<PAGE> 1
INVESTMENT PORTFOLIO
DECEMBER 31, 1998 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 98.3% SHARES VALUE
=========================================================================
CONSTRUCTION - 2.0%
SPECIAL TRADE CONTRACTORS
Zhejiang Expressway Co. Ltd. HK 328 $ 66
--------
- -------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 35.9%
DEPOSITORY INSTITUTIONS - 13.4%
Development Bank of Singapore Ltd. Si 17 153
HSBC Holdings PLC (a) HK 5 120
Hang Seng Bank HK 14 126
Oversea-Chinese Banking Corp. Ltd Si 7 47
--------
446
--------
HOLDING COMPANIES - 9.0%
Cheung Kong Holdings Ltd. HK 23 166
Hutchison Whampoa Ltd. HK 19 134
--------
300
--------
NONDEPOSITORY CREDIT INSTITUTIONS - 6.8%
Acom Co., Ltd. JP 1 83
Aiful Corp. JP 1 48
Shohkoh Fund JP (b) 96
--------
227
--------
REAL ESTATE - 6.7%
SM Prime Holdings, Inc. Ph 170 32
Sun Hung Kai Properties Ltd. HK 26 190
--------
222
--------
- -------------------------------------------------------------------------
MANUFACTURING - 24.9%
COMMUNICATIONS EQUIPMENT - 8.3%
Matsushita Communication Industrial Co. JP 2 94
Matsushita-Kotobuki Electronics Industries JP 3 65
Sony Corp. JP 2 116
--------
275
--------
ELECTRICAL INDUSTRIAL EQUIPMENT - 3.3%
Nidec Corp. JP 1 110
--------
ELECTRICAL INDUSTRIAL COMPONENTS - 1.4%
Minebea Co., Ltd. JP 4 46
--------
FOOD & KINDRED PRODUCTS - 3.1%
Ito En, Ltd. JP 2 103
--------
<PAGE> 2
Investment Portfolio/December 31, 1998
- -------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
=========================================================================
HOUSEHOLD APPLIANCES - 1.1%
Guangdong Kelon Electric Holdings, Class H HK 42 $ 38
--------
MACHINERY & COMPUTER EQUPIMENT - 3.3%
Canon, Inc. JP 2 43
Union Tool JP 1 65
--------
108
--------
PRINTING & PUBLISHING - 3.0%
Singapore Press Holdings Ltd. Si 9 98
--------
RUBBER & PLASTIC -1.4%
Bridgestone Corp. JP 2 45
--------
- -------------------------------------------------------------------------
MINING & ENERGY - 1.1%
COAL MINING
Yanzhou Coal Mining Co. Ltd. CH 224 38
--------
- -------------------------------------------------------------------------
RETAIL TRADE - 7.0%
GENERAL MERCHANDISE STORES - 3.9%
Fujimi, Inc. JP 1 35
Ryohin Keikaku Co., Ltd. JP 1 93
--------
128
--------
MISCELLANEOUS RETAIL - 3.1%
Matsumotokiyoshi Co. JP 3 104
--------
- -------------------------------------------------------------------------
SERVICES - 8.3%
COMPUTER RELATED SERVICES - 4.4%
Fujitsu Support & Services, Inc. JP 1 72
Orix Corporation JP 1 75
--------
147
--------
COMPUTER SOFTWARE - 2.6%
Fuji Soft ABC, Inc. JP 2 86
--------
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 1.3%
Meitec Corp. JP 2 42
--------
- -------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC
GAS & SANITARY SERVICES - 14.3%
ELECTRIC SERVICES - 2.7%
China Light & Power Co., Ltd. HK 18 90
--------
GAS SERVICES - 3.8%
HKng Kong and China Gas Co., Ltd. HK 99 126
--------
TELECOMMUNICATION - 7.8%
China Telecom Ltd. (c) HK 101 176
JPT Data Communications Systems Co. (b) 84
--------
260
--------
<PAGE> 3
Investment Portfolio/December 31, 1998
- -------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
=========================================================================
WHOLESALE TRADE - 4.8%
DURABLE GOODS
Johnson Electric Holdings Ltd. HK 34 $ 87
Li & Fung Ltd. HK 36 74
--------
161
--------
TOTAL INVESTMENTS (cost of $2,490)(d) 3,266
--------
SHORT-TERM OBLIGATIONS - 0.6% 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 $20 (repurchase proceeds $20) $ 20 20
--------
OTHER ASSETS & LIABILITIES, NET - 1.1% 36
=========================================================================
NET ASSETS - 100% $ 3,322
========
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------
(a) The value of this security represents fair value as determined in
good faith under the directions of the Trustees.
(b) Rounds to less than one. (c) Non-income producing.
(d) Cost for federal income tax purposes is the same.
Summary of Securities
by Country Country Value % of Total
- -------------------------------------------------------------------------
Japan JP $ 1,505 46.0
Hong Kong HK 1,393 43.0
Singapore Si 298 9.0
China CH 38 1.0
Phillippines Ph 32 1.0
--------- --------
$ 3,266 100.0
========= ========
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
See notes to financial statements.
<PAGE> 4
STATEMENT OF ASSETS & LIABILITIES
FOR THE SIX MONTH ENDED DECEMBER 31, 1998
( UNAUDITED)
(in thousands except for per share amounts and footnotes)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments at value (cost $2,490) $3,266
Short-term obligations 20
------
3,286
Receivable for:
Dividends 8
Expense reimbursement due from
Advisor/Administrator 54 61
----- ------
Total Assets 3,347
LIABILITIES
Accrued:
Management fee 11
Administration fee 1
Transfer agent fee 1
Bookkeeping fee 4
Other 8
-----
Total Liabilities 25
------
NET ASSETS $3,322
======
Net asset value & redemption price per share -
Class A (3,058/232) $13.18(a)
======
Maximum offering price per share - Class A
($13.18/0.9425) $13.98(b)
======
Net asset value & offering price per share -
Class B ($132/10) $13.16(a)
======
Net asset value & offering price per share -
Class C ($132/10) $13.16(a)
======
</TABLE>
See notes to financial statements.
<PAGE> 5
STATEMENT OF ASSETS & LIABILITIES - CONT.
<TABLE>
<CAPTION>
<S> <C>
COMPOSITION OF NET ASSETS
Capital paid in $2,524
Overdistributed net investment income (24)
Accumulated net realized gain 46
Net unrealized appreciation 776
------
$3,322
======
</TABLE>
(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> 6
STATEMENT OF OPERATIONS
FOR THE SIX MONTH ENDED DECEMBER 31, 1998
( UNAUDITED)
(in thousands)
INVESTMENT INCOME
Dividends:
Hang Seng Bank Limit $ 3
Hong Kong and China Gas Co., Ltd. 2
Singapore Press 8
Sun Hung Kai Properties 2
Yanzhou Coal Mining Co., 2
Other 4
Interest 5
----
Total Investment Income 26
EXPENSES
Management fee $11
Administration fee 3
Service fee - Class A, Class B, Class C 3
Transfer agent fee 3
Bookkeeping fee 10
Trustees fee 1
Custodian fee 5
Audit fee 4
Registration fee 46
Reports to shareholders 1
Other 1
---
88
Fees and expenses waived or borne
by the Advisor/Administrator (64) 24
--- ----
Net Investment Income 2
----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss on:
Investments 46
Foreign currency transactions (2)
---
Net Realized Gain 44
Change in net unrealized appreciation
during the period 776
----
Net Gain 820
----
Increase in Net Assets from Operations $822
====
See notes to financial statements.
<PAGE> 7
STATEMENT OF CHANGES IN NET ASSETS
( UNAUDITED)
(Unaudited)
Six months
ended
December 31
(in thousands) -----------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 2
Net realized gain 44
Net unrealized appreciation 776
------
Net Increase from Operations 822
------
Distributions:
From net investment income - Class A (24)
From net realized gains - Class A --
In excess of net realized gains - Class A --
From net investment income - Class B (1)
From net realized gains - Class B
In excess of net realized gains - Class B --
From net investment income - Class C (1)
From net realized gains - Class C --
In excess of net realized gains - Class C --
------
796
------
Fund Share Transactions:
Receipts for shares sold - Class A 2,300
Value of distributions reinvested - Class A 24
------
2,324
------
Receipts for shares sold - Class B 100
Value of distributions reinvested - Class B 1
------
101
------
Receipts for shares sold - Class C 100
Value of distributions reinvested - Class C 1
------
101
------
Net Increase from Fund
Share Transactions 2,526
------
Total Increase 3,322
NET ASSETS
Beginning of period 2,500
------
End of period (net of overdistributed
net investment income of $24)
$3,322
======
See notes to financial statements.
<PAGE> 8
STATEMENT OF CHANGES IN NET ASSETS - CoNT.
(Unaudited)
Six months
ended
December 31
(in thousands) -----------
NUMBER OF FUND SHARES
Sold - Class A 230
Issued for distributions reinvested - Class A 2
---
232
---
Sold - Class B 10
Issued for distributions reinvested - Class B (a)
---
10
---
Sold - Class C 10
Issued for distributions reinvested - Class C (a)
---
10
---
(a) Rounds less than one.
See notes to financial statements.
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Newport Asia Pacific Fund (the Fund), a series
of Colonial Trust VI, the accompanying financial statements contain all normal
and recurring adjustments for the fair presentation of the financial position of
the Fund at December 31, 1998, and the results of its operations, the changes in
its net assets and the financial highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Newport Asia Pacific 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
or which derive a substantial portion of their revenue from business activity
with or in the Asian Pacific Region number of shares. The Fund offers three
classes of shares: Class A, Class B and Class C. 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.
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.
<PAGE> 10
Notes to Financial Statements/December 31, 1998
- --------------------------------------------------------------------------------
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.
<PAGE> 11
Notes to Financial Statements/December 31, 1998
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
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 3. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Newport Fund Management (the Advisor) is the investment Advisor
of the Fund and receives a monthly fee equal to 1.00% annually of the Fund's
average net assets.
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% annually of the Fund's average net assets.
<PAGE> 12
Notes to Financial Statements/December 31, 1998
- --------------------------------------------------------------------------------
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 no net underwriting discounts on sales of the
Fund's Class A and Class C shares and received no contingent deferred sales
charges (CDSC) on Class A, Class B and Class C share redemptions.
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 1.90% annually of the Fund's average net
assets.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Advisor or Administrator.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the six months ended December 31, 1998, purchases
and sales of investments, other than short-term obligations, were $2,543,762 and
$99,649, respectively.
Unrealized appreciation (depreciation) at December 31, 1998, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $829,328
Gross unrealized depreciation (53,499)
--------
Net unrealized appreciation $775,829
========
<PAGE> 13
Notes to Financial Statements/December 31, 1998
- --------------------------------------------------------------------------------
NOTE 4. PORTFOLIO INFORMATION - CONT.
- --------------------------------------------------------------------------------
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 5. 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 six months ended December 31, 1998.
<PAGE> 14
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
(Unaudited)
Six months ended December 31
--------------------------------
1998
Class A Class B Class C
------- ------- -------
Net asset value -
Beginning of period $10.000 $10.000 $10.000
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (a)(b)(c) 0.013 (0.019) (0.019)
Net realized and
unrealized gain 3.283 3.273 3.273
------- ------- -------
Total from Investment
Operations 3.296 3.254 3.254
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.106) (0.094) (0.094)
In excess of net investment income - - -
------- ------- -------
Total Distributions
Declared to Shareholders (0.106) (0.094) (0.094)
------- ------- -------
Net asset value -
End of period $13.190 $13.160 $13.160
======= ======= =======
Total return (d)(e)(f) 32.87% 32.55% 32.55%
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g)(h) 2.15% 2.90% 2.90%
Net investment
income (loss) (g)(h) 0.28% (0.47)% (0.47)%
Fees and expenses
waived or borne by the
Advisor/Administrator (g)(h) 6.02% 6.02% 6.02%
Portfolio turnover (f) 4% 4% 4%
Net assets at end
of period (000) $ 3,058 $ 132 $ 132
(a) Net of fees and expenses waived or borne by the Advisor/Administrator
which amounted to: $ 0.257 $ 0.257 $ 0.257
(b) Per share data was calculated using average shares outstanding during
the period.
(c) Includes distributions from Hang Seng Bank Limited., Hong Kong and
China Gas Co., Ltd. Singapore Press, Sun Hung Kai Properties, and
Yanzhou Coal Mining Co., which amounted to $0.067 per share.
(d) Total return at net asset value assuming all distributions reinvested
and no initial sales charge or contingent deferred sales charge.
(e) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(h) Annualized.
