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LIBERTY VALUE FUND Annual Report
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June 30, 2000
[cover photo]
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Not FDIC May Lose Value
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Insured No Bank Guarantee
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President's Message
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. Rest assured, the investment objectives
and strategies employed by the Fund's manager are not affected by this name
change. We believe the new name better reflects that your Fund is part of 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 Fund's fiscal year proved to be one of significant fluctuation in the stock
markets as investor sentiment seemed to shift from continued optimism to concern
in a matter of months. As 1999 came to a close, stock prices reached record
levels. The biggest beneficiaries of positive investor sentiment were technology
stocks, which tend to have a growth orientation. With growth stocks performing
so well, investors moved away from value-oriented stocks. As the new year began,
a number of growth stocks, particularly in the technology sector, suffered
significant setbacks. As a result, value stocks started to gain some strength,
which benefited Liberty Value Fund.
The change in sentiment seemed to be triggered in part by continued interest
rate increases instituted by the Federal Reserve Board. Investors appeared to be
less interested in stocks of companies that had only the expectation of strong
earnings, preferring instead companies that were generating current earnings.
Despite the rebound, value stocks have far from recovered from an extended
period of underperforming growth stocks.
Liberty Value Fund's Class A share total return of negative 13.79%, not
including the sales charge, trailed its competitive group average return of
2.09% for the same 12-month period. Still, the Fund is adhering to its value
investment style, and has been able to upgrade the quality of the portfolio due
to weakness in this part of the market.
The following report provides a discussion of your Fund and the economic and
market factors that have had an impact on its performance. Thank you for
including Liberty Value Fund as part of your portfolio and allowing us to help
you meet your investment goals.
Sincerely,
/s/ Stephen E. Gibson
------------------------
Stephen E. Gibson
President
August 10, 2000
Not FDIC Insured
May Lose Value
No Bank Guarantee
<PAGE> 3
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Highlights
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- VALUE STOCKS AGAIN FACE DIFFICULT CHALLENGES After ending the previous
fiscal year on a strong note, value stocks suffered in comparison to their
growth counterparts in the first half of the Fund's fiscal year. Investors
continued to pour money into growth-oriented technology stocks, in some
cases pushing prices to what appeared to be unsustainable levels. Momentum,
rather than attractive valuations, was the market's driving force during
the period.
- QUALITY BECOMES AVAILABLE AT A BARGAIN The lagging performance of value
stocks gave us an opportunity to strengthen the portfolio with some
high-quality names that had lost considerable value. Stocks such as Disney
(1.7% of net assets), McDonald's (1.4% of net assets) and Proctor & Gamble
(2.6% of net assets) were available at prices far below what seemed to be a
fair market valuation, and we took advantage of the situation.
- VALUE SEES SOME RECOVERY In the early months of 2000, investors became
somewhat disillusioned with the unreasonably high prices of growth stocks,
and began shifting their focus to the value sector. This move helped to
create a better environment for the Fund, and many companies that were
delivering positive financial results outside of the technology sector
began to see increases in their stock prices.
12-MONTH TOTAL RETURNS FOR THE PERIOD ENDED 6/30/00(1)
Without With
sales sales
charge charge
--------------------------------
Class A (13.79)% (18.74)%
--------------------------------
Class B (14.43)% (18.65)%
--------------------------------
Class C (14.43)% (15.28)%
--------------------------------
Class Z (13.63)% --
--------------------------------
(1) The "with sales charge" returns include the maximum sales charge of 5.75%
for Class A shares and the maximum applicable contingent deferred sales charge
for 12 months of 5% for Class B shares and 1% for Class C shares.
NET ASSET VALUE PER SHARE AS OF 6/30/00
Class A $11.34
------------------------
Class B $11.31
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Class C $11.31
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Class Z $11.34
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12-MONTH DISTRIBUTIONS AS OF 6/30/00
Class A $0.237
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Class B $0.172
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Class C $0.172
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Class Z $0.258
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BOUGHT
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Proctor & Gamble
(2.6% of net assets.) After announcing an earnings shortfall earlier in the
year, the price of P&G's stock dropped considerably. But the company remains one
of the consumer product stalwarts of the world, and we believe it is one of the
best run companies on the market today.
1
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PORTFOLIO MANAGER'S REPORT
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SECTOR BREAKDOWNS AS OF 6/30/00
Consumer Cyclicals 9.32%
Financials 12.22%
Energy/Natural Resources 14.53%
Basic Materials 2.50%
Consumer Staples 24.93%
Heathcare 12.22%
Utilities 3.07%
Capital Goods 8.87%
Technologies 7.73%
Services 3.65%
Transportation 0.96%
Sector 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 maintain the same portfolio holdings and sector breakdown in the future.
Industrial sectors in the following financial statements are based upon standard
industrial classification (SIC) as published by the U.S. Office of Management
and Budget. The sector classifications used on this page are based upon the
Advisor's defined criteria as used in the investment process.
BOUGHT
----------------------
DISNEY
(1.7% of net assets.) For years, Disney stock was hurt by management's lack of
attention to investor concerns and difficulties stemming from the purchase of
the broadcast firm ABC. But with a renewed focus on shareholders and improving
financial conditions, spurred on by the success of the highly profitable "Who
Wants To Be A Millionaire," on ABC, the stock appears to be on the rebound.
VALUE STOCKS AGAIN ARE CHALLENGED
For the 12-month period ended June 30, 2000, the Fund's Class A shares had a
total return of negative 13.79%, not including the sales charge. The Fund lagged
the S&P 500 stock index, a measure of broad market performance, which grew by
7.24% during the period.
In the first half of the fiscal year, investors poured their money into growth
stocks, particularly the fast-paced technology market. Momentum was the story of
the day during these months, as technology stocks seemed to gain in price not so
much on the strength of their current financial position as on the fast-growing
interest of the market. In the meantime, investors seemed to ignore the strong
financial characteristics underlying many value stocks like those found in the
Fund's portfolio.
ECONOMIC TRENDS CHANGE SENTIMENTS
As the new millennium took hold, investors started having a change of heart
about technology companies. With interest rates continuing to trend up and
inflation concerns becoming more real, investors began to sell technology
issues. They suddenly became concerned that companies couldn't sustain growth
rates to justify their lofty stock prices. It was in this environment that value
stocks began to appear more attractive. The rebound did not offset value's
underperformance in the latter months of 1999, but it helped the Fund reclaim
some of its lost ground.
ADDING QUALITY STOCKS
One of the side benefits of the weakness in value stocks was that a number of
very high quality companies suddenly became available at bargain prices.
Big-name stocks such as McDonald's, Proctor & Gamble (P&G), Walt Disney and Sara
Lee (3.1% of net assets) were added to the portfolio. By adding what we think
are some of America's best run companies to the Fund, we were able to put our
shareholders in a better position to benefit from a potential move toward value
stocks going forward.
We also see positive opportunities in a number of sectors that are
well-represented in the portfolio. This includes companies that offer consumer
staples, such as P&G and Bestfoods (3.3% of net assets), which have been able to
implement price increases in recent months. Energy stocks have seen improved
performance since the price of oil has risen, and we expect that select
financial stocks, namely insurance companies, may be positioned for a rebound
after struggling in recent years. Even some health care names, such as Abbott
Labs (3.1% of net assets), have been added to the portfolio since they became
available at very reasonable prices.
ECONOMY REMAINS STRONG, BUT MAY BE SLOWING
Throughout all of this, the U.S. economy has continued to grow at a rapid rate.
However, the Federal Reserve seems determined to raise interest rates as long as
necessary to slow the rate of growth. While it's difficult to say exactly when
that will happen, we're confident that the Fund is positioned in a number of
quality stocks that offer strong prospects for holding their own.
/s/ Scott Schermerhorn
--------------------------
Scott Schermerhorn
Scott Schermerhorn is portfolio manager of Liberty Value Fund and is a senior
vice president of Colonial Management Associates, Inc.
An investment in the Fund offers significant long-term growth potential but also
involves certain risks. The Fund may be affected by stock market fluctuations
that occur in response to economic and business developments.
2
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PERFORMANCE INFORMATION
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PERFORMANCE OF A $10,000 INVESTMENT IN CLASS A SHARES 4/1/96 - 6/30/00
[Graphic chart]
WITHOUT WITH
S&P 500 INDEX SALES CHARGE SALES CHARGE
4/1/96 10000 10000 9425
4/30/96 10147 9950 9378
5/31/96 10408 10069 9490
6/30/96 10447 10239 9650
7/31/96 9986 9771 9209
8/31/96 10196 10060 9481
9/30/96 10769 10428 9828
10/31/96 11067 10717 10101
11/30/96 11902 11304 10654
12/31/96 11666 11114 10475
1/31/97 12394 11529 10866
2/28/97 12492 11650 10980
3/31/97 11980 11286 10637
4/30/97 12694 11570 10904
5/31/97 13470 12216 11514
6/30/97 14069 12822 12085
7/31/97 15188 13630 12846
8/31/97 14337 13296 12532
9/30/97 15121 14074 13265
10/31/97 14616 13417 12645
11/30/97 15293 13881 13083
12/31/97 15556 14407 13579
1/31/98 15727 14338 13514
2/28/98 16861 15575 14680
3/31/98 17724 16275 15339
4/30/98 17905 16057 15133
5/31/98 17597 15976 15058
6/30/98 18312 16023 15101
7/31/98 18118 15838 14928
8/31/98 15500 12911 12169
9/30/98 16493 13893 13094
10/31/98 17832 14840 13987
11/30/98 18913 15345 14462
12/31/98 20002 15577 14681
1/31/99 20838 15591 14694
2/28/99 20190 15453 14565
3/31/99 20998 16411 15468
4/30/99 21811 18261 17211
5/31/99 21296 18206 17159
6/30/99 22474 18437 17377
7/31/99 21775 17752 16731
8/31/99 21666 16997 16020
9/30/99 21072 15591 14695
10/31/99 22406 16087 15162
11/30/99 22861 15922 15006
12/31/99 24205 15906 14991
1/31/00 22990 15056 14191
2/29/00 22555 13929 13128
3/31/00 24761 15633 14735
4/30/00 24016 15941 15025
5/31/00 23524 16780 15815
6/30/00 24115 15804 14895
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/00
<TABLE>
<CAPTION>
Share Class A B C Z
Inception 4/1/96 4/1/96 4/1/96 12/1/98
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w/o sales with sales w/o sales with sales w/o sales with sales w/o sales
charge charge charge charge charge charge charge
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
One Year (13.79)% (18.74)% (14.43)% (18.65)% (14.43)% (15.28)% (13.63)%
---------------------------------------------------------------------------------------------
Life of Fund 11.78 10.24 10.95 10.62 10.95 10.95 11.87
---------------------------------------------------------------------------------------------
</TABLE>
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 5.75% 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 Z share performance information includes returns of the Fund's Class A
shares (as its expense structure more closely resembles that of the newer class)
for periods prior to its inception date. These Class A share returns are not
restated to reflect any expense differential (e.g., Rule 12b-1 fees) between
Class Z shares. Had the expense differential been reflected, the returns for the
period prior to the inception of the newer class shares would have been higher.
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of 500 widely held, large-capitalization U.S. stocks. Unlike mutual
funds, indexes are not investments and do not incur fees or expenses. It is not
possible to invest directly in an index.
TOP 10 HOLDINGS AS OF 6/30/00
Bestfoods 3.3%
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Abbott Labs 3.1%
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Sara Lee Corp 3.1%
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Philip Morris Co Inc 2.8%
--------------------------------
Schering-Plough Corp 2.7%
--------------------------------
Procter & Gamble Co 2.6%
--------------------------------
XL Capital Ltd 2.5%
--------------------------------
Merck & Co Inc 2.4%
--------------------------------
Royal Dutch Petroleum 2.4%
--------------------------------
Boeing Co 2.4%
--------------------------------
Portfolio holdings 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.
3
<PAGE> 6
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INVESTMENT PORTFOLIO
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June 30, 2000
(In thousands)
COMMON STOCKS - 96.5% SHARES VALUE
--------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 14.4%
Depository Institutions - 5.3%
Banc One Corp. 31 $ 824
Firstar Corp. 18 379
FleetBoston Financial Corp. 16 547
Washington Mutual, Inc. 23 667
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2,417
-------
INSURANCE CARRIERS - 7.4%
Aetna Inc. 11 700
Aon Corp. 33 1,031
United Healthcare Corp. 6 506
XL Capital Ltd., Class A 21 1,120
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3,357
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NONDEPOSITORY CREDIT INSTITUTIONS - 1.7%
Freddie Mac 20 790
-------
--------------------------------------------------------------------------
MANUFACTURING - 60.8%
CHEMICAL & ALLIED PRODUCTS - 13.8%
Abbott Laboratories 32 1,408
Merck & Co., Inc. 14 1,096
Praxair, Inc. 15 561
Proctor & Gamble Co. 21 1,174
Schering-Plough Corp. 24 1,217
Sherwin-Williams Co. 39 820
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6,276
-------
COMMUNICATIONS EQUIPMENT - 0.8%
Motorola, Inc. 13 375
-------
ELECTRICAL INDUSTRIAL EQUIPMENT - 2.0%
Emerson Electric Co. 15 930
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FOOD & KINDRED PRODUCTS - 14.7%
Bestfoods 22 1,510
General Mills, Inc. 17 631
Nabisco Holdings Corp 17 882
PepsiCo, Inc. 22 978
Philip Morris Co., Inc. 49 1,291
Sara Lee Corp. 72 1,392
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6,684
-------
LUMBER & WOOD PRODUCTS - 1.2%
Georgia Pacific Corp. 20 533
MACHINERY & COMPUTER EQUIPMENT - 2.4%
Compaq Computer Corp. 18 463
Ingersoll Rand Co. 16 640
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1,103
-------
SHARES VALUE
--------------------------------------------------------------------------
MEASURING & ANALYZING INSTRUMENTS - 4.5%
Boston Scientific Corp. (a) 20 $ 432
Eastman Kodak Co. 15 893
Xerox Corp. 34 714
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2,039
-------
MISCELLANEOUS MANUFACTURING - 1.7%
Mattel, Inc. 57 749
-------
PAPER PRODUCTS - 1.7%
Kimberly Clark Corp. 13 757
-------
PETROLEUM REFINING - 9.4%
Amerada Hess Corp. 17 1,050
Chevron Corp. 6 534
Royal Dutch Petroleum Co. 18 1,084
Texaco, Inc. 14 735
USX-Marathon Group 34 860
-------
4,263
-------
RUBBER & PLASTIC - 2.2%
Nike, Inc., Class B 25 999
-------
STONE, CLAY, GLASS & CONCRETE - 1.7%
Minnesota Mining & Manufacturing Co. 10 792
-------
TRANSPORTATION EQUIPMENT - 4.7%
Boeing Co. 26 1,075
Delphi Automotive Systems Corp. 41 601
United Technologies Corp. 8 453
-------
2,129
-------
--------------------------------------------------------------------------
MINING & ENERGY - 3.5%
CRUDE PETROLEUM & NATURAL GAS - 2.1%
Anadarko Petroleum Corp. 19 942
-------
OIL & GAS SERVICES - 1.4%
Diamond Offshore Drilling, Inc. 18 632
-------
--------------------------------------------------------------------------
RETAIL TRADE - 5.4%
APPAREL & ACCESSORY STORES - 1.2%
Nordstrom, Inc. 23 557
-------
FOOD STORES - 2.0%
Albertson's, Inc. 28 914
-------
GENERAL MERCHANDISE STORES - 0.8%
Federated Department Stores, Inc. (a) 11 361
-------
RESTAURANTS - 1.4%
McDonald's Corp. 19 616
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4
<PAGE> 7
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INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) SHARES VALUE
--------------------------------------------------------------------------
SERVICES - 3.8%
COMPUTER RELATED SERVICES - 2.1%
First Data Corp. 19 $ 948
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MOTION PICTURES - 1.7%
The Walt Disney Co. 20 788
-------
--------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 8.6%
ELECTRIC SERVICES - 3.0%
Entergy Corp. 19 506
PG&E Corp. 11 263
Southern Co. 25 578
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1,347
-------
RAILROAD - 0.9%
Union Pacific Corp. 11 420
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TELECOMMUNICATIONS - 3.5%
AT&T Corp. 27 841
WorldCom, Inc. (a) 17 762
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1,603
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WATER TRANSPORTATION - 1.2%
Tidewater, Inc. 15 536
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TOTAL COMMON STOCKS
(cost of $42,245)(b) 43,857
-------
SHORT TERM OBLIGATIONS - 3.5% PAR
--------------------------------------------------------------------------
REPURCHASE AGREEMENT with SBC
Warburg Ltd., dated 6/30/00, due
07/03/00 at 6.600%, collateralized
by U.S. Treasury notes with various
maturities to 2026, market value $1,600
(repurchase proceeds $1,568) $1,567 1,567
-------
OTHER ASSETS & LIABILITIES, NET - 0 0% 18
--------------------------------------------------------------------------
Net Assets - 100% $45,442
=======
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
See notes to financial statements.
5
<PAGE> 8
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STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 2000
(In thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $42,245) $43,857
Short-term obligations 1,567
-------
45,424
Receivable for:
Dividends $105
Fund shares sold 83
Expense reimbursement due from Advisor 28
Deferred organization expenses 8
Other 3 227
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Total Assets 45,651
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LIABILITIES
Payable for:
Fund shares repurchased 88
Accrued:
Management fee 61
Transfer agent 14
Bookkeeping fee 2
Deferred Trustees fees 1
Other 43
----
Total Liabilities 209
-------
NET ASSETS $45,442
-------
Net asset value & redemption price per share--
Class A ($10,441/921) $ 11.34(a)
-------
Maximum offering price per share--
Class A ($11.34/0.9425) $ 12.03(b)
-------
Net asset value & offering price per share--
Class B ($19,380/1,714) $ 11.31(a)
-------
Net asset value & offering price per share--
Class C ($1,934/171) $11.31(a)
-------
Net asset value, redemption & offering
price per share-- Class Z ($13,687/1,207) $11.34
-------
COMPOSITION OF NET ASSETS
Capital paid in $49,034
Undistributed net investment income 40
Accumulated net realized loss (5,244)
Net unrealized appreciation 1,612
-------
$45,442
=======
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Year Ended June 30, 2000
(In thousands)
INVESTMENT INCOME
Dividends $853
Interest 46
-------
(net of nonreclaimable foreign taxes
withheld which amounted to $6) 899
EXPENSES
Management fee $357
Service fee-- Class A, B, C 81
Distribution fee-- Class B 145
Distribution fee-- Class C 12
Transfer agent fee 112
Bookkeeping fee 27
Trustee fee 7
Custodian fee 6
Audit fee 22
Legal fee 11
Registration fee 52
Reports to shareholders 7
Amortization of deferred
organization expenses 11
Other 3
----
853
Fees and expenses waived or borne
by the Advisor (281) 572
---- -------
Net Investment Income 327
-------
NET REALIZED & UNREALIZED LOSS ON
PORTFOLIO POSITIONS
Net realized loss (5,244)
------
Net change in unrealized
appreciation/depreciation (1,925)
------
Net Loss (7,169)
-------
Decrease in Net Assets from Operations $(6,842)
=======
See notes to financial statements.
6
<PAGE> 9
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
(In Thousands)
YEAR ENDED JUNE 30,
------------------------
INCREASE (DECREASE) IN NET ASSETS 2000 1999(a)
--------------------------------------------------------------------------
Operations:
Net investment income $ 327 $ 108
Net realized gain (loss) (5,244) 829
Net change in unrealized
appreciation/depreciation (1,925) 2,668
------- -------
Net Increase (Decrease) from Operations (6,842) 3,605
------- -------
Distributions:
From net investment income -- Class A (95) (82)
In excess of net investment income -- Class A -- (11)
From net realized gains -- Class A (142) (563)
From net investment income -- Class B (60) (12)
In excess of net investment income -- Class B -- (2)
From net realized gains -- Class B (240) (55)
From net investment income -- Class C (5) (3)
In excess of net investment income -- Class C -- (1)
From net realized gains -- Class C (20) (55)
From net investment income -- Class Z (134) (23)
In excess of net investment income -- Class Z -- (3)
From net realized gains -- Class Z (146) --
------- -------
(7,684) 2,795
------- -------
Fund Share Transactions:
Receipts for shares sold -- Class A 4,463 7,946
Value of distributions reinvested -- Class A 224 653
Cost of shares repurchased -- Class A (4,754) (632)
------- -------
(67) 7,967
------- -------
Receipts for shares sold -- Class B 14,982 17,193
Value of distributions reinvested -- Class B 269 67
Cost of shares repurchased -- Class B (9,896) (1,492)
5,355 15,768
Receipts for shares sold -- Class C 1,534 930
Value of distributions reinvested -- Class C 23 59
Cost of shares repurchased -- Class C (708) (20)
------- -------
849 969
------- -------
Receipts for shares sold -- Class Z 7,908 7,539
Value of distributions reinvested -- Class Z 280 25
Cost of shares repurchased -- Class Z (1,082) --
------- -------
7,106 7,564
------- -------
Net Increase from Fund Share Transactions 13,243 32,268
------- -------
Total Increase 5,559 35,063
NET ASSETS
------- -------
Beginning of period 39,883 4,820
------- -------
End of period (including undistributed
and net of overdistributed net investment
income of $40 and $4, respectively) $45,442 $39,883
------- -------
YEAR ENDED JUNE 30,
-------------------------
NUMBER OF FUND SHARES 2000 1999(a)
---------------------------------------------------------------------------
Sold-- Class A 377 653
Issued for distributions reinvested -- Class A 20 58
Repurchased -- Class A (424) (52)
------- -------
(27) 659
------- -------
Sold -- Class B 1,244 1,396
Issued for distributions reinvested -- Class B 24 6
Repurchased -- Class B (864) (120)
------- -------
404 1,282
------- -------
Sold -- Class C 129 72
Issued for distributions reinvested -- Class C 2 5
Repurchased-- Class C (64) (1)
------- -------
67 76
------- -------
Sold-- Class Z 665 608
Issued for distributions reinvested -- Class Z 25 2
Repurchased -- Class Z (93) --
------- -------
597 610
------- -------
(a) Class Z shares were initially offered on December 1, 1998. See notes to
financial statements.
See notes to financial statements.
7
<PAGE> 10
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
June 30, 2000
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Liberty Value Fund (formerly Colonial Value Fund), (the Fund) a series of
Liberty Funds Trust VI, is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund's investment 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 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. Effective
February 1, 2000, Class B shares will convert to Class A shares as follows:
CONVERTS TO
ORIGINAL PURCHASE CLASS A SHARES
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
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.
Portfolio positions for which market quotations are not readily available 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 (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 the 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.
Per share data was calculated using the 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.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM:
Interest income is recorded on the accrual basis. Original issue discount is
accreted to interest income over the life of a security with a corresponding
increase in the cost basis; premium and market discount are not amortized or
accreted.
DEFERRED ORGANIZATION EXPENSES:
The Fund incurred expenses of $53,387 in connection with its organization,
initial registration with the Securities and Exchange Commission and with
various states, and the initial public offering of its shares. These expenses
were deferred and are being amortized on a straight-line basis over five years.
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 fluctuation in exchange rates on gains (losses) 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.
8
<PAGE> 11
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
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 (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonreclaimable 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:
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 equal to 0.80% annually of the Fund's average net assets.
BOOKKEEPING FEE:
The Advisor provides bookkeeping and pricing services for a monthly fee equal to
$27,000 per year 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 to the Advisor
provided shareholder services for a monthly fee equal to 0.236% annually of the
Fund's average net assets through December 31, 1999. 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 Fund receives reimbursement for certain out-of-pocket
expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc., (the Distributor), a subsidiary of the Advisor,
is the Fund's principal underwriter. For the year ended June 30, 2000, the Fund
has been advised that the Distributor retained net underwriting discounts of
$284,140, on sales of the Fund's Class A shares and received contingent deferred
sales charges (CDSC) of $48, $132,496 and $2,696 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
monthly 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 monthly distribution fee to the Distributor equal to 0.75%
annually of the average net assets attributable to Class B shares 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 has agreed, until further notice, to waive fees and bear certain
Fund expenses to the extent that total expenses (exclusive of service fees,
distribution fees, brokerage commissions, interest, taxes, and extraordinary
expenses, if any) exceed 0.75% 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.
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 year ended June 30, 2000, purchases and sales of investments, other
than short-term obligations, were $53,761,903 and $41,906,499, respectively.
Unrealized appreciation (depreciation) at June 30, 2000, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
Gross unrealized appreciation $4,390,215
Gross unrealized depreciation (2,922,177)
Net unrealized appreciation $1,468,038
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 foreign currency exchange
or the imposition of 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. OTHER RELATED PARTY TRANSACTIONS
At June 30, 2000, Colonial Counselor Select Growth Fund owned 17.6%, Colonial
Counselor Select Balanced Fund owned 11.8% and Keyport Life Insurance Company
owned 10.5% of the Fund's outstanding shares.
During the year ended June 30, 2000, the Fund used Alphatrade, a wholly owned
subsidiary of Colonial Management Associates, Inc., as a broker. Total
commissions paid to Alphatrade during the year were $16,387.
9
<PAGE> 12
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 2000
CLASS A CLASS B CLASS C CLASS Z
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.430 $13.420 $13.420 $13.430
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(b) 0.117 0.031 0.031 0.146
Net realized and unrealized loss (1.970) (1.969) (1.969) (1.978)
------- ------- ------- -------
Total from Investment Operations (1.853) (1.938) (1.938) (1.832)
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.099) (0.034) (0.034) (0.120)
From net realized gains (0.138) (0.138) (0.138) (0.138)
------- ------- ------- -------
Total Distributions Declared to Shareholders (0.237) (0.172) (0.172) (0.258)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.340 $11.310 $11.310 $11.340
======= ======= ======= =======
Total return (c)(d) (13.79)% (14.43)% (14.43)% (13.63)%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 1.00% 1.75% 1.75% 0.75%
Fees and expenses waived or borne by the Advisor (e) 0.63% 0.63% 0.63% 0.63%
Net investment income (e) 1.02% 0.27% 0.27% 1.27%
Portfolio turnover 96% 96% 96% 96%
Net assets at end of period (000) $10,441 $19,380 $ 1,934 $13,687
(a) Net of fees and expenses waived or borne by
the Advisor which amounted to: $ 0.073 $ 0.073 $ 0.073 $ 0.073
(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 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.
</TABLE>
10
<PAGE> 13
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1999
CLASS A CLASS B CLASS C CLASS Z(C)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.960 $13.910 $13.910 $11.230
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(b) 0.137 0.043 0.044 0.089
Net realized and unrealized gain 1.502 1.513 1.510 2.185
------- ------- ------- -------
Total from Investment Operations 1.639 1.556 1.554 2.274
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.201) (0.093) (0.091) (0.065)
In excess of net investment income (0.028) (0.013) (0.013) (0.009)
From net realized gains (1.940) (1.940) (1.940) --
------- ------- ------- -------
Total Distributions Declared to Shareholders (2.169) (2.046) (2.044) (0.074)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $13.430 $13.420 $13.420 $13.430
======= ======= ======= =======
Total return (d)(e) 15.07% 14.23% 14.21% 20.30%(f)
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 1.00% 1.75% 1.75% 0.75%(h)
Fees and expenses waived or borne by the Advisor (g) 1.28% 1.28% 1.28% 1.08%(h)
Net investment income (g) 1.07% 0.32% 0.32% 1.21%(h)
Portfolio turnover 65% 65% 65% 65%
Net assets at end of period (000) $12,732 $17,569 $ 1,394 $ 8,188
(a) Net of fees and expenses waived or borne by the
Advisor which amounted to: $ 0.160 $ 0.160 $ 0.160 $ 0.079
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Class Z shares were initially offered on December 1, 1998. Per share data
reflects activity from date.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(h) Annualized.
</TABLE>
11
<PAGE> 14
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
1998 1997 1996 (D)
CLASS A CLASS B CLASS C(C) CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $12.690 $12.630 $12.630 $10.280 $10.260 $10.260 $ 9.940 $ 9.940 $ 9.940
------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss)(a)(b) 0.070 (0.031) (0.031) 0.141 0.058 0.058 0.044 0.024 0.024
Net realized and unrealized gain 2.900 2.897 2.897 2.428 2.413 2.413 0.296 0.296 0.296
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment Operations 2.970 2.866 2.866 2.569 2.471 2.471 0.340 0.320 0.320
------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment income (0.150) (0.036) (0.036) (0.159) (0.101) (0.101) -- -- --
From net realized gains (1.550) (1.550) (1.550) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions
Declared to Shareholders (1.700) (1.586) (1.586) (0.159) (0.101) (0.101) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $13.960 $13.910 13.910 $12.690 $12.630 $12.630 $10.280 $10.260 $10.260
======= ======= ====== ======= ======= ======= ======= ======= =======
Total return (e)(f) 24.99% 24.13% 24.13% 25.23% 24.23% 24.23% 3.42%(g) 3.22%(g) 3.22
======= ======= ====== ======= ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (h) 1.52% 2.27% 2.27% 1.55% 2.30% 2.30% 1.55%(i) 2.30%(i) 2.30%(i)
Fees and expenses waived or
borne by the Advisor (h) 2.11% 2.11% 2.11% 2.64% 2.64% 2.64% 1.55%(i) 1.55%(i) 1.55%(i)
Net investment income (loss) (h) 0.52% (0.23)% (0.23)% 1.27% 0.52% 0.52% 1.77%(i) 1.02%(i) 1.02%(i)
Portfolio turnover 79% 79% 79% 129% 129% 129% 16%(g) 16%(g) 16%(g)
Net assets at end of period (000) $ 4,029 $ 395 $ 396 $ 3,217 $ 319 $ 319 $ 2,570 $ 257 $ 257
(a) Net of fees and expenses waived
or borne by the Advisor which
amounted to: $ 0.285 $ 0.285 $ 0.285 $ 0.292 $ 0.292 $ 0.292 $ 0.039 $ 0.039 $ 0.039
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Class D shares were redesignated Class C shares on July 1, 1997.
(d) The Fund commenced investment operations on March 25, 1996. The activity
shown is from effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(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 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.
</TABLE>
12
<PAGE> 15
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
TO THE TRUSTEES OF LIBERTY FUNDS TRUST VI AND THE SHAREHOLDERS OF
LIBERTY VALUE FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Liberty Value Fund, (formerly
Colonial Value Fund) (the "Fund") (a series of Liberty Funds Trust VI) at June
30, 2000, the results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States. These financial statements
and the financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of portfolio positions
at June 30, 2000 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
---------------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 10, 2000
13
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<PAGE> 19
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, Naftalls & 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)
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 Value 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 Value Fund . This
report may also be used as sales literature when preceded or accompanied by the
current prospectus which provides details of sales charges, investment
objectives and operating policies of the Funds and with the most recent copy of
the Liberty Funds Distributor, Inc. Performance Update.
ANNUAL REPORT:
LIBERTY VALUE FUND
<PAGE> 20
--------------------------------------------------------------------------------
CHOOSE LIBERTY
--------------------------------------------------------------------------------
BECAUSE NO SINGLE INVESTMENT MANAGER CAN BE ALL THINGS TO ALL INVESTORS.(SM)
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 investing.
HUSON
NEWPORT A leader in international investing.(SM)
STEIN ROE Innovative solutions for growth and income investing.
ADVISOR
KEYPORT 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 Value fund Annual Report, June 30, 2000
[Liverty logo]
LIBERTY
ALL-START - COLONIAL - CRABBE HUSON - NEWPORT - STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)2000
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
--------------------------------------------------------------------------------
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