<PAGE>
LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present Colonial High Yield Securities Fund's annual report
for the 12 months ended December 31, 1994. During the fiscal year your Fund
provided investors with a steady flow of high current income through investments
in high yield, high risk corporate bonds.(1)
FUND PERFORMANCE (1/1/94 - 12/31/94)(2)
<TABLE>
<CAPTION>
CLASS A CLASS B
INCEPTION 3/31/80 6/8/92
- --------------------------------------------------------------------------------
<S> <C> <C>
Distributions declared
per share $0.627 $0.577
- --------------------------------------------------------------------------------
SEC yield on 12/31/94 9.42% 9.13%
- --------------------------------------------------------------------------------
12-month total return assuming
reinvestment of all distributions
and no sales charge or CDSC -0.34% -1.09%
- --------------------------------------------------------------------------------
Net asset value per share
on 12/31/94 $ 6.30 $ 6.30
- --------------------------------------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
The preliminary 1994 GDP of 4.0% indicates the rapid pace at which the U.S.
economy has been expanding. After several years of often lackluster growth, this
was certainly a welcome development. However, along with economic strength came
renewed fears about inflation. The Federal Reserve Board took firm action,
raising short-term interest rates six times during the fiscal year. As a result,
yields moved higher across the bond market.
Although high yield bonds were not immune from the volatility that rocked the
bond market, they fared somewhat better than other fixed-income securities. This
reflected the improved climate for the corporations that issue these bonds.
Nevertheless, investors have become more cautious, and are now demanding higher
yields to compensate them for the increased risk inherent in the current
economic environment. Over all, yields are now quite attractive.
INVESTMENT STRATEGY
To reduce the impact of bond market volatility on the Fund's net asset value,
the Fund maintained a position in short-term, liquid investments of 7.0% to
10.0% throughout most of the fiscal year. On the last day of the period the
Fund's average maturity was 7.2 years, the average coupon rate for all holdings
was 11.1%, and average duration was 4.5 years. Duration is a measure used to
determine a portfolio's exposure to risk over time. Portfolio's with longer
durations generally provide greater returns, but with more risk and price
volatility.
To further diversify the portfolio, there was a slight increase in foreign
investments. Your Fund manager found cable companies in the United Kingdom to be
especially attractive. U.S. investments were focused on industries such as paper
products and communications, which tend to do well at this point in an economic
cycle. As the recovery begins to mature, there may be a shift in emphasis toward
less cyclical sectors, such as supermarkets (food stores) and health services.
During the most recent fiscal year, however, investments in supermarkets, along
with casinos (amusement & recreation), were reduced due to increased competition
in those industries. Industries represented in the portfolio at the end of the
fiscal year included communications (11.7%); health services (7.5%); oil & gas
extraction (6.1%); paper products (6.0%); and chemicals (6.0%).
It appears that the Fed's monetary policy finally began to take effect during
the final two months of 1994. Although there may be further tightening, the
economy should begin to slow sometime during 1995. This should help create a
more favorable climate for all fixed-income securities.
[PHOTO OF JOHN A. McNEICE, JR.]
Sincerely,
/s/ John A. McNeice, Jr.
- -------------------------
John A. McNeice, Jr.
President
February 10, 1995
(1) The Fund's Trustees recently approved modifications to the wording of your
Fund's objective to more precisely describe the Fund's investment approach. No
Fund policies or practices were changed. As of 11/30/94, the Fund's modified
objective is to seek high current income and total return by investing primarily
in high yield, high risk corporate debt securities.
(2) Refer to the mountain chart on page two.
<PAGE>
REPORT FROM COLONIAL MANAGEMENT
- --------------------------------------------------------------------------------
Your Fund's performance during the fiscal year ended December 31, 1994,
demonstrated the value of its investment strategy. Although the Fund invests
primarily in high yield, high risk corporate bonds issued by U.S. corporations,
it also has the flexibility to invest in U.S. government securities (10.0% of
investments on 12/31/94) and high yield bonds issued by foreign corporations
(2.3% of investments). The changes in the individual sector weightings from the
beginning to the end of the fiscal year are illustrated in the chart at the
right.
PORTFOLIO PROFILES
The Fund maintains a portfolio diversified across different sectors of the
entire bond market and a variety of securities within those sectors. However,
Lead Portfolio Manager Andrea Feingold did find certain industries and companies
to be particularly attractive.
ENERGY RELATED
This industry produces the petroleum and natural gas products we use every
day. These bonds may therefore be more reliable than securities from more
cyclical industries. GULF CANADA LTD. is an energy exploration and production
company that focuses on oil, natural gas, and natural gas liquids. TRITON ENERGY
is an international gas exploration and production company, with operations in
15 countries, including Malaysia, Thailand, and France.
HEALTH SERVICES
Healthcare companies should continue to offer attractive investment
opportunities. This sector will benefit from favorable demographic trends in the
United States and further consolidation within the industry. HILL HAVEN, with
353 healthcare facilities in 36 states, is the second largest operator of
nursing homes in the U.S. HEALTHTRUST operates 116 acute care hospitals
throughout the South and Midwest. It was recently announced that the company
will be acquired by Horizon Health Care, which may further benefit this holding.
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/94
<TABLE>
<CAPTION>
CLASS A CLASS B
NAV MOP NAV W/CDSC
<S> <C> <C> <C> <C>
1 year -0.34% -5.08% -1.09% -5.62%
5 years 12.10% 11.02% -- --
10 years 11.31% 10.77% -- --
Since Inception 12.61% 12.24% 9.03% 8.02%
</TABLE>
<TABLE>
CHANGES IN BOND MARKET
SECTOR WEIGHTINGS
<CAPTION>
12/31/93 - 12/31/94
<S> <C> <C>
Foreign High Yield Corp. 0% 2.1%
U.S. Government 1.9% 10.0%
U.S. High Yield Corp. 98.1% 87.9%
</TABLE>
<TABLE>
COMPARISON OF THE CHANGE IN VALUE OF $10,000
INVESTED IN COLONIAL HIGH YIELD SECURITIES FUND
AND THE FIRST BOSTON HIGH YIELD INDEX
12/31/84 - 12/31/94
<CAPTION>
CHYSE MOP NAV FIRST BOSTON
<S> <C> <C> <C>
12/84 10,000 9,525 10,000
3/85 10,429 9,933 10,591
6/85 11,141 10,612 11,370
9/85 11,524 10,977 11,762
12/85 12,178 11,599 12,494
3/86 12,901 12,288 13,596
6/86 13,371 12,736 14,117
9/86 13,546 12,903 14,190
12/86 13,981 13,317 14,449
3/87 14,804 14,101 15,327
6/87 14,696 13,998 15,106
9/87 14,577 13,884 15,038
12/87 14,582 13,890 15,391
3/88 15,440 14,706 16,266
6/88 15,933 15,176 16,812
9/88 16,267 15,494 17,109
12/88 16,478 15,695 17,492
3/89 16,762 15,966 17,797
6/89 17,231 16,412 18,439
9/89 17,029 16,220 18,058
12/89 16,487 15,704 17,561
3/90 15,702 14,956 17,107
6/90 16,477 15,695 18,088
9/90 14,772 14,071 16,453
12/90 14,038 13,371 16,440
3/91 16,181 15,412 19,485
6/91 17,708 16,867 20,929
9/91 19,122 18,214 22,631
12/91 20,198 19,239 23,634
3/92 22,262 21,205 25,569
6/92 23,065 21,969 26,196
9/92 24,108 22,963 27,142
12/92 24,470 23,308 27,570
3/93 25,991 24,757 29,493
6/93 27,355 26,056 30,639
9/93 27,861 26,537 31,398
12/92 29,289 27,898 32,783
3/94 29,361 27,967 32,435
6/94 29,175 27,789 31,967
9/94 29,248 27,859 32,478
12/94 29,188 27,802 32,464
</TABLE>
The First Boston High Yield Index is an unmanaged index that tracks the
performance of higher-yielding, lower-rated corporate bonds. The 30-day SEC
yield on December 31, 1994, of 9.42% for Class A shares and 9.13% for Class B
shares reflects the portfolio's earning power, net of expenses, and does not
include changes in Fund price. SEC yield on January 31, 1995, was 9.48% for
Class A shares and 9.20% for Class B shares. Past performance cannot predict
future results. Return and value of an investment will vary, resulting in a gain
or loss on sale. Performance for different share classes will vary based on
differences in sales charges and fees associated with each class. All results
shown assume reinvestment of distributions. Net asset value (NAV) return does
not include sales charges or contingent deferred sales charges (CDSC). Maximum
offering price (MOP) return includes the maximum sales charge of 4.75%. The CDSC
return reflects the maximum charge of 5.00% for one year and 3.00% since
inception.
<PAGE>
INVESTMENT PORTFOLIO (in thousands) DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONDS & NOTES - 96.3% PAR VALUE
- ------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS & NOTES - 86.6%
- ------------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - 1.5%
BUILDING CONSTRUCTION - 0.5%
Nortek, Inc.,
9.875% 03/01/04. . . . . . . . . $ 3,500 $ 3,115
--------
SPECIAL TRADE CONTRACTORS - 1.0%
Overhead Door, Inc.,
12.250% 02/01/00. . . . . . . . . 6,750 6,817
- ------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 2.9%
DEPOSITORY INSTITUTIONS - 0.2%
Pioneer Financial Corp.,
13.500% 12/01/98. . . . . . . . . 2,000 1,440
--------
FINANCIAL SERVICES - 0.8%
Comdata Network, Inc.,
12.500% 12/15/99. . . . . . . . . 5,000 5,350
--------
INSURANCE CARRIERS - 0.9%
Reliance Group Holdings, Inc.,
9.000% 11/15/00. . . . . . . . . 6,000 5,460
--------
NONDEPOSITORY CREDIT INSTITUTIONS - 0.6%
Card Establishment Services, Inc.,
Series B,
10.000% 10/01/03. . . . . . . . . 4,000 4,160
--------
REAL ESTATE - 0.4%
Residential Trust Co.,
10.500% 10/15/03. . . . . . . . . 2,500 2,366
- ------------------------------------------------------------------------------
MANUFACTURING - 41.0%
CHEMICALS - 6.0%
Agricultural Minerals Co., Limited
Partnership,
10.750% 09/30/03. . . . . . . . . 8,500 8,585
Energy Ventures, Inc.,
10.250% 03/15/04. . . . . . . . . 3,500 3,290
Huntsman Corp.,
11.000% 04/15/04. . . . . . . . . 9,000 9,360
OSI Special Holdings Co.,
stepped coupon, (11.500%
04/15/99) 04/15/04 (a). . . . . . . . . . . . . 6,000 3,660
Polymer Group, Inc.,
12.250% 07/15/02. . . . . . . . . 3,500 3,360
Revlon Worldwide Corp.,
(b) 03/15/98. . . . . . . . . 9,000 5,265
UCC Investors Holdings, Inc.:
11.000% 05/01/03. . . . . . . . . 3,000 2,955
stepped coupon, (12.000%
5/01/98) 05/01/05 (a) . . . . . . . . . . 3,000 1,987
--------
38,462
--------
ELECTRONIC & ELECTRICAL EQUIPMENT - 2.3%
Amphenol Corp.:
10.450% 11/01/01. . . . . . . . . 4,000 4,240
12.750% 12/15/02. . . . . . . . . 4,000 4,480
Exide Corp.,
10.750% 12/15/02. . . . . . . . . 2,000 2,000
IMO Industries, Inc.,
12.000% 11/01/01. . . . . . . . . 2,000 2,018
International Semi-Tech
Microelectronics, Inc., stepped
coupon, (11.500%
08/15/00) 08/15/03 (a) . . . . . . . . . . . . 5,000 2,150
--------
14,888
--------
FOOD & KINDRED PRODUCTS - 2.4%
Gillett Holdings, Inc.,
12.250% 06/30/02. . . . . . . . . 4,650 4,743
Pilgrim's Pride Corp.,
10.875% 08/01/03. . . . . . . . . 6,000 5,655
Seminole Kraft, Inc.,
13.500% 10/15/96. . . . . . . . . 601 601
Specialty Foods Corp., Series B,
11.250% 08/15/03. . . . . . . . . 5,000 4,350
--------
15,349
--------
FURNITURE & FIXTURES - 0.6%
Interco, Inc., Series A,
10.000% 06/01/01. . . . . . . . . 3,834 3,872
--------
LUMBER & WOOD PRODUCTS - 0.9%
Triangle Pacific Corp.,
10.500% 08/01/03. . . . . . . . . 6,000 5,745
--------
MACHINERY & COMPUTER EQUIPMENT - 1.2%
Foamex Corp., Limited Partnership,
11.250% 10/01/02. . . . . . . . . 2,000 1,900
SPX, Inc.,
11.750% 06/01/02. . . . . . . . . 6,000 5,970
--------
7,870
--------
MISCELLANEOUS MANUFACTURING - 3.7%
American Standard Co.:
stepped coupon, (10.500%
06/01/98) 06/01/05 (a) . . . . . . . . . . . . 14,000 8,995
11.375% 05/15/04. . . . . . . . . 2,000 2,050
Coleman Holdings Co.,Series B,
(b) 05/27/98. . . . . . . . . 7,000 4,707
Eagle Industries, Inc., stepped coupon,
(10.500% 07/15/98) 07/15/03 (a) . . . . . . . . 12,250 7,962
--------
23,714
--------
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONDS & NOTES - CONT. PAR VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
PAPER PRODUCTS - 6.0%
Container Corp. of America,
Series A,
11.250% 05/01/04. . . . . . . . . $ 6,000 $ 6,150
Domtar, Inc.,
12.000% 04/15/01. . . . . . . . . 6,000 6,240
Fort Howard Corp.,
12.625% 11/01/00. . . . . . . . . 285 293
Gaylord Container Corp.,
stepped coupon, (12.750%
05/15/96) 05/15/05 (a). . . . . . . . . . . . . 3,500 3,097
Repap Wisconsin, Inc.,
9.250% 02/01/02. . . . . . . . . 9,500 8,550
SD Warren Co.
12.000% 12/15/04. . . . . . . . . 5,000 5,125
Stone Container Corp.:
9.875% 02/01/01. . . . . . . . . 2,000 1,880
11.500% 10/01/04. . . . . . . . . 2,000 2,010
11.875% 12/01/98. . . . . . . . . 5,000 5,175
--------
38,520
--------
PETROLEUM REFINING - 1.6%
Flores & Rucks, Inc.,
13.500% 12/01/04. . . . . . . . . 4,500 4,511
Wainoco Oil Corp.,
12.000% 08/01/02. . . . . . . . . 6,000 6,120
--------
10,631
--------
PRIMARY METAL - 5.0%
A.K. Steel Corp.,
10.750% 04/01/04. . . . . . . . . 8,000 7,920
Inland Steel Co.:
12.000% 12/01/98. . . . . . . . . 3,000 3,180
12.750% 12/15/02. . . . . . . . . 2,000 2,152
Jorgensen Earle M. Co.,
10.750% 03/01/00. . . . . . . . . 6,000 5,760
Magma Copper Co.,
12.000% 12/15/01. . . . . . . . . 6,500 7,020
Talley Manufacturing & Technology,
Inc.,
10.750% 10/15/03. . . . . . . . . 2,250 1,969
Weirton Steel Corp.,
10.875% 10/15/99. . . . . . . . . 4,000 3,950
--------
31,951
--------
PRINTING & PUBLISHING - 1.6%
American Media Operations, Inc.,
11.625% 11/15/04. . . . . . . . . 5,000 5,125
K-III Communications Corp.,
10.625% 05/01/02. . . . . . . . . 2,000 1,940
Marvel Entertainment Group, Inc.,
(b) 04/15/98. . . . . . . . . 5,000 3,075
--------
10,140
--------
RUBBER & PLASTIC - 1.5%
Atlantis Group, Inc.,
11.000% 02/15/03. . . . . . . . . $ 6,500 $ 6,305
Berry Plastics Corp.,
12.250% 04/15/04. . . . . . . . . 3,500 3,378
--------
9,683
--------
STONE, CLAY, GLASS & CONCRETE - 2.8%
Owens-Illinois Inc.:
10.500% 06/15/02. . . . . . . . . 6,000 5,925
11.000% 12/01/03. . . . . . . . . 5,000 5,188
USG Corp.,
10.250% 12/15/02. . . . . . . . . 6,600 6,715
--------
17,828
--------
TEXTILE MILL PRODUCTS - 0.8%
Bibb Co.,
14.000% 10/01/99. . . . . . . . . 1,750 928
Consoltex Group, Inc., Series B,
11.000% 10/01/03. . . . . . . . . 3,500 3,220
NTC/BIBB Group, Inc.,
13.875% 08/01/99. . . . . . . . . 2,500 1,200
--------
5,348
--------
TRANSPORTATION EQUIPMENT - 4.6%
Aftermarket Technology Corp.,
12.000% 08/01/04. . . . . . . . . 6,500 6,695
Fairfield Manufacturing Inc.,
11.375% 07/01/01. . . . . . . . . 3,500 3,290
ICON Health & Fitness, Inc. Units,
13.000%7/15/02 (c) . . . . . . . . . 3,000 2,955
JPS Automotive Products Corp.,
11.125% 06/15/01. . . . . . . . . 3,250 3,120
Motor Wheel Corp., Series B,
11.500% 03/01/00. . . . . . . . . 5,000 4,625
Roadmaster Industries, Inc.,
11.750% 07/15/02. . . . . . . . . 4,000 3,840
Venture Holdings Trust Co.,
9.750% 04/01/04. . . . . . . . . 6,000 5,100
--------
29,625
- ------------------------------------------------------------------------------
MINING - 8.5%
CRUDE PETROLEUM & NATURAL GAS - 1.6%
Triton Energy Corp.:
(b) 11/01/97. . . . . . . . . 10,000 7,350
stepped coupon, (9.750%
12/15/96) 12/15/00 (a). . . . . . . . . . . . 4,500 3,358
--------
10,708
--------
OIL & GAS EXTRACTION - 6.1%
Falcon Drilling Co., Inc., Series B,
9.750% 01/15/01. . . . . . . . . 5,000 4,750
Gulf Canada Resources Ltd.,
9.250% 01/15/04. . . . . . . . . 11,000 10,093
</TABLE>
See notes to investment portfolio.
4
<PAGE>
INVESTMENT PORTFOLIO - continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONDS & NOTES - CONT. PAR VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
OIL & GAS EXTRACTION - CONT.
Maxus Energy Corp.,
11.250% 05/01/13. . . . . . . . . $ 353 $ 325
Mesa Capital Corp.,
stepped coupon, (12.750%
06/30/95) 06/30/98 (a) . . . . . . . . . . . 3,500 3,019
Nuevo Energy Co.,
12.500% 06/15/02. . . . . . . . . 2,500 2,562
OPI International, Inc.,
12.875% 07/15/02. . . . . . . . . 3,000 3,240
Plains Resources, Inc.,
12.000% 10/01/99. . . . . . . . . 4,000 3,860
Santa Fe Energy Resources, Inc.,
11.000% 05/15/04. . . . . . . . . 6,500 6,598
TransTexas Gas Corp.,
10.500% 09/01/00. . . . . . . . . 5,000 4,775
--------
39,222
--------
OIL & GAS FIELD SERVICES - 0.8%
Tuboscope Vetco International
Corp.,
10.750% 04/15/03. . . . . . . . . 5,000 4,900
- ------------------------------------------------------------------------------
RETAIL TRADE - 4.9%
FOOD STORES - 3.0%
Homeland Stores, Inc.,
11.750% 03/01/99. . . . . . . . . 4,000 3,880
Pathmark Stores, Inc.:
9.625% 05/01/03. . . . . . . . . 2,000 1,780
stepped coupon, (10.750%
11/01/99) 11/01/03 (a) . . . . . . . . . 9,500 4,845
11.625% 06/15/02. . . . . . . . . 6,500 6,240
Victory Markets, Inc.,
12.500% 03/15/00. . . . . . . . . 4,000 2,680
--------
19,425
--------
HOME FURNISHINGS & EQUIPMENT - 0.4%
Levitz Furniture, Inc.,
12.375% 04/15/97. . . . . . . . . 2,500 2,575
Miscellaneous retail - 1.5%
Barry's Jewelers, Inc.,
12.625% 05/15/96. . . . . . . . . 28 28
Eye Care Centers of America,
12.000% 10/01/03. . . . . . . . . 2,000 1,560
Finlay Fine Jewelry Corp.,
10.625% 05/01/03. . . . . . . . . 4,250 3,995
Thrifty Payless Holdings, Inc.,
11.750% 04/15/03. . . . . . . . . 4,000 3,920
--------
9,503
--------
- ------------------------------------------------------------------------------
SERVICES - 13.3%
AMUSEMENT & RECREATION - 2.6%
Bally's Grand, Inc., Series B,
10.375% 12/15/03. . . . . . . . . 7,000 6,090
Empress River Casino Finance
Corp.,
10.750% 04/01/02. . . . . . . . . 5,500 5,033
Falcon Holdings Group, PIK,
11.000% 09/15/03. . . . . . . . . 2,000 1,680
Grand Casino Resorts, Inc.,
12.500% 02/01/00. . . . . . . . . 4,000 3,760
--------
16,563
--------
BUSINESS SERVICES - 0.0%
Darling Delaware, Inc.,
13.750% 07/15/00. . . . . . . . . 261 239
--------
HEALTH SERVICES - 7.5%
Abbey Healthcare Group, Inc.,
9.500% 11/01/02. . . . . . . . . 5,000 4,500
American Medical International,
13.500% 08/15/01. . . . . . . . . 5,725 6,240
Community Health Systems, Inc.,
10.250% 11/30/03. . . . . . . . . 6,000 5,940
Healthtrust, Inc.,
10.750% 05/01/02. . . . . . . . . 3,000 3,188
Hillhaven Corp.,
10.125% 09/01/01. . . . . . . . . 6,500 6,500
Integrated Health Services, Inc.,
10.750% 07/15/04. . . . . . . . . 7,000 7,000
OrNda Health Corp.:
11.375% 08/15/04. . . . . . . . . 2,500 2,562
12.250% 05/15/02. . . . . . . . . 5,000 5,350
Surgical Health Corp.,
11.500% 07/15/04. . . . . . . . . 3,250 3,250
Wright Medical Technology,
10.750% 07/01/00. . . . . . . . . 3,500 3,378
--------
47,908
--------
HOTELS, CAMPS & LODGING - 2.5%
Bally's Park Place Funding,
9.250% 03/15/04. . . . . . . . . 3,000 2,580
Host Marriott Hospitality, Inc.,
10.500% 05/01/06. . . . . . . . . 4,583 4,560
11.000% 05/01/07. . . . . . . . . 9,000 9,000
--------
16,140
--------
</TABLE>
See notes to investment portfolio.
5
<PAGE>
INVESTMENT PORTFOLIO - continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONDS & NOTES - CONT. PAR VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
SERVICES - CONT.
MISCELLANEOUS REPAIR SERVICES - 0.3%
Universal Outdoor, Inc.,
11.000% 11/15/03. . . . . . . . . $ 2,000 $ 1,800
--------
MOTION PICTURES - 0.4%
Plitt Theatres, Inc.,
10.875% 06/15/04. . . . . . . . . 3,000 2,790
- ------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 13.9%
AIR TRANSPORTATION - 0.4%
World Corp., Inc.,
13.875% 08/15/97. . . . . . . . . 2,500 2,450
--------
Communications - 11.7%
Allbritton Communications Co.,
11.500% 08/15/04. . . . . . . . . 6,000 6,030
Bell Cablemedia, stepped
coupon (11.950% 07/15/99)
07/15/04 (a). . . . . . . . . . . . . . . . . 9,000 4,815
Cablevision Industries Corp.,
10.750% 01/30/02. . . . . . . . . 5,000 4,975
Cablevision Systems Corp.,
10.750% 04/01/04. . . . . . . . . 7,000 7,000
Continental Cablevision, Inc.:
9.500% 08/01/13. . . . . . . . . 1,500 1,373
11.000% 06/01/07. . . . . . . . . 7,000 7,105
Diamond Cable Co.,stepped
coupon, (13.250% 09/30/99)
09/30/04 (a). . . . . . . . . . . . . . . . . 4,000 1,960
Marcus Cable Co., stepped
coupon, (13.500% 08/01/99)
08/01/04 (a). . . . . . . . . . . . . . . . 4,000 2,120
MFS Communications Co., Inc.,
stepped coupon, (9.375%
01/15/99) 01/15/04 (a). . . . . . . . . . . . 7,000 4,130
NWCG Holding Corp.,
(b) 06/15/99. . . . . . . . . 6,000 3,060
Nextel Communications, Inc.,
stepped coupon, (11.500%
09/01/98) 09/01/03 (a) . . . . . . . . . . . 5,000 1,950
Pricellular Wireless Corp., stepped
coupon, (5.000% 11/15/97)
11/15/01 (a) . . . . . . . . . . . . . . . . 5,000 3,300
Rogers Cablesystems of America,
9.650% 01/15/14 (d) . . . . . . . . . 3,500 2,072
SCI Television, Inc.,
11.000% 06/30/05. . . . . . . . . 10,500 10,605
Sinclair Broadcast Group, Inc.,
10.000% 12/15/03. . . . . . . . . 5,500 5,115
Southeastern Public Service Co.,
11.875% 02/01/98. . . . . . . . . 1,506 1,491
USA Mobile Communications Holdings,
Inc.:
9.500% 02/01/04. . . . . . . . . 500 405
14.000% 11/01/04. . . . . . . . . 1,500 1,530
Young Broadcasting, Inc.,
11.750% 11/15/04. . . . . . . . . 6,000 6,060
--------
75,096
--------
GAS SERVICES - 0.4%
Midland Funding Corp.,
10.330% 07/23/02. . . . . . . . . 3,029 2,863
--------
TRANSPORTATION - 1.0%
Trism, Inc.,
10.750% 12/15/00. . . . . . . . . 7,000 6,650
--------
WATER TRANSPORTATION - 0.4%
Sea Containers Ltd.,
9.500% 07/01/03. . . . . . . . . 2,500 2,275
- ------------------------------------------------------------------------------
WHOLESALE TRADE - 0.6%
DURABLE GOODS
Waxman Industries:
12.250% 09/01/98. . . . . . . . . 3,000 2,790
stepped coupon, (12.750%
06/01/99) 06/01/04 (a) . . . . . . . . . . . . 1,856 817
--------
3,607
- ------------------------------------------------------------------------------
Total corporate fixed-income bonds & notes
(cost $573,206) 557,048
- ------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS- 9.7%
- ------------------------------------------------------------------------------
Federal National Mortgage Association,
10.600% 11/10/95. . . . . . . . . 5,000 5,130
--------
U. S. Treasury Bonds,
12.625% 05/15/95. . . . . . . . . 6,000 6,136
--------
U. S. Treasury Notes:
8.750% 10/15/97. . . . . . . . . 16,326 16,693
11.250% 05/15/95. . . . . . . . . 34,000 34,590
--------
51,283
- ------------------------------------------------------------------------------
Total U.S. government
& agency obligations (cost $69,156) 62,549
- ------------------------------------------------------------------------------
Total bonds & notes (cost $642,362) 619,597
- ------------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
6
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
PREFERRED STOCKS - 1.1% SHARES VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 0.5%
DEPOSITORY INSTITUTIONS - 0.2%
California Federal Bank, 10.625%.................. 15 $ 1,500
-------
HOLDING & OTHER INVESTMENT OFFICES - 0.3%
First Nationwide Bank, 11.500%.................... 20 1,950
- ---------------------------------------------------------------------
MANUFACTURING - 0.6%
PRIMARY METAL - 0.4%
Geneva Steel Company, 14.000%..................... 20 2,240
-------
PRINTING & PUBLISHING - 0.2%
K-III Communications Corp.,
Sr. Exchangeable, $2.85......................... 60 1,515
- ---------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS
& SANITARY SERVICES - 0.0%
LOCAL & SUBURBAN TRANSIT - 0.0%
Greyhound Lines, Inc., 12.500%
Escrow Receipt (e).............................. 2 (f)
Greyhound Lines, Inc., 13.000%
Escrow Receipt (e).............................. 1 (f)
-------
(f)
- ---------------------------------------------------------------------
Total preferred stocks (cost $5,000) 7,205
- ---------------------------------------------------------------------
COMMON STOCKS - 1.0%
- ---------------------------------------------------------------------
MANUFACTURING - 0.4%
CHEMICALS - 0.0%
UCC Investors
Holdings, Inc. (e) (g).......................... 15 193
-------
FOOD & KINDRED PRODUCTS - 0.2%
Dr. Pepper Bottling Company of Texas,
Series A (g).................................... 80 280
Rymer Foods, Inc.(g).............................. 308 1,002
-------
1,282
-------
MACHINERY & COMPUTER EQUIPMENT - 0.0%
Thermadyne Holdings Corp.(g)...................... 17 189
-------
MEASURING & ANALYZING INSTRUMENTS - 0.2%
Bucyrus-Erie Co.(g)............................... 135 943
- ---------------------------------------------------------------------
RETAIL TRADE - 0.4%
FOOD STORES - 0.2%
National Convenience Stores,
Inc. (g)........................................ 124 1,082
-------
MISCELLANEOUS RETAIL - 0.1%
Barry's Jewelers, Inc. (g)........................ 106 745
Macleod-Stedman, Inc. (e) (g)..................... 425 4
Pharmhouse Corp.(g)............................... 1 (f)
749
-------
RESTAURANTS - 0.1%
Host Marriott Corp................................ 8 72
Marriott International, Inc....................... 8 212
-------
284
- ---------------------------------------------------------------------
SERVICES - 0.1%
Business services - 0.1%
American Buildings Co.(g)......................... 19 308
Darling Delaware Corp. (g)........................ 18 224
GTECH Corp. (g)................................... 7 143
-------
675
- ---------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.1%
GAS SERVICES - 0.0%
United Gas Holdings
Corp. (e) (g)..................................... 22 290
-------
MOTOR FREIGHT & WAREHOUSING - 0.1%
St. Johnsbury Trucking
Co. (e) (g)..................................... 79 472
Sun Carriers, Inc.(e) (g)......................... 326 3
-------
475
- ---------------------------------------------------------------------
Total common stocks (cost $16,718) 6,162
- ---------------------------------------------------------------------
WARRANTS (G)- 0.1%
- ---------------------------------------------------------------------
MANUFACTURING - 0.0%
CHEMICALS - 0.0%
OSI Specialties Holdings Co.,
expires 04/15/99................................ 10 90
-------
RUBBER & PLASTIC - 0.0%
BPC Holdings Corp.,
expires 04/15/04................................ 4 53
- ---------------------------------------------------------------------
MINING - 0.0%
Oil & gas extraction - 0.0%
Forest Oil Corp.,
expires 10/01/96................................ 23 13
- ---------------------------------------------------------------------
RETAIL TRADE - 0.0%
FOOD STORES - 0.0%
National Convenience Stores, Inc.,
expires 03/09/98................................ 68 44
Purity Supreme, Inc.,
expires 08/06/97................................ 9 (f)
Southland Corp.,
expires 03/05/96................................ 34 93
-------
137
- ---------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
7
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
WARRANTS - CONT. SHARES VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
RETAIL TRADE - CONT.
MISCELLANEOUS RETAIL - 0.0%
Eye Care Centers of America,
expires 10/01/03................................ 2 $ 10
- ----------------------------------------------------------------------
SERVICES - 0.1%
HEALTH SERVICES - 0.1%
Wright Medical Technology,
expires 06/15/03................................ 1 184
--------
Hotels, camps & lodging - 0.0%
Capital Gaming International Corp.,
expires 02/01/99................................ 6 4
- ----------------------------------------------------------------------
WHOLESALE TRADE - 0.0%
DURABLE GOODS - 0.0%
Waxman Industries,
expires 06/01/04................................ 59 15
- ----------------------------------------------------------------------
Total warrants (cost $409) 506
- ----------------------------------------------------------------------
Total investments - 98.5% (cost $664,489) (h) 633,470
- ----------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 1.4% PAR
Repurchase agreement with Lehman Government
Securities, Inc., dated 12/30/94, due 01/03/95
at 5.850%, collateralized by U.S.Treasury notes
with various maturities to 1999, market value
$9,018 (repurchase proceeds $8,837) $ 8,831 8,831
- ----------------------------------------------------------------------
OTHER ASSETS & LIABILITIES - 0.1% 928
- ----------------------------------------------------------------------
NET ASSETS - 100.0% $643,229
- ----------------------------------------------------------------------
</TABLE>
Notes to investment portfolio:
(a) Currently zero coupon. Shown parenthetically is the interest to be paid
and the date the Fund will begin to accruing this rate.
(b) Zero coupon bond.
(c) Each unit consists of one bond and one warrant to purchase shares of Class
A and Class L common stock.
(d) This security is Canadian. Par amount is stated in Canadian dollars.
(e) The value of this security represents fair value as determined in good
faith under the direction of the Trustees.
(f) Rounds to less than one.
(g) Non-income producing.
(h) Cost for federal income tax purposes is $664,751.
Acronym Name
------- ---------------
PIK Payment-In-Kind
See notes to financial statements.
8
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES
December 31, 1994
(in thousands except for per share amounts and footnote)
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $664,489)............................... $633,470
Short-term obligations............................................. 8,831
--------
642,301
Receivable for:
Interest............................................. $ 14,029
Investments sold..................................... 1,415
Fund shares sold..................................... 1,041
Other.................................................. 66 16,551
-------- --------
Total assets........................................ 658,852
LIABILITIES
Payable for:
Investments purchased................................ 14,486
Fund shares repurchased.............................. 1,076
Accrued:
Deferred Trustees fees............................... 22
Other................................................ 39
--------
Total liabilities................................... 15,623
--------
NET ASSETS $643,229
--------
Net asset value & redemption price per share - Class A
($389,791/61,852)................................................ $6.30
--------
Maximum offering price per share - Class A
($6.30/0.9525)................................................... $6.61*
--------
Net asset value & offering price per share - Class B
($253,438/40,218)................................................ $6.30
--------
COMPOSITION OF NET ASSETS
Capital paid in.................................................. $740,180
Undistributed net investment income.............................. 340
Accumulated net realized loss.................................... (66,269)
Net unrealized depreciation on:
Investments.................................................... (31,019)
Foreign currency transactions.................................. (3)
--------
$643,229
--------
STATEMENT OF OPERATIONS
Year ended December 31, 1994
(in thousands)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest........................................................... $ 64,571
Dividends.......................................................... 916
--------
65,487
EXPENSES
Management fee......................................... $ 3,832
Service fee............................................ 1,599
Distribution fee - Class B............................. 1,742
Transfer agent......................................... 1,848
Bookkeeping fee........................................ 233
Trustees fees.......................................... 44
Custodian fee.......................................... 22
Audit fee.............................................. 47
Legal fee.............................................. 9
Reports to shareholders................................ 16
Registration fees...................................... 55
Other.................................................. 149 9,596
-------- --------
Net investment income..................................... 55,891
--------
NET REALIZED & UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments ......................................... (18,758)
Foreign currency transactions........................ (22)
Forward currency contracts........................... 22
--------
Net realized loss.............................................. (18,758)
Net unrealized depreciation
during the period on:
Investments........................................ (40,417)
Foreign currency transactions...................... (3)
--------
Net unrealized depreciation.................................. (40,420)
--------
Net loss................................................... (59,178)
--------
Net decrease in net assets from operations......................... $ (3,287)
--------
</TABLE>
* On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
9
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended
December 31
----------------------
1994 1993
---------- ---------
<S> <C> <C>
Increase (decrease) in net assets
Operations
Net investment income................................ $ 55,891 $ 52,450
Net realized gain (loss)............................. (18,758) 29,401
Net unrealized appreciation (depreciation)........... (40,420) 15,174
--------- --------
Net increase (decrease) from operations........... (3,287) 97,025
Distributions
From net investment income - Class A................. (38,370) (38,958)
From net investment income - Class B................. (20,184) (14,522)
--------- --------
(61,841) 43,545
--------- --------
Fund share transactions
Receipts for shares sold - Class A................... 101,116 119,356
Value of distributions reinvested - Class A.......... 15,346 16,518
Cost of shares repurchased - Class A................. (128,358) (72,816)
--------- --------
(11,896) 63,058
--------- --------
Receipts for shares sold - Class B................... 122,449 137,800
Value of distributions reinvested - Class B.......... 9,440 7,582
Cost of shares repurchased - Class B................. (78,401) (29,385)
--------- --------
53,488 115,997
--------- --------
Net increase from Fund share transactions......... 41,592 179,055
--------- --------
Total increase (decrease)................ (20,249) 222,600
Net assets
Beginning of period ................................. 663,478 440,878
--------- --------
End of period (including undistributed net
investment income of $340 and $2,708, respectively) $ 643,229 $663,478
--------- --------
Number of Fund shares
Sold - Class A....................................... 15,239 17,732
Issued for distributions reinvested - Class A........ 2,325 2,442
Repurchased - Class A................................ (19,165) (10,799)
--------- --------
(1,601) 9,375
--------- --------
Sold - Class B....................................... 18,466 20,467
Issued for distributions reinvested - Class B........ 1,434 1,119
Repurchased - Class B................................ (11,706) (4,346)
--------- --------
8,194 17,240
--------- --------
Net increase in shares outstanding................ 6,593 26,615
Outstanding at
Beginning of period............................... 95,477 68,862
--------- --------
End of period..................................... 102,070 95,477
--------- --------
</TABLE>
See notes to financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
Colonial High Yield Securities Fund (the Fund), a series of Colonial Trust
I, is a Massachusetts business trust, registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end, manage- ment investment
company. The Fund may issue an unlimited number of shares. The Fund offers Class
A shares sold with a front-end sales charge and Class B shares which 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. The following significant accounting policies are
consistently followed by the Fund in the preparation of its financial statements
and conform to generally accepted accounting principles.
- --------------------------------------------------------------------------------
SECURITY VALUATION AND TRANSACTIONS
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Equity securities are valued at the last sale price or, in the case of
unlisted or listed secur- ities for which there were no sales during the day, at
current quoted bid prices.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased or sold.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This
may increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
- --------------------------------------------------------------------------------
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS
All income, expenses (other than the Class B distribution fee), realized
and unrealized gains (losses) are allocated to each class proportionate- ly on a
daily basis for purposes of determining the net asset value of each class.
Class B ratios are calculated by adjusting the expense and net investment
income ratios for the Fund for the entire period by the distribution fee
applicable to Class B 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.
- --------------------------------------------------------------------------------
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM
Interest income is recorded on the accrual basis. Original issue discount
is accreted to interest income over the life of a security with a corresponding
increase in the cost basis; premium and market discount are not amortized or
accreted.
The value of additional securities received as an interest or dividend
payment is recorded as income and as the cost basis of such securities.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and records distributions daily and pays monthly.
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.
- --------------------------------------------------------------------------------
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- -------------------------------------------------------------------------------
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 has adopted Statement of Position 93-4, Foreign Currency
Accounting and Financial Statement Presentation for Investment Companies.
Accordingly, net realized and unrealized gain (loss) on foreign currency
transactions includes the fluctuation in exchange rates on gains and losses
between trade and settlement dates on securities transactions, gains and losses
arising from the disposition of foreign currency, and currency gains and losses
between the accrual and payment dates on dividend and interest income and
foreign withholding taxes.
The Fund does not distinguish that portion of gains and losses on
investments which is due to changes in foreign exchange rates from that which is
due to changes in market prices of the investments. Such fluctuations are
included with the net realized and unrealized gains and losses from investments.
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 or sales of securities. The Fund may also enter into
forward currency contracts to hedge certain other foreign currency denominated
assets. The contracts are used to minimize the exposure to foreign exchange rate
fluctuations during the period between trade and settlement date of the
contracts. All contracts are marked-to- market daily, resulting in unrealized
gains or losses which become realized at the time the forward currency contracts
are closed or mature. Realized and unrealized gains(losses) arising from such
transactions are included in net realized and unrealized gains(losses) on
foreign currency transactions. Forward currency contracts do not eliminate
fluctuations in the prices of the Fund's portfolio securities. While the maximum
potential loss from such contracts is the aggregate face value in U.S. dollars
at the time the contract was opened, the actual exposure is typically limited to
the change in value of the contract (in U.S. dollars) over the period it remains
open. Risks may also arise if counterparties fail to perform their obligations
under the contracts.
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
Colonial Management Associates, Inc. (the Adviser) is the investment
adviser of the Fund and furnishes accounting and other services and office
facilities for a monthly fee equal to 0.60% annually of the Fund's average net
assets.
BOOKKEEPING FEE
The Adviser provides bookkeeping and pricing services for $27,000 per year
plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT
Colonial Investors Service Center, Inc. (the Transfer Agent), an affiliate
of the Adviser, provides shareholder services for a monthly fee equal to 0.25%
annually of the Fund's average net assets, and receives a reimburse- ment for
certain out of pocket expenses.
- --------------------------------------------------------------------------------
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through its Colonial Investment Services (the Distributor)
division, (effective March 1, 1995 a separate subsidiary of the Adviser) is the
Fund's principal underwriter. During the year ended December 31, 1994, the
Distributor retained net underwriting discounts of $159,072 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
$684,199 on Class B 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 of the Fund's 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
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.
- --------------------------------------------------------------------------------
OTHER
The Fund pays no compensation to its officers, all of whom are employees of
the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which
may be ter- minated at any time. Obligations of the plan will be paid solely out
of the Fund's assets.
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the year ended December 31, 1994, purchases and sales of
investments, other than short-term obligations, were $765,666,222 and
$730,762,378, respectively, of which $142,881,875 and $93,633,678, respectively,
were U.S. government securities.
Unrealized appreciation (depreciation) at December 31, 1994, based on cost
of investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation......................... $ 4,570,470
Gross unrealized depreciation......................... (35,851,792)
------------
Net unrealized depreciation ....................... $(31,281,322)
------------
</TABLE>
CAPITAL LOSS CARRYFORWARDS
At December 31, 1994, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<TABLE>
<CAPTION>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
<S> <C>
1997................ $ 4,192,000
1998................ 5,104,000
1999................ 38,162,000
2000................ 4,852,000
2002................ 9,495,000
-----------
$61,805,000
-----------
</TABLE>
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.
13
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B(a) CLASS A CLASS A
------- -------- -------- -------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period........................... $ 6.950 $ 6.950 $ 6.400 $ 6.400 $ 5.860 $ 6.360 $ 4.640 $ 6.340
------- -------- -------- -------- -------- ------- -------- ---------
Income (loss) from investment
operations:
Net investment income............... 0.599 0.549 0.634 0.585 0.669 0.332 0.726 0.799
Net realized and unrealized
gain (loss) on investments........ (0.622) (0.622) 0.576 0.576 0.531 0.057 1.207 (1.669)
------- -------- -------- -------- -------- ------- -------- ---------
Total from investment
operations........................ (0.023) (0.073) 1.210 1.161 1.200 0.389 1.933 (0.870)
------- -------- -------- -------- -------- ------- -------- ---------
Less distributions declared
to shareholders:
From net investment income.......... (0.627) (0.577) (0.660) (0.611) (0.660) (0.349) (0.713) (0.830)
------- -------- -------- -------- -------- ------- -------- ---------
Net asset value - End of period........ $ 6.300 $ 6.300 $ 6.950 $ 6.950 $ 6.400 $ 6.400 $ 5.860 $ 4.640
------- -------- -------- -------- -------- ------- -------- ---------
Total return (b)....................... (0.34)% (1.09)% 19.69% 18.83% 21.15% 5.53%(c) 43.88% (14.86)%
------- -------- -------- -------- -------- ------- -------- ---------
Ratios to average net assets
Expenses............................ 1.23% 1.98% 1.23% 1.98% 1.26% 2.01%(d) 1.36% 1.33%
Net investment income............... 9.03% 8.28% 9.55% 8.80% 10.64% 9.89%(d) 13.41% 14.32%
Portfolio turnover..................... 123% 123% 122% 122% 66% 66% 37% 9%
Net assets at end of period
(000)............................... $389,791 $253,438 $440,942 $222,536 $346,225 $94,653 $299,587 $ 233,813
</TABLE>
(a) Class B shares were initially offered on June 8, 1992. Per share amounts
reflect activity from that date.
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or CDSC.
(c) Not Annualized.
(d) Annualized.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES OF COLONIAL TRUST I AND THE SHAREHOLDERS OF COLONIAL HIGH YIELD
SECURITIES 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 High Yield Securities
Fund (a series of Colonial Trust I) at December 31, 1994, 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, 1994 by correspondence with the custodian and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 10, 1995
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ABOUT OUR COVER...
The symbol on the cover of this Report represents the Fund's primary investment
focus on corporate bonds.
- --------------------------------------------------------------------------------
Colonial High Yield Securities Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
SHAREHOLDER SERVICES AND TRANSFER AGENT
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
This material may be used with potential investors if it is preceded or
accompanied by a current Fund prospectus containing more complete information
including fees, risks, and expenses.
15
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
COLONIAL
HIGH YIELD
SECURITIES FUND
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ANNUAL REPORT
DECEMBER 31, 1994
[COLONIAL MUTUAL FUNDS LOGO]
COLONIAL INVESTMENT SERVICES (C)1995
One Financial Center, Boston, Massachusetts 02111-2621
Printed on recycled paper
HY-02/614A-1294
