N-CSR
COLUMBIA FUNDS TRUST VII
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6347
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Columbia Funds Trust VII
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Russell Kane, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3363
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Date of fiscal year end: 08/31/2003
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Date of reporting period: 08/31/2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270,30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C, ss. 3507.
Item 1. Reports to Stockholders
[GRAPHIC]
Columbia
Newport Tiger Fund
Annual Report
August 31, 2003
We are now Columbia Funds!
INSIDE -- Management's discussion of the changes effective as of October 13,
2003.
President's Message
[PHOTO]
Dear Shareholder:
As you know, the fund you invest in has long been associated with a larger
investment management organization. In the 1990s, it was affiliated with
Liberty Financial, whose asset management companies included Colonial, Stein
Roe and Newport. In 2001, these companies became part of the asset management
division of Fleet Boston Financial Corp., which you know as Columbia Management
Group (CMG).
Earlier this year, six of the asset management firms that were brought together
under the CMG umbrella were consolidated and renamed Columbia Management
Advisors, Inc. On October 13, 2003, we took the natural next step forward in
this process by changing the name of our funds from Liberty to Columbia. For
example, Liberty Newport Tiger Fund was changed to Columbia Newport Tiger Fund.
We have also modified certain fund names that existed under both the Liberty
and Columbia brands.
As a result of these fund name changes, most fund CUSIP numbers have changed.
(A CUSIP is a unique identification number assigned to each class of a mutual
fund by the Committee on Uniform Security Identification Procedures.) However,
ticker symbols have not changed. A list of new fund names and other information
related to these changes are available online at www.columbiafunds.com, our new
website address.
A consolidated identity
The consolidation of our management under a single organization and the
renaming of our funds are part of a larger effort to create a consistent
identity. Having taken these additional steps, we believe it will be easier for
our shareholders to do business with us. All funds will be listed under the
"Columbia" name in the mutual fund listings section of your newspaper (as long
as they meet the newspaper's listing requirements). All service inquires will
be handled by Columbia Funds Services, Inc., the new name of our shareholder
service organization.
What will not change is our commitment to fund shareholders. We remain
committed to providing the best possible customer service and to offering a
wide variety of mutual funds to help you pursue your long-term financial goals.
Should you have questions, please call shareholder services at 800-345-6611.
In the report that follows, your portfolio manager talks in depth about
investment strategies and other factors that affected your fund's performance
during the period. We encourage you to read the report carefully.
As always, we thank you for your business and we look forward to continuing to
serve your investment needs.
Sincerely,
/s/ Joseph R. Palumbo
Joseph R. Palombo
President
Net asset value per share as of 08/31/03 ($)
Class A 10.24
Class B 9.90
Class C 9.91
Class T 10.29
Class Z 10.26
[LOGO] Not FDIC Insured May Lose Value
No Bank Guarantee
Economic and market conditions change frequently. There is no assurance that
the trends described in this report will continue or commence.
Performance Information
Value of a $10,000 investment
8/31/93--8/31/03
Performance of a $10,000 investment
8/31/93--8/31/03 ($)
without sales with sales
charge charge
- --------------------------------
Class A 12,290 11,584
- --------------------------------
Class B 11,527 11,527
- --------------------------------
Class C 11,531 11,531
- --------------------------------
Class T 12,525 11,805
- --------------------------------
Class Z 12,490 n/a
[CHART]
Liberty Newport Liberty Newport MSCI AC
Tiger - A Tiger - A ASIA FREE
Without With ex JAPAN
sales charge sales charge Index
------------ ------------ -----------
08/31/1993 $10,000 $ 9,425 $10,000
09/30/1993 10,201 9,614 10,386
10/31/1993 11,845 11,164 12,299
11/30/1993 11,622 10,953 12,217
12/31/1993 13,974 13,170 15,187
01/31/1994 13,334 12,567 14,149
02/28/1994 12,648 11,921 13,541
03/31/1994 11,368 10,715 12,087
04/30/1994 12,166 11,467 12,550
05/31/1994 12,739 12,007 13,021
06/30/1994 12,054 11,361 12,584
07/31/1994 12,683 11,954 13,237
08/31/1994 13,425 12,653 14,293
09/30/1994 13,346 12,579 14,016
10/31/1994 13,514 12,737 14,235
11/30/1994 12,436 11,721 12,978
12/31/1994 12,303 11,595 12,614
01/31/1995 11,084 10,446 11,318
02/28/1995 12,120 11,423 12,263
03/31/1995 12,382 11,670 12,255
04/30/1995 12,404 11,691 12,086
05/31/1995 13,863 13,066 13,446
06/30/1995 13,680 12,893 13,236
07/31/1995 14,011 13,205 13,485
08/31/1995 13,543 12,764 12,863
09/30/1995 13,793 13,000 13,016
10/31/1995 13,702 12,914 12,792
11/30/1995 13,736 12,947 12,502
12/31/1995 14,301 13,479 13,120
01/31/1996 15,678 14,777 14,139
02/29/1996 15,678 14,777 14,293
03/31/1996 15,564 14,669 14,398
04/30/1996 15,506 14,615 14,916
05/31/1996 15,426 14,539 14,749
06/30/1996 15,082 14,214 14,529
07/31/1996 14,232 13,414 13,457
08/31/1996 14,749 13,901 13,863
09/30/1996 15,186 14,313 14,102
10/31/1996 15,082 14,215 13,834
11/30/1996 15,874 14,961 14,487
12/31/1996 15,866 14,954 14,436
01/31/1997 15,763 14,857 14,735
02/28/1997 15,740 14,835 14,860
03/31/1997 14,770 13,921 14,020
04/30/1997 14,504 13,670 13,812
05/31/1997 15,796 14,888 14,436
06/30/1997 16,457 15,510 14,964
07/31/1997 16,712 15,751 15,090
08/31/1997 13,852 13,056 12,414
09/30/1997 14,384 13,557 12,359
10/31/1997 10,877 10,252 9,611
11/30/1997 10,588 9,979 8,952
12/31/1997 10,477 9,875 8,618
01/31/1998 8,781 8,276 7,873
02/28/1998 10,651 10,039 9,542
03/31/1998 10,547 9,940 9,401
04/30/1998 9,583 9,032 8,578
05/31/1998 8,131 7,663 7,269
06/30/1998 7,249 6,832 6,453
07/31/1998 6,737 6,350 6,289
08/31/1998 5,678 5,351 5,384
09/30/1998 6,690 6,306 5,918
10/31/1998 8,796 8,291 7,204
11/30/1998 9,215 8,685 7,786
12/31/1998 9,211 8,682 7,948
01/31/1999 8,643 8,146 7,821
02/28/1999 8,608 8,113 7,669
03/31/1999 9,424 8,883 8,588
04/30/1999 11,508 10,846 10,158
05/31/1999 10,821 10,199 9,939
06/30/1999 12,124 11,427 11,492
07/31/1999 12,112 11,415 11,239
08/31/1999 12,183 11,483 11,517
09/30/1999 11,674 11,003 10,711
10/31/1999 12,289 11,583 11,055
11/30/1999 13,983 13,179 12,107
12/31/1999 15,949 15,032 13,088
01/31/2000 15,143 14,273 13,023
02/29/2000 15,652 14,752 12,751
03/31/2000 16,339 15,400 13,051
04/30/2000 15,155 14,283 11,854
05/31/2000 14,124 13,312 10,823
06/30/2000 15,664 14,763 11,394
07/31/2000 15,676 14,775 10,907
08/31/2000 15,676 14,775 10,826
09/30/2000 14,540 13,704 9,585
10/31/2000 13,817 13,023 8,831
11/30/2000 13,107 12,353 8,489
12/31/2000 13,427 12,655 8,476
01/31/2001 14,385 13,558 9,567
02/28/2001 13,532 12,754 9,116
03/31/2001 11,862 11,180 8,084
04/30/2001 12,573 11,850 8,096
05/31/2001 12,278 11,572 8,084
06/30/2001 11,934 11,248 7,890
07/31/2001 11,614 10,946 7,591
08/31/2001 10,844 10,220 7,473
09/30/2001 9,187 8,659 6,298
10/31/2001 9,507 8,960 6,638
11/30/2001 10,644 10,032 7,525
12/31/2001 11,205 10,560 8,151
01/31/2002 11,360 10,707 8,477
02/28/2002 11,300 10,650 8,539
03/31/2002 11,957 11,269 9,111
04/30/2002 12,076 11,382 9,204
05/31/2002 11,766 11,089 8,996
06/30/2002 11,145 10,504 8,549
07/31/2002 10,535 9,929 8,225
08/31/2002 10,284 9,693 8,080
09/30/2002 9,365 8,826 7,190
10/31/2002 9,783 9,220 7,555
11/30/2002 10,356 9,760 7,957
12/31/2002 9,767 9,205 7,472
01/31/2003 9,707 9,149 7,533
02/28/2003 9,383 8,843 7,229
03/31/2003 8,999 8,482 6,891
04/30/2003 9,143 8,617 7,108
05/31/2003 9,839 9,273 7,722
06/30/2003 10,487 9,884 8,208
07/31/2003 11,339 10,687 8,908
08/31/2003 12,290 11,584 9,591
Mutual fund performance changes over time. Please visit www.columbiafunds.com
for daily performance updates
Past performance is no guarantee of future investment results. The principal
value and investment return will fluctuate, resulting in a gain or loss on
sale. The Morgan Stanley Capital International (MSCI) AC Asia Free ex Japan
Index is an unmanaged index that tracks the performance of equity securities in
eleven countries in Asia, excluding Japan and taking into account local market
restrictions on share ownership by foreigners. Unlike the fund, indices are not
investments and do not incur fees or expenses and are not professionally
managed. Securities in the fund may not match those in the index. It is not
possible to invest directly in an index.
Average annual total return as of 8/31/03 (%)
Share class A B C T Z
Inception 4/1/95 4/1/95 4/1/95 5/31/89 5/31/89
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without with without with without with without with without
sales sales sales sales sales sales sales sales sales
charge charge charge charge charge charge charge charge charge
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8-month
(cumulative) 25.80 18.57 25.32 20.32 25.28 24.28 26.10 18.85 26.04
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1-year 19.46 12.60 18.71 13.71 18.68 17.68 19.79 12.90 19.86
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5-year 16.69 15.32 15.82 15.60 15.78 15.78 16.98 15.60 16.91
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10-year 2.08 1.48 1.43 1.43 1.43 1.43 2.28 1.67 2.25
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Average annual total return as of 6/30/03 (%)
Share class A B C T Z
without with without with without with without with without
sales sales sales sales sales sales sales sales sales
charge charge charge charge charge charge charge charge charge
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8-month
(cumulative) 6.80 0.66 6.28 1.28 6.27 5.27 7.04 0.88 7.06
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1-year -5.90 -11.31 -6.62 -11.29 -6.62 -7.55 -5.64 -11.07 -5.65
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5-year 7.67 6.40 6.85 6.54 6.83 6.83 7.89 6.62 7.87
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10-year 1.06 0.46 0.43 0.43 0.43 0.43 1.25 0.65 1.23
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Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale. All results shown assume reinvestment of distributions. The "with sales
charge" returns include the maximum 5.75% charge for class A and T shares, the
appropriate class B contingent deferred sales charge (CDSC) for the holding
period after purchase as follows: Through the 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 contingent 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.
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.
The fund was originally introduced on 5/31/89 and became Colonial Newport Tiger
Fund on 4/1/95 when class A, B, and D (since designated C) shares were offered.
On 4/30/98, the fund was renamed Newport Tiger Fund. The fund was renamed
Liberty Newport Tiger Fund on July 14, 2000. Please see the fund's prospectus
for additional details. Class A, B and C share performance information includes
returns of the fund's class T shares for periods prior to the inception dates
of those classes. Class T share returns are not restated to reflect any expense
differential, e.g., Rule 12b-1 fees, between class T shares and class A, B, and
C shares. Had expense differentials been reflected, returns for the periods
prior to the inception date of the class A, B and C shares would have been
lower.
1
Top 5 countries as of 8/31/03 (%)
Hong Kong 21.5
South Korea 15.1
China 12.4
India 12.0
Taiwan 11.2
Top 10 holdings as of 8/31/03 (%)
Samsung Electronics 7.8
Taiwan Semiconductor Manufacturing 6.2
Sun Hung Kai Properties 5.5
Hutchison Whampoa 4.8
China Mobile 4.1
Huaneng Power International 3.9
Housing Development Finance 3.5
Infosys Technologies 3.1
Hong Kong & China Gas 3.1
KT Corp. 3.0
Top 5 countries are calculated as a percentage of total investments and top
10 holdings are calculated as a percentage of net assets.
Since the fund is actively managed, there is no guarantee the fund will
continue to maintain these holdings or countries in the future.
Bought
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Ranbaxy Laboratories Ltd. (1.4% of net assets)
We expect this India-based generic pharmaceutical company to benefit from the
global push to limit rising health care costs.
Sold
- --------------------------------------------------------------------------------
Singapore Technologies Engineering
We sold our position in this aerospace and defense company because we believe
it will experience limited growth over the next year or two.
Portfolio Managers' Report
The Board of Trustees for Columbia Newport Tiger Fund approved the change of
the fund's fiscal year end from December 31 to August 31. As a result, this
report covers the eight-month period since the last annual report was issued.
The next report you receive will cover the six-month period through February
2004.
For the eight-month period ended August 31, 2003, Columbia Newport Tiger Fund
class A shares returned 25.80% without sales charge. That was lower than the
28.36% return from the MSCI AC Asia Free ex Japan Index. The fund also
underperformed the 26.36% average return of its peer group, the Lipper Pacific
ex Japan Category./1/ Early in the period, the fund lost ground against its
benchmark and peer group. At that time, the fund had an overweight position in
Hong Kong, which was hit hard by SARS (severe acute respiratory syndrome). In
addition, Infosys Technologies Ltd. (3.1% of net assets), an India-based
technology company, declined sharply./2/ Once SARS appeared under control and
the Hong Kong economy began to improve, stocks in Hong Kong began to rebound.
Infosys also rallied strongly as the technology sector staged a comeback.
Real estate, technology and financial companies were themes
In Hong Kong, which was the fund's biggest country position, property companies
such as Henderson Land Development Co. Ltd., Sun Hung Kai Properties Ltd. and
Swire Pacific Ltd. (1.1%, 5.5% and 1.2% of net assets, respectively) strongly
aided the fund's return. These companies benefited from an upturn in the Hong
Kong economy and government policy changes related to the ownership of property.
In South Korea, the fund's second largest country allocation, individual
companies did well. However, the investment environment in Korea was negatively
affected when the consumer credit bubble burst in 2001-2002. In addition,
unexpectedly high wage settlements with labor unions and instability in North
Korea contributed to a weak market. However, Samsung Electronics Co. Ltd. (7.8%
of net assets), the fund's largest
- ------------
/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/ Holdings are disclosed as of August 31, 2003, and are subject to change.
2
corporate holding, continued to aid total return. Samsung is a globally
recognizable brand, and its products continue to be strong sellers.
After suffering from a poor economy and a deflationary spiral, long-term
prospects for Taiwan improved. Stock valuations were at a historically low
level, and the government has instituted new policies that should attract more
foreign investment. In addition, there is a market-oriented government in
mainland China, where many Taiwanese manufacturers are located. All of these
factors are positive for Taiwan's economy and stock market. To capitalize on
the improving environment, we added Chinatrust Financial Holding Co. Ltd. (1.0%
of net assets) to our financial services holdings.
Our investments in Thailand did well. Thailand's low interest rates have
sparked an increase in consumer spending, profit growth is robust and stock
valuations are attractive. Some economists have raised their expectations for
gross domestic product (GDP) growth for 2003 and 2004. The positive economic
environment in Thailand has benefited the financial and real estate sectors. To
take advantage of this situation, we invested in Bangkok Bank and Kasikornbank
Public Co., Ltd. (2.5% and 1.9% of net assets, respectively). We also added
Land & Houses (2.3% of net assets), a real estate company.
A more positive outlook
In general, we are positive about the prospects for the emerging markets of
Asia. The "dividend culture" has been growing in many markets, and companies
are eager to make dividend payments to shareholders. Interest rates are at
historically low levels, and the debt-to-equity ratio for many companies is at
a 25-year low. Several important elections are scheduled for 2004. In the past,
the election season has been a stimulus for growth for Asian economies. We
believe that the fund is well positioned to take advantage of all of these
developments.
/s/ Chris Legallet /s/ Eric Sandlund
Chris Legallet and Eric Sandlund are the co-managers of Columbia Newport Tiger
Fund. Mr. Legallet has managed or co-managed the fund since October 1998. Mr.
Sandlund has co-managed the fund since August 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.
A concentration of investments in a specific sector, such as technology, may
cause a fund to experience increased volatility.
Top 5 sectors as of 8/31/03 (%)
[CHART]
Financials 32.3
Information technology 21.4
Consumer discretionary 11.1
Telecommunication services 9.1
Utilities 8.5
Sectors breakdowns are calculated as a percentage of net assets. Since the fund
is actively managed, there is no guarantee the fund will continue to maintain
this breakdown in the future.
3
Investment Portfolio
August 31, 2003
Common Stocks - 98.7% Shares Value
----------------------------------------------------------
CONSUMER DISCRETIONARY - 11.1%
Automobiles - 3.4%
Bajaj Auto Ltd. 58,300 $ 925,478
Hyundai Motors Co., Ltd. 239,350 7,988,523
PT Astra International (a) 7,733,000 3,463,217
------------
12,377,218
------------
Hotels, Restaurants & Leisure - 2.2%
Genting Berhad 1,981,000 8,132,526
------------
Media - 3.0%
Singapore Press Holdings Ltd. 632,400 6,744,927
Television Broadcasts Ltd. 985,000 4,155,079
------------
10,900,006
------------
Specialty Retail - 0.2%
Big C Supercenter Public Co., Ltd.,
NVDR 1,921,000 874,244
------------
Textiles, Apparel & Luxury Goods - 2.3%
Li & Fung Ltd. 4,906,000 8,366,163
------------
----------------------------------------------------------
CONSUMER STAPLES - 1.3%
Food & Drug Retailing - 0.2%
Convenience Retail Asia Ltd. 3,258,000 856,352
------------
Food Products - 1.1%
Nestle India Ltd. 244,800 3,069,342
Thai Union Frozen Products Public
Co., Ltd. 1,218,700 919,438
------------
3,988,780
------------
----------------------------------------------------------
FINANCIALS - 32.3%
Banks - 15.7%
Bangkok Bank Public Co.,
Ltd. (a) 5,186,700 9,088,401
Chinatrust Financial Holding
Co., Ltd. 4,384,780 3,575,737
DBS Group Holdings Ltd. 560,859 4,030,584
Hang Seng Bank Ltd. 752,200 8,318,396
Hong Leong Bank Berhad 3,141,000 4,628,842
Kasikornbank Public Co., Ltd.,
NVDR (a) 6,841,200 6,909,462
Kookmin Bank 210,225 7,687,666
Public Bank Berhad 7,995,312 5,575,678
United Overseas Bank Ltd. 1,043,000 7,554,954
------------
57,369,720
------------
Diversified Financials - 4.8%
Housing Development Finance
Corp., Ltd. 1,232,586 12,969,568
Swire Pacific Ltd., Series A 791,000 4,442,196
------------
17,411,764
------------
Shares Value
-------------------------------------------------------
Real Estate - 11.8%
City Developments Ltd. 2,199,500 $ 6,397,907
Henderson Land Development
Co., Ltd. 1,104,000 4,175,786
Land & Houses Public Co., Ltd. 7,631,000 2,247,143
Land & Houses Public Co., Ltd.,
NVDR 24,222,000 6,307,506
SM Prime Holdings, Inc. 39,173,000 3,850,978
Sun Hung Kai Properties Ltd. 2,796,000 20,255,025
------------
43,234,345
------------
-------------------------------------------------------
HEALTH CARE - 4.5%
Health Care Equipment & Supplies - 0.2%
Pihsiang Machinery
Manufacturing Co., Ltd. 270,000 879,143
------------
Pharmaceuticals - 4.3%
Dr. Reddy's Laboratories Ltd.,
ADR 417,400 10,581,090
Ranbaxy Laboratories Ltd. (a) 234,900 5,128,257
------------
15,709,347
------------
-------------------------------------------------------
INDUSTRIALS - 8.2%
Electrical Equipment - 0.5%
Phoenixtec Power Co., Ltd. 1,501,470 1,761,772
------------
Industrial Conglomerates - 6.4%
China Merchants Holdings
International Co., Ltd. 5,302,000 5,914,338
Hutchison Whampoa Ltd. 2,361,100 17,407,219
------------
23,321,557
------------
Transportation Infrastructure - 1.3%
Zhejiang Expressway Co., Ltd. 9,984,000 4,832,465
------------
-------------------------------------------------------
INFORMATION TECHNOLOGY - 21.4%
Computers & Peripherals - 1.6%
Asustek Computer, Inc. 2,211,750 5,968,935
------------
Electronic Equipment & Instruments - 1.7%
Ambit Microsystems Corp. 1,091,200 2,992,878
Venture Corp., Ltd. 275,000 3,168,311
------------
6,161,189
------------
Information Technology Consulting & Services - 3.1%
Infosys Technologies Ltd. 132,573 11,304,262
------------
Semiconductor Equipment & Products - 15.0%
Realtek Semiconductor Corp. 1,623,600 3,524,388
Samsung Electronics Co., Ltd. 77,480 28,696,296
Taiwan Semiconductor
Manufacturing Co., Ltd. (a) 11,455,315 22,514,113
------------
54,734,797
------------
-------------------------------------------------------
See notes to investment portfolio.
4
Investment Portfolio (continued)
August 31, 2003
Common Stocks (continued) Shares Value
-------------------------------------------------------
MATERIALS - 2.3%
Construction Materials - 2.3%
Siam Cement Public Co., Ltd. 193,500 $ 885,325
Siam Cement Public Co., Ltd.,
NVDR 1,809,500 7,486,371
------------
8,371,696
------------
-------------------------------------------------------
TELECOMMUNICATION SERVICES - 9.1%
Diversified Telecommunication Services - 5.1%
KT Corp., ADR 588,064 11,085,006
Philippine Long Distance
Telephone Co. (a) 443,000 4,314,673
PT Telekomunikasi 5,865,200 3,162,439
------------
18,562,118
------------
Wireless Telecommunication Services - 4.0%
China Mobile Ltd. 5,766,000 14,823,002
------------
-------------------------------------------------------
UTILITIES - 8.5%
Electric Utilities - 5.4%
Beijing Datang Power Generation
Co., Ltd. 10,532,000 5,705,382
Huaneng Power International,
Inc. 10,350,000 14,199,442
------------
19,904,824
------------
Gas Utilities - 3.1%
Hong Kong & China Gas Co., Ltd. 8,303,908 11,179,413
------------
Total Common Stocks
(cost of $315,071,361) 361,025,638
------------
Short-Term Obligation - 1.8% Par Value
----------------------------------------------------------
Repurchase agreement with State
Street Bank & Trust Co., dated
08/29/03, due 09/02/03 at
0.940%, collateralized by a U.S.
Treasury Bond maturing
05/15/16, market value of
$6,636,281 (repurchase
proceeds $6,505,679)
(cost of $6,505,000) $6,505,000 $ 6,505,000
------------
Total Investments - 100.5%
(cost of $321,576,361) (b) 367,530,638
------------
Other Assets & Liabilities, Net - (0.5)% (1,784,055)
----------------------------------------------------------
Net Assets - 100.0% $365,746,583
------------
Notes to Investment Portfolio:
(a) Non-income producing.
(b) Cost for federal income tax purposes is $321,600,859.
Acronym Name
- ------- ----
ADR American Depositary Receipt
NVDR Non-Voting Depositary Receipt
Summary of Securities % of Total
by Country (Unaudited) Value Investments
-----------------------------------------------
Hong Kong $ 79,155,628 21.5%
South Korea 55,457,492 15.1
China 45,474,629 12.4
India 43,977,996 12.0
Taiwan 41,216,967 11.2
Thailand 34,717,890 9.4
Singapore 27,896,682 7.6
Malaysia 18,337,047 5.0
Philippines 8,165,651 2.2
Indonesia 6,625,656 1.8
United States 6,505,000 1.8
------------ -----
$367,530,638 100.0%
------------ -----
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
See notes to financial statements.
5
Statement of Assets and Liabilities
August 31, 2003
Assets:
Investments, at cost $ 321,576,361
-------------
Investments, at value $ 367,530,638
Cash 498
Foreign currency (cost of $1,658,093) 1,658,073
Receivable for:
Fund shares sold 697,229
Interest 509
Dividends 718,868
Deferred Trustees' compensation plan 17,605
-------------
Total Assets 370,623,420
-------------
Liabilities:
Payable for:
Investments purchased 898,090
Fund shares repurchased 739,308
Management fee 253,576
Administration fee 79,404
Transfer agent fee 170,891
Pricing and bookkeeping fees 12,008
Distribution and service fees 123,854
Custody fee 100,420
Foreign capital gains tax payable 2,250,269
Expense reimbursement due to Advisor 157,373
Deferred Trustees' fee 17,605
Other liabilities 74,039
-------------
Total Liabilities 4,876,837
-------------
Net Assets $ 365,746,583
-------------
Composition of Net Assets:
Paid-in capital $ 540,401,178
Undistributed net investment income 1,622,391
Accumulated net realized loss (219,982,231)
Net unrealized appreciation/depreciation on:
Investments 45,954,277
Foreign currency translations 1,237
Foreign capital gains tax (2,250,269)
-------------
Net Assets $ 365,746,583
-------------
Class A:
Net assets $ 131,974,394
Shares outstanding 12,883,771
-------------
Net asset value per share $ 10.24(a)
-------------
Maximum offering price per share ($10.24/0.9425) $ 10.86(b)
-------------
Class B:
Net assets $ 118,848,846
Shares outstanding 12,006,908
-------------
Net asset value and offering price per share $ 9.90(a)
-------------
Class C:
Net assets $ 22,619,406
Shares outstanding 2,282,377
-------------
Net asset value and offering price per share $ 9.91(a)
-------------
Class T:
Net assets $ 27,500,950
Shares outstanding 2,672,036
-------------
Net asset value per share $ 10.29(a)
-------------
Maximum offering price per share ($10.29/0.9425) $ 10.92(b)
-------------
Class Z:
Net assets $ 64,802,987
Shares outstanding 6,314,217
-------------
Net asset value and offering price per share $ 10.26(c)
-------------
(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.
(c) Redemption price per share is equal to net asset value less any applicable
redemption fee.
Statement of Operations
For the For the
Period Ended Year Ended
August 31, December
2003 (a) 31, 2002
------------ ------------
Investment Income:
Dividends $ 6,364,074 $ 11,033,617
Interest 35,990 126,796
----------- ------------
Total Investment Income (net
of foreign taxes withheld of
$515,828 and $1,269,899) 6,400,064 11,160,413
----------- ------------
Expenses:
Management fee 1,762,612 3,835,667
Administration fee 532,058 1,195,223
Distribution fee:
Class B 531,013 1,075,185
Class C 96,204 189,007
Service fee:
Class A 178,976 424,851
Class B 177,004 358,395
Class C 32,068 63,002
Pricing and bookkeeping fees 69,800 193,713
Transfer agent fee 952,674 1,758,227
Trustees' fees 12,471 23,741
Custody fee 269,987 535,341
Other expenses 146,938 196,749
----------- ------------
Total Operating Expenses 4,761,805 9,849,101
Fees and expenses waived or
reimbursed by Advisor (437,391) (341,020)
Custody earnings credit (644) (1,297)
----------- ------------
Net Operating Expenses 4,323,770 9,506,784
Interest expense 4,082 64,499
----------- ------------
Net Expenses 4,327,852 9,571,283
----------- ------------
Net Investment Income 2,072,212 1,589,130
----------- ------------
Net Realized And Unrealized Gain (Loss) on Investments
and Foreign Currency:
Net realized gain (loss) on:
Investments 586,614 13,323,533
Foreign currency transactions (209,692) (553,549)
Foreign capital gains tax (200,361) --
----------- ------------
Net realized gain 176,561 12,769,984
----------- ------------
Net change in unrealized
appreciation/depreciation on:
Investments 74,192,548 (61,475,526)
Foreign currency translations (1,195) 3,882
Foreign capital gains tax (2,250,269) --
----------- ------------
Net change in unrealized
appreciation/depreciation 71,941,084 (61,471,644)
----------- ------------
Net Gain (Loss) 72,117,645 (48,701,660)
----------- ------------
Net Increase (Decrease) in Net
Assets From Operations $74,189,857 $(47,112,530)
----------- ------------
(a) The Fund has changed its fiscal year from December 31 to August 31.
See notes to financial statements.
6
Statements of Changes in Net Assets
Period Ended Year Ended December 31,
August 31, ----------------------------
Increase (Decrease) in Net Assets: 2003 (a) 2002 2001
- ---------------------------------------------------------------------------- -----------------------------
Operations:
Net investment income $ 2,072,212 $ 1,589,130 $ 3,480,675
Net realized gain (loss) on investments, foreign currency transactions and
foreign capital gains tax 176,561 12,769,984 16,561,399
Net change in unrealized appreciation/depreciation on investments, foreign
currency translations and foreign capital gains tax 71,941,084 (61,471,644) (130,353,256)
------------- ------------- -------------
Net Increase (Decrease) from operations 74,189,857 (47,112,530) (110,311,182)
------------- ------------- -------------
Distributions declared to shareholders:
From net investment income:
Class A -- (522,787) (1,930,005)
Class B -- -- (337,440)
Class C -- -- (57,192)
Class T -- (179,551) (365,762)
Class Z -- (667,756) (1,538,179)
------------- ------------- -------------
Total distributions declared to shareholders -- (1,370,094) (4,228,578)
------------- ------------- -------------
Share Transactions:
Class A:
Subscriptions 131,510,550 643,189,834 714,848,613
Distributions reinvested -- 463,247 1,395,674
Redemptions (135,540,145) (698,824,493) (826,623,955)
------------- ------------- -------------
Net Decrease (4,029,595) (55,171,412) (110,379,668)
------------- ------------- -------------
Class B:
Subscriptions 3,837,634 9,920,631 10,670,520
Distributions reinvested -- -- 291,464
Redemptions (22,251,418) (42,924,609) (68,922,824)
------------- ------------- -------------
Net Decrease (18,413,784) (33,003,978) (57,960,840)
------------- ------------- -------------
Class C:
Subscriptions 9,575,621 43,515,160 25,562,822
Distributions reinvested -- -- 49,574
Redemptions (11,445,140) (48,691,339) (33,772,697)
------------- ------------- -------------
Net Decrease (1,869,519) (5,176,179) (8,160,301)
------------- ------------- -------------
Class T:
Subscriptions 58,308 234,399 1,693,179
Distributions reinvested -- 157,730 319,333
Redemptions (2,469,957) (4,265,132) (9,184,602)
------------- ------------- -------------
Net Decrease (2,411,649) (3,873,003) (7,172,090)
------------- ------------- -------------
Class Z:
Subscriptions 59,682,091 586,858,953 306,065,565
Distributions reinvested -- 575,242 1,489,425
Redemptions (83,864,261) (623,845,867) (318,915,729)
Redemption fees 9,941 -- --
------------- ------------- -------------
Net Decrease (24,172,229) (36,411,672) (11,360,739)
------------- ------------- -------------
Net Decrease from Share Transactions (50,896,776) (133,636,244) (195,033,638)
------------- ------------- -------------
Total Increase (Decrease) in Net Assets 23,293,081 (182,118,868) (309,573,398)
See notes to financial statements.
7
Statements of Changes in Net Assets (continued)
Period Ended Year Ended December 31,
August 31, --------------------------
Increase (Decrease) in Net Assets: 2003 (a) 2002 2001
- -------------------------------------------------------------------------------- ---------------------------
Net Assets:
Beginning of period $342,453,502 $524,572,370 $834,145,768
------------ ------------ ------------
End of period (including undistributed (overdistributed) net investment income
of $1,622,391, $(234,686) and $(2,098,787), respectively) $365,746,583 $342,453,502 $524,572,370
------------ ------------ ------------
Changes in Shares:
Class A:
Subscriptions 15,939,086 71,066,481 72,701,314
Issued for distributions reinvested -- 54,370 145,686
Redemptions (16,360,254) (76,814,494) (82,219,859)
------------ ------------ ------------
Net Decrease (421,168) (5,693,643) (9,372,859)
------------ ------------ ------------
Class B:
Subscriptions 478,874 1,116,852 1,090,471
Issued for distributions reinvested -- -- 31,259
Redemptions (2,769,012) (4,810,443) (7,126,055)
------------ ------------ ------------
Net Decrease (2,290,138) (3,693,591) (6,004,325)
------------ ------------ ------------
Class C:
Subscriptions 1,191,289 5,104,039 2,620,726
Issued for distributions reinvested -- -- 5,302
Redemptions (1,420,516) (5,657,106) (3,435,404)
------------ ------------ ------------
Net Decrease (229,227) (553,067) (809,376)
------------ ------------ ------------
Class T:
Subscriptions 7,033 26,459 163,814
Issued for distributions reinvested -- 18,448 33,229
Redemptions (298,398) (460,186) (925,415)
------------ ------------ ------------
Net Decrease (291,365) (415,279) (728,372)
------------ ------------ ------------
Class Z:
Subscriptions 7,168,711 65,769,295 31,995,936
Issued for distributions reinvested -- 67,517 155,472
Redemptions (10,345,294) (69,376,873) (33,010,087)
------------ ------------ ------------
Net Decrease (3,176,583) (3,540,061) (858,679)
------------ ------------ ------------
(a) The Fund has changed its fiscal year from December 31 to August 31.
See notes to financial statements.
8
Notes to Financial Statements
August 31, 2003
Note 1. Accounting Policies
Organization:
Columbia Newport Tiger Fund (the "Fund"), (formerly Liberty Newport Tiger
Fund), a series of Columbia Funds Trust VII, (formerly Liberty Funds Trust
VII), 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 capital appreciation
by investing primarily in equity securities of companies located in the Tigers
of Asia (Hong Kong, Singapore, South Korea, Taiwan, Malaysia, Thailand, India,
Indonesia, China and the Philippines). The Fund may issue an unlimited number
of shares. The Fund offers five classes of shares: Class A, Class B, Class C,
Class T 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 T shares are sold with a
front-end sales charge and Class Z shares are offered continuously at net asset
value. There are certain restrictions on the purchase of Class T shares and
Class Z shares, as described in the Fund's prospectus.
Effective February 11, 2003, the Board of Trustees approved a change in the
fiscal year from December 31 to August 31.
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 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 reported at the
close of the principal securities exchanges on which the investments are made
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. South 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.
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.
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.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
9
Notes to Financial Statements (continued)
August 31, 2003
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 specific fees), and realized and
unrealized gains (losses) are allocated to each class proportionately on a
daily basis, based on net assets, for purposes of determining the net asset
value of each class.
Foreign Capital Gains Tax:
Realized gains in certain countries may be subject to foreign taxes at the fund
level, at rates ranging from approximately 10% to 30%. The Fund accrues for
such foreign taxes on net realized and unrealized gains at the rate appropriate
for each jurisdiction.
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 Translations and Transactions:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities of the Fund are
translated into U.S. dollars at the daily rates of exchange on the valuation
date. Purchases and sales of investment securities, dividend and interest
income and certain expenses are translated at the rates of exchange prevailing
on the respective dates of such transactions. Net unrealized foreign exchange
gains or losses arise from changes in the value of assets and liabilities,
other than investments in securities, resulting from changes in the exchange
rates.
Net realized and unrealized gains (losses) on foreign currency transactions and
translations include 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) from investments.
Foreign 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 is opened, the actual 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.
Redemption Fees:
Effective February 10, 2003, the Fund began imposing a 2% redemption fee to
shareholders of Class Z shares who redeem shares held for 60 days or less. For
the period February 10, 2003 to August 31, 2003, the redemption fee for Class Z
shares amounted to $9,941. This amount, which is retained by the Fund, is
accounted for as an addition to paid in capital. For the period February 10,
2003 through October 8, 2003, redemption fees were recorded as a component of
paid in capital on Class Z. Effective October 9, 2003, redemption fees are
allocated to paid in capital of each class proportionately for purposes of
determining the net asset value of each class.
10
Notes to Financial Statements (continued)
August 31, 2003
Other:
Interest income is recorded on an 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, foreign currency
transactions, foreign taxes expense, capital loss carryforwards and
non-deductible expenses. 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 period ended August 31, 2003 permanent items identified and
reclassified among the components of net assets are as follows:
Undistributed Net Accumulated Net
Investment Income Realized Loss
----------------- ------------------------
$(215,135) $215,135
Net investment income, net realized gains (losses) and net assets were not
affected by this reclassification.
The tax character of distributions paid during the period ended August 31, 2003
and the years ended December 31, 2002 and 2001 was as follows:
Period Ended Years Ended
August 31, December 31,
2003 2002 2001
------------ ---------- ----------
Distributions paid from
ordinary Income $-- $1,370,094 $4,228,578
As of August 31, 2003, the components of distributable earnings on a tax basis
were as follows:
Undistributed
Ordinary Income Unrealized Appreciation*
--------------- ------------------------
$1,651,923 $43,680,747
* The difference between book-basis and tax-basis unrealized appreciation is
attributable primarily to the tax deferral of losses on wash sales.
The following capital loss carryforwards, determined as of August 31, 2003, 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:
Capital Loss
Year of Expiration Carryforward
------------------ ------------
2006 $197,792,987
2007 22,164,746
------------
$219,957,733
------------
Expired capital loss carryforwards, if any, are recorded as a reduction of
paid-in capital.
The Fund may be subject to foreign taxes on income and gains on investments
which are accrued based upon the Fund's understanding of the tax rules and
regulations that exist in the markets in which it invests. Foreign governments
may also impose taxes on other payments or transactions with respect to foreign
securities. The Fund accrues such taxes as applicable.
Note 3. Fees and Compensation Paid to Affiliates
On April 1, 2003, Newport Fund Management, Inc. the investment advisor to the
Fund, and Colonial Management Associates, Inc., the administrator 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 Newport Fund Management and Colonial Management Associates, 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.
11
Notes to Financial Statements (continued)
August 31, 2003
Management Fee:
Columbia is the investment advisor of the Fund and receives a monthly fee based
on the Fund's average daily net assets as follows:
Average Daily Net Assets Annual Fee Rate
------------------------ ------------------------
First $100 million 1.00%
Next $1.4 billion 0.75%
Next $1.0 billion 0.70%
Over $2.5 billion 0.65%
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. For the period ended August 31,
2003, the annualized net asset based fee rate was 0.029%. 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 comprised of 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. Effective October 13, 2003,
Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc.
At a special meeting held on October 8, 2003, the Board of Trustees approved
the change of transfer agent fees structure of the Fund. Effective November 1,
2003, the Fund will be charged an annual $28.00 charge per open account for the
transfer agent fees.
Underwriting Discounts, Service and Distribution Fees:
Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia,
is the Fund's principal underwriter. Effective October 13, 2003, Liberty Funds
Distributor, Inc. changed its name to Columbia Funds Distributor, Inc. For the
period ended August 31, 2003, the Fund has been advised that the Distributor
retained net underwriting discounts of $13,394 on sales of the Fund's Class A
and Class T shares and received CDSC of $25,974, $111,345 and $3,807 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 of 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 voluntarily 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 1.55% annually of the Fund's average
daily net assets.
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 $644 of custody
fees were reduced by balance credits for the period ended August 31, 2003. The
Fund could have invested a portion of the assets
12
Notes to Financial Statements (continued)
August 31, 2003
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 period ended August 31, 2003, purchases and sales of investments, other
than short-term obligations, were $56,916,560 and $109,820,250, respectively.
Unrealized appreciation (depreciation) at August 31, 2003, based on cost of
investments for both financial statement and federal income tax purposes, was:
Gross unrealized appreciation $ 80,022,077
Gross unrealized depreciation (34,092,298)
------------
Net unrealized appreciation $ 45,929,779
------------
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 each 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 Funds participated in
a separate credit agreement with similar terms to their existing agreement. For
the period ended August 31, 2003, the average daily loan balance outstanding on
days where borrowings existed was $3,111,111 at a weighted average interest
rate of 1.75%.
13
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
Period Ended
August 31, Year Ended December 31,
2003 (a) ---------------------------------------------------------
Class A Shares ------------ 2002 2001 2000 1999 1998
- ----------------------------------- ---------------------------------------------------------
Net Asset Value,
Beginning of Period $ 8.14 $ 9.38 $ 11.34 $ 13.47 $ 7.78 $ 9.02
--------- --------- --------- --------- --------- ---------
Income from
Investment
Operations:
Net investment income (b) 0.07 0.05 0.08 0.01 0.09 0.14
Net realized and unrealized
gain (loss) on investments,
foreign currency and foreign
capital gains tax 2.03 (1.25) (1.95) (2.14) 5.60 (1.23)
--------- --------- --------- --------- --------- ---------
Total from Investment
Operations 2.10 (1.20) (1.87) (2.13) 5.69 (1.09)
--------- --------- --------- --------- --------- ---------
Less Distributions
Declared to
Shareholders:
From net investment income -- (0.04) (0.09) -- -- (0.15)
--------- --------- --------- --------- --------- ---------
Net Asset Value,
End of Period $ 10.24 $ 8.14 $ 9.38 $ 11.34 $ 13.47 $ 7.78
--------- --------- --------- --------- --------- ---------
Total return (c) 25.80%(d)(e) (12.83)%(d) (16.55)%(d) (15.81)% 73.14% (12.08)%
--------- --------- --------- --------- --------- ---------
Ratios to Average Net
Assets/Supplemental
Data:
Operating expenses (f) 1.80%(g) 1.80% 1.80% 1.71% 1.77% 1.78%
Interest expense --(g)(h) 0.01% --(h) -- -- --
Expenses (f) 1.80%(g) 1.81% 1.80% 1.71% 1.77% 1.78%
Net investment income (f) 1.21%(g) 0.54% 0.75% 0.07% 0.97% 2.02%
Waiver/reimbursement 0.20%(g) 0.07% --(h) -- -- --
Portfolio turnover rate 18%(e) 25% 12% 25% 14% 15%
Net assets, end of period (000's) $ 131,974 $ 108,240 $ 178,145 $ 321,671 $ 403,082 $ 250,089
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
(h) Rounds to less than 0.01%.
14
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
Period
Ended Year Ended December 31,
August 31, ---------------------------------------------------------
Class B Shares 2003 (a) 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $ 7.90 $ 9.14 $ 11.05 $ 13.23 $ 7.70 $ 8.92
--------- --------- --------- --------- --------- ---------
Income from Investment
Operations:
Net investment income (loss) (b) 0.03 (0.02) --(c) (0.08) 0.02 0.09
Net realized and unrealized gain (loss)
on investments, foreign currency
and foreign capital gains tax 1.97 (1.22) (1.89) (2.10) 5.51 (1.23)
--------- --------- --------- --------- --------- ---------
Total from Investment
Operations 2.00 (1.24) (1.89) (2.18) 5.53 (1.14)
--------- --------- --------- --------- --------- ---------
Less Distributions
Declared to
Shareholders:
From net investment income -- -- (0.02) -- -- (0.08)
--------- --------- --------- --------- --------- ---------
Net Asset Value,
End of Period $ 9.90 $ 7.90 $ 9.14 $ 11.05 $ 13.23 $ 7.70
--------- --------- --------- --------- --------- ---------
Total return (d) 25.32%(e)(f) (13.57)%(e) (17.12)%(e) (16.48)% 71.82% (12.77)%
--------- --------- --------- --------- --------- ---------
Ratios to Average Net
Assets/Supplemental
Data:
Operating expenses (g) 2.55%(h) 2.55% 2.55% 2.46% 2.52% 2.53%
Interest expense --(h)(i) 0.01% --(i) -- -- --
Expenses (g) 2.55%(h) 2.56% 2.55% 2.46% 2.52% 2.53%
Net investment income (loss) (g) 0.49%(h) (0.21)% --(i) (0.68)% 0.22% 1.27%
Waiver/reimbursement 0.20%(h) 0.07% --(i) -- -- --
Portfolio turnover rate 18%(f) 25% 12% 25% 14% 15%
Net assets, end of period (000's) $ 118,849 $ 112,942 $ 164,354 $ 265,219 $ 407,179 $ 280,163
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(e) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) Rounds to less than 0.01%.
15
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
Period Ended
August 31, Year Ended December 31,
2003 (a) --------------------------------------------------------
Class C Shares ------------ 2002 2001 2000 1999 1998
- -------------------------------- ---------------------------------------------------------
Net Asset Value,
Beginning of Period $ 7.91 $ 9.15 $ 11.07 $ 13.25 $ 7.71 $ 8.94
--------- --------- --------- --------- --------- ---------
Income from
Investment
Operations:
Net investment income
(loss) (b) 0.03 (0.02) --(c) (0.08) 0.02 0.09
Net realized and unrealized
gain (loss) on investments,
foreign currency and foreign
capital gains tax 1.97 (1.22) (1.90) (2.10) 5.52 (1.24)
--------- --------- --------- --------- --------- ---------
Total from Investment
Operations 2.00 (1.24) (1.90) (2.18) 5.54 (1.15)
--------- --------- --------- --------- --------- ---------
Less Distributions
Declared to
Shareholders:
From net investment income -- -- (0.02) -- -- (0.08)
--------- --------- --------- --------- --------- ---------
Net Asset Value,
End of Period $ 9.91 $ 7.91 $ 9.15 $ 11.07 $ 13.25 $ 7.71
--------- --------- --------- --------- --------- ---------
Total return (d) 25.28%(e)(f) (13.55)%(e) (17.18)%(e) (16.45)% 71.85% (12.89)%
--------- --------- --------- --------- --------- ---------
Ratios to Average Net
Assets/
Supplemental Data:
Operating expenses (g) 2.55%(h) 2.55% 2.55% 2.46% 2.52% 2.53%
Interest expense --(h)(i) 0.01% --(i) -- -- --
Expenses (g) 2.55%(h) 2.56% 2.55% 2.46% 2.52% 2.53%
Net investment income
(loss) (g) 0.49%(h) (0.21)% --(i) (0.68)% 0.22% 1.27%
Waiver/reimbursement 0.20%(h) 0.07% --(i) -- -- --
Portfolio turnover rate 18%(f) 25% 12% 25% 14% 15%
Net assets, end of period
(000's) $ 22,619 $ 19,866 $ 28,036 $ 42,897 $ 73,038 $ 48,316
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(e) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) Rounds to less than 0.01%.
16
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
Period
Ended
August 31, Year Ended December 31,
2003 (a) ---------------------------------------------------------
Class T Shares 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $ 8.16 $ 9.41 $ 11.38 $ 13.48 $ 7.77 $ 9.01
--------- --------- --------- --------- --------- ---------
Income from Investment
Operations:
Net investment income (b) 0.08 0.08 0.10 0.04 0.12 0.16
Net realized and unrealized gain
(loss) on investments, foreign
currency and foreign capital gains
tax 2.05 (1.27) (1.96) (2.14) 5.59 (1.23)
--------- --------- --------- --------- --------- ---------
Total from Investment
Operations 2.13 (1.19) (1.86) (2.10) 5.71 (1.07)
--------- --------- --------- --------- --------- ---------
Less Distributions
Declared to
Shareholders:
From net investment income -- (0.06) (0.11) -- -- (0.17)
--------- --------- --------- --------- --------- ---------
Net Asset Value,
End of Period $ 10.29 $ 8.16 $ 9.41 $ 11.38 $ 13.48 $ 7.77
--------- --------- --------- --------- --------- ---------
Total return (c) 26.10%(d)(e) (12.68)%(d) (16.39)%(d) (15.58)% 73.49% (11.87)%
--------- --------- --------- --------- --------- ---------
Ratios to Average Net
Assets/Supplemental
Data:
Operating expenses (f) 1.55%(g) 1.55% 1.55% 1.46% 1.52% 1.53%
Interest expense --(g)(h) 0.01% --(h) -- -- --
Expenses (f) 1.55%(g) 1.56% 1.55% 1.46% 1.52% 1.53%
Net investment income (f) 1.50%(g) 0.79% 1.00% 0.32% 1.22% 2.27%
Waiver/reimbursement 0.20%(g) 0.07% --(h) -- -- --
Portfolio turnover rate 18%(e) 25% 12% 25% 14% 15%
Net assets, end of period (000's) $ 27,501 $ 24,180 $ 31,782 $ 46,733 $ 69,503 $ 51,526
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
(h) Rounds to less than 0.01%.
17
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
Period
Ended Year Ended December 31,
August 31, ---------------------------------------------------------
Class Z Shares 2003 (a) 2002 2001 2000 1999 1998
- -------------------------------------- ---------------------------------------------------------
Net Asset Value,
Beginning of Period $ 8.14 $ 9.38 $ 11.35 $ 13.46 $ 7.75 $ 9.01
--------- --------- --------- --------- --------- ---------
Income from Investment
Operations:
Net investment income (b) 0.07 0.08 0.10 0.04 0.12 0.16
Net realized and unrealized gain
(loss) on investments, foreign
currency and foreign capital gains
tax 2.05 (1.26) (1.96) (2.15) 5.59 (1.25)
--------- --------- --------- --------- --------- ---------
Total from Investment
Operations 2.12 (1.18) (1.86) (2.11) 5.71 (1.09)
--------- --------- --------- --------- --------- ---------
Less Distributions Declared
to Shareholders:
From net investment income -- (0.06) (0.11) -- -- (0.17)
--------- --------- --------- --------- --------- ---------
Redemption Fees:
Redemption fees added to
paid-in capital --(c) -- -- -- -- --
Net Asset Value,
End of Period $ 10.26 $ 8.14 $ 9.38 $ 11.35 $ 13.46 $ 7.75
--------- --------- --------- --------- --------- ---------
Total return (d) 26.04%(e)(f) (12.61)%(e) (16.43)%(e) (15.68)% 73.68% (12.09)%
--------- --------- --------- --------- --------- ---------
Ratios to Average Net
Assets/Supplemental Data:
Operating expenses (g) 1.55%(h) 1.55% 1.55% 1.46% 1.52% 1.53%
Interest expense --(h)(i) 0.01% --(i) -- -- --
Expenses (g) 1.55%(h) 1.56% 1.55% 1.46% 1.52% 1.53%
Net investment income (g) 1.31%(h) 0.79% 1.00% 0.32% 1.22% 2.27%
Waiver/reimbursement 0.20%(h) 0.07% --(i) -- -- --
Portfolio turnover rate 18%(f) 25% 12% 25% 14% 15%
Net assets, end of period (000's) $ 64,803 $ 77,225 $ 122,255 $ 157,606 $ 214,498 $ 138,988
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01.
(d) Total return at net asset value assuming all distributions reinvested.
(e) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) Rounds to less than 0.01%.
18
Report of Independent Accountants
To the Trustees of Columbia Funds Trust VII
and the Shareholders of Columbia Newport Tiger 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 Columbia Newport Tiger Fund (the
"Fund") (formerly Liberty Newport Tiger Fund) (a series of Columbia Funds Trust
VII) (formerly Liberty Funds Trust VII) at August 31, 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 the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States 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 August 31, 2003 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 21, 2003
19
Unaudited Information
Federal Income Tax Information
Foreign taxes paid during the period ended August 31, 2003, amounting to
$716,189 ($0.02 per share) are expected to be passed through to shareholders as
100% allowable foreign tax credits on Form 1099-DIV for the year ending
December 31, 2003.
Gross income derived from sources within foreign countries amounted to
$6,824,726 ($0.19 per share) for the period ended August 31, 2003.
20
Trustees
Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were
appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth
had been directors of 15 Columbia Funds and 12 funds in the CMG Fund Trust.
Also effective October 8, 2003, the incumbent trustees of the Fund were elected
as directors of the 15 Columbia Funds and as trustees of the 12 funds in the
CMG Fund Trust. The new combined Board of Trustees of the Fund now oversees 124
funds in the Columbia Funds Complex (including the former Liberty Funds, former
Stein Roe Funds, Columbia Funds and CMG Funds). Several of those trustees also
serve on the Boards of other funds in the Columbia Funds Complex.
The Trustees serve terms of indefinite duration. The names, addresses and ages
of the Trustees and officers of the Funds in the Columbia Funds Complex, 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 Fund in the Columbia
Funds Complex. 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.
Number of
Year First Portfolios in
Position Elected or Columbia Funds
with Appointed Principal Occupation(s) Complex Overseen
Name, Address and Age Funds to Office/1/ During Past Five Years by Trustee
- --------------------------------------------------------------------------------------------------------------
Disinterested Trustees
Douglas A. Hacker (Age 48) Trustee 1996 Executive Vice President - Strategy of 124
P.O. Box 66100 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 Chief Administrative Officer and Senior 124
3100 West Beaver Road Vice President, Kmart Holding
Troy, MI 48084-3163 Corporation since September, 2003
(formerly Executive Vice
President-Corporate Development and
Administration, General Counsel and
Secretary, Kellogg Company (food
manufacturer), from September, 1999 to
August, 2003; 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 126/3/
10701 Charleston Drive (formerly Chairman and Chief Executive
Vero Beach, FL 32963 Officer, U.S. Plywood Corporation
(building products manufacturer)).
Charles R. Nelson (Age 61) Trustee 1981 Professor of Economics, University of 124
Department of Economics Washington, since January, 1976; Ford
University of Washington and Louisa Van Voorhis Professor of
Seattle, WA 98195 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 127/3,4/
84 College Road Faculties since August, 1999, Boston
Chestnut Hill, MA 02467-3838 College (formerly Dean, Boston College
School of Management from September,
1977 to September, 1999.
Patrick J. Simpson (Age 58) Trustee 2000 Partner, Perkins Coie L.L.P. (formerly 124
1211 S.W. 5th Avenue Partner, Stoel Rives Boley Jones &
Suite 1500 Grey).
Portland, OR 97204
Thomas E. Stitzel (Age 67) Trustee 1998 Business Consultant since 1999 124
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.
Other
Principal Occupation(s) Directorships
During Past Five Years Held
- ---------------------------------------------------------------------------
Executive Vice President - Strategy of None
United 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).
Chief Administrative Officer and Senior None
Vice President, Kmart Holding
Corporation since September, 2003
(formerly Executive Vice
President-Corporate Development and
Administration, General Counsel and
Secretary, Kellogg Company (food
manufacturer), from September, 1999 to
August, 2003; Senior Vice President,
Secretary and General Counsel, Sara Lee
Corporation (branded, packaged,
consumer-products manufacturer) from
January, 1995 to September, 1999).
Private Investor since August, 1987 None
(formerly Chairman and Chief Executive
Officer, U.S. Plywood Corporation
(building products manufacturer)).
Professor of Economics, University of None
Washington, since January, 1976; Ford
and 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.
Academic Vice President and Dean of Saucony, Inc. (athletic footwear);
Faculties since August, 1999, Boston SkillSoft Corp.
College (formerly Dean, Boston College (E-Learning)
School of Management from September,
1977 to September, 1999.
Partner, Perkins Coie L.L.P. (formerly None
Partner, Stoel Rives Boley Jones &
Grey).
Business Consultant since 1999 None
(formerly Professor of Finance from
1975 to 1999 and Dean from 1977 to
1991, College of Business, Boise State
University); Chartered Financial
Analyst.
21
Trustees (continued)
Number of
Year First Portfolios in
Position Elected or Columbia Funds
with Appointed Principal Occupation(s) Complex Overseen
Name, Address and Age Funds to Office/1/ During Past Five Years by Trustee
- ---------------------------------------------------------------------------------------------------------------
Disinterested Trustees
Thomas C. Theobald (Age 66) Trustee 1996 Managing Director, William Blair 124
27 West Monroe Street, Capital Partners (private equity
Suite 3500 investing) since September, 1994
Chicago, IL 60606 (formerly Chief Executive Officer and
Chairman of the Board of Directors,
Continental Bank Corporation prior
thereto).
Anne-Lee Verville (Age 58) Trustee 1998 Author and speaker on educational 125/4/
359 Stickney Hill Road systems needs (formerly General
Hopkinton, NH 03229 Manager, Global Education Industry from
1994 to 1997, and President,
Applications Solutions Division from
1991 to 1994, IBM Corporation (global
education and global applications)).
Richard L. Woolworth (Age 62) Trustee 1991 Chairman and Chief Executive Officer, 124
100 S.W. Market Street The Regence Group (healthcare
#1500 maintenance organization) (formerly
Portland, OR 97207 Chairman and Chief Executive Officer,
BlueCross BlueShield of Oregon;
Certified Public Accountant, Arthur
Young & Company).
Interested Trustees
William E. Mayer/2/ (Age 63) Trustee 1994 Managing Partner, Park Avenue Equity 126/3/
399 Park Avenue Partners (private equity) since
Suite 3204 February, 1999 (formerly Founding
New York, NY 10022 Partner, Development Capital LLC from
November 1996 to February, 1999; Dean
and Professor, College of Business and
Management, University of Maryland from
October, 1992 to November, 1996).
Joseph R. Palombo/2/ (Age 50) Trustee, 2000 Executive Vice President and Chief 125/5/
One Financial Center Chairman Operating Officer of Columbia
Boston, MA 02111 of the Management Group, Inc. (Columbia
Board Management) since December, 2001 and
and Director, Executive Vice President and
President 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 Columbia 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 Columbia Funds from
April, 1999 to August, 2000; Chief
Operating Officer and Chief Compliance
Officer, Putnam Mutual Funds from
December, 1993 to March, 1999).
Other
Principal Occupation(s) Directorships
During Past Five Years Held
- ------------------------------------------------------------------------
Managing Director, William Blair Anixter International (network
Capital Partners (private equity support equipment distributor),
investing) since September, 1994 Jones Lang LaSalle (real estate
(formerly Chief Executive Officer and management services) and
Chairman of the Board of Directors, MONY Group (life insurance).
Continental Bank Corporation prior
thereto).
Author and speaker on educational Chairman of the Board of
systems needs (formerly General Directors, Enesco Group, Inc.
Manager, Global Education Industry from (designer, importer and
1994 to 1997, and President, distributor of giftware and
Applications Solutions Division from collectibles).
1991 to 1994, IBM Corporation (global
education and global applications)).
Chairman and Chief Executive Officer, NW Natural, a natural gas
The Regence Group (healthcare service provider
maintenance organization) (formerly
Chairman and Chief Executive Officer,
BlueCross BlueShield of Oregon;
Certified Public Accountant, Arthur
Young & Company).
Managing Partner, Park Avenue Equity Lee Enterprises (print media),
Partners (private equity) since WR Hambrecht + Co. (financial
February, 1999 (formerly Founding service provider) and First
Partner, Development Capital LLC from Health (healthcare).
November 1996 to February, 1999; Dean
and Professor, College of Business and
Management, University of Maryland from
October, 1992 to November, 1996).
Executive Vice President and Chief None
Operating Officer of Columbia
Management Group, 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 Columbia 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 Columbia Funds from
April, 1999 to August, 2000; Chief
Operating Officer and Chief Compliance
Officer, Putnam Mutual Funds from
December, 1993 to March, 1999).
/1/ In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Funds (the "CMG
Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds Complex).
/2/ 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.
/3/ Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of
the All-Star Funds, currently consisting of 2 funds, which are advised by
an affiliate of the Advisor.
/4/ Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
/5/ Mr. Palombo also serves as an interested director of Columbia Management
Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor.
22
Officers and Transfer Agent
Year First
Elected or
Position with Appointed
Name, Address and Age Columbia Funds to Office Principal Occupation(s) During Past Five Years
- ------------------------------------------------------------------------------------------------------------
Officers
Vicki L. Benjamin (Age 42) Chief Accounting 2001 Controller of the Columbia Funds and of the
One Financial Center Officer and Liberty All-Star Funds since May, 2002; Chief
Boston, MA 02111 Controller Accounting Officer of the Columbia Funds and
Liberty All-Star 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 Columbia Funds and of the
One Financial Center Liberty 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).
Important Information About This Report
The Transfer Agent for Columbia Newport Tiger Fund is:
Columbia Funds Services, Inc.
P.O. Box 8081
Boston, MA 02266-8081
Please note our new name as of October 13, 2003
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 Columbia Newport Tiger 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 Columbia Funds Performance Update.
Annual Report:
Columbia Newport Tiger Fund
23
- -
Columbia Newport Tiger Fund Annual Report, August 31, 2003
[LOGO](R) ColumbiaFunds
A Member of Columbia Management Group
(c)2003 Columbia Funds Distributor, Inc.
One Financial Center, Boston, MA 02111-2621
800.426.3750 WWW.columbiafunds.com
732-02/207P-0803 (10/03) 03/2924
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Holliston, MA Permit NO. 20
[GRAPHIC]
Columbia
Europe Fund
Annual Report
August 31, 2003
We are now Columbia Funds!
INSIDE -- Management's discussion of the changes effective as of October 13,
2003.
President's Message
[PHOTO]
Dear Shareholder:
As you know, the fund you invest in has long been associated with a larger
investment management organization. In the 1990s, it was affiliated with
Liberty Financial, whose asset management companies included Colonial, Stein
Roe and Newport. In 2001, these companies became part of the asset management
division of FleetBoston Financial Corp., which you know as Columbia Management
Group (CMG).
Earlier this year, six of the asset management firms that were brought together
under the CMG umbrella were consolidated and renamed Columbia Management
Advisors, Inc. On October 13, 2003, we took the natural next step forward in
this process by changing the name of our funds from Liberty to Columbia. For
example, Liberty Newport Europe Fund was changed to Columbia Europe Fund. We
have also modified certain fund names that existed under both the Liberty and
Columbia brands.
As a result of these fund name changes, most fund CUSIP numbers have changed.
(A CUSIP is a unique identification number assigned to each class of a mutual
fund by the Committee on Uniform Security Identification Procedures.) However,
ticker symbols have not changed. A list of new fund names and and other
information related to these changes are available at www.columbiafunds.com,
our new website address.
A consolidated identity
The consolidation of our management under a single organization and the
renaming of our funds are part of a larger effort to create a consistent
identity. Having taken these additional steps, we believe it will be easier for
our shareholders to do business with us. All funds will be listed under the
"Columbia" name in the mutual fund listings section of your newspaper (as long
as they meet the newspaper's listing requirements). All service inquires will
be handled by Columbia Funds Services, Inc., the new name of our shareholder
service organization.
What will not change is our commitment to fund shareholders. We remain
committed to providing the best possible customer service and to offering a
wide variety of mutual funds to help you pursue your long-term financial goals.
Should you have questions, please call shareholder services at
800-345-6611.
In the report that follows, your portfolio manager talks in depth about
investment strategies and other factors that affected your fund's performance
during the period. We encourage you to read the report carefully.
As always, we thank you for your business and look forward to continuing to
serve your investment needs.
Sincerely,
/s/ Joseph R. Palumbo
Joseph R. Palombo
President
Net asset value per share as of 8/31/03 ($)
Class A 7.84
Class B 7.61
Class C 7.55
Class Z 8.00
[LOGO] Not FDIC Insured May Lose Value
No Bank Guarantee
Economic and market conditions change frequently. There is no assurance that
trends described in this report will continue or commence.
Performance Information
Value of a $10,000 investment 11/8/99 - 8/31/03
Performance of a $10,000 investment 11/8/99 - 8/31/03 ($)
without sales with sales
charge charge
--------------------------------
Class A 7,590 7,153
--------------------------------
Class B 7,367 7,146
--------------------------------
Class C 7,309 7,309
--------------------------------
Class Z 7,744 n/a
[CHART]
Class A Shares Class A Shares MSCI
Without With Sales Europe
Sales Charge Charge Index
---------------- ---------------- ------------
11/1999 $10,707 $10,091 $10,270
12/1999 12,527 11,807 11,323
1/2000 11,733 11,058 10,517
2/2000 13,621 12,838 11,064
3/2000 12,933 12,189 11,331
4/2000 12,197 11,496 10,831
5/2000 11,887 11,204 10,743
6/2000 11,771 11,094 10,974
7/2000 11,877 11,194 10,798
8/2000 11,867 11,185 10,671
9/2000 11,490 10,829 10,171
10/2000 11,151 10,510 10,094
11/2000 10,628 10,017 9,703
12/2000 11,373 10,719 10,372
1/2001 10,948 10,318 10,377
2/2001 10,116 9,534 9,466
3/2001 9,128 8,603 8,760
4/2001 9,564 9,014 9,383
5/2001 9,195 8,667 8,925
6/2001 9,089 8,566 8,587
7/2001 9,021 8,502 8,609
8/2001 9,108 8,584 8,385
9/2001 8,324 7,845 7,548
10/2001 8,305 7,827 7,788
11/2001 8,469 7,982 8,100
12/2001 8,663 8,165 8,308
1/2002 8,237 7,763 7,873
2/2002 8,266 7,790 7,872
3/2002 8,527 8,037 8,298
4/2002 8,440 7,955 8,235
5/2002 8,237 7,763 8,210
6/2002 8,111 7,644 7,925
7/2002 7,230 6,814 7,043
8/2002 7,181 6,768 7,041
9/2002 6,417 6,048 6,115
10/2002 6,775 6,385 6,706
11/2002 7,046 6,640 7,035
12/2002 6,745 6,358 6,780
1/2003 6,455 6,084 6,459
2/2003 6,388 6,020 6,249
3/2003 6,427 6,057 6,156
4/2003 7,007 6,605 6,986
5/2003 7,443 7,015 7,439
6/2003 7,395 6,970 7,511
7/2003 7,540 7,106 7,663
8/2003 7,590 7,153 7,649
Mutual fund performance changes over time. Please visit www.columbiafunds.com
for daily performance updates.
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale. The graph and table don't reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
The Morgan Stanley Capital International (MSCI) Europe Index is a broad-based,
unmanaged index that tracks the performance of European stocks. Unlike the
fund, indices are not investments, do not incur fees or expenses and are not
professionally managed. Securities in the fund may not match those in the
index. It is not possible to invest directly in an index. Index performance is
from October 31, 1999.
Average annual total return as of 8/31/03 (%)
Share class A B C Z
Inception 11/8/99 11/8/99 11/8/99 11/8/99
----------------------------------------------------------------
without with without with without with without
sales sales sales sales sales sales sales
charge charge charge charge charge charge charge
----------------------------------------------------------------
1-year 5.66 -0.42 4.82 -0.18 3.99 2.99 8.25
----------------------------------------------------------------
Life -6.96 -8.39 -7.68 -8.42 -7.88 -7.88 -6.47
----------------------------------------------------------------
Average annual total return as of 6/30/03 (%)
Share class A B C Z
----------------------------------------------------------------
without with without with without with without
sales sales sales sales sales sales sales
charge charge charge charge charge charge charge
----------------------------------------------------------------
1-year -8.83 -14.07 -9.51 -14.04 -10.23 -11.13 -4.18
----------------------------------------------------------------
Life -7.93 -9.41 -8.66 -9.42 -8.83 -8.83 -7.40
----------------------------------------------------------------
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale. All results shown assume reinvestment of distributions. The "with sales
charge" returns include the maximum 5.75% sales charge for class A shares, the
appropriate class B contingent deferred sales charge for the holding period
after purchase as follows: first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, thereafter - 0% and the
class C contingent deferred sales charge of 1% for the first year only.
Performance for different share classes varies based on differences in sales
charges and fees associated with each class.
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.
1
Portfolio Managers' Report
Top 10 holdings as of 8/31/03 (%)
Vodafone Group 3.6
Amadeus Global Travel Distribution 3.3
BP PLC 3.3
Telefonica 3.1
Credit Suisse 3.0
Standard Chartered 2.9
BHP Billiton 2.8
Novartis 2.7
Anglo Irish Bank 2.4
Noble Biocare Holding 2.3
Top 5 countries as of 8/31/03 (%)
United Kingdom 29.8
France 14.5
Spain 11.2
Switzerland 10.0
Netherlands 7.3
Top 5 countries and top 10 holdings are calculated as a percentage of total
investments and net assets, respectively. Since the fund is actively
managed, there is no guarantee the fund will continue to maintain these
holdings or countries in the future.
Bought
--------------------------------
Burberry (0.6% of net assets)
This company is focused on redesigning its products and
retail stores and repositioning its brand in the luxury sector,
an area that we believe should do well as economic growth
improves. The stock is selling at a discount to its peers,
despite its higher expected growth rate.
Sold
--------------------------------
Heineken
This Dutch brewing company was overvalued and running
out of growth prospects. We lost confidence in its ability to
meet the market's expectations.
For the 12-month period ended August 31, 2003, Columbia Europe Fund class A
shares returned 5.66% without sales charge. The fund underperformed both its
benchmark and peer group. The MSCI Europe Index returned 8.62% for the period,
and the average return for the Lipper European Region Funds Category was
7.42%./1/ We believe the fund's emphasis on defensive stocks at the outset of
the international stock market rally, along with our focus on high-quality
growth stocks, hampered relative returns as economically-sensitive and
lower-quality stocks moved into investor favor. In addition, the fund was
underweight relative to the MSCI Europe Index in Germany and Greece, where
stocks rose sharply.
Responding to a rapid global economic revival
Early in the period, the fund was positioned defensively in sectors that we
believed would do well in a poor economic environment. These positions included
consumer staples, utility and health care stocks. This focus held back the
fund's performance because stocks tied to an improving economy led performance
when international stock markets rallied in the last calendar quarter of 2002.
Early in 2003, we began to add more companies that had the potential to do well
in an improving economy and sell defensive stocks, which had become expensive.
However, economically-sensitive stocks rebounded earlier than we expected, and
the fund did not take full advantage of a second run-up in stocks, which
occurred in the second calendar quarter of 2003.
The fund emphasizes high-quality growth companies with good balance sheets and
strong management. Unfortunately, as international stock markets rallied many
of the best performers were low-quality companies with large amounts of debt.
The fund does not invest in these types of companies. The fund was also
underweight in Germany and Greece, countries whose stock markets rose sharply.
We began increasing our stake in Germany, attracted by an improving economy,
corporate restructurings and cheap stock valuations.
Undervalued companies were plentiful
In selecting stocks, we found undervalued growth companies in a variety of
sectors. In the consumer discretionary area, we added Burberry Group PLC
- ------------
/1/ Lipper, Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment objectives
as the fund.
2
(0.6% of net assets), a London-based retailer that makes luxury apparel and
other goods./2/ Burberry is repositioning its brand and redesigning its product
line and retail stores. The stock was attractively valued and was a positive
contributor to performance.
We found value in the technology sector, where valuations were at historically
low levels. For example, we invested in ARM Holdings PLC (0.7% of net assets).
Based in London, ARM Holdings designs semiconductor chips for wireless
telephones and other hand-held devices. The stock rallied nicely. In addition,
the fund also added to its stake in software and Internet stocks, which
rebounded from their earlier lows.
In the financial sector we moved away from retail banks and added investment
banks. We purchased Credit Suisse Group (3.0% of net assets), which over the
past few years has done extensive cost-cutting. The stock was also attractively
valued, with good earnings prospects. Credit Suisse posted strong gains during
the period, and has the potential to do well going forward if equity markets
remain strong and merger and acquisition activity picks up.
Western and Eastern Europe offered opportunity
During the period, we continued to favor Spain, which continued to experience
the biggest gross domestic product (GDP) growth of all the large European Union
countries. We also began seeking opportunities in Eastern Europe, favoring
countries with strong GDP growth that are scheduled to enter the European Union
next year. Poland, Hungary, the Czech Republic and Russia were of particular
interest. We added Erste Bank der Oesterreichischen Sparkassen AG (0.8% of net
assets), an Austrian-based bank whose sales come from the Czech Republic and
Slovenia. We also established a small position in Russia's Norilsk Nickel
Sponsored ADR (0.3% of net assets), the world's leading miner of nickel,
platinum and palladium.
- ------------
/2/ Holdings are disclosed as of August 31, 2003, and are subject to change.
A better European economy
We are optimistic about the potential for a European economic rebound. Many
companies have restructured their businesses. Unemployment rates have
stabilized, and factory orders have moved higher, even as inventories have
declined. Consumer and business confidence has picked up. We believe the
portfolio is well positioned to benefit from this more positive economic
environment.
/s/ Deborah F. Snee /s/ Penny L. Burgess
Deborah F. Snee and Penny L. Burgess are the portfolio managers of Columbia
Europe Fund. Deborah Snee has co-managed the fund since November 1999. Penny
Burgess has co-managed the fund since February, 2003.
International investing offers significant long-term growth potential, but
also involves certain risks. These risks include currency exchange rate
fluctuations, economic change, instability of emerging countries and political
developments. A portfolio of stocks from a single region poses additional
risks due to limited diversification.
A concentration of investments in a specific sector, such as the financial
sector, may cause the fund to experience increased volatility.
Top 5 Sectors as of 8/31/03 (%)
[CHART]
Financials 23.8
Industrials 13.7
Consumer discretionary 12.2
Health care 11.2
Information technology 8.6
Sector breakdowns are calculated as a percentage of net assets. Since the fund
is actively managed, there is no guarantee the fund will continue to maintain
this breakdown in the future.
3
Investment Portfolio
August 31, 2003
Common Stocks - 96.1% Shares Value
----------------------------------------------------
CONSUMER DISCRETIONARY - 12.2%
Consumer Durables & Apparel - 1.0%
Puma AG 300 $ 34,102
----------
Hotels, Restaurants & Leisure - 1.4%
Accor SA (a) 1,325 51,696
----------
Media - 6.5%
British Sky Broadcasting Group
PLC (a) 6,800 71,013
JC Decaux SA (a) 2,700 35,975
Pearson PLC 7,600 74,092
VNU N.V. 1,700 52,890
----------
233,970
----------
Specialty Retail - 3.3%
Burberry Group PLC 4,100 21,020
Kesa Electricals PLC (a) 3,240 11,423
Kingfisher PLC 10,340 44,367
LVMH Moet Hennessy
Louis Vuitton SA (a) 700 42,133
----------
118,943
----------
----------------------------------------------------
CONSUMER STAPLES - 5.5%
Beverages - 1.5%
Pernod-Ricard SA 625 53,696
----------
Food Products - 1.0%
Nestle SA 160 34,866
----------
Household Products - 1.5%
Reckitt Benckiser PLC 2,900 54,440
----------
Personal Products - 0.6%
L'Oreal SA 300 20,877
----------
Tobacco - 0.9%
Imperial Tobacco Group PLC 2,200 34,289
----------
----------------------------------------------------
ENERGY - 5.8%
Oil & Gas - 5.8%
BP PLC 17,700 119,784
Eni S.p.A. 2,800 42,356
TotalFinaElf SA 300 46,074
----------
208,214
----------
----------------------------------------------------
FINANCIALS - 23.8%
Banks - 17.8%
Anglo Irish Bank Corp. PLC 8,800 87,165
Banco Popular Espanol SA 685 30,875
Banco Santander Central Hispano SA 8,500 72,607
Barclays PLC 4,583 33,257
Credit Agricole SA 4,228 80,411
Credit Suisse Group 3,460 108,152
Shares Value
------------------------------------------------------
Erste Bank der Oesterreichischen
Sparkassen AG 300 $ 27,671
Royal Bank of Scotland Group PLC 1,357 33,694
Standard Chartered PLC 7,700 102,762
UniCredito Italiano S.p.A. 13,300 61,848
----------
638,442
----------
Diversified Financials - 6.0%
Allianz AG 700 62,495
Euronext N.V. 700 17,561
ING Groep N.V. 3,438 67,125
Irish Life & Permanent PLC 5,700 67,801
----------
214,982
----------
------------------------------------------------------
HEALTH CARE - 11.2%
Health Care Equipment & Services - 3.8%
Nobel Biocare Holding AG 1,058 84,094
Smith & Nephew PLC 5,600 35,866
SSL International PLC 3,700 18,395
----------
138,355
----------
Pharmaceuticals - 7.4%
GlaxoSmithKline PLC, ADR 775 30,093
Novartis AG, Registered Shares 2,600 95,667
Sanofi-Synthelabo SA 612 34,447
Stada Arzneimittel AG 400 23,192
Taro Pharmaceuticals
Industries Ltd. (a) 200 10,798
Teva Pharmaceutical Industries Ltd.,
ADR 1,200 70,454
----------
264,651
----------
------------------------------------------------------
INDUSTRIALS - 13.7%
Commercial Services & Supplies - 1.7%
Adecco SA 590 29,845
Capita Group PLC 7,900 30,065
----------
59,910
----------
Electrical Components & Equipment - 4.1%
Koninklijke (Royal) Philips
Electronics N.V. 3,100 75,657
Siemens AG 600 37,202
Smiths Group PLC 3,000 33,317
----------
146,176
----------
Machinery - 2.1%
Atlas Copco AB, Class B 1,200 33,002
Linde AG 600 25,138
Singulus Technologies AG (a) 900 19,163
----------
77,303
----------
See notes to investment portfolio.
4
Investment Portfolio (continued)
August 31, 2003
Common Stocks (continued) Shares Value
----------------------------------------------------
INDUSTRIALS (continued)
Transportation - 5.8%
Amadeus Global Travel Distribution
SA, Class A 17,900 $ 120,038
BAA PLC 5,047 36,305
Fraport AG 700 18,585
Ryanair Holdings PLC (a) 5,000 34,245
----------
209,173
----------
----------------------------------------------------
INFORMATION TECHNOLOGY - 8.6%
Computers & Peripherals - 0.3%
Logitech International SA (a) 400 12,860
----------
Information Technology Consulting & Services - 1.6%
Indra Sistemas SA 5,100 56,515
----------
Internet Software & Services - 1.0%
T-Online International AG (a) 3,300 35,372
----------
Semiconductors - 3.5%
ARM Holdings PLC (a) 14,600 26,026
ASML Holding N.V. 4,500 70,991
STMicroelectronics N.V. 1,204 29,980
----------
126,997
----------
Software - 2.2%
Dassault Systemes SA 2,151 77,799
----------
----------------------------------------------------
MATERIALS - 5.6%
Chemicals - 1.0%
L'Air Liquide SA 262 37,674
----------
Metals & Mining - 3.2%
BHP Billiton PLC 15,600 102,250
Norilsk Nickel, ADR 300 11,895
----------
114,145
----------
Paper & Forest Products - 1.4%
Stora Enso Oyj, Class R 1,500 19,557
UPM-Kymmene Oyj 1,600 29,023
----------
48,580
----------
----------------------------------------------------
TELECOMMUNICATION SERVICES - 8.0%
Diversified Telecommunication Services - 3.9%
Telecom Italia S.p.A. (a) 12,543 29,509
Telefonica SA, ADR 9,363 110,343
----------
139,852
----------
Wireless Telecommunication Services - 4.1%
Telefonica Moviles SA (a) 2,189 17,134
Vodafone Group PLC 70,079 127,961
----------
145,095
----------
Shares Value
-------------------------------------------------------
UTILITIES - 1.7%
Gas Utilities - 1.7%
National Grid Transco PLC 7,300 $ 44,595
Snam Rete Gas S.p.A. 4,400 16,108
----------
60,703
----------
Total Common Stocks - 96.1%
(cost of $3,103,937) 3,449,677
----------
Short-Term Obligation - 5.3% Par
-------------------------------------------------------
Repurchase agreement with State
Street Bank & Trust Co., dated
08/29/03, due 09/02/03 at 0.940%,
collateralized by a U.S. Treasury
Note maturing 05/15/16, market
value of $199,400 (repurchase
proceeds $191,020)
(cost of $191,000) $191,000 191,000
----------
Total Investments - 101.4%
(cost of $3,294,937) (b) 3,640,677
----------
Other Assets & Liabilities, Net - (1.4)% (49,996)
-------------------------------------------------------
Net Assets - 100.0% $3,590,681
----------
Notes to Investment Portfolio:
(a) Non-income producing.
(b) Cost for federal income tax purposes is $3,295,643.
Summary of Securities by % of Total
Country Value Investments
-----------------------------------------------
United Kingdom $1,085,014 29.8%
France 528,324 14.5
Spain 407,513 11.2
Switzerland 365,484 10.0
Netherlands 266,663 7.3
Germany 255,247 7.0
United States 191,000 5.3
Ireland 189,211 5.2
Italy 149,821 4.1
Israel 81,252 2.3
Finland 48,580 1.3
Sweden 33,002 0.9
Austria 27,671 0.8
Russia 11,895 0.3
---------- -----
$3,640,677 100.0%
---------- -----
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
- ------- ----
ADR American Depositary Receipt
See notes to financial statements.
5
Statement of Assets and Liabilities
August 31, 2003
Assets:
Investments, at cost $ 3,294,937
-----------
Investments, at value $ 3,640,677
Cash 345
Foreign currency (cost of $5,815) 5,866
Receivable for:
Dividends 17,877
Fund shares sold 785
Interest 15
Deferred Trustees' compensation plan 1,681
Other assets 768
-----------
Total Assets 3,668,014
-----------
Liabilities:
Payable for:
Investments purchased 19,163
Management fee 2,126
Administration fee 830
Transfer agent fee 2,959
Pricing and bookkeeping fees 1,133
Audit fee 32,306
Custody fee 5,781
Reports to shareholders 5,593
Expense reimbursement due to Advisor 4,140
Deferred Trustees' fee 1,681
Other liabilities 1,621
-----------
Total Liabilities 77,333
-----------
Net Assets $ 3,590,681
-----------
Composition of Net Assets:
Paid-in capital $ 7,240,997
Accumulated net investment loss (8,203)
Accumulated net realized loss (3,989,435)
Net unrealized appreciation on:
Investments 345,740
Foreign currency translations 1,582
-----------
Net Assets $ 3,590,681
-----------
Class A:
Net assets $ 1,995,093
Shares outstanding 254,478
-----------
Net asset value per share $ 7.84 (a)
-----------
Maximum offering price per share
($7.84/0.9425) $ 8.32 (b)
-----------
Class B:
Net assets $ 1,237,562
Shares outstanding 162,565
-----------
Net asset value and offering price per share $ 7.61 (a)
-----------
Class C:
Net assets $ 258,591
Shares outstanding 34,247
-----------
Net asset value and offering price per share $ 7.55 (a)
-----------
Class Z:
Net assets $ 99,435
Shares outstanding 12,437
-----------
Net asset value and offering price per share $ 8.00(c)
-----------
(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.
(c) Redemption price per share is equal to net asset value less any applicable
redemption fee.
Statement of Operations
For the Year Ended August 31, 2003
Investment Income:
Dividends $ 79,325
Interest 3,138
---------
Total Investment Income (net of foreign
taxes withheld of $10,965) 82,463
---------
Expenses:
Management fee 27,854
Administration fee 9,947
Distribution fee:
Class A 2,469
Class B 9,338
Class C 1,621
Service fee:
Class A 6,217
Class B 3,112
Class C 540
Pricing and bookkeeping fees 10,792
Transfer agent fee 19,802
Trustees' fee 5,613
Custody fee 24,686
Audit fee 38,446
Registration fee 49,573
Reports to shareholders 15,136
Other expenses 3,847
---------
Total Expenses 228,993
Fees and expenses waived or reimbursed by
Advisor (145,933)
Fees waived by Distributor - Class A (2,469)
Custody earnings credit (135)
---------
Net Expenses 80,456
---------
Net Investment Income 2,007
---------
Net Realized and Unrealized
Gain (Loss) on Investments and
Foreign Currency:
Net realized loss on:
Investments (187,013)
Foreign currency transactions (9,314)
---------
Net realized loss (196,327)
---------
Net change in unrealized appreciation/
depreciation on:
Investments 412,924
Foreign currency translations 915
---------
Net change in unrealized appreciation/
depreciation 413,839
---------
Net Gain 217,512
---------
Net Increase in Net Assets from Operations $ 219,519
---------
See notes to financial statements.
6
Statement of Changes in Net Assets
Year Ended August 31,
Increase (Decrease) -------------------------
in Net Assets: 2003 2002
- --------------------------
Operations:
Net investment income (loss) $ 2,007 $ (1,626)
Net realized loss on
investments and foreign
currency transactions (196,327) (1,744,313)
Net change in unrealized
appreciation/depreciation
on investments and foreign
currency translations 413,839 258,159
----------- ------------
Net Increase (Decrease) from
Operations 219,519 (1,487,780)
----------- ------------
Share Transactions:
Class A:
Subscriptions 6,630,977 10,114,890
Redemptions (9,468,293) (10,018,321)
----------- ------------
Net Increase (Decrease) (2,837,316) 96,569
----------- ------------
Class B:
Subscriptions 1,231,412 1,755,972
Redemptions (1,451,614) (2,039,324)
----------- ------------
Net Decrease (220,202) (283,352)
----------- ------------
Class C:
Subscriptions 8,762,220 4,657,062
Redemptions (8,766,448) (4,789,813)
----------- ------------
Net Decrease (4,228) (132,751)
----------- ------------
Class Z:
Subscriptions 7,001,434 5,357,359
Redemptions (6,946,104) (5,390,636)
----------- ------------
Net Increase (Decrease) 55,330 (33,277)
----------- ------------
Net Decrease from Share
Transactions (3,006,416) (352,811)
----------- ------------
Total Decrease in Net Assets (2,786,897) (1,840,591)
Net Assets:
Beginning of period 6,377,578 8,218,169
----------- ------------
End of period (including
accumulated net
investment loss of $(8,203)
and $(9,019), respectively) $ 3,590,681 $ 6,377,578
----------- ------------
Year Ended August 31,
------------------------
2003 2002
- -------------------------
Changes in Shares:
Class A:
Subscriptions $ 963,349 $ 1,235,740
Redemptions (1,353,961) (1,209,508)
----------- -----------
Net Increase (Decrease) (390,612) 26,232
----------- -----------
Class B:
Subscriptions 182,247 218,695
Redemptions (211,698) (249,017)
----------- -----------
Net Decrease (29,451) (30,322)
----------- -----------
Class C:
Subscriptions 1,299,443 601,823
Redemptions (1,291,182) (608,975)
----------- -----------
Net Increase (Decrease) 8,261 (7,152)
----------- -----------
Class Z:
Subscriptions 1,021,706 647,246
Redemptions (1,010,307) (649,035)
----------- -----------
Net Increase (Decrease) 11,399 (1,789)
----------- -----------
See notes to financial statements.
7
Notes to Financial Statements
August 31, 2003
Note 1. Accounting Policies
Organization:
Columbia Europe Fund (the "Fund") (formerly Liberty Newport Europe Fund), a
series of Columbia Funds Trust VII (formerly Liberty Funds Trust VII), is a
diversified portfolio of a Massachusetts business trust, registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment goal is to seek long-term growth. The
Fund may issue an unlimited number of shares. The Fund offers four classes of
shares: Class A, Class B, Class C and Class Z. Class A shares are sold with a
front-end sales charge. A 1.00% contingent deferred sales charge ("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 reported at the
close of business of the principal securities exchanges on which the
investments are traded or, in the case of unlisted or listed securities for
which there were no sales during the day, at the current quoted bid price. In
certain countries, the Fund may hold foreign designated shares. If the foreign
share prices are not readily available as a result of limited share activity,
the securities are valued at the last sale price of the local shares in the
principal market in which such securities are normally traded.
Forward currency contracts are valued based on the weighted value of
exchange-traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The values of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange ("NYSE"). The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
also generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE, which would not be reflected in the computation of
the Fund's net asset value. If events materially affecting the value of such
securities and such exchange rates occur during such period, then these
securities will be valued at their fair value as determined in good faith by or
under the supervision of the Board 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 specific fees), and realized and
unrealized gains (losses) are allocated to each class proportionately on a
daily basis, based on net assets, for purposes of determining the net asset
value of each class.
8
Notes to Financial Statements (continued)
August 31, 2003
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 Translations and Transactions:
The books and records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities of the Fund are
translated into U.S. dollars at the daily rates of exchange on the valuation
date. Purchases and sales of investment securities, dividend and interest
income and certain expenses are translated at the rates of exchange prevailing
on the respective dates of such transactions. Net unrealized foreign exchange
gains or losses arise from changes in the value of assets and liabilities,
other than investments in securities, resulting from changes in the exchange
rates.
Net realized and unrealized gains (losses) on foreign currency transactions and
translations includes gains (losses) arising from the fluctuations in exchange
rates between trade and settlement dates on securities transactions, gains
(losses) arising from the disposition of foreign currency and currency gains
(losses) between the accrual and payment dates on dividends and interest income
and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included
with the net realized and unrealized gains (losses) on investments.
Forward Currency Contracts:
The Fund may enter into forward currency contracts to purchase or sell foreign
currencies at predetermined exchange rates in connection with the settlement of
purchases and sales of securities. The Fund may also enter into forward
currency contracts to hedge certain other foreign currency denominated assets.
The contracts are used to minimize the exposure to foreign exchange rate
fluctuations during the period between trade and settlement date of the
contracts. All contracts are marked-to-market daily, resulting in unrealized
gains (losses) which become realized at the time the forward currency contracts
are closed or mature. Realized and unrealized gains (losses) arising from such
transactions are included in net realized and unrealized gains (losses) on
foreign currency transactions 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.
Redemption Fees:
Effective February 10, 2003, the Fund began imposing a 2% redemption fee to
shareholders of Class Z shares who redeem shares held for 60 days or less. For
the period February 10, 2003 to August 31, 2003, there were no redemption fees
paid to the Fund for Class Z shares.
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, capital loss
carryforwards, post-October
9
Notes to Financial Statements (continued)
August 31, 2003
losses and non-deductible expenses. 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 August 31, 2003, permanent items identified and reclassified
among the components of net assets are as follows:
Accumulated Accumulated
Net Investment Net Realized Paid-In
Loss Loss Capital
-------------- ------------ -------
$(1,191) $9,314 $(8,123)
Net investment income, net realized gains (losses) and net assets were not
affected by this reclassification.
As of August 31, 2003, the components of distributable earnings on a tax basis
were as follows:
Unrealized
Appreciation*
-------------
$346,616
* The difference between book-basis and tax-basis unrealized appreciation is
attributable primarily to the tax deferral of losses on wash sales.
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:
Year of Capital Loss
Expiration Carryforward
---------- ------------
2009 $ 82,647
2010 2,239,196
2011 1,487,332
----------
$3,809,175
----------
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 August 31, 2003 for federal income tax purposes, post-October
losses of $179,554 and $6,150 attributable to security transactions and foreign
currency losses, respectively, were deferred to September 1, 2003.
Expired capital loss carryforward, if any, are recorded as a reduction of
paid-in capital.
Note 3. Fees and Compensation Paid to Affiliates
On April 1, 2003, Newport Fund Management, Inc., the previous investment
advisor to the Fund, and Colonial Management Associates, Inc. ("Colonial"), the
previous administrator 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 Newport Fund Management and
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 to Columbia.
Management Fee:
Columbia is the investment advisor of the Fund and receives a monthly fee equal
to 0.70% annually of the Fund's average daily net assets.
At a special meeting held on October 8, 2003, the Board of Trustees approved a
new management fee structure to go into effect on November 1, 2003. Under the
new structure, Columbia will receive a monthly fee based on the Fund's average
daily net assets as follows:
Annual
Average Daily Net Assets Fee Rate
------------------------ --------
First $1 billion 0.70%
Next $1 billion to $1.5 billion 0.65%
Over $1.5 billion 0.60%
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.
At a special meeting held on October 8, 2003, the Board of Trustees approved an
administration fee reduction to go into effect on November 1, 2003. As a result
of the reduction, Columbia will receive a monthly fee equal to 0.20% 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
10
Notes to Financial Statements (continued)
August 31, 2003
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. Effective October 13, 2003, Liberty Funds
Services, Inc. changed its name to Columbia Funds Services, Inc.
At a special meeting held on October 8, 2003, the Board of Trustees approved
the change of transfer agent fees structure of the Fund. Effective November 1,
2003, the Fund will be charged an annual $28.00 charge per open account for the
transfer agent fees.
Underwriting Discounts, Service and Distribution Fees:
Liberty Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia,
is the Fund's principal underwriter. Effective October 13, 2003 Liberty Funds
Distributor, Inc. changed its name to Columbia Funds Distributor, Inc. For the
year ended August 31, 2003, the Fund has been advised that the Distributor
retained net underwriting discounts of $211 on sales of the Fund's Class A
shares and received CDSC of $1,680, $3,234 and $2,660 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 0.10%, 0.75% and 0.75% annually of the average daily net assets
attributable to Class A, Class B and Class C shares, respectively. The
Distributor has voluntarily agreed to waive the Class A share distribution fee
in its entirety.
The CDSC and the fees received from the Plan are used principally as repayment
to the Distributor for amounts paid by the Distributor to dealers who sold such
shares.
Expense Limits:
Columbia has voluntarily agreed, until further notice, to waive fees and bear
certain Fund expenses so that total expenses (exclusive of service and
distribution fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed 1.50% annually of the Fund's average daily
net assets.
Other:
The Fund pays no compensation to its officers, all of whom are employees of
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 $135 of custody
fees were reduced by balance credits for the year ended August 31, 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 August 31, 2003, purchases and sales of investments, other
than short-term obligations, were $2,841,927 and $5,651,051, respectively.
Unrealized appreciation (depreciation) at August 31, 2003, for federal income
tax purposes, was:
Gross unrealized appreciation $ 463,433
Gross unrealized depreciation (118,399)
---------
Net unrealized appreciation $ 345,034
---------
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. In addition,
concentration of investments in a single region or country may result in
greater volatility.
11
Notes to Financial Statements (continued)
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 August 31, 2003, the Fund did not borrow under these agreements.
Note 6. Beneficial Interest
At August 31, 2003, 45.78% of the outstanding shares of the Fund were held by
one shareholder, holding in excess of 5% of the Fund's shares outstanding.
Investment activity of this shareholder may have a material effect on the Fund.
12
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
Period Ended
Year Ended August 31, August 31,
------------------------------ 2000 (a)
Class A Shares 2003 2002 2001 ------------
- ---------------------------------------------------------------------------
Net Asset Value, Beginning of
Period $ 7.42 $ 9.41 $ 12.26 $ 10.33
--------- --------- --------- ---------
Income from Investment
Operations:
Net investment income (loss) (b) 0.02 0.02 (0.01) (0.03)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.40 (2.01) (2.84) 1.96
--------- --------- --------- ---------
Total from Investment Operations 0.42 (1.99) (2.85) 1.93
--------- --------- --------- ---------
Net Asset Value, End of Period $ 7.84 $ 7.42 $ 9.41 $ 12.26
--------- --------- --------- ---------
Total return (c)(d) 5.66% (21.15)% (23.25)% 18.68%(e)
--------- --------- --------- ---------
Ratios to Average Net Assets/
Supplemental Data:
Expenses (f) 1.75% 1.75% 1.75% 1.75%(g)
Net investment income (loss) (f) 0.28% 0.18% (0.14)% (0.25)%(g)
Waiver/reimbursement 3.64% 1.93% 1.25% 1.45%(g)
Portfolio turnover rate 74% 71% 67% 24%(e)
Net assets, end of period (000's) $ 1,995 $ 4,788 $ 5,823 $ 9,874
(a) The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with
the Securities and Exchange Commission.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(d) Had the Advisor and/or Distributor not waived or reimbursed a portion of
expenses, total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
13
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
Year Ended August 31, Period Ended
------------------------------- August 31,
Class B Shares 2003 2002 2001 2000 (a)
- ----------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $ 7.26 $ 9.27 $ 12.17 $ 10.33
--------- --------- --------- ---------
Income from Investment
Operations:
Net investment loss (b) (0.02) (0.05) (0.09) (0.10)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.37 (1.96) (2.81) 1.94
--------- --------- --------- ---------
Total from Investment Operations 0.35 (2.01) (2.90) 1.84
--------- --------- --------- ---------
Net Asset Value, End of Period $ 7.61 $ 7.26 $ 9.27 $ 12.17
--------- --------- --------- ---------
Total return (c)(d) 4.82% (21.68)% (23.83)% 17.81%(e)
--------- --------- --------- ---------
Ratios to Average Net Assets/
Supplemental Data:
Expenses (f) 2.50% 2.50% 2.50% 2.50%(g)
Net investment loss (f) (0.27)% (0.57)% (0.89)% (1.00)%(g)
Waiver/reimbursement 3.95% 1.83% 1.15% 1.45%(g)
Portfolio turnover rate 74% 71% 67% 24%(e)
Net assets, end of period (000's) $ 1,238 $ 1,394 $ 2,062 $ 2,989
(a) The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with
the Securities and Exchange Commission.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming no contingent deferred sales
charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
14
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
Period Ended
Year Ended August 31, August 31,
------------------------------- 2000 (a)
Class C Shares 2003 2002 2001 ------------
- ----------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 7.26 $ 9.28 $ 12.19 $ 10.33
--------- --------- --------- ---------
Income from Investment Operations:
Net investment loss (b) (0.04) (0.05) (0.09) (0.10)
Net realized and unrealized gain (loss) on investments
and foreign currency 0.33 (1.97) (2.82) 1.96
--------- --------- --------- ---------
Total from Investment Operations 0.29 (2.02) (2.91) 1.86
--------- --------- --------- ---------
Net Asset Value, End of Period $ 7.55 $ 7.26 $ 9.28 $ 12.19
--------- --------- --------- ---------
Total return (c)(d) 3.99% (21.77)% (23.87)% 18.01%(e)
--------- --------- --------- ---------
Ratios to Average Net Assets/
Supplemental Data:
Expenses (f) 2.50% 2.50% 2.50% 2.50%(g)
Net investment loss (f) (0.65)% (0.57)% (0.89)% (1.00)%(g)
Waiver/reimbursement 3.51% 1.83% 1.15% 1.45%(g)
Portfolio turnover rate 74% 71% 67% 24%(e)
Net assets, end of period (000's) $ 259 $ 189 $ 308 $ 488
(a) The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with
the Securities and Exchange Commission.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming no contingent deferred sales
charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
15
Financial Highlights (continued)
Selected data for a share outstanding throughout each period is as follows:
Period Ended
Year Ended August 31, August 31,
------------------------------- 2000 (a)
Class Z Shares 2003 2002 2001 ------------
- ----------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $ 7.39 $ 9.09 $ 11.83 $ 10.33
--------- --------- --------- ---------
Income from Investment
Operations:
Net investment income (loss) (b) (0.02) 0.04 0.01 --(c)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.63 (1.74) (2.75) 1.50
--------- --------- --------- ---------
Total from Investment Operations 0.61 (1.70) (2.74) 1.50
--------- --------- --------- ---------
Net Asset Value, End of Period $ 8.00 $ 7.39 $ 9.09 $ 11.83
--------- --------- --------- ---------
Total return (d) 8.25% (18.70)% (23.16)% 14.52%(e)
--------- --------- --------- ---------
Ratios to Average Net Assets/
Supplemental Data:
Expenses (f) 1.50% 1.50% 1.50% 1.50%(g)
Net investment income (loss) (f) (0.26)% 0.43% 0.11% --(g)(h)
Waiver/reimbursement 3.54% 1.83% 1.15% 1.45%(g)
Portfolio turnover rate 74% 71% 67% 24%(e)
Net assets, end of period (000's) $ 99 $ 8 $ 26 $ 35
(a) The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with
the Securities and Exchange Commission.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
(h) Rounds to less than 0.01%
16
Report of Ernst & Young LLP, Independent Auditors
To the Trustees of Columbia Funds Trust VII
and the Shareholders of Columbia Europe Fund
We have audited the accompanying statement of assets and liabilities of
Columbia Europe Fund (formerly Liberty Newport Europe Fund), (one of the
portfolios constituting the Columbia Funds Trust VII (formerly Liberty Funds
Trust VII), the "Trust"), including the Investment Portfolio, as of August 31,
2003 and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, the financial highlights for each of the three years in the period then
ended, and for the period from November 8, 1999 (the effective date of
registration) to August 31, 2000. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of August 31, 2003, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Columbia Europe Fund of Columbia Funds Trust VII, at August 31, 2003, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, the financial
highlights for each of the three years in the period then ended, and for the
period from November 8, 1999 (the effective date of registration) to August 31,
2000, in conformity with accounting principles generally accepted in the United
States.
/s/ Ernst & Young LLP
Boston, Massachusetts
October 17, 2003
17
Trustees
Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were
appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth
had been directors of 15 Columbia Funds and 12 funds in the CMG Fund Trust.
Also effective October 8, 2003, the incumbent trustees of the Fund were elected
as directors of the 15 Columbia Funds and as trustees of the 12 funds in the
CMG Fund Trust. The new combined Board of Trustees of the Fund now oversees 124
funds in the Columbia Funds Complex (including the former Liberty Funds, former
Stein Roe Funds, Columbia Funds and CMG Funds). Several of those trustees also
serve on the Boards of other funds in the Columbia Funds Complex.
The Trustees serve terms of indefinite duration. The names, addresses and ages
of the Trustees and officers of the Funds in the Columbia Funds Complex, 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 Fund in the Columbia
Funds Complex. 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.
Number of
Year First Portfolios in
Position Elected or Columbia Funds
with Appointed Principal Occupation(s) Complex Overseen
Name, Address and Age Funds to Office/1/ During Past Five Years by Trustee
- --------------------------------------------------------------------------------------------------------------
Disinterested Trustees
Douglas A. Hacker (Age 48) Trustee 1996 Executive Vice President - Strategy of 124
P.O. Box 66100 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 Chief Administrative Officer and Senior 124
3100 West Beaver Road Vice President, Kmart Holding
Troy, MI 48084-3163 Corporation since September, 2003
(formerly Executive Vice
President-Corporate Development and
Administration, General Counsel and
Secretary, Kellogg Company (food
manufacturer), from September, 1999 to
August, 2003; 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 126/3/
10701 Charleston Drive (formerly Chairman and Chief Executive
Vero Beach, FL 32963 Officer, U.S. Plywood Corporation
(building products manufacturer)).
Charles R. Nelson (Age 61) Trustee 1981 Professor of Economics, University of 124
Department of Economics Washington, since January, 1976; Ford
University of Washington and Louisa Van Voorhis Professor of
Seattle, WA 98195 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 127/3,4/
84 College Road Faculties since August, 1999, Boston
Chestnut Hill, MA 02467-3838 College (formerly Dean, Boston College
School of Management from September,
1977 to September, 1999.
Patrick J. Simpson (Age 58) Trustee 2000 Partner, Perkins Coie L.L.P. (formerly 124
1211 S.W. 5th Avenue Partner, Stoel Rives Boley Jones &
Suite 1500 Grey).
Portland, OR 97204
Thomas E. Stitzel (Age 67) Trustee 1998 Business Consultant since 1999 124
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.
Other
Principal Occupation(s) Directorships
During Past Five Years Held
- ---------------------------------------------------------------------------
Executive Vice President - Strategy of None
United 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).
Chief Administrative Officer and Senior None
Vice President, Kmart Holding
Corporation since September, 2003
(formerly Executive Vice
President-Corporate Development and
Administration, General Counsel and
Secretary, Kellogg Company (food
manufacturer), from September, 1999 to
August, 2003; Senior Vice President,
Secretary and General Counsel, Sara Lee
Corporation (branded, packaged,
consumer-products manufacturer) from
January, 1995 to September, 1999).
Private Investor since August, 1987 None
(formerly Chairman and Chief Executive
Officer, U.S. Plywood Corporation
(building products manufacturer)).
Professor of Economics, University of None
Washington, since January, 1976; Ford
and 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.
Academic Vice President and Dean of Saucony, Inc. (athletic footwear);
Faculties since August, 1999, Boston SkillSoft Corp.
College (formerly Dean, Boston College (E-Learning)
School of Management from September,
1977 to September, 1999.
Partner, Perkins Coie L.L.P. (formerly None
Partner, Stoel Rives Boley Jones &
Grey).
Business Consultant since 1999 None
(formerly Professor of Finance from
1975 to 1999 and Dean from 1977 to
1991, College of Business, Boise State
University); Chartered Financial
Analyst.
18
Trustees (continued)
Number of
Year First Portfolios in
Position Elected or Columbia Funds
with Appointed Principal Occupation(s) Complex Overseen
Name, Address and Age Funds to Office/1/ During Past Five Years by Trustee
- ---------------------------------------------------------------------------------------------------------------
Disinterested Trustees
Thomas C. Theobald (Age 66) Trustee 1996 Managing Director, William Blair 124
27 West Monroe Street, Capital Partners (private equity
Suite 3500 investing) since September, 1994
Chicago, IL 60606 (formerly Chief Executive Officer and
Chairman of the Board of Directors,
Continental Bank Corporation prior
thereto).
Anne-Lee Verville (Age 58) Trustee 1998 Author and speaker on educational 125/4/
359 Stickney Hill Road systems needs (formerly General
Hopkinton, NH 03229 Manager, Global Education Industry from
1994 to 1997, and President,
Applications Solutions Division from
1991 to 1994, IBM Corporation (global
education and global applications)).
Richard L. Woolworth (Age 62) Trustee 1991 Chairman and Chief Executive Officer, 124
100 S.W. Market Street The Regence Group (healthcare
#1500 maintenance organization) (formerly
Portland, OR 97207 Chairman and Chief Executive Officer,
BlueCross BlueShield of Oregon;
Certified Public Accountant, Arthur
Young & Company).
Interested Trustees
William E. Mayer/2/ (Age 63) Trustee 1994 Managing Partner, Park Avenue Equity 126/3/
399 Park Avenue Partners (private equity) since
Suite 3204 February, 1999 (formerly Founding
New York, NY 10022 Partner, Development Capital LLC from
November 1996 to February, 1999; Dean
and Professor, College of Business and
Management, University of Maryland from
October, 1992 to November, 1996).
Joseph R. Palombo/2/ (Age 50) Trustee, 2000 Executive Vice President and Chief 125/5/
One Financial Center Chairman Operating Officer of Columbia
Boston, MA 02111 of the Management Group, Inc. (Columbia
Board Management) since December, 2001 and
and Director, Executive Vice President and
President 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 Columbia 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 Columbia Funds from
April, 1999 to August, 2000; Chief
Operating Officer and Chief Compliance
Officer, Putnam Mutual Funds from
December, 1993 to March, 1999).
Other
Principal Occupation(s) Directorships
During Past Five Years Held
- ------------------------------------------------------------------------
Managing Director, William Blair Anixter International (network
Capital Partners (private equity support equipment distributor),
investing) since September, 1994 Jones Lang LaSalle (real estate
(formerly Chief Executive Officer and management services) and
Chairman of the Board of Directors, MONY Group (life insurance).
Continental Bank Corporation prior
thereto).
Author and speaker on educational Chairman of the Board of
systems needs (formerly General Directors, Enesco Group, Inc.
Manager, Global Education Industry from (designer, importer and
1994 to 1997, and President, distributor of giftware and
Applications Solutions Division from collectibles).
1991 to 1994, IBM Corporation (global
education and global applications)).
Chairman and Chief Executive Officer, NW Natural, a natural gas
The Regence Group (healthcare service provider
maintenance organization) (formerly
Chairman and Chief Executive Officer,
BlueCross BlueShield of Oregon;
Certified Public Accountant, Arthur
Young & Company).
Managing Partner, Park Avenue Equity Lee Enterprises (print media),
Partners (private equity) since WR Hambrecht + Co. (financial
February, 1999 (formerly Founding service provider) and First
Partner, Development Capital LLC from Health (healthcare).
November 1996 to February, 1999; Dean
and Professor, College of Business and
Management, University of Maryland from
October, 1992 to November, 1996).
Executive Vice President and Chief None
Operating Officer of Columbia
Management Group, 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 Columbia 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 Columbia Funds from
April, 1999 to August, 2000; Chief
Operating Officer and Chief Compliance
Officer, Putnam Mutual Funds from
December, 1993 to March, 1999).
/1/ In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Funds (the "CMG
Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds Complex).
/2/ 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.
/3/ Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of
the All-Star Funds, currently consisting of 2 funds, which are advised by
an affiliate of the Advisor.
/4/ Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
/5/ Mr. Palombo also serves as an interested director of Columbia Management
Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor.
19
Officers and Transfer Agent
Year First
Elected or
Position with Appointed Principal Occupation(s)
Name, Address and Age Columbia Funds to Office During Past Five Years
- ------------------------------------------------------------------------------------------------------------
Officers
Vicki L. Benjamin (Age 42) Chief Accounting 2001 Controller of the Columbia Funds and of the
One Financial Center Officer and Liberty All-Star Funds since May, 2002; Chief
Boston, MA 02111 Controller Accounting Officer of the Columbia Funds and
Liberty All-Star 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 Columbia Funds and of the
One Financial Center Liberty 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).
Important Information About This Report
The Transfer Agent for Columbia Europe Fund is:
Columbia Funds Services, Inc.
P.O. Box 8081
Boston, MA 02266-8081
Please note our new name as of October 13, 2003
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 Columbia Europe Fund. This
report may also be used as sales literature when preceded or accompanied by the
current prospectus which provides details of sales charges, investment
objectives and operating policies of the fund and with the most recent copy of
the Columbia Funds Performance Update.
Annual Report:
Columbia Europe Fund
Columbia Europe Fund Annual Report, August 31, 2003
[LOGO](R) ColumbiaFunds
A Member of Columbia Management Group
(c)2003 Columbia Funds Distributor, Inc.
One Financial Center, Boston, MA 02111-2621
800.426.3750 WWW.columbiafunds.com
738-02/213P-0803 (10/03) 03/2923
PRSRT STD
U.S. Postage
PAID
Holliston, MA Permit NO. 20
Item 2. Code of Ethics.
(a) The registrant has, as of the end of the period covered by this
report, adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
Registrant or a third party.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers
or implicit waivers to a provision of the code of ethics adopted in
2(a) above.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that Douglas A. Hacker and
Anne-Lee Verville, each of whom are members of the registrant's Board of
Trustees and Audit Committee, each qualify as an audit committee financial
expert. Mr. Hacker and Ms. Verville are each independent trustees, as defined in
paragraph (a)(2) of this item's instructions.
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.
Item 8. Reserved.
Item 9. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer, based on their evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing 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 Form N-CSR is accumulated and
communicated to the registrant's management, including the principal
executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
Item 10. Exhibits.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR
attached hereto as Exhibit 99.CODE ETH
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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) Columbia Funds Trust VII
--------------------------------------
By (Signature and Title) /s/ Joseph R. Palombo
-------------------------
Joseph R. Palombo, President
Date November 7, 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 November 7, 2003
----------------------------------------------
By (Signature and Title) /s/ J. Kevin Connaughton
--------------------------
J. Kevin Connaughton, Treasurer
Date November 7, 2003
----------------------------------------------