<PAGE>
[LOGO]
COLONIAL
NEWPORT
TIGER FUND
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE>
COLONIAL NEWPORT TIGER FUND HIGHLIGHTS
JANUARY 1, 1995 - DECEMBER 31, 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
PORTFOLIO MANAGER COMMENTARY: "While 1995 may have been a difficult year for
some of the Tiger countries, Colonial Newport Tiger Fund was able to provide
shareholders with a return of 16.27% on Class A shares. The return reflects the
excellent performance of Hong Kong and Singapore, the two largest country
weightings in the portfolio."
COLONIAL NEWPORT TIGER FUND PERFORMANCE*
<TABLE>
<CAPTION>
CLASS A CLASS T CLASS Z
<S> <C> <C> <C>
Inception 4/1/95 5/31/89 5/31/89
Distributions declared per share $ 0.084 $ 0.105 $ 0.105
12-months/since inception total return
assuming reinvestment of all distributions
and no sales charge or contingent deferred
sales charge (CDSC) 16.27%* 16.28% 16.28%
Net asset value per share at 12/31/95 $ 12.46 $ 12.45 $ 12.45
</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. Total return
shown includes 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
1. Hong Kong
2. Singapore
3. Malaysia
<TABLE>
<CAPTION>
TOP FIVE SECTORS**
<S> <C>
1. Consumer Cyclicals 27.9%
2. Financial Services 23.4%
3. Utilities 16.9%
4. Consumer Staples 10.4%
5. Transportation 6.4%
</TABLE>
**Top five sectors based on total investments. There can be no guarantee the
Fund will continue to invest in these sectors.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
During 1995, your Fund produced a total return in excess of 16%. The average
annual return for the past five years has been over 22%.
1995 was a difficult year for most Tiger markets. Hong Kong was the star
performer with a gain of 23.1%. Singapore was the next best performer with an
increase of 8.3% in U.S. dollars. Hong Kong and Singapore represented 48.4% and
21.5%, respectively, of your Fund's portfolio at the end of the year. Other
Tiger markets were slightly up, in the case of Indonesia and Malaysia, to
significantly down, in the case of Thailand, South Korea, the Philippines and
Taiwan.
Portfolio Co-Managers, Jack Mussey and Tim Tuttle, believe 1996 will be a good
year for the Tiger markets as global investors diversify their attention away
from the U.S. market to the somewhat overlooked markets of the world's fastest
growing economies in Asia. It is their view that many of the stocks available in
this region are attractively priced and may offer significant growth
opportunities in the future. In the following report they comment on the key
issues affecting the markets in which your Fund invests.
Respectfully,
/s/ John A. McNeice, Jr.
John A. McNeice, Jr.
President
February 9, 1996
At the time of this printing, Jack Mussey was named 1995 International Fund
Manager of the Year by Morningstar Mutual Funds, a highly regarded independent
mutual fund rating service. We are pleased to see Jack receive this recognition.
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
JACK MUSSEY is President and Chief Executive Officer of Newport Pacific
Management and Co-Portfolio Manager of Colonial Newport Tiger Fund. Mr. Mussey
has more than 25 years of experience as an investment professional. He is a
Chartered Financial Analyst and is a member of the Security Analysts of San
Francisco. Jack received a BA from the University of Redlands in 1963 and an MBA
from the University of California at Berkeley in 1965.
TIM TUTTLE is Managing Director of Newport Pacific Management and Co-Portfolio
Manager of Colonial Newport Tiger Fund. He has 25 years experience as an
investment professional and is a Chartered Financial Analyst. He received a BA
from Williams College in 1964.
FUND TAKES ADVANTAGE OF MOST ATTRACTIVE TIGERS: During the year, investments
were focused on six of the nine countries in which the Fund can invest. The Fund
gained 16.27% on Class A shares, which is a significant premium over the Morgan
Stanley Capital International EAFE (GDP) Index, which was up 11.16%. We
attribute this superior performance to our conservative large-cap approach and
our significant overweighting in Hong Kong. Despite short-term fluctuations that
may occur, management believes the region offers great potential over the long
term. Investments in Hong Kong, Singapore, Malaysia and Thailand received
particular emphasis.
THE HONG KONG market, which represents 48.4% of your Fund's portfolio, rose
23.1% in 1995 as investors began anticipating the benefits of falling U.S.
interest rates and an improving political and economic environment in China.
With lower interest rates, the outlook for a rebound in Hong Kong's residential
property prices in 1996 is good. This should have a positive effect on consumer
confidence and spending.
CHINA appears to have successfully engineered a slow down in their overheated
economy from 12% to about 10% in real terms. This rate of growth should be
sustainable in 1996 with an acceptable rate of inflation. Some easing of
monetary policy in China is expected; this will benefit Hong Kong companies
doing business in China as well as increase trade flows through Hong Kong.
Politics in China appear more stable with Jiang Zemin solidifying his power.
Fears of Hong Kong's transition to China in 1997 are turning to recognition of
the immense opportunity Hong Kong will have as the financial and trade center
for the world's fastest growing economy.
SINGAPORE (21.5% of the portfolio) rose 8.3% in 1995. This performance does not
adequately reflect the exemplary economic fundamentals this "Safe-Haven" of Asia
produces: 8.3% real economic growth with only 1.8% inflation, a huge current
account surplus and a strong currency.
MALAYSIA (10.9% of the portfolio) and Thailand (9.6% of the portfolio) suffered
from growing pains in 1995 with real economic growth of 9.8% and 8.7%,
respectively, in real terms producing deteriorating current accounts. To
4
<PAGE>
slow these economies to more sustainable growth rates, the authorities raised
interest rates, temporarily dampening their stock markets.
LOOKING AHEAD: We are optimistic that the high quality large-cap growth
businesses favored for investment in your portfolio represent good value at
current levels and can produce superior performance in the years ahead within an
economic environment that is growing 2 to 3 times faster than the U.S., Europe
or Japan.
COLONIAL NEWPORT TIGER FUND INVESTMENT PERFORMANCE VS.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE (GDP) INDEX
Change in Value of $10,000 from 5/31/89 - 12/31/95. Based on Net Asset Value and
Maximum Offering Price for Class A, Class T and Class Z Shares
[GRAPH]
<TABLE>
<CAPTION>
Label A B C
----- ---- --- ---
Label CNTF msci mop nav
- ----- ---- ---- --- ---
<S> <C> <C> <C> <C>
1 5/89 10000 9425 10000
2 6/89 10172.39 9368 9940
3 11309.84 9651 10240
4 11038.47 9463 10040
5 11450.67 9717 10310
6 10895.69 9482 10060
7 11445.42 9821 10420
8 12/89 12293.98 10443 11080
9 12055.91 10556 11200
10 11503.51 10707 11360
11 11114.69 10537 11180
12 10950.74 9931 10537
13 11751.46 10896 11561
14 11853.64 11161 11842
15 12138.56 11776 12494
16 10800.74 10073 10688
17 9286.33 8494 9012
18 10423.83 9109 9664
19 9948.79 8711 9243
20 12/90 9936.39 8862 9403
21 10191.35 9196 9757
22 11240.62 10015 10626
23 10372.88 10358 10990
24 10483.47 10711 11364
25 10699.77 10987 11657
26 9850.3 10777 11435
27 10244.37 11006 11678
28 10159.08 10558 11202
29 10580.49 10358 10990
30 10533.46 10511 11152
31 10220.8 10835 11496
32 12/91 10790.79 11168 11849
33 10682.09 11835 12557
34 10519.8 12207 12951
35 9984.55 11892 12618
36 10054.6 12569 13336
37 10629.26 13398 14215
38 10265.43 13426 14246
39 9885.23 13122 13922
40 10359.7 12616 13386
41 9963 12750 13528
42 9543.21 14103 14963
43 9575.09 13960 14812
44 12/92 9558.95 13627 14458
45 9655.18 14057 14915
46 9978.89 14841 15747
47 10646.06 14908 15818
48 11611.89 16046 17025
49 11779.12 16486 17492
50 11561.38 16142 17127
51 11894.95 16123 17106
52 12752.08 17098 18141
53 12469.65 17442 18506
54 12797.87 20244 21479
55 11763.78 19871 21084
56 12/93 12576.91 23892 25350
57 13523.73 22798 24189
58 13434.68 21626 22946
59 13226.55 19437 20622
60 13879.48 20800 22069
61 13545.81 21780 23109
62 13524.17 20608 21865
63 13822.61 21684 23007
64 14041.02 22951 24352
65 13531.35 22817 24209
66 13926 23105 24515
67 13289.28 21261 22558
68 12/94 13373.93 21034 22317
69 13015.07 18950 20106
70 12983.54 20722 21987
71 13553.47 21171 22462
72 14141.13 21190 22483
73 13986.21 23705 25151
74 13811.6 23393 24820
75 14696.49 23958 25420
76 14065.69 23159 24572
77 14215.15 23588 25027
78 13785.64 23432 24862
79 14058.81 23491 24924
80 12/95 14642.88 24456 25948
</TABLE>
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 December
31, 1995: Class B w/ CDSC (inception 4/1/95) $10,965; Class D w/CDSC (inception
4/1/95) $11,270. Please see footnote on page 2 concerning inception dates.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------
1 YEAR 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A (Inception: 4/1/95)
NAV 16.27% 22.51% 15.57%
MOP 9.58% 21.07% 14.54%
- ------------------------------------------------------------------------------
CLASS B (Inception: 4/1/95)*
NAV -- -- 14.65%
w/CDSC -- -- 9.65%
- ------------------------------------------------------------------------------
CLASS D (Inception: 4/1/95)*
NAV -- -- 14.85%
MOP w/CDSC -- -- 12.70%
- ------------------------------------------------------------------------------
CLASS T (Inception: 5/31/89)
NAV 16.28% 22.51% 15.57%
MOP 9.59% 21.07% 14.54%
- ------------------------------------------------------------------------------
CLASS Z (Inception: 5/31/89)
NAV 16.28% 22.51% 15.57%
</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. NAV return does not include sales charges
or 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.
*Cumulative Since Inception.
5
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 92.9% COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 1.2%
AGRICULTURE
Sime Darby Berhad Ma 4,000 $ 10,634
--------
- ---------------------------------------------------------------------------------------
CONSTRUCTION - 3.9%
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION
Citic Pacific Ltd. HK 10,000 34,206
--------
- ---------------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 48.5%
DEPOSITORY INSTITUTIONS - 22.2%
Bank of Ayudhya Ltd. Th 2,566 14,363
Development Bank of Singapore Ltd. Si 2,300 28,622
Guoco Group Ltd. HK 5,200 25,084
HSBC Holdings PLC HK 2,000 30,262
Hang Seng Bank HK 3,800 34,032
Oversea-Chinese Banking Corp. Ltd Si 2,091 26,169
Public Bank Berhad Ma 4,420 8,460
Public Bank Berhad Si 2,500 4,808
Thai Farmers Bank Ltd. Th 2,164 21,822
--------
193,622
--------
HOLDING & OTHER INVESTMENT COMPANIES - 4.5%
Hutchison Whampoa Ltd. HK 3,000 18,274
Singapore Technologies
Industrial Corp. Si 8,000 18,101
Taiwan Fund, Inc. Tw 128 2,614
--------
38,989
--------
NONDEPOSITORY CREDIT INSTITUTIONS - 0.8%
Manhattan Card Co. Ltd. HK 16,500 7,042
--------
REAL ESTATE - 21.0%
Cheung Kong Holdings Ltd. HK 5,500 33,501
City Developments Ltd. Si 4,500 32,772
Filinvest Development Corp. Ph 4,000 2,669
Land and House Co. Ltd. Th 800 13,148
Shun Tak Holdings Ltd. HK 20,000 14,096
Sun Hung Kai Properties Ltd. HK 4,000 32,719
Swire Pacific Ltd., Series A HK 3,600 27,934
Wharf Holdings HK 8,000 26,641
--------
183,480
--------
</TABLE>
6
<PAGE>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------
MANUFACTURING - 12.9%
CHEMICALS & ALLIED PRODUCTS - 1.1%
Pt Kalbe Farma Reg In 1,669 $ 5,657
Pt Darya Varia Laboratoria In 2,000 3,630
-------
9,287
-------
ELECTRONIC & ELECTRICAL EQUIPMENT - 1.1%
Nylex Malaysia Berhad Ma 3,000 9,098
-------
FABRICATED METAL - 1.2%
Kian Joo Can Factory Berhad Ma 2,600 10,752
-------
FOOD & KINDRED PRODUCTS - 1.4%
Pt Mayora Indah Reg In 17,133 12,364
-------
MEASURING & ANALYZING INSTRUMENTS - 1.7%
China Hong Kong Photo Product HK 7,000 3,961
Pt Modern Photo Film Reg In 1,915 11,097
-------
15,058
-------
PRIMARY METAL - 1.1%
China Steel Corp., GDS (a) Ch 100 1,737
Pohang Iron & Steel Co. Ltd. ADR Ko 377 8,247
-------
9,984
-------
PRINTING & PUBLISHING - 3.7%
Singapore Press Holdings Ltd. Si 1,800 31,818
-------
STONE, CLAY, GLASS & CONCRETE - 1.6%
Siam Cement Co. Ltd. Th 258 14,298
-------
- ---------------------------------------------------------------------------------
RETAIL TRADE - 4.1%
AUTO DEALERS & GAS STATIONS - 2.1%
Cycle & Carriage Ltd. Si 1,865 18,593
-------
APPAREL & ACCESSORY STORES - 2.0%
Giordano International Ltd. HK 20,068 17,129
-------
- ---------------------------------------------------------------------------------
SERVICES - 3.8%
HOTELS, CAMPS & LODGING - 2.3%
Genting Berhad Ma 2,401 20,044
-------
MISCELLANEOUS REPAIR SERVICES - 1.5%
Keppel Corp. Si 1,500 13,364
-------
- ---------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 18.5%
COMMUNICATIONS - 9.1%
Advanced Information Services Th 800 14,164
</TABLE>
7
<PAGE>
Investment Portfolio/December 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT
COMMUNICATIONS - CONT
Hong Kong Telecommunications Ltd. HK 15,500 $ 27,662
Pt Indosat In 2,500 9,075
Philippine Long Distance Telephone, ADR Ph 100 5,413
Telekom Malaysia Berhad Ma 2,900 22,615
---------
78,929
---------
ELECTRIC SERVICES - 4.9%
Hong Kong Electric Holdings Ltd. HK 8,500 27,866
Korea Electric Power Corp. Ko 347 15,000
---------
42,866
---------
GAS SERVICES - 4.5%
Hong Kong and China Gas Co. Ltd. HK 20,000 32,202
Petronas Gas Berhad Ma 2,090 7,120
---------
39,322
---------
TOTAL COMMON STOCKS (cost of $634,561)(b) 810,879
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM OBLIGATIONS - 6.8% PAR
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with Chase Securities, Inc.,
dated 12/29/95 due 1/02/96 at 5.500% collateralized
by U.S. Treasury notes with various maturities
to 1999, market value $5,629 (repurchase
proceeds $5,505) $ 5,502 5,502
Repurchase agreement with JP Morgan Securities,
Inc., dated 12/29/95 due 1/02/96 at 5.625% collateralized
by U.S. Treasury notes with various maturities
to 1998, market value $54,486 (repurchase
proceeds $53,383) 53,350 53,350
---------
TOTAL SHORT-TERM OBLIGATIONS 58,852
---------
FORWARD CURRENCY CONTRACTS (c) - 0.0% (2)
- ------------------------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.3% 2,718
- ------------------------------------------------------------------------------------------------------
NET ASSETS - 100% $ 872,447
---------
</TABLE>
8
<PAGE>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
(c) As of December 31, 1995, the Fund had entered into the following forward
currency exchange contracts:
<TABLE>
<CAPTION>
Net Unrealized
Contracts In Exchange Settlement Depreciation
to Receive For Date (US $)
- ---------- ----- ---- ------
<S> <C> <C> <C> <C> <C>
MR 4,214 US $1,661 01/03/96 $2
SD 609 US $ 431 01/02/96 0
SD 666 US $ 471 01/03/96 0
--
$2
--
</TABLE>
<TABLE>
<CAPTION>
Summary of Securities
by Country Country Value % of Total
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Hong Kong HK $392,611 48.4
Singapore (SD) Si 174,247 21.5
Malaysia (MR) Ma 88,723 10.9
Thailand Th 77,795 9.6
Indonesia In 41,823 5.2
Korea Ko 23,247 2.9
Philippine Ph 8,082 1.0
Taiwan Tw 2,614 0.3
China Ch 1,737 0.2
-------- -----
$810,879 100.0
-------- -----
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
----------- --------
ADR American Depository Receipt
GDS Global Depository Shares
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1995
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $634,561) $810,879
Short-term obligations 58,852
--------
869,731
Cash including foreign currencies (cost $225) 225
Receivable for:
Fund shares sold 9,974
Dividends 949
Interest 28
Other 39 11,215
----- --------
Total Assets 880,946
LIABILITIES
Unrealized depreciation on forward
currency contracts 2
Payable for:
Fund shares repurchased 3,054
Investments purchased 2,651
Distributions 1,300
Accrued:
Management fee 542
Administration fee 173
Service fee - Class A, Class B, Class D 63
Distribution fee - Class B, Class D 74
Transfer agent fee 173
Bookkeeping fee 25
Other 442
-----
Total Liabilities 8,499
--------
NET ASSETS $872,447
--------
</TABLE>
10
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - CONT.
<TABLE>
<S> <C>
Net asset value & redemption price per share -
Class A ($196,870/15,803) $ 12.46
--------
Maximum offering price per share - Class A
($12.46/0.9425) $13.22(a)
--------
Net asset value & offering price per share -
Class B ($112,588/9,085) $12.39(b)
--------
Net asset value & redemption price per share -
Class D ($21,420/1,726) $12.41(b)
--------
Maximum offering price per share - Class D
($12.41/0.9900) $ 12.54
--------
Net asset value & redemption price per share -
Class T ($195,986/15,738) $ 12.45
--------
Maximum offering price per share - Class T
($12.45/0.9425) $ 13.21(a)
--------
Net asset value, offering & redemption price
per share - Class Z ($345,583/27,755) $ 12.45
--------
COMPOSITION OF NET ASSETS
Capital paid in $697,194
Undistributed net investment income 110
Accumulated net realized loss (1,175)
Net unrealized appreciation 176,318
--------
$872,447
--------
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See notes to financial statements.
11
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $11,642
Special distribution from Taiwan Fund 791
Interest 1,856
-------
Total Investment Income (net of nonrebatable
foreign taxes withheld at source which
amounted to $880) 14,289
EXPENSES
Management fee $ 4,820
Administration fee 1,442
Service fee - Class A 160
Service fee - Class B 74
Service fee - Class D 14
Distribution fee - Class B 221
Distribution fee - Class D 41
Transfer agent fee 1,814
Bookkeeping fee 165
Trustees fee 16
Custodian fee 1,058
Audit fee 41
Legal fee 85
Registration fee 175
Reports to shareholders 21
Other 108
-------
10,255
Custodian and bookkeeping credits earned (666) 9,589
------- -------
Net Investment Income 4,700
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 452
Foreign currency transactions (123)
-------
Net Realized Gain 329
Net unrealized appreciation (depreciation)
during the period on:
Investments 90,371
Foreign currency transactions (6)
-------
Net Unrealized Appreciation 90,365
-------
Net Gain 90,694
-------
Net Increase in Net Assets from Operations $95,394
-------
</TABLE>
See notes to financial statements.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands) Year ended December 31
----------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
<S> <C> <C>
Operations:
Net investment income $ 4,700 $ 2,281
Net realized gain 329 4,472
Net unrealized appreciation (depreciation) 90,365 (62,048)
--------- --------
Net Increase (Decrease) from Operations 95,394 (55,295)
--------- --------
Distributions:
From net investment income - (1,623)
From net realized gains - (4,463)
From net investment income - Class A (904) -
From net realized gains - Class A (356) -
From net investment income - Class B (308) -
From net realized gains - Class B (200) -
From net investment income - Class D (61) -
From net realized gains - Class D (38) -
From net investment income - Class T (1,295) -
From net realized gains - Class T (373) -
From net investment income - Class Z (2,234) -
From net realized gains - Class Z (657) -
--------- --------
88,968 (61,381)
--------- --------
Fund Share Transactions (a)(b):
Receipts for shares sold - Class A 303,747 -
Value of distributions reinvested - Class A 1,039 -
Cost of shares repurchased - Class A (116,002) -
--------- --------
188,784 -
--------- --------
Receipts for shares sold - Class B 119,409 -
Value of distributions reinvested - Class B 463 -
Cost of shares repurchased - Class B (11,187) -
--------- --------
108,685 -
--------- --------
Receipts for shares sold - Class D 21,584 -
Value of distributions reinvested - Class D 90 -
Cost of shares repurchased - Class D (985) -
--------- --------
20,689 -
--------- --------
Receipts for shares sold - Class T 38,724 -
Value of distributions reinvested - Class T 1,402 -
Cost of shares repurchased - Class T (67,684) -
--------- --------
(27,558) -
--------- --------
Receipts for shares sold - Class Z 247,737 -
Value of distributions reinvested - Class Z 2,257 -
Cost of shares repurchased - Class Z (213,356) -
--------- --------
36,638 -
--------- --------
</TABLE>
(a) Class A, Class B and Class D shares were initially offered on April 1, 1995.
(b) See Note 4 in Notes to Financial Statements.
Statement of Changes in Net Assets continued on following page.
See notes to financial statements.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
<TABLE>
<CAPTION>
Year ended December 31
----------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
<S> <C> <C>
Fund Share Transactions (a)(b) - Cont.
Sold $ - $ 300,921
Reinvested - 4,992
Repurchased - (183,174)
-------- ---------
Net Increase from Fund Share Transactions 327,238 122,739
-------- ---------
Total Increase 416,206 61,358
NET ASSETS
Beginning of period 456,241 394,883
-------- ---------
End of period (including undistributed net
investment income of $110 and $658, respectively) $872,447 $ 456,241
-------- ---------
NUMBER OF FUND SHARES (a)(b)
Sold - Class A 25,291 -
Issued for distributions reinvested - Class A 84 -
Repurchased - Class A (9,572) -
-------- ---------
15,803 -
-------- ---------
Sold - Class B 9,978 -
Issued for distributions reinvested - Class B 38 -
Repurchased - Class B (931) -
-------- ---------
9,085 -
-------- ---------
Sold - Class D 1,802 -
Issued for distributions reinvested - Class D 7 -
Repurchased - Class D (83) -
-------- ---------
1,726 -
-------- ---------
Sold - Class T 3,591 -
Issued for distributions reinvested - Class T 116 -
Repurchased - Class T (6,016) -
-------- ---------
(2,309) -
-------- ---------
Sold - Class Z 22,635 -
Issued for distributions reinvested - Class Z 187 -
Repurchased - Class Z (19,250) -
-------- ---------
3,572 -
-------- ---------
Sold - 26,589
Reinvested - 468
Repurchased - (16,576)
-------- ---------
Net Increase in Shares Outstanding 27,877 10,481
-------- ---------
</TABLE>
(a) Class A, Class B and Class D shares were initially offered on April 1, 1995.
(b) See Note 4 in Notes to Financial Statements.
See notes to financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1. ACCOUNTING POLICIES
...........................................................................
ORGANIZATION: Colonial Newport Tiger Fund (formerly Newport Tiger Fund)
(the Fund), a series of Colonial Trust VII, is a diversified portfolio of a
Massachusetts business trust, registered under the Investment Company Act
of 1940, as amended, as an open-end, management investment company. The
Fund seeks capital appreciation by investing primarily in equity securities
of companies located in the nine Tigers of Asia (Hong Kong, Singapore,
South Korea, Taiwan, Malaysia, Thailand, Indonesia, China and the
Philippines). The Fund may issue an unlimited number of shares. The Fund
offers 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 on the purchase of Class T shares and Class Z shares,
please refer to a prospectus.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies that are
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there were
no sales during the day, at current quoted bid prices. In certain countries, the
Fund may hold foreign designated shares. If the foreign share prices are not
readily available as a result of limited share activity, the securities are
valued at the last sale price of the local shares in the principal market in
which such securities are normally traded. Korean equity securities that have
reached the limit for aggregate foreign ownership and for which premiums to the
local exchange prices may be paid by foreign investors are valued by applying a
broker quoted premium to the local share price.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. In certain countries,
the Fund may hold
15
<PAGE>
Notes to Financial Statements/December 31, 1995
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
................................................................................
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, sold or mature.
Cost is determined and gains and losses are based upon the first-in, first-out
basis for both financial statement and federal income tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class A, Class B and Class D service fee and Class B
and Class D distribution fee), realized and unrealized gains (losses) are
allocated to each class proportionately on a daily basis for purposes of
determining the net asset value of each class.
Class A, Class B and Class D per share data was calculated using average shares
outstanding during the period. In addition, Class A, Class B and Class D net
investment income per share data reflects the service fee per share applicable
to Class A, Class B and Class D shares and the distribution fee applicable to
Class B and Class D shares only.
Class A, Class B and Class D ratios are calculated by adjusting the expense and
net investment income ratios for the Fund for the entire period by the service
fee applicable to Class A, Class B and Class D shares and the distribution fee
applicable to Class B and Class D shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryovers) under income tax regulations.
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
(losses) between trade and settlement dates on securities transactions, gains
(losses) arising from the disposition of foreign currency, and currency gains
(losses) between the accrual and payment dates on dividends and interest income
and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) from investments.
16
<PAGE>
Notes to Financial Statements/December 31, 1995
- -------------------------------------------------------------------------------
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 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: Under an administration agreement, Commonwealth Shareholder
Services Inc., ("CSS") provided administrative services to the Fund through
March 31, 1995. Administration fees paid during the period January 1 through
March 31, 1995 amounted to $203,700. Effective April 1, 1995, Colonial
Management Associates, Inc. (the Administrator) became the Administrator of the
Fund furnishing accounting and other services for a monthly fee equal to 0.25%
of the Fund's average net assets.
17
<PAGE>
Notes to Financial Statements/December 31, 1995
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
................................................................................
BOOKKEEPING FEE: For the period ending April 30, 1995, the custodian provided
pricing and bookkeeping services for the Fund. 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: During the period January 1 through March 31, 1995, Fund's
Services Inc. ("FSI"), provided transfer agency services to the Fund pursuant to
a service agreement with the Fund. Fees under this agreement for the period
ended March 31, 1995 amounted to $125,639. Effective April 1, 1995, 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: Newport Distributors,
Inc. ("NDI"), a subsidiary of the Adviser, was the principal underwriter of the
Fund through March 31, 1995. The Fund has been advised that for the period
January 1, 1995 through March 31, 1995, NDI received $99,117 in aggregate
commissions from the Fund. Effective April 1, 1995, Colonial Investment
Services, Inc., (the Distributor), an affiliate of the Administrator, became the
Fund's principal underwriter. For the period April 1, 1995 through December 31,
1995 the Fund has been advised that the Distributor retained net underwriting
discounts of $406,643 on the sales of the Fund's Class A, Class D and Class T
shares and received contingent deferred sales charges of $38,726 and $4,637 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 NDI and the Distributor for amounts paid by NDI and 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 December 31, 1995, the Fund's operating expenses did not
exceed the 1.55% expense limit.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser or Administrator.
18
<PAGE>
Notes to Financial Statements/December 31, 1995
- --------------------------------------------------------------------------------
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 3. PORTFOLIO INFORMATION
................................................................................
INVESTMENT ACTIVITY: During the year ended December 31, 1995, purchases and
sales of investments, other than short-term obligations, were $330,939,286 and
$33,518,878, respectively.
Unrealized appreciation (depreciation) at December 31, 1995, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 193,059,588
Gross unrealized depreciation (16,741,675)
---------------
Net unrealized appreciation $ 176,317,913
---------------
</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.
NOTE 4. REORGANIZATION
................................................................................
Newport Tiger Fund, a series of The World Funds, Inc., a Maryland Corporation,
was reorganized on April 1, 1995 as the Colonial Newport Tiger Fund, a series of
Colonial Trust VII (formerly Liberty Financial Trust) a Massachusetts business
trust. Under the plan of reorganization all of the Newport Tiger Fund's assets
were transferred, subject to its liabilities, in exchange for shares in the
Colonial Newport Tiger Fund. Under the plan, existing Newport Tiger Fund
shareholders received newly issued Class T or Class Z shares of Colonial Newport
Tiger Fund. The Financial Highlights and capital stock activity for Class T and
Class Z shares is presented as if the reorganization occurred on January 1,
1995.
19
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Year ended December 31
----------------------------------------------------------------------------------
1995
Class A (a) Class B (a) Class D (a) Class T (b) Class Z (b)
---------- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 10.860 $ 10.860 $ 10.860 $ 10.800 $ 10.800
-------- --------- ------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income 0.067 (0.003) (0.003) 0.099(d) 0.099(d)
Net realized and
unrealized gain(loss) 1.617 1.594 1.615 1.656 1.656
-------- --------- ------- -------- --------
Total from Investment
Operations 1.684 1.591 1.612 1.755 1.755
-------- --------- ------- -------- --------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net
investment income (0.060) (0.037) (0.038) (0.081) (0.081)
From net
realized gains (0.024) (0.024) (0.024) (0.024) (0.024)
In excess of net
investment income -- -- -- -- --
-------- --------- ------- -------- --------
Total Distributions
Declared to
Shareholders (0.084) (0.061) (0.062) (0.105) (0.105)
-------- --------- ------- -------- --------
Net asset value -
End of period $ 12.460 $ 12.390 $ 12.410 $ 12.450 $ 12.450
-------- --------- ------- -------- --------
Total return (e) 16.27%(f) 14.65%(f) 14.85%(f) 16.28% 16.28%
-------- --------- ------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.37%(f)(g) 1.93 %(f)(g) 1.93 %(f)(g) 1.60%(g) 1.60%(g)
Net investment income 0.28%(f)(g) (0.28)%(f)(g) (0.28)%(f)(g) 0.75% 0.75%
Portfolio turnover 4% 4 % 4 % 4% 4%
Net assets at end
of period (000) $196,870 $112,588 $21,420 $195,986 $345,583
</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) Newport Tiger Fund was reorganized as Colonial Newport Tiger Fund on April
1, 1995. Under the plan of reorganization, existing shareholders of Newport
Tiger Fund received Class T or Class Z shares of Colonial Newport Tiger
Fund. The financial highlights for Classes T and Z are presented as if the
reorganization had occurred on January 1, 1995.
(c) Reflects 2 for 1 stock split effective November 29, 1993.
(d) Includes distribution from Taiwan Fund which amounted to $ 0.013 of per
share.
(e) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
20
<PAGE>
FINANCIAL STATEMENTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------
1994 1993(c) 1992(c) 1991
------------ ------------ ------------ ------------
<S> <C> <C> <C>
$ 12.440 $ 7.120 $ 5.860 $ 4.650
------------ ------------ ------------ ------------
0.060 0.040 0.020 (0.020)
(1.550) 5.330 1.270 1.230
------------ ------------ ------------ ------------
(1.490) 5.370 1.290 1.210
------------ ------------ ------------ ------------
(0.040) (0.040) (0.020) --
(0.110) (0.010) -- --
-- -- (0.010) --
------------ ------------ ------------ ------------
(0.150) (0.050) (0.030) --
------------ ------------ ------------ ------------
$ 10.800 $ 12.440 $ 7.120 $ 5.860
------------ ------------ ------------ ------------
(11.96)% 75.45% 22.02% 26.02%
------------ ------------ ------------ ------------
1.29% 1.56% 1.85% 2.49%
0.57% 0.59% 0.36% (0.40)%
8% 11% 17% 59%
$ 456,241 $ 394,883 $ 98,836 $ 26,401
</TABLE>
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had an impact of 0.07% on Class A, Class B and Class D: 0.11%
on Class T and Class Z. Prior year ratios are net of benefits received, if
any.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST VII AND THE SHAREHOLDERS OF
COLONIAL NEWPORT TIGER FUND
In our opinion, the accompanying statement of assets and liabilities,
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 Colonial Newport Tiger Fund (the "Fund") (a series of Colonial
Trust VII) at December 31, 1995, the results of its operations, the changes in
its net assets and the financial highlights for the year then ended, 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 audit. We
conducted our audit 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 audit, which included confirmation of investments owned at December 31,
1995, provides a reasonable basis for the opinion expressed above. The
Statement of Changes in Net Assets for the year ended December 31, 1994 and the
Financial Highlights for each of the periods then ended were audited by another
Independent Accountant whose report, dated January 25, 1995, expressed an
unqualified opinion on those statements.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 9, 1996
22
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Newport Tiger Fund is:
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]
Mutual Funds for
Planned Portfolios
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)
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
------------------------------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
------------------------------------------
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
NT-02/697B-1231 (2/96)
