (.78) 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 $16.74 $17.52 $14.90 $16.75 $14.80 $15.12 ==================================================================================================================================== Total Return (c) (4.45)%(d) 19.25% (8.99)% 23.00% 5.80% 32.30% ==================================================================================================================================== Ratios to Average Net Assets Expenses 1.13%(e) 1.17%(f) 1.15%(f) 1.15%(f) 1.20%(f) 1.35%(f) Net investment income (loss) (.58)%(e) (.46)%(f) (.32)%(f) .00%(f)(g) (.42)%(f) (.49)%(f) Portfolio turnover rate 13%(d) 24% 45% 49% 42% 33% Net assets at end of period (in millions) $ 221 $ 229 $ 222 $ 371 $ 281 $ 185
(a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Not annualized. (e) Annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) 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 (Unaudited) November Six Months through Liberty Acorn Foreign Forty Class Z Ended June 30, Years Ended December 31, December 31, - ------------------------------------------------------------------------------------------------------------------------------------ Selected data for a share outstanding throughout each period 2002 2001 2000 1999 1998 Net Asset Value, Beginning of Period $12.09 $ 17.15 $ 19.93 $11.00 $10.00 Income from Investment Operations Net investment income (loss) (a) .04 (.05) (.11) (.02) (.01) Net realized and unrealized gain (loss) (.27) (4.92) (2.53) 8.98 1.01 - ------------------------------------------------------------------------------------------------------------------------------------ Total from Investment Operations (.23) (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 $11.86 $ 12.09 $ 17.15 $19.93 $11.00 ==================================================================================================================================== Total Return (b) (1.90)%(c)(d) (29.05)%(d) (13.35)% 81.60%(d) 10.00%(c)(d) ==================================================================================================================================== Ratios to Average Net Assets Expenses 1.45%(e) 1.45%(f) 1.33%(f) 1.48%(g) 1.73%(e)(g) Net investment income (loss) .73%(e) (.32)%(f) (.42)%(f) (.17)%(g) (.78)%(e)(g) Reimbursement .24%(e) .01% -- .09% .97%(e) Portfolio turnover rate 48%(c) 82% 79% 60% 90%(e) Net assets at end of period (in millions) $ 32 $ 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) Not annualized. (d) Had the Advisor not reimbursed a portion of expenses, total return would have been reduced. (e) Annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) 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 ratio 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 1.45% 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.
Inception (Unaudited) November 23 Six Months through Liberty Acorn Twenty Class Z Ended June 30, Years Ended December 31, December 31, - ------------------------------------------------------------------------------------------------------------------------------------ Selected data for a share outstanding throughout each period 2002 2001 2000 1999 1998 Net Asset Value, Beginning of Period $15.23 $14.13 $13.70 $10.71 $10.00 Income from Investment Operations Net investment income (loss) (a) (.05) (.05) (.07) (.08) .00(b) Net realized and unrealized gain (loss) (.71) 1.18 1.59 3.21 .71 - ------------------------------------------------------------------------------------------------------------------------------------ Total from Investment Operations (.76) 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 $14.47 $15.23 $14.13 $13.70 $10.71 ==================================================================================================================================== Total Return (c) (4.99)%(d) 8.00%(e) 11.68% 29.30%(e) 7.10%(d)(e) ==================================================================================================================================== Ratios to Average Net Assets Expenses 1.26%(f) 1.35% 1.34%(g) 1.37%(g) 1.41%(f)(g) Net investment income (loss) (.68)%(f) (.44)% (.52)%(g) (.62)%(g) .22%(f)(g) Reimbursement -- .03% -- .04% .42%(f) Portfolio turnover rate 30%(d) 82% 116% 101% 173%(f) Net assets at end of period (in millions) $ 69 $ 70 $ 67 $ 68 $ 34
(a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Not annualized. (e) Had the Advisor not reimbursed a portion of expenses, total return would have been reduced. (f) Annualized. (g) 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 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, 1.35% and 0.28% for the period ended December 31, 1998. See accompanying notes to financial statements 50 & 51 A I U F40 20 Liberty Acorn Family of Funds >Notes to Financial Statements (Unaudited) 1. Nature of Operations Liberty Acorn Fund, Liberty Acorn International, Liberty Acorn USA, Liberty Acorn Foreign Forty and Liberty 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. 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 semi-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 fair 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 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 A I U F40 20 52 foreign currency contracts) and the credit risk should a counterparty fail to perform under such contracts. None of the Funds had futures contracts open at June 30, 2002. Liberty Acorn International entered into forward contracts to sell foreign currency as described below: Liberty Acorn International Foreign Settlement U.S. Dollar Unrealized Amount (000) Currency Date Proceeds (000) Gain (000) - -------------------------------------------------------------------------------- 4,500,000 Japanese Yen 9/27/02 $37,833 $25 ========== Liberty Acorn Fund, Liberty Acorn USA, Liberty Acorn Foreign Forty and Liberty Acorn Twenty did not enter into any futures or forward foreign currency contracts during the six months ended June 30, 2002. >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. >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 Funds 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 which each Fund intends to treat as having been incurred in the current 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. 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 ================================================================================ 53 A I U F40 20 Liberty Acorn Family of Funds >Notes to Financial Statements (Unaudited) continued 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. ("Liberty WAM"), an indirect wholly-owned subsidiary of Columbia Management Group, Inc., which in turn is a wholly-owned subsidiary of Fleet National Bank, which in turn is a wholly-owned subsidiary of FleetBoston Financial Corporation ("Fleet"), furnishes continuing investment supervision to each Fund and is responsible for the overall management of each Fund's business affairs. Under the Funds' investment management agreement, fees are accrued daily and paid monthly to Liberty 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 Fund's advisor has voluntarily agreed to reimburse the ordinary operating expenses (exclusive of distribution and service fees, interest, taxes and extraordinary expenses, if any) exceeding 1.45% of the average annual net assets for Liberty Acorn Foreign Forty and 1.35% of the average annual net assets for Liberty Acorn Twenty Class Z shares. Liberty 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 indirect subsidiary of Fleet, 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 Liberty WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with Liberty WAM. Trustees' fees and expenses for the six months ended June 30, 2002 are as follows: Six Months Ended June 30, - -------------------------------------------------------------------------------- (in thousands) 2002 Liberty Acorn Fund $176 Liberty Acorn International 87 Liberty Acorn USA 14 Liberty Acorn Foreign Forty 2 Liberty Acorn Twenty 1 ---- $280 ==== 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 A I U F40 20 54 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. During the six months ended June 30, 2002, 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 Twenty $384 $-- Liberty Acorn Foreign Forty -- 78 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 six months ended June 30, 2002. 5. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the six months ended June 30, 2002 were: Liberty Acorn Fund - -------------------------------------------------------------------------------- (in thousands) 2002 Investment securities Purchases $1,309,216 Proceeds from sales 270,179 ================================================================================ Liberty Acorn International - -------------------------------------------------------------------------------- (in thousands) 2002 Investment securities Purchases $ 371,553 Proceeds from sales 435,886 ================================================================================ Liberty Acorn USA - -------------------------------------------------------------------------------- (in thousands) 2002 Investment securities Purchases $ 78,823 Proceeds from sales 39,956 ================================================================================ Liberty Acorn Foreign Forty - -------------------------------------------------------------------------------- (in thousands) 2002 Investment securities Purchases $ 19,774 Proceeds from sales 25,988 ================================================================================ Liberty Acorn Twenty - -------------------------------------------------------------------------------- (in thousands) 2002 Investment securities Purchases $ 51,272 Proceeds from sales 29,918 ================================================================================ 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 7. Subsequent Event On July 26, 2002, Liberty Acorn USA acquired all of the net assets of the Stein Roe Small Company Growth Fund ("Stein Roe Fund") pursuant to a plan of reorganization approved by the Stein Roe Fund shareholders on June 28, 2002. The acquisition was accomplished by a tax-free exchange of 1,139,488 shares of the Stein Roe Fund (valued at $10,096,640) for 726,123 shares of Liberty Acorn USA. The net assets of the Stein Roe Fund were combined with the net assets of Liberty Acorn USA on the acquisition date and included $3,125,202 of unrealized depreciation on investments. The aggregate net assets of the Liberty Acorn USA fund immediately before and after the acquisition were $306,945,066 and $317,041,706, respectively. 55 A I U F40 20 Notes - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - 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-------------------------------------------------------------------------------- 57 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 0.12% ------ Expense Ratio 0.80% - -------------------------------------------------------------------------------- Liberty Acorn International ACINX - -------------------------------------------------------------------------------- Management Fee 0.81% 12b-1 Fee None Other Expenses 0.22% ------ Expense Ratio 1.03% - -------------------------------------------------------------------------------- Liberty Acorn USA AUSAX - -------------------------------------------------------------------------------- Management Fee 0.94% 12b-1 Fee None Other Expenses 0.19% ------ Expense Ratio 1.13% - -------------------------------------------------------------------------------- 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 0.36% ------ Net Expense Ratio 1.26% Fees and expenses are for the six months ended June 30, 2002 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. A I U F40 20 58 Board of Trustees and 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 Elected or Name, Position(s) with Acorn Appointed Principal Occupation(s) during and Age at January 1, 2002 to Office Past Five Years Other Directorships - ------------------------------------------------------------------------------------------------------------------------------------ Trustees who are not interested persons of Acorn: - ------------------------------------------------------------------------------------------------------------------------------------ Margaret Eisen, 48, 2002 Managing director, DeGuardiola Advisors; formerly managing Chair, Institute for Trustee director, North American Equities at General Motors Asset Financial Markets; Management; prior thereto, director of Worldwide Pension director, Global Investments for DuPont Asset Management. Financial Group (venture capital fund of funds) - ------------------------------------------------------------------------------------------------------------------------------------ Leo A. Guthart, 65, 1994 Executive vice president, Honeywell International (home AptarGroup, Inc. Trustee and building control); Chairman, Cylink Corporation (producer of (supplier of encryption equipment); former chairman of the dispensing valves, board of trustees, Hofstra University; chairman and chief pumps and closures); executive officer, Topspin Partners, L.P. Symbol Technologies, Inc. (manufacturer of bar code scanning equipment) - ------------------------------------------------------------------------------------------------------------------------------------ Irving B. Harris, 91, Trustee 1970 Chairman, The Irving Harris Foundation None. (charitable foundation). - ------------------------------------------------------------------------------------------------------------------------------------ Jerome Kahn, Jr., 67, Trustee 1987 Former president, William Harris Investors, Inc. None. (investment adviser). - ------------------------------------------------------------------------------------------------------------------------------------ Steven N. Kaplan, 43, Trustee 1999 Neubauer Family Professor of Entrepreneurship and Finance, None. Graduate School of Business, University of Chicago. - ------------------------------------------------------------------------------------------------------------------------------------ David C. Kleinman, 66, 1972 Adjunct professor of strategic management, University of Sonic Foundry, Inc. Trustee Chicago Graduate School of Business; Business consultant. (software); AT&T Latin America. - ------------------------------------------------------------------------------------------------------------------------------------ Allan B. Muchin, 66, 1998 Partner, Katten Muchin Zavis Rosenman (law firm). Alberto-Culver Trustee Company (toiletries). - ------------------------------------------------------------------------------------------------------------------------------------ Robert E. Nason, 66, 1998 Consultant and private investor since 1998; from None. Trustee and chairman 1990-1998, executive partner and chief executive officer, member of the executive committee of Grant Thornton, LLP (public accounting firm) and member of the policy board of Grant Thornton International. - ------------------------------------------------------------------------------------------------------------------------------------ John A. Wing, 66, 2002 Frank Wakely Gunsaulus Professor of Law and Finance, and AmerUs Life Holdings Trustee chairman of the Center for the Study of Law and Financial (life insurance); Markets, Illinois Institute of Technology; prior thereto, LDF, Inc. and Lake chairman of the board and chief executive officer of Federal Bank ABM-AMRO Incorporated, formerly The Chicago Corporation. (banking); Margo Canibe, Inc. (farming). - ------------------------------------------------------------------------------------------------------------------------------------ Trustees who are an interested person of Acorn: - ------------------------------------------------------------------------------------------------------------------------------------ Charles P. McQuaid, 48, 1994 Portfolio manager since 1995 and director of None. Trustee and Senior research since July 1992 of Liberty WAM; Principal, Vice President(1) WAM from July 1995 to September 29, 2000; senior vice president, Wanger Advisors Trust. - ------------------------------------------------------------------------------------------------------------------------------------ Ralph Wanger, 67, 1994 President, Chief Investment Officer and portfolio Wanger Advisors Trust Trustee and President*(1) manager, Liberty WAM since 1992; principal, WAM (4 portfolios). 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. - ------------------------------------------------------------------------------------------------------------------------------------ Officers of Acorn: - ------------------------------------------------------------------------------------------------------------------------------------ J. Kevin Connaughton, 37, 2001 Treasurer of the Liberty Funds and of the Liberty None. Assistant Treasurer All-Star Funds since December, 2000 (formerly controller of the Liberty None. 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 Assocaties from February 1998 to October 2000); Senior Tax Manager, Coopers & Lybrand, LLP from April 1996 to January 1998. - ------------------------------------------------------------------------------------------------------------------------------------ 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 since April None. Assistant Treasurer 2000; assistant treasurer, Wanger Advisors Trust; fund controller, Liberty 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 since April None. Vice President, Secretary 1995; principal, WAM from January 2000 to September and Treasurer 29, 2000; vice president, treasurer and assistant secretary, Wanger Advisors Trust; director, Wanger Investment Company plc and New Americas Small Cap Fund. - ------------------------------------------------------------------------------------------------------------------------------------ Jean Loewenberg, 56, 2002 Group Senior Counsel, Fleet National Bank. None. Assistant Secretary - ------------------------------------------------------------------------------------------------------------------------------------ Robert A. Mohn, 40, 1997 Analyst and portfolio manager, Liberty WAM since None. Vice President 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 since None. Vice President 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 since None. Vice President July 1993; principal, WAM from 1998 to September 29, 2000; vice president, Wanger Advisors Trust. - ------------------------------------------------------------------------------------------------------------------------------------ Vincent P. Pietropaolo, 36, 2001 Vice president and Counsel, Liberty Funds Group None. Assistant Secretary since December 1999; associate, Morgan Lewis & Bockius, October 1998 to December 1999; product manager, Putnam Investments April 1997 to October 1998. - ------------------------------------------------------------------------------------------------------------------------------------ Joseph Turo, 34, 2002 Senior Counsel, FleetBoston Financial since August None. Assistant Secretary 1997; prior thereto, associate, Ropes & Gray. - ------------------------------------------------------------------------------------------------------------------------------------ Leah J. Zell, 52, 1994 Analyst, and portfolio manager, Liberty WAM since None. Vice President* July 1992; vice president, Wanger Advisors Trust; director and managing member of trust committee, Chai Trust Company. - ------------------------------------------------------------------------------------------------------------------------------------
(1) Trustee who is an "interested person" of the Trust and of Liberty WAM, as defined in the Investment Company Act of 1940, because he is an officer of the Trust and an employee of Liberty WAM. 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 Three Expressway Plaza, Suite 100, Roslyn Heights, New York 11577. The address for Mr. Muchin is Katten Muchin Zavis Rosenman, 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 Ms. Eisen is DeGuardiola Advisors, Inc., 405 Park Avenue, Suite 1201, New York, New York 10022. The address for Mr. Wing is Illinois Institute of Technology, 565 West Adams Street, Suite 320-B, Chicago, IL 60661-3091. The address for Connaughton, Jacobs, Pietropaolo, Loewenberg and Turo is Liberty Funds Group LLC, 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: * Mr. Wanger and Ms. Zell are married to each other. Liberty Funds Distributor, Inc. One Financial Center Boston, MA 02111-2621 1-800-426-3750 www.libertyfunds.com 59 A I U F40 20 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 8081 Boston, Massachusetts 02266-8081 1-800-962-1585 Outside Legal Counsel Bell, Boyd & Lloyd LLC 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 60 Mark Your Calendar For The 2002 Annual Shareholder Meeting When: September 24, 2002 9 a.m. to 10 a.m., Central time Where: Bank One Auditorium, Plaza Level 38 South Dearborn Street Chicago, IL 60602 Refreshments will be served. DIRECTIONS TO THE 2002 ANNUAL SHAREHOLDER MEETING The Bank One Auditorium is located on the Plaza Level of the Bank One building. The Bank One building is located in the center of the Loop, bordered by Dearborn Street on the east, Madison Street on the north, Clark Street on the west and Monroe Street on the south. FROM THE SOUTH: Take 1-57 (which merges with I-94, also known as the Dan Ryan Expressway). Take the Dan Ryan into Chicago. Follow the signs for the Kennedy Expressway West. Travel on the Kennedy and exit using the Monroe Street exit. Turn right (east) from the exit onto Monroe Street. Proceed east on Monroe Street to Dearborn. FROM THE NORTH: Take the Kennedy Expressway (I-90/94) south to Chicago. Exit in the city at Monroe Street. Turn left (east) from the exit onto Monroe Street. Proceed east on Monroe Street to Dearborn. FROM THE WEST: Take the Eisenhower Expressway (I-290) from the west. This becomes Congress Street in the city. Take Congress east to Dearborn Street. Turn left (north) on Dearborn to Monroe Street. FROM THE SOUTHWEST: Take the Stevenson Expressway (I-55). Exit to the Kennedy Expressway (North-Wisconsin). Travel on the Kennedy and exit using the Monroe Street exit. Turn right (east) from the exit onto Monroe Street. Proceed east on Monroe Street to Dearborn. Please RSVP by September 18 if you plan to attend by calling (800) 922-6769. PLEASE JOIN US AT THE 2002 ANNUAL MEETING FOR SHAREHOLDERS ON SEPTEMBER 24. [GRAPHIC OMITTED] LOOK INSIDE FOR MORE DETAILS. - -------------------------------------------------------------------------------- PRESORTED FIRST-CLASS MAIL U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [LOGO] Liberty Funds A Member of Columbus Management Group Liberty Funds Distributor, Inc. One Financial Center Boston, MA 02111-2621 -----END PRIVACY-ENHANCED MESSAGE-----