UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6347
---------------------
Liberty Funds Trust VII
------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Jean S. Loewenberg, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
- ------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-426-3750
-------------------
Date of fiscal year end: August 31, 2003
------------------
Date of reporting period: February 28, 2003
-----------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
LIBERTY NEWPORT
EUROPE FUND
Semiannual Report
February 28, 2003
[photo of man and woman outdoors]
ELIMINATE CLUTTER IN TWO EASY STEPS.
POINT. CLICK. LIBERTY eDELIVERY
For more information about receiving your shareholder
reports electronically, call us at 800-345-6611.
To sign up for eDelivery, visit us online at
www.libertyfunds.com.
LIBERTY NEWPORT
EUROPE FUND
Semiannual Report
February 28, 2003
[photo of man and woman outdoors]
ELIMINATE CLUTTER IN TWO EASY STEPS.
POINT. CLICK. LIBERTY eDELIVERY
To sign up for eDelivery, go to
www.icsdelivery.com.
PRESIDENT'S MESSAGE
[photo of Joseph R. Palombo]
Dear Shareholder:
Stock markets in Europe tumbled and gold and oil prices rose to new highs on
concerns about war with Iraq and weak economic conditions. Late in the six-month
period, the euro hit a three-year high against the dollar. A stronger currency
means that European goods are likely to be less competitive with American goods
in the global marketplace and could curb export growth in the year ahead. All of
Europe's major economies reported a decline in manufacturing activity late in
the period.
While negative stock market performance is always disappointing, we continue to
believe that Europe offers potential for investors who take a long-term
perspective. Exposure to stock markets outside the United States can help
investors achieve diversification and access to foreign-based market leaders in
pharmaceuticals, financial services, consumer brands and other growing
industries.
In the report that follows, the fund's portfolio managers provide a more
detailed discussion about European stock markets and the decisions they made in
managing the fund. During these challenging times, we thank you for your
investment in Liberty Funds.
Sincerely,
/s/ Joseph R. Palombo
Joseph R. Palombo
President
- --------------------------------------------------------------------------------
MEET THE NEW PRESIDENT
Joseph R. Palombo, president and chairman of the Board of Trustees for Liberty
Funds, is also chief operating officer of Columbia Management Group. Mr. Palombo
has over 19 years of experience in the financial services industry. Prior to
joining Columbia Management, he was chief operating officer and chief compliance
officer for Putnam Mutual Funds. Prior to that, he was a partner at Coopers &
Lybrand. Mr. Palombo received his degree in economics/accounting from the
College of the Holy Cross, where he was a member of Phi Beta Kappa. He earned
his master's degree in taxation from Bentley College and participated in the
Executive Program at the Amos B. Tuck School at Dartmouth College.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE as of 2/28/03 ($)
Class A 6.60
Class B 6.42
Class C 6.38
Class Z 6.65
- --------------------------------------------------------------------------------
Not FDIC Insured
May Lose Value
No Bank Guarantee
Economic and market conditions change frequently. There is no assurance that
trends described in this report will continue or commence.
PERFORMANCE INFORMATION
Value of a $10,000 investment
11/8/99 - 2/28/03
Performance of a $10,000 investment
11/8/99 - 2/28/03 ($)
without with
sales sales
charge charge
- ----------------------------------------
Class A 6,389 6,022
- ----------------------------------------
Class B 6,215 6,028
- ----------------------------------------
Class C 6,177 6,177
- ----------------------------------------
Class Z 6,438 n/a
- ----------------------------------------
[mountain chart data]:
Class A shares Class A shares
without sales charge with sales charge MSCI Europe Index
11/1999 $10,000.0 $ 9,525.0 $10,000.0
10,707.0 10,198.0 10,270.0
12,527.0 11,932.0 11,323.0
11,733.0 11,176.0 10,517.0
13,621.0 12,974.0 11,064.0
12,933.0 12,319.0 11,331.0
12,197.0 11,618.0 10,831.0
11,887.0 11,323.0 10,743.0
11,771.0 11,212.0 10,974.0
11,877.0 11,313.0 10,798.0
11,867.0 11,304.0 10,671.0
11,490.0 10,944.0 10,171.0
11,151.0 10,621.0 10,094.0
10,628.0 10,123.0 9,703.0
11,373.0 10,833.0 10,372.0
10,948.0 10,428.0 10,377.0
10,116.0 9,635.0 9,466.0
9,128.0 8,695.0 8,760.0
9,564.0 9,109.0 9,383.0
9,195.0 8,759.0 8,925.0
9,089.0 8,657.0 8,587.0
9,021.0 8,592.0 8,609.0
9,108.0 8,676.0 8,385.0
8,324.0 7,929.0 7,548.0
8,305.0 7,910.0 7,788.0
8,469.0 8,067.0 8,100.0
8,663.0 8,252.0 8,308.0
8,237.0 7,846.0 7,873.0
8,266.0 7,873.0 7,872.0
8,527.0 8,122.0 8,298.0
8,440.0 8,039.0 8,235.0
8,237.0 7,845.0 8,210.0
8,111.0 7,725.0 7,925.0
7,230.0 6,886.0 7,043.0
7,181.0 6,840.0 7,041.0
6,417.0 6,112.0 6,115.0
6,775.0 6,453.0 6,706.0
7,046.0 6,711.0 7,035.0
6,745.0 6,425.0 6,780.0
6,455.0 6,149.0 6,459.0
2/2003 6,389.0 6,022.0 6,249.0
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. PLEASE VISIT LIBERTYFUNDS.COM FOR
DAILY PERFORMANCE UPDATES.
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale. The graph and table do not reflect the deduction of taxes a shareholder
would pay on fund distributions or the redemption of fund shares.The Morgan
Stanley Capital International (MSCI) Europe Index is a broad-based, unmanaged
index that tracks the performance of European stocks. Unlike the fund, an index
is not an investment, does not incur fees or expenses and is not professionally
managed. It is not possible to invest directly in an index. Securities in the
fund may not match those in the index. Index performance is from October 31,
1999.
Average annual total return as of 2/28/03 (%)
Share class A B C Z
Inception 11/8/99 11/8/99 11/8/99 11/8/99
- -------------------------------------------------------------------------------------------------------------------
without with without with without with without
sales sales sales sales sales sales sales
charge charge charge charge charge charge charge
- -------------------------------------------------------------------------------------------------------------------
6-month (cumulative) -11.05 -16.17 -11.57 -15.99 -12.12 -13.00 -10.01
- -------------------------------------------------------------------------------------------------------------------
1-year -22.72 -27.16 -23.48 -27.31 -23.96 -24.72 -19.69
- -------------------------------------------------------------------------------------------------------------------
Life -12.64 -14.19 -13.37 -14.16 -13.53 -13.53 -12.44
- -------------------------------------------------------------------------------------------------------------------
Average annual total return as of 12/31/02 (%)
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
- -------------------------------------------------------------------------------------------------------------------
6-month (cumulative) -16.83 -21.61 -17.07 -21.22 -17.66 -18.48 -14.50
- -------------------------------------------------------------------------------------------------------------------
1-year -22.12 -26.60 -22.73 -26.59 -23.18 -23.95 -19.82
- -------------------------------------------------------------------------------------------------------------------
Life -11.73 -13.37 -12.42 -13.26 -12.58 -12.58 -11.77
- -------------------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale. All results shown assume reinvestment of distributions. The "with sales
charge" returns include the maximum 5.75% sales charge for class A shares, the
appropriate class B contingent deferred sales charge for the holding period
after purchase as follows: first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year -1%, thereafter - 0% and the class
C contingent deferred sales charge of 1% for the first year only.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower. Performance for
different share classes vary based on differences in sales charges and fees
associated with each class.
1
Top 10 holdings as of 2/28/03 (%)
Vodafone Group 4.3%
Teva Pharmaceutical Industries 3.6
Unilever 3.5
Bank of Ireland 3.4
BP 3.2
Royal Bank of Scotland Group 3.2
UniCredito Italiano 3.0
Telefonica 3.0
Smith & Nephew 3.0
Standard Chartered 2.9
Portfolio holdings are calculated as a percentage of net assets. Since the fund
is actively managed, there is no guarantee the fund will continue to hold these
securities in the future.
Top 5 countries as of 2/28/03 (%)
United Kingdom 39.6
France 12.9
Spain 12.3
Ireland 10.9
Switzerland 7.1
Country breakdowns are calculated as a percentage of total investments. Since
the fund is actively managed, there is no guarantee the fund will continue to
invest in these countries in the future.
Bought
- --------------------------------------------------------------------------------
PUMA (2.1% OF NET ASSETS)
Earnings of this global athletic clothing company grew 154% in 2001 and 112% in
2002. Its backorders for merchandise have been up 48%. The stock has been
selling at a significant discount to its competitors.
Sold
- --------------------------------------------------------------------------------
SIGNET GROUP
Approximately half of the sales of Signet Group, the owner of Kay Jewelers, come
from the United States. Although the company has produced good earnings, we sold
the stock because we believe that consumer spending in the United States is at
risk of declining.
PORTFOLIO MANAGERS' REPORT
For the six-month period that ended February 28, 2003, the class A shares of
Liberty Newport Europe Fund returned negative 11.05% without sales charge. The
fund performed better than its benchmark, the MSCI Europe Index, which returned
negative 11.26%. A weak economic environment, uncertainty about geopolitical
issues and a substantial sell-off of equities by insurance companies caused
European stock prices to decline. As investors grew increasingly concerned that
insurance companies may not have adequate capital, the insurance sector fell
24%, making it one of the worst performing areas of the market. Since the fund
held only one insurance company, it was less affected by the poor performance of
insurance stocks than it was by the downward trend of stock prices in general.
RESTRUCTURING THE PORTFOLIO
Disappointed by our performance relative to our benchmark and peer group in the
prior period, we undertook a thorough review of the stocks and sectors in the
portfolio and began to restructure our holdings. The fund's significant position
in technology benefited performance when the sector rallied between October and
November. However, the rally also resulted in higher valuations, relative to our
expectations for future earnings growth and stock price appreciation. As a
result, we cut back on our technology investments. We also trimmed our
investments in consumer staples stocks after they had appreciated strongly.
However, we were not able to trim our position in this sector before prices
started to come down and these stocks started to detract from performance.
L'Oreal (0.7% of net assets), a personal care products company, and Diageo (1.6%
of net assets), a distiller and vintner, held back the fund's results.1 As we
lowered the commitment to consumer staples, we raised the fund's position in the
consumer discretionary area, where we invested in undervalued retailers and
media companies that had improved earnings.
At the beginning of the period, the fund's relatively small allocation to
telecommunications stocks hurt performance as the European telecommunications
sector rose 4% over the six-month period. In restructuring the portfolio,
- --------------
1 Holdings and sector breakdowns are disclosed as of February 28, 2003, and are
subject to change.
2
we added to the fund's position in Vodafone Group (4.3% of net assets), a world
leader in wireless telecommunications, and made a new investment in Telefonica
(3.0% of net assets), Spain's telecommunications company. We feel these are high
quality companies with solid profit margins.
In health care, many of the portfolio's holdings did well although the sector
declined approximately 9%. We shifted assets out of brand name drug companies,
which declined, to generic drug companies, such as Teva Pharmaceutical
Industries (3.6% of net assets). The fund's medical technology companies, such
as Smith & Nephew (3.0% of net assets), also made a positive contribution. By
the end of the period, the changes we made to the portfolio had made a
measurable difference as we outperformed our benchmark.
A POTENTIALLY STRONG MARKET IN A DIFFICULT ECONOMY
We are optimistic about the prospects for European stock markets for three
reasons. First, the European markets have declined for nearly three years, which
is a historical anomaly. Stock market indices have declined to 1997 levels.
Second, valuations in Europe have declined. Price-to-book ratios are where they
were in 1992 and price/earnings ratios are at l996 levels. Therefore, we believe
that stocks are attractively valued. Third, we believe that many companies are
better positioned to boost earnings, having restructured their businesses, cut
costs and improved their balance sheets. These factors bode well for stock
market performance, especially in an economy that appears to be stabilizing. In
restructuring, we positioned the fund to take advantage of this type of
environment by shifting assets to companies that are somewhat economically
sensitive.
/s/ Deborah F. Snee
/s/ Penny L. Burgess
Deborah F. Snee and Penny L. Burgess are the portfolio managers of Liberty
Newport Europe Fund. Ms. Snee and Ms. Burgess are vice presidents of Newport
Fund Management, Inc., an affiliate of Columbia Management Group, Inc. Ms. Snee
has co-managed the fund since November 1999 and Ms. Burgess has co-managed the
fund since February 2003.
TOP 5 SECTORS as of 2/28/03 (%)
[bar chart data]:
Financials 22.3%
Consumer discretionary 16.8
Health care 16.7
Consumer staples 13.7
Industrials 9.3
Sector breakdowns are calculated as a percentage of net assets. Since the fund
is actively managed, there is no guarantee the fund will continue to maintain
the same sector breakdowns in the future.
International investing offers significant long-term growth potential, but also
involves certain risks. These risks include currency exchange rate fluctuations,
economic change, instability of emerging countries and political developments. A
portfolio of stocks from a single region poses additional risks due to limited
diversification.
3
INVESTMENT PORTFOLIO
February 28, 2003 (Unaudited)
COMMON STOCKS -- 102.5% SHARES VALUE
- --------------------------------------------------------
CONSUMER DISCRETIONARY -- 16.8%
CONSUMER DURABLES & APPAREL -- 2.0%
FOOTWEAR -- 2.0%
Puma AG 900 $ 60,829
-----------
HOTELS, RESTAURANTS & LEISURE -- 2.8%
HOTELS, RESORTS & CRUISE LINES -- 2.8%
Amadeus Global Travel
Distribution SA 17,900 82,391
-----------
MEDIA -- 6.0%
ADVERTISING -- 0.8%
JC Decaux SA (a) 2,700 24,739
-----------
BROADCASTING & CABLE -- 2.3%
British Sky Broadcasting
Group PLC (a) 6,800 67,261
-----------
PUBLISHING -- 2.9%
Pearson PLC 4,200 31,728
Reed Elsevier PLC 2,200 15,738
VNU N.V. 1,700 37,402
-----------
84,868
-----------
RETAILING -- 6.0%
APPAREL RETAIL -- 2.2%
Industria de Diseno Textil SA 2,700 65,194
-----------
DEPARTMENT STORES-- 1.8%
Marks & Spencer Group PLC 10,923 52,517
-----------
HOME IMPROVEMENT RETAIL -- 2.0%
Kingfisher PLC 16,200 58,321
-----------
- -------------------------------------------------------
CONSUMER STAPLES -- 13.7%
FOOD, BEVERAGE & TOBACCO -- 10.2%
DISTILLERS & VINTNERS -- 3.2%
Diageo PLC 4,723 46,828
Pernod-Ricard SA 625 48,407
-----------
95,235
-----------
PACKAGED FOODS & MEATS -- 5.2%
Nestle SA 260 52,351
Unilever PLC 11,500 102,439
-----------
154,790
-----------
TOBACCO -- 1.8%
Imperial Tobacco Group PLC 3,300 51,442
-----------
HOUSEHOLD & PERSONAL PRODUCTS -- 3.5%
HOUSEHOLD PRODUCTS -- 2.8%
Reckitt Benckiser PLC 5,200 81,919
-----------
PERSONAL PRODUCTS -- 0.7%
L'Oreal SA 300 19,371
-----------
SHARES VALUE
- -------------------------------------------------------
ENERGY -- 6.8%
OIL & GAS -- 6.8%
INTEGRATED OIL & GAS -- 6.8%
BP PLC 15,200 $ 95,687
Eni S.p.A. 1,800 26,632
TotalFinaElf SA 600 79,294
-----------
201,613
-----------
- -------------------------------------------------------
FINANCIALS -- 22.3%
BANKS -- 16.1%
Anglo Irish Bank Corp. PLC 11,800 79,499
Banco Popular Espanol SA 1,954 79,619
Danske Bank A/S 3,000 47,244
Royal Bank of Scotland
Group PLC 4,157 95,059
Standard Chartered PLC 7,700 84,464
UniCredito Italiano S.p.A. 22,300 89,422
-----------
475,307
-----------
DIVERSIFIED FINANCIALS -- 6.2%
DIVERSIFIED FINANCIAL SERVICES -- 6.2%
Bank of Ireland 9,200 101,651
Irish Life & Permanent PLC 8,100 79,456
-----------
181,107
-----------
- -------------------------------------------------------
HEALTH CARE -- 16.7%
HEALTH CARE EQUIPMENT & SERVICES -- 5.1%
HEALTH CARE SUPPLIES -- 5.1%
Nobel Biocare Holding AG 1,058 62,426
Smith & Nephew PLC 15,400 88,706
-----------
151,132
-----------
PHARMACEUTICALS & BIOTECHNOLOGY -- 11.6%
PHARMACEUTICALS -- 11.6%
Aventis SA 1,700 77,022
GlaxoSmithKline PLC, ADR 1,575 41,215
Novartis AG, Registered Shares 1,600 58,767
Sanofi-Synthelabo SA 612 32,735
Schering AG 731 27,351
Teva Pharmaceutical Industries
Ltd., ADR 2,800 105,784
-----------
342,874
-----------
- -------------------------------------------------------
INDUSTRIALS -- 9.3%
CAPITAL GOODS -- 1.3%
ELECTRICAL COMPONENTS & EQUIPMENT -- 1.3%
Schneider Electric SA 900 39,155
-----------
COMMERCIAL SERVICES & SUPPLIES-- 1.9%
EMPLOYMENT SERVICES-- 1.9%
Capita Group PLC 14,400 55,070
-----------
TRANSPORTATION -- 6.1%
AIRLINES -- 2.4%
Ryanair Holdings PLC (a) 10,800 68,920
-----------
See notes to investment portfolio.
4
INVESTMENT PORTFOLIO (CONTINUED)
February 28, 2003 (Unaudited)
COMMON STOCKS (CONTINUED) SHARES VALUE
- -------------------------------------------------------
INDUSTRIALS (CONTINUED)
AIRPORT SERVICES -- 1.8%
BAA PLC 7,800 $ 53,153
-----------
HIGHWAYS & RAILTRACKS -- 1.9%
Acesa Infraestructuras SA 4,500 56,609
-----------
- -------------------------------------------------------
INFORMATION TECHNOLOGY -- 3.6%
SOFTWARE & SERVICES -- 1.8%
APPLICATION SOFTWARE -- 0.8%
Dassault Systemes SA 1,000 22,917
-----------
INTERNET SOFTWARE & SERVICES -- 1.0%
Check Point Software
Technologies Ltd. (a) 1,900 28,253
-----------
TECHNOLOGY HARDWARE & EQUIPMENT -- 1.8%
SEMICONDUCTORS -- 1.4%
ASML Holding N.V. 2,800 20,192
STMicroelectronics N.V. 1,204 22,258
-----------
42,450
-----------
TELECOMMUNICATIONS EQUIPMENT-- 0.4%
Tandberg ASA (a) 2,700 12,814
-----------
- -------------------------------------------------------
MATERIALS -- 5.5%
CHEMICALS -- 3.0%
INDUSTRIAL GASES -- 1.6%
L'Air Liquide SA 362 46,475
-----------
SPECIALTY CHEMICALS -- 1.4%
Givaudan SA 100 41,007
-----------
METALS & MINING -- 1.7%
DIVERSIFIED METALS & MINING -- 1.7%
BHP Billiton PLC 9,800 50,897
-----------
PAPER & FOREST PRODUCTS -- 0.8%
PAPER PRODUCTS -- 0.8%
UPM-Kymmene Oyj 800 22,939
-----------
- -------------------------------------------------------
TELECOMMUNICATION SERVICES -- 7.3%
DIVERSIFIED TELECOMMUNICATION SERVICES-- 3.0%
INTEGRATED TELECOMMUNICATION SERVICES-- 3.0%
Telefonica SA, ADR 9,180 89,060
-----------
WIRELESS TELECOMMUNICATION SERVICES-- 4.3%
Vodafone Group PLC 70,079 125,455
-----------
SHARES VALUE
- -------------------------------------------------------
UTILITIES -- 0.5%
GAS UTILITIES -- 0.5%
Snam Rete Gas S.p.A. 4,400 $ 15,493
-----------
TOTAL COMMON STOCKS -- 102.5%
(cost of $3,175,790)(b) 3,021,577
-----------
OTHER ASSETS & LIABILITIES, NET-- (2.5)% (74,886)
- -------------------------------------------------------
NET ASSETS-- 100.0% $ 2,946,691
-----------
NOTES TO INVESTMENT PORTFOLIO:
(a)Non-income producing.
(b)Cost for federal income tax purposes is the same.
% OF TOTAL
SUMMARY OF SECURITIES COMMON
BY COUNTRY VALUE STOCKS
- -----------------------------------------------------
United Kingdom $1,197,900 39.6%
France 390,115 12.9
Spain 372,873 12.3
Ireland 329,525 10.9
Switzerland 214,552 7.1
Israel 134,037 4.4
Italy 131,547 4.4
Germany 88,180 2.9
Netherlands 79,852 2.6
Denmark 47,244 1.6
Finland 22,939 0.8
Norway 12,813 0.5
---------- -----
$3,021,577 100.0%
========== =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------------ ---------------------------
ADR American Depositary Receipt
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
February 28, 2003 (Unaudited)
ASSETS:
Investments, at cost $ 3,175,790
-----------
Investments, at value $ 3,021,577
Cash 7,006
Foreign currency (cost of $700) 698
Receivable for:
Fund shares sold 725
Dividends 16,147
Expense reimbursement due from
Advisor 15,229
Deferred Trustees' compensation plan 1,058
Other assets 314
-----------
Total Assets 3,062,754
-----------
LIABILITIES:
Payable for:
Investments purchased 57,863
Fund shares repurchased 16,725
Management fee 1,825
Administration fee 723
Transfer agent fee 4,111
Pricing and bookkeeping fees 2,582
Registration fee 19,607
Deferred Trustees' fee 1,058
Other liabilities 11,569
-----------
Total Liabilities 116,063
-----------
NET ASSETS $ 2,946,691
===========
COMPOSITION OF NET ASSETS:
Paid-in capital $ 7,162,035
Accumulated net investment loss (23,247)
Accumulated net realized loss (4,040,434)
Net unrealized appreciation (depreciation) on:
Investments (154,213)
Foreign currency translations 2,550
-----------
NET ASSETS $ 2,946,691
===========
CLASS A:
Net assets $ 1,690,654
Shares outstanding 256,283
-----------
Net asset value per share $ 6.60(a)
===========
Maximum offering price per share
($6.60/0.9425) $ 7.00(b)
===========
CLASS B:
Net assets $ 1,121,812
Shares outstanding 174,615
-----------
Net asset value and offering
price per share $ 6.42(a)
===========
CLASS C:
Net assets $ 134,166
Shares outstanding 21,044
-----------
Net asset value and offering
price per share $ 6.38(a)
===========
CLASS Z:
Net assets $ 59.85
Shares outstanding 9
-----------
Net asset value, offering and
redemption price per share $ 6.65
===========
(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 Six Months Ended
February 28, 2003 (Unaudited)
INVESTMENT INCOME:
Dividends $ 29,213
Interest 2,843
-----------
Total Investment Income (net of
foreign taxes withheld of $3,879) 32,056
-----------
EXPENSES:
Management fee 16,276
Administration fee 5,812
Distribution fee:
Class A 1,527
Class B 4,651
Class C 1,051
Service fee:
Class A 3,865
Class B 1,550
Class C 350
Pricing and bookkeeping fees 5,824
Transfer agent fee 10,912
Trustees' fee 1,734
Custody fee 8,690
Audit fee 11,814
Registration fee 35,674
Other expenses 10,677
-----------
Total Expenses 120,407
Fees and expenses waived or reimbursed by
Advisor (72,596)
Fees waived by Distributor-- Class A (1,527)
-----------
Net Expenses 46,284
-----------
Net Investment Loss (14,228)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized loss on:
Investments (235,024)
Foreign currency transactions (2,988)
-----------
Net realized loss (238,012)
-----------
Net change in unrealized appreciation/depreciation on:
Investments (87,029)
Foreign currency translations 1,883
-----------
Net change in unrealized
appreciation/depreciation (85,146)
-----------
Net Loss (323,158)
-----------
Net Decrease in Net Assets
from Operations $ (337,386)
-----------
See notes to financial statements.
6
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
INCREASE (DECREASE) FEBRUARY 28, AUGUST 31,
IN NET ASSETS: 2003 2002
- -------------------------------------------------------
OPERATIONS:
Net investment loss $ (14,228) $ (1,626)
Net realized loss on
investments and foreign
currency transactions (238,012) (1,744,313)
Net change in unrealized
appreciation/depreciation
on investments and foreign
currency translations (85,146) 258,159
---------- -----------
Net Decrease from Operations (337,386) (1,487,780)
---------- -----------
SHARE TRANSACTIONS:
Class A:
Subscriptions 6,517,312 10,114,890
Redemptions (9,344,296) (10,018,321)
---------- -----------
Net Increase (Decrease) (2,826,984) 96,569
---------- -----------
Class B:
Subscriptions 889,724 1,755,972
Redemptions (1,013,522) (2,039,324)
---------- -----------
Net Decrease (123,798) (283,352)
---------- -----------
Class C:
Subscriptions 7,889,843 4,657,062
Redemptions (7,988,390) (4,789,813)
---------- -----------
Net Decrease (98,547) (132,751)
---------- -----------
Class Z:
Subscriptions 6,901,870 5,357,359
Redemptions (6,946,042) (5,390,636)
---------- -----------
Net Decrease (44,172) (33,277)
---------- -----------
Net Decrease from
Share Transactions (3,093,501) (352,811)
---------- -----------
Total Decrease in Net Assets (3,430,887) (1,840,591)
NET ASSETS:
Beginning of period 6,377,578 8,218,169
---------- -----------
End of period (including
accumulated net
investment loss of
$(23,247) and $(9,019),
respectively) $ 2,946,691 $ 6,377,578
=========== ===========
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, AUGUST 31,
2003 2002
- --------------------------------------------------------
CHANGES IN SHARES:
Class A:
Subscriptions 948,163 1,235,740
Redemptions (1,336,970) (1,209,508)
----------- -----------
Net Increase (Decrease) (388,807) 26,232
----------- -----------
Class B:
Subscriptions 134,800 218,695
Redemptions (152,201) (249,017)
----------- -----------
Net Decrease (17,401) (30,322)
----------- -----------
Class C:
Subscriptions 1,176,364 601,823
Redemptions (1,181,306) (608,975)
----------- -----------
Net Decrease (4,942) (7,152)
----------- -----------
Class Z:
Subscriptions 1,009,269 647,246
Redemptions (1,010,298) (649,035)
----------- -----------
Net Decrease (1,029) (1,789)
----------- -----------
See notes to financial statements.
7
NOTES TO FINANCIAL STATEMENTS
February 28, 2003 (Unaudited)
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Liberty Newport Europe Fund (the "Fund"), a series of Liberty Funds Trust VII
(the "Trust"), is a diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund's investment goal is to seek long-term
growth. The Fund may issue an unlimited number of shares. The Fund offers four
classes of shares: Class A, Class B, Class C and Class Z. 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 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. 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS:
Equity securities generally are valued at the last sale price or, in the case of
unlisted or listed securities for which there were no sales during the day, at
the current quoted bid price. In certain countries, the Fund may hold foreign
designated shares. If the foreign share prices are not readily available as a
result of limited share activity, the securities are valued at the last sale
price of the local shares in the principal market in which such securities are
normally traded.
Forward currency contracts are valued based on the weighted value of
exchange-traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The values of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange ("NYSE"). The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE, which would not be reflected in the computation of
the Fund's net asset value. If events materially affecting the value of such
securities and such exchange rates occur during such period, then these
securities will be valued at their fair value as determined in good faith by or
under the supervision of the Board of Trustees.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value under
procedures approved by the Board of Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS:
All income, expenses (other than Class A, Class B and Class C distribution and
service 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.
Class A, Class B and Class C per share data and ratios are calculated by
adjusting the expense and net investment income per share data and ratios for
the Fund for the entire period by the distribution and service fees applicable
to Class A, Class B and Class C shares only.
8
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 2003 (Unaudited)
FEDERAL INCOME TAXES:
Consistent with the Fund's policy to qualify as a regulated investment company
and to distribute all of its taxable income, no federal income tax has been
accrued.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to shareholders are recorded on the ex-date.
FOREIGN CURRENCY TRANSACTIONS:
Net realized and unrealized gains (losses) on foreign currency transactions
includes gains (losses) arising from the fluctuations in exchange rates between
trade and settlement dates on securities transactions, gains (losses) arising
from the disposition of foreign currency and currency gains (losses) between the
accrual and payment dates on dividends and interest income and foreign
withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) on investments.
FORWARD CURRENCY CONTRACTS:
The Fund may enter into forward currency contracts to purchase or sell foreign
currencies at predetermined exchange rates in connection with the settlement of
purchases and sales of securities. The Fund may also enter into forward currency
contracts to hedge certain other foreign currency denominated assets. The
contracts are used to minimize the exposure to foreign exchange rate
fluctuations during the period between trade and settlement date of the
contracts. All contracts are marked-to-market daily, resulting in unrealized
gains (losses) which become realized at the time the forward currency contracts
are closed or mature. Realized and unrealized gains (losses) arising from such
transactions are included in net realized and unrealized gains (losses) on
foreign currency transactions. Forward currency contracts do not eliminate
fluctuations in the prices of the Fund's portfolio securities. While the maximum
potential loss from such contracts is the aggregate face value in U.S. dollars
at the time the contract was opened, exposure is typically limited to the change
in value of the contract (in U.S. dollars) over the period it remains open.
Risks may also arise if counterparties fail to perform their obligations under
the contracts.
OTHER:
Interest income is recorded on the accrual basis. Corporate actions and dividend
income are recorded on the ex-date (except for certain foreign securities which
are recorded as soon after ex-date as the Fund becomes aware of such), net of
non-reclaimable tax withholdings. Where a high level of uncertainty as to
collection exists, income on securities is recorded net of all tax withholdings
with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 2. FEDERAL TAX INFORMATION
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from 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.
The following capital loss carryforwards, determined as of August 31, 2002, are
available to reduce taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code:
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
------------------ -------------------------
2009 $ 82,647
2010 2,239,196
----------
$2,321,843
==========
NOTE 3. FEES AND COMPENSATION PAID
TO AFFILIATES
MANAGEMENT FEE:
Newport Fund Management, Inc. (the "Advisor"), a subsidiary of Newport Pacific
Management, Inc. ("NPMI"), is the investment advisor of the Fund and receives a
monthly fee equal to 0.70% annually of the Fund's average daily 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 daily net assets.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 2003 (Unaudited)
PRICING AND BOOKKEEPING FEES:
The Administrator is responsible for providing pricing and bookkeeping services
to the Fund under a Pricing and Bookkeeping Agreement. Under a separate
agreement (the "Outsourcing Agreement"), the Administrator has delegated those
functions to State Street Bank and Trust Company ("State Street"). The
Administrator pays fees to State Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, the Administrator
receives from the Fund an annual flat fee of $10,000, paid monthly, and in any
month that the Fund's average daily net assets are more than $50 million, a
monthly fee equal to the average daily net assets of the Fund for that month
multiplied by a fee rate that is calculated by taking into account the fees
payable to State Street under the Outsourcing Agreement. The Fund also pays
out-of-pocket costs for pricing services.
TRANSFER AGENT FEE:
Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of the
Administrator, provides shareholder services for a monthly fee equal to 0.06%
annually of the Fund's average daily net assets plus charges based on the number
of shareholder accounts and transactions. The Transfer Agent also receives
reimbursement for certain out-of-pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of the
Administrator, is the Fund's principal underwriter. For the six months ended
February 28, 2003, the Fund has been advised that the Distributor retained net
underwriting discounts of $90 on sales of the Fund's Class A shares and received
contingent deferred sales charges ("CDSC") of $930, $1,963 and $2,659 on Class
A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan (the "Plan"), which requires the payment of a
monthly service fee to the Distributor equal to 0.25% annually of the average
daily net assets attributable to Class A, Class B and Class C shares as of the
20th of each month. The Plan also requires the payment of a monthly distribution
fee to the Distributor equal to 0.10%, 0.75% and 0.75% annually of the average
daily net assets attributable to Class A, Class B and Class C shares,
respectively. The Distributor has voluntarily agreed to waive the Class A share
distribution fee in its entirety.
The CDSC and the fees received from the Plan are used principally as repayment
to the Distributor for amounts paid by the Distributor to dealers who sold such
shares.
EXPENSE LIMITS:
The Advisor has voluntarily agreed, until further notice, to waive fees and bear
certain Fund expenses so that total expenses (exclusive of service and
distribution fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed 1.50% annually of the Fund's average daily net
assets.
OTHER:
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor, Administrator or any of their affiliates.
The Fund's Independent Trustees may participate in a deferred compensation plan
which may be terminated at any time. Obligations of the plan will be paid solely
out of the Fund's assets.
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. If applicable, the Fund could invest a portion of
the assets utilized in connection with the expense offset arrangement in an
income-producing asset if it had not entered into such an agreement. For the six
months ended February 28, 2003, there were no such credits.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
For the six months ended February 28, 2003, purchases and sales of investments,
other than short-term obligations, were $1,466,153 and $4,161,673, respectively.
Unrealized appreciation (depreciation) at February 28, 2003, based on cost of
investments for federal income tax purposes, was:
Gross unrealized appreciation $ 169,256
Gross unrealized depreciation (323,469)
----------
Net unrealized depreciation $ (154,213)
==========
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
10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 28, 2003 (Unaudited)
currency exchange or other foreign governmental laws or restrictions. In
addition, concentration of investments in a single region or country may result
in greater volatility.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 5. LINE OF CREDIT
The Fund has a fundamental policy which allows it to borrow from banks, other
affiliated funds and other entities to the extent permitted by applicable law,
provided that the Fund's borrowings shall not exceed 33 1/3% of the value of its
total net assets (exclusive of borrowings). The Fund is part of a $200,000,000
credit facility that has been set up as a means of borrowing. 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%. Other investment companies managed
by the Advisor also participate in the line of credit on the same terms. In
addition, a commitment fee of 0.10% per annum on the unused commitment shall be
paid quarterly by each fund based on the relative asset size of each fund to the
Trust as a whole. The commitment fee is included in "Other expenses" on the
Statement of Operations. Because several investment companies participate, there
is no assurance that an individual fund will have access to the entire
$200,000,000 at any particular time. For the six months ended February 28, 2003,
the Fund had no borrowings under the agreement.
NOTE 6. SUBSEQUENT EVENT
On April 1, 2003, the Advisor merged into NPMI, an indirect subsidiary of
Columbia Management Group, Inc. ("CMG"). Immediately following this merger, NPMI
and the Administrator merged into Columbia Management Advisers, Inc.
("Columbia"), a direct subsidiary of CMG, which subsequently became the
investment advisor of the Fund. The merger will not change the way the Fund is
managed, the investment personnel assigned to manage the Fund or the fees paid
by the Fund to Columbia.
11
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS YEAR ENDED
ENDED AUGUST 31, PERIOD ENDED
FEBRUARY 28, -------------------------------- AUGUST 31,
CLASS A SHARES 2003 2002 2001 2000 (a)
========================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.42 $ 9.41 $ 12.26 $ 10.33
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) (0.01) 0.02 (0.01) (0.03)
Net realized and unrealized gain (loss) on
investments and foreign currency (0.81) (2.01) (2.84) 1.96
------- ------- ------- -------
Total from Investment Operations (0.82) (1.99) (2.85) 1.93
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 6.60 $ 7.42 $ 9.41 $ 12.26
======= ======= ======= =======
Total return (c)(d) (11.05)%(e) (21.15)% (23.25)% 18.68%(e)
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (f) 1.75%(g) 1.75% 1.75% 1.75%(g)
Net investment income (loss) (f) (0.37)%(g) 0.18% (0.14)% (0.25)%(g)
Waiver/reimbursement 3.22%(g) 1.93% 1.25% 1.45%(g)
Portfolio turnover rate 34%(e) 71% 67% 24%(e)
Net assets, end of period (000's) $ 1,691 $ 4,788 $ 5,823 $ 9,874
(a)The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with the
Securities and Exchange Commission.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(d)Had the Advisor and/or Distributor not waived or reimbursed a portion of
expenses, total return would have been reduced.
(e)Not annualized.
(f)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g)Annualized.
12
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS YEAR ENDED
ENDED AUGUST 31, PERIOD ENDED
FEBRUARY 28, -------------------------------- AUGUST 31,
CLASS B SHARES 2003 2002 2001 2000 (a)
========================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.26 $ 9.27 $ 12.17 $ 10.33
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.04) (0.05) (0.09) (0.10)
Net realized and unrealized gain (loss) on
investments and foreign currency (0.80) (1.96) (2.81) 1.94
------- ------- ------- -------
Total from Investment Operations (0.84) (2.01) (2.90) 1.84
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 6.42 $ 7.26 $ 9.27 $ 12.17
======= ======= ======= =======
Total return (c)(d) (11.57)%(e) (21.68)% (23.83)% 17.81%(e)
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (f) 2.50%(g) 2.50% 2.50% 2.50%(g)
Net investment loss (f) (1.12)%(g) (0.57)% (0.89)% (1.00)%(g)
Waiver/reimbursement 3.12%(g) 1.83% 1.15% 1.45%(g)
Portfolio turnover rate 34%(e) 71% 67% 24%(e)
Net assets, end of period (000's) $ 1,122 $ 1,394 $ 2,062 $ 2,989
(a)The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with the
Securities and Exchange Commission.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Total return at net asset value assuming no contingent deferred sales
charge.
(d)Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g)Annualized.
13
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS YEAR ENDED
ENDED AUGUST 31, PERIOD ENDED
FEBRUARY 28, -------------------------------- AUGUST 31,
CLASS C SHARES 2003 2002 2001 2000 (a)
========================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.26 $ 9.28 $ 12.19 $ 10.33
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.04) (0.05) (0.09) (0.10)
Net realized and unrealized gain (loss) on
investments and foreign currency (0.84) (1.97) (2.82) 1.96
------- ------- ------- -------
Total from Investment Operations (0.88) (2.02) (2.91) 1.86
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 6.38 $ 7.26 $ 9.28 $ 12.19
======= ======= ======= =======
Total return (c)(d) (12.12)%(e) (21.77)% (23.87)% 18.01%(e)
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (f) 2.50%(g) 2.50% 2.50% 2.50%(g)
Net investment loss (f) (1.12)%(g) (0.57)% (0.89)% (1.00)%(g)
Waiver/reimbursement 3.12%(g) 1.83% 1.15% 1.45%(g)
Portfolio turnover rate 34%(e) 71% 67% 24%(e)
Net assets, end of period (000's) $ 134 $ 189 $ 308 $ 488
(a)The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with the
Securities and Exchange Commission.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Total return at net asset value assuming no contingent deferred sales
charge.
(d)Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g)Annualized.
14
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows:
(UNAUDITED)
SIX MONTHS YEAR ENDED
ENDED AUGUST 31, PERIOD ENDED
FEBRUARY 28, -------------------------------- AUGUST 31,
CLASS Z SHARES 2003 2002 2001 2000 (a)
========================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.39 $ 9.09 $ 11.83 $ 10.33
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) --(c) 0.04 0.01 --(c)
Net realized and unrealized gain (loss) on
investments and foreign currency (0.74) (1.74) (2.75) 1.50
------- ------- ------- -------
Total from Investment Operations (0.74) (1.70) (2.74) 1.50
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 6.65 $ 7.39 $ 9.09 $ 11.83
======= ======= ======= =======
Total return (d)(e) (10.01)%(f) (18.70)% (23.16)% 14.52%(f)
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (g) 1.50%(h) 1.50% 1.50% 1.50%(h)
Net investment income (loss) (g) (0.12)%(h) 0.43% 0.11% --%(h)(i)
Waiver/reimbursement 3.12%(h) 1.83% 1.15% 1.45%(h)
Portfolio turnover rate 34%(f) 71% 67% 24%(f)
Net assets, end of period (000's) $ --(j) $ 8 $ 26 $ 35
(a)The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with the
Securities and Exchange Commission.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Rounds to less than $0.01 per share.
(d)Total return at net asset value.
(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, if applicable, had an impact of less than 0.01%.
(h)Annualized.
(i)Rounds to less than 0.01%.
(j)Rounds to less than $1,000.
15
[THIS PAGE INTENTIONALLY LEFT BLANK]
TRANSFER AGENT
Important Information About This Report
The Transfer Agent for Liberty Newport Europe Fund is:
Liberty Funds Services, Inc.
P.O. Box 8081
Boston, MA 02266-8081
The fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call shareholder services at 800-345-6611 and
additional reports will be sent to you.
This report has been prepared for shareholders of Liberty Newport Europe 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.
Semiannual Report:
Liberty Newport Europe Fund
Liberty Newport Europe Fund SEMIANNUAL REPORT, FEBRUARY 28, 2003
[eagle head logo]
LibertyFunds
A Member of Columbia Management Group
(C)2003 Liberty Funds Distributor, Inc.
A Member of Columbia Management Group
One Financial Center, Boston, MA 02111-2621
PRSRT STD
U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
738-03/083N-0303 (04/03) 03/0823
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEMS 4-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable at this time.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Not applicable at this time.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could affect these controls subsequent to the date of our
evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) in the exact form set forth below: Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Liberty Funds Trust VII
-----------------------------------------------------------
By (Signature and Title)* /s/ Joseph R. Palombo
----------------------------------------------
Joseph R. Palombo, President
Date April 25, 2003
-------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Joseph R. Palombo
----------------------------------------------
Joseph R. Palombo, President
Date April 25, 2003
-------------------------------------------------------------------
By (Signature and Title)* /s/ J. Kevin Connaughton
----------------------------------------------
J. Kevin Connaughton, Treasurer
Date April 25, 2003
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.