China's history dates back more than 5,000 years. Today's global investors are
most interested in the growth potential created over the last twenty.
--------------------------------------------------------------------------------
LIBERTY NEWPORT GREATER CHINA FUND Annual Report
--------------------------------------------------------------------------------
August 31, 2000
[PHOTO: GREAT WALL OF CHINA]
<PAGE>
President's Message
Dear Shareholder:
You may have noticed that your Fund has a new name. As of July 14, the names of
our funds changed to include Liberty. Rest assured, the investment objectives
and strategies employed by the Fund's managers are not affected by this name
change. We believe the new name better reflects your Fund's affiliation with the
Liberty Funds, a diverse family of funds representing a wide selection of
investment styles and specialized money management. The goal of all Liberty
Funds is to help you reach for financial freedom -- however you define it.
The stock markets of greater China, which includes the People's Republic of
China (China), Hong Kong and Taiwan, began the fiscal year strongly. Later in
the year, as a worldwide correction in technology and telecommunications stocks
developed, these markets retreated. During this time, the performance of several
stocks listed on the Hong Kong Stock Exchange enabled the Fund to outperform its
peers as reported by Lipper, Inc.(1)
In general, our outlook for this region of the world remains positive. China's
economy continues to gain strength, and since this nation represents such a
large block of the world's population, we believe the country represents
attractive investment potential. Hong Kong's economy is also growing at a strong
rate, and Taiwan remains an economically viable marketplace.
The following report provides more specifics about the Fund's management, and
the economic, political and market factors that affected its performance. As
always, thank you for choosing the Liberty Newport Greater China Fund and for
giving us the opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
October 9, 2000
(1) Lipper, Inc., a widely respected data provider for the industry, calculates
an average total return for mutual funds with similar investment objectives as
the Fund. The average total return calculated for funds in the Lipper China
Regions Funds category was 27.30% for the 12 months ended August 31, 2000. The
Fund's Class A shares ranked in the first quartile for one year (6 out of 26
funds) and in the first quartile for three years (3 out of 15 funds). Rankings
do not include any sales charges. Performance for different share classes will
vary with fees associated with each class. Past performance is no indication of
future results.
Because economic and market conditions change frequently, there can be not
assurance that the trends described above and on the following pages will
continue.
---------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
---------------------------
<PAGE>
--------------------------------------------------------------------------------
Highlights
--------------------------------------------------------------------------------
o China's economic turnaround continued
The remarkable transformation of China to a free market economy continued
throughout the period. The government's support of private enterprise
helped create new excitement about the prospects for growth in China, and
the investment environment has been positive.
o The Fund turned in strong performance
The bulk of the Fund's positive total return was generated in the first
half of the fiscal year. Although markets in greater China were very
strong toward the end of 1999, this environment experienced a worldwide
downturn for stocks of technology and telecommunications companies in
early 2000. The Fund's holdings weathered this changing environment
relatively well, but growth slowed in the second half of the year.
o Hong Kong, Taiwan remained strong
China's success story may be the most compelling, but two of Asia's
economic constants, Hong Kong and Taiwan, continued to show impressive
strength as well. The Fund succeeded in finding significant opportunities
for its shareholders in those markets, which contributed to the Fund's
overall performance.
Fund Performance vs. Benchmark
Total Return 9/1/99-8/31/00
[The following information was represented by a bar chart in the
printed material.]
Liberty Newport
Greater China MSCI Pacific
Fund (Ex-Japan) Index
--------------- ----------------
43.33% 6.81%
The Fund's Class A share return without sales charge is compared to the MSCI
Pacific (ex-Japan) Index, a broad-based, unmanaged index that tracks the
performance of stock in Pacific Basin countries other than Japan. Unlike mutual
funds, indexes are not investments and do not incur fees or expenses. It is not
possible to invest directly in an index. Returns do not include sales charges.
Performance for all other shares will vary.
Past performance cannot guarantee future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. Performance results
assume reinvestment of distributions.
Net asset value per share
as of 8/31/00
Class A $19.98
---------------------------------
Class B $19.75
---------------------------------
Class C $20.03
---------------------------------
Class Z $20.11
---------------------------------
Top Five Sector Breakdown
as of 8/31/00
[The following information was represented by a bar chart in the
printed material.]
Fund as of 8/31/00 Fund as of 8/31/99
------------------ ------------------
Durable 16.2% 14.4%
Goods
Real Estate 14.5% 13.4%
Holding 12.3% 13.8%
Companies
Telecommunications 9.0% 15.4%
Depository 7.5% 5.4%
Institutions
Sector breakdowns are calculated as a percentage of net assets. Because the Fund
is actively managed, there can be no guarantee that the Fund will continue to
maintain this breakdown in the future.
1
<PAGE>
--------------------------------------------------------------------------------
Portfolio Managers' Report
--------------------------------------------------------------------------------
Top 10 Holdings as of 8/31/00
China Mobile 9.0%
---------------------------------
Li & Fung Ltd. 7.9%
---------------------------------
Hutchison 7.6%
Whampoa Ltd.
---------------------------------
Cheung Kong Hldg. 6.2%
---------------------------------
PetroChina Co. Ltd. 5.4%
---------------------------------
Hong Kong & 4.9%
China Gas
---------------------------------
Sun Hung Kai 4.7%
Properties Ltd.
---------------------------------
Citic Pacific 4.6%
---------------------------------
Johnson Electric 4.6%
Hldgs.-New
---------------------------------
Taiwan Semiconductor 4.6%
---------------------------------
Holdings are calculated as a percentage of 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
--------------------------------------------------------------------------------
Huaneng Power and China Unicom (3.7% and 2.6% of net assets, respectively) are
two growing Chinese companies that list shares on the Hong Kong Stock Exchange.
Both are positioned to benefit from China's domestic growth and increasing
demand for utilities services.
The Fund registered solid gains during the year
An economic rebound continued throughout Greater China during the period. As a
result, Class A shares of the Fund had a total return of 43.33% for the 12-month
period ended August 31, 2000 without a sales charge, compared to 6.81% for the
Morgan Stanley Capital International (MSCI) Pacific (ex-Japan) Index. The MSCI
Pacific (ex-Japan) Index is a broad-based, unmanaged index that tracks the
performance of stocks in Pacific Basin countries other than Japan.
Economic recovery triggered stronger markets
This economic revival was triggered in large part by increasing export demand
for products manufactured in or marketed by companies in China, Taiwan and Hong
Kong. More importantly, these economies are slowly becoming less dependent on
exports to western markets and Japan, and are generating more business from
growth in their domestic economies. This is a particularly new trend in China
itself, where the effects of economic reform are truly beginning to take hold.
In the first few months of the calendar year 2000, rising interest rates in
world markets had a cooling effect on stocks in the region, as did a global
correction among most technology and telecommunications stocks. This contributed
to the under-performance of two significant Fund holdings in 2000 - China
Telecom and Taiwan Semiconductor Manufacturing Co.
China's enthusiastic shift to freer markets
We see a continued emphasis on privatization in China, a trend that is beginning
to reward investors. Entrepreneurial enthusiasm in China is becoming infectious
as reforms spread to banking, the capital markets and other aspects of Chinese
society. The country is now emerging from a five-year deflationary cycle, which
was the result of a painful but necessary economic restructuring. The situation
has improved dramatically, and considering China's likely entry into the World
Trade Organization, the benefits of reform on the mainland should spread to Hong
Kong and Taiwan as well.
The change has been so dramatic that the value of Chinese stocks on the Hong
Kong market now represents one-third of Hong Kong's total market capitalization.
This is a significant change from even a few years ago, when Chinese stocks
barely had any impact on the Hong Kong stock exchange.
2
<PAGE>
--------------------------------------------------------------------------------
Portfolio Managers' Report (continued)
--------------------------------------------------------------------------------
Local demand could drive future growth
One of the most exciting trends is that much of China's economic growth is
likely to come from domestic demand. In the past, companies in China, Hong Kong
and Taiwan have been highly dependent on exports to succeed. While this is still
true, it is likely future growth will center on increasing consumer demand by
the Chinese people, another sign of positive economic change.
Taiwan remained an economic force
About 10% of the Fund's assets are invested in Taiwanese companies, and this
island nation continued to be a prime economic force in Asia. While political
tensions between China and Taiwan remain a concern, Taiwan benefited from a
number of positive economic developments during the period. For instance, many
Japanese firms outsourced manufacturing to Taiwanese companies who were well
positioned to set up manufacturing facilities in China. Recently, Taiwanese
companies have invested $45 billion to construct new factories in China, a
development that should help both of these markets.
Looking ahead
The general outlook for greater China remains upbeat. Certainly, any investment
in this region is subject to a certain level of volatility. But over the long
run, we are very encouraged by the trend toward capitalism that is sweeping over
China.
We will remain focused on a select, diversified group of companies from
the region that we believe offers long-term growth potential for our investors.
Given the improved economic climate, our expectation is that this marketplace
will continue to present attractive investment potential.
/s/ Thomas R. Tuttle /s/ Christopher Legallet
Thomas R. Tuttle is president of Newport Fund Management, Inc. and a
co-portfolio manager of Liberty Newport Greater China Fund. Christopher Legallet
is Chief Investment Officer of Newport Fund Management, Inc. and co-portfolio
manager of Liberty Newport Greater China Fund.
International investing offers significant long-term growth potential, but also
involves special risks due to currency fluctuations, as well as political,
economic and social developments. A portfolio of stocks of a single region poses
additional risks due to its limited diversification.
REDUCED
--------------------------------------------------------------------------------
Legend Holdings, Ltd.
(2.0% of net assets) is a large manufacturer of personal computers which has
greatly benefited from booming demand for its products in China. After enjoying
a strong run-up in value, the Fund's position in the stock was reduced due to
short-term valuation considerations.
HELD
--------------------------------------------------------------------------------
Two Hong Kong firms with ties to the real estate business, Hutchison Whampoa and
Cheung Kong Holdings (7.6% and 6.2% of net assets, respectively), have improved
earnings outlooks, triggered by an upsurge in housing sales and prices in Hong
Kong.
3
<PAGE>
--------------------------------------------------------------------------------
Performance Information
--------------------------------------------------------------------------------
Performance of a
$10,000 investment
in all share classes
5/16/97-8/31/00
Without With
Sales Sales
Charge Charge
--------------------------------------
Class A $15,165 $14,293
--------------------------------------
Class B $14,877 $14,577
--------------------------------------
Class C $15,090 $15,090
--------------------------------------
Class Z $15,305 N/A
--------------------------------------
[The following information was represented by a line chart in the
printed material.]
Value of an initial $10,000 investment
5/16/97 8/31/00
----------------------
Class A shares of the Fund
Without Sales Charge $10,000 $15,165
Class A shares of the Fund
With Sales Charge $10,000 $14,293
Hang Seng Index $10,000 $13,251
MSCI Pacific
(Ex-Japan) Index $10,000 $ 8,965
The Hang Seng Index is a capitalization-weighted price-only index of 33
companies that represent approximately 70% of the total market capitalization of
the Stock Exchange of Hong Kong. The Morgan Stanley Capital International (MSCI)
Pacific (Ex-Japan) Index is an unmanaged index that tracks the performance of
stocks in Pacific Basin countries other than Japan. The return for the indexes
are from 4/30/97. Unlike mutual funds, indexes are not investments and do not
incur fees or expenses. It is not possible to invest directly in an index.
Average Annual Total Returns as of 8/31/00
<TABLE>
<CAPTION>
Share Class A B C Z
Inception Date 05/16/97 05/16/97 05/16/97 05/16/97
--------------------------------------------------------------------------------------------
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>
1 Year 43.33% 35.09% 42.29% 37.29% 42.06% 41.06% 43.54%
--------------------------------------------------------------------------------------------
Life of Fund 13.48 11.46 12.82 12.12 13.31 13.31 13.80
--------------------------------------------------------------------------------------------
</TABLE>
Average Annual Total Returns as of 6/30/00
<TABLE>
<CAPTION>
Share Class A B C Z
--------------------------------------------------------------------------------------------
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>
1 Year 38.13% 30.19% 37.18% 32.18% 37.03% 36.03% 38.46%
--------------------------------------------------------------------------------------------
Life of Fund 13.89 11.75 13.27 12.53 13.79 13.79 14.23
--------------------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict 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%, and 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 will vary
based on differences in sales charges and fees associated with each class.
4
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio
--------------------------------------------------------------------------------
August 31, 2000
(In thousands)
COMMON STOCKS - 98.9% Country Shares Value
--------------------------------------------------------------------------------
CONSTRUCTION - 3.3%
Special Trade Contractors
Zhejiang Expressway Co., Ltd,
Class H HK 13,018 $ 2,404
-------
--------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 34.3%
Depository Institutions - 7.5%
Dah Sing Financial HK 215 1,003
HSBC Holdings PLC (a) HK 206 2,965
Hang Seng Bank Ltd. HK 139 1,493
-------
5,461
-------
Holding Companies - 12.3%
Citic Pacific Ltd. HK 704 3,358
Hutchison Whampoa Ltd. HK 392 5,532
-------
8,890
-------
Real Estate - 14.5%
Cheung Kong Holdings Ltd. HK 345 4,490
China Resources Enterprises Ltd. HK 1,320 1,963
Shandong International Power Development
Co., Ltd., Class H HK 3,608 694
Sun Hung Kai Properties Ltd. HK 354 3,370
-------
10,517
-------
--------------------------------------------------------------------------------
MANUFACTURING - 3.4%
Electronic Components - 1.6%
United Microelectronics Corp., Ltd. Tw 427 1,134
-------
Household Appliances - 0.3%
Guangdong Kelon Electric
Holdings, Class H HK 720 238
-------
Measuring & Analyzing Instruments - 0.3%
China Hong Kong Photo
Products Holdings, Ltd. HK 2,497 250
-------
Printing & Publishing - 1.2%
South China Morning Post Ltd. HK 1,158 869
-------
--------------------------------------------------------------------------------
MINING & ENERGY - 5.4%
Oil & Gas Extraction
PetroChina Co., Ltd., Class H HK 16,274 3,881
-------
--------------------------------------------------------------------------------
RETAIL TRADE - 8.6%
Apparel & Accessory Stores - 4.5%
Esprit Holdings Ltd. HK 1,210 946
Giordano International Ltd. HK 2,826 1,549
Glorious Sun Enterprises HK 3,476 798
-------
3,293
-------
Food Stores - 3.5%
President Chain Store Corp. Tw 850 2,520
-------
Restaurants - 0.6%
Cafe de Coral Holdings Ltd. HK 1,220 462
-------
--------------------------------------------------------------------------------
SERVICES - 7.0%
Business Services - 2.0%
Legend Holdings Ltd. HK 1,356 1,443
-------
Computer Related Services - 0.4%
SINA.com Ch 7 148
Synnex Technology International Corp. Tw 30 120
-------
268
-------
Computer Software - 4.6%
Taiwan Semiconductor
Manufacturing Co. (b) Tw 766 3,319
-------
--------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION,
ELECTRIC, GAS & SANITARY SERVICES - 19.9%
Air Transportation - 2.6%
China Unicom Ltd. HK 806 1,871
-------
Electric Services - 1.1%
Beijing Datang Power
Generation Co., Ltd., Class H HK 3,502 822
-------
Gas Services - 4.9%
Hong Kong & China Gas Co., Ltd. HK 2,852 3,547
-------
Railroad - 1.0%
Guangshen Railway Co., Ltd., Class H HK 5,589 760
-------
Telecommunications - 9.0%
China Mobile Ltd. (a)(b) HK 842 6,504
-------
Transportation Services - 1.3%
Jiangsu Expressway Co., Ltd., Class H HK 3,608 652
Shenzhen Expressway Co., Ltd., Class H Ch 2,100 304
-------
956
-------
--------------------------------------------------------------------------------
WHOLESALE TRADE - 17.0%
Durable Goods - 16.2%
Huaneng Power International Inc.,
Class H HK 6,384 2,660
Johnson Electric Holdings Ltd. HK 1,612 3,348
Li & Fung Ltd. HK 1,311 5,715
-------
11,723
-------
Nondurable Goods - 0.8%
Ng Fung Hong Ltd. HK 1,106 606
-------
TOTAL COMMON STOCKS
(cost of $58,627)(c) 71,738
-------
See notes to investment portfolio.
5
<PAGE>
--------------------------------------------------------------------------------
Investment Portfolio (continued)
--------------------------------------------------------------------------------
August 31, 2000
(In thousands)
Value
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 1.1% $ 779
--------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 72,517
-------
Notes to Investment Portfolio:
--------------------------------------------------------------------------------
(a) The value of this security represents fair value as determined in good
faith under the direction of the Trustees.
(b) Non-income producing.
(c) Cost for federal income tax purposes is the same.
Summary of
Securities by Country Country Value % of Total
--------------------------------------------------------------------------------
Hong Kong HK $64,193 89.5
Taiwan Tw 7,093 9.9
China Ch 452 0.6
------- -----
$71,738 100.0
------- -----
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
See notes to financial statements.
6
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities
--------------------------------------------------------------------------------
August 31, 2000
(In thousands except for per share amounts and footnotes)
Assets
Investments at value (cost $58,627) $ 71,738
Cash including foreign currencies
(cost $103) $ 101
Receivable for:
Investments sold 3,939
Fund shares sold 328
Dividend receivable 235
Expense reimbursement due from
Advisor/Administrator 15
Deferred organization expenses 4
Other 5 4,627
-------- --------
Total Assets 76,365
Liabilities
Cash including foreign currencies
(cost $1,977) 1,977
Payable due to custodian bank 888
Payable for:
Fund shares repurchased 686
Investments purchased 2
Accrued:
Management fee 78
Administration fee 16
Transfer agent fee 34
Bookkeeping fee 3
Deferred Trustees fees 1
Other 163
--------
Total Liabilities 3,848
--------
Net Assets $ 72,517
========
Net asset value & redemption price per share -
Class A ($64,722/3,240) $ 19.98 (a)
========
Maximum offering price per share -
Class A ($19.98/0.9425) $ 21.20 (b)
========
Net asset value & offering price per share -
Class B ($6,335/321) $ 19.75 (a)
========
Net asset value & offering price per share -
Class C ($1,296/65) $ 20.03 (a)
========
Net asset value, offering & redemption price
per share - Class Z ($164/8) $ 20.11
========
Composition of Net Assets
Capital paid in $ 94,000
Overdistributed net investment income (13)
Accumulated net realized loss (34,574)
Net unrealized appreciation (depreciation) on:
Investments 13,111
Foreign currency transactions (7)
--------
$ 72,517
========
--------------------------------------------------------------------------------
Statement of Operations
--------------------------------------------------------------------------------
For the Year Ended August 31, 2000
(In thousands)
Investment Income
Dividends $ 1,580
Interest 93
--------
Total Investment Income (net of nonreclaimable
foreign taxes withheld at source which
amounted to $11) 1,673
Expenses
Management fee $ 797
Administration fee 173
Service fee - Class A, Class B, Class C 173
Distribution fee - Class B 38
Distribution fee - Class C 8
Transfer agent fee 190
Bookkeeping fee 34
Trustees' fee 8
Custodian fee 70
Audit fee 20
Legal fee 5
Registration fee 47
Reports to shareholders 36
Amortization of deferred
organization expenses 2
Other 5
--------
1,606
Fees and expenses waived or borne by
the Advisor/Administrator (70) 1,536
-------- --------
Net Investment Income 137
--------
Net Realized and Unrealized Gain (Loss)
on Portfolio Positions
Net realized gain (loss) on:
Investments 8,421
Foreign currency transactions (7)
--------
Net Realized Gain 8,414
Net change in unrealized appreciation/
depreciation during the period on:
Investments 15,459
Foreign currency transactions (7)
--------
Net Change in Unrealized
Appreciation/Depreciation 15,452
--------
Net Gain 23,866
--------
Increase in Net Assets from Operations $ 24,003
--------
(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.
7
<PAGE>
--------------------------------------------------------------------------------
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
(In thousands)
Year Year
ended ended
August 31, August 31,
---------- ----------
Increase (Decrease) in Net Assets 2000 1999
--------------------------------------------------------------------------------
Operations:
Net investment income $ 137 $ 441
Net realized gain (loss) 8,414 (22,085)
Net change in unrealized appreciation/
depreciation 15,452 57,856
-------- --------
Net Increase from Operations 24,003 36,212
-------- --------
Distributions:
From net investment income - Class A -- (362)
From net investment income - Class B -- --
From net investment income - Class C -- --
From net investment income - Class Z -- (1)
-------- --------
24,003 35,849
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 32,267 10,986
Value of distributions reinvested - Class A -- 245
Cost of shares repurchased - Class A (44,313) (21,210)
-------- --------
(12,046) (9,979)
-------- --------
Receipts for shares sold - Class B 3,256 1,301
Value of distributions reinvested - Class B -- --
Cost of shares repurchased - Class B (1,877) (1,457)
-------- --------
1,379 (156)
-------- --------
Receipts for shares sold - Class C 1,117 281
Value of distributions reinvested - Class C -- --
Cost of shares repurchased - Class C (870) (464)
-------- --------
247 (183)
-------- --------
Receipts for shares sold - Class Z 2 2
Value of distributions reinvested - Class Z -- 1
Cost of shares repurchased - Class Z (a) --
-------- --------
2 3
-------- --------
Net Decrease from Fund Share Transactions (10,418) (10,315)
-------- --------
Total Increase 13,585 25,534
Net Assets
Beginning of period 58,932 33,398
-------- --------
End of period ( net of
overdistributed net investment
income of $13 and $177, respectively) $ 72,517 $ 58,932
======== ========
Number of Fund Shares
Sold - Class A 1,732 975
Issued for distributions reinvested - Class A -- 23
Repurchased - Class A (2,410) (2,001)
-------- --------
(678) (1,003)
-------- --------
Sold - Class B 179 123
Issued for distributions reinvested - Class B -- --
Repurchased - Class B (104) (144)
-------- --------
75 (21)
-------- --------
Sold - Class C 60 26
Issued for distributions reinvested - Class C -- --
Repurchased - Class C (50) (41)
-------- --------
10 (15)
-------- --------
Sold - Class Z (a) (a)
Issued for distributions reinvested - Class Z -- (a)
Repurchased - Class Z (a) --
-------- --------
(a) (a)
-------- --------
(a) Rounds to less than one.
See notes to financial statements.
8
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements
--------------------------------------------------------------------------------
August 31, 2000
Note 1. Accounting Policies
Organization
Liberty Newport Greater China Fund (formerly Newport Greater China Fund) (the
Fund), a series of Liberty Funds Trust II, 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 capital appreciation by investing primarily in
equity securities of companies located in, or which derive a substantial portion
of their revenue from business activity with or in, the Greater China Region
(i.e., Hong Kong, the People's Republic of China and Taiwan). 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 to Class A shares
purchased without an initial sales charge on redemptions made within eighteen
months on an original purchase of $1 million to $25 million. Class B shares are
subject to an annual distribution fee and a contingent deferred sales charge.
Class B shares will convert to Class A shares in three, four or eight years
after purchase, depending on the program under which shares were purchased.
Class C shares are subject to a contingent deferred sales charge on redemptions
made within one year after purchase and an annual distribution fee. Class Z
shares are offered continuously at net asset value. There are certain
restrictions on the purchase of Class Z shares, 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 that are 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. 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. In addition, if the values of foreign securities have been
materially affected by events occurring after the closing of a foreign market,
the foreign securities may be valued at their fair value under procedures
approved by the Trustees.
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 is
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
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.
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 ratios are calculated by adjusting the expense and
net investment income 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. 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.
9
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
August 31, 2000
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) from 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 contracts are used to minimize the
exposure to foreign exchange rate fluctuations during the period between trade
and settlement date of the contracts. The Fund may also enter into forward
currency contracts to hedge certain other foreign currency denominated assets.
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 is 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 (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonrebatable 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. Fees and Compensation Paid to Affiliates
Management fee
Newport Fund Management, Inc. (the Advisor), is the investment Advisor of the
Fund and receives a monthly fee equal to 1.15% annually of the Fund's average
net assets.
Administration fee
Colonial Management Associates, Inc. (the Administrator), an affiliate of the
Advisor, provides accounting and other services for a monthly fee equal to 0.25%
annually of the Fund's average net assets.
Bookkeeping fee
The Administrator provides bookkeeping and pricing services for a monthly fee
equal to $27,000 annually plus 0.035% annually of the Fund's average net assets
over $50 million.
Transfer agent fee
Liberty Funds Services Inc. (the Transfer Agent), an affiliate of the
Administrator, provides shareholder services for a monthly fee equal to 0.236%
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. The Transfer Agent receives reimbursement
for certain out-of-pocket expenses.
Underwriting discounts, service and distribution fees
Liberty Funds Distributor, Inc. (the Distributor), a subsidiary of the
Administrator, is the Fund's principal underwriter. For the year ended August
31, 2000, the Fund has been advised that the Distributor retained net
underwriting discounts of $11,655 on sales of the Fund's Class A shares and
received contingent deferred sales charges (CDSC) of $38,128, $29,496 and $3,268
on Class A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee 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.
Expense limits
The Advisor/Administrator have agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes and
extraordinary expenses, if any) exceed 1.90% annually of the Fund's average net
assets.
Other
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor or Administrator.
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.
10
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
August 31, 2000
Note 3. Portfolio Information
Investment activity
During the year ended August 31, 2000, purchases and sales of investments, other
than short-term obligations, were $18,863,009 and $27,838,206, respectively.
Unrealized appreciation (depreciation) at August 31, 2000, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $23,059,791
Gross unrealized depreciation (9,948,559)
-----------
Net unrealized appreciation $13,111,232
===========
Capital loss carryforwards
At August 31, 2000, capital loss carryforwards available (to the extent provided
in regulations) to offset future realized gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
2006 $ 829,000
2007 33,041,000
2008 704,000
------------
$ 34,574,000
============
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
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 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%. There were no borrowings under the line of credit during
the year ended August 31, 2000.
11
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended August 31, 2000
-----------------------------------------------
Class A Class B Class C Class Z
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value - Beginning of Period $13.940 $13.880 $14.100 $14.010
------- ------- ------- -------
Income from Investment Operations:
Net investment income (loss) (a) (b) 0.046 (0.089) (0.091) 0.090
Net realized and unrealized gain 5.994 5.959 6.021 6.010
------- ------- ------- -------
Total from Investment Operations 6.040 5.870 5.930 6.100
------- ------- ------- -------
Net Asset Value - End of Period $19.980 $19.750 $20.030 $20.110
======= ======= ======= =======
Total return (c) (d) 43.33% 42.29% 42.06% 43.54%
======= ======= ======= =======
Ratios to Average Net Assets
Expenses (e) 2.15% 2.90% 2.90% 1.90%
Net investment income (loss) (e) 0.26% (0.49)% (0.49)% 0.51%
Fees and expenses waived or borne by the Advisor/Administrator (e) 0.10% 0.10% 0.10% 0.10%
Portfolio turnover 28% 28% 28% 28%
Net assets at end of period (000) $64,722 $ 6,335 $ 1,296 $ 164
<FN>
(a) Net of fees and expenses waived or borne by the Advisor/
Administrator which amounted to: $ 0.018 $ 0.018 $ 0.018 $ 0.018
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year ended August 31, 1999
-----------------------------------------------
Class A Class B Class C Class Z
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value - Beginning of Period $ 6.340 $ 6.340 $ 6.320 $ 6.380
------- ------- ------- -------
Income from Investment Operations:
Net investment income (a) (b) 0.100 0.019 0.019 0.128
Net realized and unrealized gain 7.582 7.521 7.761 7.608
------- ------- ------- -------
Total from Investment Operations 7.682 7.540 7.780 7.736
------- ------- ------- -------
Less Distributions Declared to Shareholders:
From net investment income (0.082) -- -- (0.106)
------- ------- ------- -------
Net Asset Value - End of Period $13.940 $13.880 $14.100 $14.010
======= ======= ======= =======
Total return (c) (d) 121.59% 118.93% 123.10% 121.80%
======= ======= ======= =======
Ratios to Average Net Assets
Expenses (e) 2.15% 2.90% 2.90% 1.90%
Net investment income (e) 0.92% 0.17% 0.17% 1.17%
Fees and expenses waived or borne by the Advisor/Administrator (e) 0.30% 0.30% 0.30% 0.30%
Portfolio turnover 20% 20% 20% 20%
Net assets at end of period (000) $54,623 $ 3,423 $ 774 $ 112
<FN>
(a) Net of fees and expenses waived or borne by the Advisor/
Administrator which amounted to: $ 0.032 $ 0.032 $ 0.032 $ 0.032
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
</FN>
</TABLE>
12
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended August 31, 1998
---------------------------------------------------
Class A Class B Class C Class Z
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value - Beginning of Period $ 17.900 $ 17.860 $ 17.860 $ 17.910
-------- -------- -------- --------
Income from Investment Operations:
Net investment income (a) (b) 0.092 0.012 0.013 0.123
Net realized and unrealized loss (11.591) (11.478) (11.498) (11.586)
-------- -------- -------- --------
Total from Investment Operations (11.499) (11.466) (11.485) (11.463)
-------- -------- -------- --------
Less Distributions Declared to Shareholders:
From net investment income (0.061) (0.054) (0.055) (0.067)
-------- -------- -------- --------
Net Asset Value - End of Period $ 6.340 $ 6.340 $ 6.320 $ 6.380
======== ======== ======== ========
Total return (c) (d) (64.42)% (64.36)% (64.46)% (64.19)%
======== ======== ======== ========
Ratios to Average Net Assets
Expenses (e) 2.15% 2.90% 2.90% 1.90%
Net investment income (loss) (e) 0.74% (0.01)% (0.01)% 0.99%
Fees and expenses waived or borne by the Advisor/Administrator (e) 0.31% 0.31% 0.31% 0.31%
Portfolio turnover 58% 58% 58% 58%
Net assets at end of period (000) $ 31,214 $ 1,692 $ 443 $ 49
<FN>
(a) Net of fees and expenses waived or borne by the Advisor/
Administrator which amounted to: $ 0.039 $ 0.039 $ 0.039 $ 0.039
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Period ended August 31, 1997 (c)
---------------------------------------------------
Class A Class B Class C Class Z
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value - Beginning of Period $ 13.340 $ 13.330 $ 13.330 $ 13.340
-------- -------- -------- --------
Income from Investment Operations:
Net investment income (loss) (a) (b) 0.052 (0.004) (0.004) 0.065
Net realized and unrealized gain (d) 4.508 4.534 4.534 4.505
-------- -------- -------- --------
Total from Investment Operations 4.560 4.530 4.530 4.570
-------- -------- -------- --------
Net Asset Value - End of Period $ 17.900 $ 17.860 $ 17.860 $ 17.910
======== ======== ======== ========
Total return (e) (f) (g) 34.22% 33.98% 33.98% 34.29%
======== ======== ======== ========
Ratios to Average Net Assets
Expenses (h) (i) 2.15% 2.90% 2.90% 1.90%
Net investment income (h) (i) 0.89% 0.14% 0.14% 1.14%
Fees and expenses waived or borne by the Advisor/Administrator (h) (i) 0.59% 0.59% 0.59% 0.59%
Portfolio turnover (g) 4% 4% 4% 4%
Net assets at end of period (000) $115,699 $ 135 $ 134 $ 135
<FN>
(a) Net of fees and expenses waived or borne by the Advisor/
Administrator which amounted to: $ 0.034 $ 0.034 $ 0.034 $ 0.034
(b) Per share data was calculated using average shares outstanding during the
period.
(c) The Fund commenced investment operations on May 12, 1997. The activity
shown is from the effective date of registration (May 16, 1997) with the
Securities and Exchange Commission. The per share information reflects the
1.5 for 1 stock split effective July 25, 1997.
(d) The amount of net realized and unrealized gain shown for a share
outstanding for the period ended August 31, 1997 does not correspond with
the aggregate net loss 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.
(e) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(f) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(g) Not annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(i) Annualized.
</FN>
</TABLE>
13
<PAGE>
--------------------------------------------------------------------------------
Report of Independent Auditors
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of Liberty Funds Trust II:
Liberty Newport Greater China Fund
We have audited the accompanying statement of assets and liabilities of Liberty
Newport Greater China Fund (formerly, Newport Greater China Fund, a series of
Liberty Funds Trust II, the "Trust"), including the Investment Portfolio, as of
August 31, 2000, and the related statement of operations, the statement of
changes in net assets and the financial highlights for the period then ended.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended August 31, 1999, and the financial
highlights for each of the three years in the period then ended were audited by
other auditors whose report dated October 12, 1999 expressed an unqualified
opinion on that financial statement and those financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of August 31, 2000, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Liberty Newport Greater China Fund, a series of Liberty Funds Trust II at August
31, 2000, the results of its operations, the changes in its net assets, and the
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
October 10, 2000
14
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Trustees & Transfer Agent
--------------------------------------------------------------------------------
Tom Bleasdale
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
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, Park Avenue Equity Partners (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)
Joseph R. Palombo
Chief Operations Officer, Mutual Funds, Liberty Financial Companies, Inc.,
Executive Vice President and Director of Colonial Management Associates, Inc.
and Executive Vice President and Chief Administrative Officer of Liberty Funds
Group LLC (formerly Vice President of Liberty Funds Group - Boston and Chief
Operating Officer, Putnam Mutual Funds)
Thomas E. Stitzel
Business Consultant and Chartered Financial Analyst (formerly Professor of
Finance, College of Business, Boise State University)
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 Newport Greater China Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The Fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call 1-800-426-3750 and additional reports
will be sent to you.
This report has been prepared for shareholders of Liberty Newport Greater China
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 Greater China Fund
<PAGE>
--------------------------------------------------------------------------------
Choose Liberty
--------------------------------------------------------------------------------
Because no single investment manager can be all things to all investors.(SM)
L I B E R T Y
---------------
F U N D S
---------------------------------------------------------------------------
ALL-STAR Institutional money management approach for individual
investors.
---------------------------------------------------------------------------
COLONIAL Fixed income and value style equity investing.
---------------------------------------------------------------------------
CRABBE A contrarian approach to fixed income and equity
HUSON investing.
---------------------------------------------------------------------------
NEWPORT A leader in international investing.(SM)
---------------------------------------------------------------------------
STEIN ROE Innovative solutions for growth and income investing.
ADVISOR
---------------------------------------------------------------------------
KEYPORT [LOGO] A leading provider of innovative annuity products.
---------------------------------------------------------------------------
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
Before you invest, consult your financial advisor.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
--------------------------------------------------------------------------------
LIBERTY NEWPORT GREATER CHINA FUND Annual Report
--------------------------------------------------------------------------------
[LOGO] L I B E R T Y ---------------
--------------- BULK RATE
F U N D S U.S. POSTAGE
PAID
Holliston, MA
PERMIT NO. 20
---------------
ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)2000
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
www.libertyfunds.com
736-02/757C-0800 (10/00) 00/1702
<PAGE>
--------------------------------------------------------------------------------
Choose Liberty
--------------------------------------------------------------------------------
Because no single investment manager can be all things to all investors.(SM)
L I B E R T Y
---------------
F U N D S
---------------------------------------------------------------------------
ALL-STAR Institutional money management approach for individual
investors.
---------------------------------------------------------------------------
COLONIAL Fixed income and value style equity investing.
---------------------------------------------------------------------------
CRABBE A contrarian approach to fixed income and equity
HUSON investing.
---------------------------------------------------------------------------
NEWPORT A leader in international investing.(SM)
---------------------------------------------------------------------------
STEIN ROE Innovative solutions for growth and income investing.
ADVISOR
---------------------------------------------------------------------------
KEYPORT [LOGO] A leading provider of innovative annuity products.
---------------------------------------------------------------------------
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
Before you invest, consult your financial advisor.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
--------------------------------------------------------------------------------
LIBERTY NEWPORT GREATER CHINA FUND Annual Report
--------------------------------------------------------------------------------
[LOGO] L I B E R T Y
---------------
F U N D S
ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
736-02/757C-0800 (10/00) 00/1702
<PAGE>
--------------------------------------------------------------------------------
Choose Liberty
--------------------------------------------------------------------------------
Because no single investment manager can be all things to all investors.(SM)
L I B E R T Y
---------------
F U N D S
---------------------------------------------------------------------------
ALL-STAR Institutional money management approach for individual
investors.
---------------------------------------------------------------------------
COLONIAL Fixed income and value style equity investing.
---------------------------------------------------------------------------
CRABBE A contrarian approach to fixed income and equity
HUSON investing.
---------------------------------------------------------------------------
NEWPORT A leader in international investing.(SM)
---------------------------------------------------------------------------
STEIN ROE Innovative solutions for growth and income investing.
ADVISOR
---------------------------------------------------------------------------
KEYPORT [LOGO] A leading provider of innovative annuity products.
---------------------------------------------------------------------------
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
Before you invest, consult your financial advisor.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
--------------------------------------------------------------------------------
LIBERTY NEWPORT GREATER CHINA FUND Annual Report
--------------------------------------------------------------------------------
[LOGO] L I B E R T Y
---------------
F U N D S
ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)2000
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
www.libertyfunds.com
736-02/757C-0800 (10/00) 00/1702
