N-CSR 1 a2117782zn-csr.txt N-CSR ----------------------------- OMB APPROVAL ----------------------------- OMB Number: 3235-0570 Expires: November 30, 2005 Estimated average burden hours per response....... 5.0 ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6529 --------------------------------------------- Liberty Funds Trust VI ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Russell L. Kane, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-426-3363 ---------------------------- Date of fiscal year end: June 30, 2003 -------------------------- Date of reporting period: June 30, 2003 ------------------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507. Item 1. Reports to Stockholders [GRAPHIC] LIBERTY SMALL-CAP VALUE FUND ANNUAL REPORT JUNE 30, 2003 LESS CLUTTER IN TWO EASY STEPS. POINT. CLICK. LIBERTY eDELIVERY. FOR MORE INFORMATION ABOUT RECEVING YOUR SHAREHOLDER REPORTS ELECTRONICALLY, CALL US AT 800-345-6611. TO SIGN UP FOR eDELIVERY, VISIT US ONLINE AT www.libertyfunds.com. [GRAPHIC] LIBERTY SMALL-CAP VALUE FUND ANNUAL REPORT JUNE 30, 2003 LESS CLUTTER IN TWO EASY STEPS. POINT. CLICK. LIBERTY eDELIVERY. TO SIGN UP FOR eDELIVERY, GO TO www.icsdelivery.com. PRESIDENT'S MESSAGE [PHOTO OF JOSEPH R. PALOMBO] Dear Shareholder: Despite the uncertainty that hung over the markets and the economy as the nation prepared to go to war in Iraq, the twelve-month period ended on a high note. Virtually all major segments of the stock and bond markets posted positive returns for the period. The economy, though still struggling, has made progress toward recovery. And a new tax law is intended to boost consumer spending power and make investing more attractive. The Jobs and Growth Tax Relief Reconciliation Act of 2003 accelerates income tax rate cuts for virtually all Americans and slashes the tax rates on dividends and long-term capital gains. The government is counting on Americans to turn their good fortune into higher spending. And the financial media has been full of advice on how to take advantage of the new rate structure. As you debate what you will do if the lower tax rate turns into a modest personal windfall, consider strategies that could have a long-term impact on your portfolio. If your take-home pay increases as a result of the tax break and any rebate check you are entitled to receive--and if it's not eaten up by higher state taxes--consider investing at least one third of it. Consider adding it to your retirement account, using it to start an education account for your child or setting it aside for an emergency. But make a commitment and stick to it. Think of it as found money, because that is what it is. You didn't have it before. But now that you've found it, you can put it to work for a long-term goal. And, before you take advice from a television pundit or a magazine cover story, talk to your financial advisor. There may be tax-related strategies that make sense for you. But there are no one-size-fits-all solutions. Keep in mind that tax rates change, and many of the provisions of this law are set to expire in just a few short years. CONSOLIDATION AND A NEW NAME: COLUMBIA On a separate note, I am pleased to announce that, effective April 1, 2003, six of the asset management firms brought together when Columbia Management Group, Inc. was formed were consolidated and renamed Columbia Management Advisors, Inc. (Columbia Management). This consolidation does not affect the management or investment objectives of your fund and is the next step in our efforts to create a consistent identity and to streamline our organization. By consolidating these firms, we are able to create a more efficient organizational structure and strengthen certain key functions, such as research. Although the name of the asset manager familiar to you has changed, what hasn't changed is the commitment of our specialized investment teams to a multi-disciplined approach to investing, focused on our goal of offering shareholders the best products and services. In the report that follows, you'll find more detailed information about how the fund performed and the strategies used by the fund's portfolio manager, Stephen Barbaro. As always, we thank you for investing in Liberty Small-Cap Value Fund. Sincerely, /s/ Joseph R. Palombo Joseph R. Palombo President MEET THE NEW PRESIDENT Joseph R. Palombo, president and chairman of the Board of Trustees for Liberty Funds, is also chief operating officer and executive vice president of Columbia Management. Mr. Palombo has over 19 years of experience in the financial services industry. Prior to joining Columbia Management, he was chief operating officer and chief compliance officer for Putnam Mutual Funds. Prior to that, he was a partner at Coopers & Lybrand. Mr. Palombo received his degree in economics/accounting from the College of the Holy Cross, where he was a member of Phi Beta Kappa. He earned his master's degree in taxation from Bentley College and participated in the Executive Program at the Amos B. Tuck School at Dartmouth College. The examples provided should be viewed as illustrations. They do not constitute tax or legal advice. Neither Columbia Management Advisors, Inc., nor its affiliates, including Liberty Funds Distributor, Inc., provide tax or legal advice. A tax advisor or attorney can provide you with answers to specific questions about taxes and other legal issues. NET ASSET VALUE PER SHARE as of 6/30/03 ($) Class A 31.39 Class B 28.18 Class C 29.24 Class I 32.29 Class Z 32.24
DISTRIBUTIONS PER SHARE 7/01/02-6/30/03 ($) Class A 4.63 Class B 4.63 Class C 4.63 Class I 0.00 Class Z 4.63
Not FDIC May Lose Value Insured No Bank Gurantee Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. PERFORMANCE INFORMATION Value of a $10,000 investment 6/30/93 - 6/30/03 PERFORMANCE OF A $10,000 INVESTMENT IN ALL SHARE CLASSES 6/30/93 - 6/30/03 ($)
WITHOUT WITH SALES SALES CHARGE CHARGE --------------------------------------- Class A 29,708 28,000 --------------------------------------- Class B 27,549 27,549 --------------------------------------- Class C 28,103 28,103 --------------------------------------- Class I 30,385 n/a --------------------------------------- Class Z 30,338 n/a
[CHART]
CLASS A SHARES CLASS A SHARES S&P SMALLCAP 600/BARRA S&P SMALLCAP WITHOUT SALES CHARGE WITH SALES CHARGE VALUE INDEX 600 INDEX 6/30/1993 $ 10,000 $ 9,425 $ 10,000 $ 10,000 7/31/1993 $ 10,095 $ 9,515 $ 10,103 $ 10,103 8/31/1993 $ 10,429 $ 9,829 $ 10,636 $ 10,636 9/30/1993 $ 10,549 $ 9,943 $ 11,023 $ 11,023 10/31/1993 $ 10,858 $ 10,234 $ 11,234 $ 11,234 11/30/1993 $ 10,644 $ 10,032 $ 10,832 $ 10,832 12/31/1993 $ 10,903 $ 10,276 $ 11,224 $ 11,224 1/31/1994 $ 11,376 $ 10,722 $ 11,504 $ 11,489 2/28/1994 $ 11,527 $ 10,865 $ 11,477 $ 11,456 3/31/1994 $ 11,029 $ 10,395 $ 10,868 $ 10,633 4/30/1994 $ 11,155 $ 10,514 $ 11,029 $ 10,793 5/31/1994 $ 10,941 $ 10,312 $ 10,883 $ 10,579 6/30/1994 $ 10,512 $ 9,908 $ 10,611 $ 10,185 7/31/1994 $ 10,764 $ 10,145 $ 10,780 $ 10,312 8/31/1994 $ 11,483 $ 10,823 $ 11,342 $ 11,014 9/30/1994 $ 11,471 $ 10,811 $ 11,172 $ 10,957 10/31/1994 $ 11,552 $ 10,888 $ 10,890 $ 10,847 11/30/1994 $ 11,344 $ 10,692 $ 10,499 $ 10,433 12/31/1994 $ 11,590 $ 10,924 $ 10,717 $ 10,686 1/31/1995 $ 11,603 $ 10,936 $ 10,690 $ 10,536 2/28/1995 $ 12,088 $ 11,393 $ 11,057 $ 10,970 3/31/1995 $ 12,479 $ 11,761 $ 11,264 $ 11,191 4/30/1995 $ 12,693 $ 11,963 $ 11,739 $ 11,442 5/31/1995 $ 13,021 $ 12,272 $ 11,998 $ 11,620 6/30/1995 $ 14,036 $ 13,229 $ 12,567 $ 12,258 7/31/1995 $ 15,658 $ 14,757 $ 13,160 $ 13,196 8/31/1995 $ 15,822 $ 14,912 $ 13,531 $ 13,483 9/30/1995 $ 16,169 $ 15,239 $ 13,810 $ 13,826 10/31/1995 $ 15,512 $ 14,620 $ 13,122 $ 13,143 11/30/1995 $ 16,080 $ 15,155 $ 13,654 $ 13,664 12/31/1995 $ 15,942 $ 15,025 $ 14,006 $ 13,889 1/31/1996 $ 15,742 $ 14,837 $ 14,142 $ 13,920 2/29/1996 $ 16,526 $ 15,576 $ 14,521 $ 14,375 3/31/1996 $ 17,078 $ 16,096 $ 14,813 $ 14,683 4/30/1996 $ 17,982 $ 16,948 $ 15,540 $ 15,525 5/31/1996 $ 18,633 $ 17,561 $ 16,033 $ 16,077 6/30/1996 $ 17,589 $ 16,578 $ 15,690 $ 15,446 7/31/1996 $ 16,386 $ 15,444 $ 14,847 $ 14,384 8/31/1996 $ 17,110 $ 16,127 $ 15,717 $ 15,273 9/30/1996 $ 17,986 $ 16,952 $ 16,148 $ 15,943 10/31/1996 $ 17,688 $ 16,671 $ 16,408 $ 15,833 11/30/1996 $ 18,744 $ 17,666 $ 17,402 $ 16,655 12/31/1996 $ 18,866 $ 17,781 $ 17,661 $ 16,850 1/31/1997 $ 19,058 $ 17,962 $ 18,227 $ 17,129 2/28/1997 $ 18,660 $ 17,587 $ 18,338 $ 16,775 3/31/1997 $ 17,807 $ 16,783 $ 17,723 $ 15,914 4/30/1997 $ 18,069 $ 17,030 $ 17,954 $ 16,108 5/31/1997 $ 19,760 $ 18,624 $ 19,652 $ 18,001 6/30/1997 $ 21,025 $ 19,816 $ 20,686 $ 18,797 7/31/1997 $ 22,276 $ 20,995 $ 22,047 $ 19,979 8/31/1997 $ 22,579 $ 21,280 $ 22,475 $ 20,482 9/30/1997 $ 24,078 $ 22,693 $ 24,023 $ 21,836 10/31/1997 $ 23,293 $ 21,954 $ 23,293 $ 20,893 11/30/1997 $ 23,300 $ 21,960 $ 23,409 $ 20,740 12/31/1997 $ 23,370 $ 22,026 $ 24,086 $ 21,159 1/31/1998 $ 23,215 $ 21,881 $ 23,587 $ 20,747 2/28/1998 $ 25,124 $ 23,679 $ 25,562 $ 22,637 3/31/1998 $ 26,571 $ 25,043 $ 26,830 $ 23,502 4/30/1998 $ 26,922 $ 25,374 $ 27,004 $ 23,640 5/31/1998 $ 25,196 $ 23,747 $ 25,824 $ 22,390 6/30/1998 $ 25,007 $ 23,569 $ 25,811 $ 22,455 7/31/1998 $ 22,681 $ 21,377 $ 23,423 $ 20,737 8/31/1998 $ 18,077 $ 17,038 $ 19,198 $ 16,735 9/30/1998 $ 18,478 $ 17,416 $ 20,217 $ 17,759 10/31/1998 $ 19,896 $ 18,752 $ 21,101 $ 18,583 11/30/1998 $ 21,438 $ 20,205 $ 22,002 $ 19,629 12/31/1998 $ 21,926 $ 20,666 $ 22,866 $ 20,883 1/31/1999 $ 21,407 $ 20,176 $ 22,603 $ 20,620 2/28/1999 $ 19,221 $ 18,116 $ 20,764 $ 18,762 3/31/1999 $ 18,877 $ 17,792 $ 20,683 $ 19,004 4/30/1999 $ 20,310 $ 19,142 $ 22,484 $ 20,261 5/31/1999 $ 21,010 $ 19,802 $ 23,381 $ 20,753 6/30/1999 $ 22,187 $ 20,911 $ 24,800 $ 21,934 7/31/1999 $ 22,092 $ 20,821 $ 24,413 $ 21,741 8/31/1999 $ 20,724 $ 19,533 $ 23,391 $ 20,784 9/30/1999 $ 20,608 $ 19,423 $ 22,960 $ 20,871 10/31/1999 $ 20,746 $ 19,553 $ 22,430 $ 20,819 11/30/1999 $ 21,381 $ 20,152 $ 22,934 $ 21,689 12/31/1999 $ 22,829 $ 21,516 $ 23,561 $ 23,472 1/31/2000 $ 21,616 $ 20,373 $ 22,354 $ 22,745 2/29/2000 $ 22,617 $ 21,317 $ 23,365 $ 25,790 3/31/2000 $ 23,253 $ 21,916 $ 24,227 $ 24,836 4/30/2000 $ 23,392 $ 22,047 $ 24,396 $ 24,411 5/31/2000 $ 22,800 $ 21,489 $ 23,999 $ 23,689 6/30/2000 $ 23,794 $ 22,426 $ 24,688 $ 25,089 7/31/2000 $ 23,978 $ 22,599 $ 25,174 $ 24,474 8/31/2000 $ 25,929 $ 24,439 $ 26,644 $ 26,642 9/30/2000 $ 26,127 $ 24,624 $ 26,591 $ 25,918 10/31/2000 $ 26,147 $ 24,644 $ 26,721 $ 26,081 11/30/2000 $ 24,181 $ 22,791 $ 24,955 $ 23,366 12/31/2000 $ 27,158 $ 25,596 $ 28,478 $ 26,245 1/31/2001 $ 27,082 $ 25,525 $ 30,734 $ 27,371 2/28/2001 $ 26,245 $ 24,736 $ 29,437 $ 25,701 3/31/2001 $ 25,683 $ 24,207 $ 28,215 $ 24,521 4/30/2001 $ 27,373 $ 25,799 $ 29,914 $ 26,390 5/31/2001 $ 28,318 $ 26,689 $ 30,677 $ 26,894 6/30/2001 $ 28,524 $ 26,884 $ 31,848 $ 27,878 7/31/2001 $ 28,516 $ 26,876 $ 31,549 $ 27,413 8/31/2001 $ 28,000 $ 26,390 $ 31,041 $ 26,788 9/30/2001 $ 24,699 $ 23,278 $ 26,599 $ 23,166 10/31/2001 $ 25,277 $ 23,823 $ 27,815 $ 24,401 11/30/2001 $ 27,033 $ 25,479 $ 30,040 $ 26,187 12/31/2001 $ 29,026 $ 27,357 $ 32,209 $ 27,960 1/31/2002 $ 29,211 $ 27,532 $ 32,811 $ 28,203 2/28/2002 $ 29,705 $ 27,997 $ 32,670 $ 27,718 3/31/2002 $ 31,865 $ 30,032 $ 35,509 $ 29,907 4/30/2002 $ 32,511 $ 30,642 $ 36,961 $ 30,754 5/31/2002 $ 31,403 $ 29,597 $ 35,561 $ 29,481 6/30/2002 $ 30,360 $ 28,614 $ 33,971 $ 27,957 7/31/2002 $ 26,656 $ 25,124 $ 28,447 $ 24,009 8/31/2002 $ 27,141 $ 25,581 $ 28,410 $ 24,237 9/30/2002 $ 25,290 $ 23,836 $ 26,319 $ 22,754 10/31/2002 $ 25,796 $ 24,313 $ 26,848 $ 23,482 11/30/2002 $ 27,793 $ 26,195 $ 28,298 $ 24,705 12/31/2002 $ 27,006 $ 25,453 $ 27,548 $ 23,870 1/31/2003 $ 26,212 $ 24,705 $ 26,411 $ 23,049 2/28/2003 $ 24,868 $ 23,438 $ 25,433 $ 22,312 3/31/2003 $ 24,915 $ 23,482 $ 25,354 $ 22,488 4/30/2003 $ 26,836 $ 25,293 $ 27,649 $ 24,314 5/31/2003 $ 29,060 $ 27,389 $ 30,226 $ 26,274 6/30/2003 $ 29,708 $ 28,000 $ 31,124 $ 26,957
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. PLEASE VISIT libertyfunds.com FOR DAILY PERFORMANCE UPDATES. The S&P SmallCap 600/Barra Value Index is an unmanaged index that tracks the performance of value stocks contained in the S&P SmallCap 600 Index, as determined by the low price to book ratios. The S&P SmallCap 600 Index tracks the performance of 600 small-capitalization stocks. Unlike mutual funds, indices are not investments and do not incur expenses. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. The inception date of the S&P SmallCap 600/Barra Value Index is 2/1/94. Performance prior to that time represents returns of the S&P SmallCap 600 Index. Average annual total return as of 6/30/03 (%)
SHARE CLASS A B C I Z INCEPTION 7/25/86 11/9/92 1/15/96 10/31/02 1/31/96 -------------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITHOUT SALES SALES SALES SALES SALES SALES SALES SALES CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE -------------------------------------------------------------------------------------------------------- 1-Year -2.16 -7.79 -2.93 -7.01 -2.92 -3.74 -1.64 -1.79 -------------------------------------------------------------------------------------------------------- 5-Year 3.50 2.29 2.71 2.40 2.71 2.71 3.82 3.78 -------------------------------------------------------------------------------------------------------- 10-Year 11.50 10.84 10.67 10.67 10.89 10.89 11.75 11.74 --------------------------------------------------------------------------------------------------------
The graph and table do not reflect the deduction of taxes a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future investment results. Returns and value of an investment will vary, resulting in a gain or loss on sale. All results shown assume reinvestment of distributions. The "with sales charge" returns include the maximum 5.75% sales charge for class A shares, the appropriate class B contingent deferred sales charge for the holding period after purchase as follows: first year - 5%, second year - 4%, third year - 3%, fourth year - 3%, fifth year - 2%, sixth year - 1%, thereafter - 0% and the class C contingent deferred sales charge of 1% for the first year only. Performance results reflect any voluntary waivers or reimbursement of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Performance for different share classes varies based on differences in sales charges and fees associated with each class. Classes B, C, & Z share performance information includes returns of the fund's Class A shares (the oldest existing fund class) for periods prior to the inception of the newer class shares. The returns for class I shares include the returns of class Z for periods prior to 11/1/02 and returns of class A prior to 7/31/1995. These returns have not been adjusted to reflect any difference in expenses (such as 12b-1 fees) between any of the predecessor shares and the newer classes of shares. Had the expense differential been reflected, the returns for the periods prior to the inception of the newer class shares would have been different. 1 TOP 10 HOLDINGS AS OF 6/30/03 (%) Boykin Lodging 4.8 Peabody Energy 1.5 Cytec Industries 1.0 CH Energy Group 1.0 EMCOR Group 1.0 Northeast Utilities 0.9 Cash America International 0.9 Imagistics International 0.9 Corn Products International 0.8 Alliance Atlantis Communications, Class B 0.8
Holdings breakdowns are calculated as a percentage of net assets. There can be no guarantee the fund will continue to maintain these holdings in the future, since the fund is actively managed. BOUGHT During the first quarter of 2003, we added economically-sensitive technology stocks with relatively cheap valuations and balance sheets that included ample cash and little debt. Our buying broadened to include semiconductor and hardware names in addition to software and services. SOLD We sold consumer discretionary stocks that had appreciated, including Rent-A-Center, a company that rents large appliances and electronics to consumers whose payments go toward eventual purchase. The company benefited from strong demand, good execution, and a leadership position in the rent-to-own market. The stock became expensive relative to its future earnings prospects and its appreciation put it above our small-cap range. PORTFOLIO MANAGER'S REPORT For the 12-month period ended June 30, 2003, Liberty Small-Cap Value Fund class A shares returned negative 2.16% without sales charge. The fund beat the S&P Small Cap 600/Barra Value Index, which returned negative 8.38% for the same period. The fund also came out ahead of the Lipper Small Value Category, which returned negative 3.10% for the 12-month period.(1) Strong stock selection, especially in the industrials, materials, and consumer discretionary sectors, helped the fund limit losses during the market downturn. FOCUS ON QUALITY REWARDED IN FIRST HALF OF THE YEAR, BUT NOT IN SECOND HALF The fund maintained its focus on small-cap stocks with relatively attractive valuations and good financials. Our strategy was rewarded during the first half of the reporting period. Stocks with strong balance sheets fared better than lower-quality stocks when economic and geopolitical uncertainty reined in investor enthusiasm for risk. However, once the major military campaigns in Iraq were underway and the economic outlook brightened, investors grew less risk-averse. Small-cap stocks benefited, but the biggest gains came from the most speculative stocks as the stock market rebounded. We stayed with our disciplined strategy, believing that over time small-cap stocks with attractive valuations, low debt, high cash and solid earnings prospects tend to do better than lower-quality stocks. STRONG STOCK SELECTION IN INDUSTRIALS, MATERIALS AND CONSUMER DISCRETIONARY We found many stocks that met our investment criteria in the industrials, basic materials and consumer discretionary sectors--areas where we had above-average representation relative to our S&P benchmark and also some of our biggest gains. In the industrials sector, we focused on transportation, business services and construction companies. In the materials sector, we owned chemicals, paper, packaging and construction materials firms. Most of our investments held up well in the downturn late in 2002, then benefited from an improved economic outlook in the spring of 2003. In the consumer discretionary group, we ---------- (1) Lipper Inc., a widely respected data provider in the industry, calculates an average total return for mutual funds with similar investment objectives as those of the fund. 2 owned mainly specialty retailers, restaurants and clothing manufacturers. All were helped by continued strong consumer spending. Stock selection in the telecommunications services and energy sectors, both of which represented relatively small stakes for the fund, detracted modestly from performance. Telecom services stocks slumped as the economy remained sluggish. Within the energy sector, our selection process led us to avoid the more aggressive service companies, which were the group's top performers. FUND POSITIONED FOR BETTER ECONOMIC TIMES The fund's biggest sector stake was financials, where we focused on banks, insurers and specialty financials. However, our exposure was still lower than that of our S&P benchmark as we neared the bottom of the interest rate cycle. We reduced our investment in consumer discretionary stocks, selling specialty retailers that had appreciated nicely, as well as some restaurants whose prospects had weakened. The proceeds from these sales were put to work largely in the technology sector, which historically has benefited from economic recovery. Our additions included hardware and semiconductor stocks as well as software and services companies. We remain optimistic that small-cap stocks will continue to do well as the economy slowly gains momentum and that investors will again reward companies with strong balance sheets, and good earnings prospects. /s/ Stephen Barbaro Stephen Barbaro has managed the fund since June 2002. [CHART] TOP 5 SECTORS AS OF 6/30/03 (%) FINANCIALS 21.10% INDUSTRIALS 18.70% CONSUMER DISCRETIONARY 17.40% INFORMATION TECHNOLOGY 13.70% HEALTH CARE 6.10%
Sector breakdowns are calculated as a percentage of net assets. Since the fund is actively managed, there can be no guarantee the fund will continue to maintain this breakdown in the future. Investing in small-cap stocks may present special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. 3 INVESTMENT PORTFOLIO June 30, 2003
COMMON STOCKS - 97.8% SHARES VALUE ------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 17.4% AUTO COMPONENTS - 1.1% BorgWarner Corp. 34,000 $ 2,189,600 Modine Manufacturing Co. 52,543 1,017,758 Standard Motor Products, Inc. 119,300 1,324,230 --------------- 4,531,588 --------------- AUTOMOBILES - 0.3% Monaco Coach Corp. (a) 66,400 1,017,912 --------------- HOTELS, RESTAURANTS & LEISURE - 2.9% Bally Total Fitness Holding Corp. (a) 220,000 1,986,600 CBRL Group, Inc. 68,900 2,677,454 Landry's Restaurants, Inc. 115,200 2,718,720 Lone Star Steakhouse & Saloon 153,907 3,350,555 Prime Hospitality Corp. (a) 189,300 1,270,203 --------------- 12,003,532 --------------- HOUSEHOLD DURABLES - 2.1% American Greetings Corp. (a) 115,100 2,260,564 Bassett Furniture Industries, Inc. 127,889 1,698,366 Jacuzzi Brands, Inc. (a) 344,200 1,820,818 Russ Berrie & Co., Inc. 23,800 868,938 Toro Co. 51,400 2,043,150 --------------- 8,691,836 --------------- LEISURE EQUIPMENT & PRODUCTS - 0.8% Jakks Pacific, Inc. (a) 148,088 1,968,089 Johnson Outdoors, Inc. (a) 79,021 1,078,637 Travis Boats & Motors, Inc. (a) 175,875 142,459 --------------- 3,189,185 --------------- MEDIA - 1.5% Alliance Atlantis Communications, Inc., Class B 234,692 3,410,075 Liberty Corp. 65,500 2,783,750 --------------- 6,193,825 --------------- MULTI-LINE RETAIL - 1.0% Neiman-Marcus Group, Inc., Class A 68,900 2,521,740 ShopKo Stores, Inc. (a) 103,200 1,341,600 --------------- 3,863,340 --------------- SPECIALTY RETAIL - 5.0% Building Material Holding Corp. 68,943 1,021,046 Dress Barn, Inc. (a) 109,921 1,392,699 Friedman's, Inc. 118,874 1,351,597 Goody's Family Clothing, Inc. 199,081 1,722,051 GTSI Corp. (a) 60,300 524,610 Monro Muffler, Inc. (a) 100,771 2,847,788 Movie Gallery, Inc. (a) 104,878 1,934,999 OfficeMax, Inc. (a) 502,800 2,664,820 TBC Corp. (a) 141,421 2,694,070 United Rentals, Inc. (a) 111,500 1,548,735 Zale Corp. (a) 63,700 2,548,000 --------------- 20,250,415 --------------- TEXTILES, APPAREL & LUXURY GOODS - 2.7% Delta Apparel, Inc. 46,500 $ 755,625 Kellwood Co. 102,450 3,240,493 Maxwell Shoe Co. (a) 160,409 2,309,890 Nautica Enterprises, Inc. (a) 100,633 1,291,121 Phillips-Van Heusen Corp. 21,000 286,230 Russell Corp. 113,000 2,147,000 Stride Rite Corp. 92,300 919,308 --------------- 10,949,667 --------------- CONSUMER STAPLES - 2.8% FOOD PRODUCTS - 2.1% Central Garden & Pet Co. (a) 83,790 1,998,391 Corn Products International, Inc. 113,600 3,411,408 Ralcorp Holdings, Inc. (a) 122,600 3,060,096 --------------- 8,469,895 --------------- PERSONAL PRODUCTS - 0.1% Inter Parfums, Inc. 86,672 641,373 --------------- TOBACCO - 0.6% Universal Corp. 56,800 2,402,640 --------------- ENERGY - 5.5% ENERGY EQUIPMENT & SERVICES - 1.6% Lufkin Industries, Inc. 91,739 2,233,845 Universal Compression Holdings, Inc. (a) 80,100 1,670,886 Willbros Group, Inc. (a) 246,100 2,556,979 --------------- 6,461,710 --------------- OIL & GAS - 3.9% Denbury Resources, Inc. (a) 159,100 2,136,713 Harvest Natural Resources, Inc. (a) 401,400 2,556,918 Peabody Energy Corp. 182,400 6,126,816 Vintage Petroleum, Inc. 227,600 2,567,328 Westport Resources Corp. (a) 118,100 2,686,775 --------------- 16,074,550 --------------- FINANCIALS - 21.1% BANKS - 10.4% BancFirst Corp. 14,650 759,749 BancorpSouth, Inc. 106,400 2,218,440 Bank of Granite Corp. 102,093 1,740,686 Bryn Mawr Bank Corp. 62,855 2,330,035 Capitol Bancorp Ltd. 45,879 1,243,321 Chemical Financial Corp. 101,380 3,021,124 Chittenden Corp. 116,000 3,172,600 Community First Bankshares, Inc. 80,300 2,192,190 Community Trust Bancorp, Inc. 56,716 1,482,556 Corus Bankshares, Inc. 54,100 2,620,063 First Citizens BancShares, Inc. 16,600 1,673,944 First Financial Bankshares, Inc. 52,000 1,739,920 Hancock Holding Co. 23,794 1,119,746 MainSource Financial Group, Inc. 39,460 961,640 MASSBANK Corp. 34,400 1,244,248
See notes to investment portfolio. 4
COMMON STOCKS (CONTINUED) SHARES VALUE ------------------------------------------------------------------------------------------------ FINANCIALS (CONTINUED) BANKS (CONTINUED) Merchants Bancshares, Inc. 82,432 $ 2,143,232 MetroCorp. Bancshares, Inc. 17,900 216,590 Mid-State Bancshares 146,560 2,894,560 Northrim BanCorp., Inc. 75,300 1,365,189 Omega Financial Corp. 17,237 589,505 Riggs National Corp. 162,496 2,473,189 Simmons First National Corp. 75,472 1,510,195 TriCo Bancshares 104,165 2,648,916 Whitney Holding Corp. 35,700 1,141,329 --------------- 42,502,967 --------------- DIVERSIFIED FINANCIALS - 2.0% Cash America International, Inc. 267,000 3,529,740 CompuCredit Corp. (a) 58,940 716,121 Metris Companies, Inc. 313,300 1,738,815 MFC Bancorp Ltd. (a) 252,370 2,094,419 --------------- 8,079,095 --------------- INSURANCE - 3.7% AmerUs Group Co. 41,400 1,167,066 Commerce Group, Inc. 52,000 1,882,400 Delphi Financial Group, Inc., Class A 72,068 3,372,782 Kansas City Life Insurance Co. 12,500 535,500 Navigators Group, Inc. (a) 31,800 948,276 Phoenix Companies, Inc. 262,000 2,365,860 RLI Corp. 75,900 2,497,110 State Auto Financial Corp. 77,563 1,741,289 Universal American Financial Corp. (a) 106,894 680,915 --------------- 15,191,198 --------------- REAL ESTATE - 5.0% American Financial Realty Trust (a) 49,800 742,518 Boykin Lodging Co. 1,030,550 19,435,437 --------------- 20,177,955 --------------- HEALTH CARE - 6.1% HEALTH CARE EQUIPMENT & SUPPLIES - 0.5% Sola International, Inc. (a) 114,000 1,983,600 --------------- HEALTH CARE PROVIDERS & SERVICES - 5.1% Cross Country Healthcare, Inc. (a) 123,900 1,634,241 Genesis Health Ventures, Inc. (a) 129,000 2,276,850 Humana, Inc. (a) 169,600 2,560,960 Kindred Healthcare, Inc. (a) 69,100 1,232,744 LifePoint Hospitals, Inc. (a) 41,400 866,916 PacifiCare Health Systems, Inc. (a) 63,382 3,126,634 Pediatrix Medical Group, Inc. (a) 59,400 2,117,610 Province Healthcare Co. (a) 82,700 915,489 Stewart Enterprises, Inc. (a) 353,496 1,520,033 Sunrise Senior Living, Inc. (a) 75,700 1,694,166 US Oncology, Inc. (a) 401,798 2,969,287 --------------- 20,914,930 --------------- PHARMACEUTICALS - 0.5% Alpharma, Inc., Class A 85,900 $ 1,855,440 --------------- INDUSTRIALS - 18.7% AEROSPACE & DEFENSE - 1.6% Armor Holdings, Inc. (a) 129,000 1,728,600 Herley Industries, Inc. (a) 87,000 1,477,260 Ladish Co., Inc. (a) 184,238 1,219,656 Precision Castparts Corp. 70,800 2,201,880 --------------- 6,627,396 --------------- AIR FREIGHT & LOGISTICS - 0.5% Ryder System, Inc. 84,800 2,172,576 --------------- AIRLINES - 1.3% Atlantic Coast Airlines Holdings, Inc. (a) 167,706 2,262,354 Mesaba Holdings, Inc. (a) 98,824 609,744 Skywest, Inc. 129,000 2,458,740 --------------- 5,330,838 --------------- BUILDING PRODUCTS - 1.0% NCI Building Systems, Inc. (a) 94,000 1,569,800 Watsco, Inc. 143,000 2,368,080 --------------- 3,937,880 --------------- COMMERCIAL SERVICES & SUPPLIES - 6.7% Banta Corp. 62,400 2,019,888 Casella Waste Systems, Inc. (a) 292,427 2,640,616 Century Business Services, Inc. (a) 325,256 1,057,082 Consolidated Graphics, Inc. (a) 121,500 2,779,920 Electro Rent Corp. (a) 53,381 575,447 Handleman Co. (a) 156,050 2,496,800 Hughes Supply, Inc. 49,600 1,721,120 Imagistics International, Inc. (a) 134,500 3,470,100 Kimball International, Class B 154,834 2,415,410 Management Network Group, Inc. (a) 576,600 1,124,370 MAXIMUS, Inc. (a) 41,400 1,143,882 MPS Group, Inc. (a) 454,350 3,125,928 ProsoftTraining (a) 908,150 390,504 SOURCECORP, Inc. (a) 82,100 1,773,360 TeleTech Holdings, Inc. (a) 172,000 727,560 --------------- 27,461,987 --------------- CONSTRUCTION & ENGINEERING - 2.0% Chicago Bridge & Iron Co. NV 78,100 1,771,308 Comfort Systems USA, Inc. (a) 276,500 727,195 EMCOR Group, Inc. (a) 79,000 3,899,440 Shaw Group, Inc. (a) 134,800 1,624,340 --------------- 8,022,283 --------------- ELECTRICAL EQUIPMENT - 0.7% Cable Design Technologies Corp. (a) 158,200 1,131,130 Genlyte Group, Inc. (a) 45,818 1,602,255 --------------- 2,733,385 ---------------
See notes to investment portfolio. 5
COMMON STOCKS (CONTINUED) SHARES VALUE ------------------------------------------------------------------------------------------------ INDUSTRIALS (CONTINUED) INDUSTRIAL CONGLOMERATES - 0.4% Carlisle Companies, Inc. 42,100 $ 1,774,936 --------------- MACHINERY - 3.7% Alamo Group, Inc. 58,000 708,760 Briggs & Stratton Corp. 42,300 2,136,150 Esterline Technologies Corp. (a) 119,400 2,078,754 Harsco Corp. 92,400 3,331,020 Kadant, Inc. (a) 120,700 2,263,125 Oshkosh Truck Corp. 39,200 2,325,344 Tecumseh Products Co. 55,712 2,134,327 --------------- 14,977,480 --------------- ROAD & RAIL - 0.8% Covenant Transport, Inc. (a) 93,100 1,582,700 Kansas City Southern 96,700 1,163,301 U.S. Xpress Enterprises, Inc., Class A (a) 55,783 594,647 --------------- 3,340,648 --------------- INFORMATION TECHNOLOGY - 13.7% COMMUNICATIONS EQUIPMENT - 1.6% Allen Telecom, Inc. (a) 110,300 1,822,156 Black Box Corp. 50,400 1,824,480 Optical Communication Products, Inc. (a) 439,968 791,942 Tollgrade Communications, Inc. (a) 101,210 1,887,566 --------------- 6,326,144 --------------- COMPUTERS & PERIPHERALS - 1.9% Crossroads Systems, Inc. (a) 139,606 235,795 Electronics for Imaging, Inc. (a) 85,900 1,742,911 Hutchinson Technology, Inc. (a) 20,958 689,309 Imation Corp. 23,100 873,642 Intergraph Corp. (a) 84,302 1,812,493 Iomega Corp. (a) 222,700 2,360,620 --------------- 7,714,770 --------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.3% Analogic Corp. 34,500 1,682,220 Anixter International, Inc. (a) 51,100 1,197,273 Benchmark Electronics, Inc. (a) 58,300 1,793,308 Checkpoint Systems, Inc. (a) 125,600 1,777,240 MTS Systems Corp. 137,182 2,022,063 NU Horizons Electronics Corp. (a) 209,007 1,254,042 Pioneer Standard Electronics 202,279 1,715,326 Plexus Corp. (a) 123,900 1,428,567 Somera Communications, Inc. (a) 329,332 480,825 Tech Data Corp. (a) 77,400 2,067,354 Vishay Intertechnology, Inc. (a) 164,700 2,174,040 --------------- 17,592,258 --------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES - 1.4% Acxiom Corp. (a) 121,741 $ 1,837,072 American Management Systems, Inc. (a) 218,962 3,126,777 Computer Horizons Corp. (a) 149,061 676,737 --------------- 5,640,586 --------------- INTERNET SOFTWARE & SERVICES - 1.2% SonicWALL, Inc. (a) 414,724 1,990,675 Stellent, Inc. (a) 214,400 1,157,760 Trizetto Group, Inc. (a) 97,800 590,712 Valueclick, Inc. (a) 202,166 1,219,061 --------------- 4,958,208 --------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS - 1.8% Dupont Photomasks, Inc. (a) 90,814 1,710,028 Exar Corp. (a) 85,900 1,359,797 Integrated Device Technology, Inc. (a) 172,000 1,900,600 Pericom Semiconductor Corp. (a) 126,545 1,176,868 Zoran Corp. (a) 72,800 1,398,488 --------------- 7,545,781 --------------- SOFTWARE - 1.5% Novell, Inc. (a) 405,545 1,249,079 Pervasive Software, Inc. (a) 211,163 1,129,722 PLATO Learning, Inc. (a) 306,486 1,762,294 Sybase, Inc. (a) 146,200 2,033,642 --------------- 6,174,737 --------------- MATERIALS - 6.0% CHEMICALS - 3.0% Cytec Industries, Inc. (a) 123,000 4,157,400 H.B. Fuller Co. 71,800 1,581,036 Lubrizol Corp. 89,500 2,773,605 Minerals Technologies, Inc. 46,300 2,252,958 Schulman (A.), Inc. 94,244 1,513,559 --------------- 12,278,558 --------------- CONSTRUCTION MATERIALS - 0.7% AMCOL International Corp. 84,300 674,400 Centex Construction Products, Inc. 59,500 2,385,355 --------------- 3,059,755 --------------- CONTAINERS & PACKAGING - 0.9% AptarGroup, Inc. 54,300 1,954,800 Greif Brothers Corp. 71,300 1,639,900 --------------- 3,594,700 --------------- METALS & MINING - 0.9% Carpenter Technology Corp. 129,000 2,012,400 RTI International Metals, Inc. (a) 163,500 1,770,705 --------------- 3,783,105 ---------------
See notes to investment portfolio. 6
COMMON STOCKS (CONTINUED) SHARES VALUE ------------------------------------------------------------------------------------------------ MATERIALS (CONTINUED) PAPER & FOREST PRODUCTS - 0.5% Glatfelter 68,700 $ 1,013,325 Schweitzer-Mauduit International, Inc. 34,500 832,830 --------------- 1,846,155 --------------- TELECOMMUNICATION SERVICES - 1.6% DIVERSIFIED TELECOMMUNICATION SERVICES - 1.5% Advanced Fibre Communications, Inc. (a) 129,000 2,098,830 Mastec, Inc. (a) 400,400 2,306,304 North Pittsburgh Systems, Inc. 96,413 1,452,944 --------------- 5,858,078 --------------- WIRELESS TELECOMMUNICATION SERVICES - 0.1% Metro One Telecommunications, Inc. (a) 107,472 554,555 --------------- UTILITIES - 4.9% ELECTRIC UTILITIES - 3.7% Central Vermont Public Service Corp. 136,300 2,664,665 CH Energy Group, Inc. 91,500 4,117,500 El Paso Electric Co. (a) 154,700 1,907,451 Maine Public Service Co. (a) 29,400 955,794 MGE Energy, Inc. 53,686 1,691,109 Northeast Utilities 219,900 3,681,126 --------------- 15,017,645 --------------- GAS UTILITIES - 0.9% Cascade Natural Gas Corp. 58,700 1,121,170 Northwest Natural Gas Co. 43,800 1,193,550 WGL Holdings, Inc. 47,300 1,262,910 --------------- 3,577,630 --------------- MULTI-UTILITIES & UNREGULATED POWER - 0.3% MDU Resources Group, Inc. 37,100 1,242,479 --------------- TOTAL COMMON STOCKS (cost of $349,093,954) 398,591,206 --------------- LIMITED PURPOSE TRUST - 0.2% INDUSTRIALS - 0.2% TRADING COMPANIES & DISTRIBUTORS - 0.2% Versacold Income Fund (cost of $768,065) 142,100 862,610 --------------- SINGLE PURPOSE TRUST - 0.2% MATERIALS - 0.2% PAPER & FOREST PRODUCTS - 0.2% PRT Forest Regeneration Income Fund (cost of $612,915) 94,700 642,626 --------------- SHORT-TERM OBLIGATION - 2.2% PAR VALUE ------------------------------------------------------------------------------------------------ Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.000%, collateralized by a U.S. Treasury Bond maturing 02/15/29, market value of $8,962,866 (repurchase proceeds $8,786,244) (cost of $8,786,000) $ 8,786,000 $ 8,786,000 --------------- TOTAL INVESTMENTS - 100.4% (cost of $359,260,934) (b) 408,882,442 --------------- OTHER ASSETS & LIABILITIES, NET - (0.4)% (1,489,909) ------------------------------------------------------------------------------------------------ NET ASSETS - 100.0% $ 407,392,533 ===============
NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Cost for federal income tax purposes is $361,117,314. See notes to financial statements. 7 STATEMENT OF ASSETS AND LIABILITIES June 30, 2003 ASSETS: Investments, at cost $ 359,260,934 --------------- Investments, at value $ 408,882,442 Cash 745 Receivable for: Fund shares sold 763,614 Interest 244 Dividends 383,673 Expense reimbursement due from Advisor 31,267 Deferred Trustees' compensation plan 18,061 --------------- Total Assets 410,080,046 --------------- LIABILITIES: Payable for: Investments purchased 729,086 Fund shares repurchased 1,279,647 Management fee 289,400 Transfer agent fee 286,993 Pricing and bookkeeping fees 17,922 Expenses received at merger 15,904 Deferred Trustees' fees 18,061 Other liabilities 50,500 --------------- Total Liabilities 2,687,513 --------------- NET ASSETS $ 407,392,533 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 371,423,068 Undistributed net investment income 210,896 Accumulated net realized loss (13,862,924) Net unrealized appreciation (depreciation) on: Investments 49,621,508 Foreign currency translations (15) --------------- NET ASSETS $ 407,392,533 =============== CLASS A: Net assets $ 181,377,480 Shares outstanding 5,778,397 =============== Net asset value per share $ 31.39(a) =============== Maximum offering price per share ($31.39/0.9425) $ 33.31(b) =============== CLASS B: Net assets $ 188,269,585 Shares outstanding 6,680,016 =============== Net asset value and offering price per share $ 28.18(a) =============== CLASS C: Net assets $ 25,186,375 Shares outstanding 861,398 =============== Net asset value and offering price per share $ 29.24(a) =============== CLASS I: Net assets $ 1,162.30 Shares outstanding 36 =============== Net asset value, offering and redemption price per share $ 32.29 =============== CLASS Z: Net assets $ 12,557,931 Shares outstanding 389,483 =============== Net asset value, offering and redemption price per share $ 32.24 ===============
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. STATEMENT OF OPERATIONS For the Year Ended June 30, 2003 INVESTMENT INCOME: Dividends $ 5,554,145 Interest 203,534 --------------- Total Investment Income (net of foreign taxes withheld of $24,198) 5,757,679 --------------- EXPENSES: Management fee 2,869,029 Distribution fee: Class B 1,393,282 Class C 174,370 Service fee: Class A 364,878 Class B 462,093 Class C 57,870 Transfer agent fees: Class A 725,239 Class B 883,904 Class C 112,134 Class I 1,218 Class Z 22,805 Pricing and bookkeeping fees 138,175 Trustees' fees 18,059 Custody fee 38,992 Merger expense 30,827 Other expenses 168,165 --------------- Total Operating Expenses 7,461,040 Fees and expenses waived or reimbursed by Advisor (153,718) Fees and expenses reimbursed by Advisor: Class A (103,679) Class B (86,520) Class C (12,858) Class Z (9,863) Custody earnings credit (73) --------------- Net Operating Expenses 7,094,329 Interest expense 2,890 --------------- Net Expenses 7,097,219 --------------- Net Investment Loss (1,339,540) --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss) on: Investments (11,170,099) Foreign currency transactions 6,984 --------------- Net realized loss (11,163,115) --------------- Net change in unrealized appreciation/depreciation on: Investments 3,793,194 Foreign currency translations (41) --------------- Net change in unrealized appreciation/depreciation 3,793,153 --------------- Net Loss (7,369,962) --------------- Net Decrease in Net Assets from Operations $ (8,709,502) ===============
See notes to financial statements. 8 STATEMENT OF CHANGES IN NET ASSETS
YEAR YEAR ENDED ENDED INCREASE (DECREASE) JUNE 30, JUNE 30, IN NET ASSETS: 2003 2002 ------------------------------------------------------------------------------------------------ OPERATIONS: Net investment loss $ (1,339,540) $ (4,058,374) Net realized gain (loss) on investments and foreign currency transactions (11,163,115) 58,387,847 Net change in unrealized appreciation/depreciation on investments and foreign currency translations 3,793,153 (32,701,034) --------------- --------------- Net Increase (Decrease) from Operations (8,709,502) 21,628,439 --------------- --------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains: Class A (17,262,144) (7,800,640) Class B (28,475,602) (13,987,582) Class C (3,407,918) (1,592,552) Class Z (31,120) (2,929) Return of capital: Class A (441,172) -- Class B (727,756) -- Class C (87,097) -- Class Z (795) -- --------------- --------------- Total Distributions Declared to Shareholders (50,433,604) (23,383,703) --------------- --------------- SHARE TRANSACTIONS: Class A: Subscriptions 92,368,303 53,059,505 Proceeds received in connection with merger 25,103,297 -- Distributions reinvested 14,993,575 7,219,388 Redemptions (77,460,669) (55,553,340) --------------- --------------- Net Increase 55,004,506 4,725,553 --------------- --------------- Class B: Subscriptions 22,179,249 30,482,462 Proceeds received in connection with merger 112,583 -- Distributions reinvested 25,322,455 12,980,455 Redemptions (50,728,910) (49,601,770) --------------- --------------- Net Decrease (3,114,623) (6,138,853) --------------- --------------- Class C: Subscriptions 7,973,792 10,286,661 Proceeds received in connection with merger 15,456 -- Distributions reinvested 2,749,843 1,494,944 Redemptions (7,852,369) (12,743,085) --------------- --------------- Net Increase (Decrease) 2,886,722 (961,480) --------------- --------------- Class I: Subscriptions 1,000 -- Proceeds received in connection with merger 1,408,563 -- Redemptions (1,358,005) -- --------------- --------------- Net Increase 51,558 -- --------------- --------------- Class Z: Subscriptions $ 27,400,365 $ 2,812,109 Proceeds received in connection with merger 720 -- Distributions reinvested 31,915 2,929 Redemptions (16,882,639) (2,729,444) --------------- --------------- Net Increase 10,550,361 85,594 --------------- --------------- Net Increase (Decrease) from Share Transactions 65,378,524 (2,289,186) --------------- --------------- Total Increase (Decrease) in Net Assets 6,235,418 (4,044,450) NET ASSETS: Beginning of period 401,157,115 405,201,565 --------------- --------------- End of period (including undistributed net investment income/accumulated net investment loss of $210,896 and $(22,352), respectively) $ 407,392,533 $ 401,157,115 =============== =============== CHANGES IN SHARES: Class A: Subscriptions 3,154,270 1,430,207 Issued in connection with merger 902,337 -- Issued for distributions reinvested 550,829 209,761 Redemptions (2,626,500) (1,498,114) --------------- --------------- Net Increase 1,980,936 141,854 --------------- --------------- Class B: Subscriptions 826,123 888,991 Issued in connection with merger 4,484 -- Issued for distributions reinvested 1,030,619 408,704 Redemptions (1,894,962) (1,472,464) --------------- --------------- Net Decrease (33,736) (174,769) --------------- --------------- Class C: Subscriptions 279,298 288,321 Issued in connection with merger 594 -- Issued for distributions reinvested 107,881 45,483 Redemptions (277,391) (359,383) --------------- --------------- Net Increase (Decrease) 110,382 (25,579) --------------- --------------- Class I: Subscriptions 36 -- Issued in connection with merger 49,371 -- Redemptions (49,371) -- --------------- --------------- Net Increase 36 -- --------------- --------------- Class Z: Subscriptions 998,716 76,822 Issued in connection with merger 25 -- Issued for distributions reinvested 1,145 84 Redemptions (617,673) (70,189) --------------- --------------- Net Increase 382,213 6,717 --------------- ---------------
See notes to financial statements. 9 NOTES TO FINANCIAL STATEMENTS June 30, 2003 NOTE 1. ACCOUNTING POLICIES ORGANIZATION: Liberty Small-Cap Value Fund (the "Fund"), a series of Liberty Funds Trust VI, is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end, management investment company. The Fund's investment goal is to seek long-term growth by investing primarily in smaller capitalization equities. The Fund may issue an unlimited number of shares. The Fund offers five classes of shares: Class A, Class B, Class C, Class I and Class Z. Class A shares are sold with a front-end sales charge. A 1.00% contingent deferred sales charge ("CDSC") is assessed on redemptions made within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a CDSC. Class B shares will convert to Class A shares in three, four or eight years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a CDSC on redemptions made within one year after purchase. Class I and Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class I and Class Z shares, as described in the Fund's prospectus. Class I shares were initially offered on October 31, 2002. As of the end of business on November 1, 2002, the Liberty Contrarian Small-Cap Fund merged into the Fund as follows:
NET ASSETS UNREALIZED SHARES ISSUED RECEIVED DEPRECIATION(1) -------------------------------------------------------------- 956,811 $ 26,640,619 $ (11,030,471)
NET ASSETS OF NET ASSETS LIBERTY CONTRARIAN NET ASSETS OF THE FUND SMALL-CAP FUND OF THE FUND PRIOR TO IMMEDIATELY PRIOR TO IMMEDIATELY AFTER COMBINATION COMBINATION COMBINATION ---------------------------------------------------------------- $ 333,518,938 $ 26,640,619 $ 360,159,557
(1) Unrealized depreciation is included in the Net Assets Received amount shown above. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS: Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES: All income, expenses (other than Class A, Class B and Class C transfer agent fees and service fees, Class B and Class C distribution fees and Class I and Class Z transfer agent fees), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the ex-date. FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on foreign currency transactions and translations include the 10 fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends and interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. OTHER: Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments for deferral of losses from wash sales, net operating losses, REIT adjustments, capital loss carryforwards, non-deductible expenses and post-October losses. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended June 30, 2003, permanent items identified and reclassified among the components of net assets are as follows:
UNDISTRIBUTED ACCUMULATED NET INVESTMENT NET REALIZED PAID-IN INCOME LOSS CAPITAL --------------------------------------------------------- $ 1,572,788 $ 4,502,525 $ (6,075,313)
Net investment income, net realized gains (losses) and net assets were not affected by this reclassification. Included in the above reclassification are book to tax timing differences which were acquired as part of the merger. The tax character of distributions paid during the years ended 2003 and 2002 was as follows:
YEAR ENDED JUNE 30, ---------------------------- 2003 2002 ------------------------------------------------------------- Distributions paid from: Long-Term Capital Gains $ 49,176,784 $ 23,383,703 Return of Capital 1,256,820 -- ------------ ------------- $ 50,433,604 $ 23,385,703 ------------ -------------
As of June 30, 2003, the components of distributable earnings on a tax basis were as follows:
UNREALIZED APPRECIATION* ------------- $ 47,765,128
* The difference between book-basis and tax-basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales and REIT adjustments. The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code:
YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD -------------------------------------------- 2005* $ 2,466,892 2006* 1,233,446 2007* 1,233,446 2009* 2,466,892 2011 2,466,892 ------------ $ 9,867,568 ------------
* The capital loss carryforward was obtained from the Fund's merger with Liberty Contrarian Small-Cap Fund. Utilization of these capital loss carryforwards may be subject to limitations imposed by the Internal Revenue Code. 11 Under current tax rules, certain capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of June 30, 2003 for federal income tax purposes, post-October losses of $1,902,269 attributable to security transactions were deferred to July 1, 2003. NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES On April 1, 2003, Colonial Management Associates Inc. ("Colonial"), the investment advisor to the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect, wholly-owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Colonial with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. MANAGEMENT FEE: Columbia is the investment advisor of the Fund and furnishes accounting and other services and office facilities for a monthly fee based on the Fund's average daily net assets as follows:
AVERAGE DAILY NET ASSETS ANNUAL FEE RATE ---------------------------------------------------- First $1 billion 0.80% Over $1 billion 0.75%
PRICING AND BOOKKEEPING FEES: Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank and Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. For the year ended June 30, 2003, the net asset based fee rate was 0.034%. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE: Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for a monthly fee equal to 0.06% annually of the Fund's average daily net assets attributable to Class A, Class B, Class C and Class Z shares plus charges based on the number of shareholder accounts and transactions. The Transfer Agent also provides shareholder services for a monthly fee at the annual rate of 0.025% for the Class I shares of the Fund. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the Fund's principal underwriter. For the year ended June 30, 2003, the Fund has been advised that the Distributor received CDSC of $2,104, $397,866 and $3,437 on Class A, Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a monthly service fee to the Distributor equal to 0.25% annually of the average daily net assets attributable to Class A, Class B and Class C shares. The Plan also requires the payment of a monthly distribution fee to the Distributor equal to 0.75% annually of the average daily net assets attributable to Class B and Class C shares only. The CDSC and the fees received from the Plan are used principally as repayment to the Distributor for amounts paid by the Distributor to dealers who sold such shares. EXPENSE LIMITS: Effective November 1, 2002, Columbia has agreed, until further notice, to waive fees and bear certain Fund expenses to the extent that total expenses (exclusive of service fees, distribution fees, class specific transfer agent fees, brokerage commissions, interest, taxes and extraordinary expenses, if any) exceed 1.00% annually of the Fund's average daily net assets. Columbia has also agreed to voluntarily reimburse the Fund so that Class A, Class B, Class C and Class Z transfer agent fees (excluding out-of-pocket expenses) do not exceed 0.25% of each class's average daily net assets. 12 OTHER: The Fund pays no compensation to its officers, all of whom are employees of Columbia or its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan, which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $73 of custody fees were reduced by balance credits for the year ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY: For the year ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $421,304,739 and $426,874,588 respectively. Unrealized appreciation (depreciation) at June 30, 2003, based on cost of investments for federal income tax purposes, was: Gross unrealized appreciation $ 59,759,802 Gross unrealized depreciation (11,994,674) -------------- Net unrealized appreciation $ 47,765,128 ==============
OTHER: The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. NOTE 5. LINE OF CREDIT The Fund and other affiliated funds participate in a $350,000,000 credit facility, which is used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to the Fund based on its borrowings. In addition, the Fund has agreed to pay commitment fees on its pro rata portion of the line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the year ended June 30, 2003, the average daily loan balance outstanding on days where borrowings existed was $2,461,538 at a weighted average interest rate of 1.78%. 13 FINANCIAL HIGHLIGHTS Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED JUNE 30, ------------------------------------------------------------------------------ CLASS A SHARES 2003 2002 2001 2000 1999 -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 37.54 $ 37.49 $ 32.56 $ 30.36 $ 34.21 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) 0.02 (0.20) (0.06) (0.10) (0.16) Net realized and unrealized gain (loss) on investments and foreign currency (1.54) 2.42 6.38 2.30 (3.69) ---------- ---------- ---------- ---------- ---------- Total from Investment Operations (1.52) 2.22 6.32 2.20 (3.85) ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (4.51) (2.17) (1.39) -- -- Return of capital (0.12) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (4.63) (2.17) (1.39) -- -- ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 31.39 $ 37.54 $ 37.49 $ 32.56 $ 30.36 ========== ========== ========== ========== ========== Total return (b) (2.16)%(c) 6.43% 19.86% 7.25% (11.25)% ========== ========== ========== ========== ========== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (d) 1.54% 1.57% 1.58% 1.49% 1.49% Interest expense --%(e) -- -- -- -- Net investment income (loss) (d) 0.07% (0.55)% (0.18)% (0.33)% (0.57)% Waiver/reimbursement 0.12% -- -- -- -- Portfolio turnover rate 118% 77% 29% 77% 53% Net assets, end of period (000's) $ 181,377 $ 142,551 $ 137,042 $ 138,969 $ 263,436
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (e) Rounds to less than 0.01%. 14 Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED JUNE 30, ------------------------------------------------------------------------------ CLASS B SHARES 2003 2002 2001 2000 1999 -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 34.50 $ 34.88 $ 30.64 $ 28.78 $ 32.67 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (a) (0.19) (0.44) (0.31) (0.31) (0.36) Net realized and unrealized gain (loss) on investments and foreign currency (1.50) 2.23 5.94 2.17 (3.53) ---------- ---------- ---------- ---------- ---------- Total from Investment Operations (1.69) 1.79 5.63 1.86 (3.89) ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (4.51) (2.17) (1.39) -- -- Return of capital (0.12) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (4.63) (2.17) (1.39) -- -- ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 28.18 $ 34.50 $ 34.88 $ 30.64 $ 28.78 ========== ========== ========== ========== ========== Total return (b) (2.93)%(c) 5.65% 18.83% 6.46% (11.91)% ========== ========== ========== ========== ========== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (d) 2.30% 2.32% 2.33% 2.24% 2.24% Interest expense --%(e) -- -- -- -- Net investment loss (d) (0.71)% (1.30)% (0.93)% (1.08)% (1.32)% Waiver/reimbursement 0.09% -- -- -- -- Portfolio turnover rate 118% 77% 29% 77% 53% Net assets, end of period (000's) $ 188,270 $ 231,602 $ 240,252 $ 238,607 $ 307,252
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (c) Had the Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (e) Rounds to less than 0.01%. 15 Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED JUNE 30, ------------------------------------------------------------------------------ CLASS C SHARES 2003 2002 2001 2000 1999 -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 35.59 $ 35.91 $ 31.50 $ 29.59 $ 33.59 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (a) (0.19) (0.45) (0.31) (0.32) (0.37) Net realized and unrealized gain (loss) on investments and foreign currency (1.53) 2.30 6.11 2.23 (3.63) ---------- ---------- ---------- ---------- ---------- Total from Investment Operations (1.72) 1.85 5.80 1.91 (4.00) ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (4.51) (2.17) (1.39) -- -- Return of capital (0.12) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (4.63) (2.17) (1.39) -- -- ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 29.24 $ 35.59 $ 35.91 $ 31.50 $ 29.59 ========== ========== ========== ========== ========== Total return (b) (2.92)%(c) 5.66% 18.85% 6.45% (11.91)% ========== ========== ========== ========== ========== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (d) 2.30% 2.32% 2.33% 2.24% 2.24% Interest expense --%(e) -- -- -- -- Net investment loss (d) (0.71)% (1.30)% (0.93)% (1.08)% (1.32)% Waiver/reimbursement 0.10% -- -- -- -- Portfolio turnover rate 118% 77% 29% 77% 53% Net assets, end of period (000's) $ 25,186 $ 26,726 $ 27,886 $ 27,400 $ 35,987
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (c) Had the Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (e) Rounds to less than 0.01%. 16 Selected data for a share outstanding throughout the period is as follows:
PERIOD ENDED JUNE 30, CLASS I SHARES 2003 (a) ----------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 27.95 ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (b) 0.13 Net realized and unrealized gain on investments and foreign currency 4.21 ---------- Total from Investment Operations 4.34 ---------- NET ASSET VALUE, END OF PERIOD $ 32.29 ========== Total return (c)(d) 15.53% ========== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (e)(f) 1.03% Interest expense (f)(g) --% Net investment income (e)(f) 0.64% Waiver/reimbursement (f) 0.04% Portfolio turnover rate 118% Net assets, end of period (000's) $ 1
(a) Class I shares were initially offered on October 31, 2002. Per share data and total return reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Had the Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. (g) Rounds to less than 0.01%. 17 Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED JUNE 30, ------------------------------------------------------------------------------ CLASS Z SHARES 2003 2002 2001 2000 1999 -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 38.28 $ 38.09 $ 33.01 $ 30.70 $ 34.49 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) 0.24 (0.12) 0.02 (0.02) (0.09) Net realized and unrealized gain (loss) on investments and foreign currency (1.65) 2.48 6.45 2.33 (3.70) ---------- ---------- ---------- ---------- ---------- Total from Investment Operations (1.41) 2.36 6.47 2.31 (3.79) ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized gains (4.51) (2.17) (1.39) -- -- Return of capital (0.12) -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total Distributions Declared to Shareholders (4.63) (2.17) (1.39) -- -- ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 32.24 $ 38.28 $ 38.09 $ 33.01 $ 30.70 ========== ========== ========== ========== ========== Total return (b) (1.79)%(c) 6.71% 20.05% 7.52% (10.99)% ========== ========== ========== ========== ========== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (d) 1.25% 1.32% 1.33% 1.24% 1.24% Interest expense --%(e) -- -- -- -- Net investment income (loss) (d) 0.82% (0.30)% 0.07% (0.08)% (0.32)% Waiver/reimbursement 0.38% -- -- -- -- Portfolio turnover rate 118% 77% 29% 77% 53% Net assets, end of period (000's) $ 12,558 $ 278 $ 21 $ 11,431 $ 11,654
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Had the Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (e) Rounds to less than 0.01%. 18 REPORT OF INDEPENDENT AUDITORS TO THE TRUSTEES OF LIBERTY FUNDS TRUST VI AND THE SHAREHOLDERS OF LIBERTY SMALL-CAP VALUE FUND In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Liberty Small-Cap Value Fund (the "Fund") (a series of Liberty Funds Trust VI), at June 30, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2003, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts August 18, 2003 19 UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION: For the fiscal year ended June 30, 2003, the Fund designates long-term capital gains of $1,356,330. 20 TRUSTEES The Trustees serve terms of indefinite duration. The names, addresses and ages of the Trustees and officers of the Liberty Funds, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee and other directorships they hold are shown below. Each officer listed below serves as an officer of each of the Liberty Funds. The Statement of Additional Information (SAI) contains additional information about the Trustees and is available without charge upon request by calling the fund's distributor at 800-345-6611.
NUMBER OF YEAR FIRST PORTFOLIOS IN ELECTED OR LIBERTY FUNDS OTHER POSITION WITH APPOINTED PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN DIRECTORSHIPS NAME, ADDRESS AND AGE LIBERTY FUNDS TO OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE HELD ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED TRUSTEES Douglas A. Hacker (Age 47) Trustee 1996 Executive Vice President-Strategy 85 None P.O. Box 66100 of United Airlines (airline) since Chicago, IL 60666 December, 2002 (formerly President of UAL Loyalty Services (airline) from September, 2001 to December, 2002; Executive Vice President and Chief Financial Officer of United Airlines from March, 1993 to September, 2001; Senior Vice President and Chief Financial Officer of UAL, Inc. prior thereto). Janet Langford Kelly (Age 45) Trustee 1996 Executive Vice President-Corporate 85 None One Kellogg Square Development and Administration, Battle Creek, MI 49016 General Counsel and Secretary, Kellogg Company (food manufacturer), since September, 1999; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer- products manufacturer) from January, 1995 to September, 1999. Richard W. Lowry (Age 67) Trustee 1995 Private Investor since August, 1987 87(4) None 10701 Charleston Drive (formerly Chairman and Chief Vero Beach, FL 32963 Executive Officer, U.S. Plywood Corporation (building products manufacturer)). Charles R. Nelson (Age 60) Trustee 1981 Professor of Economics, University 120(2) None Department of Economics of Washington, since January, 1976; University of Washington Ford and Louisa Van Voorhis Seattle, WA 98195 Professor of Political Economy, University of Washington, since September, 1993; Director, Institute for Economic Research, University of Washington, since September, 2001; Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. John J. Neuhauser (Age 60) Trustee 1985 Academic Vice President and Dean of 88(4),(5) Saucony, Inc. 84 College Road Faculties since August, 1999, (athletic footwear); Chestnut Hill, MA 02467-3838 Boston College (formerly Dean, SkillSoft Corp. Boston College School of Management (E-Learning) from September, 1977 to September, 1999. Thomas E. Stitzel (Age 67) Trustee 1998 Business Consultant since 1999 85 None 2208 Tawny Woods Place (formerly Professor of Finance from Boise, ID 83706 1975 to 1999 and Dean from 1977 to 1991, College of Business, Boise State University); Chartered Financial Analyst. Thomas C. Theobald (Age 66) Trustee 1996 Managing Director, William Blair 85 Anixter 27 West Monroe Street, Capital Partners (private equity International Suite 3500 investing) since September, 1994 (network support Chicago, IL 60606 (formerly Chief Executive Officer equipment and Chairman of the Board of distributor), Jones Directors, Continental Bank Lang LaSalle (real Corporation prior thereto). estate management services) and MONY Group (life insurance). Anne-Lee Verville (Age 58) Trustee 1998 Author and speaker on educational 86(5) Chairman of the 359 Stickney Hill Road systems needs (formerly General Board of Directors, Hopkinton, NH 03229 Manager, Global Education Enesco Group, Inc. Industry from 1994 to 1997, and (designer, importer President, Applications Solutions and distributor of Division from 1991 to 1994, IBM giftware and Corporation (global education and collectibles). global applications)).
21
NUMBER OF YEAR FIRST PORTFOLIOS IN ELECTED OR LIBERTY FUNDS OTHER POSITION WITH APPOINTED PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN DIRECTORSHIPS NAME, ADDRESS AND AGE LIBERTY FUNDS TO OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE HELD ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEES William E. Mayer(3) (Age 63) Trustee 1994 Managing Partner, Park Avenue 87(4) Lee Enterprises 399 Park Avenue Equity Partners (private equity) (print media), WR Suite 3204 since February, 1999 (formerly Hambrecht + Co. New York, NY 10022 Founding Partner, Development (financial service Capital LLC from November 1996 to provider) and First February, 1999; Dean and Professor, Health (healthcare). College of Business and Management, University of Maryland from October, 1992 to November, 1996). Joseph R. Palombo(3) (Age 50) Trustee, 2000 Executive Vice President and Chief 86(6) None One Financial Center Chairman of Operating Officer of Columbia Boston, MA 02111 the Board Management Group, Inc. (Columbia and President Management) since December, 2001 and Director, Executive Vice President and Chief Operating Officer of the Advisor since April, 2003 (formerly Chief Operations Officer of Mutual Funds, Liberty Financial Companies, Inc. from August, 2000 to November, 2001; Executive Vice President of Stein Roe & Farnham Incorporated (Stein Roe) from April, 1999 to April, 2003; Director of Colonial Management Associates, Inc. (Colonial) from April, 1999 to April, 2003; Director of Stein Roe from September, 2000 to April, 2003) President of Liberty Funds and Galaxy Funds since February, 2003 (formerly Vice President from September 2002 to February 2003); Manager of Stein Roe Floating Rate Limited Liability Company since October, 2000; (formerly Vice President of the Liberty Funds from April, 1999 to August, 2000; Chief Operating Officer and Chief Compliance Officer, Putnam Mutual Funds from December, 1993 to March, 1999).
(1) In December, 2000, the boards of each of the Liberty Funds and former Stein Roe funds were combined into one board of trustees with common membership. The date shown is the earliest date on which a trustee was elected to either the Liberty Funds board or the former Stein Roe funds board. (2) In addition to serving as a disinterested Trustee of the Liberty Funds, Mr. Nelson serves as a disinterested Director or Trustee of the Columbia Funds and CMG Funds, currently consisting of 15 funds and 20 funds, respectively, which are advised by the Advisor. (3) Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. Mr. Palombo is an interested person as an employee of the Advisor. (4) In addition to serving as trustees of Liberty Funds, Messrs. Lowry, Neuhauser and Mayer each serve as a director/trustee of the Liberty All-Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. (5) In addition to serving as disinterested trustees of the Liberty Funds, Mr. Neuhauser and Ms. Verville serve as disinterested directors of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. (6) In addition to serving as an interested trustee of the Liberty Funds, Mr. Palombo serves as an interested director of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. 22 OFFICERS AND TRANSFER AGENT
YEAR FIRST ELECTED OR POSITION WITH APPOINTED NAME, ADDRESS AND AGE LIBERTY FUNDS TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS ------------------------------------------------------------------------------------------------------------------------------ OFFICERS Vicki L. Benjamin (Age 41) Chief 2001 Controller of the Liberty Funds and of the Liberty All-Star One Financial Center Accounting Funds since May, 2002; Chief Accounting Officer of the Boston, MA 02111 Officer and Liberty Funds and Liberty All-Star Funds since June, 2001; Controller Controller and Chief Accounting Officer of the Galaxy Funds since September, 2002 (formerly Vice President, Corporate Audit, State Street Bank and Trust Company from May, 1998 to April, 2001; Audit Manager from July, 1994 to June, 1997; Senior Audit Manager from July, 1997 to May, 1998, Coopers & Lybrand, LLP). J. Kevin Connaughton (Age 39) Treasurer 2000 Treasurer of the Liberty Funds and of the Liberty All-Star One Financial Center Funds since December, 2000; Vice President of the Advisor Boston, MA 02111 since April, 2003 (formerly Controller of the Liberty Funds and of the Liberty All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002; Treasurer, Columbia Management Multi-Strategy Hedge Fund, LLC since December, 2002 (formerly Vice President of Colonial from February, 1998 to October, 2000 and Senior Tax Manager, Coopers& Lybrand, LLP from April, 1996 to January, 1998).
IMPORTANT INFORMATION ABOUT THIS REPORT The Transfer Agent for Liberty Small-Cap Value Fund is: Liberty Funds Services, Inc. P.O. Box 8081 Boston, MA 02266-8081 The fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Liberty Small-Cap Value Fund. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the fund and with the most recent copy of the Liberty Funds Performance Update. Annual Report: LIBERTY SMALL-CAP VALUE FUND LIBERTY SMALL-CAP VALUE FUND, ANNUAL REPORT, JUNE 30, 2003 PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [LIBERTY FUNDS LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP (C) 2003 LIBERTY FUNDS DISTRIBUTOR, INC. A MEMBER OF COLUMBIA MANAGEMENT GROUP ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 769-02/628O-0603 (08/03) 03/2252 LIBERTY SMALL-CAP VALUE FUND, ANNUAL REPORT, JUNE 30, 2003 [LIBERTY FUNDS LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP (C) 2003 LIBERTY FUNDS DISTRIBUTOR, INC. A MEMBER OF COLUMBIA MANAGEMENT GROUP ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 769-02/628O-0603 (08/03) 03/2252 LIBERTY SMALL-CAP VALUE FUND, ANNUAL REPORT, JUNE 30, 2003 [LIBERTY FUNDS LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP 769-02/628O-0603 (08/03) 03/2252 [GRAPHIC] LIBERTY NEWPORT ASIA PACIFIC FUND ANNUAL REPORT JUNE 30, 2003 LESS CLUTTER IN TWO EASY STEPS. POINT. CLICK. LIBERTY eDELIVERY. FOR MORE INFORMATION ABOUT RECEVING YOUR SHAREHOLDER REPORTS ELECTRONICALLY, CALL US AT 800-345-6611. TO SIGN UP FOR eDELIVERY, VISIT US ONLINE AT www.libertyfunds.com. [GRAPHIC] LIBERTY NEWPORT ASIA PACIFIC FUND ANNUAL REPORT JUNE 30, 2003 LESS CLUTTER IN TWO EASY STEPS. POINT. CLICK. LIBERTY eDELIVERY. TO SIGN UP FOR eDELIVERY, GO TO www.icsdelivery.com. PRESIDENT'S MESSAGE [PHOTO OF JOSEPH R. PALOMBO] Dear Shareholder: Despite the uncertainty that hung over the markets and the economy as the nation prepared to go to war in Iraq, the twelve-month period ended on a high note. Virtually all major segments of the stock and bond markets posted positive returns for the period. The economy, though still struggling, has made progress toward recovery. And a new tax law is intended to boost consumer spending power and make investing more attractive. The Jobs and Growth Tax Relief Reconciliation Act of 2003 accelerates income tax rate cuts for virtually all Americans and slashes the tax rates on dividends and long-term capital gains. The government is counting on Americans to turn their good fortune into higher spending. And the financial media has been full of advice on how to take advantage of the new rate structure. As you debate what you will do if the lower tax rate turns into a modest personal windfall, consider strategies that could have a long-term impact on your portfolio. If your take-home pay increases as a result of the tax break and any rebate check you are entitled to receive--and if it's not eaten up by higher state taxes--consider investing at least one third of it. Consider adding it to your retirement account, using it to start an education account for your child or setting it aside for an emergency. But make a commitment and stick to it. Think of it as found money, because that is what it is. You didn't have it before. But now that you've found it, you can put it to work for a long-term goal. And, before you take advice from a television pundit or a magazine cover story, talk to your financial advisor. There may be tax-related strategies that make sense for you. But there are no one-size-fits-all solutions. Keep in mind that tax rates change, and many of the provisions of this law are set to expire in just a few short years. CONSOLIDATION AND A NEW NAME: COLUMBIA On a separate note, I am pleased to announce that, effective April 1, 2003, six of the asset management firms brought together when Columbia Management Group, Inc. was formed were consolidated and renamed Columbia Management Advisors, Inc. (Columbia Management). This consolidation does not affect the management or investment objectives of your fund and is the next step in our efforts to create a consistent identity and to streamline our organization. By consolidating these firms, we are able to create a more efficient organizational structure and strengthen certain key functions, such as research. Although the name of the asset manager familiar to you has changed, what hasn't changed is the commitment of our specialized investment teams to a multi-disciplined approach to investing, focused on our goal of offering shareholders the best products and services. In the following report, you'll find more detailed information about the market environment and about the strategies employed by portfolio managers Chris Legallet and Jamie Chui. Sincerely, /s/ Joseph R. Palombo Joseph R. Palombo President NET ASSET VALUE PER SHARE as of 06/30/03 ($) Class A 12.87 Class B 12.45 Class C 12.44 Class Z 12.97
Past performance cannot predict future investment results. Returns and value of an investment will vary, resulting in a gain or a loss on sale. All results shown assume reinvestment of distributions. MEET THE NEW PRESIDENT Joseph R. Palombo, president and chairman of the Board of Trustees for Liberty Funds, is also chief operating officer and executive vice president of Columbia Management. Mr. Palombo has over 19 years of experience in the financial services industry. Prior to joining Columbia Management, he was chief operating officer and chief compliance officer for Putnam Mutual Funds. Prior to that, he was a partner at Coopers & Lybrand. Mr. Palombo received his degree in economics/accounting from the College of the Holy Cross, where he was a member of Phi Beta Kappa. He earned his master's degree in taxation from Bentley College and participated in the Executive Program at the Amos B. Tuck School at Dartmouth College. Not FDIC May Lose Value ----------------- Insured No Bank Guarantee The examples provided should be viewed as illustrations. They do not constitute tax or legal advice. Neither Columbia Management Advisors, Inc., nor its affiliates, including Liberty Funds Distributor, Inc., provide tax or legal advice. A tax advisor or attorney can provide you with answers to specific questions about taxes and other legal issues. Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. PERFORMANCE INFORMATION Value of a $10,000 investment 8/19/98 - 6/30/03 PERFORMANCE OF A $10,000 INVESTMENT 8/19/98 - 6/30/03 ($)
WITHOUT WITH SALES SALES CHARGE CHARGE Class A 14,128 13,316 Class B 13,641 13,441 Class C 13,631 13,631 Class Z 14,238 n/a
[CHART]
CLASS A SHARES CLASS A SHARES MSCI AC ASIA PACIFIC WITHOUT SALES CHARGE WITH SALES CHARGE FREE INDEX 08/20/1998 - 08/31/1998 $ 9,470 $ 8,925 $ 10,000 09/01/1998 - 09/30/1998 $ 10,200 $ 9,614 $ 10,038 10/01/1998 - 10/31/1998 $ 12,130 $ 11,433 $ 11,744 11/01/1998 - 11/30/1998 $ 12,870 $ 12,130 $ 12,387 12/01/1998 - 12/31/1998 $ 13,297 $ 12,533 $ 12,768 01/01/1999 - 01/31/1999 $ 12,914 $ 12,172 $ 12,871 02/01/1999 - 02/28/1999 $ 13,105 $ 12,352 $ 12,596 03/01/1999 - 03/31/1999 $ 14,960 $ 14,100 $ 14,171 04/01/1999 - 04/30/1999 $ 17,177 $ 16,189 $ 15,235 05/01/1999 - 05/31/1999 $ 16,299 $ 15,362 $ 14,446 06/01/1999 - 06/30/1999 $ 19,161 $ 18,059 $ 15,959 07/01/1999 - 07/31/1999 $ 20,654 $ 19,466 $ 16,951 08/01/1999 - 08/31/1999 $ 21,459 $ 20,225 $ 16,888 09/01/1999 - 09/30/1999 $ 21,702 $ 20,454 $ 17,368 10/01/1999 - 10/31/1999 $ 22,709 $ 21,403 $ 18,000 11/01/1999 - 11/30/1999 $ 26,379 $ 24,862 $ 18,965 12/01/1999 - 12/31/1999 $ 29,444 $ 27,751 $ 20,213 01/01/2000 - 01/31/2000 $ 27,562 $ 25,977 $ 19,501 02/01/2000 - 02/29/2000 $ 27,871 $ 26,268 $ 19,020 03/01/2000 - 03/31/2000 $ 28,933 $ 27,269 $ 20,239 04/01/2000 - 04/30/2000 $ 26,540 $ 25,014 $ 18,713 05/01/2000 - 05/31/2000 $ 24,775 $ 23,351 $ 17,643 06/01/2000 - 06/30/2000 $ 26,093 $ 24,593 $ 18,876 07/01/2000 - 07/31/2000 $ 24,478 $ 23,071 $ 17,115 08/01/2000 - 08/31/2000 $ 25,222 $ 23,772 $ 17,833 09/01/2000 - 09/30/2000 $ 23,628 $ 22,270 $ 16,674 10/01/2000 - 10/31/2000 $ 21,599 $ 20,357 $ 15,622 11/01/2000 - 11/30/2000 $ 20,525 $ 19,345 $ 15,058 12/01/2000 - 12/31/2000 $ 20,043 $ 18,890 $ 14,465 01/01/2001 - 01/31/2001 $ 20,921 $ 19,718 $ 14,854 02/01/2001 - 02/28/2001 $ 19,527 $ 18,404 $ 14,177 03/01/2001 - 03/31/2001 $ 17,991 $ 16,956 $ 13,364 04/01/2001 - 04/30/2001 $ 19,144 $ 18,043 $ 14,102 05/01/2001 - 05/31/2001 $ 19,012 $ 17,918 $ 14,077 06/01/2001 - 06/30/2001 $ 18,112 $ 17,071 $ 13,469 07/01/2001 - 07/31/2001 $ 17,047 $ 16,067 $ 12,616 08/01/2001 - 08/31/2001 $ 16,214 $ 15,281 $ 12,367 09/01/2001 - 09/30/2001 $ 14,129 $ 13,316 $ 10,982 10/01/2001 - 10/31/2001 $ 14,656 $ 13,813 $ 11,198 11/01/2001 - 11/30/2001 $ 15,643 $ 14,744 $ 11,732 12/01/2001 - 12/31/2001 $ 15,709 $ 14,806 $ 11,467 01/01/2002 - 01/31/2002 $ 15,489 $ 14,599 $ 11,040 02/01/2002 - 02/28/2002 $ 15,412 $ 14,526 $ 11,342 03/01/2002 - 03/31/2002 $ 16,279 $ 15,343 $ 12,001 04/01/2002 - 04/30/2002 $ 16,599 $ 15,644 $ 12,438 05/01/2002 - 05/31/2002 $ 16,620 $ 15,664 $ 12,925 06/01/2002 - 06/30/2002 $ 15,884 $ 14,971 $ 12,268 07/01/2002 - 07/31/2002 $ 14,809 $ 13,957 $ 11,494 08/01/2002 - 08/31/2002 $ 14,644 $ 13,802 $ 11,408 09/01/2002 - 09/30/2002 $ 13,502 $ 12,726 $ 10,718 10/01/2002 - 10/31/2002 $ 13,776 $ 12,984 $ 10,434 11/01/2002 - 11/30/2002 $ 14,248 $ 13,429 $ 10,868 12/01/2002 - 12/31/2002 $ 13,700 $ 12,912 $ 10,511 01/01/2003 - 01/31/2003 $ 13,216 $ 12,456 $ 10,295 02/01/2003 - 02/28/2003 $ 12,974 $ 12,228 $ 10,212 03/01/2003 - 03/31/2003 $ 12,699 $ 11,969 $ 9,877 04/01/2003 - 04/30/2003 $ 12,732 $ 12,000 $ 10,024 05/01/2003 - 05/31/2003 $ 13,424 $ 12,652 $ 10,579 06/01/2003 - 06/30/2003 $ 14,128 $ 13,316 $ 11,277
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. PLEASE VISIT libertyfunds.com FOR DAILY PERFORMANCE UPDATES. The Morgan Stanley Capital International (MSCI) All Country (AC) Asia Pacific Free Index is an unmanaged index that tracks the performance of stock traded on stock exchanges in Pacific Basin countries, including Australia, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, the People's Republic of China, the Philippines, Singapore, South Korea, Taiwan and Thailand. The index performance is from August 31, 1998. Unlike mutual funds, indexes are not an investment and do not incur fees or expenses. It is not possible to invest directly in an index. AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/03 (%)
SHARE CLASS A B C Z INCEPTION 8/19/98 8/19/98 8/19/98 2/1/01 ------------------------------------------------------------------------------------------------- WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT SALES SALES SALES SALES SALES SALES SALES CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE CHARGE ------------------------------------------------------------------------------------------------- 1-year -11.06 -16.17 -11.64 -16.06 -11.71 -12.59 -10.86 3-year -18.50 -20.09 -19.12 -19.91 -19.11 -19.11 -18.29 Life of fund 7.37 6.07 6.59 6.27 6.58 6.58 7.54
Past performance is no guarantee of future investment results. The principal value and investment returns will fluctuate, resulting in again or loss on sale. All results shown assume reinvestment of distributions, if any. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The "with sales charge" returns include the maximum 5.75% charge for class A shares, maximum appropriate class B maximum contingent deferred sales charge for the holding period after purchase as follows: through first year - 5%, second year - 4%, third year - 3%, fourth year - 3%, fifth year - 2%, sixth year - 1%, thereafter - 0%, and the class C contingent deferred sales charge of 1% for the first year only. Performance for different share classes will vary based on differences in sales charges and fees associated with each class. Class Z share (newer class shares) performance includes returns of the fund's class A shares (the oldest existing fund class) for periods prior to the inception date of the newer class shares. Returns are not restated to reflect any expense differential, e.g., 12b-1 fees, between class A and the newer class shares. Had the expense differential been reflected, the returns for the period prior to the inception of class Z shares would have been higher. 1 TOP 5 COUNTRIES AS OF 6/30/03 (%) Japan 41.6 Hong Kong 11.9 Australia 11.3 India 7.0 Taiwan 5.4
Calculated as a percentage of total investments. TOP 10 HOLDINGS AS OF 6/30/03 (%) NTT DoCoMo 3.6 Taiwan Semiconductor Manufacturing Co. 2.9 Foster's Group 2.8 China Mobile 2.8 Honda Motor Co. 2.6 Sun Hung Kai Properties 2.5 Hong Kong & China Gas Co. 2.4 Canon 2.4 Takeda Chemical Industries 2.4 Samsung Electronics Co. 2.3
Calculated as a percentage of net assets. Since the fund is actively managed, there can be no guarantee the fund will continue to maintain the same country weightings or portfolio holdings in the future. BOUGHT Denso Corp.(1.1% of net assets) in Japan. An auto parts manufacturer, Denso has restructured its business and has reduced costs. It should do well as global economies and the auto industry improve. SOLD Huaneng Power International (1.6% of net assets) in Hong Kong. We reduced the position of this long-term contributor to performance because the stock's valuation had become less attractive than those of other growth stocks PORTFOLIO MANAGERS' REPORT For the 12-month period ended June 30, 2003, class A shares of Liberty Newport Asia Pacific Fund returned negative 11.06% without sales charge. The fund fell behind its benchmark, the MSCI AC Asia Pacific Free Index, which returned negative 8.10% for the same period. The fund was hurt primarily by its investment in CSL (0.8% of net assets), an Australian pharmaceutical company, which declined as the Australian dollar strengthened relative to the US dollar.(1) Performance was also held back by India-based Infosys Technologies (2.1% of net assets), which forecasted disappointing earnings. We continued to hold Infosys because of its competitive advantage in the rapidly growing area of technology outsourcing. A DIFFICULT BEGINNING; A MORE POSITIVE ENDING Weak global economic growth, uncertainty leading up to the war with Iraq and the SARS (severe acute respiratory syndrome) epidemic had a negative impact on the Asian stock markets during the first nine months of the reporting period. Once military action in Iraq officially ended and SARS appeared under control, investors turned their attention to prospects for better economic growth. Between April and June 2003, the Asian stock markets began to recover. TAKING PROFITS IN LONG-TERM HOLDINGS We trimmed some long-term holdings in China, Singapore and Hong Kong. In China, we reduced Huaneng Power International (1.6% of net assets), which had appreciated nicely. We also sold Legend Group, a personal computer manufacturer, amid concerns that increased competition would erode its market share and profits. In Singapore, we cut back Singapore Press Holdings (0.9% of net assets). In Hong Kong, we made our biggest reductions in Hang Seng Bank as well as Hong Kong & China Gas (1.4% and 2.4% of net assets, respectively). A TURNAROUND IN JAPAN Japan was the fund's biggest country allocation. An improved global economic outlook and the most attractive valuations in two decades helped boost the Japanese stock market. The primary catalyst ---------- (1) Holdings are disclosed as of June 30, 2003 and are subject to change. 2 for the turnaround, however, was the government's bailout of Resona Bank (not in the portfolio), which led investors to believe that the government would support the financial system to avert a crisis. In Japan, we focused on companies that had restructured their businesses. We added to NTT DoCoMo (3.6% of net assets), Japan's largest wireless telephone provider. We also bought Denso Corp., an auto components company (1.1% of net assets). ADDITIONS IN INDONESIA AND INDIA We also found companies with attractive valuations and prospects for significant growth in Indonesia and India. In Indonesia, we purchased PT Astra International (0.5% of net assets), a conglomerate whose core business is selling automobiles and motorcycles through distributorships throughout the region, and PT Telekomunikas (0.6% of net assets), an integrated telecommunications company. Capitalizing on the global emphasis on reducing health care costs, we favored two Indian generic pharmaceutical companies. We added to Dr. Reddy's Laboratories and built a position in Ranbaxy Laboratories (2.2% and 0.5% of net assets, respectively). THE ASIA PACIFIC REGION IS POISED FOR GROWTH The Asia Pacific region is currently attractive because valuations are low and dividend yields are higher than in other parts of the globe. China's economy has continued to grow and benefit from the country's competitive advantage in manufacturing and a record level of foreign direct investment. China's robust economy has been in turn fueling the region's growth. Going forward, we plan to focus on the big economies, such as China and India. /s/ Chris Legallet /s/ Jamie Chui Chris Legallet and Jamie Chui are portfolio co-managers of Liberty Newport Asia Pacific Fund. Mr. Legallet has co-managed the fund since it commenced operations in August 1998. Ms. Chui has co-managed the fund since July 2002. There are specific risks involved when investing in foreign stocks, such as currency exchange rate fluctuations, economic change, instability of emerging countries and political developments. In addition, concentration of investments in a single region or country may result in greater volatility. TOP 5 SECTORS AS OF 06/30/03 (%) INFORMATION TECHNOLOGY 22.0 CONSUMER DISCRETIONARY 16.1 FINANCIALS 12.2 HEALTH CARE 11.3 TELECOMMUNICATION SERVICES 9.4
Sectors are calculated as a percentage of net assets. Since the fund is actively managed, there can be no guarantee the fund will continue to maintain the same sectors in the future. 3 INVESTMENT PORTFOLIO June 30, 2003
COMMON STOCKS -- 96.7% SHARES VALUE ------------------------------------------------------------------------ CONSUMER DISCRETIONARY -- 16.1% AUTO COMPONENTS -- 1.1% Denso Corp. 6,600 $ 104,792 ------------- AUTOMOBILES -- 4.7% Honda Motor Co., Ltd. 6,500 246,756 PT Astra International (a) 116,000 50,267 Toyota Motor Corp. 5,600 145,309 ------------- 442,332 ------------- HOTELS, RESTAURANTS & LEISURE -- 1.1% Genting Berhad 27,000 106,579 ------------- INTERNET & CATALOG RETAIL -- 0.3% Belluna Co., Ltd. 600 24,530 ------------- MEDIA -- 1.0% Singapore Press Holdings Ltd. 8,400 87,304 ------------- MULTI-LINE RETAIL -- 3.8% Don Quijote Co., Ltd. 800 40,249 Don Quijote Co., Ltd., Bonus shares(a)(b) 800 36,845 Seiyu (a) 38,000 93,213 Woolworth's Ltd. 22,496 189,114 ------------- 359,421 ------------- SPECIALTY RETAIL -- 1.8% Matsushita Electric Industrial Co., Ltd. 7,000 69,442 Yamada Denki Co., Ltd. 4,700 103,917 ------------- 173,359 ------------- TEXTILES, APPAREL & LUXURY GOODS -- 2.3% Li & Fung Ltd 126,000 162,385 Sanyo Shokai Ltd. 8,200 49,670 ------------- 212,055 ------------- CONSUMER STAPLES -- 8.0% BEVERAGES -- 2.8% Foster's Group Ltd. 94,490 267,105 ------------- FOOD & DRUG RETAILING -- 1.9% Lawson, Inc. 1,600 44,053 Seven-Eleven Japan Co., Ltd. 3,000 74,840 Yaoko Co., Ltd. 4,100 56,204 ------------- 175,097 ------------- FOOD PRODUCTS -- 2.1% Katokichi Co., Ltd. 7,900 134,792 Yakult Honsha Co., Ltd. 5,000 67,164 ------------- 201,956 ------------- HOUSEHOLD PRODUCTS -- 1.2% Kao Corp. 6,000 111,885 ------------- ENERGY -- 1.1% OIL & GAS -- 1.1% Tokyo Gas Co., Ltd. 37,000 106,504 ------------- FINANCIALS -- 12.2% BANKS -- 4.8% Commonwealth Bank of Australia 5,650 $ 112,104 Hang Seng Bank Ltd. 12,200 128,678 United Overseas Bank Ltd. 29,000 204,231 ------------- 445,013 ------------- DIVERSIFIED FINANCIALS -- 3.2% Housing Development Finance Corp., Ltd. 23,400 206,561 Swire Pacific Ltd., Series A 22,000 95,920 ------------- 302,481 ------------- REAL ESTATE -- 4.2% City Developments Ltd. 39,000 98,344 Mitsubishi Estate Co., Ltd. 10,000 67,832 Sun Hung Kai Properties Ltd. 46,000 231,824 ------------- 398,000 ------------- HEALTH CARE -- 11.3% HEALTH CARE EQUIPMENT & SUPPLIES -- 3.0% Cochlear Ltd. 4,528 98,203 Olympus Optical Co., Ltd. 9,000 186,600 ------------- 284,803 ------------- PHARMACEUTICALS -- 8.3% Chugai Pharmaceutical Co., Ltd. 13,600 154,774 CSL Ltd. 9,610 77,109 Dr. Reddy's Laboratories Ltd., ADR 8,900 207,459 Ranbaxy Laboratories Ltd. 3,000 50,799 Rohto Pharmaceutical Co., Ltd. 5,000 38,755 Sawai Pharmaceutical Co., Ltd. 900 24,104 Takeda Chemical Industries Ltd. 6,000 221,768 ------------- 774,768 ------------- INDUSTRIALS -- 6.9% COMMERCIAL SERVICES & SUPPLIES -- 1.1% Secom Co., Ltd. 3,500 102,791 ------------- CONSTRUCTION & ENGINEERING -- 1.4% Land & House Public Co., Ltd. 563,600 127,269 ------------- INDUSTRIAL CONGLOMERATES -- 4.4% Hutchison Whampoa Ltd. 29,000 176,644 Kasikornbank Public Co., Ltd., NVDR (a) 99,500 80,414 Wesfarmers Ltd. 9,208 156,423 ------------- 413,481 ------------- INFORMATION TECHNOLOGY -- 22.0% COMMUNICATIONS EQUIPMENT -- 0.8% UTStarcom, Inc. (a) 2,100 74,697 ------------- COMPUTERS & PERIPHERALS -- 1.9% Ambit Microsystems Corp. (a) 27,000 83,473
See notes to investment portfolio. 4
COMMON STOCKS (CONTINUED) SHARES VALUE ------------------------------------------------------------------------ INFORMATION TECHNOLOGY (CONTINUED) COMPUTERS & PERIPHERALS (CONTINUED) Asustek Computer, Inc. (a) 38,000 $ 96,070 ------------- 179,543 ------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 5.0% Fanuc Ltd. 2,200 109,215 Hoya Corp. 1,800 124,200 Keyence Corp. 300 55,067 Murata Manufacturing Co., Ltd. 3,200 126,019 Stanley Electric Co., Ltd. 4,000 57,102 ------------- 471,603 ------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES -- 2.1% Infosys Technologies Ltd. 2,800 197,229 ------------- OFFICE ELECTRONICS -- 4.6% Brother Industries Ltd. 9,000 62,325 Canon, Inc. 5,000 229,861 Ricoh Co., Ltd. 8,300 135,869 ------------- 428,055 ------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS -- 7.6% Realtek Semiconductor, Inc. 30,000 61,110 Rohm Co., Ltd. 1,500 163,823 Samsung Electronics Co., Ltd. 730 216,953 Taiwan Semiconductor Manufacturing Co., Ltd. (a) 165,193 272,060 ------------- 713,946 ------------- MATERIALS -- 4.6% CHEMICALS -- 2.7% Nitto Denko Corp. 4,600 150,832 Shin-Etsu Chemical Co., Ltd. 3,000 102,624 ------------- 253,456 ------------- METALS & MINING -- 1.9% BHP Billiton Ltd. 30,862 179,041 ------------- TELECOMMUNICATION SERVICES -- 9.4% DIVERSIFIED TELECOMMUNICATION SERVICES -- 3.0% KT Corp. 2,300 89,920 Telecom Corp. of New Zealand Ltd. (a) 43,284 133,080 PT Telekomunikasi 104,800 58,752 ------------- 281,752 ------------- WIRELESS TELECOMMUNICATION SERVICES -- 6.4% China Mobile Ltd. (a) 113,000 266,627 NTT DoCoMo, Inc. 155 336,240 ------------- 602,867 ------------- TRANSPORTATION -- 1.1% TRANSPORTATION INFRASTRUCTURE-- 1.1% Zhejiang Expressway Co., Ltd., Class H (a) 240,000 99,254 ------------- UTILITIES -- 4.0% ELECTRIC UTILITIES -- 1.6% Huaneng Power International, Inc. 128,000 $ 146,086 ------------- GAS UTILITIES -- 2.4% Hong Kong & China Gas Co., Ltd. 182,613 230,662 ------------- TOTAL COMMON STOCKS (cost of $9,101,603) 9,079,716 ------------- PAR ------------------------------------------------------------------------ SHORT-TERM OBLIGATION -- 4.6% Repurchase agreement with State Street Bank & Trust Co., dated 06/30/03, due 07/01/03 at 1.00%, collateralized by a U.S. Treasury Bond maturing 08/15/23, market value $441,531 (repurchase proceeds $432,012) (cost of $432,000) $ 432,000 432,000 ------------- TOTAL INVESTMENTS-- 101.3% (cost of $9,533,603) (c) 9,511,716 ------------- OTHER ASSETS & LIABILITIES, NET -- (1.3)% (124,023) ------------------------------------------------------------------------ NET ASSETS -- 100.0% $ 9,387,693 =============
NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing. (b) Security purchased on a when-issued basis. (c) Cost for federal income tax purposes is $9,569,091.
ACRONYM NAME -------------------------------------------------------------- ADR American Depositary Receipt NVDR Non-Voting Depositary Receipt
SUMMARY OF SECURITIES % OF TOTAL BY COUNTRY (UNAUDITED) VALUE INVESTMENTS ---------------------------------------------------------------------------- Japan $ 3,959,967 41.6% Hong Kong 1,130,356 11.9 Australia 1,079,097 11.3 India 662,049 7.0 Taiwan 512,713 5.4 United States 506,697 5.3 Singapore 389,879 4.1 South Korea 306,873 3.2 China 245,340 2.6 Thailand 207,683 2.2 Bermuda 162,385 1.7 New Zealand 133,080 1.4 Indonesia 109,018 1.2 Malaysia 106,579 1.1 ------------- ----- $ 9,511,716 100.0% ============= =====
Certain securities are listed by country of underlying exposure but may trade predominantly on other exchanges. See notes to financial statements 5 STATEMENT OF ASSETS AND LIABILITIES June 30, 2003 ASSETS: Investments, at cost $ 9,533,603 --------------- Investments, at value $ 9,511,716 Cash 198 Foreign currency (cost of $29,594) 29,569 Receivable for: Investments sold 30,246 Fund shares sold 8,369 Interest 12 Dividends 2,207 Expense reimbursement due from Advisor/Administrator 33,407 Deferred Trustees' compensation plan 4,871 --------------- Total Assets 9,620,595 --------------- LIABILITIES: Payable for: Investments purchased 156,165 Fund shares repurchased 11,911 Management fee 7,821 Administration fee 2,065 Transfer agent fee 12,617 Pricing and bookkeeping fees 1,561 Trustees' fees 24 Audit fee 18,695 Reports to shareholders 11,652 Deferred Trustees' fees 4,871 Other liabilities 5,520 --------------- Total Liabilities 232,902 --------------- NET ASSETS $ 9,387,693 =============== COMPOSITION OF NET ASSETS: Paid-in capital $ 17,696,536 Accumulated net investment loss (12,839) Accumulated net realized loss (8,273,877) Net unrealized depreciation on: Investments (21,887) Foreign currency translations (240) --------------- NET ASSETS $ 9,387,693 =============== CLASS A: Net assets $ 4,620,025 Shares outstanding 358,949 --------------- Net asset value per share $ 12.87(a) =============== Maximum offering price per share ($12.87/0.9425) $ 13.66(b) =============== CLASS B: Net assets $ 3,227,190 Shares outstanding 259,203 --------------- Net asset value and offering price per share $ 12.45(a) =============== CLASS C: Net assets $ 714,725 Shares outstanding 57,457 --------------- Net asset value and offering price per share $ 12.44(a) =============== CLASS Z: Net assets $ 825,753 Shares outstanding 63,668 --------------- Net asset value, offering and redemption price per share $ 12.97 ===============
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. STATEMENT OF OPERATIONS For the Year Ended June 30, 2003 INVESTMENT INCOME: Dividends $ 197,927 Interest 4,937 --------------- Total Investment Income (net of foreign taxes withheld of $20,104) 202,864 --------------- EXPENSES: Management fee 102,939 Administration fee 25,847 Distribution fee: Class B 27,682 Class C 6,258 Service fee: Class A 13,932 Class B 9,227 Class C 2,086 Pricing and bookkeeping fees 13,915 Transfer agent fee 81,076 Trustees' fees 6,843 Custody fee 29,152 Registration fee 45,348 Other expenses 38,405 --------------- Total Operating Expenses 402,710 Fees and expenses waived or reimbursed by Advisor/Administrator (147,661) Custody earnings credit (32) --------------- Net Operating Expenses 255,017 Interest expense 393 --------------- Net Expenses 255,410 --------------- Net Investment Loss (52,546) --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on: Investments (1,086,952) Foreign currency transactions (10,184) --------------- Net realized loss (1,097,136) --------------- Net change in unrealized appreciation/ depreciation on: Investments (197,586) Foreign currency translations (1,405) --------------- Net change in unrealized appreciation/depreciation (198,991) --------------- Net Loss (1,296,127) --------------- Net Decrease in Net Assets from Operations $ (1,348,673) ===============
See notes to financial statements. 6 STATEMENT OF CHANGES IN NET ASSETS
YEAR YEAR ENDED ENDED INCREASE (DECREASE) JUNE 30, JUNE 30, IN NET ASSETS: 2003 2002 ------------------------------------------------------------------------ OPERATIONS: Net investment loss $ (52,546) $ (121,980) Net realized loss on investments and foreign currency transactions (1,097,136) (1,564,247) Net change in unrealized appreciation/depreciation on investments and foreign currency translations (198,991) (222,347) ------------- ------------- Net Decrease from Operations (1,348,673) (1,908,574) ------------- ------------- SHARE TRANSACTIONS: Class A: Subscriptions 28,630,724 18,708,721 Redemptions (30,054,165) (20,214,863) ------------- ------------- Net Decrease (1,423,441) (1,506,142) ------------- ------------- Class B: Subscriptions 1,206,593 1,611,226 Redemptions (2,252,380) (2,794,582) ------------- ------------- Net Decrease (1,045,787) (1,183,356) ------------- ------------- Class C: Subscriptions 10,662,175 4,392,539 Redemptions (10,999,756) (4,346,103) ------------- ------------- Net Increase (Decrease) (337,581) 46,436 ------------- ------------- Class Z (formerly Class S) (a): Subscriptions 1,868,968 178,644 Proceeds received in combination with original Class Z 13 -- Redemptions (1,271,675) (221,759) ------------- ------------- Net Increase (Decrease) 597,306 (43,115) ------------- ------------- Class Z (through 07/29/02): Subscriptions -- 485 Proceeds combined into former Class S (13) -- Redemptions -- (6,879) ------------- ------------- Net Decrease (13) (6,394) ------------- ------------- Net Decrease from Share Transactions (2,209,516) (2,692,571) ------------- ------------- Total Decrease in Net Assets (3,558,189) (4,601,145) NET ASSETS: Beginning of period 12,945,882 17,547,027 ------------- ------------- End of period (including accumulated net investment loss of $(12,839) and $(121,497), respectively) $ 9,387,693 $ 12,945,882 ============= ============= CHANGES IN SHARES: Class A: Subscriptions 2,287,361 1,284,099 Redemptions (2,398,752) (1,372,817) ------------- ------------- Net Decrease (111,391) (88,718) ------------- ------------- Class B: Subscriptions 99,602 113,932 Redemptions (184,634) (196,072) ------------- ------------- Net Decrease (85,032) (82,140) ------------- ------------- Class C: Subscriptions 871,959 308,889 Redemptions (890,657) (301,261) ------------- ------------- Net Increase (Decrease) (18,698) 7,628 ------------- ------------- Class Z (formerly Class S) (a): Subscriptions 147,874 11,880 Issued in combination with original Class Z 1 -- Redemptions (99,198) (15,309) ------------- ------------- Net Increase (Decrease) 48,677 (3,429) ------------- ------------- Class Z (through 07/29/02): Subscriptions -- 34 Shares combined into former Class S (1) -- Redemptions -- (483) ------------- ------------- Net Decrease (1) (449) ------------- -------------
(a) On July 29, 2002, the Fund's existing Class Z shares were combined into the Fund's Class S shares, which were subsequently redesignated as Class Z shares. See notes to financial statements. 7 NOTES TO FINANCIAL STATEMENTS June 30, 2003 NOTE 1. ACCOUNTING POLICIES ORGANIZATION: Liberty Newport Asia Pacific Fund (the "Fund"), a series of Liberty Funds Trust VI, is a diversified portfolio of a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment goal is to seek long-term growth. The Fund may issue an unlimited number of shares. The Fund offers four classes of shares: Class A, Class B, Class C and Class Z. On July 29, 2002, the Fund's existing Class Z shares were combined into the Fund's Class S shares, which were subsequently redesignated as Class Z shares. Class A shares are sold with a front-end sales charge. A 1.00% contingent deferred sales charge ("CDSC") is assessed to Class A shares purchased without an initial sales charge on redemptions made within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a CDSC. Class B shares will convert to Class A shares in three, four or eight years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a CDSC on redemptions made within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in the Fund's prospectus. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS: Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at the current quoted bid price. In certain countries, the Fund may hold foreign designated shares. If the foreign share prices are not readily available as a result of limited share activity, the securities are valued at the last sale price of the local shares in the principal market in which such securities are normally traded. Korean equity securities that have reached the limit for aggregate foreign ownership and for which premiums to the local exchange prices may be paid by foreign investors are valued by applying a broker quoted premium to the local share price. Forward currency contracts are valued based on the weighted value of exchange-traded contracts with similar durations. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange ("NYSE"). The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE, which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities and such exchange rates occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees. Investments for which market quotations are not readily available, or quotations which management believes are not appropriate, are valued at fair value under procedures approved by the Board of Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. DETERMINATION OF CLASS NET ASSET VALUES: All income, expenses (other than Class A, Class B and Class C service fees and Class B and Class C distribution fees), and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. 8 FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the ex-date. FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on foreign currency transactions and translations includes gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends and interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts to purchase or sell foreign currencies at predetermined exchange rates in connection with the settlement of purchases and sales of securities. The Fund may also enter into forward currency contracts to hedge certain other foreign currency denominated assets. The contracts are used to minimize the exposure to foreign exchange rate fluctuations during the period between trade and settlement date of the contracts. All contracts are marked-to-market daily, resulting in unrealized gains (losses) which become realized at the time the forward currency contracts are closed or mature. Realized and unrealized gains (losses) arising from such transactions are included in net realized and unrealized gains (losses) on foreign currency transactions and translations. Forward currency contracts do not eliminate fluctuations in the prices of the Fund's portfolio securities. While the maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened, exposure is typically limited to the change in value of the contract (in U.S. dollars) over the period it remains open. Risks may also arise if counterparties fail to perform their obligations under the contracts. OTHER: Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date (except for certain foreign securities which are recorded as soon after ex-date as the Fund becomes aware of such), net of non-reclaimable tax withholdings. Where a high level of uncertainty as to collection exists, income on securities is recorded net of all tax withholdings with any rebates recorded when received. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEDERAL TAX INFORMATION Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments for deferral of losses from wash sales, mark-to-market on foreign currency transactions, net operating losses, capital loss carryforwards, non-deductible expenses and post-October losses. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended June 30, 2003, permanent items identified and reclassified among the components of net assets are as follows:
ACCUMULATED ACCUMULATED NET INVESTMENT NET REALIZED PAID-IN LOSS LOSS CAPITAL ---------------------------------------------------- $ 161,204 $ (86,310) $ (74,894)
Net investment income, net realized gains (losses) and net assets were not affected by this reclassification. As of June 30, 2003, the components of distributable earnings on a tax basis were as follows:
UNREALIZED DEPRECIATION* ---------------- $ (57,737)
* The difference between book-basis and tax-basis unrealized depreciation is attributable primarily to the tax deferral of losses on wash sales and foreign currency transactions. 9 The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code:
CAPITAL LOSS YEAR OF EXPIRATION CARRYFORWARD --------------------------------------------- 2006 $ 2,391,127 2010 3,676,821 2011 1,404,163 ----------- $ 7,472,111 ===========
Under current tax rules, certain capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of June 30, 2003 for federal income tax purposes, post-October losses of $766,278 and $6,303 attributable to security transactions and foreign currency losses, respectively, were deferred to July 1, 2003. NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES On April 1, 2003, Newport Fund Management, Inc., the investment advisor to the Fund, merged into Columbia Management Advisors, Inc., ("Columbia"), formerly known as Columbia Management Co., an indirect, wholly-owned subsidiary of Fleet Boston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Newport Fund Management, Inc. with respect to the Fund. The merger did not change the way the Fund is managed, the investment personnel assigned to manage the Fund or the fees paid by the Fund. MANAGEMENT FEE: Columbia is the investment advisor of the Fund and receives a monthly fee equal to 1.00% annually of the Fund's average daily net assets. ADMINISTRATION FEE: Columbia also provides accounting and other services for a monthly fee equal to 0.25% annually of the Fund's average daily net assets. PRICING AND BOOKKEEPING FEES: Columbia is responsible for providing pricing and bookkeeping services to the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank and Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Fund, Columbia receives from the Fund an annual flat fee of $10,000, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets of the Fund for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. The Fund also pays out-of-pocket costs for pricing services. TRANSFER AGENT FEE: Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for a monthly fee equal to 0.06% annually of the Fund's average daily net assets plus charges based on the number of shareholder accounts and transactions. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the Fund's principal underwriter. For the year ended June 30, 2003, the Fund has been advised that the Distributor retained net underwriting discounts of $1,772 on sales of the Fund's Class A shares and received CDSC of $10,386, $11,746 and $3,888 on Class A, Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a monthly service fee to the Distributor equal to 0.25% annually of the average daily net assets attributable to Class A, Class B and Class C shares. The Plan also requires the payment of a monthly distribution fee to the Distributor equal to 0.75% annually of the average daily net assets attributable to Class B and Class C shares only. The CDSC and the fees received from the Plan are used principally as repayment to the Distributor for amounts paid by the Distributor to dealers who sold such shares. EXPENSE LIMITS: Columbia has agreed, until further notice, to waive fees and bear certain Fund expenses to the extent that total expenses (exclusive of service fees, distribution fees, brokerage commissions, interest, taxes and extraordinary expenses, if any) exceed 1.90% annually of the Fund's average daily net assets. 10 OTHER: The Fund pays no compensation to its officers, all of whom are employees of Columbia or any of its affiliates. The Fund's Independent Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. The Fund has an agreement with its custodian bank under which $32 of custody fees were reduced by balance credits for the year ended June 30, 2003. The Fund could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. NOTE 4. PORTFOLIO INFORMATION INVESTMENT ACTIVITY: For the year ended June 30, 2003, purchases and sales of investments, other than short-term obligations, were $4,212,783 and $6,113,625, respectively. Unrealized appreciation (depreciation) at June 30, 2003, for federal income tax purposes, was: Gross unrealized appreciation $ 1,345,372 Gross unrealized depreciation (1,402,747) ------------ Net unrealized depreciation $ (57,375) ============
OTHER: There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or other foreign governmental laws or restrictions. The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. NOTE 5. LINE OF CREDIT The Fund and other affiliated funds participate in a $350,000,000 credit facility, which is used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to the Fund based on its borrowings. In addition, the Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. Prior to April 26, 2003, the Fund participated in a separate credit agreement with similar terms to its existing agreement. For the year ended June 30, 2003, the average daily loan balance outstanding on days where borrowings existed was $1,000,000 at a weighted average interest rate of 1.26%. NOTE 6. OTHER RELATED PARTY TRANSACTIONS At June 30, 2003, FIM Funding, Inc. owned 23.7% of the Fund's outstanding shares. 11 FINANCIAL HIGHLIGHTS Selected data for a share outstanding throughout each period is as follows:
PERIOD YEAR ENDED JUNE 30, ENDED ----------------------------------------------------------- JUNE 30, CLASS A SHARES 2003 2002 2001 2000 1999 (a) ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 14.47 $ 16.50 $ 24.55 $ 19.01 $ 10.00 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.03) (0.08) (0.04) (0.16)(c) (0.02)(c) Net realized and unrealized gain (loss) on investments and foreign currency (1.57) (1.95) (7.38) 7.03 9.14 ----------- ----------- ----------- ----------- ----------- Total from Investment Operations (1.60) (2.03) (7.42) 6.87 9.12 ----------- ----------- ----------- ----------- ----------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- (0.50) (0.11) From net realized gains -- -- (0.18) (0.83) -- In excess of net realized gains -- -- (0.45) -- -- ----------- ----------- ----------- ----------- ----------- Total Distributions Declared to Shareholders -- -- (0.63) (1.33) (0.11) ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, END OF PERIOD $ 12.87 $ 14.47 $ 16.50 $ 24.55 $ 19.01 =========== =========== =========== =========== =========== Total return (d)(e) (11.06)% (12.30)% (30.60)% 36.18% 91.64%(f) =========== =========== =========== =========== =========== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (g) 2.15% 2.15% 2.15% 2.15% 2.15%(i) Interest expense --%(h) --%(h) -- -- -- Net investment loss (g) (0.24)% (0.55)% (0.22)% (0.65)% (0.15)%(i) Waiver/reimbursement 1.40% 1.74% 1.26% 0.96% 3.10%(i) Portfolio turnover rate 42% 24% 43% 31% 26%(f) Net assets, end of period (000's) $ 4,620 $ 6,804 $ 9,222 $ 10,213 $ 4,606
(a) The Fund commenced investment operations on August 19, 1998. Per share data, total return and portfolio turnover rate reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net of fees and expenses waived or borne by the Advisor/Administrator which amounted to $0.233 and $0.365 per share for the periods ended June 30, 2000 and 1999, respectively. (d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (e) Had the Advisor/Administrator not waived a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Rounds to less than 0.01%. (i) Annualized. 12 Selected data for a share outstanding throughout each period is as follows:
PERIOD YEAR ENDED JUNE 30, ENDED ----------------------------------------------------------- JUNE 30, CLASS B SHARES 2003 2002 2001 2000 1999 (a) ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 14.09 $ 16.19 $ 24.31 $ 18.90 $ 10.00 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.11) (0.19) (0.15) (0.34)(c) (0.11)(c) Net realized and unrealized gain (loss) on investments and foreign currency (1.53) (1.91) (7.34) 7.03 9.10 ----------- ----------- ----------- ----------- ----------- Total from Investment Operations (1.64) (2.10) (7.49) 6.69 8.99 ----------- ----------- ----------- ----------- ----------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- (0.45) (0.09) From net realized gains -- -- (0.18) (0.83) -- In excess of net realized gains -- -- (0.45) -- -- ----------- ----------- ----------- ----------- ----------- Total Distributions Declared to Shareholders -- -- (0.63) (1.28) (0.09) ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, END OF PERIOD $ 12.45 $ 14.09 $ 16.19 $ 24.31 $ 18.90 =========== =========== =========== =========== =========== Total return (d)(e) (11.64)% (12.97)% (31.20)% 35.43% 90.36%(f) =========== =========== =========== =========== =========== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (g) 2.90% 2.90% 2.90% 2.90% 2.90%(i) Interest expense --%(h) --%(h) -- -- -- Net investment loss (g) (0.87)% (1.30)% (0.80)% (1.40)% (0.90)%(i) Waiver/reimbursement 1.45% 1.74% 1.38% 0.96% 3.10%(i) Portfolio turnover rate 42% 24% 43% 31% 26%(f) Net assets, end of period (000's) $ 3,227 $ 4,851 $ 6,903 $ 5,836 $ 515
(a) The Fund commenced investment operations on August 19, 1998. Per share data, total return and portfolio turnover rate reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net of fees and expenses waived or borne by the Advisor/Administrator which amounted to $0.233 and $0.365 per share for the periods ended June 30, 2000 and 1999, respectively. (d) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (e) Had the Advisor/Administrator not waived a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Rounds to less than 0.01%. (i) Annualized. 13 Selected data for a share outstanding throughout each period is as follows:
PERIOD YEAR ENDED JUNE 30, ENDED ----------------------------------------------------------- JUNE 30, CLASS C SHARES 2003 2002 2001 2000 1999 (a) ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 14.09 $ 16.18 $ 24.28 $ 18.90 $ 10.00 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.11) (0.19) (0.18) (0.34)(c) (0.11)(c) Net realized and unrealized gain (loss) on investments and foreign currency (1.54) (1.90) (7.29) 7.00 9.10 ----------- ----------- ----------- ----------- ----------- Total from Investment Operations (1.65) (2.09) (7.47) 6.66 8.99 ----------- ----------- ----------- ----------- ----------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- (0.45) (0.09) From net realized gains -- -- (0.18) (0.83) -- In excess of net realized gains -- -- (0.45) -- -- ----------- ----------- ----------- ----------- ----------- Total Distributions Declared to Shareholders -- -- (0.63) (1.28) (0.09) ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, END OF PERIOD $ 12.44 $ 14.09 $ 16.18 $ 24.28 $ 18.90 =========== =========== =========== =========== =========== Total return (d)(e) (11.71)% (12.92)% (31.15)% 35.27% 90.36%(f) =========== =========== =========== =========== =========== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (g) 2.90% 2.90% 2.90% 2.90% 2.90%(i) Interest expense --%(h) --%(h) -- -- -- Net investment loss (g) (0.87)% (1.30)% (0.92)% (1.40)% (0.90)%(i) Waiver/reimbursement 1.46% 1.74% 1.29% 0.96% 3.10%(i) Portfolio turnover rate 42% 24% 43% 31% 26%(f) Net assets, end of period (000's) $ 715 $ 1,073 $ 1,109 $ 1,383 $ 202
(a) The Fund commenced investment operations on August 19, 1998. Per share data, total return and portfolio turnover rate reflect activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Net of fees and expenses waived or borne by the Advisor/Administrator which amounted to $0.233 and $0.365 per share for the periods ended June 30, 2000 and 1999, respectively. (d) Total return at net asset value assuming all distributions reinvested and no contingent deferred sales charge. (e) Had the Advisor/Administrator not waived a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Rounds to less than 0.01%. (i) Annualized. 14 Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED JUNE 30, PERIOD ENDED ----------------------------- JUNE 30, CLASS Z SHARES 2003 (a) 2002 2001 (b) ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.55 $ 16.54 $ 19.06 ------------ ------------ ------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (c) (0.01) (0.04) 0.08 Net realized and unrealized loss on investments and foreign currency (1.57) (1.95) (2.60) ------------ ------------ ------------ Total from Investment Operations (1.58) (1.99) (2.52) ------------ ------------ ------------ NET ASSET VALUE, END OF PERIOD $ 12.97 $ 14.55 $ 16.54 ============ ============ ============ Total return (d) (10.86)% (12.03)% (13.22)%(e) ============ ============ ============ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Operating expenses (f) 2.07% 1.90% 1.90%(h) Interest expense --%(g) --%(g) -- Net investment income (loss) (f) (0.06)% (0.30)% 1.08%(h) Waiver/reimbursement 1.95% 1.74% 1.99%(h) Portfolio turnover rate 42% 24% 43% Net assets, end of period (000's) $ 826 $ 218 $ 305
(a) On July 29, 2002, the Fund's existing Class Z shares were combined into the Fund's Class S shares which were subsequently redesignated as Class Z shares. (b) Class S shares were initially offered on February 1, 2001. Per share data and total return reflect activity from that date. (c) Per share data was calculated using average shares outstanding during the period. (d) Had the Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Rounds to less than 0.01%. (h) Annualized. 15 REPORT OF INDEPENDENT AUDITORS TO THE TRUSTEES OF LIBERTY FUNDS TRUST VI AND THE SHAREHOLDERS OF LIBERTY NEWPORT ASIA PACIFIC FUND In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Liberty Newport Asia Pacific Fund (the "Fund") (a series of Liberty Funds Trust VI), at June 30, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2003, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts August 18, 2003 16 TRUSTEES Trustees and Officers (this section applies to all of the Funds) The Trustees serve terms of indefinite duration. The names, addresses and ages of the Trustees and officers of the Liberty Funds, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee and other directorships they hold are shown below. Each officer listed below serves as an officer of each of the Liberty Funds. The Statement of Additional Information (SAI) contains additional information about the Trustees and is available without charge upon request by calling the fund's distributor at 800-345-6611.
YEAR FIRST NUMBER OF ELECTED OR PORTFOLIOS IN LIBERTY OTHER POSITION WITH APPOINTED PRINCIPAL OCCUPATION(S) FUNDS COMPLEX DIRECTORSHIPS NAME, ADDRESS AND AGE LIBERTY FUNDS TO OFFICE(1) DURING PAST FIVE YEARS OVERSEEN BY TRUSTEE HELD ----------------------------------------------------------------------------------------------------------------------------------- DISINTERESTED TRUSTEES Douglas A. Hacker (Age 47) Trustee 1996 Executive Vice 85 None P.O. Box 66100 President-Strategy of United Chicago, IL 60666 Airlines (airline) since December, 2002 (formerly President of UAL Loyalty Services (airline) from September, 2001 to December, 2002; Executive Vice President and Chief Financial Officer of United Airlines from March, 1993 to September, 2001; Senior Vice President and Chief Financial Officer of UAL, Inc. prior thereto). Janet Langford Kelly (Age 45) Trustee 1996 Executive Vice 85 None One Kellogg Square President-Corporate Battle Creek, MI 49016 Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), since September, 1999; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999. Richard W. Lowry (Age 67) Trustee 1995 Private Investor since August, 87(4) None 10701 Charleston Drive 1987 (formerly Chairman and Vero Beach, FL 32963 Chief Executive Officer, U.S. Plywood Corporation (building products manufacturer)). Charles R. Nelson (Age 60) Trustee 1981 Professor of Economics, 120(2) None Department of Economics University of Washington, University of Washington since January, 1976; Ford and Seattle, WA 98195 Louisa Van Voorhis Professor of Political Economy, University of Washington, since September, 1993; Director, Institute for Economic Research, University of Washington, since September, 2001; Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. John J. Neuhauser (Age 60) Trustee 1985 Academic Vice President and 88(4),(5) Saucony, Inc. 84 College Road Dean of Faculties since (athletic Chestnut Hill, MA 02467-3838 August, 1999, Boston College footwear); (formerly Dean, Boston College SkillSoft Corp. School of Management from (E-Learning) September, 1977 to September, 1999. Thomas E. Stitzel (Age 67) Trustee 1998 Business Consultant since 1999 85 None 2208 Tawny Woods Place (formerly Professor of Finance Boise, ID 83706 from 1975 to 1999 and Dean from 1977 to 1991, College of Business, Boise State University); Chartered Financial Analyst.
17
YEAR FIRST NUMBER OF ELECTED OR PORTFOLIOS IN LIBERTY OTHER POSITION WITH APPOINTED PRINCIPAL OCCUPATION(S) FUNDS COMPLEX DIRECTORSHIPS NAME, ADDRESS AND AGE LIBERTY FUNDS TO OFFICE(1) DURING PAST FIVE YEARS OVERSEEN BY TRUSTEE HELD ----------------------------------------------------------------------------------------------------------------------------------- DISINTERESTED TRUSTEES Thomas C. Theobald (Age 66) Trustee 1996 Managing Director, William 85 Anixter 27 West Monroe Street, Blair Capital Partners International Suite 3500 (private equity investing) (network support Chicago, IL 60606 since September, 1994 equipment (formerly Chief Executive distributor), Jones Officer and Chairman of the Lang LaSalle (real Board of Directors, estate management Continental Bank Corporation services) and MONY prior thereto). Group (life insurance). Anne-Lee Verville (Age 58) Trustee 1998 Author and speaker on 86(5) Chairman of the 359 Stickney Hill Road educational systems needs Board of Directors, Hopkinton, NH 03229 (formerly General Manager, Enesco Group, Inc. Global Education Industry from (designer, importer 1994 to 1997, and President, and distributor of Applications Solutions giftware and Division from 1991 to 1994, collectibles). IBM Corporation (global education and global applications)). INTERESTED TRUSTEES William E. Mayer(3) (Age 63) Trustee 1994 Managing Partner, Park Avenue 87(4) Lee Enterprises 399 Park Avenue Equity Partners (private (print media), WR Suite 3204 equity) since February, 1999 Hambrecht + Co. New York, NY 10022 (formerly Founding Partner, (financial service Development Capital LLC from provider) and First November 1996 to February, Health (healthcare). 1999; Dean and Professor, College of Business and Management, University of Maryland from October, 1992 to November, 1996). Joseph R. Palombo(3) (Age 50) Trustee, 2000 Executive Vice President and 86(6) None One Financial Center Chairman of the Chief Operating Officer of Boston, MA 02111 Board and Columbia Management Group, President Inc. (Columbia Management) since December, 2001 and Director, Executive Vice President and Chief Operating Officer of the Advisor since April, 2003 (formerly Chief Operations Officer of Mutual Funds, Liberty Financial Companies, Inc. from August, 2000 to November, 2001; Executive Vice President of Stein Roe & Farnham Incorporated (Stein Roe) from April, 1999 to April, 2003; Director of Colonial Management Associates, Inc. (Colonial) from April, 1999 to April, 2003; Director of Stein Roe from September, 2000 to April, 2003) President of Liberty Funds and Galaxy Funds since February, 2003 (formerly Vice President from September 2002 to February 2003); Manager of Stein Roe Floating Rate Limited Liability Company since October, 2000; (formerly Vice President of the Liberty Funds from April, 1999 to August, 2000; Chief Operating Officer and Chief Compliance Officer, Putnam Mutual Funds from December, 1993 to March, 1999).
(1) In December, 2000, the boards of each of the Liberty Funds and former Stein Roe funds were combined into one board of trustees with common membership. The date shown is the earliest date on which a trustee was elected to either the Liberty Funds board or the former Stein Roe funds board. (2) In addition to serving as a disinterested Trustee of the Liberty Funds, Mr. Nelson serves as a disinterested Director or Trustee of the Columbia Funds and CMG Funds, currently consisting of 15 funds and 20 funds, respectively, which are advised by the Advisor. (3) Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. Mr. Palombo is an interested person as an employee of the Advisor. (4) In addition to serving as trustees of Liberty Funds, Messrs. Lowry, Neuhauser and Mayer each serve as a director/trustee of the Liberty All- Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. (5) In addition to serving as disinterested trustees of the Liberty Funds, Mr. Neuhauser and Ms. Verville serve as disinterested directors of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. (6) In addition to serving as an interested trustee of the Liberty Funds, Mr. Palombo serves as an interested director of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. 18 OFFICERS AND TRANSFER AGENT
YEAR FIRST ELECTED OR POSITION WITH APPOINTED NAME, ADDRESS AND AGE LIBERTY FUNDS TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------------------------------- OFFICERS Vicki L. Benjamin (Age 41) Chief 2001 Controller of the Liberty Funds and of the Liberty One Financial Center Accounting All-Star Funds since May, 2002; Chief Accounting Boston, MA 02111 Officer and Officer of the Liberty Funds and Liberty All-Star Controller Funds since June, 2001; Controller and Chief Accounting Officer of the Galaxy Funds since September, 2002 (formerly Vice President, Corporate Audit, State Street Bank and Trust Company from May, 1998 to April, 2001; Audit Manager from July, 1994 to June, 1997; Senior Audit Manager from July, 1997 to May, 1998, Coopers & Lybrand, LLP). J. Kevin Connaughton (Age 39) Treasurer 2000 Treasurer of the Liberty Funds and of the Liberty One Financial Center All-Star Funds since December, 2000; Vice Boston, MA 02111 President of the Advisor since April, 2003 (formerly Controller of the Liberty Funds and of the Liberty All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002; Treasurer, Columbia Management Multi-Strategy Hedge Fund, LLC since December, 2002 (formerly Vice President of Colonial from February, 1998 to October, 2000 and Senior Tax Manager, Coopers & Lybrand, LLP from April, 1996 to January, 1998).
IMPORTANT INFORMATION ABOUT THIS REPORT The Transfer Agent for Liberty Newport Asia Pacific Fund is: Liberty Funds Services, Inc. P.O. Box 8081 Boston, MA 02266-8081 The fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Liberty Newport Asia Pacific Fund. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the fund and with the most recent copy of the Liberty Funds Performance Update. Annual Report: LIBERTY NEWPORT ASIA PACIFIC FUND LIBERTY NEWPORT ASIA PACIFIC FUND ANNUAL REPORT, JUNE 30, 2003 PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [LIBERTY FUNDS LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP (C) 2003 LIBERTY FUNDS DISTRIBUTOR, INC. A MEMBER OF COLUMBIA MANAGEMENT GROUP ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 737-02/621O-0603 (08/03) 03/2210 LIBERTY NEWPORT ASIA PACIFIC FUND ANNUAL REPORT, JUNE 30, 2003 [LIBERTY FUNDS LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP (C) 2003 LIBERTY FUNDS DISTRIBUTOR, INC. A MEMBER OF COLUMBIA MANAGEMENT GROUP ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 737-02/621O-0603 (08/03) 03/2210 LIBERTY NEWPORT ASIA PACIFIC FUND ANNUAL REPORT, JUNE 30, 2003 [LIBERTY FUNDS LOGO] A MEMBER OF COLUMBIA MANAGEMENT GROUP 737-02/621O-0603 (08/03) 03/2210 ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable at this time. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable at this time. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) The Registrant's Chief Executive Officer and Chief Financial Officer, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Registrant's management, including the Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. (b) There was no change in the registrant's internal control over financial Reporting that occurred over the registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 10. EXHIBITS. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable at this time. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)). Attached hereto as Exhibit 99.CERT. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)). Attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Liberty Funds Trust VI ------------------------------------------------------------------- By (Signature and Title) /s/ Joseph R. Palombo ------------------------------------------------------ Joseph R. Palombo, President Date September 5, 2003 --------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ Joseph R. Palombo ------------------------------------------------------ Joseph R. Palombo, President Date September 5, 2003 --------------------------------------------------------------------------- By (Signature and Title) /s/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, Treasurer Date September 5, 2003 ---------------------------------------------------------------------------