<PAGE> 1
- ----------------------------- -----------------
NEWPORT TIGER CUB FUND ANNUAL REPORT
- ----------------------------- -----------------
August 31, 1999
[GRAPHIC DEPICTING TIGER CUBS]
<PAGE> 2
PRESIDENT'S MESSAGE
[Photo of Gibson]
Dear Shareholder:
We are pleased to present the annual report for Newport Tiger Cub Fund. This
report covers the 12 months ended August 31, 1999.
Two years ago, many of Asia's financial markets were rocked by currency troubles
and economic upheaval. Now, there are signs of recovery in many regions and a
renewed sense of optimism among investors.
Asian companies are working hard to restructure their businesses and improve
their balance sheets. These efforts have resulted in a more promising outlook
for profits, which, coupled with falling interest rates, have led to a rebound
in many Asian equity markets. Amid this healthier economic backdrop, the Fund
posted a total return in excess of 100%, without a sales charge, and showed a
solid ranking within the second quartile of its Lipper peer group.(1)
The Fund responded to the improved market conditions by making new investments
in Hong Kong and Singapore. Newport Fund Management believes that China offers
superior long-term growth opportunities and that it makes sense to invest
through the Hong Kong market. Newport's intimate knowledge of Asia's markets and
more than 20 years of experience through various market cycles are advantageous
for the Fund.
On the pages that follow, the Fund's portfolio manager discusses the investment
strategies that contributed to the Fund's performance. As always, we thank you
for choosing Newport Tiger Cub Fund, and we look forward to continuing to serve
your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
October 12, 1999
TABLE OF CONTENTS
1 HIGHLIGHTS
2 PORTFOLIO MANAGER'S
REPORT
4 PERFORMANCE
5 PORTFOLIO OF
INVESTMENTS
7 FINANCIAL
STATEMENTS
9 NOTES TO FINANCIAL
STATEMENTS
12 FINANCIAL
HIGHLIGHTS
(1) Lipper, Inc., a widely respected data provider for the industry, calculates
an average total return for mutual funds with similar investment objectives
as the Fund. The average total return calculated for funds in the Lipper
Pacific Ex-Japan category was 98.62% for the 12 months ended August 31,
1999. The Fund's Class A shares ranked in the second quartile for one year
(ranked 26 out of 84 funds) and in the second quartile for three years
(ranked 23 out of 64 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.
Because market and economic conditions change, there can be no assurance
that the trends described in this report will continue or come to pass.
- ----------- -------------------
Not FDIC May Lose Value
- ----------- -------------------
Insured No Bank Guarantee
- ----------- -------------------
<PAGE> 3
- ----------------------------------------------
HIGHLIGHTS
- ----------------------------------------------
- - LOWER INTEREST RATES PUSH ASIAN STOCK MARKETS HIGHER
The widespread global decline in interest rates, which began in the fall of
1998, has been a major force behind the impressive performance of many Asian
stock markets in the last 12 months. Lower rates have helped boost consumer
spending which, in turn, has reinvigorated Asian economies.
- - CURRENCIES HAVE STABILIZED
Currencies throughout Asia have held firm during the past year. This
stability - indicating a healthier economic environment - is in sharp
contrast to the devaluations of 1997, which were brought about by serious
economic problems and helped trigger the region's financial crisis.
- - STRONG PERFORMANCE SINCE INCEPTION
Stock and country selection combined with improving economic conditions to
help the Fund deliver strong returns for the period.(1)
NEWPORT TIGER CUB FUND PERFORMANCE VS.
LIPPER PACIFIC EX-JAPAN FUNDS CATEGORY
AVERAGE: 8/31/98 - 8/31/99
[BAR GRAPH]
Tiger Cub Fund 107.10%
Lipper Average 98.62%
(1) Source: Lipper, Inc. The Fund's Class A share return is compared to the
Lipper Pacific Ex-Japan Funds category average. Returns do not include sales
charges. Performance for all other share classes will vary.
Past performance cannot predict future investment results. Returns and value
of an investment will vary, resulting in a gain or loss on sale. All results
shown assume reinvestment of distributions.
NET ASSET VALUE PER SHARE AS OF 8/31/99
Class A $8.07
- ---------------------------------------
Class B $7.87
- ---------------------------------------
Class C $7.89
- ---------------------------------------
Class Z $8.10
- ---------------------------------------
DISTRIBUTIONS DECLARED PER SHARE 9/1/98 - 8/31/99
Class A $0.005
- ---------------------------------------
Class B $0.000
- ---------------------------------------
Class C $0.000
- ---------------------------------------
Class Z $0.023
- ---------------------------------------
TOP 10 HOLDINGS AS OF 8/31/99
1. Johnson Electric Holdings Ltd. 6.8%
- ------------------------------------------------------------
2. Li & Fung Ltd. 6.7%
- ------------------------------------------------------------
3. Datacraft Asia Ltd. 5.1%
- ------------------------------------------------------------
4. Four Seas Mercantile Holdings Ltd. 4.3%
- ------------------------------------------------------------
5. SM Prime Holdings, Inc. 4.3%
- ------------------------------------------------------------
6. Thai Union Frozen Products Co. 3.9%
- ------------------------------------------------------------
7. Avimo Singapore Ltd. 3.8%
- ------------------------------------------------------------
8. Overseas-Chinese Banking Corp., Ltd. 3.8%
- ------------------------------------------------------------
9. Venture Manufacturing Singapore Ltd. 3.7%
- ------------------------------------------------------------
10. Dickson Concepts International Ltd. 3.6%
- ------------------------------------------------------------
Holdings are calculated as a percentage of net assets. Because the Fund is
actively managed, there can be no guarantee the Fund will continue to hold these
securities in the future.
1
<PAGE> 4
ANNUAL REPORT:
PORTFOLIO MANAGER'S REPORT
FUND OUTPERFORMED FOR THE PERIOD
The Fund's Class A shares had a total return of 107.10%, without a sales charge,
for the past 12 months. This performance exceeded the Fund's Lipper peer group
average of 98.62%. The Fund's strong performance can be attributed to a
significant improvement in the economies and financial markets within Southeast
Asia. and its solid showing in its peer group reflects good stock selection on
the part of Newport Fund Management.
CONTINUED FOCUS ON HONG KONG
We remain enthusiastic about the prospects for many Chinese companies listed on
the Hong Kong stock exchange. Accordingly, during the past year we increased the
Fund's exposure to Hong Kong from 44% of net assets to 49%. We are optimistic
that the Chinese government will prove successful in its long-term effort to
stimulate consumption, an area in which China has thus far lagged its Asian
neighbors. Lower interest rates are an important part of the stimulus package,
because low rates make it less attractive for people to stockpile their savings.
Already we have seen pockets of progress, and we expect this trend to continue.
One noteworthy recent addition to the portfolio is Guangdong Kelon (3.0% of net
assets), one of China's leading manufacturers of refrigerators and air
conditioners. Whereas these "white goods" markets are considered mature in the
United States, they are growth markets in China because household income is
rising. The upswing in disposable income is especially noticeable among urban
consumers, which constitute the company's primary market. Other factors in
Guangdong Kelon's favor are the quality of its management team and the fact that
its balance sheet is extremely strong relative to other Chinese companies.
INCREASED COMMITMENT TO SINGAPORE
We increased the Fund's exposure to Singapore from 14% of the portfolio to 19%.
Most of the companies purchased by the Fund during the past year have been
technology companies, as the electronics industry has been at the center of the
Asian recovery. We are drawn to Singapore in particular because it is home to
manufacturers of such important components as semiconductors and disk drives,
and because Singapore-based manufacturers tend to have relatively lower levels
of debt compared to manufacturing companies elsewhere in the region.
COUNTRY BREAKDOWN AS OF 8/31/99
Hong Kong 48.7%
- -------------------------
Singapore 18.9%
- -------------------------
Thailand 9.0%
- -------------------------
Philippines 6.5%
- -------------------------
Indonesia 5.5%
- -------------------------
China 1.7%
- -------------------------
Country breakdown is calculated as a percentage of net assets. Because the Fund
is actively managed, there can be no guarantee the Fund will continue to
maintain the current country breakdown in the future.
TOP EQUITY SECTORS: 8/31/99 VS. 8/31/98
Portfolio as Portfolio as
of 8/31/99 of 8/31/98
------------ ------------
Manufacturing 29.7% 44.2%
Durable Goods 13.5% 7.6%
Real Estate 12.4% 12.1%
Financials 12.2% 11.6%
Retail Trade 7.4% 3.8%
Utilities 4.7% 4.3%
Sector breakdowns are calculated as a percentage of net assets. Because the Fund
is actively managed, there can be no guarantee the Fund will continue to
maintain the current sector breakdown in the future.
2
<PAGE> 5
INDIVIDUAL COMPANIES EMERGE FROM CRISIS STRONGER THAN EVER
Another important and somewhat under-appreciated aspect of the Asian recovery is
that many individual companies have been able to enhance their market positions.
For example, Johnson Electric (6.8% of net assets), one of the Fund's core
holdings, consolidated its position in micromotors through the purchase of a
U.S. micromotor manufacturer that had been a subsidiary of Lear, Inc. This
purchase was beneficial because it utilized Johnson Electric's cash reserves and
doubled the firm's revenues. In addition, the U.S. operations will be relocated
to China, reducing labor costs and boosting profit margins.
A BRIGHTENING OUTLOOK
We believe that the worst of the Asian economic crisis is behind us. The
high-quality companies that have survived over the past two and a half years are
now dominant in their industries, and they should continue to strengthen their
market positions. The recovery of Japan's economy will continue to be a
significant factor, as it remains an engine for the economic growth of the Asian
region. While there are undoubtedly future hurdles to overcome, we believe that
the positive developments over the past year can be sustained.
/s/ Robert Cameron
Robert Cameron
ROBERT CAMERON is portfolio manager of Newport Tiger Cub Fund and is a senior
vice president of Newport Fund Management.
BOUGHT
VENTURE MANUFACTURING
Based in Singapore, Venture (3.7% of net assets) is a contract manufacturer
specializing in electronic components. The company's customers include
Hewlett-Packard and other blue-chip U.S. manufacturing companies. Venture
provides a complete package of design services, manufacturing and logistics.
DATACRAFT
Another Singapore company, Datacraft (5.1% of net assets) provides multinational
corporations with the infrastructure for Internet and Intranet operations,
including routers and data lines.
3
<PAGE> 6
ANNUAL REPORT: NEWPORT TIGER CUB FUND
- -------------------------------------------------
PERFORMANCE INFORMATION
- -------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT IN
CLASS A SHARES 6/30/96 - 8/31/99
MSCI PACIFIC NTCF WITHOUT NTCF WITH
EX-JAPAN SALES CHARGE SALES CHARGES
------------ ------------ --------------
6/30/96 10,000 10,000 9,425
7/31/96 9,496 9,425 8,883
8/31/96 9,920 9,405 8,864
9/30/96 10,173 9,516 8,968
10/31/96 10,449 9,162 8,635
11/30/96 11,007 9,606 9,053
12/31/96 11,028 9,728 9,168
1/31/97 10,895 9,899 9,329
2/28/97 11,049 9,768 9,206
3/31/97 10,536 9,354 8,816
4/30/97 10,320 9,273 8,739
5/31/97 10,961 9,798 9,234
6/30/97 11,201 9,929 9,358
7/31/97 11,171 10,303 9,710
8/31/97 9,620 9,183 8,654
9/30/97 9,948 9,435 8,892
10/31/97 7,838 7,639 7,199
11/30/97 7,590 7,538 7,104
12/31/97 7,609 6,983 6,581
1/31/98 7,139 5,782 5,449
2/28/98 8,237 7,195 6,781
3/31/98 8,140 7,164 6,752
4/30/98 7,571 6,599 6,219
5/31/98 6,721 5,792 5,458
6/30/98 6,316 4,924 4,640
7/31/98 6,100 4,652 4,384
8/31/98 5,275 3,935 3,708
9/30/98 5,757 4,379 4,127
10/31/98 6,868 5,469 5,154
11/30/98 7,188 5,943 5,601
12/31/98 7,104 5,949 5,606
1/31/99 7,153 5,565 5,245
2/28/99 7,078 5,494 5,178
3/31/99 7,637 5,676 5,349
4/30/99 8,898 6,928 6,529
5/31/99 8,266 7,352 6,929
6/30/99 8,947 8,584 8,090
7/31/99 8,864 8,514 8,024
8/31/99 8,661 8,149 7,681
AVERAGE ANNUAL TOTAL RETURNS AS OF 8/31/99
<TABLE>
<CAPTION>
Share Class A B C Z
Inception 6/3/96 6/3/96 6/3/96 6/3/96
------------------------- ------------------------- ------------------------- -------------------------
Without With Sales Without With Sales Without With Sales Without With Sales
Sales Charge Charge Sales Charge Charge Sales Charge Charge Sales Charge Charge
------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
l year 107.10% 95.19% 105.48% 100.48% 106.01% 105.01% 107.43% N/A
------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
Life of Fund (6.37) (8.06) (7.11) (7.98) (7.04) (7.04) (6.17) N/A
------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/99
Share Class A B C Z
------------------------- ------------------------- ------------------------- -------------------------
Without With Sales Without With Sales Without With Sales Without With Sales
Sales Charge Charge Sales Charge Charge Sales Charge Charge Sales Charge Charge
------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
1 year 74.33% 64.30% 73.13% 68.13% 73.54% 72.54% 74.75% N/A
------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
Life of Fund (5.12) (6.93) (5.84) (6.77) (5.77) (5.77) (4.92) N/A
------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
</TABLE>
Past performance cannot predict furore investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "With Sales Charge" returns include
the maximum 5.75% charge for Class A shares and the maximum contingent deferred
sales charge of 5% for one year and 3% for life 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
taxes associated with each class.
The Morgan Stanley Capital International (MSCI) Pacific Region (Ex-Japan) Index
is an unmanaged index that tracks the performance of stocks in Pacific Basin
countries other than Japan. Unlike mutual funds, indexes are not investments and
do not incur fees or expenses. It is not possible to invest directly in an
index.
PERFORMANCE OF A $10,000 INVESTMENT IN ALL SHARE CLASSES 6/30/96 - 8/31/99
Without With Sales
Sales Charge Charge
- ------- ------------ ----------
Class A $8,149 $7,681
- ------- ------------ ----------
Class B $7,941 $7,703
- ------- ------------ ----------
Class C $7,962 $7,962
- ------- ------------ ----------
Class Z $8,205 --
- ------- ------------ ----------
4
<PAGE> 7
- ----------------------------------------
INVESTMENT PORTFOLIO
- ----------------------------------------
August 31, 1999
(In thousands)
COMMON STOCKS - 88.1% COUNTRY SHARES VALUE
- ----------------------------------------------- --------- -------- -------
CONSTRUCTION - 3.1%
BUILDING CONSTRUCTION - 1.7%
Shenzhen Fangda Co., Ltd., Class B Ch 500 $ 216
-------
SPECIAL TRADE CONTRACTORS - 1.4%
Zhejiang Expressway Co., Ltd. HK 1,000 178
-------
- ----------------------------------------------- --------- -------- -------
FINANCE, INSURANCE &
REAL ESTATE - 24.6%
DEPOSITORY INSTITUTIONS - 6.0%
Hang Seng Bank Ltd. HK 25 283
Oversea-Chinese
Banking Corp., Ltd. Si 70 490
-------
773
-------
HOLDING COMPANIES - 3.6%
Dickson Concepts International Ltd. HK 500 464
-------
INSURANCE CARRIERS - 2.6%
Thai Reinsurance Co., Ltd. Th 240 344
-------
REAL ESTATE - 12.4%
Cheung Kong Holdings Ltd. HK 25 217
City Developments Ltd. Si 54 327
HKR International Ltd. HK 349 270
SM Prime Holdings, Inc. Ph 3,000 552
Sun Hung Kai Properties Ltd. HK 29 248
-------
1,614
-------
- ----------------------------------------------- --------- -------- -------
MANUFACTURING - 29.7%
FOOD & KINDRED PRODUCTS - 8.2%
Four Seas Mercantile Holdings Ltd. HK 1,754 553
Thai Union Frozen Products
Public Co. - Foreign Shares Th 160 505
-------
1,058
-------
HOUSEHOLD APPLIANCES - 3.0%
Guangdong Kelon Electric Holdings,
Class H HK 379 388
-------
MEASURING & ANALYZING
INSTRUMENTS - 13.1%
Avimo Singapore Ltd. Si 380 498
China Hong Kong Photo Products
Holdings Ltd. HK 2,898 384
PT Modern Photo Film -
Foreign Shares In 1,398 337
Venture Manufacturing Singapore Ltd. Si 50 478
-------
1,697
-------
COUNTRY SHARES VALUE
- ----------------------------------------------- --------- -------- -------
NONMETALLIC, EXCEPT FUELS - 2.5%
Eastern Water Resources
Development & Management Ltd. -
Foreign Shares Th 327 $ 320
-------
RUBBER & PLASTIC - 2.9%
PT Dynaplast - Foreign Shares In 2,795 373
-------
- ----------------------------------------------- --------- -------- -------
RETAIL TRADE - 7.4%
APPAREL & ACCESSORY STORES - 3.7%
Giordano International Ltd. HK 200 185
Glorious Sun Enterprises HK 900 290
-------
475
-------
MISCELLANEOUS RETAIL - 1.9%
Sa Sa International Holdings Ltd. HK 1,500 253
-------
RESTAURANTS- 1.8%
Cafe de Coral Holdings Ltd. HK 500 237
-------
- ----------------------------------------------- --------- -------- -------
SERVICES - 5.1%
COMPUTER RELATED SERVICES
Datacraft Asia Ltd. Si 170 656
-------
- ----------------------------------------------- --------- -------- -------
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - 4.7%
GAS SERVICES - 2.3%
Hong Kong and China Gas Co., Ltd. HK 209 293
-------
TELECOMMUNICATIONS - 2.4%
China Telecom Ltd. (a)(b) HK 100 311
-------
- ----------------------------------------------- --------- -------- -------
WHOLESALE TRADE - 13.5%
DURABLE GOODS
Johnson Electric Holdings Ltd. HK 196 883
Li & Fung Ltd. HK 272 872
-------
1,755
-------
TOTAL COMMON STOCKS
(cost of $10,227) 11,405
-------
WARRANTS(a) - 2.2%
- ----------------------------------------------- --------- -------- -------
RETAIL TRADE - 2.2%
RESTAURANTS
Jollibee Foods Corp.(cost of $294) Ph 650 287
-------
TOTAL INVESTMENTS
(cost of $10,521)(c) 11,692
-------
5
<PAGE> 8
- ----------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
- ----------------------------------------
August 31, 1999
(In thousands)
SHORT-TERM OBLIGATIONS - 5.2% PAR VALUE
- -------------------------------------------------------------------
Repurchase agreement with ABN AMRO
Chicago Corp., dated 08/31/99, due
09/01/99 at 5.400%, collateralized
by U.S. Treasury bonds and/or
notes with various maturities to 2027,
market value $462 (repurchase
proceeds $454) $454 $ 454
Student Loan Marketing Association,
5.400% 09/01/99 (d) 225 225
-------
TOTAL SHORT-TERM OBLIGATIONS 679
-------
OTHER ASSETS & LIABILITIES, NET - 4.5% 584
- -------------------------------------------------------------------
NET ASSETS - 100% $12,955
=======
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 the same.
(d) Rate represents yield at day of purchase.
SUMMARY OF SECURITIES BY % OF
COUNTRY COUNTRY VALUE TOTAL
- -------------------------------------------------------------------
Hong Kong HK $ 6,309 54.0
Singapore Si 2,449 20.9
Thailand Th 1,169 10.0
Philippines Ph 839 7.2
Indonesia In 710 6.1
China Ch 216 1.8
------- -----
$11,692 100.0
======= =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
6 See notes to financial statements.
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
(In thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $10,521) $11,692
Short-term obligations 679
-------
12,371
Cash including foreign
currencies (cost $271) $274
Receivable for:
Investments sold 679
Dividends 57
Expense reimbursement due from
Advisor/Administrator 44
Fund shares sold 15 1,069
-------
Total Assets 13,440
LIABILITIES
Payable due to custodian bank 2
Cash including foreign
currencies (cost $340) 340
Payable for:
Fund shares repurchased 22
Investments purchased 21
Accrued:
Management fee 12
Administration fee 3
Transfer agent fee 2
Bookkeeping fee 4
Deferred Trustees fee 1
Other 78
Total Liabilities 485
-------
NET ASSETS $12,955
CLASS A =======
Net asset value & redemption price
per share(S4,847/601) $ 8.07(a)
-------
Maximum offering price per share ($8.07/0.9425) $ 8.56(b)
-------
CLASS B
Net asset value & offering price per share ($7,115/904) $ 7.87(a)
-------
CLASS C
Net asset value & offering price per share ($954/121) $ 7.89(a)
-------
CLASS Z
Net asset value, offering & redemption price per share ($39/5) $ 8.10
-------
COMPOSITION OF NET ASSETS
Capital paid in $17,258
Overdistributed net investment income (39)
Accumulated net realized loss (5,437)
Net unrealized appreciation on:
Investments 1,171
Foreign currency transactions 2
-------
$12,955
=======
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1999
(In thousands)
INVESTMENT INCOME
Dividends:
China Hong Kong Photo
Products Holdings Ltd. $ 39
Four Seas Mercantile
Holdings Ltd. 27
HKR International Ltd. 22
Li & Fung Ltd. 26
Thai Union Frozen Products
Public Co. -- Foreign Shares 39
Venture Manufacturing Singapore Ltd. 29
Other 114
Interest 41
------
Total Investment Income
(net of nonreclaimable foreign taxes
withheld at source which amounted to $12) 337
EXPENSES
Management fee $ 125
Administration fee 27
Service fee -- Class A, Class B, Class C 28
Distribution fee -- Class B 39
Distribution fee -- Class C 9
Transfer agent fee 42
Bookkeeping fee 27
Trustees fee 8
Custodian fee 21
Audit fee 46
Legal fee 8
Registration fee 41
Reports to shareholders 2
Other 17
------
440
Fees and expenses waived or borne
by the Advisor/Administrator (146) 294
------ ------
Net Investment Income 43
NET REALIZED & UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized loss on:
Investments (366)
Foreign currency transactions (79)
------
Net Realized Loss (445)
Net change in unrealized
appreciation/depreciation
during the period on:
Investments 7,639
Foreign currency transactions (4)
------
Net Change in Unrealized
Appreciation/Depreciation 7,635
------
Net Gain 7,190
------
Increase in Net Assets from Operations $7,233
======
(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.
7
<PAGE> 10
- --------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------
1999 1998
------- -------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income $ 43 $ 186
Net realized loss (445) (4,661)
Net change in unrealized appreciation/depreciation 7,635 (5,988)
------- -------
Net (Increase) Decrease from Operations 7,233 (10,463)
------- -------
Distributions:
From net investment income -- Class A (4) --
From net investment income -- Class Z (a) --
------- -------
7,229 (10,463)
------- -------
Fund Share Transactions:
Receipts for shares sold -- Class A 4,205 6,030
Value of distributions reinvested -- Class A 4 --
Cost of shares repurchased -- Class A (5,991) (6,251)
------- -------
(1,782) (221)
------- -------
Receipts for shares sold -- Class B 2,883 4,820
Cost of shares repurchased -- Class B (2,304) (4,821)
------- -------
579 (1)
------- -------
Receipts for shares sold -- Class C 470 1,898
Cost of shares repurchased -- Class C (1,007) (1,686)
------- -------
(537) 212
------- -------
Receipts for shares sold -- Class Z 5 12
Value of distributions reinvested -- Class Z (a) --
Cost of shares repurchased -- Class Z (15) (883)
------- -------
(10) (871)
------- -------
Net Decrease from Fund
Share Transactions (1,750) (881)
------- -------
Total Increase (Decrease) 5,479 (11,344)
NET ASSETS
Beginning of period 7,476 18,820
------- -------
End of period (net of overdistributed net investment income of $39 and none, respectively) $12,955 $ 7,476
======= =======
NUMBER OF FUND SHARES
Sold -- Class A 594 905
Issued for distributions reinvested -- Class A 1 --
Repurchased -- Class A (906) (944)
------- -------
(311) (39)
------- -------
Sold -- Class B 462 687
Repurchased -- Class B (384) (711)
------- -------
78 (24)
------- -------
Sold -- Class C 84 305
Repurchased -- Class C (154) (258)
------- -------
(70) 47
------- -------
Sold -- Class Z 1 2
Issued for distributions reinvested -- Class Z (a) --
Repurchased -- Class Z (2) (128)
------- -------
(1) (126)
------- -------
</TABLE>
(a) Rounds to less than one
8 See notes to financial statements.
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Newport Tiger Cub Fund, a series of Liberty Funds Trust II, formerly Colonial
Trust II, 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 (i.e., companies with equity market capitalizations of U.S. $1 billion
or less) located in the nine Tiger markets of Asia (Hong Kong, Singapore, South
Korea, Taiwan, Malaysia, Thailand, Indonesia, The People's Republic of 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 C and Class Z. Class A
shares are sold with a front-end sales charge. A 1.00% contingent deferred sales
charge is assessed 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, as described in the Fund's
prospectus.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of 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 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. 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. In addition, if the values of foreign securities have
been materially affected by events occurring after the closing of the market,
the foreign securities may be valued at their fair value under procedures
approved by the Trustees.
Forward currency contracts are valued based on the weighted value of the
contracts with similar maturities.
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), 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 reflects 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 $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
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS CONT.
August 31, 1999
regulations which may differ from generally accepted accounting principles.
Reclassifications are made to the Fund's capital accounts to reflect income and
gains available for distribution (or available capital loss carryforwards) under
income tax regulations.
FOREIGN CURRENCY TRANSACTIONS:
Net realized and unrealized gains (losses) on foreign currency transactions
includes the gains (losses) arising from the fluctuations in exchange rates
between trade and settlement dates on securities transactions, gains (losses)
arising from the disposition of foreign currency and currency gains (losses)
between the accrual and payment dates on dividends and interest income and
foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) 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 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE:
Newport Fund Management (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 a monthly fee
equal to $27,000 annually plus 0.035% of the Fund's average net assets over $50
million.
TRANSFER AGENT FEE:
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of the
Administrator, provides shareholder services for a monthly fee equal to 0.236%
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 year ended August
31, 1999, the Fund has been advised that the Distributor retained net
underwriting discounts of $2,920 on sales of the Fund's Class A shares and
received contingent deferred sales charges (CDSC) of $908, $39,910 and $2,545 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.
10
<PAGE> 13
- --------------------------------------------
NOTES TO FINANCIAL STATEMENTS CONT.
- --------------------------------------------
August 31, 1999
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 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
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
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
During the year ended August 31, 1999, purchases and sales of investments, other
than short-term obligations, were $3,569,948 and $5,581,498, respectively.
Unrealized appreciation (depreciation) at August 31, 1999, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 2,964,457
Gross unrealized depreciation (1,793,678)
-----------
Net unrealized appreciation $ 1,170,779
===========
CAPITAL LOSS CARRYFORWARDS:
At August 31, 1999, capital loss carryforwards available (to the extent provided
in regulations) to offset future realized gains were approximately as follows:
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
- ------------------ -------------------------
2005 $ 38,000
2006 914,000
2007 4,208,000
----------
$5,160,000
==========
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 4. LINE OF CREDIT
The Fund may borrow up to 33 1/3% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended August 31, 1999.
- --------------------------------------------------------------------------------
CHANGE IN INDEPENDENT AUDITOR (UNAUDITED)
Based on the recommendation of the Audit Committee of the Fund on June 18, 1999,
the Board of Trustees determined not to retain PricewaterhouseCoopers LLP (PwC)
as the Fund's independent auditor and voted to appoint Ernst & Young LLP for the
fiscal year ended August 31, 2000. During the two most recent fiscal years,
PwC's audit reports contained no adverse opinion or disclaimer of opinion; nor
were its reports qualified or modified as to uncertainty, audit scope, or
accounting principle. Further, in connection with its audits for the two most
recent fiscal years and through October 12, 1999, there were no disagreements
between the Fund and PwC on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which if not
resolved to the satisfaction of PwC would have caused it to make reference to
the disagreements in its report on the financial statements for such years.
- --------------------------------------------------------------------------------
11
<PAGE> 14
- --------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
-------------------------------------------
1999
-------------------------------------------
CLASS A CLASS B CLASS C CLASS Z
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 3.900 $ 3.830 $ 3.830 $ 3.920
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(b)(c) 0.051 0.005 0.006 0.067
Net realized and unrealized gain 4.124 4.035 4.054 4.136
------- ------- ------- -------
Total from Investment Operations 4.175 4.040 4.060 4.203
------- ------- ------- -------
LESS DISTRIBUTION DECLARED TO SHAREHOLDERS:
From net investment income (0.005) -- -- (0.023)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 8.070 $ 7.870 $ 7.890 $ 8.100
======= ======= ======= =======
Total return (d)(e) 107.10% 105.48% 106.01% 107.43%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (f) 2.25% 3.00% 3.00% 2.00%
Net investment income (f) 0.84% 0.09% 0.09% 1.09%
Fees and expenses waived or borne by the Advisor/Administrator (f) 1.35% 1.35% 1.35% 1.35%
Portfolio turnover 36% 36% 36% 36%
Net assets at end of period (000) $ 4,847 $ 7,115 $ 954 $ 39
(a) Net of fees and expenses waived or borne by the Advisor/Administrator
which amounted to: $ 0.083 $ 0.083 $ 0.083 $ 0.083
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Includes distributions from securities listed on the Statement of Operations
which amounted to $0.022, $0.015, $0.012, $0.015, $0.022 and $0.017 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) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------------------------------------------------------------
1998 1997
---------------------------------------- ----------------------------------------
CLASS A CLASS B CLASS C CLASS Z CLASS A CLASS B CLASS C(d) CLASS Z
------- ------- ------- ------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.100 $ 9.020 $ 9.020 $ 9.130 $ 9.320 $ 9.300 $ 9.300 $ 9.320
------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a)(b)(c) 0.115 0.067 0.067 0.132 0.059 (0.012) (0.012) 0.083
Net realized and unrealized loss (5.315) (5.257) (5.257) (5.342) (0.279) (0.268) (0.268) (0.273)
------- ------- ------- ------- ------- ------- ------- -------
Total from Investment Operations (5.200) (5.190) (5.190) (5.210) (0.220) (0.280) (0.280) (0.190)
------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 3.900 $ 3.830 $ 3.830 $ 3.920 $ 9.100 $ 9.020 $ 9.020 $ 9.130
======= ======= ======= ======= ======= ======= ======= =======
Total return (e)(f) (57.14)% (57.54)% (57.54)% (57.06)% (2.36)% (3.01)% (3.01)% (2.04)%
======= ======= ======= ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 2.25% 3.00% 3.00% 2.00% 2.25% 3.00% 3.00% 2.00%
Net investment income (loss) (g) 1.75% 1.00% 1.00% 2.00% 0.62% (0.13)% (0.13)% 0.87%
Fees and expenses waived or borne by
the Advisor/Administrator (g) 1.02% 1.02% 1.02% 1.02% 1.09% 1.09% 1.09% 1.09%
Portfolio turnover 56% 56% 56% 56% 96% 96% 96% 96%
Net assets at end of period (000) $ 3,556 $ 3,165 $ 732 $ 23 $ 8,653 $ 7,664 $ 1,300 $ 1,203
(a) Net of fees and expenses waived or
borne by the Advisor/Administrator
which amounted to: $ 0.067 $ 0.067 $ 0.067 $ 0.067 $ 0.105 $ 0.105 $ 0.105 $ 0.105
(b) Per share data was calculated using average shares outstanding during the
period.
(c) 1998 information includes distributions from China Hong Kong Photo Products,
Dickson Concepts International Ltd., Four Seas Mercantile, Hang Seng Bank
Ltd., Hon Kwok Land Investment, Li & Fung Ltd., Sa Sa International Ltd.,
Sun Hung Kai Properties Ltd. and Varitronix International Ltd., which amount
to $0.126 per share. 1997 information includes distributions from Srithai
Superware Public Co., Ltd. and Varitronix International Ltd. which amounted
to $0.039 per share.
(d) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(e) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(f) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
</TABLE>
12
<PAGE> 15
- --------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
PERIOD ENDED AUGUST 31
----------------------------------------
1996(c)
----------------------------------------
CLASS A CLASS B CLASS C CLASS Z
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.000 $10.000 $10.000 $10.000
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(b) 0.016 (0.002) (0.002) 0.021
Net realized and unrealized loss (0.696) (0.698) (0.698) (0.701)
------- ------- ------- -------
Total from Investment Operations (0.680) (0.700) (0.700) (0.680)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 9.320 $ 9.300 $ 9.300 $ 9.320
======= ======= ======= =======
Total return (d)(e)(f) (6.80)% (7.00)% (7.00)% (6.80)%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g)(h) 2.25% 3.00% 3.00% 2.00%
Net investment income (loss) (g)(h) 0.62% (0.13)% (0.13)% 0.87%
Fees and expenses waived or borne by the Advisor/Administrator (g)(h) 5.16% 5.16% 5.16% 5.16%
Portfolio turnover (f) 3% 3% 3% 3%
Net assets at end of period (000) $ 3,542 $ 2,654 $ 738 $ 1,166
(a) Net of fees and expenses waived or borne by the Advisor/Administrator
which amounted to: $ 0.123 $ 0.123 $ 0.123 $ 0.123
(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 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.
</TABLE>
13
<PAGE> 16
- -------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------
TO THE TRUSTEES OF LIBERTY FUNDS TRUST II AND THE SHAREHOLDERS OF
NEWPORT TIGER CUB FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Newport Tiger Cub Fund ("the Fund")
(a series of Liberty Funds Trust II, formerly Colonial Trust II), at August 31,
1999, the results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and the financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of portfolio positions at August 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 12, 1999
14
<PAGE> 17
ANNUAL REPORT: NEWPORT TIGER CUB FUND
TRUSTEES & TRANSFER AGENT
- --------------------------------------------------------------------------------
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
Academic Vice President and Dean of Faculties, Boston College (former 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)
- --------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Newport Tiger Cub Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The 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 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 and with the most recent copy of
the Liberty Funds Distributor, Inc. Performance Update.
<PAGE> 18
- -------------------------------------------------------
CHOOSE LIBERTY
- -------------------------------------------------------
BECAUSE NO SINGLE INVESTMENT MANAGER CAN BE ALL THINGS TO ALL
INVESTORS.(SM)
----------------------------------------------------------------------
L I B E R T Y
----------------------------------------------------------------------
[COLONIAL Colonial has long been a recognized leader in
MANAGEMENT fixed-income investing. In addition, Colonial has
ASSOCIATES, distinguished itself with both a traditional value
INC. LOGO] and a more contemporary approach to equity investing.
Crabbe Huson's contrarian investment style seeks
[CRABBE long-term performance by investing in stocks from
HUSON high-quality, out-of-favor companies. This
LOGO] risk-averse strategy capitalizes on the potential of
these companies to regain market popularity.
[LIBERTY LAMCO brings institutional money management to
ASSET individual investors through a disciplined
MANAGEMENT multi-manager investment process that seeks to
COMPANY LOGO] deliver consistent long-term returns.
[NEWPORT FUND Leaders in Asian Investing with a global reach.
MANAGEMENT
LOGO]
[STEIN ROE & Stein Roe's growth management style emphasizes
FARNHAM LOGO] companies with the ability to create, maintain and
grow earnings in different market environments.
----------------------------------------------------------------------
BOSTON * CHICAGO * NEW YORK * PORTLAND * SAN FRANCISCO
----------------------------------------------------------------------
That's why each of these affiliated managers has excelled in a particular
investment style. These managers not only specialize in a distinct investment
style, they hold a passion for their style along with a demonstrated track
record.
Each of these managers is a member of the Liberty Financial Companies (NYSE: L),
a diversified asset accumulation and management organization with over $62.7
billion in assets under management for more than 1.7 million investors. Many of
the affiliated managers' products are offered by prospectus through Liberty
Funds Distributor, Inc.
Ask your financial advisor to help you develop an investment strategy that
blends the complementary disciplines of different managers into a well-balanced
program tailored to your goals.
- --------------------------------- -------------------
NEWPORT TIGER CUB FUND ANNUAL REPORT
- --------------------------------- -------------------
[LIBERTY FUNDS LOGO] ---------------
BULK RATE
U.S. POSTAGE
Liberty Funds Distributor, Inc. (c)1999 PAID
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750 HOLLISTON,MA
www.libertyfunds.com PERMIT NO. 20
---------------
