<PAGE>
- ------------------------------------------
NEWPORT TIGER FUND ANNUAL REPORT
- ------------------------------------------
December 31, 1998
-------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
-------------------------------
<PAGE>
NEWPORT TIGER FUND HIGHLIGHTS
JANUARY 1, 1998 - DECEMBER 31, 1998
INVESTMENT OBJECTIVE: 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 dramatic fourth-quarter turnaround in Asian
stock prices helped dissipate the negative sentiment that had existed for much
of the Fund's fiscal year. We were encouraged by this rally and continue to
believe that holding high-quality stocks within the strongest Tiger markets is
the best way to invest in Asia over the long term."
-- Jack Mussey & Tim Tuttle
<TABLE>
<CAPTION>
NEWPORT TIGER FUND PERFORMANCE(1)
12-month total returns,
assuming reinvestment of
distributions and no sales
charge or contingent deferred Net asset value
Inception dates sales charge (CDSC) per share on 12/31/98
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 4/1/95 (12.08) % $7.78
Class B 4/1/95 (12.77) % $7.70
Class C 4/1/95 (12.89) % $7.71
Class T 5/31/89 (11.87) % $7.77
Class Z 5/31/89 (12.09) % $7.75
- -----------------------------------------------------------------------------------------------
</TABLE>
COUNTRY DISTRIBUTION(2) TOP FIVE SECTORS(2)
(as of 12/31/98) (AS OF 12/31/98)
- -------------------------------------- -----------------------------------
1. Hong Kong and China ....... 70.4% 1. Financials ............... 49.4%
2. Singapore ................. 26.5% 2. Consumer Cyclicals ....... 17.2%
3. Philippines ............... 0.9% 3. Utilities ................ 16.1%
4. Technologies ............. 7.5%
5. Capital Goods ............ 7.5%
(1) The Fund was originally introduced on 5/31/89. On 4/1/95, the shares that
had been available since 5/31/89 were re-designated as either Class T or
Class Z. Also, share classes A, B and C were initially offered on that date.
Performance may reflect any voluntary waivers or reimbursement of Fund
expenses by the Advisor or its affiliates. Absent these waivers or
reimbursement arrangements, performance results may have been lower.
(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.
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Stephen E. Gibson]
I am pleased to present the annual report for Newport Tiger Fund for the
12-month period ended December 31, 1998.
While local financial and economic issues continued to hinder Asian market
performance for much of 1998, stock prices within the region made a dramatic
turnaround during the fourth quarter. Flight-to-quality was a theme that
repeated itself throughout the year, as global investors continued to liquidate
equity positions in less-developed foreign markets and shift assets to
high-quality U.S. stocks and bonds. In the fall of 1998, ongoing concerns about
a global economic slowdown prompted a series of interest rate cuts by the
Federal Reserve Board. The Fed's actions appeared to have a broad impact,
reducing fears of a global recession while spurring market rallies in the U.S.
and abroad.
The impressive gains that were achieved during the last several months of 1998
are encouraging, particularly for Newport Tiger Fund investors who have remained
patient during the past year. While declining interest rates, relative currency
stability and attractive stock valuations are beginning to entice investors back
to Asia, it is important to recognize that the economies of many Asian countries
continue to contract, albeit less dramatically than before. As the region's
economies begin to strengthen, we believe a heavier influx of global investment
capital may return to the region.
Few investment managers possess the experience, level of knowledge and strong
local relationships in Southeast Asia that Newport Fund Management has developed
over the past 20 years. Participating in numerous economic and market cycles has
given them significant expertise in Asian market investing.
Thank you for choosing Newport Tiger Fund and for giving us the opportunity to
serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
February 11, 1999
Because market and economic conditions change, there can be no assurance that
the trends described above or on the following pages will continue.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
[Photo of Jack Mussey]
[Photo of Tim Tuttle]
JACK MUSSEY and TIM TUTTLE are portfolio co-managers of Newport Tiger Fund. Mr.
Mussey is president and chief executive officer of Newport Fund Management, Inc.
and has more than 25 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 received a B.A. from Williams College in 1964.
MARKET RALLIES LATE IN PERIOD DESPITE WEAK ECONOMIC FUNDAMENTALS
During the first nine months of 1998, the economies of most Asian countries
remained weak. The financial and economic problems that began in 1997 remained
mostly unresolved in 1998, encouraging global investors to avoid Asian equity
markets. During the second and third quarters of 1998, the devaluation of
Russia's currency and increasing concerns about Latin America's economic
stability renewed fears of a global economic crisis. In the fourth quarter,
however, the genuine negative sentiment that existed throughout most of 1998
began to change. As global central bankers made concerted efforts to reduce
fears of a worldwide economic slowdown, Asian markets staged an impressive
rally. Investor confidence received an added boost when the U.S. Federal Reserve
Board lowered short-term interest rates three times in the fall of 1998.
A NUMBER OF FACTORS HELPED DRIVE STOCK PRICES HIGHER LATE IN THE YEAR
We believe that a series of events during the year helped drive stock prices
higher in the fourth quarter. First, global interest rates trended downward,
which is generally positive for stocks. Second, central banks in the more
solvent Asian countries injected significant amounts of capital into local stock
and bond markets. Finally, in response to the factors mentioned above, global
money managers who have enjoyed success in the U.S. and Europe over the past two
years began re-establishing positions in Asia in early September in anticipation
of a potential economic strengthening later in 1999.
In the fourth quarter of 1998, the Morgan Stanley Capital International EAFE
(GDP) Index -- which tracks the performance of stocks in several Asian
countries, including Hong Kong and Singapore -- had a total return of 21.59%.
Newport Tiger Fund also turned in a solid performance in the fourth quarter. The
Fund's focus on high-quality, interest rate sensitive stocks enabled it to
achieve a 37.69% return for the fourth quarter (for Class A shares based on net
asset value). For the 12-month period, the Fund generated a total return of
negative 12.08% for Class A shares, based on net asset value.
THE IMPORTANCE OF MAINTAINING A CONSERVATIVE APPROACH
In managing the Fund, we continue to take a conservative approach by focusing on
countries with relatively stable economies, sound banking systems and
well-financed corporations. Hong Kong, China, Singapore and, to some extent, the
Philippines offer a variety of high-quality companies with strong balance
sheets. We believe these companies have a better chance of weathering a global
recession, should that scenario continue to build. Within the financially and
fundamentally weaker Tiger countries, including Indonesia, Thailand, South Korea
and Malaysia, economic numbers remained negative in 1998. While the extent of
recession in these countries is showing some degree of improvement, many still
have high debt levels. Moreover, the banking systems in these countries remain
weak.
NEW ADDITIONS TO THE PORTFOLIO OFFER STRONG FUTURE GROWTH POTENTIAL
With only two Singapore bank stocks in the portfolio, we decided to add a third.
United Overseas Bank (0.83% of total net assets) is well capitalized and has
benefited from declining interest rates and the ability to expand throughout the
region.
A second holding added in the fourth quarter was Johnson Electric (0.82% of
total net assets), one of only two global manufacturers of miniature electric
motors. Use of these motors -- the types that are found in hairdryers,
windshield wipers and car door locks -- is growing rapidly. Johnson Electric is
based in Hong Kong but manufactures its products in China. The company has
weathered the deflation in Asia and the global economic slowdown, while
maintaining strong earnings growth over the past two years.
MANY VARIABLES WILL AFFECT FUTURE ECONOMIC GROWTH ACROSS ASIA
The ability for Asian companies to grow depends somewhat on the economies of
Japan, the U.S. and Europe. We believe the U.S. and Europe will continue to grow
moderately in 1999, providing enough demand for Asian exporters to survive.
However, it is too early to predict when the turnaround in Japan will begin.
We believe that China still holds the key to long-term growth opportunities in
Asia, and we remain optimistic about its potential. The Chinese government is
projecting 7% growth for 1999, down slightly from 1998. Current growth is coming
mostly from government spending on infrastructure projects that employ a lot of
people. While exports did not grow in 1998 and consumption slowed, China still
finished 1998 with a $43 billion trade surplus -- an indication of financial
strength. Other positive factors included $45 billion in additional capital from
direct foreign investment in 1998, and no inflation. With these developments, we
believe China's economy is on course towards economic recovery -- a scenario
that has the potential to benefit the entire region. However, this Fund remains
committed to its strategy of taking advantage of China's growth primarily
through investments in high-quality companies listed on the Hong Kong stock
exchange.
NEWPORT TIGER FUND'S INVESTMENT PERFORMANCE VS.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE (GDP) INDEX
Change in Value of $10,000 from 5/31/89 - 12/31/98
Class A Shares based on NAV and POP
MSCI
Index NAV POP
5/31/89 $10,000 $10,000 $10,000
6/30/89 10,186 9,940 9,368
7/31/89 11,339 10,240 9,651
8/31/89 11,081 10,040 9,463
9/30/89 11,509 10,310 9.717
10/31/89 10,965 10,060 9,482
11/30/89 11,533 10,420 9,821
12/31/89 12,404 11,080 10,443
1/31/90 12,180 11,200 10,556
2/28/90 11,637 11,360 10,707
3/31/90 11,260 11,180 10,537
4/30/90 11,111 10,537 9,931
5/31/90 11,940 11,561 10,896
6/30/90 12,062 11,842 11,161
7/31/90 12,369 12,494 11,776
8/31/90 11,024 10,688 10,073
9/30/90 9,496 9,012 8,494
10/31/90 10,678 9,664 9,109
11/30/90 10,210 9,243 8,711
12/31/90 10,216 9,403 8,862
1/31/91 10,497 9,757 9,196
2/28/91 11,596 10,626 10,015
3/31/91 10,817 10,990 10,358
4/30/91 10,849 11,364 10,711
5/31/91 11,090 11,657 10,987
6/30/91 10,226 11,435 10,777
7/31/91 10,652 11,678 11,006
8/31/91 10,580 11,202 10,558
9/30/91 11,037 10,990 10,358
10/31/91 11,005 11,152 10,511
11/30/91 10,696 11,496 10,835
12/31/91 11,312 11,849 11,168
1/31/92 11,216 12,557 11,835
2/29/92 11,064 12,951 12,207
3/31/92 10,519 12,618 11,892
4/30/92 10,610 13,336 12,569
5/31/92 11,235 14,215 13,398
6/30/92 10,869 14,246 13,426
7/31/92 10,484 13,822 13,122
8/31/92 11,006 13,386 12,616
9/30/92 10,602 13,528 12,760
10/31/92 10,172 14,963 14,103
11/31/92 10,222 14,812 13,960
12/31/92 10,220 14,458 13,627
1/31/93 10,338 14,915 14,057
2/28/93 10,700 15,747 14,841
3/31/93 11,430 15,818 14,908
4/30/93 12,483 17,025 16,046
5/31/93 12,678 17,492 16,486
6/30/93 12,459 17,127 16,142
7/31/93 12,834 17,106 16,123
8/31/93 13,774 18,141 17,098
9/30/93 13,485 18,506 17,442
10/31/93 13,856 21,479 20,244
11/30/93 12,752 21,084 19,871
12/31/93 13,649 25,350 23,892
1/31/94 14,693 24,189 22,798
2/28/94 14,612 22,946 21,626
3/31/94 14,403 20,622 19,437
4/30/94 15,130 22,069 20,800
5/31/94 14,783 23,109 21,780
6/30/94 14,776 21,865 20,608
7/31/94 15,119 23,007 21,684
8/31/94 15,376 24,352 22,951
9/30/94 14,835 24,209 22,817
10/31/94 15,286 24,515 23,105
11/30/94 14,605 22,558 21,261
12/31/94 14,715 22,317 21,034
1/31/95 14,338 20,106 18,950
2/28/95 14,322 21,987 20,722
3/31/95 14,971 22,462 21,171
4/30/95 15,640 22,504 21,210
5/31/95 15,489 25,151 23,705
6/30/95 15,316 24,820 23,393
7/31/95 16,317 25,420 23,958
8/31/95 15,636 24,572 23,159
9/30/95 15,821 25,027 23,588
10/31/95 15,363 24,862 23,432
11/30/95 15,686 24,924 23,491
12/31/95 16,358 25,948 24,456
1/31/96 16,565 28,447 26,811
2/29/96 16,615 28,447 26,811
3/31/96 16,835 28,239 26,615
4/30/96 17,359 28,135 26,517
5/31/96 17,103 27,989 26,380
6/30/96 17,237 27,364 25,791
7/31/96 16,742 25,823 24,338
8/31/96 16,733 26,760 25,222
9/30/96 17,193 27,552 25,967
10/31/96 17,005 27,364 25,791
11/30/96 17,732 28,801 27,145
12/31/96 17,605 28,786 27,131
1/31/97 17,274 28,597 26,953
2/29/97 17,394 28,556 26,914
3/31/97 17,725 26,797 25,256
4/30/97 17,682 26,315 24,802
5/31/97 18,603 28,660 27,012
6/30/97 19,711 29,858 28,142
7/31/97 20,145 30,320 28,577
8/31/97 18,700 25,134 23,689
9/30/97 19,901 26,100 24,599
10/31/97 18,431 19,738 18,603
11/30/97 18,355 19,213 18,108
12/31/97 18,621 19,012 17,919
1/31/98 19,589 15,935 15,018
2/28/98 20,715 10,328 18,217
3/31/98 21,843 19,138 18,038
4/30/98 22,171 17,389 16,389
5/31/98 22,485 14,754 13,906
6/30/98 22,696 13,154 12,397
7/31/98 22,992 12,225 11,522
8/31/98 19,962 10,303 9,711
9/30/98 19,405 12,140 11,442
10/31/98 21,564 15,962 15,044
11/30/98 22,682 16,722 15,760
12/31/98 23,595 16,715 15,754
Value of a $10,000 investment made on 5/31/89
As of 12/31/98
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS T CLASS Z
NAV POP NAV w/CDSC NAV w/CDSC NAV POP NAV
- -------------------------------------------------------------------------------
$16,715 $15,754 $16,233 $16,233 $16,243 $16,243 $16,850 $15,881 $16,807
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/98
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE
- --------------------------------------------------------------------------------
CLASS A (Inception 4/1/95)
NAV (12.08)% (7.99)% 5.50%
POP (17.13)% (9.07)% 4.85%
- --------------------------------------------------------------------------------
CLASS B (Inception 4/1/95)
NAV (12.77)% (8.53)% 5.18%
w/CDSC (17.08)% (8.89)% 5.18%
- --------------------------------------------------------------------------------
CLASS C (4) (Inception 4/1/95)
NAV (12.89)% (8.52)% 5.19%
w/CDSC (13.75)% (8.52)% 5.19%
- --------------------------------------------------------------------------------
CLASS T (Inception 5/31/89)
NAV (11.87)% (7.84)% 5.59%
POP (16.94)% (8.93)% 4.94%
- --------------------------------------------------------------------------------
CLASS Z (Inception 5/31/89)
NAV (12.09)% (7.89)% 5.56%
- --------------------------------------------------------------------------------
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or contingent deferred sales charges (CDSC). The public
offering price (POP) returns include the maximum charge of 5.75% for Classes A
and T. The CDSC returns reflect the maximum applicable charges of 5% for one
year and 2% for five years for Class B shares and 1% for one year for class C
shares.
Performance results reflect any voluntary waivers or reimbursement of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower. Performance for
different share classes will vary based on differences in sales charges and fees
associated with each class.
The Fund was originally introduced on 5/31/89 and became Colonial Newport Tiger
Fund on 4/1/95 when Class A, B and D (since redesignated as C) shares were
offered. As of 4/30/98, the Fund was renamed Newport Tiger Fund. Please see the
Fund's prospectus for additional details. Class A, B and C share performance
information includes returns of the Fund's Class Z shares for periods prior to
the inception dates of those classes. These Class Z share returns are not
restated to reflect any expense differential (e.g., Rule 12b-1 fees) between
Class Z shares and the Class A, B and C shares. Had the expense differential
been reflected, the returns for periods prior to the inception date of the Class
A, B and C shares would have been lower.
The Morgan Stanley Capital International EAFE (GDP) Index is an unmanaged index
that tracks the performance of equity securities of developed countries outside
North America, including Hong Kong and Singapore. Unlike mutual funds, indexes
are not investments and do not incur fees or expenses. It is not possible to
invest in an index.
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1998 (IN THOUSANDS)
COMMON STOCKS - 97.7% COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 68.3%
DEPOSITORY INSTITUTIONS - 25.1%
Development Bank of Singapore Ltd. Si 6,718 $ 60,632
HSBC Holdings PLC (a) HK 1,300 32,396
Hang Seng Bank HK 4,500 40,225
Oversea-Chinese Banking Corp. Ltd Si 7,879 53,452
United Overseas Bank Si 1,000 6,420
---------
193,125
---------
HOLDING COMPANIES - 18.9%
Cheung Kong Holdings Ltd. HK 8,000 57,570
Citic Pacific Ltd. HK 14,095 30,384
Hutchison Whampoa Ltd. HK 7,500 53,004
Singapore Technologies Engineering Ltd. Si 5,000 4,664
---------
145,622
---------
INSURANCE CARRIERS - 0.5%
National Mutual Asia Ltd. HK 5,000 3,743
---------
REAL ESTATE - 23.8%
Ayala Land, Inc. Ph 4,500 1,273
China Resources Enterprises Ltd. HK 14,000 21,866
City Developments Ltd. Si 7,993 34,615
Henderson Land Development Co., Ltd. HK 1,000 5,176
New World Development Co., Ltd. HK 12,170 30,633
SM Prime Holdings, Inc. Ph 28,000 5,326
Sun Hung Kai Properties Ltd. HK 7,240 52,802
Swire Pacific Ltd., Series A HK 7,000 31,354
---------
183,045
---------
...............................................................................
MANUFACTURING - 6.1%
MEASURING & ANALYZING INSTRUMENTS - 0.4%
China Hong Kong Photo Products Holdings, Ltd. HK 31,400 3,040
---------
PRINTING & PUBLISHING - 5.7%
Singapore Press Holdings Ltd. Si 4,019 43,821
---------
...............................................................................
RETAIL TRADE - 0.5%
APPAREL & ACCESSORY STORES
Giordano International Ltd. HK 20,000 3,743
---------
...............................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 20.2%
ELECTRIC SERVICES - 7.5%
China Light & Power Co., Ltd. HK 5,500 27,404
Hong Kong Electric Holdings Ltd. HK 10,000 30,334
---------
57,738
---------
GAS SERVICES - 6.6%
Hong Kong and China Gas Co., Ltd. HK 40,000 $ 50,858
---------
TELECOMMUNICATION - 6.1%
China Telecom Ltd. (a)(b) HK 18,000 31,274
Hong Kong Telecommunications Ltd. (a) HK 8,711 15,297
---------
46,571
---------
...............................................................................
WHOLESALE TRADE - 2.6%
DURABLE GOODS
Johnson Electric Holdings Ltd. HK 2,444 6,279
Li & Fung Ltd. HK 6,622 13,719
---------
19,998
---------
TOTAL COMMON STOCKS (cost of $877,524) 751,304
---------
WARRANTS (a) - 0.0%
- -------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES
GAS SERVICES
Hong Kong and China Gas Co., Ltd. HK 1,454 96
(cost of $0) ---------
TOTAL INVESTMENTS - 97.7% (cost of $877,524)(c) 751,400
---------
SHORT-TERM OBLIGATIONS - 3.0% PAR
- --------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp.,
dated 12/31/98, due 01/04/99 at 4.750%, collateralized
by U.S. Treasury notes with various maturities to 2015,
market value $23,898 (repurchase proceeds $23,497) $ 23,485 23,485
----------
OTHER ASSETS & LIABILITIES, NET - (0.7%) (5,803)
- --------------------------------------------------------------------------------
NET ASSETS - 100% $ 769,082
----------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) The value of this security represents fair value as determined in good
faith under the direction of the Trustees.
(b) Non-income producing.
(c) Cost for federal income tax purposes is $877,683.
<PAGE>
Investment Portfolio/December 31, 1998
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO - CONT.
- --------------------------------------------------------------------------------
Summary of Securities
by Country Country Value % of Total
- --------------------------------------------------------------------------------
Hong Kong HK $ 541,197 72.0
Singapore Si 203,604 27.1
Phillippines Ph 6,599 0.9
--------- ----
$ 751,400 100.0
========= =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------------------- ------------
ADR American Depositary Receipt
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1998
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $877,524) $ 751,400
Short-term obligations 23,485
---------
774,885
Cash including foreign currencies (cost $769) $ 769
Receivable for:
Investments sold 3,527
Fund shares sold 2,086
Dividends 1,320
Interest 3
Other 11 7,716
------- ---------
Total Assets 782,601
LIABILITIES
Cash including foreign currencies (cost $1,764) 1,764
Payable for:
Fund shares repurchased 10,332
Accrued:
Management fee 513
Administration fee 164
Service fee - Class A, Class B, Class C 123
Distribution fee - Class B 178
Distribution fee - Class C 31
Transfer agent fee 155
Bookkeeping fee 24
Deferred Trustees fees 10
Other 225
-------
Total Liabilities 13,519
---------
NET ASSETS $ 769,082
=========
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - CONT.
Net asset value & redemption price per share -
Class A ($250,089/32,146) $7.78(a)
------
Maximum offering price per share - Class A
($7.78/0.9425) $8.25(b)
------
Net asset value & offering price per share -
Class B ($280,163/36,405) $7.70(a)
------
Net asset value & offering price per share -
Class C ($48,316/6,269) $7.71(a)
------
Net asset value & redemption price per share -
Class T ($51,526/6,635) $7.77
------
Maximum offering price per share - Class T
($7.77/0.9425) $8.24(b)
------
Net asset value, offering & redemption price
per share - Class Z ($138,988/17,933) $7.75
------
COMPOSITION OF NET ASSETS
Capital paid in $1,213,813
Overdistributed net investment income (7,483)
Accumulated net realized loss (311,124)
Net unrealized depreciation (126,124)
----------
$ 769,082
==========
(a) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(in thousands)
INVESTMENT INCOME
Dividends:
Cheung Kong Holdings Ltd. $ 1,851
Hang Seng Bank 2,558
Hong Kong Electric Holdings Ltd. 2,659
Hong Kong Telecommunications Ltd. 1,728
HSBC Holdings PLC 2,604
Hong Kong and China Gas Co., Ltd. 1,869
Hutchison Whampoa Ltd. 1,742
Singapore Press 3,697
Swire Pacific Ltd., Series A 1,577
Other 7,731
Interest 1,993
-----------
Total Investment Income (net of nonreclaimable
foreign taxes withheld at source which
amounted to $1,713) 30,009
EXPENSES
Management fee $ 6,197
Administration fee 1,982
Service fee - Class A, Class B, Class C 1,514
Distribution fee - Class B 2,117
Distribution fee - Class C 381
Transfer agent fee 2,705
Bookkeeping fee 287
Trustees fee 46
Custodian fee 418
Audit fee 30
Legal fee 14
Registration fee 114
Reports to shareholders 45
Other 231 16,081
--------- -----------
Net Investment Income 13,928
-----------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss on:
Investments (195,402)
Foreign currency transactions (7,932)
--------
Net Realized Loss (203,334)
Change in net unrealized appreciation
during the period on:
Investments 55,570
Foreign currency transactions 68
--------
Net Change in Unrealized Appreciation 55,638
-----------
Net Loss (147,696)
-----------
Decrease in Net Assets from Operations $ (133,768)
==========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Year ended
(in thousands) December 31
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1998 1997 (A)
Operations:
Net investment income $ 13,928 $ 6,757
Net realized loss (203,334) (119,897)
Net unrealized appreciation (depreciation) 55,638 (471,123)
---------- -----------
Net Decrease from Operations (133,768) (584,263)
---------- -----------
Distributions:
From net investment income - Class A (4,839) (1,296)
From net realized gains - Class A - (1,835)
In excess of net realized gains - Class A - (3)
From net investment income - Class B (3,032) -
From net realized gains - Class B (1,973)
In excess of net realized gains - Class B - (3)
From net investment income - Class C (503) -
From net realized gains - Class C - (347)
In excess of net realized gains - Class C - (b)
From net investment income - Class T (1,162) (654)
From net realized gains - Class T - (497)
In excess of net realized gains - Class T - (1)
From net investment income - Class Z (3,078) (1,444)
From net realized gains - Class Z - (1,024)
In excess of net realized gains - Class Z - (2)
---------- -----------
(146,382) (593,342)
---------- -----------
Fund Share Transactions:
Receipts for shares sold - Class A 390,952 688,564
Value of distributions reinvested - Class A 3,964 2,747
Cost of shares repurchased - Class A (423,839) (748,862)
---------- -----------
(28,923) (57,551)
---------- -----------
Receipts for shares sold - Class B 118,738 285,774
Value of distributions reinvested - Class B 2,739 1,820
Cost of shares repurchased - Class B (150,324) (285,671)
---------- -----------
(28,847) 1,923
---------- -----------
Receipts for shares sold - Class C 36,392 72,752
Value of distributions reinvested - Class C 463 320
Cost of shares repurchased - Class C (41,371) (84,050)
---------- -----------
(4,516) (10,978)
---------- -----------
Receipts for shares sold - Class T 3,578 4,180
Value of distributions reinvested - Class T 994 969
Cost of shares repurchased - Class T (22,132) (60,405)
---------- -----------
(17,560) (55,256)
---------- -----------
(a) Class D shares were redesignated Class C shares on July 1, 1997.
Continued on next page.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year ended
(in thousands) December 31
----------------------------
1998 1997(A)
Receipts for shares sold - Class Z 149,223 77,647
Value of distributions reinvested - Class Z 2,303 2,048
Cost of shares repurchased - Class Z (167,695) (156,891)
--------- -----------
(16,169) (77,196)
--------- -----------
Net Decrease from Fund
Share Transactions (96,015) (199,058)
--------- -----------
Total Decrease (242,397) (792,400)
NET ASSETS
Beginning of period 1,011,479 1,803,879
--------- -----------
End of period (net of overdistributed
net investment income of
$7,483 and $872, respectively) $ 769,082 $ 1,011,479
========= ===========
NUMBER OF FUND SHARES
Sold - Class A 53,978 56,469
Issued for distributions reinvested - Class A 511 241
Repurchased - Class A (58,196) (62,212)
--------- -----------
(3,707) (5,502)
--------- -----------
Sold - Class B 16,083 23,200
Issued for distributions reinvested - Class B 348 130
Repurchased - Class B (20,659) (24,648)
--------- -----------
(4,228) (1,318)
--------- -----------
Sold - Class C 4,975 6,098
Issued for distributions reinvested - Class C 59 23
Repurchased - Class C (5,782) (7,069)
--------- -----------
(748) (948)
--------- -----------
Sold - Class T 492 346
Issued for distributions reinvested - Class T 128 91
Repurchased - Class T (3,092) (4,977)
--------- -----------
(2,472) (4,540)
--------- -----------
Sold - Class Z 20,851 6,329
Issued for distributions reinvested - Class Z 297 194
Repurchased - Class Z (23,285) (13,127)
--------- -----------
(2,137) (6,604)
--------- -----------
(a) Class D shares were redesignated Class C shares on July 1, 1997.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1. ACCOUNTING POLICIES
................................................................................
ORGANIZATION: Newport Tiger Fund (formerly Colonial Newport Tiger) (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 Phillipines). 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 a 1.00% contingent deferred sales charge on
redemptions made within eighteen months on an original purchase of $1 million to
$5 million. Class B shares are subject to an annual distribution fee and a
contingent deferred sales charge. Class B shares will convert to Class A when
they have been outstanding approximately eight years. Class C shares are subject
to a contingent deferred sales charge on redemptions made within one year after
purchase and an annual distribution fee. Class 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 liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the period. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies that are consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities generally are valued at
the last sale price or, in the case of unlisted or listed securities for which
there were no sales during the day, at current quoted bid prices. In certain
countries, the Fund may hold foreign designated shares. If the foreign share
prices are not readily available as a result of limited share activity, the
securities are valued at the last sale price of the local shares in the
principal market in which such securities are normally traded. Korean equity
securities that have reached the limit for aggregate foreign ownership and for
which premiums to the local exchange prices may be paid by foreign investors are
valued by applying a broker quoted premium to the local share price. In
addition, if the values of foreign securities have been materially affected by
events occurring after the closing of the market, the foreign securities may be
valued at their current value.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies 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 fees and Class B
and Class C distribution fees), and realized and unrealized gains (losses), are
allocated to each class proportionately on a daily basis for purposes of
determining the net asset value of each class.
The per share data was calculated using average shares outstanding during the
period. In addition, Class A, Class B and Class C net investment income per
share data 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.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) from investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward currency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily,
resulting in unrealized gains (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract is opened, the
actual exposure is typically limited to the change in value of the contract (in
U.S. dollars) over the period it remains open. Risks may also arise if
counterparties fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on the ex-date (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonreclaimable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
................................................................................
MANAGEMENT FEE: Newport Fund Management (the Advisor) is the investment Advisor
of the Fund and receives a monthly fee based on the Fund's average net assets as
follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $100 million 1.00%
Next $1.4 billion 0.75%
Next $1.0 billion 0.70%
Over $2.5 billion 0.65%
ADMINISTRATION FEE: Colonial Management Associates, Inc. (the Adminis-
trator) an affiliate of the Advisor, provides accounting and other services
for a monthly fee equal to 0.25% annually of the Fund's average net assets.
BOOKKEEPING FEE: The Administrator provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
Average Net Assets Annual Fee Rate
------------------ ---------------
First $50 million No charge
Next $950 million 0.035%
Next $1 billion 0.025%
Next $1 billion 0.015%
Over $3 billion 0.010%
TRANSFER AGENT: Liberty Funds Services, Inc., formerly Colonial Investors
Service Center, Inc. (the Transfer Agent), an affiliate of the Administrator,
provides shareholder services for a monthly fee equal to 0.236% annually of the
Fund's average net assets and receives reimbursement for certain out of pocket
expenses.
Effective October 1, 1997 and continuing through September 1998, the Transfer
Agent fee was reduced by 0.0012% in cumulative monthly increments, resulting in
a decrease in the fee from 0.25% to 0.236% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc. (the
Distributor), a subsidiary of the Administrator, is the Fund's principal
underwriter. For the year ended December 31, 1998, the Fund has been advised
that the Distributor retained net underwriting discounts of $233,889 on sales of
the Fund's Class A, Class C and Class T shares and received contingent deferred
sales charges (CDSC) of $126,238, $1,917,816 and $93,446 on Class A, Class B and
Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually on Class A, Class B and Class C net assets
as of the 20th of each month. The plan also requires the payment of a
distribution fee to the Distributor equal to 0.75% of the average net assets
attributable to Class B and Class C shares.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Administrator has agreed, until further notice, to waive
fees and bear certain Fund expenses to the extent that total expenses (exclusive
of service fees, distribution fees, brokerage commissions, interest, taxes and
extraordinary expenses, if any) exceed 1.55% annually of the Fund's average net
assets.
For the year ended December 31, 1998, the Fund's operating expenses, as defined
above, did not exceed the 1.55% expense limit.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Advisor or Administrator.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
................................................................................
INVESTMENT ACTIVITY: During the year ended December 31, 1998, purchases and
sales of investments, other than short-term obligations, were $113,560,445 and
$208,341,380, respectively.
Unrealized appreciation (depreciation) at December 31, 1998, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 77,395,824
Gross unrealized depreciation (203,678,691)
-------------
Net unrealized depreciation $(126,282,867)
-------------
CAPITAL LOSS CARRYFORWARDS: At December 31, 1998, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
2005 $ 81,206,000
2006 229,760,000
------------
$310,966,000
------------
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
OTHER: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of currency exchange or
other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 4. LINE OF CREDIT
................................................................................
The Fund may borrow up to 33 1/3% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended December 31, 1998.
NOTE 5. RESULTS OF SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
................................................................................
On October 30, 1998, a Special Meeting of Shareholders of the Fund was held to
approve the following items, all as described in the Proxy Statement for the
Meeting. On August 21, 1998, the record date for the Meeting, the Fund had
outstanding 108,540,820 shares of beneficial interest. The votes cast at the
Meeting were as follows:
AUTHORITY
FOR WITHHELD
--- --------
To Elect a Board of Trustees.
54,477,774 2,121,777
54,505,145 2,094,403
54,500,620 2,098,928
54,552,382 2,047,166
54,503,027 2,096,520
54,525,285 2,074,264
54,490,615 2,108,935
54,512,441 2,087,108
54,533,143 2,066,405
54,521,629 2,077,918
54,515,006 2,084,481
54,531,425 2,068,104
54,548,081 2,051,467
To amend fundamental investment policies regarding borrowing and lending.
FOR AGAINST ABSTAIN
--- ------- -------
38,653,421 2,802,374 1,897,676
To approve or disapprove changes to fundamental investment policies.
FOR AGAINST ABSTAIN
--- ------- -------
38,384,207 2,987,351 1,981,915
To approve or disapprove the amended and restated Agreement and Declaration of
Trust.
FOR AGAINST ABSTAIN
--- ------- -------
38,388,058 2,881,290 2,084,123
To approve policies for a master fund/feeder fund structure.
FOR AGAINST ABSTAIN
--- ------- -------
38,185,714 3,079,219 2,088,539
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
Year ended December 31
------------------------------------------------------------------------------------
1998
Class A Class B Class C Class T Class Z
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of
period $ 9.020 $ 8.920 $ 8.940 $ 9.010 $ 9.010
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b)(c) 0.145 0.091 0.091 0.163 0.163
Net realized and unrealized loss (1.234) (1.228) (1.241) (1.232) (1.252)
------- ------- ------- ------- -------
Total from Investment Operations (1.089) (1.137) (1.150) (1.070) (1.090)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.151) (0.083) (0.080) (0.171) (0.171)
From net realized gains - - - - -
------- ------- ------- ------- -------
Total Distributions
Declared to Shareholders (0.151) (0.083) (0.080) (0.171) (0.171)
------- ------- ------- ------- -------
Net asset value - End of period $ 7.780 $ 7.700 $ 7.710 $ 7.770 $ 7.750
------- ------- ------- ------- -------
Total return (d) (12.08)% (12.77)% (12.89)% (11.87)% (12.09)%
------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Operating expenses (e) 1.78% 2.53% 2.53% 1.53% 1.53%
Interest expense - - - - -
Total expenses (e) 1.78% 2.53% 2.53% 1.53% 1.53%
Net investment
income (loss) (e) 2.02% 1.27% 1.27% 2.27% 2.27%
Portfolio turnover 15% 15% 15% 15% 15%
Net assets at end
of period (000) $250,089 $ 280,163 $ 48,316 $ 51,526 $ 138,988
(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) 1998 information includes distributions from securities listed on the Statement of
Operationsrwhichnamountedstoi$0.019,i$0.026,m$0.027, $0.017, $0.026, $0.019 $0.018, $0.037 and $0.016 per share,
respectively. 1997 information includes distribution from Hong Kong Electric Holdings Ltd. which amounted to $0.015 per
share in 1997.
(d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent
deferred sales charge.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
<CAPTION>
Year ended December 31
---------------------------------------------------------------------------
1997
Class A Class B Class C (a) Class T Class Z
------- ------- ----------- ------- -------
<S> <C> <C> <C> <C>
$ 13.750 $ 13.640 $ 13.660 $ 13.750 $ 13.750
-------- -------- -------- -------- --------
0.081 (0.011) (0.012) 0.112 0.112
(4.735) (4.667) (4.666) (4.740) (4.740)
-------- -------- -------- -------- --------
(4.654) (4.678) (4.678) (4.628) (4.628)
-------- -------- -------- -------- --------
(0.034) - - (0.070) (0.070)
(0.042) (0.042) (0.042) (0.042) (0.042)
-------- -------- -------- -------- --------
(0.076) (0.042) (0.042) (0.112) (0.112)
-------- -------- -------- -------- --------
$ 9.020 $ 8.920 $ 8.940 $ 9.010 $ 9.010
-------- -------- -------- -------- --------
(33.95)% (34.41)% (34.36)% (33.76)% (33.76)%
-------- -------- -------- -------- --------
1.73% 2.48% 2.48% 1.48% 1.48%
(f) (f) (f) (f) (f)
1.73% 2.48% 2.48% 1.48% 1.48%
0.64% (0.11)% (0.11)% 0.89% 0.89%
12% 12% 12% 12% 12%
$323,407 $362,442 $ 62,703 $ 82,095 $180,832
(e) The benefits derived from custody credits and directed brokerage arrangements
had no impact.
(f) Rounds to less than 0.01%.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
Year ended December 31
----------------------------------------------------------------------------
1996
Class A Class B Class C Class T Class Z
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period $ 12.460 $ 12.390 $ 12.410 $ 12.450 $ 12.450
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) 0.083 (0.016) (0.016) 0.116 0.116
Net realized and unrealized gain 1.278 1.275 1.270 1.281 1.281
-------- -------- -------- -------- --------
Total from Investment
Operations 1.361 1.259 1.254 1.397 1.397
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.067) (0.005) - (0.093) (0.093)
From net realized gains (0.004) (0.004) (0.004) (0.004) (0.004)
-------- -------- -------- -------- --------
Total Distributions
Declared to Shareholders (0.071) (0.009) (0.004) (0.097) (0.097)
-------- -------- -------- -------- --------
Net asset value - End of period $ 13.750 $ 13.640 $ 13.660 $ 13.750 $ 13.750
-------- -------- -------- -------- --------
Total return (e) 10.94% 10.16% 10.11% 11.24% 11.24%
-------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 1.74% 2.49% 2.49% 1.49% 1.49%
Net investment income (g) 0.62% (0.13)% (0.13)% 0.87% 0.87%
Portfolio turnover 6% 6% 6% 6% 6%
Net assets at end of period (000) $568,497 $572,089 $108,785 $187,659 $366,849
(a) Class A, Class B and Class C shares were initially offered on April 1, 1995. Per share data reflects activity from that
date.
(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) Per share data was calculated using average shares outstanding during the period. (d) Includes distribution from Taiwan
Fund which amounted to $ 0.013 per share. (e) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
Year ended December 31
----------------------------------------------------------------------------------
1995
Class A (a) Class B (a) Class C (a) Class T (b) Class Z (b)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ 10.860 $ 10.860 $ 10.860 $ 10.800 $ 10.800
-------- -------- -------- -------- --------
0.067 (0.003) (0.003) 0.099 (d) 0.099 (d)
1.617 1.594 1.615 1.656 1.656
-------- -------- -------- -------- --------
1.684 1.591 1.612 1.755 1.755
-------- -------- -------- -------- --------
(0.060) (0.037) (0.038) (0.081) (0.081)
(0.024) (0.024) (0.024) (0.024) (0.024)
-------- -------- -------- -------- --------
(0.084) (0.061) (0.062) (0.105) (0.105)
-------- -------- -------- -------- --------
$ 12.460 $ 12.390 $ 12.410 $ 12.450 $ 12.450
-------- -------- -------- -------- --------
15.52% (f) 14.65% (f) 14.85% (f) 16.28% 16.28%
-------- -------- -------- -------- --------
1.37% (f) 1.93% (f) 1.93% (f) 1.60% 1.60%
0.28% (f) (0.28)% (f) (0.28)% (f) 0.75% 0.75%
4% 4% 4% 4% 4%
$ 196,870 $ 112,588 $ 21,420 $ 195,986 $ 345,583
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage arrangements had no impact in 1996. In 1995, the
benefits derived from custody credits and directed brokerage arrangements had an impact of 0.07% on Class A, Class B
and Class C: 0.11% on Class T and Class Z.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended
December 31
----------
1994
----------
Net asset value - Beginning of period $ 12.440
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.060
Net realized and unrealized loss (1.550)
--------
Total from Investment Operations (1.490)
--------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.040)
From net realized gains (0.110)
--------
Total Distributions Declared to Shareholders (0.150)
--------
Net asset value - End of period $ 10.800
--------
Total return (b) (11.96)%
--------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.29%
Net investment income 0.57%
Portfolio turnover 8%
Net assets at end
of period (000) $ 456,241
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST VII AND THE SHAREHOLDERS OF
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 Newport Tiger Fund, (the "Fund"),
(formerly Colonial Newport Tiger Fund) (a series of Colonial Trust VII), at
December 31, 1998, the results of its operations, the changes in its net assets
and the financial highlights for the periods indicated in conformity with
generally accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of portfolio positions at December 31, 1998
by correspondence with the custodian, provide a reasonable basis for the opinion
expressed above. The financial highlights for the period ended December 31, 1994
was audited by another Independent Accountant whose report, dated January 25,
1995, expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 1999
<PAGE>
HOW TO REACH US
BY PHONE OR BY MAIL
BY TELEPHONE
CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends and capital gains information ......... press [1]
For account information .......................................... press [2]
To speak to a service representative ............................. press [3]
For yield and total return information ........................... press [4]
For duplicate statements or new supply of checks ................. press [5]
To order duplicate tax forms and year-end statements ............. press [6]
(February through May)
To review your options at any time during your call .............. press [*]
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET.
TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
LITERATURE - 1-800-426-3750
To request literature on any fund distributed by Liberty Funds Distributor,
Inc., call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
LIBERTY FUNDS SERVICES, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your Fund has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Liberty Funds Services directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES(1): Exchange all or part of your account into the same share
class of another fund distributed by Liberty Funds Distributor, Inc. by phone or
mail.
EASY ACCESS TO YOUR MONEY(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it within one year, you can reinvest in any fund distributed by
Liberty Funds Distributor of the same share class without any penalty or sales
charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Fund account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
processing date will be the previous business day. Dividends and capital gains
must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Funds Distributor. Minimum for each transfer is $100.
RETIREMENT PLANS: Choose from a broad range of retirement plans, including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at
any time. Exchanges are not available on all funds. Investors who purchase
Class B or C shares, or $1 million or more of Class A shares, may be subject
to a contingent deferred sales charge.
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
LIBERTY FUNDS DISTRIBUTOR INVESTOR OPPORTUNITIES: Mailed with your quarterly
account statements, this newsletter highlights timely investment strategies,
portfolio manager commentary and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Newport Greater China Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Newport Greater China Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call 1-800-426-3750 and
additional reports will be sent to you.
This report has been prepared for shareholders of Newport Greater China Fund.
This report may also be used as sales literature when preceded or accompanied by
the current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund and with the most recent copy of
the Liberty Funds Distributor, Inc. Performance Update.
*Effective October 1, 1998, Colonial Investors Service Center, Inc. -- the
Transfer Agent for Colonial, Stein Roe Advisor and Newport Funds -- changed its
name to Liberty Funds Services, Inc.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
[logo] L I B E R T Y
COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621 1-800-426-3750
Visit us at www.libertyfunds.com
NT-02/341G-1298 (2/99) 99/131
