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