<PAGE> 1
PRESIDENT'S MESSAGE
STEVE GIBSON PHOTO
Dear Shareholder:
You may have noticed that your Fund has a new name. Beginning July 14, the names
of our funds changed to include Liberty. We believe this better reflects that
they are part of one fund family. We offer a diverse family of mutual funds
representing a wide selection of investment styles and specialized money
management. Our goal is to help you reach for financial freedom--however you
define it.
Strong economic growth, both in the U.S. and around the world, rising interest
rates and a volatile stock market characterized the six-month period ended May
31, 2000. The Federal Reserve Board continued to raise interest rates in an
attempt to slow the U.S. economy, which has been expanding for nine years. Few
signs of a slowdown have materialized so far. However, the stock market's
response to the rate increases has been volatility. High valuations in the
technology sector also contributed to an unsettled market during the period. As
prices came down on some of the largest technology and telecommunications
stocks, small- and mid-cap stocks gained ground. Energy stocks were also strong.
Although the investment environment for utility stocks was mixed, your portfolio
manager's investment strategy generated a solid return.
The following report will provide you with more specific information on the
Fund's performance and the strategies employed during the period. For more
information about the Fund, contact your financial advisor or visit us on the
Internet at www.libertyfunds.com. As always, we thank you for investing in
Liberty Utilities Fund.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
July 17, 2000
PERFORMANCE HIGHLIGHTS (AS OF 5/31/00)
<TABLE>
<S> <C> <C>
NET ASSET VALUE PER SHARE
CLASS A $23.27
CLASS B $23.24
CLASS C $23.23
CLASS Z $23.27
DISTRIBUTIONS DECLARED PER SHARE
(12/1/99-5/31/00)
CLASS A $1.870
CLASS B $1.784
CLASS C $1.784
CLASS Z $1.899
</TABLE>
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
<TABLE>
<S> <C>
------------------------
NOT EDIC MAY
INSURED LOSE VALUE
-----------
NO BANK
GUARANTEE
------------------------
</TABLE>
<PAGE> 2
PERFORMANCE INFORMATION
Value of a $10,000 Investment
5/31/90 - 5/31/00
PERFORMANCE OF A $10,000 INVESTMENT IN
SHARE CLASSES AND INDEXES 5/31/90-5/31/00
<TABLE>
<CAPTION>
Without With
sales sales
charge charge
-------------------------------
<S> <C> <C>
Class A $38,384 $36,560
-------------------------------
Class B $36,163 $36,163
-------------------------------
Class C $37,569 $37,569
-------------------------------
Class Z $38,493
</TABLE>
<TABLE>
<CAPTION>
CUF (WITH SALES CUF (WITHOUT SALES
S&P 500 INDEX CHARGE) CHARGE) DJUA
------------- --------------- ------------------ ----
<S> <C> <C> <C> <C>
5/31/90 10000.00 10000.00 9475.00 10000.00
6/30/90 9933.00 10032.00 9505.00 10010.00
7/31/90 9901.00 10034.00 9507.00 10045.00
8/31/90 9007.00 9858.00 9341.00 9424.00
9/30/90 8569.00 9647.00 9141.00 9612.00
10/31/90 8533.00 9524.00 9024.00 10377.00
11/30/90 9084.00 9767.00 9254.00 10376.00
12/31/90 9336.00 9761.00 9249.00 10336.00
1/31/91 9742.00 9998.00 9473.00 10227.00
2/28/91 10437.00 10480.00 9930.00 10583.00
3/31/91 10690.00 10777.00 10211.00 10868.00
4/30/91 10715.00 11178.00 10591.00 10561.00
5/31/91 11176.00 11324.00 10729.00 10708.00
6/30/91 10664.00 11171.00 10585.00 10034.00
7/31/91 11161.00 11473.00 10870.00 10307.00
8/31/91 11425.00 11665.00 11053.00 10710.00
9/30/91 11234.00 11784.00 11166.00 11031.00
10/31/91 11384.00 11959.00 11331.00 11220.00
11/30/91 10927.00 12074.00 11440.00 11439.00
12/31/91 12174.00 12292.00 11647.00 11910.00
1/31/92 11948.00 12683.00 12017.00 11101.00
2/29/92 12102.00 13013.00 12330.00 10924.00
3/31/92 11867.00 13040.00 12356.00 11014.00
4/30/92 12215.00 13307.00 12609.00 11331.00
5/31/92 12275.00 13623.00 12908.00 11529.00
6/30/92 12092.00 13736.00 13015.00 11494.00
7/31/92 12585.00 14456.00 13697.00 12302.00
8/31/92 12329.00 14430.00 13672.00 12019.00
9/30/92 12474.00 14515.00 13753.00 12189.00
10/31/92 12517.00 14525.00 13762.00 12195.00
11/30/92 12942.00 14509.00 13747.00 12184.00
12/31/92 13101.00 14875.00 14094.00 12398.00
1/31/93 13211.00 15153.00 14357.00 12737.00
2/28/93 13391.00 15929.00 15092.00 13578.00
3/31/93 13674.00 16051.00 15209.00 13740.00
4/30/93 13343.00 16014.00 15174.00 13644.00
5/31/93 13699.00 15989.00 15149.00 13665.00
6/30/93 13739.00 16444.00 15581.00 14114.00
7/31/93 13684.00 16740.00 15862.00 14449.00
8/31/93 14202.00 17166.00 16264.00 14898.00
9/30/93 14093.00 17011.00 16118.00 14594.00
10/31/93 14385.00 16763.00 15883.00 14094.00
11/30/93 14248.00 15987.00 15147.00 13273.00
12/31/93 14420.00 16257.00 15403.00 13592.00
1/31/94 14911.00 15992.00 15152.00 13418.00
2/28/94 14507.00 15251.00 14451.00 12575.00
3/31/94 13876.00 14841.00 14062.00 11811.00
4/30/94 14053.00 15171.00 14374.00 12020.00
5/31/94 14282.00 14527.00 13765.00 11306.00
6/30/94 13932.00 14196.00 13451.00 10847.00
7/31/94 14389.00 14723.00 13950.00 11435.00
8/31/94 14978.00 14766.00 13990.00 11695.00
9/30/94 14612.00 14392.00 13636.00 11306.00
10/31/94 14940.00 14582.00 13816.00 11324.00
11/30/94 14396.00 14538.00 13775.00 11303.00
12/31/94 14609.00 14577.00 13812.00 11515.00
1/31/95 14987.00 15529.00 14714.00 12275.00
2/28/95 15570.00 15621.00 14801.00 12411.00
3/31/95 16030.00 15498.00 14684.00 12091.00
4/30/95 16501.00 15817.00 14986.00 12566.00
5/31/95 17159.00 16530.00 15662.00 13428.00
6/30/95 17557.00 16585.00 15714.00 13236.00
7/31/95 18139.00 16691.00 15815.00 13385.00
8/31/95 18184.00 17080.00 16183.00 13355.00
9/30/95 18951.00 18024.00 17078.00 14229.00
10/31/95 18883.00 18415.00 17449.00 14278.00
11/30/95 19710.00 18743.00 17759.00 14464.00
12/31/95 20091.00 19647.00 18615.00 15199.00
1/31/96 20774.00 20026.00 18974.00 15601.00
2/29/96 20967.00 19539.00 18513.00 14907.00
3/31/96 21168.00 19342.00 18326.00 14546.00
4/30/96 21479.00 19131.00 18127.00 14401.00
5/31/96 22031.00 19158.00 18152.00 14477.00
6/30/96 22115.00 19876.00 18833.00 15288.00
7/31/96 21138.00 19101.00 18098.00 14270.00
8/31/96 21584.00 19195.00 18187.00 14999.00
9/30/96 22797.00 19235.00 18225.00 15254.00
10/31/96 23426.00 20018.00 18967.00 15985.00
11/30/96 25194.00 20668.00 19583.00 16706.00
12/31/96 24696.00 20832.00 19738.00 16580.00
1/31/97 26237.00 21267.00 20150.00 16607.00
2/28/97 26444.00 21637.00 20501.00 16321.00
3/31/97 25360.00 20828.00 19734.00 15781.00
4/30/97 26871.00 20992.00 19890.00 15663.00
5/31/97 28513.00 21710.00 20571.00 16167.00
6/30/97 29782.00 22349.00 21175.00 16574.00
7/31/97 32149.00 22668.00 21478.00 17242.00
8/31/97 30349.00 22151.00 20988.00 17068.00
9/30/97 32009.00 23312.00 22088.00 17611.00
10/31/97 30940.00 23426.00 22196.00 17958.00
11/30/97 32372.00 25481.00 24143.00 19249.00
12/31/97 32929.00 26722.00 25319.00 20394.00
1/31/98 33291.00 26692.00 25291.00 19693.00
2/28/98 35692.00 27328.00 25893.00 20417.00
3/31/98 37519.00 29541.00 27990.00 21557.00
4/30/98 37902.00 28723.00 27215.00 21483.00
5/31/98 37250.00 28301.00 26815.00 21595.00
6/30/98 38762.00 28694.00 27188.00 22375.00
7/31/98 38351.00 28559.00 27060.00 21254.00
8/31/98 32810.00 26966.00 25550.00 21326.00
9/30/98 34913.00 28786.00 27274.00 23585.00
10/31/98 37748.00 29615.00 28060.00 23219.00
11/30/98 40035.00 30657.00 29048.00 23479.00
12/31/98 42341.00 32659.00 30944.00 24242.00
1/31/99 44111.00 32257.00 30564.00 23517.00
2/28/99 42739.00 31483.00 29830.00 22927.00
3/31/99 44449.00 30888.00 29267.00 22886.00
4/30/99 46169.00 33446.00 31690.00 24426.00
5/31/99 45079.00 34212.00 32415.00 25918.00
6/30/99 47581.00 34889.00 33057.00 25011.00
7/31/99 46097.00 34526.00 32714.00 24871.00
8/31/99 45866.00 33376.00 31624.00 25075.00
9/30/99 44610.00 33133.00 31393.00 23749.00
10/31/99 47433.00 34133.00 32341.00 24459.00
11/30/99 48396.00 34680.00 32859.00 22551.00
12/31/99 51242.00 37010.00 35067.00 22781.00
1/31/00 48670.00 36995.00 35053.00 25369.00
2/29/00 47750.00 35338.00 33483.00 23365.00
3/31/00 52420.00 37264.00 35307.00 23736.00
4/30/00 50842.00 37562.00 35590.00 25872.00
5/31/00 49800.00 38384.00 36560.00 26881.00
</TABLE>
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of 500 widely held, large capitalization U.S. stocks. The Dow Jones
Utility Average is an unmanaged index that tracks the performance of utility
stocks. Unlike mutual funds, indexes are not investment, do not incur fees or
expenses and are not professionally managed. It is not possible to invest
directly in an index.
Average Annual Total Returns as of 5/31/00
<TABLE>
<CAPTION>
Share Class A B C Z
Inception 3/4/92(1) 5/5/92 8/1/97 1/29/99
--------------------------------------------------------------------------------------------------------------
Without With Without With Without With Without
Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six months (cumulative) 10.68% 5.42% 10.27% 5.27% 10.27% 9.27% 10.72%
--------------------------------------------------------------------------------------------------------------
1 year 12.20% 6.87% 11.36% 6.36% 11.32% 10.32% 12.43%
--------------------------------------------------------------------------------------------------------------
5 years 18.35% 17.20% 17.48% 17.27% 17.84% 17.84% 18.42%
--------------------------------------------------------------------------------------------------------------
10 years 14.40% 13.84% 13.72% 13.72% 14.15% 14.15% 14.43%
</TABLE>
Average Annual Total Returns as of 3/31/00
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six months (cumulative) 12.46% 7.12% 11.99% 6.99% 12.04% 11.04% 12.50%
--------------------------------------------------------------------------------------------------------------
1 year 20.65% 14.92% 19.69% 14.69% 19.69% 18.69% 20.84%
--------------------------------------------------------------------------------------------------------------
5 years 19.18% 18.02% 18.29% 18.08% 18.70% 18.70% 19.23%
--------------------------------------------------------------------------------------------------------------
10 years 14.12% 13.57% 13.45% 13.45% 13.89% 13.89% 14.15%
</TABLE>
(1)Change in investment policies.
Past performance cannot predict future 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. The "with sales charge" returns include
the maximum 4.75% sales charge for Class A shares, the appropriate Class B
contingent deferred sales charge for the holding period after purchase as
follows: through first year - 5%, second year - 4%, third year - 3%, fourth
year - 3%, fifth year - 2%, sixth year - 1%, thereafter - 0% and the Class C
contingent deferred sales charge of 1% for the first year only. Performance for
different share classes will vary based on differences in sales charges and fees
associated with each class.
Class B, C and Z share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception dates of the newer class shares. These Class A
share returns are not restated to reflect any expense differential (e.g. Rule
12b-1 fees) between Class A shares and newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
date of Class B and Class C shares would have been lower.
1
<PAGE> 3
TOP 10 HOLDINGS AS OF 5/31/00
<TABLE>
<S> <C> <C>
CMS ENERGY 4.7%
ENTERGY 3.9%
PG&E 3.4%
TXU 3.1%
PHILIP MORRIS 3.1%
SOUTHERN 2.9%
SBC COMMUNICATIONS 2.8%
BELL SOUTH 2.8%
SIERRA PACIFIC RESOURCES 2.7%
NIKE 2.6%
HOLDING BREAKDOWNS ARE CALCULATED AS
A PERCENTAGE OF TOTAL NET ASSETS.
BECAUSE THE FUND IS ACTIVELY
MANAGED, THERE CAN BE NO GUARANTEE
THE FUND WILL CONTINUE TO HOLD THESE
SECURITIES IN THE FUTURE.
BOUGHT
------------------------------------
WALT DISNEY (2.3% OF NET ASSETS)
AT THE BEGINNING OF THE YEAR, WE
INVESTED IN WALT DISNEY. WE WERE
ATTRACTED TO THE STOCK BECAUSE IT
WAS SELLING AT AN ALL-TIME LOW
VALUATION BASED ON CASH FLOW, AND
BUSINESS WAS IMPROVING ON AT LEAST
THREE FRONTS: ITS AMERICAN
BROADCASTING CORPORATION (ABC) UNIT
WAS TURNING AROUND; MANAGEMENT WAS
IMPROVING EFFICIENCY WITHIN DISNEY
THEME PARKS; AND THE COMPANY WAS
BECOMING MORE RESPONSIVE TO
SHAREHOLDERS.
SOLD
------------------------------------
GLOBAL CROSSING
WE SOLD GLOBAL CROSSING EARLY IN THE
YEAR WHEN ITS VALUATION WAS
EXTREMELY HIGH AND ITS PROSPECTS FOR
LONG-TERM PROFITABILITY WERE
UNCERTAIN. NO EARNINGS WERE
PROJECTED UNTIL 2002.
</TABLE>
PORTFOLIO MANAGER'S REPORT
SOLID PERFORMANCE IN A VOLATILE MARKET
Liberty Utilities Fund delivered solid gains for the six months ended May 31,
2000, despite volatile stock market conditions. The Fund's Class A shares
returned 10.68%, without sales charge. Although the Dow Jones Utility Average
gained 19.21%, that Index consists of electric utilities, and is not a good
comparison for the Fund, which invests in a broad range of utility sectors. The
Standard & Poor's 500 Index, an unmanaged index that tracks the performance of
large cap U.S. stocks, gained 2.90% during the period.
ENERGY AND GAS COMPANIES EMPHASIZED
We increased our exposure to energy companies, adding Royal Dutch Petroleum,
Texaco, and USX-Marathon Group (2.4%, 2.0% and 1.6% of net assets, respectively)
to the portfolio. In particular, we have a positive outlook for the gas business
going forward. Gas prices continue to be strong, and supply and demand is
favorable. In addition, electric utility deregulation could spawn higher demand
for gas, as independent electric producers are increasingly running gas
turbines.
MARKET VOLATILITY CREATES OPPORTUNITY
Last year, the utility sector was a microcosm for the broad stock market. "New
economy" utilities -- those that were moving into higher-growth areas such as
fuel cells or broad band -- outperformed other solid companies with real
earnings. This created a huge valuation discrepancy. Electric firms that had not
expanded into these fast-growth areas were selling at very conservative
valuations, and we added many of them to the portfolio. In addition, market
volatility created attractive buying opportunities. For example, when it
appeared that CMS Energy (4.7% of net assets) would receive an unfavorable rate
ruling in Michigan, the stock price fell to a 52-week low in a matter of days.
We used that opportunity to add to our position. Subsequently, the stock rallied
when the actual rate ruling was more benign than expected.
2
<PAGE> 4
SHIFTED OUT OF HIGHER-VALUATION STOCKS
Over the past six months, we shifted away from the more aggressive areas within
utilities, where valuations had become extremely high, and moved into more
traditional utilities and into nonutility companies with conservative
valuations. These shifts during the period aided the Fund's recent performance.
For example, we sold Global Crossing, Sonera, and NLTI Industries. All these
companies were, in our opinion, trading at excessive valuations. In addition, we
had questions about their fundamental strategies. We also reduced our holdings
in Enron (1.9% of net assets), a well-positioned energy company with excellent
management. As its stock valuation reached new highs, we lowered our exposure.
Telephone stocks were another sector where we lowered exposure. We did this in
the belief that the group is now at the upper end of its valuation range.
Regional telephone companies, in particular, are expanding into new
communications businesses. Some have made sizable investments in these areas,
and earnings could be at risk if the new business does not materialize. Finally,
we trimmed our investment in electric firms that are diversifying into
communications because their valuations have soared.
NONUTILITY EXPOSURE BOOSTED
As we shifted out of some of the more overpriced utilities stocks, we used some
of our proceeds to invest in nonutility stocks. Deregulation has changed the
risk profile of the utilities business, making it more risky and more volatile.
Thus, when we see a potentially better, conservative total return company
outside the utility arena, we take the opportunity to exercise the Fund's
ability to invest up to 35% of the portfolio in nonutility stocks. (A recent
trustee vote raised the limit from 20% to 35%). We added select high-quality,
blue chip firms selling at attractive valuations to the portfolio, including
Nike, Walt Disney, Procter & Gamble, and General Mills (2.6%, 2.3%, 2.4% and
1.5% of net assets, respectively).
SECTOR BREAKDOWN (AS OF 5/31/00)
PIE CHART
ELECTRIC SERVICES: 36.0%
NON-UTILITIES: 32.8%
TELECOMMUNICATIONS: 18.8%
GAS SERVICES: 8.0%
PREFERRED STOCKS: 2.6%
TRANSPORTATION: 1.1%
CASH & OTHER: 0.7%
SECTOR BREAKDOWNS ARE CALCULATED AS A PERCENTAGE OF NET ASSETS. BECAUSE THE FUND
IS ACTIVELY MANAGED, THERE CAN BE NO GUARANTEE THE FUND WILL MAINTAIN THIS
BREAKDOWN.
OPPORTUNITIES IN PROVEN COMPANIES
Looking ahead, we believe that the best opportunities lie in those companies
that have a proven business mix, a good management team, strong cash flow, and
attractive valuations. We will continue to favor companies with somewhat more
modest growth rates we believe are sustainable rather than firms sporting higher
growth rates that may not be sustainable.
/s/ Scott Schermerhorn
Scott Schermerhorn, Senior Vice President of Colonial Management Associates,
Inc., the Advisor, began managing the Fund in January 2000.
An investment in the Fund involves certain risks, including fluctuations in
utility and other stock prices, which may occur in response to changes in
interest rates and regulatory, economic and business developments.
3
<PAGE> 5
See notes to investment portfolio.
INVESTMENT PORTFOLIO
May 31, 2000 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
COMMON STOCKS AND
CONVERTIBLES - 96.7% COUNTRY SHARES VALUE
---------------------------------------------------------
<S> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 2.8%
INSURANCE CARRIERS - 0.7%
MetLife, Inc.(a) 401 $ 8,216
----------
NONDEPOSITORY CREDIT INSTITUTIONS - 2.1%
Freddie Mac 515 22,922
----------
---------------------------------------------------------
MANUFACTURING - 25.8%
CHEMICALS & ALLIED PRODUCTS - 2.4%
Procter & Gamble Co. 395 26,294
----------
FOOD & KINDRED PRODUCTS - 7.0%
General Mills, Inc. 428 16,990
Philip Morris Cos., Inc. 1,301 33,991
Sara Lee Corp. 1,445 26,003
----------
76,984
----------
MEASURING & ANALYZING INSTRUMENTS - 4.2%
Eastman Kodak Co. 388 23,183
Xerox Corp. 834 22,625
----------
45,808
----------
MISCELLANEOUS MANUFACTURING - 1.7%
Mattel, Inc. 1,357 18,400
----------
PETROLEUM REFINING - 5.9%
Royal Dutch Petroleum Co. Nt 417 26,005
Texaco, Inc. 374 21,505
USX-Marathon Group 629 17,095
----------
64,605
----------
RUBBER & PLASTIC - 2.6%
Nike, Inc., Class B 665 28,525
----------
TRANSPORTATION EQUIPMENT - 2.0%
Boeing Co. 551 21,512
----------
---------------------------------------------------------
MINING & ENERGY - 1.9%
OIL & GAS FIELD SERVICES
Enron Corp. 284 20,676
----------
---------------------------------------------------------
SERVICES - 2.3%
MOTION PICTURES
The Walt Disney Co. 597 25,203
----------
</TABLE>
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------------------------
---------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS
& SANITARY SERVICES - 63.9%
ELECTRIC SERVICES - 36.0%
AES Corp.(a) 156 $ 13,611
CMS Energy Corp. 2,259 51,390
Citizens Utilities Co.
5.000% Convertible
Preferred 100 6,012
Duke Power Co. 395 23,009
Entergy Corp. 1,459 42,320
FPL Group, Inc. 458 22,666
Korea Electric Power
Corp., ADR Kr 717 11,202
Northeast Utilities 573 12,682
PG&E Corp. 1,442 37,399
Peco Energy Co. 566 24,851
Pinnacle West Capital
Corp. 302 10,796
Public Service Company of
New Mexico 1,191 19,875
Reliant Energy, Inc. 807 23,011
Sierra Pacific Resources 2,086 30,109
Southern Co. 1,227 31,820
TXU Corp. 955 34,156
----------
394,909
----------
GAS SERVICES - 8.0%
El Paso Energy Corp. 521 26,832
K N Energy, Inc., 8.250%
PEPS 375 16,875
MCN Energy Group, 8.750%
PRIDES 402 9,180
MDU Resources Group, Inc. 459 10,460
Williams Cos., Inc. 582 24,199
----------
87,546
----------
RAILROAD - 1.1%
Union Pacific Corp. 300 12,702
----------
</TABLE>
4
<PAGE> 6
INVESTMENT PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATION - 18.8%
AT&T Corp. 568 $ 19,706
Bell Atlantic Corp. 475 25,126
BellSouth Corp. 653 30,473
Century Telephone
Enterprises, Inc. 781 21,090
GTE Corp. 412 26,027
SBC Communications, Inc.,
Class A 701 30,609
Telefonica de Espana ADR Sp 203 12,373
Telefonos de Mexico SA Mx 249 12,133
WorldCom, Inc.(a) 750 28,219
----------
205,756
----------
Total Common Stock & Convertibles
(cost of $873,525) 1,060,058
----------
PREFERRED STOCKS - 1.8%
---------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY
SERVICES - 1.8%
ELECTRIC SERVICES
Entergy Arkansas, Inc.:
7.800% 10 865
7.880% 9 770
Entergy Gulf States
Utilities 7.560% 18 1,670
Entergy Louisiana, Inc.
8.000% 30 600
Northern Indiana Public
Service Co., 7.440% 9 909
Pennsylvania Power Co.,
7.750% 15 1,480
TXU Electric Capital,
TOPRS, 8.250% 622 13,379
----------
Total Preferred Stocks (cost of $22,583) 19,673
----------
ADJUSTABLE RATE PREFERRED STOCKS - 0.8%
---------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY
SERVICES - 0.8%
ELECTRIC SERVICES
Cleveland Electric
Illuminating Co., Series
L 65 6,305
Entergy Gulf States
Utilities, Series A 14 1,425
Toledo Edison Co., Series A 40 965
----------
Total Adjustable Rate Preferred Stocks
(cost of $8,434) 8,695
----------
Total Investments (cost of $904,542) 1,088,426
----------
SHORT-TERM OBLIGATIONS - 0.6% PAR VALUE
---------------------------------------------------------
Repurchase Agreement with
SBC Warburg Ltd., dated
05/31/00 due 06/01/00 at
6.360% collateralized by
U.S. Treasury notes with
various maturities to
2027, market value $7,058
(repurchase proceeds
$6,913) $6,912 $ 6,912
----------
OTHER ASSETS & LIABILITIES, NET - 0.1% 1,241
---------------------------------------------------------
NET ASSETS - 100.0% $1,096,579
----------
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF SECURITIES % OF
BY COUNTRY COUNTRY VALUE TOTAL
---------------------------------------------------------
<S> <C> <C> <C>
United States $1,026,713 94.3
Netherlands Nt 26,005 2.4
Spain Sp 12,373 1.2
Mexico Mx 12,133 1.1
Korea Kr 11,202 1.0
---------- -----
$1,088,426 100.0
---------- -----
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
<TABLE>
<CAPTION>
ACRONYM NAME
-----------------------------------------------
<S> <C>
ADR American Depositary Receipt
PEPS Premium Equity Participating Security
PRIDES Preferred Redeemable Increased
Dividend Equity Security
TOPRS Trust Originated Preferred
Redeemable Securities
</TABLE>
See notes to financial statements.
5
<PAGE> 7
STATEMENT OF ASSETS & LIABILITIES
May 31, 2000 (Unaudited)
(In thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost
$904,542) $1,088,426
Short-term obligations 6,912
----------
1,095,338
Cash $ 33
RECEIVABLE FOR:
Investments sold 17,635
Dividends 3,397
Fund shares sold 622
Foreign tax reclaims 145
Interest 1
Other 22 21,855
------- ----------
Total Assets 1,117,193
LIABILITIES
PAYABLE FOR:
Investments purchased 17,372
Fund shares repurchased 2,294
Interest expense 6
ACCRUED:
Management fee 585
Transfer agent fee 110
Bookkeeping fee 32
Deferred Trustees fees 19
Other 196
-------
Total Liabilities 20,614
----------
NET ASSETS $1,096,579
----------
----------
Net asset value & redemption
price per share - Class A
($365,872/15,723) $ 23.27(a)
----------
----------
Maximum offering price per
share - Class A ($23.27/0.9525) $ 24.43(b)
----------
Net asset value & offering price
per share - Class B
($726,124/31,249) $ 23.24(a)
----------
Net asset value & offering price
per share - Class C ($4,180/180) $ 23.23(a)
----------
Net asset value, redemption and
offering price per share -
Class Z ($403/17) $ 23.27
----------
COMPOSITION OF NET ASSETS
Capital paid in $ 633,631
Undistributed net investment
income 3,167
Accumulated net realized gain 276,012
Net unrealized appreciation
(depreciation) on:
Investments 183,884
Foreign currency transactions (115)
----------
$1,096,579
----------
</TABLE>
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 2000 (Unaudited)
(In thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 17,815
Interest 525
---------
Total Investment Income
(net of nonreclaimable
foreign taxes withheld at
source which amounted to
$104) 18,340
EXPENSES
Management fee $ 3,537
Service fee - Class A, Class B,
Class C 1,366
Distribution fee - Class B 2,743
Distribution fee - Class C 15
Transfer agent fee 1,168
Bookkeeping fee 192
Registration fee 25
Custodian fee 28
Audit fee 11
Trustees fees 27
Reports to shareholders 13
Legal fee 6
Other 73
---------
Total expenses 9,204
Interest expense 41 9,245
--------- ---------
Net Investment Income 9,095
---------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO
POSITIONS
NET REALIZED GAIN ON:
Investments 275,781
Foreign currency transactions 238
---------
Net Realized Gain 276,019
NET CHANGE IN UNREALIZED APPRECIATION/ DEPRECIATION
DURING THE PERIOD ON:
Investments (176,739)
Foreign currency transactions (110)
---------
Net Change in Unrealized
Appreciation/Depreciation (176,849)
---------
Net Gain 99,170
---------
Increase in Net Assets from
Operations $ 108,265
---------
</TABLE>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
6
<PAGE> 8
STATEMENT OF CHANGES IN NET ASSETS
(In thousands)
<TABLE>
<CAPTION>
(UNAUDITED) YEAR ENDED
SIX MONTHS ENDED NOVEMBER 30,
MAY 31, 2000 1999(A)
--------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 9,095 $ 14,473
Net realized gain 276,019 85,168
Net change in
Unrealized
Appreciation/
Depreciation (176,849) 32,136
---------- ----------
Net Increase from
Operations 108,265 131,777
DISTRIBUTIONS:
From net investment
income - Class A (3,130) (5,557)
From net realized
gains - Class A (25,729) (10,862)
From net investment
income - Class B (3,665) (7,066)
From net realized
gains - Class B (53,187) (22,812)
From net investment
income - Class C (20) (30)
From net realized
gains - Class C (278) (82)
From net investment
income - Class Z (5) (5)
From net realized
gains - Class Z (38) --
---------- ----------
22,213 85,363
---------- ----------
FUND SHARE TRANSACTIONS:
Receipts for shares
sold - Class A 11,098 14,107
Value of distributions
reinvested - Class A 24,636 13,579
Cost of shares
repurchased - Class A (31,419) (52,627)
---------- ----------
4,315 (24,941)
---------- ----------
Receipts for shares
sold - Class B 15,495 47,658
Value of distributions
reinvested - Class B 48,140 25,209
Cost of shares
repurchased - Class B (85,160) (133,371)
---------- ----------
(21,525) (60,504)
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED) YEAR ENDED
SIX MONTHS ENDED NOVEMBER 30,
MAY 31, 2000 1999(A)
--------------------------------------------------------
<S> <C> <C>
Receipts for shares
sold - Class C $ 1,136 $ 1,646
Value of distributions
reinvested - Class C 260 106
Cost of shares
repurchased - Class C (1,084) (786)
---------- ----------
312 966
---------- ----------
Receipts for shares
sold - Class Z (b) 526
Value of distributions
reinvested - Class Z 43 5
Cost of shares
repurchased - Class Z (164) (27)
---------- ----------
(121) 504
---------- ----------
Net Decrease from Fund
Share Transactions (17,019) (83,975)
---------- ----------
Total Increase 5,194 1,388
NET ASSETS
Beginning of period 1,091,385 1,089,997
---------- ----------
End of period
(including
undistributed net
investment income of
$3,167 and $892,
respectively) $1,096,579 $1,091,385
========== ==========
NUMBER OF FUND SHARES
Sold - Class A 487 644
Issued for
distributions
reinvested - Class A 1,139 623
Repurchased - Class A (1,397) (2,387)
---------- ----------
229 (1,120)
---------- ----------
Sold - Class B 688 2,171
Issued for
distributions
reinvested - Class B 2,226 1,161
Repurchased - Class B (3,792) (6,054)
---------- ----------
(878) (2,722)
---------- ----------
Sold - Class C 50 75
Issued for
distributions
reinvested - Class C 12 5
Repurchased - Class C (48) (36)
---------- ----------
14 44
---------- ----------
Sold - Class Z (b) 24
Issued for
distributions
reinvested - Class Z 2 (b)
Repurchased - Class Z (8) (1)
---------- ----------
(6) 23
---------- ----------
</TABLE>
(a) Class Z shares were initially offered on January 29, 1999.
(b) Rounds to less than one.
See notes to financial statements.
7
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
May 31, 2000 (Unaudited)
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Liberty Utilities Fund (formerly Colonial Utilities Fund) (the Fund), a series
of Liberty Funds Trust IV, 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 objective is
to seek current income and 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. Class A shares are sold with a front-end sales charge. A
1.00% contingent deferred sales charge is assessed on redemptions made within
eighteen months on an original purchase of $1 million to $5 million. Class B
shares are subject to an annual distribution fee and a contingent deferred sales
charge. Class B shares are subject to an annual distribution fee. Effective
February 1, 2000, Class B shares will convert to Class A shares as follows:
<TABLE>
<CAPTION>
CONVERTS TO
ORIGINAL PURCHASE CLASS A SHARES
----------------- --------------
<S> <C>
Less than $250,000 8 years
$250,000 to less than
$500,000 4 years
$500,000 to less than
$1,000,000 3 years
</TABLE>
Class C shares are subject to a contingent deferred sales charge on redemptions
made within one year after purchase and an annual distribution fee. Class Z
shares are offered continuously at net asset value. There are certain
restrictions on the purchase of Class Z shares, as described in the Fund's
prospectus.
The preparation of financial statements in conformity with generally accepted
accounting principles 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 revenues 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
current quoted bid prices.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
In certain countries, the Fund may hold portfolio positions for which market
quotations are not readily available. Such securities are valued at fair value
under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS:
All income, expenses (other than Class A, Class B, and Class C service fees and
the Class B and Class C distribution fees), 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.
The per share data was calculated using average shares outstanding during the
period. In addition, Class A, Class B and Class C net investment income per
share data reflects the service fee per share applicable to Class A, Class B and
Class C shares and the distribution fee applicable to Class B and Class C shares
only.
Class A, Class B and Class C per share data and ratios are calculated by
adjusting the expense and net investment income per share data and ratios for
the Fund for the entire period by the service fee applicable to Class A, Class B
and Class C shares and the distribution fee applicable to Class B and Class C
shares only.
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.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS:
Net realized and unrealized gains (losses) on foreign currency transactions
includes the gains (losses) arising from the fluctuations 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. 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:
Corporate actions are recorded on the ex-date. Interest income is recorded on
the accrual basis.
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. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE:
Colonial Management Associates, Inc. (the Advisor), 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 net assets as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS ANNUAL FEE RATE
------------------ ---------------
<S> <C>
First $1 billion 0.65%
Over $1 billion 0.60%
</TABLE>
BOOKKEEPING FEE:
The Advisor provides bookkeeping and pricing services for $27,000 per year plus
a percentage of the Fund's average net assets as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS ANNUAL FEE RATE
------------------ ----------------
<S> <C>
First $50 million No charge
Next $950 million 0.035%
Next $1 billion 0.025%
Next $1 billion 0.015%
Over $3 billion 0.001%
</TABLE>
TRANSFER AGENT FEE:
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of the Advisor,
provides shareholder services for a monthly fee equal to 0.20% annually of the
Fund's average net assets and receives reimbursement for certain out-of-pocket
expenses.
Effective January 1, 2000, the Transfer Agent fee was changed to a fee comprised
of 0.07% annually of average net assets plus charges based on the number of
shareholder accounts and transactions.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc. (the Distributor), a subsidiary of the Advisor,
is the Fund's principal underwriter. During the six months ended May 31, 2000,
the Fund has been advised that the Distributor retained net underwriting
discounts of $8,714 on sales of the Fund's Class A shares and received
contingent deferred sales charges (CDSC) of $1,296, $350,595 and
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
$775 on Class A, Class B, and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually on Class A, Class B and Class C net
assets as of the 20th of each month. The plan also requires the payment of a
distribution fee to the Distributor equal to 0.75% annually of the average net
assets attributable to Class B and Class C shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER:
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
During the six months ended May 31, 2000, purchases and sales of investments,
other than short-term obligations, were $794,123,406 and $882,956,546,
respectively.
Unrealized appreciation (depreciation) at May 31, 2000, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $212,378,065
Gross unrealized depreciation (28,493,945)
------------
Net unrealized appreciation $183,884,120
============
</TABLE>
OTHER:
The Fund concentrates its investments in utility securities, subjecting it to
greater risk than a fund that is more diversified.
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 foreign currency exchange
or the imposition of other foreign government laws or restrictions.
NOTE 4. LINE OF CREDIT
The Fund may borrow up to 33 1/3% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. During the six months ended May 31, 2000, the Fund had a
maximum loan outstanding of $32,000,000 at an interest rate of 6.054%.
10
<PAGE> 12
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding
throughout each period are as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 2000
CLASS A CLASS B CLASS C CLASS Z
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 22.850 $ 22.820 $ 22.810 $ 22.870
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.243 0.159 0.159 0.271
Net realized and unrealized gain 2.047 2.045 2.045 2.028
-------- -------- -------- --------
Total from Investment Operations 2.290 2.204 2.204 2.299
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.200) (0.114) (0.114) (0.229)
From net realized gains (1.670) (1.670) (1.670) (1.670)
-------- -------- -------- --------
Total Distributions Declared to Shareholders (1.870) (1.784) (1.784) (1.899)
-------- -------- -------- --------
NET ASSET VALUE -- END OF PERIOD $ 23.270 $ 23.240 $ 23.230 $ 23.270
======== ======== ======== ========
Total return(b)(c) 10.68% 10.27% 10.27% 10.72%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Operating expenses(d)(e) 1.18% 1.93% 1.93% 0.93%
Interest expense -- -- -- --
Net investment income(d)(e) 2.17% 1.42% 1.42% 2.42%
Portfolio turnover 73% 73% 73% 73%
Net assets at end of period (in millions) $ 366 $ 726 $ 4 $ (f)
</TABLE>
(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) Not annualized.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(e) Annualized.
(f) Rounds to less than one million.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1999
CLASS A CLASS B CLASS C CLASS Z(A)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 21.130 $ 21.130 $ 21.130 $ 21.500
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.399 0.234 0.232 0.369
Net realized and unrealized gain 2.319 2.320 2.312 1.301
-------- -------- -------- --------
Total from Investment Operations 2.718 2.554 2.544 1.670
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.341) (0.207) (0.207) (0.300)
From net realized gains (0.657) (0.657) (0.657) --
-------- -------- -------- --------
Total Distributions Declared to Shareholders (0.998) (0.864) (0.864) (0.300)
-------- -------- -------- --------
NET ASSET VALUE -- END OF PERIOD $ 22.850 $ 22.820 $ 22.810 $ 22.870
======== ======== ======== ========
Total return(b) 13.15% 12.32% 12.33% 7.82%(c)
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses(d) 1.22% 1.97% 1.97% 0.97%(e)
Net investment income(d) 1.80% 1.05% 1.05% 1.99%(e)
Portfolio turnover 28% 28% 28% 28%
Net assets at end of period (in millions) $ 354 $ 733 $ 4 $ 1
</TABLE>
(a) Class Z shares were initially offered on January 29, 1999. Per share amounts
reflect activity from that date.
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c) Not annualized.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(e) Annualized.
11
<PAGE> 13
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of each class outstanding
throughout each period are as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1998
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 18.060 $ 18.060 $ 18.060
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.516 0.365 0.365
Net realized and unrealized gain 3.111 3.111 3.111
-------- -------- --------
Total from Investment Operations 3.627 3.476 3.476
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.530) (0.382) (0.382)
In excess of net investment income (0.013) (0.010) (0.010)
From net realized gains (0.014) (0.014) (0.014)
-------- -------- --------
Total Distributions Declared to Shareholders (0.557) (0.406) (0.406)
-------- -------- --------
NET ASSET VALUE -- END OF PERIOD $ 21.130 $ 21.130 $ 21.130
======== ======== ========
Total return(a) 20.32% 19.41% 19.41%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses(b) 1.19% 1.94% 1.94%
Net investment income(b) 2.63% 1.88% 1.88%
Portfolio turnover 22% 22% 22%
Net assets at end of period (in millions) $ 351 $ 736 $ 3
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1997 1996
CLASS A CLASS B CLASS C(A) CLASS A CLASS B
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 15.210 $ 15.210 $ 16.260 $ 14.370 $ 14.370
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.599 0.481 0.166 0.612 0.502
Net realized and unrealized gain 2.852 2.852 1.794(b) 0.831 0.831
-------- -------- -------- -------- --------
Total from Investment Operations 3.451 3.333 1.960 1.443 1.333
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.601) (0.483) (0.160) (0.603) (0.493)
-------- -------- -------- -------- --------
NET ASSET VALUE -- END OF PERIOD $ 18.060 $ 18.060 $ 18.060 $ 15.210 $ 15.210
======== ======== ======== ======== ========
Total return(c) 23.26% 22.36% 12.12%(d) 10.27% 9.45%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses(e) 1.22% 1.97% 1.97%(f) 1.20% 1.95%
Net investment income(e) 3.76% 3.01% 2.96%(f) 4.16% 3.41%
Portfolio turnover 7% 7% 7% 8% 8%
Net assets at end of period (in millions) $ 327 $ 684 $ 1 $ 348 $ 729
</TABLE>
(a) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(b) The aggregate net gain on investments for the period due to the timing of
sales and repurchases of Fund shares in relation to fluctuating market
values of the investments of the Fund.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(f) Annualized.
12
<PAGE> 14
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of each class outstanding
throughout each period are as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
CLASS A CLASS B
--------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 11.720 $ 11.720
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.640 0.544
Net realized and unrealized gain 2.659 2.659
-------- --------
Total from Investment Operations 3.299 3.203
-------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.649) (0.553)
-------- --------
NET ASSET VALUE -- END OF PERIOD $ 14.370 $ 14.370
======== ========
Total return(a) 28.90% 27.96%
======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses(b) 1.21% 1.96%
Net investment income(b) 5.00% 4.25%
Portfolio turnover 7% 7%
Net assets at end of period (in millions) $ 400 $ 821
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
13
<PAGE> 15
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<PAGE> 16
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<PAGE> 17
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<PAGE> 18
TRUSTEE & TRANSFER AGENT
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN V. CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President - Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Academic Vice President and Dean of Faculties, Boston College (formerly Dean,
Boston College School of Management)
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Liberty Utilities Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
800-345-6611
The Funds mail one shareholder report to each shareholder address. If you would
like more than one report, please call 800-426-3750 and additional reports will
be sent to you.
This report has been prepared for shareholders of Liberty Utilities 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 Funds and with the most recent copy of
the Liberty Funds Distributor, Inc. performance update.
Semiannual Report:
Liberty Utilities Fund
<PAGE> 19
GIVE ME LIBERTY.(SM)
WE BELIEVE IN FINANCIAL CHOICE
AT LIBERTY, IT'S OUR JOB TO HELP YOU ACHIEVE YOUR FINANCIAL GOALS. SO WHETHER
IT'S SAVING FOR YOUR KIDS' EDUCATION, BUILDING YOUR RETIREMENT NEST EGG, OR
MANAGING YOUR INCOME...WE CAN HELP. WE OFFER A DIVERSE FAMILY OF MUTUAL FUNDS
REPRESENTING A WIDE SELECTION OF INVESTMENT STYLES AND SPECIALIZED MONEY
MANAGEMENT. IT'S ALL DESIGNED TO HELP YOU REACH FOR FINANCIAL FREEDOM -- HOWEVER
YOU DEFINE IT.
WE BELIEVE IN PROFESSIONAL ADVICE
TODAY'S EVER-CHANGING FINANCIAL MARKETS CAN CHALLENGE EVEN THE MOST SEASONED
INVESTORS. THAT'S WHY WE RECOMMEND WORKING WITH A FINANCIAL ADVISOR. WITH AN
ADVISOR YOU HAVE AN EXPERIENCED, KNOWLEDGEABLE PROFESSIONAL LOOKING OUT FOR YOUR
BEST INTERESTS. YOUR ADVISOR CAN HELP YOU ESTABLISH A PLAN FOR REACHING YOUR
PERSONAL FINANCIAL GOALS AND HELP YOU STAY ON TRACK OVER THE LONG-TERM. IT'S A
RELATIONSHIP THAT'S FOCUSED ON YOU AND YOUR NEEDS.
Liberty Utilities Fund Semiannual Report, May 31, 2000
[Liberty Funds Logo]
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