<PAGE>
[GRAPHIC OMITTED]
- -------------------------------------------------------------------------------
COLONIAL
NEWPORT TIGER
CUB FUND
- -------------------------------------------------------------------------------
SEMIANNUAL REPORT
FEBRUARY 28, 1997
NOT FDIC-
INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
<PAGE>
COLONIAL NEWPORT TIGER CUB FUND HIGHLIGHTS
SEPTEMBER 1, 1996 - FEBRUARY 28, 1997
INVESTMENT OBJECTIVE: Colonial Newport Tiger Cub Fund seeks capital appreciation
by investing primarily in equity securities of small companies (i.e., companies
with equity market capitalizations of U.S. $1 billion or less) located in the
nine Tigers of Asia: Hong Kong, Singapore, South Korea, Taiwan, Malaysia,
Thailand, Indonesia, China and the Philippines.
THE FUND IS DESIGNED TO OFFER:
|X| Access to entrepreneurial company stocks in fast-growing economies
|X| Aggressive long-term growth potential
|X| Experienced investment management
PORTFOLIO MANAGER COMMENTARY: "The Fund's focus on small Asian companies with
products and services targeted to the high growth regional market should provide
shareholders with attractive capital appreciation opportunities."
-- Robert Cameron
COLONIAL NEWPORT TIGER CUB FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
Inception Date 6/3/96 6/3/96 6/3/96
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Six-month total returns, assuming 3.86% 3.55% 3.66%
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC)
- ---------------------------------------------------------------------------------------
Six-month total returns assuming maximum (2.11)% (1.45)% 1.62%
offering price (MOP) and CDSC*
- ---------------------------------------------------------------------------------------
Net asset value per share on 2/28/97 $ 9.68 $9.63 $9.64
- ---------------------------------------------------------------------------------------
*Maximum offering price (MOP) returns include the maximum sales charge of 5.75%
for Class A and 1% for Class D shares. The contingent deferred sales charge
(CDSC) returns reflect the maximum charge of 5% and 1%, respectively, for Class
B and Class D shares. Past performance cannot predict future results. Returns
and value of an investment will fluctuate, resulting in a gain or loss on sale.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP FIVE COUNTRIES** TOP FIVE HOLDINGS**
- --------------------------------------------------------------------------------
1. Hong Kong ................ 52.0% 1. Elec & Eltek International .... 5.0%
2. Singapore ................ 26.3% 2. Hutchinson Whampoa Ltd. .. .... 4.1%
3. Indonesia ................ 8.0% 3. Varitronix International Ltd. . 3.7%
4. Philippines .............. 5.6% 4. Singapore Finance Ltd. ........ 3.7%
5. Malaysia ................. 4.6% 5. Cheung Kong Holding ........... 3.7%
- --------------------------------------------------------------------------------
**Country and holdings breakdowns are calculated as a percent of total
investments. Because the Fund is actively managed, there can be no guarantee
the Fund will continue to hold these securities or invest in these countries
in the future.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF HAROLD W. COGGER]
I am pleased to present your Fund's semiannual report for the six months ended
February 28, 1997. This report reflects on the investment environment of the
past six months and on the performance of your Fund.
While economic growth in the Asian region as a whole moderated during 1996,
China, Hong Kong and Taiwan experienced an increase in growth throughout the
year. In particular, Hong Kong benefited from increased investor enthusiasm.
More recently, firmer demand has been evident in Singapore and Malaysia.
Our expectations for 1997 are relatively bright and include an economic surge in
the Hong Kong market as control changes hands from the British to the Chinese at
the end of June. We anticipate continued capital flows into the Tiger countries
as a result of their relatively large sustainable growth rates, which should
translate into strong stock market performance.
The following report will provide you with specific information on your Fund's
performance as well as an in-depth discussion with your portfolio manager,
Robert Cameron. As always, we thank you for the opportunity to help you meet
your investment goals through the Colonial family of funds.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
April 10, 1997
Because market conditions change frequently, there can be no assurance that the
trends described in this report will continue, come to pass or affect Fund
performance.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
[PHOTO OF ROBERT CAMERON]
ROBERT CAMERON is portfolio manager of Colonial Newport Tiger Cub Fund and is
senior vice president of Newport Fund Management, Inc.
Q. WHAT WAS THE FUND'S STRATEGY DURING THE PAST SIX MONTHS?
A. We maintained our long-term investment approach and focused on the best
quality, high growth smaller capitalization stocks in East Asia. We looked for
well-managed companies with a unique market niche, consistent and sustainable
earnings growth, low debt levels and strong cash flows. In particular, the
Fund's assets were invested in companies with products and services targeted to
the high growth Asian region rather than to the slower growth export market. We
invest in companies with good basic businesses whose stock prices are supported
by core earnings. The portfolio's regional approach, with assets diversified
among the nine Tiger nations, also provides a hedge against any individual weak
market in the region.
Q. WHAT ARE SOME OF THE STOCKS HELD BY THE FUND?
A. The Fund owns a number of consumer stocks that are positioned to benefit from
rising disposable incomes and standards of living in many Asian nations. One
such investment is Hong Kong-based Guangnan Holdings, an importer and exporter
of gourmet foods within Asia, and operator of close to 100 supermarkets. Another
holding is Elec & Eltek International, a Singapore-based company that
manufactures high-end printed circuit boards for Hewlett Packard, Motorola and
other major players in the electronics market.
Q. HONG KONG HAS REPRESENTED A LARGE PORTION OF THE FUND'S PORTFOLIO IN THE
PAST. DOES IT STILL, AND HOW HAS HONG KONG'S RETURN TO CHINESE SOVEREIGNTY IN
JUNE AFFECTED YOUR STRATEGY?
A. Yes, the Fund's investment in Hong Kong stocks represented 52% of assets at
the end of the period and was the major contributor to performance. Increased
investor enthusiasm for this market resulted, in part, from a growing acceptance
that Hong Kong's return to Chinese sovereignty on June 30, 1997, will stimulate
the local economy. This economic stimulus is expected to result in significant
increases in both infrastructure and direct investment spending.
Q. HOW DID THE VARIOUS "TIGER" MARKETS PERFORM DURING THE PERIOD?
A. The Hong Kong market was very strong, returning 20% over the period. However,
because much of the Hong Kong market was dominated by large capitalization
stocks rather than by the smaller capitalization stocks that represent the bulk
of the portfolio, the Fund's participation in these returns was limited. The
portfolio's next largest country exposure, Singapore, returned 3.25% over the
period as the markets rose to record levels and investors were attracted by the
nation's well-managed economy. The Thai market was a disappointment, losing 34%
of its value as a result of declining exports, political difficulties and
problems in the financial services sector. We reduced the Fund's investment in
Thailand from 8% of assets to 3% at the end of the period.
Q. WHAT IS YOUR OUTLOOK FOR THE MONTHS AHEAD?
A. We believe that the investment environment in the region should be generally
favorable despite the Federal Reserve Board's recent tightening of interest
rates. Exchange rates have held fairly stable and some interest rate spreads
have even narrowed. Further Fed tightening should not upset Asian financial
markets although more dramatic tightening could have a more significant impact.
Stock valuations continue to be reasonable, growth prospects are good and we do
not see any significant political or economic risks on the horizon. Hong Kong's
return to Chinese sovereignty is expected to go smoothly. Jiang Zemin, the
president of China, the region's superpower, is firmly in control, and there are
no major elections coming up in the region. These conditions bode well for
investor confidence. In addition, many of the smaller stocks that represent the
Fund's investment focus are starting to pick up and we are hopeful that the
market will broaden, with a greater number of stocks contributing to
performance. We do not anticipate any changes to our investment strategy of
buying well-managed quality companies that seek to provide sustainable earnings
over the long term.
<PAGE>
INVESTMENT PORTFOLIO
FEBRUARY 28, 1997 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 92.7% COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 0.5%
AGRICULTURE-LIVESTOCK
Pt Anwar Sierad (Foreign) In 107 $ 83
--------
- ------------------------------------------------------------------------------------
CONSTRUCTION - 4.4%
BUILDING CONSTRUCTION - 2.3%
C & P Homes, Inc. Ph 765 392
--------
HEAVY CONSTRUCTION-NON BUILDING CONSTRUCTION - 2.1%
Road Builder (M) Holdings Bhd Ma 62 362
--------
- ------------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 39.8%
DEPOSITORY INSTITUTIONS - 12.7%
Dah Sing Financial HK 110 460
HSBC Holdings PLC HK 20 478
JCG Holdings Ltd. HK 476 396
PT Lippo Bank In 330 386
Keppel Bank Si 150 453
--------
2,173
--------
HOLDING & OTHER INVESTMENT COMPANIES - 3.8%
Hutchison Whampoa Ltd. HK 85 648
--------
INSURANCE CARRIERS - 1.8%
Thai Reinsurance Co., Ltd. Th 100 305
--------
NONDEPOSITORY CREDIT INSTITUTIONS - 7.6%
Manhattan Card Co., Ltd. HK 470 182
Singapore Finance Ltd. Si 355 588
ST Capital Ltd. Si 329 526
--------
1,296
--------
REAL ESTATE - 13.9%
China Overseas Land & Investment HK 900 526
Cheung Kong Holdings Ltd. HK 61 583
City Developments Ltd. Si 54 534
Hon Kwok Land Investment Ltd. HK 1,085 396
Sun Hung Kai Properties Ltd. HK 29 335
--------
2,374
--------
............................................................................................
MANUFACTURING - 30.6%
CHEMICALS & ALLIED PRODUCTS - 1.4%
PT Darya Varia Laboratoria (a) In 150 236
--------
ELECTRONIC & ELECTRICAL EQUIPMENT - 13.5%
Clipsal Industries Ltd. Si 137 $ 562
Elec & Eltek International Company Ltd. Si 160 790
Nylex Malaysia Bhd Ma 150 363
Varitronix International Ltd. HK 357 590
--------
2,305
--------
FABRICATED METAL - 1.5%
Sinocan Holdings Ltd. HK 744 267
--------
FOOD & KINDRED PROUDCTS - 4.7%
Guangnan Holdings HK 216 304
La Tondena Distillers Inc. Ph 179 499
--------
803
--------
FURNITURE & FIXTURES - 0.7%
Courts Ltd. Si 90 119
--------
MEASURING & ANALYZING INSTRUMENTS - 4.0%
China Hong Kong Photo Products HK 1,898 686
--------
RUBBER & PLASTIC - 4.8%
PT Dynaplast In 725 575
Srithai Superware Public Co., Ltd.
(Foreign) Th 53 250
--------
825
--------
....................................................................................
RETAIL TRADE - 8.2%
APPAREL & ACCESSORY STORES - 5.6%
Dickson Concepts International Ltd. HK 123 450
Four Seas Mercantile HK 308 178
Glorios Sun Enterprises (a) HK 700 337
--------
965
--------
MISCELLANEOUS RETAIL - 2.6%
Singapore Technologies Automotive Ltd. Si 190 440
--------
....................................................................................
SERVICES - 1.0%
MISCELLANEOUS REPAIR SERVICES
Keppel Corp. (a) Si 24 174
--------
....................................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 3.1%
COMMUNICATIONS - 2.0%
Hong Kong Telecommunications Ltd. HK 197 339
--------
GAS SERVICES - 1.1%
Hong Kong and China Gas Co., Ltd. HK 97 $ 184
--------
....................................................................................
WHOLESALE TRADE - 5.1%
DURABLE GOODS
Johnson Electric Holdings Ltd. HK 142 392
Li & Fung Ltd. HK 594 483
--------
875
--------
TOTAL COMMON STOCKS (cost of $14,735) 15,851
--------
WARRANTS (a) - 0.2%
- -------------------------------------------------------------------------------------
MANUFACTURING - 0.2%
FOOD & KINDRED PRODUCTS
Guangnan Holdings
Expires 08/31/98 HK 59 39
--------
TOTAL WARRANTS (cost of $3) 39
--------
TOTAL INVESTMENTS (cost of $14,738) (b) 15,890
========
SHORT-TERM OBLIGATIONS - 6.9% PAR
- -------------------------------------------------------------------------------------
Repurchase agreement with Bankers Trust
Securities Corp. dated 02/28/97 due 03/03/97 at
5.350%, collateralized by U.S. Treasury notes
with various maturities to 2019, market
value $1,204 (repurchase proceeds $1,179) $ 1,178 1,178
--------
FORWARD CURRENCY CONTRACTS (c) - 0.0% (2)
- -------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.2% 41
- ------------------------------------------------------------------------------------
NET ASSETS - 100% $ 17,107
========
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
(c) As of February 28, 1997, the Fund had entered into the following
forward currency exchange contracts:
Net Unrealized
Contracts In Exchange Settlement Depreciation
to Receive For Date (US $)
- ---------- ------------ ---------- ---------------
SD 205 US $ 145 03/05/97 $ (2)
Summary of
Securities
by Country Country Value % of Total
- -------------------------------------------------------------------------------------
Hong Kong HK $ 8,255 52.0
Singapore Si 4,185 26.3
Indonesia In 1,279 8.0
Philippines Ph 891 5.6
Malaysia Ma 725 4.6
Thailand Th 555 3.5
------- -----
$15,890 100.0
======= ======
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
See notes to financial statements.
</TABLE>
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
FEBRUARY 28, 1997 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $14,738) $ 15,890
Short-term obligations 1,178
--------
17,068
Cash including foreign currencies (cost $444) 444
Receivable for:
Investments sold 372
Fund shares sold 154
Expense reimbursement due from
Adviser/Administrator 112
Deferred organization expenses 1 1,083
----- -------
Total Assets
18,151
LIABILITIES
Unrealized depreciation on forward
currency contracts 2
Payable for:
Investments bought 983
Fund shares repurchased 13
Accrued:
Management fee 16
Other 30
-----
Total Liabilities 1,044
--------
NET ASSETS $ 17,107
========
Net asset value & redemption price per share -
Class A ($7,977/824) $9.68
========
Maximum offering price per share - Class A
($9.68/0.9425) $10.27(a)
========
Net asset value & offering price per share -
Class B ($6,427/667) $9.63(b)
========
Net asset value & redemption price per share -
Class D ($1,412/146) $9.64(b)
========
Maximum offering price per share - Class D
($9.64/0.9900) $9.74
========
Net asset value, offering & redemption price
per share - Class Z ($1,291/133) $9.70
========
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Dividends $ 92
Interest 22
------
Total Investment Income (net of nonrebatable
foreign taxes withheld at source which
amounted to $2) 114
EXPENSES
Management fee $ 74
Administration fee 16
Service fee - Class A, Class B, Class D 14
Distribution fee - Class B 18
Distribution fee - Class D 4
Transfer agent fee 18
Bookkeeping fee 14
Trustees fee 4
Audit fee 16
Legal fee 6
Custodian fee 24
Registration fee 15
Reports to shareholders 4
Other 24
-----
251
Fees and expenses waived or borne
by the Adviser/Administrator (86) 165
----- ------
Net Investment Loss (51)
------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss on:
Investments (838)
Foreign currency transactions (42)
------
Net Realized Loss (880)
Net unrealized appreciation (depreciation)
during the period on:
Investments 1,469
Foreign currency transactions (2)
------
Net Unrealized Gain 1,467
------
Net Gain 587
------
Net Increase in Net Assets from Operations $ 536
======
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months Period
ended ended
(in thousands) February 28 August 31
----------- ----------
INCREASE (DECREASE) IN NET ASSETS 1997 1996 (a)
Operations:
Net investment income (loss) $ (51) $ 5
Net realized loss (880) (62)
Net unrealized appreciation (depreciation) 1,467 (317)
------- ------
Net Increase (Decrease) from Operations 536 (374)
------- ------
Fund Share Transactions
Receipts for shares sold - Class A 4,885 4,138
Cost of shares repurchased - Class A (693) (462)
------- ------
4,192 3,676
------- ------
Receipts for shares sold - Class B 4,461 2,816
Cost of shares repurchased - Class B (884) (49)
------- ------
3,577 2,767
------- ------
Receipts for shares sold - Class D 812 889
Cost of shares repurchased - Class D (186) (108)
------- ------
626 781
------- ------
Receipts for shares sold - Class Z 76 1,250
------- ------
Net Increase from Fund Share Transactions 8,471 8,474
------- ------
Total Increase 9,007 8,100
NET ASSETS
Beginning of period 8,100 -
End of period (including accumulated net
investment loss of $110 and $17,
respectively) $17,107 $8,100
======= ======
NUMBER OF FUND SHARES
Sold - Class A 516 429
Repurchased - Class A (72) (49)
------- -------
444 380
------- -------
Sold - Class B 477 290
Repurchased - Class B (95) (5)
------- ------
382 285
------- ------
Sold - Class D 87 90
Repurchased - Class D (20) (11)
------- ------
67 79
------- ------
Sold - Class Z 8 125
------- ------
(a) The Fund commenced investment operations on June 3, 1996.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1997 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial Newport Tiger Cub Fund (the Fund), a
series of Colonial Trust II, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at February 28, 1997, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end, management investment company. The Fund's investment objective is to
seek capital appreciation by investing primarily in equity securities of small
companies located in the nine Tigers of Asia (Hong Kong, Singapore, South Korea,
Taiwan, Malaysia, Thailand, Indonesia, China and the Philippines). The Fund may
issue an unlimited number of shares. The Fund offers four classes of shares:
Class A, Class B, Class D, and Class Z. Class A shares are sold with a front-end
sales charge and Class B shares are subject to an annual distribution fee and a
contingent deferred sales charge. Class B shares will convert to Class A shares
when they have been outstanding approximately eight years. Class D shares are
subject to a reduced front-end sales charge, a contingent deferred sales charge
on redemptions made within one year after purchase and a continuing distribution
fee. Class Z shares are offered continuously at net asset value. There are
certain restrictions on the purchase of Class Z shares, please refer to the
prospectus.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies that are consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there were
no sales during the day, at current quoted bid prices. In certain countries, the
Fund may hold foreign designated shares. If the foreign share prices are not
readily available as a result of limited share activity, the securities are
valued at the last sale price of the local shares in the principal market in
which such securities are normally traded. 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 the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. In certain countries,
the Fund may hold portfolio positions which cannot be valued as set forth above,
and are valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class A, Class B and Class D service fee and Class B
and Class D distribution fee), realized and unrealized gains (losses) are
allocated to each class proportionately on a daily basis for purposes of
determining the net asset value of each class.
The per share data was calculated using average shares outstanding during the
period. In addition, Class A, Class B and Class D net investment income per
share data reflects the service fee per share applicable to Class A, Class B and
Class D shares and the distribution fee applicable to Class B and Class D shares
only.
Class A, Class B and Class D ratios are calculated by adjusting the expense and
net investment income ratios for the Fund for the entire period by the service
fee applicable to Class A, Class B and Class D shares and the distribution fee
applicable to Class B and Class D shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred $1,000 of expenses in
connection with its organization. These expenses were deferred and are being
amortized on a straight-line basis over five years.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Notes to Financial
Statements/February 28, 1997
Fund's capital accounts to reflect income and gains available for distribution
(or available capital loss carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency transactions includes the fluctuation in exchange rates on
gains (losses) between trade and settlement dates on securities transactions,
gains (losses) arising from the disposition of foreign currency, and currency
gains (losses) between the accrual and payment dates on dividends and interest
income and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) from investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward currency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily,
resulting in unrealized gains (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract 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.
OTHER: Corporate actions are recorded on the ex-date (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonrebatable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Newport Fund Management (the Adviser) is the investment Adviser
of the Fund and receives a monthly fee equal to 1.15% annually of the Fund's
average net assets.
ADMINISTRATION FEE: Colonial Management Associates, Inc. (the Administrator)
provides accounting and other services for a monthly fee equal to 0.25% annually
of the Fund's average net assets.
BOOKKEEPING FEE: The Administrator provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer Agent), an
affiliate of the Administrator, provides shareholder services for a monthly fee
equal to 0.25% annually of the Fund's average net assets and receives
reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Administrator, is the
Fund's principal underwriter. For the six months ended February 28, 1997, the
Fund has been advised that the Distributor retained net underwriting discounts
of $18,321 on sales of the Fund's Class A shares and received contingent
deferred sales charges (CDSC) of $2,561 and $598 on Class B and Class D share
redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually on Class A, Class B and Class D net assets
as of the 20th of each month. The plan also requires the payment of a
distribution fee to the Distributor equal to 0.75% of the average net assets
attributable to Class B and Class D shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Adviser/Administrator have 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 2.00% annually of the Fund's
average net assets.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser or Administrator.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the six months ended February 28, 1997, purchases
and sales of investments, other than short-term obligations, were $11,856,980
and $3,733,085 respectively.
Unrealized appreciation (depreciation) at February 28, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $1,768,396
Gross unrealized depreciation (615,991)
----------
Net unrealized appreciation $1,152,405
==========
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. OTHER RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
At February 28, 1997, the Fund had one shareholder, Liberty Financial Companies
who owned greater than 5% of the Fund's shares outstanding.
NOTE 6. COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Capital paid in $16,939
Accumulated net investment loss (110)
Accumulated net realized loss (872)
Net unrealized appreciation (depreciation) on:
Investments 1,152
Foreign currency transactions (2)
-------
$17,107
=======
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout the period are
as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended February 28
--------------------------------------------------------
1997
Class A Class B Class D Class Z
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 9.320 $ 9.300 $ 9.300 $ 9.320
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (a)(b) (0.023) (0.058) (0.058) (0.011)
Net realized and
unrealized gain (loss) (b) 0.383 0.388 0.398 0.391
------- ------- ------- -------
Total from Investment
Operations 0.360 0.330 0.340 0.380
------- ------- ------- -------
Net asset value -
End of period $ 9.680 $ 9.630 $ 9.640 $ 9.700
======= ======= ======= =======
Total return (d)(e)(f) 3.86% 3.55% 3.66% 4.08%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g)(h) 2.25% 3.00% 3.00% 2.00%
Net investment
income (loss) (g)(h) (0.47)% (1.22)% (1.22)% (0.22)%
Fees and expenses
waived or borne by
the Adviser/Administrator (g)(h) 1.33% 1.33% 1.33% 1.33%
Portfolio turnover (f) 32% 32% 32% 32%
Average commission rate $ 0.0054 $ 0.0054 $ 0.0054 $0.0054
Net assets at end
of period (000) $ 7,977 $ 6,427 $ 1,412 $ 1,291
(a) Net of fees and expenses waived or borne by the Adviser/Administrator which
amounted to: $ 0.126 $ 0.126 $ 0.126 $ 0.126
(b) Per share data was calculated using average shares outstanding during the period.
(c) The Fund commenced investment operations on June 3, 1996.
(d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or
contingent deferred sales charge.
(e) Had the Adviser/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage arrangements had no impact.
(h) Annualized.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Period ended August 31
-----------------------------
1996 (c)
Class A Class B Class D Class Z
------- ------- ------- -------
$10.000 $10.000 $10.000 $10.000
------- ------- ------- -------
0.016 (0.002) (0.002) 0.021
(0.696) (0.698) (0.698) (0.701)
------- ------- ------- -------
(0.680) (0.700) (0.700) (0.680)
------- ------- ------- -------
$ 9.320 $ 9.300 $ 9.300 $ 9.320
======= ======= ======= =======
(6.80)% (7.00)% (7.00)% (6.80)%
======= ======= ======= =======
2.25% 3.00% 3.00% 2.00%
0.62% (0.13)% (0.13)% 0.87%
5.16% 5.16% 5.16% 5.16%
3% 3% 3% 3%
$0.0049 $0.0049 $0.0049 $0.0049
$ 3,542 $ 2,654 $ 738 $ 1,166
$ 0.123 $ 0.123 $ 0.123 $ 0.123
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES*: Exchange all or part of your account into the same share class
of another Colonial fund, by phone or mail, as your needs change over time.
EASY ACCESS TO YOUR MONEY*: Make withdrawals from your account by phone, by mail
or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it to Colonial within one year, you can reinvest in any
Colonial fund of the same share class without any penalty or sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Colonial account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly, or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th of each month. Dividends and capital gains must be
reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
LOW COST IRAS: Choose from a broad range of retirement plans, including IRAs.
*Redemptions and exchanges are made at the next determined net asset value after
the request is received by Colonial. Proceeds may be more or less than your
original cost. The exchange privilege may be terminated at any time. Exchanges
are not available on all funds. Investors who purchase Class B or D shares (for
applicable funds), or $1 million or more of Class A shares, may be subject to a
contingent deferred sales charge.
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
Colonial account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale, or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
COLONIAL SHAREHOLDER NEWS: Mailed with your quarterly account statements, this
newsletter highlights timely investment strategies, portfolio manager
commentary, and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends, and capital gains information ........... press 1
For account information ............................................. press 2
To speak to a Colonial representative ............................... press 3
For yield and total return information .............................. press 4
For duplicate statements or new supply of checks .................... press 5
To order duplicate tax forms and year-end statements ................ press 6
(February through May)
To review your options at any time during your call ................. press *
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 am to 8:00 pm ET, and Saturdays from February through
mid-April, 10:00 am to 2:00 pm ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
am to 7:00 pm ET. Transactions received after the close of the New York Stock
Exchange will receive the next business day's closing price.
LITERATURE - 1-800-426-3750
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Newport Tiger Cub Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Newport Tiger Cub Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call Colonial at
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Newport Tiger Cub
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.
<PAGE>
[GRAPHIC OMITTED]
COLONIAL
MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price &
Rhoads; President and Chief Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, C. S. First
Boston Merchant Bank; and President and Chief Executive Officer, The First
Boston Corporation)
JAMES L. MOODY, JR.
Chairman of the Board and Director, Hannaford Bros. Co. (formerly Chief
Executive Officer, Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Retired Partner, Peat Marwick Main & Co. (formerly Management Consultant,
Saatchi and Saatchi Consulting Ltd. and Principal and International Practice
Director, Management Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1997
A Liberty Financial Company (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
CF-03/450D-0297 M (4/97)
