[Front Cover]
[Photo of Bengal Tiger]
COLONIAL NEWPORT TIGER FUND Annual report
December 31, 1997
Not FDIC May Lose Value
Insured No Bank Guarantee
<PAGE>
COLONIAL NEWPORT TIGER FUND HIGHLIGHTS
JANUARY 1, 1997 - DECEMBER 31, 1997
Investment Objective: Colonial Newport Tiger 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.
Portfolio Manager Commentary: "A currency crisis in Southeast Asia during the
period caused many markets to decline more than 60%. However, our top-down
investment process, which first focuses on investing in the most fundamentally
sound countries, resulted in investing the bulk of the Fund's assets in Hong
Kong and Singapore -- countries whose markets suffered much smaller declines.
-- Jack Mussey & Tim Tuttle
Colonial Newport Tiger Fund Performance(1)
12-month total returns, Net asset value per
Inception dates assuming no sales charge share on 12/31/97
- -------------------------------------------------------------------------------
Class A 5/31/89 (33.95) % $9.02
- -------------------------------------------------------------------------------
Class B 4/1/95 (34.41) % $8.92
- -------------------------------------------------------------------------------
Class C 4/1/95 (34.36) % $8.94
- -------------------------------------------------------------------------------
Class T 5/31/89 (33.76) % $9.01
- -------------------------------------------------------------------------------
Class Z 5/31/89 (33.76) % $9.01
- -------------------------------------------------------------------------------
(1)The Fund was originally introduced on 5/31/89 and became Colonial Newport
Tiger Fund on 4/1/95, at which time Class A, B, C, T and Z shares were
offered.
Top Five Countries(2) Top Five Sectors(2)
(as of 12/31/97 (as of 12/31/97)
- -------------------------------------------------------------------------------
1. Hong Kong ..... 69.9% 1. Financials ............ 32.0%
2. Singapore ..... 20.4% 2. Utilities ............. 22.6%
3. Philippines ... 3.0% 3. Consumer Cyclicals .... 14.5%
4. Malaysia ...... 2.8% 4. Capital Goods ......... 10.2%
5. Indonesia ..... 1.0% 5. Transportation ........ 7.3%
(2)Country and sector weightings are calculated as a percentage of total net
assets. Because the Fund is actively managed, there can be no guarantee it
will continue to maintain these country and sector weightings in the future.
Industry sectors in the following financial statements are based upon the
standard industrial classifications (SIC) published by the U.S. Office of
Management and Budget. The sector classifications used on this page are
based upon Newport's defined criteria used in the investment process.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF HAROLD W. COGGER]
The economies of the Pacific Rim dominated headlines during the second half of
1997. The Thai currency collapse in July quickly developed into currency
devaluations throughout the region. In turn, declining currencies exposed credit
problems and a widespread need for financial restructuring, in several cases
including the assistance of the International Monetary Fund (IMF).
Although economic conditions varied by country across the region, each market
experienced significant volatility. Market declines in Thailand, Korea,
Malaysia, Indonesia and the Philippines were driven in large part by
deteriorating investment fundamentals, weakening currencies and a loss of export
competitiveness. Unfortunately, the market declines were not limited to these
nations as the fear of declining markets spilled over into the fundamentally
strong markets of Hong Kong and Singapore. Shaken investor confidence resulted
in institutional selling, particularly in Hong Kong where large investments
could be liquidated quickly.
The long-term benefits of investing in an international fund include an
opportunity to diversify your core portfolio. While we believe each of the nine
Tiger markets of Asia will grow and contract at different rates, we also believe
that opportunities are available in these markets for long-term investors.
Progress towards higher standards of living as well as improved infrastructures
in the Tiger countries may indicate opportunities for improving long-term market
conditions. Going forward, one of the keys to uncovering investment
opportunities in the Tiger markets will be thorough country analysis and careful
security selection.
Effective April 30, 1998, Colonial Newport Tiger Fund will be renamed Newport
Tiger Fund. This new name does not change the Fund's investment approach or
management style, but rather underscores Newport Fund Management's position as a
leader in Asian investing.
Thank you for giving us the opportunity to serve your investment needs.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
February 9, 1998
Because market conditions change frequently, there can be no assurance that the
trends described here will continue.
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
[Photos of Jack Mussey and Tim Tuttle -- portfolio co-managers]
Jack Mussey and Tim Tuttle are portfolio co-managers of Colonial Newport Tiger
Fund. Mr. Mussey is president and chief executive officer of Newport Fund
Management, Inc. and has more than 20 years of experience investing in Asian
markets. He is a Chartered Financial Analyst and a member of the Security
Analysts of San Francisco. Mr. Mussey 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. Mr. Tuttle is managing director of Newport Fund Management, Inc. and also
has more than 20 years of experience investing in Asian markets. He is a
Chartered Financial Analyst and he received a B.A. from Williams College in
1964.
Volatile Southeast Asian investment environment
challenged performance
A collapse of Thailand's currency sparked a downturn in much of Southeast Asia
during the second half of 1997. What we expected to be isolated market
corrections in the overheated economies of Thailand, Indonesia and Malaysia
turned into a free-fall for nearly all Asian currencies and markets. Many Tiger
markets lost over 60% of their U.S. dollar value during this period, including
Thailand (76%), Indonesia (72%), Korea (70%), Malaysia (69%) and the Philippines
(61%). However, at the end of the period the Fund had over 60% of its assets
invested in Hong Kong and approximately 20% invested in Singapore. These markets
represented the two strongest Asian economies, although for the period they
suffered declines of 20% and 30%, respectively.
As a result, during this period the Fund generated a negative total return of
33.95% for Class A shares, based on net asset value. This performance was
stronger than its Lipper peer group average, which had a negative return of
35.52%.
This is not the first Asian market crisis that we have experienced, and we don't
expect that it will be the last. For example, Hong Kong has experienced three
corrections of over 40% during the 20 years ended December 31, 1996, yet, has
achieved impressive average annual total returns of 15.6% over the same period.
High quality, long-term investment philosophy shielded
the Fund from the worst of the region's decline
Our top-down investment approach, whereby we first select the highest quality
countries followed by the highest quality companies within those countries,
served the portfolio well. We began the period with a sizable investment in Hong
Kong and Singapore. Both markets contain quality growth companies with strong
balance sheets -- the kind of companies we favor. However, as the Thai currency
crisis emerged and unmasked a precarious banking system, we suspected its
potential spread to other markets and we retrenched, shifting additional assets
into Hong Kong and Singapore. We
4
<PAGE>
viewed the banking systems in these countries to be considerably stronger with
better capitalization and larger, more liquid reserves. Accordingly, we
increased positions in several banking institutions including Hang Seng Bank,
Singapore's Development Bank and Oversea-Chinese Banking Corp. We believe that
each of these banks has the ability to acquire assets and loans in troubled
areas, allowing them to build and acquire market share inexpensively.
Portfolio's investments represent high quality growth opportunities
We've reduced the number of stocks in the portfolio since the last annual
report, from 49 to 34. These stocks represent companies that we believe are
among the best-managed, best-capitalized growth businesses in Asia. In
particular, we believe the utility sector has strong growth potential. In Hong
Kong, utilities enjoy a favorable regulatory environment as well as steady
demand that we expect will increase as residential building activity increases.
Two of our investments in this sector are Hong Kong and China Gas Co., Ltd. and
Hong Kong Electric Holdings, Ltd.
We also believe that Hong Kong will benefit in the long term from its
association with China. China's huge economy is rich in terms of foreign
reserves, high savings and significant export activity. More importantly, we
believe China has both the political capability and the will to stimulate its
economy. We expect lower interest rates, more accessible credit and improved
liquidity. In addition, strong, ongoing productivity gains make Chinese exports
very competitive with those of other nations. We anticipate that many Hong Kong
companies will experience increased business and asset flows from China's
growing economy.
Looking ahead
While the magnitude of the Asian market and currency declines of 1997 indicates
serious financial problems, we are hopeful that this crisis should pass.
However, we are not comfortable predicting a quick turnaround in the seriously
weak economies of Thailand, Indonesia and South Korea. We question the will of
their government to take the painful steps of economic restructuring that may
result in political or social unrest. On the other hand, currencies should
stabilize as imports stagnate and exports grow. This could attract foreign
capital to recapitalize the banking and industrial sectors of these economies.
In keeping with our quality philosophy, we currently intend to continue to
emphasize Hong Kong and Singapore in the portfolio. Weakness in these two
markets over the past six months has resulted from a spillover of shaken
investor trust in the region. We are confident that Hong Kong should continue to
defend its currency and that weakness resulting from market speculators will be
dealt with swiftly by the Hong Kong Currency Board. Over the long term, we
believe that Hong Kong will benefit from its commitment to its currency, a
growing property development sector and its close connection with China.
We believe that over the long term, the Tiger markets should once again generate
attractive returns and we appreciate your patience and long term support.
5
<PAGE>
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 - 12/31/97 Based on NAV and POP
[Mountain Chart]
CLASS A SHARES
- -------------------------------------------------------------------------------
NAV POP MSCI EAFE
5/89(3) 10,000 9,425 10,000
6/30/89 9,940 9,368 10,186
7/31/89 10,240 9,651 11,339
8/31/89 10,040 9,463 11,081
9/30/89 10,310 9,717 11,509
10/31/89 10,060 9,482 10,965
11/30/89 10,420 9,821 11,533
12/31/89 11,080 10,443 12,404
1/31/90 11,200 10,556 12,180
2/28/90 11,360 10,707 11,637
3/31/90 11,180 10,537 11,260
4/30/90 10,537 9,931 11,111
5/31/90 11,561 10,896 11,940
6/30/90 11,842 11,161 12,062
7/31/90 12,494 11,776 12,369
8/31/90 10,688 10,073 11,024
9/30/90 9,012 8,494 9,496
10/31/90 9,664 9,109 10,678
11/30/90 9,243 8,711 10,210
12/31/90 9,403 8,862 10,216
1/31/91 9,757 9,196 10,497
2/28/91 10,626 10,015 11,596
3/31/91 10,990 10,358 10,817
4/30/91 11,364 10,711 10,849
5/31/91 11,657 10,987 11,090
6/30/91 11,435 10,777 10,226
7/31/91 11,678 11,006 10,652
8/31/91 11,202 10,558 10,580
9/30/91 10,990 10,358 11,037
10/31/91 11,152 10,511 11,005
11/30/91 11,496 10,835 10,696
12/31/91 11,849 11,168 11,312
1/31/92 12,557 11,835 11,216
2/29/92 12,951 12,207 11,064
3/31/92 12,618 11,892 10,519
4/30/92 13,336 12,569 10,610
5/31/92 14,215 13,398 11,235
6/30/92 14,246 13,426 10,869
7/31/92 13,922 13,122 10,484
8/31/92 13,386 12,616 11,006
9/30/92 13,528 12,750 10,602
10/31/92 14,963 14,103 10,172
11/30/92 14,812 13,960 10,222
12/31/92 14,458 13,627 10,220
1/31/93 14,915 14,057 10,338
2/28/93 15,747 14,841 10,700
3/31/93 15,818 14,908 11,430
4/30/93 17,025 16,046 12,483
5/31/93 17,492 16,486 12,678
6/30/93 17,127 16,142 12,459
7/31/93 17,106 16,123 12,834
8/31/93 18,141 17,098 13,774
9/30/93 18,506 17,442 13,485
10/31/93 21,479 20,244 13,856
11/30/93 21,084 19,871 12,752
12/31/93 25,350 23,892 13,649
1/31/94 24,189 22,798 14,693
2/28/94 22,946 21,626 14,612
3/31/94 20,622 19,437 14,403
4/30/94 22,069 20,800 15,130
5/31/94 23,109 21,780 14,783
6/30/94 21,865 20,608 14,776
7/31/94 23,007 21,684 15,119
8/31/94 24,352 22,951 15,376
9/30/94 24,209 22,817 14,835
10/31/94 24,515 23,105 15,286
11/30/94 22,558 21,261 14,605
12/31/94 22,317 21,034 14,715
1/31/95 20,106 18,950 14,338
2/28/95 21,987 20,722 14,322
3/31/95 22,462 21,171 14,971
4/30/95 22,504 21,210 15,640
5/31/95 25,151 23,705 15,489
6/30/95 24,820 23,393 15,316
7/31/95 25,420 23,958 16,317
8/31/95 24,572 23,159 15,636
9/30/95 25,027 23,588 15,821
10/31/95 24,862 23,432 15,363
11/30/95 24,924 23,491 15,686
12/31/95 25,948 24,456 16,358
1/31/96 28,447 26,811 16,565
2/29/96 28,447 26,811 16,615
3/31/96 28,239 26,615 16,835
4/30/96 28,135 26,517 17,359
5/31/96 27,989 26,380 17,103
6/30/96 27,364 25,791 17,237
7/31/96 25,823 24,338 16,742
8/31/96 26,760 25,222 16,733
9/30/96 27,552 25,967 17,193
10/31/96 27,364 25,791 17,005
11/30/96 28,801 27,145 17,732
12/31/96 28,786 27,131 17,605
1/31/97 28,597 26,953 17,274
2/28/97 28,556 26,914 17,394
3/31/97 26,797 25,256 17,725
4/30/97 26,315 24,802 17,682
5/31/97 28,660 27,012 18,603
6/30/97 29,858 28,142 19,711
7/31/97 30,320 28,577 20,145
8/31/97 25,134 23,689 18,700
9/30/97 26,100 24,599 19,901
10/31/97 19,738 18,603 18,431
11/30/97 19,213 18,108 18,355
12/31/97 19,012 17,919 18,621
[Mountain Chart]
CLASS T SHARES
- -------------------------------------------------------------------------------
5/89(3) 10,000 9,425 10,000
6/30/89 9,940 9,368 10,186
7/31/89 10,240 9,651 11,339
8/31/89 10,040 9,463 11,081
9/30/89 10,310 9,717 11,509
10/31/89 10,060 9,482 10,965
11/30/89 10,420 9,821 11,533
12/31/89 11,080 10,443 12,404
1/31/90 11,200 10,556 12,180
2/28/90 11,360 10,707 11,637
3/31/90 11,180 10,537 11,260
4/30/90 10,537 9,931 11,111
5/31/90 11,561 10,896 11,940
6/30/90 11,842 11,161 12,062
7/31/90 12,494 11,776 12,369
8/31/90 10,688 10,073 11,024
9/30/90 9,012 8,494 9,496
10/31/90 9,664 9,109 10,678
11/30/90 9,243 8,711 10,210
12/31/90 9,403 8,862 10,216
1/31/91 9,757 9,196 10,497
2/28/91 10,626 10,015 11,596
3/31/91 10,990 10,358 10,817
4/30/91 11,364 10,711 10,849
5/31/91 11,657 10,987 11,090
6/30/91 11,435 10,777 10,226
7/31/91 11,678 11,006 10,652
8/31/91 11,202 10,558 10,580
9/30/91 10,990 10,358 11,037
10/31/91 11,152 10,511 11,005
11/30/91 11,496 10,835 10,696
12/31/91 11,849 11,168 11,312
1/31/92 12,557 11,835 11,216
2/29/92 12,951 12,207 11,064
3/31/92 12,618 11,892 10,519
4/30/92 13,336 12,569 10,610
5/31/92 14,215 13,398 11,235
6/30/92 14,246 13,426 10,869
7/31/92 13,922 13,122 10,484
8/31/92 13,386 12,616 11,006
9/30/92 13,528 12,750 10,602
10/31/92 14,963 14,103 10,172
11/30/92 14,812 13,960 10,222
12/31/92 14,458 13,627 10,220
1/31/93 14,915 14,057 10,338
2/28/93 15,747 14,841 10,700
3/31/93 15,818 14,908 11,430
4/30/93 17,025 16,046 12,483
5/31/93 17,492 16,486 12,678
6/30/93 17,127 16,142 12,459
7/31/93 17,106 16,123 12,834
8/31/93 18,141 17,098 13,774
9/30/93 18,506 17,442 13,485
10/31/93 21,479 20,244 13,856
11/30/93 21,084 19,871 12,752
12/31/93 25,350 23,892 13,649
1/31/94 24,189 22,798 14,693
2/28/94 22,946 21,626 14,612
3/31/94 20,622 19,437 14,403
4/30/94 22,069 20,800 15,130
5/31/94 23,109 21,780 14,783
6/30/94 21,865 20,608 14,776
7/31/94 23,007 21,684 15,119
8/31/94 24,352 22,951 15,376
9/30/94 24,209 22,817 14,835
10/31/94 24,515 23,105 15,286
11/30/94 22,558 21,261 14,605
12/31/94 22,317 21,034 14,715
1/31/95 20,106 18,950 14,338
2/28/95 21,987 20,722 14,322
3/31/95 22,483 21,190 14,971
4/30/95 22,483 21,190 15,640
5/31/95 25,131 23,686 15,489
6/30/95 24,800 23,374 15,316
7/31/95 25,420 23,958 16,317
8/31/95 24,572 23,159 15,636
9/30/95 25,027 23,588 15,821
10/31/95 24,862 23,432 15,363
11/30/95 24,944 23,510 15,686
12/31/95 25,950 24,458 16,358
1/31/96 28,472 26,835 16,565
2/29/96 28,472 26,835 16,615
3/31/96 28,264 26,639 16,835
4/30/96 28,181 26,560 17,359
5/31/96 28,035 26,423 17,103
6/30/96 27,430 25,853 17,237
7/31/96 25,888 24,399 16,742
8/31/96 26,805 25,264 16,733
9/30/96 27,618 26,030 17,193
10/31/96 27,451 25,873 17,005
11/30/96 28,868 27,208 17,732
12/31/96 28,866 27,206 17,605
1/31/97 28,698 27,048 17,274
2/28/97 28,656 27,008 17,394
3/31/97 26,893 25,346 17,725
4/30/97 26,431 24,911 17,682
5/31/97 28,782 27,127 18,603
6/30/97 30,007 28,282 19,711
7/31/97 30,449 28,698 20,145
8/31/97 25,248 23,796 18,700
9/30/97 26,238 24,729 19,901
10/31/97 19,836 18,696 18,431
11/30/97 19,331 18,219 18,355
12/31/97 19,120 18,020 18,621
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 12/31/97:
Class B w/CDSC (inception 4/1/95) $8,038; Class C (inception 4/1/95) $8,301;
Class Z (inception 5/31/89) $19,120. The Morgan Stanley Capital International
Europe, Australia and Far East GDP Index is a broad-based, unmanaged index that
tracks the performance of foreign stocks. Unlike mutual funds, an index is not
an investment, does not incur fees or expenses and is not professionally
managed.
Average Annual Total Returns
as of December 31, 1997
- -------------------------------------------------------------------------------
1 year 5 years Since inception
- -------------------------------------------------------------------------------
Class A (Inception 5/31/89)
NAV (33.95)% 5.63% 7.76%
POP (37.75)% 4.39% 7.02%
- -------------------------------------------------------------------------------
Class B (Inception 4/1/95)
NAV (34.41)% -- (6.60)%
w/CDSC (37.68)% -- (7.62)%
- -------------------------------------------------------------------------------
Class C(4) (Inception 4/1/95)
NAV (34.36)% -- (6.53)%
w/CDSC (35.01)% -- (6.53)%
- -------------------------------------------------------------------------------
Class T (Inception 5/31/89)
NAV (33.76)% 5.75% 7.84%
POP (37.57)% 4.50% 7.09%
- -------------------------------------------------------------------------------
Class Z (Inception 5/31/89)
NAV (33.76)% 5.75% 7.84%
- -------------------------------------------------------------------------------
(3)The Fund was originally introduced on 5/31/89 and became Colonial Newport
Tiger Fund on 4/1/95. Class A,B, C, T and Z shares were offered at that time.
Total returns shown for Class A,T and Z shares include performance prior to
Fund conversion, at which time there was no 12b-1 fee on Class A shares. Past
performance cannot predict future results. Returns and value of an investment
will vary, resulting in a gain or loss on sale. All results shown assume
reinvestment of all distributions. Net asset value (NAV) returns do not
include sales charges or contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 5.75%. The
CDSC returns reflect the maximum applicable charges of 5% for one year and 3%
since inception for Class B shares and 1% for one year for Class C shares.
(4)On July 1, 1997, Class D shares were redesignated Class C shares. Consult a
current prospectus for more information.
6
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 97.4% COUNTRY SHARES VALUE
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 62.0%
Depository Institutions - 20.6%
Development Bank of Singapore Ltd. Si 5,168 $ 44,231
HSBC Holdings PLC HK 2,500 61,630
Hang Seng Bank HK 6,500 62,711
Oversea-Chinese Banking Corp. Ltd Si 6,768 39,422
------------
207,994
------------
Holding & Other Investment Companies - 21.0%
Cheung Kong Holdings Ltd. HK 9,500 62,227
Citic Pacific Ltd. HK 14,095 56,032
Guangdong Investments HK 44,000 29,247
Hutchison Whampoa Ltd. HK 9,720 60,971
Taiwan Fund, Inc. Tw 227 3,737
------------
212,214
------------
Insurance Carriers - 0.5%
National Mutual Asia Ltd. HK 5,000 4,969
------------
Real Estate - 19.9%
Ayala Land Inc., Class B Ph 3,750 1,482
China Resources Enterprises Ltd. HK 10,000 22,329
City Developments Ltd. Si 7,993 37,055
Filinvest Development Corp. Ph 23,000 1,931
New World Development Co. Ltd. HK 12,170 42,097
SM Prime Holdings, Inc. Ph 28,000 4,148
Sun Hung Kai Properties Ltd. HK 7,000 48,788
Swire Pacific Ltd., Series A HK 8,000 43,884
------------
201,714
------------
..................................................................................................
MANUFACTURING - 5.8%
Fabricated Metal - 0.3%
Kian Joo Can Factory Berhad Ma 3,300 2,939
------------
Measuring & Analyzing Instruments - 1.0%
China Hong Kong Photo Product HK 30,100 7,537
PT Modern Photo Film Reg. In 8,010 2,309
------------
9,846
------------
Printing & Publishing - 4.3%
Singapore Press Holdings Ltd. Si 3,500 43,893
------------
Rubber & Plastic - 0.2%
Nylex Malaysia Berhad Ma 4,500 1,726
------------
7
<PAGE>
Investment Portfolio/December 31, 1997
--------------------------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
--------------------------------------------------------------------------------------------------
RETAIL TRADE - 1.8%
Apparel & Accessory Stores - 0.7%
Giordano International Ltd. HK 21,555 $ 7,442
-----------
Auto Dealers & Gas Stations - 1.1%
Cycle & Carriage Ltd. Si 2,665 11,009
-----------
.................................................................................................
SERVICES - 4.3%
Hotels, Camps & Lodging - 1.3%
Genting Berhad Ma 5,299 13,301
-----------
Miscellaneous Repair Services - 3.0%
Keppel Corp. Si 10,625 30,565
-----------
.................................................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 22.8%
Communications - 6.2%
Hong Kong Telecommunications Ltd. HK 15,711 32,343
PT Telekomunikasi Indonesia In 14,500 7,642
Philippine Long Distance Telephone ADR Ph 1,000 22,500
-----------
62,485
-----------
Electric Services - 7.5%
Hong Kong Electric Holdings Ltd. HK 20,000 76,022
-----------
Gas Services - 9.1%
Hong Kong and China Gas Co. Ltd. HK 42,368 82,026
Petronas Gas Berhad Ma 4,590 10,457
-----------
92,483
-----------
.................................................................................................
WHOLESALE TRADE - 0.7%
Durable Goods
Li & Fung Ltd. HK 5,010 7,016
-----------
TOTAL COMMON STOCKS (cost of $1,167,312)(a) 985,618
-----------
SHORT-TERM OBLIGATIONS - 4.1% PAR
------------------------------------------------------------------------------------------------
Repurchase agreement with ABN Amro Chicago Corp., dated 12/31/97 due
01/02/98 at 6.600% collateralized by U.S. Treasury notes with
maturities to 2000, market value $42,362 (repurchase
proceeds $41,462) $ 41,447 41,447
------------
OTHER ASSETS & LIABILITIES, NET - (1.5)% (15,586)
-------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 1,011,479
============
</TABLE>
8
<PAGE>
Investment Portfolio/December 31, 1997
-----------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
-----------------------------------------------------------------------------
(a) Cost for federal income tax purposes is the same.
Summary of Securities
by Country Country Value % of Total
-----------------------------------------------------------------------------
Hong Kong HK $ 707,271 71.8
Singapore Si 206,175 20.9
Philippines Ph 30,061 3.0
Malaysia Ma 28,423 2.9
Indonesia In 9,951 1.0
Taiwan Tw 3,737 0.4
---------- -----------
$ 985,618 100.0
========== ===========
Certain securities are listed by country of underlying exposure but
may trade predominantly on other exchanges.
Acronym Name
-------------- --------------------
ADR American Depositary Receipt
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1997
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $1,167,312) $ 985,618
Short-term obligations 41,447
----------
1,027,065
Cash including foreign currencies (cost $796) $ 747
Receivable for:
Dividends 2,782
Fund shares sold 2,424
Investments sold 619
Interest 8
Other 29 6,609
-------- ----------
Total Assets 1,033,674
LIABILITIES
Payable for:
Fund shares repurchased 20,144
Accrued:
Management fee 697
Administration fee 226
Service fee - Class A, Class B, Class C 158
Distribution fee - Class B 240
Distribution fee - Class C 41
Transfer agent fee 222
Bookkeeping fee 32
Deferred Trustees fees 1
Other 434
--------
Total Liabilities 22,195
-----------
NET ASSETS $1,011,479
===========
Continued on next page.
See notes to financial statements.
10
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - CONT.
Net asset value & redemption price per share -
Class A ($323,407/35,853) $9.02
==========
Maximum offering price per share - Class A
($9.02/0.9425) $9.57(a)
==========
Net asset value & offering price per share -
Class B ($362,442/40,633) $8.92(b)
==========
Net asset value & offering price per share -
Class C ($62,703/7,017) $8.94(b)
==========
Net asset value & redemption price per share -
Class T ($82,095/9,107) $9.01
==========
Maximum offering price per share - Class T
($9.01/0.9425) $9.56(a)
==========
Net asset value, offering & redemption price
per share - Class Z ($180,832/20,070) $9.01
==========
COMPOSITION OF NET ASSETS
Capital paid in $1,309,844
Overdistributed net investment income (872)
Accumulated net realized loss (115,731)
Net unrealized depreciation on:
Investments (181,694)
Foreign currency transactions (68)
----------
$1,011,479
==========
(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, 1997
(in thousands)
INVESTMENT INCOME
Dividends:
Hong Kong Electric Holdings Ltd. $ 2,001
Other 33,136
Interest 3,879
----------
Total Investment Income (net of nonrebatable
foreign taxes withheld at source which
amounted to $2,215) 39,016
EXPENSES
Management fee $ 12,598
Administration fee 4,116
Service fee - Class A, Class B, Class C 2,940
Distribution fee - Class B 4,209
Distribution fee - Class C 745
Transfer agent fee 5,029
Bookkeeping fee 576
Trustees fee 80
Custodian fee 1,381
Audit fee 20
Legal fee 12
Registration fee 406
Reports to shareholders 27
Other 119
-----------
32,258
Interest expense 1 32,259
----------- ----------
Net Investment Income 6,757
----------
NET REALIZED & UNREALIZED LOSS ON PORTFOLIO POSITIONS Net realized
loss on:
Investments (115,723)
Foreign currency transactions (4,174)
-----------
Net Realized Loss (119,897)
Net unrealized depreciation
during the period on:
Investments (471,064)
Foreign currency transactions (59)
-----------
Net Unrealized Depreciation (471,123)
----------
Net Loss (591,020)
----------
Decrease in Net Assets from Operations $ (584,263)
==========
See notes to financial statements.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended December 31
-------------------------------
INCREASE (DECREASE) IN NET ASSETS 1997 (a) 1996
Operations:
Net investment income $ 6,757 $ 6,973
Net realized gain (loss) (119,897) 7,061
Net unrealized appreciation (depreciation) (471,123) 113,043
----------- ----------
Net Increase (Decrease) from Operations (584,263) 127,077
----------- ----------
Distributions:
From net investment income - Class A (1,296) (2,861)
From net realized gains - Class A (1,835) (174)
In excess of net realized gains - Class A (3) --
From net investment income - Class B -- (204)
From net realized gains - Class B (1,973) (173)
In excess of net realized gains - Class B (3) --
From net investment income - Class C -- (1)
From net realized gains - Class C (347) (33)
In excess of net realized gains - Class C (b) --
From net investment income - Class T (654) (1,264)
From net realized gains - Class T (497) (56)
In excess of net realized gains - Class T (1) --
From net investment income - Class Z (1,444) (2,480)
From net realized gains - Class Z (1,024) (109)
In excess of net realized gains - Class Z (2) --
----------- ----------
(593,342) 119,722
----------- ----------
Fund Share Transactions:
Receipts for shares sold - Class A 688,564 929,445
Value of distributions reinvested - Class A 2,747 2,555
Cost of shares repurchased - Class A (748,862) (593,997)
----------- ----------
(57,551) 338,003
----------- ----------
Receipts for shares sold - Class B 285,774 662,217
Value of distributions reinvested - Class B 1,820 342
Cost of shares repurchased - Class B (285,671) (228,641)
----------- ----------
1,923 433,918
----------- ----------
Receipts for shares sold - Class C 72,752 102,136
Value of distributions reinvested - Class C 320 31
Cost of shares repurchased - Class C (84,050) (19,435)
----------- ----------
(10,978) 82,732
----------- ----------
Receipts for shares sold - Class T 4,180 12,366
Value of distributions reinvested - Class T 969 1,077
Cost of shares repurchased - Class T (60,405) (41,025)
----------- ----------
(55,256) (27,582)
----------- ----------
(a) Class D shares were redesignated Class C shares on July 1, 1997.
(b) Rounds to less than one.
Continued on next page.
See notes to financial statements.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year ended December 31
-------------------------------
1997 (a) 1996
Receipts for shares sold - Class Z 77,647 187,095
Value of distributions reinvested - Class Z 2,048 1,995
Cost of shares repurchased - Class Z (156,891) (204,451)
----------- ----------
(77,196) (15,361)
----------- ----------
Net Increase (Decrease) from Fund
Share Transactions (199,058) 811,710
----------- ----------
Total Increase (Decrease) (792,400) 931,432
NET ASSETS
Beginning of period 1,803,879 872,447
----------- ----------
End of period (net of overdistributed
net investment income of $872 and $60,
respectively) $ 1,011,479 $1,803,879
=========== ==========
NUMBER OF FUND SHARES
Sold - Class A 56,469 69,916
Issued for distributions reinvested - Class A 241 189
Repurchased - Class A (62,212) (44,553)
----------- ----------
(5,502) 25,552
----------- ----------
Sold - Class B 23,200 50,191
Issued for distributions reinvested - Class B 130 26
Repurchased - Class B (24,648) (17,351)
----------- ----------
(1,318) 32,866
----------- ----------
Sold - Class C 6,098 7,708
Issued for distributions reinvested - Class C 23 2
Repurchased - Class C (7,069) (1,471)
----------- ----------
(948) 6,239
----------- ----------
Sold - Class T 346 924
Issued for distributions reinvested - Class T 91 80
Repurchased - Class T (4,977) (3,095)
----------- ----------
(4,540) (2,091)
----------- ----------
Sold - Class Z 6,329 14,054
Issued for distributions reinvested - Class Z 194 148
Repurchased - Class Z (13,127) (15,283)
----------- ----------
(6,604) (1,081)
----------- ----------
(a) Class D shares were redesignated Class C shares on July 1, 1997.
See notes to financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1. ACCOUNTING POLICIES
...............................................................................
Organization: Colonial 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's investment objective is to seek 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 C, 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. Effective July 1,
1997, Class D shares were redesignated Class C shares. Class C shares are
subject to a contingent deferred sales charge on redemptions made within one
year after purchase and an annual distribution fee. Class 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 reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
Security valuation and transactions: Equity securities generally are valued at
the last sale price or, in the case of unlisted or listed securities for which
there were no sales during the day, at current quoted bid prices. In certain
countries, the Fund may hold foreign designated shares. If the foreign share
prices are not readily available as a result of limited share activity, the
securities are valued at the last sale price of the local shares in the
principal market in which such securities are normally traded. 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.
15
<PAGE>
Notes to Financial Statements/December 31, 1997
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
...............................................................................
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. In certain countries,
the Fund may hold portfolio positions for which market quotations are not
readily available. Such securities are valued at fair value under procedures
approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
Determination of class net asset values and financial highlights: All income,
expenses (other than the Class A, Class B and Class C service fee and Class B
and Class C distribution fee), and realized and unrealized gains (losses), are
allocated to each class proportionately on a daily basis for purposes of
determining the net asset value of each class.
The per share data was calculated using average shares outstanding during the
period. In addition, Class A, Class B and Class C net investment income per
share data reflects the service fee per share applicable to Class A, Class B and
Class C shares and the distribution fee applicable to Class B and Class C shares
only.
Class A, Class B and Class C ratios are calculated by adjusting the expense and
net investment income ratios for the Fund for the entire period by the service
fee applicable to Class A, Class B and Class C shares and the distribution fee
applicable to Class B and Class C shares only.
Federal income taxes: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
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 carryforwards) under income tax regulations.
Foreign currency transactions: Net realized and unrealized gains (losses) on
foreign currency transactions includes the gains (losses) arising from the
fluctuation in exchange rates between trade and settlement dates on securities
transactions, gains (losses) arising from the disposition of foreign currency
and currency gains (losses) between the accrual and payment dates on dividends
and interest income and foreign withholding taxes.
16
<PAGE>
Notes to Financial Statements/December 31, 1997
- --------------------------------------------------------------------------------
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) from investments.
Forward currency contracts: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The
contracts are used to minimize the exposure to foreign exchange rate
fluctuations during the period between trade and settlement date of the
contracts. The Fund may also enter into forward currency contracts to hedge
certain other foreign currency denominated assets. All contracts are
marked-to-market daily, resulting in unrealized gains (losses) which become
realized at the time the forward currency contracts are closed or mature.
Realized and unrealized gains (losses) arising from such transactions are
included in net realized and unrealized gains (losses) on foreign currency
transactions. Forward currency contracts do not eliminate fluctuations in the
prices of the Fund's portfolio securities. While the maximum potential loss from
such contracts is the aggregate face value in U.S. dollars at the time the
contract is opened, 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:
Average Net Assets Annual Fee Rate
----------------------- ---------------------
First $100 million 1.00%
Over $100 million 0.75%
Effective October 1, 1997, the fee was reduced to 0.70% in excess of $1.5
billion and 0.65% in excess of $2.5 billion.
17
<PAGE>
Notes to Financial Statements/December 31, 1997
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
...............................................................................
Administration fee: Colonial Management Associates, Inc. (the Administrator) an
affiliate of the Adviser, provides accounting and other services for a monthly
fee equal to 0.25% annually of the Fund's average net assets.
Bookkeeping fee: The Administrator provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
Average Net Assets Annual Fee Rate
----------------------- ---------------------
First $50 million No charge
Next $950 million 0.035%
Next $1 billion 0.025%
Next $1 billion 0.015%
Transfer agent: Colonial Investors Service Center, Inc. (the Transfer Agent), an
affiliate of the Administrator, provides shareholder services for a monthly fee
equal to 0.25% annually of the Fund's average net assets and receives
reimbursement for certain out of pocket expenses.
Effective October 1, 1997 and continuing through September 30, 1998, the
Transfer Agent fee will be reduced by 0.0012% in cumulative monthly increments,
resulting in a decrease in the fee from 0.25% to 0.236% annually.
Underwriting discounts, service and distribution fees: Liberty Financial
Investments, Inc., formerly Colonial Investment Services, Inc. (the
Distributor), an affiliate of the Administrator, is the Fund's principal
underwriter. For the year ended December 31, 1997, the Fund has been advised
that the Distributor retained net underwriting discounts of $626,504 on sales of
the Fund's Class A, Class C (formerly Class D shares) and Class T shares and
received contingent deferred sales charges (CDSC) of $3,328,236 and $106,931 on
Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually on Class A, Class B and Class C net assets
as of the 20th of each month. The plan also requires the payment of a
distribution fee to the Distributor equal to 0.75% annually of the average net
assets attributable to Class B and Class C shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
Expense limits: The 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 year ended December 31, 1997, the Fund's operating expenses did not
exceed the 1.55% expense limit.
18
<PAGE>
Notes to Financial Statements/December 31, 1997
- --------------------------------------------------------------------------------
Other: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser or Administrator.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
...............................................................................
Investment activity: During the year ended December 31, 1997, purchases and
sales of investments, other than short-term obligations, were $190,454,179 and
$349,662,842, respectively.
Unrealized appreciation (depreciation) at December 31, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation 129,571,761
Gross unrealized depreciation (311,265,996)
-----------
Net unrealized depreciation (181,694,235)
===========
Capital loss carryforwards: At December 31, 1997, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- -----------
2005 $81,206,000
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
Other: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of currency exchange or
other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 4. LINE OF CREDIT
...............................................................................
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%.
The average daily loan balance for the year ended December 31, 1997 was $8,219,
at a weighted average interest rate of 6.08%. The maximum loan outstanding
during the period was $3,000,000.
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
----------------------------------------------------------------
1997
Class A Class B Class C(a) Class T Class Z
----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 13.750 $ 13.640 $ 13.660 $ 13.750 $ 13.750
-------- -------- -------- -------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (b) 0.081(c) (0.011)(c) (0.012)(c) 0.112(c) 0.112(c)
Net realized and
unrealized gain
(loss) (b) (4.735) (4.667) (4.666) (4.740) (4.740)
-------- -------- -------- -------- ----------
Total from Investment
Operations (4.654) (4.678) (4.678) (4.628) (4.628)
-------- -------- -------- -------- ----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.034) - - (0.070) (0.070)
From net
realized gains (0.042) (0.042) (0.042) (0.042) (0.042)
In excess of net
realized gains - - - - -
-------- -------- -------- -------- ----------
Total Distributions
Declared to
Shareholders (0.076) (0.042) (0.042) (0.112) (0.112)
-------- -------- -------- -------- ----------
Net asset value -
End of period $ 9.020 $ 8.920 $ 8.940 $ 9.010 $ 9.010
======== ======== ======== ======== ==========
Total return (d) (33.95)% (34.41)% (34.36)% (33.76)% (33.76)%
======== ======== ======== ======== ==========
RATIOS TO AVERAGE NET ASSETS
Operating expenses 1.73% 2.48% 2.48% 1.48% 1.48%
Interest Expense - - - - -
Total expenses (e) 1.73% 2.48% 2.48% 1.48% 1.48%
Net investment
income (loss) (e) 0.64% (0.11)% (0.11)% 0.89% 0.89%
Portfolio turnover 12% 12% 12% 12% 12%
Average commission
rate (f) $ 0.0085 $ 0.0085 $ 0.0085 $ 0.0085 $ 0.0085
Net assets at end
of period (000) $323,407 $362,442 $ 62,703 $ 82,095 $180,832
</TABLE>
(a) Class D shares were redesignated Class C shares on July 1, 1997.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Includes distribution from Hong Kong Electric Holdings Ltd. which amounted
to $0.015 per share.
(d) Total return at net asset value assuming all distributions reinvested
and no initial sales charge or contingent deferred sales charge.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
20
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended December 31
-------------------------------------------------------------
1996
Class A Class B Class C (a) Class T Class Z
---------- --------- ---------- --------- ---------
$ 12.460 $ 12.390 $ 12.410 $ 12.450 $ 12.450
---------- --------- --------- --------- ---------
0.083 (0.016) (0.016) 0.116 0.116
1.278 1.275 1.270 1.281 1.281
---------- --------- --------- --------- ---------
1.361 1.259 1.254 1.397 1.397
---------- --------- --------- --------- ---------
(0.067) (0.005) -- (0.093) (0.093)
(0.004) (0.004) (0.004) (0.004) (0.004)
-- -- -- -- --
---------- --------- --------- --------- ---------
(0.071) (0.009) (0.004) (0.097) (0.097)
---------- --------- --------- --------- ---------
$ 13.750 $ 13.640 $ 13.660 $ 13.750 $ 13.750
========== ========= ========= ========= =========
10.94% 10.16% 10.11% 11.24% 11.24%
========== ========= ========= ========= =========
1.74% 2.49% 2.49% 1.49% 1.49%
-- -- -- -- --
1.74% 2.49% 2.49% 1.49% 1.49%
0.62% (0.13)% (0.13)% 0.87% 0.87%
6% 6% 6% 6% 6%
$ 0.0179 $ 0.0179 $ 0.0179 $ 0.0179 $ 0.0179
$568,497 $572,089 $108,785 $187,659 $366,849
(f) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades on which
commissions are charged.
21
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
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 C (a)(b) Class T (c) Class Z (c)
---------- ---------- -------------- ---------- ----------
<S> <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 (loss) (e) 0.067 (0.003) (0.003) 0.099(f) 0.099(f)
Net realized and
unrealized gain (loss) (e) 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)
---------- ---------- ---------- ---------- ----------
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 (g) 15.52% (h) 14.65% (h) 14.85% (h) 16.28% 16.28%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.37%(h)(i) 1.93%(h)(i) 1.93%(h)(i) 1.60%(i) 1.60%(i)
Net investment income 0.28%(h)(i) (0.28)%(h)(i) (0.28%)(h)(i) 0.75%(i) 0.75%(i)
Portfolio turnover 4% 4% 4% 4% 4%
Net assets at end
of period (000) $196,870 $112,588 $21,420 $195,986 $345,583
(a) Class A, Class B and Class D shares were initially offered on April 1,
1995. Per share data reflects activity from that date.
(b) Class D shares were redesignated Class C shares on July 1, 1997.
(c) 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.
(d) Reflects the 2-for-1 stock split effective November 29, 1993.
(e) Per share data was calculated using average shares outstanding during the
period.
</TABLE>
22
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each
period are as follows:
Year ended December 31
------------------------------
1994 1993 (d)
----------- -----------
$ 12.440 $ 7.120
----------- -----------
0.060 0.040
(1.550) 5.330
----------- -----------
(1.490) 5.370
----------- -----------
(0.040) (0.040)
(0.110) (0.010)
----------- -----------
(0.150) (0.050)
----------- -----------
$ 10.800 $ 12.440
=========== ===========
(11.96)% 75.45%
=========== ===========
1.29% 1.56%
0.57% 0.59%
8% 11%
$ 456,241 $ 394,883
(f) Includes distribution from Taiwan Fund which amounted to $ 0.013 per share.
(g) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(h) Not annualized.
(i) 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 years' ratios are net of benefits received,
if any.
23
<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,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Newport Tiger Fund (a
series of Colonial Trust VII) at December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years then ended and the financial highlights for each of the three
years 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 audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of portfolio positions
at December 31, 1997 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above. The financial highlights for each of the
periods ended December 31, 1994 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, 1998
24
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
Colonial Customer Connection - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends and capital gains information ........... press 1
For account information ............................................ press 2
To speak to a Colonial representative .............................. press 3
For yield and total return information ............................. press 4
For duplicate statements or a new supply of checks ................. press 5
To order duplicate tax forms and year-end statements ............... press 6
(February through May)
To review your options at any time during your call ................ press *
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET
Colonial Telephone Transaction Department - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
Literature - 1-800-426-3750
To request literature on any Colonial fund, call Monday to Friday, 8:30 a.m. to
6:30 p.m. ET.
BY MAIL
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
25
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Colonial directly at 1-800-345-6611.
Affordable Additional Investments: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
Free Exchanges(1): Exchange all or part of your account into the same share
class of another Colonial fund, by phone or mail.
Easy Access to Your Money(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
One-Year Reinstatement Privilege: If you need access to your money, but then
choose to return it to Colonial within one year, you can reinvest in any
Colonial fund of the same share class without any penalty or sales charge.
Fundamatic: Make periodic investments as low as $50 from your checking account
to your Colonial account.
Systematic Withdrawal Plan (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
payable date will be the previous business day. Dividends and capital gains must
be reinvested.
Automated Dollar Cost Averaging: Transfer money on a monthly basis from any
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.
Liberty(TM) Qualified Plans: Choose from a broad range of retirement plans,
including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial. Proceeds may be more or less than
your original cost. The exchange privilege may be terminated at any time.
Exchanges are not available on all funds. Investors who purchase Class B or
Class C shares (for applicable funds), or $1 million or more of Class A
shares, may be subject to a contingent deferred sales charge.
26
<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 1-800-426-3750 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. Telephone redemptions may only be made by wiring the
proceeds to a predesignated bank account. Please send your request, with a
signature guarantee, to Colonial Investors Service Center, Inc., P.O. Box 1722,
Boston, MA 02105-1722. 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.
27
<PAGE>
`
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board and Chief Executive Officer, Hannaford
Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Retired Partner, Peat Marwick Main & Co. (formerly Management Consultant,
Saatchi and Saatchi Consulting Ltd. and Principal and International Practice
Director, Management Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
[Liberty logo]
LIBERTY FINANCIAL INVESTMENTS, INC. (c)1998
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621
NT-02/672E-1297 M (2/98) 98/103
