<PAGE>
[COLONIAL
MUTUAL FUNDS LOGO]
COLONIAL
NEWPORT
TIGER FUND
SEMIANNUAL REPORT
JUNE 30, 1995
[GRAPHIC]
<PAGE>
COLONIAL NEWPORT TIGER FUND HIGHLIGHTS
JANUARY 1, 1995 - JUNE 30, 1995
INVESTMENT OBJECTIVE: Colonial Newport Tiger Fund seeks capital appreciation by
investing primarily in equity securities issued by companies located in the nine
"Tigers" of Asia -- Hong Kong, Singapore, South Korea, Taiwan, Malaysia,
Thailand, Indonesia, China, and the Philippines.
STRATEGY: The Fund pursues its objective by investing in common and preferred
stocks.
THE FUND IS DESIGNED TO OFFER:
- Access to the world's fastest growing economies
- Long-term growth potential
- Experienced management
COLONIAL NEWPORT TIGER FUND PERFORMANCE*
<TABLE>
<CAPTION>
CLASS A CLASS T CLASS Z
<S> <C> <C> <C>
Inception 6/1/89 6/1/89 6/1/89
Distributions declared per share -- $0.01 $0.01
Total returns, assuming
reinvestment of all distributions and no
sales charge or contingent deferred sales charge
- 6 months 11.22% 11.12% 11.12%
- 12 months 13.51% 13.42% 13.42%
Net asset value per share at 6/30/95 $12.00 $11.99 $11.99
</TABLE>
* The Fund originally was introduced on 5/31/89 and became Colonial Newport
Tiger Fund on 4/1/95. Class A, B, and D shares were offered at that time. Fund
average returns shown here include performance prior to Fund conversion, at
which time there was no 12b-1 fee.
Performance for Class B and Class D shares appears on page 5.
TOP THREE COUNTRIES** TOP FIVE SECTORS
1. Hong Kong 46.9% 1. Banking/Financial Services
2. Singapore 21.6% 2. Property
3. Malaysia 14.2% 3. Conglomerates
** As a percent of common 4. Telecommunications
stock investments 5. Utilities
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
During the six months ended June 30, 1995, equity investments provided
attractive returns for investors. Most impressive was the fact that this strong
performance was maintained despite a slowing of economic growth in the United
States, one of the world's most influential equity markets, over the second half
of the fiscal year.
Almost all sectors of the stock market performed well during the period. Foreign
stocks, especially the nine "Asian Tigers" that are your Fund's primary
investment focus, benefited from recovering economies at home and the strength
of local currencies versus the U.S. dollar. The dollar weakened significantly
over the second half of the fiscal year. Conditions for U.S. small
capitalization stocks relative to larger capitalization issues were somewhat
less favorable during the fiscal year than in previous years. However, they
continued to reward investors with strong returns. Large capitalization "blue
chip" stocks also did well because investors sought out the stability provided
by these stocks as the U.S. economy began to slow.
Lead Portfolio Manager Jack Mussey believes economic conditions for the Tigers
will improve in the months ahead. It is Jack's view that, despite potential
short term volatility, the stocks available in this region are attractively
priced, and may offer significant growth opportunities in the future. In the
following report, Jack comments on the Fund's management strategy and on key
issues affecting the nine Asian Tigers in which the Fund invests.
Respectfully,
/s/ John A. McNeice, Jr.
- ------------------------
John A. McNeice, Jr.
President
August 11, 1995
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
JACK MUSSEY is President and Chief Executive Officer of Newport Pacific
Management and Lead Portfolio Manager of the Colonial Newport Tiger Fund. Mr.
Mussey has more than 25 years of experience as an investment professional. Prior
to founding Newport Pacific Management in 1983, he was President of Newport
Capital Management from 1978-1983 and President of G.T. Management from
1974-1978. He is a Chartered Financial Analyst and is a member of the Security
Analysts of San Francisco. Jack received a B.A. from the University of Redlands
in 1963 and an M.B.A. from the University of California at Berkeley in 1965.
EXPORT DIVERSITY FUELS ECONOMIC GROWTH: Over the course of the semiannual
period, the Tigers enjoyed low inflation at home and favorable export markets
for their products. In recent years, exports have gone to an increasingly
diverse group of trading partners, reducing some of the risk that had formerly
plagued many of the Tiger countries.
TIES TO DOLLAR HELP PERFORMANCE: Since almost all of the Tigers' currencies are
closely tied to the U.S. dollar, interest rates in the region will generally
reflect their U.S. counterparts. Although the relatively high rates in the
United States during 1994 had a negative impact on Tiger stocks, as U.S. rates
have moved lower Tiger stocks have gained momentum.
FUND TAKES ADVANTAGE OF MOST ATTRACTIVE TIGERS: During the semiannual period,
investments were focused on six of the nine countries in which the Fund can
invest. Despite short-term fluctuations that may occur, management believes the
region offers great potential over the long term. Investments in Taiwan, China,
and the Philippines were avoided because of limited investment opportunities and
economic concerns about those countries. Of the remaining countries, investments
in Hong Kong, Singapore, and Malaysia received particular emphasis.
HONG KONG'S economy is expanding at an annualized rate exceeding 5.0% -- a clear
sign of its economic health. Trade with China, one of its largest trading
partners, has been slow, reflecting the Chinese government's restrictive
monetary policy. However, we believe this situation should improve over the next
18 months. Another source of concern has been Great Britain's relinquishment of
political control of Hong Kong to China. Although there have been some troubling
political incidents, most signs point toward a smooth transition of power.
SINGAPORE is the second largest country position in the portfolio. Although
economic growth may slow over the near term, the country's economic fundamentals
remain sound. Its currency is strong, and Singapore boasts low inflation as well
as a high rate of savings and investment.
MALAYSIA ad one of the world's strongest economies over the first half of 1995.
In fact, the country's economic growth has exceeded 8.0% for the past seven
years. Although its economy is similar to Singapore's, Malaysian
4
<PAGE>
investments are a little bit riskier, with a tradeoff of greater growth
potential over the long term.
LOOKING AHEAD: We believe all of the Tiger stock markets are currently below
their historical valuation ranges. This means there is plenty of room for stock
market growth should conditions remain favorable.
COLONIAL NEWPORT TIGER FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 6/89 - 6/95
Based on Maximum Offering Price for Class A Shares
[GRAPH]
A $10,000 investment in the following share classes, based on the maximum sales
charge for each class, would have been valued at the amount shown on June 30,
1995: Class B (inception 4/1/95) $10,513; Class D (inception 4/1/95) $10,328;
Class T (inception 6/1/89) $23,374; Class Z (inception 6/1/89) $23,374.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A (Inception: 6/1/89)
NAV 13.51% 15.95% 16.11%
MOP 6.99% 14.59% 14.99%
- --------------------------------------------------------------------------------
CLASS B (Inception: 4/1/95)
NAV -- -- 10.13%
w/CDSC -- -- 5.13%
- --------------------------------------------------------------------------------
CLASS D (Inception: 4/1/95)
NAV -- -- 10.31%
MOP w/CDSC -- -- 8.21%
- --------------------------------------------------------------------------------
CLASS T (Inception: 6/1/89)
NAV 13.42% 15.93% 16.10%
MOP 6.90% 14.57% 14.97%
- --------------------------------------------------------------------------------
CLASS Z (Inception: 6/1/89)
NAV 13.42% 15.93% 16.10%
</TABLE>
Past performance cannot predict future results. Return 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) return does not
include sales charges or contingent deferred sales charges (CDSC). Maximum
offering price (MOP) return includes the maximum sales charge for Class A shares
of 5.75%. The maximum CDSC for Class B shares is 5.00% and 1.00% on Class D
shares. Performance for different share classes will vary based on differences
in sales charges and fees associated with each class.
5
<PAGE>
INVESTMENT PORTFOLIO
JUNE 30, 1995 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 93.3% COUNTRY SHARES VALUE
- ---------------------------------------------------------------------
<S> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 45.7%
DEPOSITORY INSTITUTIONS - 20.2%
Development Bank Of Singapore Ltd. Si 2,100 $ 23,901
HSBC Holdings PLC HK 1,800 23,088
Hang Seng Bank HK 3,200 24,400
Oversea Chinese Banking Si 1,691 18,762
Public Bank Bhd Ma 3,000 6,706
Public Bank Bhd Si 2,500 5,243
Thai Farmers Bank Ltd. Th 2,164 20,690
--------
122,790
--------
HOLDING & OTHER INVESTMENT COMPANIES - 5.8%
Citic Pacific Ltd. (a) HK 7,000 17,596
Shun Tak Holdings Ltd. HK 16,000 12,717
Taiwan Fund, Inc. Tw 222 4,856
--------
35,169
--------
NONDEPOSITORY CREDIT INSTITUTIONS - 1.1%
Manhattan Card Co., Ltd. HK 16,500 6,717
--------
REAL ESTATE - 15.5%
Cheung Kong Holdings Ltd. HK 4,500 22,274
City Developments Ltd. Si 3,300 20,197
Land and House Co., Ltd. Th 700 14,746
Sun Hung Kai Properties Ltd. HK 3,300 24,416
Wharf Holdings HK 4,000 13,053
--------
94,686
--------
SECURITY BROKERS & DEALERS - 3.1%
Guoco Group Ltd. HK 4,000 18,662
--------
- ---------------------------------------------------------------------
MANUFACTURING - 14.8%
APPAREL - 1.7%
Giordano International Ltd. HK 14,020 10,419
--------
CHEMICALS - 1.0%
Pt Kalbe Farma Reg. In 1,269 5,812
--------
FABRICATED METAL - 1.7%
Kian Joo Can Factory Bhd Ma 2,600 10,185
--------
FOOD & KINDRED PRODUCTS - 1.8%
Pt Mayora Indah Reg. In 2,367 10,843
--------
MACHINERY & COMPUTER EQUIPMENT - 1.5%
Pt Modern Photo Film Reg. (a) In 1,665 9,047
--------
</TABLE>
6
<PAGE>
Investment Portfolio/June 30, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
PETROLEUM REFINING - 1.5%
Nylex Malaysia Bhd Ma 3,000 $9,290
--------
PRINTING & PUBLISHING - 2.9%
Singapore Press Holdings Ltd. (a) Si 1,200 17,953
--------
STONE, CLAY, GLASS & CONCRETE - 2.7%
Siam Cement Co., Ltd. Th 258 16,472
--------
- -----------------------------------------------------------------------------------
RETAIL TRADE - 2.7%
AUTO DEALERS & GAS STATIONS - 2.7%
Cycle & Carriage Ltd. Si 1,865 16,688
--------
- -----------------------------------------------------------------------------------
SERVICES - 5.9%
HOTELS, CAMPS & LODGING - 3.2%
Genting Bhd Ma 2,001 19,776
--------
MISCELLANEOUS REPAIR SERVICES - 2.7%
Keppel Corp. (a) Si 2,000 16,321
--------
- -----------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 21.1%
AIR TRANSPORTATION - 3.8%
Swire Pacific Ltd., Series A HK 3,000 22,875
--------
COMMUNICATIONS - 8.6%
Advanced Information Services Th 475 6,773
Hong Kong Telecommunications Ltd. HK 10,000 19,773
Korea Mobile Telecom Corp., GDR Ko 140 5,005
Philippine Long Distance Telephone, ADR Ph 80 5,740
Telekom Malaysia Bhd Ma 2,000 15,176
--------
52,467
--------
ELECTRIC SERVICES - 4.5%
Hong Kong Electric Holdings Ltd. HK 5,000 16,995
Korea Electric Power Corp. (a) Ko 284 10,637
--------
27,632
--------
GAS SERVICES - 4.2%
Hong Kong and China Gas Co., Ltd. HK 16,000 25,537
--------
- -----------------------------------------------------------------------------------
WHOLESALE TRADE - 3.1%
DURABLE GOODS - 3.1%
China Steel Corp., GDR (a) Ch 100 2,113
Sime Darby Bhd Ma 6,000 16,735
--------
18,848
--------
TOTAL COMMON STOCKS (COST OF $422,587) 568,189
--------
</TABLE>
7
<PAGE>
Investment Portfolio/June 30, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.2% COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.2%
COMMUNICATIONS - 0.2%
Philippine Long Distance Telephone,
8.75% Series 3 (cost of $1,000) Ph 20 $ 1,275
--------
WARRANTS (a) - 0.1%
- ---------------------------------------------------------------------------------------------
MANUFACTURING - 0.1%
FABRICATED METAL
Kian Joo Can Factory (expires 01/22/99)
(cost of $150) Ma 320 481
--------
TOTAL INVESTMENTS - 96.7% (cost of $423,737)(b) 569,945
--------
SHORT-TERM OBLIGATIONS - 1.6% PAR
- ---------------------------------------------------------------------------------------------
Federal National Mortgage Association
(cost of $28,432) 5.900% 07/05/95 $28,455 28,455
--------
OTHER ASSETS & LIABILITIES, NET - 1.7% 10,444
- ---------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $608,844
--------
NOTES TO INVESTMENT PORTFOLIO:
- ---------------------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
</TABLE>
<TABLE>
<CAPTION>
Summary of Securities by Country Country Value % of Total
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hong Kong HK $258,522 43.2
Singapore Si 119,065 19.9
Malaysia Ma 78,349 13.1
Thailand Th 58,681 9.8
United States $ 28,455 4.8
Indonesia In 25,702 4.3
Korea Ko 15,642 2.6
Phillipine Ph 7,015 1.2
Taiwan Tw 4,856 0.8
China Ch 2,113 0.3
-------- -----
$598,400 100.0
-------- -----
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
- ------- ----
<S> <C>
ADR American Depository Receipt
GDR Global Depository Receipt
</TABLE>
See notes to financial statements.
8
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnote)
ASSETS
<S> <C> <C>
Investments at value (cost $423,737) $569,945
Short-term obligations (cost $28,432) 28,455
--------
598,400
Cash held in foreign banks (cost $8,166) $8,202
Receivable for:
Fund shares sold 5,027
Dividends 1,119
Investments sold 25
Interest 1
Other 52 14,426
------ --------
Total Assets 612,826
LIABILITIES
Payable for:
Investments purchased 2,020
Fund shares repurchased 1,103
Accrued other expenses 859
------
Total Liabilities 3,982
--------
NET ASSETS $608,844
--------
Net asset value & redemption price per share -
Class A ($49,628/4,135) $12.00
--------
Maximum offering price per share - Class A
($12.00/0.9425) $12.73*
--------
Net asset value & offering price per share -
Class B ($17,424/1,457) $11.96
--------
Net asset value & redemption price per share -
Class D ($3,459/289) $11.98
--------
Maximum offering price per share - Class D
($11.98/0.9900) $12.10
--------
Net asset value & redemption price per share -
Class T ($209,270/17,447) $11.99
--------
Maximum offering price per share - Class T
($11.99/0.9425) $12.72*
--------
Net asset value, offering & redemption price
per share - Class Z ($329,063/27,438) $11.99
--------
</TABLE>
*On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
9
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 7,380
Interest 314
-------
Total Investment Income (net of
nonrebatable foreign taxes
withheld at source which
amounted to $639) 7,694
EXPENSES
Management fee $ 2,031
Administration fee 554
Service fee - Class A 15
Service fee - Class B 5
Service fee - Class D 1
Distribution fee - Class B 14
Distribution fee - Class D 3
Transfer agent 728
Trustees fee 12
Custodian fee 64
Audit fee 63
Legal fee 71
Registration fee 77
Reports to shareholders 107
Other 87 3,832
------- -------
Net Investment Income 3,862
-------
NET REALIZED & UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized loss on:
Investments (4,671)
Foreign currency transactions (11)
-------
Net realized loss (4,682)
Net unrealized appreciation during
the period on:
Investments 60,283
Foreign currency transactions 31
-------
Net unrealized appreciation 60,314
-------
Net Gain 55,632
-------
Net Increase in Net Assets From Operations $59,494
=======
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Year ended
(in thousands) June 30 December 31
---------------- -----------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
---------------- -----------
<S> <C> <C>
Operations:
Net investment income $ 3,862 $ 2,281
Net realized gain (loss) (4,682) 4,472
Net unrealized appreciation (depreciation) 60,314 (62,048)
--------- ---------
Net Increase (Decrease) from Operations 59,494 (55,295)
--------- ---------
Distributions:
From net investment income - Class T (179) (1,623)
From net investment income - Class Z (270) (4,463)
--------- ---------
59,045 (61,381)
--------- ---------
Fund Share Transactions (a):
Receipts for shares sold - Class A 61,004
Cost of shares repurchased - Class A (13,134)
--------- ---------
47,870
--------- ---------
Receipts for shares sold - Class B 17,681
Cost of shares repurchased - Class B (676)
--------- ---------
17,005
--------- ---------
Receipts for shares sold - Class D 3,504
Cost of shares repurchased - Class D (124)
--------- ---------
3,380
--------- ---------
Receipts for shares sold - Class T 31,911
Value of distributions reinvested - Class T 148
Cost of shares repurchased - Class T (39,021)
--------- ---------
(6,962)
--------- ---------
Receipts for shares sold - Class Z 180,775
Value of distributions reinvested - Class Z 206
Cost of shares repurchased - Class Z (148,716)
--------- ---------
32,265
--------- ---------
Sold 300,921
Reinvested 4,992
Repurchased (183,174)
--------- ---------
Net Increase from Fund Share Transactions 93,558 122,739
--------- ---------
Total Increase 152,603 61,358
NET ASSETS
Beginning of period 456,241 394,883
--------- ---------
End of period (including undistributed net
investment income of $4,071 and $658, respectively) $ 608,844 $ 456,241
========= =========
</TABLE>
(a) Class A, Class B and Class D shares were initially offered on April 1,
1995.
Statement of Changes in Net Assets continued on following page.
See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Year ended
June 30 December 31
---------------- -----------
1995 1994
---------------- -----------
<S> <C> <C>
NUMBER OF FUND SHARES (a)
Sold - Class A 5,232
Repurchased - Class A (1,097)
------- -------
4,135
------- -------
Sold - Class B 1,513
Repurchased - Class B (56)
------- -------
1,457
------- -------
Sold - Class D 299
Repurchased - Class D (10)
------- -------
289
------- -------
Sold - Class T 3,025
Issued for distributions reinvested - Class T 14
Repurchased - Class T (3,639)
------- -------
(600)
------- -------
Sold - Class Z 17,092
Issued for distributions reinvested - Class Z 20
Repurchased - Class Z (13,857)
------- -------
3,255
------- -------
Sold 26,589
Reinvested 468
Repurchased (16,576)
------- -------
Net Increase in Shares Outstanding 8,536 10,481
------- -------
</TABLE>
(a) Class A, Class B and Class D shares were initially offered on April 1,
1995.
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial Newport Tiger Fund (formerly
Newport Tiger Fund) (the Fund), a series of Colonial Trust VII, the accompanying
financial statements contain all normal and recurring adjustments necessary for
the fair presentation of the financial position of the Fund at June 30, 1995,
and the results of its operations, the changes in its net assets and the
financial highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: The Fund is a Massachusetts business trust, registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end,
management investment company. The Fund may issue an unlimited number of shares.
The Fund offers five classes of shares: Class A, Class B, Class D, Class T and
Class Z. Class A shares are sold with a front-end sales charge and Class B
shares are subject to an annual distribution fee and a contingent deferred sales
charge. Class B shares will convert to Class A shares when they have been
outstanding approximately eight years. Class D shares are subject to a reduced
front-end sales charge, a contingent deferred sales charge on redemptions made
within one year after purchase and a continuing distribution fee. Class T shares
are sold with a front-end sales charge and Class Z shares are offered
continuously at net asset value. There are certain restrictions to purchasing
Class T shares and Class Z shares, please refer to a prospectus. The following
significant accounting policies are consistently followed by the Fund in the
preparation of its financial statements and conform to generally accepted
accounting principles.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there were
no sales during the day, at current quoted bid prices.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased or sold.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
13
<PAGE>
Notes to Financial Statements/June 30, 1995
- -------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class A, Class B and Class D service fee and Class B
and Class D distribution fee), realized and unrealized gains (losses) are
allocated to each class proportionately on a daily basis for purposes of
determining the net asset value of each class.
Class A, Class B and Class D per share data was calculated using average shares
outstanding during the period. In addition, Class B and Class D net investment
income per share data reflects the distribution fee per share applicable to
Class B and Class D shares only.
Class B and Class D ratios are calculated by adjusting the expense and net
investment income ratios for the Fund for the entire period by the distribution
fee applicable to Class B and Class D shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
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.
FOREIGN CURRENCY TRANSACTIONS: The Fund has adopted Statement of Position 93-4,
Foreign Currency Accounting and Financial Statement Presentation for Investment
Companies. Accordingly, net realized and unrealized gains (losses) on foreign
currency transactions includes the fluctuation in exchange rates on gains and
losses between trade and settlement dates on securities transactions, gains and
losses arising from the disposition of foreign currency, and currency gains and
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 and 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 and 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 or losses which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized
14
<PAGE>
Notes to Financial Statements/June 30, 1995
- -------------------------------------------------------------------------------
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 was opened, the
actual exposure is typically limited to the change in value of the contract (in
U.S. dollars) over the period it remains open. Risks may also arise if
counterparties fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on the ex-date (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonrebatable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system
of securities collateralizing repurchase agreements. Collateral is
marked-to-market daily to ensure that the market value of the underlying assets
remains sufficient to protect the Fund. The Fund may experience costs and delays
in liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Newport Fund Management (the Adviser) is the investment adviser
of the Fund and receives a monthly fee based on the Fund's average net assets as
follows:
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
- -------------------------------- ---------------
<S> <C>
First $100 million.................................. 1.00%
Over $100 million................................... 0.75%
</TABLE>
ADMINISTRATION FEE: Colonial Management Associates, Inc., (the Administrator)
furnishes accounting and other services and office facilities for a monthly fee
equal to 0.25% annually of the Fund's average net assets.
BOOKKEEPING FEE: Effective May 1, 1995, the Administrator provides bookkeeping
and pricing services for $27,000 per year plus 0.035% of the Fund's average net
assets over $50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc., (the Transfer Agent),
an affiliate of the Administrator, provides shareholder services for a monthly
fee equal to 0.25% annually of the Fund's average net assets, and receives a
reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: The Administrator,
through Colonial Investment Services, Inc., (the Distributor), is the Fund's
principal underwriter. Since inception of Class A, Class B and Class D shares
15
<PAGE>
Notes to Financial Statements/June 30, 1995
- -------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES - CONT.
on April 1, 1995, the Distributor has retained net underwriting discounts of
$528,134 on sales of the Fund's Class A shares and received contingent deferred
sales charges (CDSC) of $1,350 and $102 on Class B and Class D share
redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually on Class A, Class B and Class D net assets
as of the 20th of each month. The plan also requires the payment of a
distribution fee to the Distributor equal to 0.75% of the average net assets
attributable to Class B and Class D shares.
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 Administrator has agreed, until further notice, to waive
fees and bear certain Fund expenses to the extent that total expenses (exclusive
of service fees, distribution fees, brokerage commissions, interest, taxes and
extraordinary expenses, if any) exceed 1.55% annually of the Fund's average net
assets.
For the period ended June 30, 1995, the Fund's operating expenses did not
exceed the 1.55% expense limit.
OTHER: Fund pays no compensation to its officers, all of whom are employees of
the Administrator. The Fund pays no compensation to its officers, all of whom
are employees of the 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 June 30, 1995, purchases and
sales of investments, other than short-term obligations, were $103,922,589 and
$17,014,573, respectively.
Unrealized appreciation (depreciation) at June 30, 1995, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 157,135,038
Gross unrealized depreciation (10,904,330)
-------------
Net unrealized appreciation $ 146,230,708
=============
</TABLE>
OTHER: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of currency exchange or
other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
16
<PAGE>
Notes to Financial Statements/June 30, 1995
- -------------------------------------------------------------------------------
NOTE 5. RESULTS OF SPECIAL SHAREHOLDERS MEETING
- -------------------------------------------------------------------------------
At the March 29, 1995 adjourned session of the special meeting of the
shareholders of the former Newport Tiger Fund (the "old Tiger Fund"), a series
of The World Funds, Inc., shareholders approved the Agreement and Plan of
Reorganization pursuant to which the old Tiger Fund was in effect converted in a
tax-free exchange into the Colonial Newport Tiger Fund (the "New Tiger Fund"), a
newly organized series of Liberty Financial Trust (now called "Colonial Trust
VII"). Of the 42,669,231 shares outstanding on the February 3, 1995 record date
for the meeting, 21,930,246 were voted in favor of the Agreement and Plan of
Reorganization, 1,072,885 were voted against, and 939,528 abstained.
NOTE 6. COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------
At June 30, 1995, net assets consisted of:
<TABLE>
<S> <C>
Capital paid in $463,179
Undistributed net investment income 4,071
Accumulated net realized loss (4,673)
Net unrealized appreciation during the period on:
Investments 146,231
Foreign currency transactions 36
--------
$608,844
========
</TABLE>
17
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended June 30
----------------------------------------------------------------------
1995
Class A (a) Class B (a) Class D (a) Class T Class Z
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $10.860 $10.860 $10.800 $ 10.800 $ 10.860
------- ------- ------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.077 0.052 0.052 0.075 0.075
Net realized and
unrealized gain 1.063 1.048 1.068 1.125 1.125
------- ------- ------- -------- --------
Total from Investment
Operations 1.140 1.100 1.120 1.200 1.200
------- ------- ------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From Net
Investment income -- -- -- (0.010) (0.010)
------- ------- ------- -------- --------
Net asset value -
End of period $12.000 $11.960 $11.980 $ 11.990 $ 11.990
------- ------- ------- -------- --------
Total return (b) 11.22% (c) 10.13% (c) 10.31% (c) 11.12% (c) 11.12% (c)
------- ------- ------- -------- --------
Ratios TO AVERAGE NET ASSETS
Expenses 1.74% (d) 2.49% (d) 2.49% (d) 1.49% (d) 1.49% (d)
Net investment income 1.29% (d) 0.54% (d) 0.54% (d) 1.54% (d) 1.54% (d)
Portfolio turnover 5% (d) 5% (d) 5% (d) 5% (d) 5% (d)
Net assets at end
of period (000) $49,628 $17,424 $ 3,459 $209,270 $329,063
</TABLE>
(a) Class A, Class B and Class D shares were initially offered on April 1,
1995. Per share data reflects activity from that date and was calculated
using average shares outstanding during the period.
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or CDSC.
(c) Not annualized.
(d) Annualized.
18
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------
1994 1993(a) 1992(a) 1991(a) 1990(a)
---- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 12.440 $ 7.120 $ 5.860 $ 4.650 $ 5.540
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income/loss 0.060 0.040 0.020 (0.020) 0.010
Net realized and
unrealized gain (loss) (1.550) 5.330 1.270 1.230 (0.840)
-------- -------- ------- ------- -------
Total from Investment
Operations (1.490) 5.370 1.290 1.210 (0.830)
-------- -------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.040) (0.040) (0.020) -- (0.030)
From net
realized gains (0.110) (0.010) -- -- --
In excess of net
investment income -- -- (0.010) -- --
From capital
paid in -- -- -- -- (0.030)
-------- -------- ------- ------- -------
Total Distributions
Declared to
Shareholders (0.150) (0.050) (0.030) -- (0.060)
-------- -------- ------- ------- -------
Net asset value -
End of period $ 10.800 $12.440 $7.120 5.860 4.650
-------- -------- ------- ------- -------
Total return (11.96)% 75.45% 22.02% 26.02% (15.77)%
-------- -------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.29% 1.56% 1.85% 2.49% 2.88%
Net investment income 0.57% 0.59% 0.36% (0.40)% 0.05%
Portfolio turnover 8% 11% 17% 59% 58%
Net assets at end
of period (000) $456,241 $394,883 $98,836 $26,401 $14,504
</TABLE>
(a) Reflects 2 for 1 stock split effective November 29, 1993.
19
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you activate any of these services,
or call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50;
$25 for an IRA account.
FREE EXCHANGES*: Exchange all or part of your account into the same share class
of another Colonial fund, by phone or mail, as your needs change over time.
EASY ACCESS TO YOUR MONEY*: Make withdrawals from your account by phone, by mail
or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it to Colonial within one year, you can reinvest in any
Colonial fund of the same share class without any penalty or sales charges.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Colonial account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly, or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. SWPs by check are processed on
the 10th of each month, including the April 1995 payment.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
LOW COST IRAs: Choose from a broad range of retirement plans, including IRAs.
* Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial. Proceeds may be more or less than
your original cost. The exchange privilege may be terminated at any time.
Investors who purchase Class B or Class D shares, or $1 million or more of Class
A shares, may be subject to a contingent deferred sales charge.
20
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
<TABLE>
<S> <C>
For fund prices, dividends, and capital gains information............ press 1
For account information.............................................. press 2
To speak to a Colonial representative................................ press 3
For yield and total return information............................... press 4
For duplicate statements or new supply of checks..................... press 5
To order duplicate tax forms and year-end statements................. press 6
(February through May)
To review your options at any time during your call.................. press *
</TABLE>
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 am to 8:00 pm ET, and Saturdays from February through
mid-April, 10:00 am to 2:00 pm ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
am to 8:00 pm ET. Transactions received after 4pm will receive the next business
day's closing price.
COLONIAL LITERATURE DEPARTMENT - 1-800-248-2828
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
21
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
Colonial account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale, or exchange,
you receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
COLONIAL SHAREHOLDER NEWS: Mailed with your quarterly account statements, this
newsletter highlights timely investment strategies, portfolio manager
commentary, and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information
are designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the
year, this statement may help you calculate your gain/loss for tax purposes.
(Usually mailed in February.)
22
<PAGE>
SHAREHOLDER SERVICES AND TRANSFER AGENT
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Newport Tiger Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call our Literature
Department at 1-800-248-2828 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Newport Tiger Fund.
This report may also be used as sales literature when preceded or accompanied by
the current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund.
IMPORTANT NOTICE REGARDING TELEPHONE REDEMPTIONS: Because of a change in policy,
shareholders of class T and Z shares wishing to make telephone redemptions of
values in excess of $50,000 must send a letter to Colonial requesting telephone
redemption privileges. Please send your request, with a signature guarantee, to
Colonial Investors Service Center, Inc., P.O. Box 1722, Boston, MA 02175-1722.
Please include the name of the recipient bank, a blank check marked void, and
the signatures that match the registration of your Colonial account. Please
refer any questions to a Colonial shareholder services representative at
1-800-345-6611.
23
<PAGE>
[LOGO]
COLONIAL
MUTUAL FUNDS
Earning Your Trust for
More Than 60 Years
- ------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly Dean,
Simon Graduate School of Business, University of Rochester; Chairman and Chief
Executive Officer, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JOHN A. MCNEICE, JR.
Chairman of the Board and Director, The Colonial Group, Inc. and Colonial
Management Associates, Inc. (formerly Chief Executive Officer, The Colonial
Group, Inc. and Colonial Management Associates, Inc.)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC. (C)1995
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
NT-03/148B-0695
- -------------------------------------------------------------------------------
