<PAGE>
[graphic omitted]
NEWPORT GREATER CHINA FUND SEMIANNUAL REPORT
February 28, 1999
----------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
----------------------------
<PAGE>
NEWPORT GREATER CHINA FUND HIGHLIGHTS
SEPTEMBER 1, 1998 - FEBRUARY 28, 1999
INVESTMENT OBJECTIVE: Newport Greater China Fund seeks long-term growth of
capital by investing primarily in equity securities of companies located in, or
which derive a substantial portion of their revenue from business activity with
or in, the Greater China Region (i.e., Hong Kong, the People's Republic of China
and Taiwan).
PORTFOLIO MANAGEMENT COMMENTARY: "During the six-month period, improved market
conditions and our continued focus on financially sound, well-managed companies
contributed to strong performance for the Fund. In addition, China has
implemented significant economic reforms that we believe have positive long-term
implications."
- Tim Tuttle and Chris Legallet, Co-Managers
NEWPORT GREATER CHINA FUND PERFORMANCE(1)
LOAD-
MODIFIED
CLASS A CLASS B CLASS C CLASS Z CLASS A
Inception dates 5/16/97 5/16/97 5/16/97 5/16/97 7/25/97
- --------------------------------------------------------------------------------
Six-month distributions $0.062 $0.000 $0.000 $0.086 $0.062
declared per share
- --------------------------------------------------------------------------------
Six-month total returns, 45.96% 44.79% 47.63% 46.00% 45.96%
assuming reinvestment of all
distributions and no sales
charge or contingent
deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Six month total returns, 37.57% 39.79% 46.63% 46.00% 43.96%(3)
assuming POP and CDSC (2)
- --------------------------------------------------------------------------------
Net asset value per share
on 2/28/99 $9.20 $9.18 $9.33 $9.24 $9.20
TOP FIVE HOLDINGS(4) TOP SECTORS (4)
(as of 2/28/99) (as of 2/28/99)
- --------------------------------------------------------------------------------
1. China Telecom Ltd. 7.9% 1. Holding Companies 15.1%
2. Cheung Kong Holdings Ltd. 7.2% 2. Real Estate 13.4%
3. Hutchison Whampoa Ltd. 7.0% 3. Transportation Services 8.5%
4. Sun Hung Kai Properties Ltd. 6.2% 4. Telecommunications 7.9%
5. Li & Fung Ltd. 5.8% 5. Electric Services 7.2%
(1) 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.
(2) Public offering price (POP) returns include the maximum sales charge of
5.75% for Class A shares. The CDSC returns reflect the maximum charges of 5%
and 1% for Class B and Class C shares, respectively. Past performance cannot
predict future results. Returns and value of an investment will fluctuate,
resulting in a gain or loss on sale.
(3) The load-modified Class A total return is shown without a front-end sales
charge but with a 2% CDSC. Class B, C and Z shares were not available during
the subscription rights offering period.
(4) Holdings and sector breakdowns are calculated as a percentage of total net
assets. Because the Fund is actively managed, there can be no guarantee the
Fund will continue to hold these securities or invest in these sectors in
the future.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Stephen E. Gibson]
I am pleased to present the semiannual report for Newport Greater China Fund for
the six-month period ended February 28, 1999.
Although Asian stocks continued to suffer from local financial and economic
conditions through the summer of 1998, Asian market performance began to turn
around dramatically in the fall. Interest rate cuts in the U.S. caused positive
reactions among global investors and spurred market rallies both here and
abroad.
The gains in Asian stocks during the past several months are encouraging,
particularly for Newport Greater China Fund investors who have remained patient.
While improving conditions are beginning to draw investors back to Asia, it is
important to note that the economies of many Asian countries are still
contracting, although less dramatically than before. We believe that global
investment capital should continue to flow into these markets as conditions
improve.
Newport Fund Management has established itself as a leader in Asian market
investing over the course of numerous economic and market cycles. Newport's
management style is built on 20 years of experience, knowledge and local
relationships in Southeast Asia that few Asian fund managers can match.
The Portfolio Management Report on the following pages will provide you with
more specific information on your Fund's performance and the market in which
your Fund invests. Thank you for choosing Newport Greater China Fund and for
giving us the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
April 13, 1999
Because market and economic conditions change, there can be no assurance that
the trends described above or on the following pages will continue.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
[Photo of Tim Tuttle]
TIM TUTTLE is managing director of Newport Fund Management, Inc. and lead
portfolio manager of Newport Greater China Fund. He has more than 20 years of
experience investing in Asian markets and is a Chartered Financial Analyst.
[Photo of Chris Legallet]
CHRIS LEGALLET is a senior vice president of Newport Fund Management, Inc. and a
co-manager of Newport Greater China Fund. He is a former managing director for
Asian Investment for Jupiter Tyndall (Asia) Ltd. in Hong Kong and, prior to
that, was a vice president of Salomon Inc.in New York.
PERFORMANCE BENEFITED FROM IMPROVED MARKET CONDITIONS
The period began with continued investor concern about currency devaluations,
weak economies and political instability in emerging markets - particularly
Russia, which devalued its currency in July 1998. However, sentiment shifted in
the fall, as investors began to see signs of global economic improvement. Many
well-managed, profitable companies posted solid earnings gains despite the
region's financial and economic difficulties. Moreover, investors were
encouraged by measures taken by some Asian countries to reinforce banking
systems and capital markets. In response, stocks rallied impressively as global
investors took advantage of attractive prices to position themselves for a
potential economic rebound. Chinese stocks showed particular strength, since
China's economic growth rate in 1998 was higher than any other country in
Southeast Asia. For the six-month period, the Fund generated a total return of
45.96% for Class A shares, based on net asset value. This return placed the Fund
at the top of its Lipper peer group for the six-month period.(1)
FUND RETAINED ITS QUALITY FOCUS
In keeping with the Fund's objective of capitalizing on the economic growth of
mainland China, we have continued to seek companies that are well-managed,
financially sound and generate consistent cash flows. For example, we invested
in Li & Fung, Ltd. (5.79% of total net assets), a Hong Kong-based trading
company that serves as an intermediary for retail stores' private label goods.
Li & Fung sources its manufacturing to countries with relatively low labor costs
and cheaper currencies, such as China, while selling finished products to
countries with stronger currencies, such as the United States. As a result, the
company can insulate its earnings from weak regional currencies and economies.
(1) Source: Lipper, Inc. Lipper rankings are based on the Lipper China Region
Funds category. The Fund (Class A shares at net asset value) ranked in the
first quartile for six months (2 out of 26 funds) and in the fourth quartile
for one year (18 out of 22 funds). Rankings do not include any sales
charges. Performance for different share classes will vary with fees
associated with each class. Past performance cannot guarantee future
results.
One of the Fund's core holdings, China Telecom (7.92% of total net assets), has
the largest cellular telephone franchise in China with a monopoly share in three
provinces comprising more than 180 million people. Because of the high cost of
installing land telephone lines, cellular offers an alternative means of
obtaining communication access. Furthermore, despite cellular's popularity in
China, subscription rates are still relatively low, offering dominant companies
significant growth potential.
CHINA'S POLITICAL AND ECONOMIC REFORM CONTINUED
China has continued to make progress on the long road to achieving the economic
reforms initiated in 1978. In recent years, the government has moved forward on
three major fronts. First, China has invested over $30 billion of capital into
its four main commercial banks, which should strengthen the banking system's
capital structure and profitability. This investment, in turn, could also
stimulate consumer spending through lower lending rates, while distributing
capital to a larger group of business sectors. In addition, China is
establishing an asset management program modeled on the U.S. Resolution Trust
Company. This program is designed to reduce the financial burden of nonpaying
loans that resulted from the speculative property boom in the early 1990s.
Second, in a significant departure from the past, China has plans to officially
recognize private enterprise, one of the economy's fastest growing sectors with
over 75 million employees. China's parliament is expected to approve a
constitutional amendment known as the "Wholly Owned Enterprise Law," which would
protect the rights of privately owned companies. This move should have a
positive effect on long-term economic activity because official recognition
would increase the private sector's access to capital and to foreign markets.
Finally, in 1998 China announced a three-year spending plan designed to invest
nearly $1.2 trillion in infrastructure and construction projects such as toll
roads, shipping ports, power generation and water treatment facilities. In
addition to creating new jobs, this program should produce a more attractive
environment for business formation and foreign investment, yielding better
prospects for China's long-term economic prosperity.
CHINA IS PROGRESSING IN THE RIGHT DIRECTION
The past few years have been challenging for investors in Greater China due to
volatile markets, slowing economic growth and the seemingly slow pace of
economic reform. However, the Fund's strong performance during the past six
months reflects China's continued progress towards an open-market economy and
its sound economic fundamentals. While China's ambitious economic reforms cannot
take place overnight, we believe the long-term benefits far outweigh the
short-term costs. China enjoys an abundant labor force, significant currency
reserves, high savings rates and an increasing share of exports to the world's
developed economies. These are the types of economic characteristics that we
believe can create a solid foundation for future long-term growth and
prosperity.
NEWPORT GREATER CHINA FUND'S INVESTMENT PERFORMANCE
VS. HANG SENG INDEX AND MSCI PACIFIC REGION (EX-JAPAN) INDEX
Change in value of $10,000 from 5/31/97 to 2/28/99
CLASS A SHARES BASED ON NAV AND POP
MSCI PACIFIC
REGION
HANG SENG (EX-JAPAN)
NAV POP INDEX INDEX
- --------------------------------------------------------------------------------
May 31, 97 $10,000 $10,000 $10,000 $10,000
Jun 30, 97 10,741 10,123 10,305 10,218
Jul 31, 97 11,256 10,608 11,126 10,191
Aug 31, 97 9,999 9,424 9,648 8,777
Sep 30, 97 10,211 9,624 10,268 9,076
Oct 31, 97 7,563 7,128 7,263 7,150
Nov 30, 97 7,178 6,765 7,255 6,924
Dec 31, 97 7,369 6,945 7,401 6,942
Jan 31, 98 5,797 5,464 6,387 6,513
Feb 28, 98 7,806 7,357 7,930 7,515
Mar 31, 98 7,711 7,268 8,004 7,426
Apr 30, 98 6,970 6,569 7,244 6,907
May 31, 98 5,921 5,580 6,271 6,132
Jun 30, 98 5,107 4,813 6,028 5,762
Jul 31, 98 4,445 4,189 5,600 5,565
Aug 31, 98 3,558 3,353 5,170 4,812
Sep 30, 98 4,686 4,417 5,614 5,252
Oct 31, 98 5,792 5,459 7,244 6,266
Nov 30, 98 5,999 5,654 7,451 6,557
Dec 31, 98 5,882 5,544 7,200 6,481
Jan 31, 99 5,289 4,985 6,812 6,525
Feb 28, 99 5,193 4,895 7,064 6,457
VALUE OF A $10,000 INVESTMENT MADE ON 5/31/97
As of 2/28/99
- -------------------------------------------------------------------------------
LOAD-MODIFIED
CLASS A CLASS B CLASS C CLASS Z CLASS A
NAV POP NAV w/CDSC NAV w/CDSC NAV NAV w/CDSC(1)
- -------------------------------------------------------------------------------
$5,193 $4,895 $5,151 $4,946 $5,236 $5,236 $5,228 $5,193 $5,091
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
As of 2/28/99
- -------------------------------------------------------------------------------------------------------------------
LOAD-MODIFIED
CLASS A CLASS B CLASS C CLASS Z CLASS A
INCEPTION 5/16/97 5/16/97 5/16/97 5/16/97 7/25/97
NAV POP NAV w/CDSC NAV w/CDSC NAV NAV w/CDSC(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 YR (33.47)% (37.30)% (33.91)% (37.21)% (32.88)% (33.55)% (33.27)% (33.47)% (34.80)%
LIFE (18.24) (20.90) (18.61) (20.43) (17.86) (17.86) (17.92) (38.10) (38.87)
- -------------------------------------------------------------------------------------------------------------------
(1) The Load-Modified Class A total return is shown without a front-end sales charge but with a 2% contingent deferred
sales charge (CDSC).
</TABLE>
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or CDSCs. Public offering price (POP) returns include the
maximum initial sales charge of 5.75% for Class A shares. CDSC returns reflect
the maximum charges of 5% for the one-year return and 4% for the life of the
fund return of Class B shares and 1% for one year for Class C shares.
Performance results reflect any voluntary waivers or reimbursement of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower. Performance for
different share classes will vary based on differences in sales charges and fees
associated with each class.
The Hang Seng Index is a capitalization-weighted index of 33 companies that
represent approximately 70% of the total market capitalization of the Stock
Exchange of Hong Kong. MSCI Pacific Region (Ex-Japan) Index is a broad-based,
unmanaged index that tracks the performance of stocks in the Pacific Rim in
countries other than Japan. Unlike mutual funds, indexes are not investments and
do not incur fees or expenses. It is not possible to invest in an index.
<PAGE>
INVESTMENT PORTFOLIO
FEBRUARY 28, 1999 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 98.8% COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------
CONSTRUCTION - 1.1%
Building Construction
Shenzen Fangda Co., Ltd., Class B Ch 1,293 $ 451
-------
..............................................................................
FINANCE, INSURANCE & REAL ESTATE - 37.9%
DEPOSITORY INSTITUTIONS - 7.1%
Dah Sing Financial HK 222 412
Hang Seng Bank HK 220 1,789
Wing Hang Bank Ltd. HK 356 786
-------
2,987
-------
HOLDING COMPANIES - 15.1%
China Resources Enterprises Ltd. HK 1,388 1,818
Citic Pacific Ltd. HK 921 1,611
Hutchison Whampoa Ltd. HK 422 2,928
-------
6,357
-------
INSURANCE CARRIERS - 2.3%
National Mutual Asia Ltd. HK 1,330 944
-------
REAL ESTATE - 13.4%
Cheung Kong Holdings Ltd. HK 446 3,037
Sun Hung Kai Properties Ltd. HK 380 2,587
-------
5,624
-------
..............................................................................
MANUFACTURING - 13.3%
Electronic Components - 3.2%
Johnson Electric Holdings Ltd. HK 508 1,344
-------
FOOD & KINDRED PRODUCTS - 2.5%
Ng Fung Hong Ltd. HK 1,380 1,042
-------
HOUSEHOLD APPLIANCES - 3.0%
Guangdong Kelon Electric Holdings, Class H HK 1,905 1,279
-------
MACHINERY & COMPUTER EQUIPMENT - 4.6%
Legend Holdings Ltd. HK 2,000 781
Taiwan Semiconductor Tw 430 1,150
-------
1,931
-------
..............................................................................
MINING & ENERGY - 2.7%
COAL MINING
Yanzhou Coal Mining Co. Ltd., Class H Ch 7,512 1,144
-------
..............................................................................
RETAIL TRADE - 5.7%
APPAREL & ACCESSORY STORES - 1.8%
Glorious Sun Enterprises HK 6,156 739
-------
Food Stores - 3.9%
President Chain Store Corp. Tw 593 $ 1,640
-------
..............................................................................
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - 32.3%
ELECTRIC SERVICES - 7.2%
Beijing Datang Power Generation Co., Ltd.,
Class H (a) HK 3,898 855
Zhejiang Southeast Electric Power Co.,
Class B Ch 13,195 2,190
-------
3,045
-------
GAS SERVICES - 5.0%
Hong Kong and China Gas Co., Ltd. HK 1,806 2,098
-------
LOCAL & SUBURBAN TRANSIT - 1.4%
Shanghai Dazhong Taxi Co. (a) Ch 1,643 569
-------
RAILROAD - 2.3%
Guangshen Railway Co., Ltd., Class H HK 7,995 918
Guangshen Railway Co., Ltd. ADR HK 12 68
-------
986
-------
TELECOMMUNICATION - 7.9%
China Telecom Ltd. (a)(b) HK 1,880 3,324
-------
TRANSPORTATION SERVICES - 8.5%
Jiangsu Expressway Co., Ltd., Class H (a) HK 4,220 872
Road King Infrastructure Ltd. HK 896 460
Shenzhen Expressway Co., Ltd., Class H (a) Ch 2,100 382
Zhejiang Expressway Co., Ltd. HK 11,378 1,851
-------
3,565
-------
..............................................................................
WHOLESALE TRADE - 5.8%
DURABLE GOODS
Li & Fung Ltd. HK 1,346 2,432
-------
TOTAL COMMON STOCKS (cost of $66,049)(c) 41,501
-------
SHORT-TERM OBLIGATIONS - 1.1% PAR
- ------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp., dated 02/26/99, due
03/01/99 at 4.750%, collateralized by U.S. Treasury bonds and notes with
various maturities to 2021, market value
$463 (repurchase proceeds $470) $ 470 470
-------
OTHER ASSETS & LIABILITIES, NET - 0.1% $ 33
- ------------------------------------------------------------------------------
NET ASSETS - 100.0% $42,004
-------
NOTES TO INVESTMENT PORTFOLIO:
- ------------------------------------------------------------------------------
(a) Non-income producing.
(b) The value of this security represents fair value as determined in good
faith under the direction of the Trustees.
(c) Cost for federal income tax purposes is $66,070.
SUMMARY OF SECURITIES
BY COUNTRY Country Value % OF TOTAL
- ---------------------------------------------------------------------------
Hong Kong HK $33,975 81.9
China Ch 4,736 11.4
Taiwan Tw 2,790 6.7
------- -----
$41,501 100.0
------- -----
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.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
FEBRUARY 28, 1999 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $66,049) $ 41,501
Short-term obligations 470
--------
41,971
Cash including foreign currencies (cost $91) $ 94
Receivable for:
Investments sold 169
Expense reimbursement due from
Advisor/Administrator 153
Fund shares sold 6
Deferred organization expenses 7
Other 43 472
-------- --------
Total Assets 42,443
LIABILITIES
Payable for:
Fund shares repurchased 339
Accrued:
Management fee 40
Administration fee 9
Transfer agent fee 8
Bookkeeping fee 2
Deferred Trustees fees 1
Other 40
--------
Total Liabilities 439
--------
NET ASSETS $ 42,004
--------
Net asset value & redemption price per share -
Class A ($38,982/4,236) $9.20 (a)
--------
Maximum offering price per share - Class A
($9.20/0.9425) $9.76 (b)
--------
Net asset value & offering price per share -
Class B ($2,376/259) $9.18 (a)
--------
Net asset value & offering price per share -
Class C ($572/61) $9.33(a)
--------
Net asset value, offering & redemption price per share -
Class Z ($74/8) $9.24
--------
(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.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Dividends:
Cheung Kong Holdings Ltd. $ 22
Citic Pacific Ltd. 40
Glorious Sun Enterprises 66
Hong Kong and China Gas Co., Ltd. 28
Hutchison Whampoa Ltd. 22
Li & Fung Ltd. 26
Smartone Telecom Holdings 58
Sun Hung Kai Properties Ltd. 35
Yanzhou Coal Mining Co. Ltd., Class H 33
Other 24
Interest 29
--------
Total Investment Income 383
EXPENSES
Management fee $ 271
Administration fee 60
Service fee - Class A, Class B, Class C 59
Distribution fee - Class B 10
Distribution fee - Class C 3
Transfer agent fee 88
Bookkeeping fee 14
Trustees fee 5
Custodian fee 21
Audit fee 12
Legal fee 4
Registration fee 27
Reports to shareholders 5
Amortization of deferred
organization expenses 2
Other 4
--------
585
Fees and expenses waived by
the Advisor/Administrator (65) 520
-------- --------
Net Investment Loss (137)
--------
Continued on following page.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS - CONT.
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss on:
Investments (19,499)
Foreign currency transactions (567)
--------
Net Realized Loss (20,066)
Change in net unrealized appreciation (depreciation)
during the period on:
Investments 35,705
Foreign currency transactions (52)
--------
Net Unrealized Appreciation 35,653
--------
Net Gain 15,587
--------
Increase in Net Assets from Operations $ 15,450
--------
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months Year
ended ended
(in thousands) February 28 August 31
----------- ---------
INCREASE (DECREASE) IN NET ASSETS 1999 1998
Operations:
Net investment income (loss) $ (137) $ 519
Net realized loss (20,066) (21,497)
Net unrealized appreciation (depreciation) 35,653 (46,968)
-------- --------
Net Increase (Decrease) from Operations 15,450 (67,946)
-------- --------
Distributions:
From net investment income - Class A (279) (356)
From net investment income - Class B - (9)
From net investment income - Class C - (2)
From net investment income - Class Z (1) (a)
-------- --------
15,170 (68,313)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 4,805 11,106
Value of distributions reinvested - Class A 185 231
Cost of shares repurchased - Class A (11,419) (29,994)
-------- --------
(6,429) (18,657)
-------- --------
Receipts for shares sold - Class B 881 4,627
Value of distributions reinvested - Class B - 5
Cost of shares repurchased - Class B (914) (1,277)
-------- --------
(33) 3,355
-------- --------
Receipts for shares sold - Class C 173 2,192
Value of distributions reinvested - Class C - 1
Cost of shares repurchased - Class C (278) (1,285)
-------- --------
(105) 908
-------- --------
Receipts for shares sold - Class Z 2 1
Value of distributions reinvested - Class Z 1 1
-------- --------
3 2
-------- --------
Net Decrease from Fund Share
Transactions (6,564) (14,392)
-------- --------
Total Increase (Decrease) 8,606 (82,705)
NET ASSETS
Beginning of period (net of overdistributed and
including undistributed net investment income
of $104 and $313, respectively) 33,398 116,103
-------- --------
End of period $ 42,004 $ 33,398
-------- --------
Continued on following page.
(a) Round to less than one
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(Unaudited)
Six months Year
ended ended
(in thousands) February 28 August 31
----------- ---------
1999 1998
NUMBER OF FUND SHARES
Sold - Class A 509 953
Issued for distributions reinvested - Class A 18 18
Repurchased - Class A (1,212) (2,514)
-------- --------
(685) (1,543)
-------- --------
Sold - Class B 90 382
Issued for distributions reinvested - Class B - (a)
Repurchased - Class B (98) (123)
-------- --------
(8) 259
-------- --------
Sold - Class C 18 194
Issued for distributions reinvested - Class C - (a)
Repurchased - Class C (27) (132)
-------- --------
(9) 62
-------- --------
Sold - Class Z (a) (a)
Issued for distributions reinvested - Class Z (a) (a)
-------- --------
(a) (a)
-------- --------
(a) Rounds to less than one.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
...............................................................................
In the opinion of management of Newport Greater China Fund (the Fund), a series
of Colonial Trust II, the accompanying financial statements contain all the
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at February 28, 1999, and the result 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 long-term growth of capital by investing primarily in equity securities of
companies located in, or which derive a substantial portion of their revenue
from business activity with or in, the Greater China Region (i.e., Hong Kong,
the People's Republic of China and Taiwan). 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 and
a 1.00% contingent deferred sales charge on redemptions made within eighteen
months on an original purchase of $1 million to $5 million. 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 C shares are subject to a contingent deferred
sales charge on redemptions made within one year after purchase and an annual
distribution fee. Class Z shares are offered continuously at net asset value.
There are certain restrictions on the purchase of Class Z shares, 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 reporting 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 generally are valued at
the last sale price or, in the case of unlisted or listed securities for which
there were no sales during the day, at current quoted bid prices. 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. In addition, if
the values of foreign securities have been materially affected by events
occurring after the closing of a foreign market, the foreign securities may be
valued at their current value.
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 is
translated into U.S. dollars at that day's exchange rates. In certain countries,
the Fund may hold portfolio positions for which market quotations are not
readily available. Such securities 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 C service fees and Class B
and Class C distribution fees) and realized and unrealized gains (losses) are
allocated to each class proportionately on a daily basis for purposes of
determining the net asset value of each class.
The per share data was calculated using average shares outstanding during the
period. In addition, Class A, Class B and Class C net investment income per
share data reflect the service fee per share applicable to Class A, Class B and
Class C shares and the distribution fee applicable to Class B and Class C shares
only.
Class A, Class B and Class C ratios are calculated by adjusting the expense and
net investment income ratios for the Fund for the entire period by the service
fee applicable to Class A, Class B and Class C shares and the distribution fee
applicable to Class B and Class C shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred $11,352 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 (or available capital
loss carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency transactions includes the fluctuations 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
contracts are used to minimize the exposure to foreign exchange rate
fluctuations during the period between trade and settlement date of the
contracts. The Fund may also enter into forward currency contracts to hedge
certain other foreign currency denominated assets. 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, 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, Inc. (the Advisor) is the investment
Advisor 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), an
affiliate of the Advisor, 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.
Average Net Assets Annual Fee Rate
------------------ ---------------
First $50 million No charge
Next $950 million 0.035%
TRANSFER AGENT: Liberty Funds Services 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.
Effective October 1, 1997 and continuing through September 30, 1998, the
Transfer Agent fee was reduced by 0.0012% in cumulative monthly increments,
resulting in a decrease in the fee from 0.25% to 0.236% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc. (the Distributor), a subsidiary of the Administrator, is the
Fund's principal underwriter. For the six months ended February 28, 1999, the
Fund has been advised that the Distributor retained net underwriting discounts
of $3,217 on sales of the Fund's Class A shares and received contingent deferred
sales charges (CDSC) of $118,980, $7,543 and $3,458 on Class A, Class B and
Class C 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 C 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% annually of the average net
assets attributable to Class B and Class C shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Advisor/Administrator have agreed, until further notice, to
waive fees and bear certain Fund expenses to the extent that total expenses
(exclusive of service and distribution fees, brokerage commissions, interest,
taxes and extraordinary expenses, if any) exceed 1.90% annually of the Fund's
average net assets.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Advisor 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
the Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
...............................................................................
INVESTMENT ACTIVITY: During the six months ended February 28, 1999, purchases
and sales of investments, other than short-term obligations, were $6,900,508 and
$13,833,850, respectively.
Unrealized appreciation (depreciation) at February 28, 1999, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 2,171,152
Gross unrealized depreciation (26,740,540)
--------------
Net unrealized depreciation $ (24,569,388)
--------------
CAPITAL LOSS CARRYFORWARDS: At August 31, 1998, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
2006 $ 829,000
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
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. COMPOSITION OF NET ASSETS
...............................................................................
Capital paid in $ 108,204
Overdistributed net investment income (104)
Accumulated net realized loss (41,545)
Net unrealized depreciation on:
Investments (24,548)
Foreign currency transactions (3)
---------
$ 42,004
---------
NOTE 6. FINANCIAL HIGHLIGHTS INFORMATION
...............................................................................
The amount of net realized and unrealized gain shown for a share outstanding for
the period ended August 31, 1998 does not correspond with the aggregate net loss
on investments for the period due to the timing of sales and repurchases of Fund
shares in relation to fluctuating market values of the investments of the Fund.
NOTE 7. RESULTS OF SPECIAL MEETING OF SHAREHOLDERS
...............................................................................
On November 13, 1998, an Adjourned Special Meeting of Shareholders of the Fund
was held to approve the following items, all as described in the Proxy Statement
for the Meeting. On August 21, 1998, the record date for the Meeting, the Fund
had outstanding 5,342,782 shares of beneficial interest.
The votes cast at the Meeting were as follows:
Authority
For Withheld
--- --------
To Elect a Board of Trustees:
Robert J. Birnbaum 2,598,671 161,844
Tom Bleasdale 2,598,222 162,293
John Carberry 2,598,867 161,648
Lora S. Collins 2,599,275 161,240
James E. Grinnell 2,597,310 163,205
Richard W. Lowry 2,598,415 162,100
Salvatore Macera 2,598,817 161,698
William E. Mayer 2,598,415 162,100
James L. Moody, Jr. 2,598,372 162,143
John J. Neuhauser 2,599,075 161,440
Thomas E. Stitzel 2,599,877 160,638
Robert L. Sullivan 2,598,673 161,842
Anne-Lee Verville 2,599,726 160,789
To amend fundamental investment policies regarding borrowing and lending.
For Against Abstain
--- ------- -------
1,950,749 131,616 139,080
To reclassify the fundamental investment policy regarding the purchase of
illiquid securities.
For Against Abstain
--- ------- -------
1,902,386 181,347 137,712
To approve policies for a master fund/feeder fund structure.
For Against Abstain
--- ------- -------
1,918,688 156,074 146,684
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
(Unaudited)
Six months ended February 28
----------------------------------------------
1999
Class A Class B Class C Class Z
---------- --------- ---------- --------
Net asset value -
Beginning of period $ 6.340 $ 6.340 $ 6.320 $ 6.380
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a)(b)(c) (0.025) (0.062) (0.063) (0.013)
Net realized and unrealized
gain 2.947 2.902 3.073 2.959
------- ------- ------- -------
Total from Investment
Operations 2.922 2.840 3.010 2.946
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.062) - - (0.086)
------- ------- ------- -------
Net asset value -
End of period $ 9.200 $ 9.180 $ 9.330 $ 9.240
------- ------- ------- -------
Total return (d)(e)(f) 45.96% 44.79% 47.63% 46.00%
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses (g)(h) 2.15% 2.90% 2.90% 1.90%
Net investment loss (g)(h) (0.53)% (1.28)% (1.28)% (0.28)%
Fees and expenses waived or
borne by the Advisor/
Administrator (g)(h) 0.28% 0.28% 0.28% 0.28%
Portfolio turnover (f) 16% 16% 16% 16%
Net assets at end of
period (000) $38,982 $ 2,376 $ 572 $ 74
(a) Net of fees and expenses waived or borne by the Advisor/Administrator
which amounted to: $ 0.013 $ 0.013 $ 0.013 $ 0.013
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Includes distributions from securites listed on the Statement of Operations
which amounted to $0.004, $0.008, $0.013, $0.006, $0.004, $0.005, $0.012,
$0.007, and $0.007 per share, respectively.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) Had the Advisor/Administrator not waived 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.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended August 31
--------------------------------------------
1998
Class A Class B Class C Class Z
------- ------- ------- -------
Net asset value -
Beginning of period $17.900 $17.860 $17.860 $17.910
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (a)(b)(c) 0.092 0.012 0.013 0.123
Net realized and
unrealized gain (loss) (11.591) (11.478) (11.498) (11.586)
------- ------- ------- -------
Total from Investment
Operations (11.499) (11.466) (11.485) (11.463)
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.061) (0.054) (0.055) (0.067)
------- ------- ------- -------
Net asset value - End of period $ 6.340 $ 6.340 $ 6.320 $ 6.380
------- ------- ------- -------
Total return (f)(g) (64.42)% (64.36)% (64.46)% (64.19)%
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses (i) 2.15% 2.90% 2.90% 1.90%
Net investment income (loss) (i) 0.74% (0.01)% (0.01)% 0.99%
Fees and expenses waived or
borne by the Advisor/
Administrator (i) 0.31% 0.31% 0.31% 0.31%
Portfolio turnover 58% 58% 58% 58%
Net assets at end
of period (000) $31,214 $ 1,692 $ 443 $ 49
(a) Net of fees and expenses waived or borne by the Advisor/Administrator
which amounted to: $ 0.039 $ 0.039 $ 0.039 $ 0.039
(b) Per share data was calculated using average shares outstanding during
the period.
(c) 1998 information includes distributions from Cheung Kong Holdings Ltd.,
Citic Pacific Ltd., Guangshen Railway Co., Ltd. and Henderson Land
Development Co., Ltd., which amounted to $0.019, $0.036, $0.018 and $0.020
per share, respectively. 1997 information includes distributions from
China Light & Power Co. Ltd., Dah Sing Financial, Glorious Sun Enterprises
and Hang Seng Bank Ltd., which amounted to $0.078 per share.
(d) The Fund commenced investment operations on May 12, 1997. The activity
shown is from the effective date of registration (May 16, 1997) with the
Securities and Exchange Commission. The per share information reflects
the 1.5 for 1 stock split effective July 25, 1997.
(e) Please see Note 6 in Notes to the Financial Statements.
(f) Total return at net asset value assuming all distributions reinvested
and no initial sales charge or contingent deferred sales charge.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Period ended August 31
-----------------------------------------------------
1997 (d)
Class A Class B Class C Class Z
--------- ------- ------- -------
$ 13.340 $ 13.330 $ 13.330 $ 13.340
-------- -------- -------- --------
0.052 (0.004) (0.004) 0.065
4.508 (e) 4.534 (e) 4.534 (e) 4.505 (e)
-------- -------- -------- --------
4.560 4.530 4.530 4.570
-------- -------- -------- --------
- - - -
-------- -------- -------- --------
17.900 17.860 17.860 17.910
-------- -------- -------- --------
34.22% (h) 33.98% (h) 33.98% (h) 34.29% (h)
-------- -------- -------- --------
2.15% (j) 2.90% (j) 2.90% (j) 1.90% (j)
0.89% (j) 0.14% (j) 0.14% (j) 1.14% (j)
0.59% (j) 0.59% (j) 0.59% (j) 0.59% (j)
4% (h) 4% (h) 4% (h) 4% (h)
$ 115,699 $ 135 $ 134 $ 135
$ 0.034 $ 0.034 $ 0.034 $ 0.034
(g) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(h) Not annualized.
(i) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(j) Annualized
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your Fund has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Liberty Funds Services, Inc. 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(1): Exchange all or part of your account into the same share
class of another fund distributed by Liberty Funds Distributor, Inc. by phone or
mail.
EASY ACCESS TO YOUR MONEY(1): 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 within one year, you can reinvest in any fund distributed by
Liberty Funds Distributor 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 Fund 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 calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
processing date will be the previous business day. Dividends and capital gains
must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Funds Distributor. Minimum for each transfer is $100.
RETIREMENT PLANS: Choose from a broad range of retirement plans, including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. 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 C shares, or $1 million or more of Class A shares, may be subject
to a contingent deferred sales charge.
<PAGE>
HOW TO REACH US
BY PHONE OR BY MAIL
BY TELEPHONE
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 service 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 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET.
TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. 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 fund distributed by Liberty Funds Distributor,
Inc., call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
LIBERTY FUNDS SERVICES, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<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
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.
LIBERTY FUNDS DISTRIBUTOR INVESTOR OPPORTUNITIES: 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>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Newport Greater China Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Newport Greater China Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call 1-800-426-3750 and
additional reports will be sent to you.
This report has been prepared for shareholders of Newport Greater China 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 the most recent copy of the
Liberty Funds Distributor, Inc. Performance Update.
* Effective October 1, 1998, Colonial Investors Service Center, Inc. - the
Transfer Agent for Colonial, Crabbe Huson, Newport and Stein Roe Advisor
funds - changed its name to Liberty Funds Services, Inc.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN V. CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
[logo] L I B E R T Y
COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
GC-03/800G-0399 (4/99) 99/437
