<PAGE>
[FLAG GRAPHIC]
COLONIAL
INCOME FUND
[PHOTO OF WOMAN & CHILD]
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE>
COLONIAL INCOME FUND HIGHLIGHTS
JANUARY 1, 1995 - DECEMBER 31, 1995
INVESTMENT OBJECTIVE: Colonial Income Fund seeks as high a level of current
income and total return, as is consistent with prudent risk.
STRATEGY: The Fund pursues its objective by investing primarily in corporate
debt securities.
THE FUND IS DESIGNED TO OFFER:
(check) High monthly income
(check) Opportunity for growth over time
(check) A quality portfolio of bonds
PORTFOLIO MANAGER COMMENTARY: "1995 was an unusually strong year for bond
funds. Early in the year, performance was dominated by U.S. government bonds
which is typically the first market to benefit from interest rate declines.
However, during the period, we increased our focus on corporate bonds, the
primary investment of your Fund."
COLONIAL INCOME FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Inception date 12/1/69 5/15/92
Distributions declared per share $0.480 $0.433
SEC Yield on 12/31/95 5.58% 5.10%
12-month total return, assuming
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC) 20.30% 19.42%
Net asset value per share at 12/31/95 $6.64 $6.64
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO STRUCTURE* QUALITY BREAKDOWN*
(as of 12/31/95) (as of 12/31/95)
- -------------------------------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Corporate Bonds........................ 68.80% AAA................................... 29.40%
2. U.S. Government........................ 26.20% A..................................... 15.08%
3. Other.................................. 5.00% BBB................................... 36.05%
BB and below.......................... 19.47%
</TABLE>
* There can be no guarantee the Fund will continue to maintain these sector
weightings or quality breakdowns in the future. Quality breakdowns are based on
total net assets.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF JOHN A. McNEICE, JR.]
As your Fund's fiscal year ends, it is a good time to examine some facts that
contributed to a memorable year for most mutual fund investors.
In general, equity investors were rewarded with unexpectedly strong corporate
earnings that sent the stock market to new highs in 1995. 1996 is likely to be
a good year as well although a more modest one.
Conditions in the fixed-income and municipal markets were also favorable. Those
investors who stayed the course through 1994's difficult environment were amply
rewarded.
Falling interest rates and controlled inflation helped the economy to grow at a
comfortable pace -- a positive environment for financial markets. We expect
this rate of growth and low inflation to continue into 1996. It is likely that
further reductions in interest rates will take place in the first half of this
year as the Federal Reserve keeps a watchful eye on inflation.
We do expect some sluggishness in the economy in the first half of the year;
with some pickup in the second half of 1996. This will reflect several
factors. Housing should benefit from lower interest rates and excess
inventories of consumer and manufactured goods should be liquidated. Secondly,
the pace of exports is likely to improve due to anticipated economic growth in
Europe and Japan.
In foreign markets, we continue to find that the Pacific Rim offers the best
combination of value and continued good earnings. In general, foreign markets
lagged the U.S. market last year. In 1996, we could see that gap narrow.
This year, investors will pay close attention to the 1996 Presidential
election. Usually, during an election year, incumbents will try to stimulate
economic growth, although this familiar pattern may be altered by the current
budget controversy.
Please remember that bull markets are a normal part of investing, but so are
bear markets. By leaving your money invested over the long term and following a
regular investment plan, you can avoid the difficulties of trying to predict
short-term market movements.
With this update, I encourage you to read the following report on your Fund. We
appreciate the opportunity to help you meet your investment goals.
Respectfully,
/s/ John A. McNeice, Jr.
John A. McNeice, Jr.
President
February 9, 1996
Because market conditions change frequently, there can be no assurance that the
trends described here will continue.
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
CARL ERICSON and RICHARD STEVENS are Vice Presidents of Colonial Management
Associates, Inc. and Portfolio Co-managers of the Colonial Income Fund. Carl
has been managing the Fund since 1981 and various other Colonial taxable income
funds. Richard became Co-manager of the Fund in September of this year having
joined Colonial's corporate bond research team in April of 1994.
Q: WHAT WERE THE PREVAILING ECONOMIC CONDITIONS DURING THE FUND'S FISCAL YEAR?
A: Both the stock and bond markets were bolstered by favorable economic
conditions over the past 12 months. Lowered interest rates, and low inflation
set the stage for improving bond prices over the year. During this period, we
continued to see positive trends in the price movement of U.S. government, high
yield corporate, and investment grade corporate bonds.
Q: DURING THE PERIOD, HOW DID THE FUND PERFORM RELATIVE TO THE LEHMAN MUTUAL
FUND GENERAL BOND INDEX AND WHY?
A: During the period, the Fund outperformed the Lehman Mutual Fund General
Bond Index, which tracks the performance of general income funds. The total
return for the Fund's Class A shares, based on net asset value, was 20.30%,
while the Lehman Mutual Fund General Bond Index posted a return of 19.25%.
There are basically three reasons why we outperformed the index over this
period: First, we were able to take advantage of good earnings from many
corporations, and the good performance of the Treasury market. A second
contributor was the Fund's attention to credit selection in the corporate bond
market. The third reason was our proactive management of the Fund's duration.
Duration measures a portfolio's exposure to changes in interest rates. The
higher the duration, the greater the gains and losses when interest rates
change. By keeping a watchful eye on the Fund's duration throughout the year
we were able to enhance the Fund's total return.
Q: WHAT SECTORS HAVE BEEN POSITIVE CONTRIBUTORS TO THE FUND'S PERFORMANCE
DURING THE PERIOD?
A: During the year we favored Financials, Energy, and Utilities. In fact, the
Fund benefited from the performance of all three sectors. In the financial
sector we witnessed more merger and consolidation activity which translated
into good earnings forecasts from those companies that participated. The
Energy and Utility sectors benefited from a good economy and low interest
rates. We have, however, cut back the Fund's exposure to Utilities to steer
away from increased regulatory issues. We reduced the Fund's position in the
retail sector and instead increased our Treasury holdings. This
4
<PAGE>
move allowed the Fund to take advantage of attractive Treasury bond prices
during the year.
Q. WHAT IS YOUR OUTLOOK FOR THE COMING YEAR?
A. We believe the economy will continue to benefit from low inflation. While we
have a positive outlook for the bond market, 1996 is not likely to be as
exceptional a year as 1995. We believe Colonial Income Fund can continue to
provide competitive returns.
COLONIAL INCOME FUND INVESTMENT PERFORMANCE VS.
THE LEHMAN MUTUAL FUND GENERAL BOND INDEX
Change in Value of $10,000 from 12/31/85 - 12/31/95
Based on Net Asset Value (NAV) and
Maximum Offering Price (MOP) for Class A Shares
LEHMAN
$25,118
NAV
[graph] $23,440
MOP
$22,327
12/85 12/95
A $10,000 investment in Class B shares made on May 15, 1992, at net asset value
would have been valued at $13,401 on December 31, 1995. The same investment
after deducting the applicable CDSC would have grown to $13,101 on December 31,
1995.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1995 (most recent quarter end)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
Inception 12/1/69 5/15/92
-------------- --------------
NAV MOP NAV w/CDSC
--- --- --- ------
<S> <C> <C> <C> <C>
1 year 20.30% 14.58% 19.42% 14.42%
- ------------------------------------------------------------------------------
5 years 10.82% 9.75% -- --
- ------------------------------------------------------------------------------
10 years 8.89% 8.36% -- --
- ------------------------------------------------------------------------------
Since Inception -- -- 8.39% 7.72%
</TABLE>
The 30-day SEC yield on December 31, 1995, of 5.58% for Class A shares and
5.10% for Class B shares reflects the portfolio's earning power, net of
expenses, expressed as an annualized percentage of the maximum offering price
per share at the end of the period. Past performance cannot predict future
results. Return and value of an investment will vary, resulting in a gain or
loss on sale. All results shown assume reinvestment of distributions. NAV
return does not include sales charges or CDSC. 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. Performance for different share classes
will vary based on differences in sales charges and fees associated with each
class.
<TABLE>
<CAPTION>
Label A B C
--------- ---------- ---------- ------------
Label CIF Chart MOP NAV Lehman
- ----- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
1 12/85 9,525.00 10,000.00 10,000.00
2 9,565.00 10,042.00 10,059.12
3 9,817.00 10,306.00 10,481.36
4 9,979.00 10,477.00 10,852.56
5 10,061.00 10,563.00 10,901.99
6 10,075.00 10,577.00 10,686.19
7 10,214.00 10,724.00 10,996.00
8 10,242.00 10,753.00 11,067.72
9 10,396.00 10,915.00 11,359.12
10 10,369.00 10,887.00 11,217.62
11 10,528.00 11,053.00 11,380.44
12 10,657.00 11,189.00 11,519.68
----------------------------------------------------------------------------
13 12/86 10,701.00 11,234.00 11,561.68
14 10,804.00 11,343.00 11,719.66
15 10,953.00 11,499.00 11,796.87
16 10,997.00 11,545.00 11,732.58
17 10,829.00 11,369.00 11,419.86
18 10,799.00 11,337.00 11,369.79
19 10,890.00 11,433.00 11,510.97
20 10,892.00 11,435.00 11,485.13
21 10,881.00 11,423.00 11,420.52
22 10,641.00 11,172.00 11,174.67
23 10,694.00 11,228.00 11,594.00
24 10,840.00 11,380.00 11,667.33
- -----------------------------------------------------------------------------
25 12/87 10,752.00 11,289.00 11,826.92
26 11,124.00 11,678.00 12,232.04
27 11,337.00 11,903.00 12,372.57
28 11,282.00 11,845.00 12,250.13
29 11,279.00 11,841.00 12,179.38
30 11,221.00 11,780.00 12,097.97
31 11,556.00 12,133.00 12,370.96
32 11,515.00 12,089.00 12,300.53
33 11,614.00 12,193.00 12,332.19
34 11,856.00 12,447.00 12,601.95
35 12,027.00 12,627.00 12,825.51
36 11,985.00 12,583.00 12,680.46
- -----------------------------------------------------------------------------
37 12/88 12,092.00 12,695.00 12,723.43
38 12,269.00 12,880.00 12,893.04
39 12,188.00 12,796.00 12,795.48
40 12,219.00 12,828.00 12,863.97
41 12,400.00 13,018.00 13,136.31
42 12,620.00 13,249.00 13,459.37
43 12,880.00 13,523.00 13,897.76
44 13,028.00 13,677.00 14,186.58
45 12,904.00 13,548.00 13,966.90
46 13,030.00 13,679.00 14,028.28
47 13,018.00 13,667.00 14,383.00
48 13,086.00 13,738.00 14,512.87
- -----------------------------------------------------------------------------
49 12/89 13,013.00 13,662.00 14,534.52
50 12,859.00 13,500.00 14,335.19
51 12,923.00 13,567.00 14,367.17
52 12,925.00 13,569.00 14,368.14
53 12,782.00 13,419.00 14,235.68
54 13,013.00 13,662.00 14,649.20
55 13,205.00 13,864.00 14,885.68
56 13,378.00 14,045.00 15,070.47
57 13,016.00 13,665.00 14,852.40
58 12,887.00 13,530.00 14,975.81
59 12,933.00 13,578.00 15,174.17
60 13,155.00 13,811.00 15,504.34
- -----------------------------------------------------------------------------
61 12/90 13,358.00 14,024.00 15,738.56
62 13,448.00 14,119.00 15,915.27
63 13,901.00 14,594.00 16,051.92
64 14,085.00 14,787.00 15,162.73
65 14,340.00 15,055.00 16,348.81
66 14,458.00 15,179.00 16,424.73
67 14,498.00 15,221.00 16,406.96
68 14,702.00 15,435.00 16,612.75
69 14,955.00 15,701.00 16,995.58
70 15,186.00 15,943.00 17,350.62
71 15,323.00 16,088.00 17,505.69
72 15,437.00 16,206.00 17,680.14
- -----------------------------------------------------------------------------
73 12/91 15,869.00 16,660.00 18,276.51
74 15,812.00 16,601.00 18,005.46
75 15,929.00 16,723.00 18,101.09
76 15,921.00 16,715.00 18,002.23
77 16,014.00 16,812.00 18,109.49
78 16,310.00 17,123.00 18,460.98
79 16,505.00 17,328.00 18,731.38
80 16,875.00 17,717.00 19,210.48
81 17,042.00 17,892.00 19,382.03
82 17,210.00 18,068.00 19,646.02
83 16,908.00 17,751.00 19,346.82
84 16,999.00 17,846.00 19,331.31
- -----------------------------------------------------------------------------
85 12/92 17,271.00 18,132.00 19,662.12
86 17,598.00 18,476.00 20,089.85
87 18,035.00 18,934.00 20,506.92
88 18,178.00 19,084.00 20,576.38
89 18,266.00 19,176.00 20,734.68
90 18,272.00 19,183.00 20,723.70
91 18,690.00 19,622.00 21,194.08
92 18,805.00 19,743.00 21,329.44
93 19,283.00 20,245.00 21,819.20
94 19,343.00 20,308.00 21,895.12
95 19,518.00 20,492.00 21,984.61
96 19,295.00 20,257.00 21,736.18
- -----------------------------------------------------------------------------
97 12/93 19,351.00 20,316.00 21,831.16
98 19,697.00 20,680.00 22,159.71
99 19,293.00 20,255.00 21,677.70
100 18,682.00 19,614.00 21,147.56
101 18,419.00 19,337.00 20,972.46
102 18,359.00 19,275.00 20,933.69
103 18,329.00 19,243.00 20,884.58
104 18,658.00 19,589.00 21,301.97
105 18,628.00 19,557.00 21,310.69
106 18,417.00 19,335.00 20,987.95
107 18,387.00 19,304.00 20,964.69
108 18,387.00 19,304.00 20,927.21
- -----------------------------------------------------------------------------
109 12/94 18,560.00 19,485.00 21,065.16
110 18,871.00 19,812.00 21,469.63
111 19,280.00 20,241.00 21,967.47
112 19,532.00 20,506.00 22,114.79
113 19,881.00 20,873.00 22,423.31
114 20,745.00 21,779.00 23,363.09
115 20,840.00 21,880.00 23,549.82
116 20,808.00 21,846.00 23,459.04
117 21,134.00 22,188.00 23,759.16
118 21,363.00 22,428.00 24,000.49
119 21,626.00 22,705.00 24,352.95
120 21,925.00 23,018.00 24,753.87
- -----------------------------------------------------------------------------
121 12/95 22,327.00 23,440.00 25,118.61
</TABLE>
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
CORPORATE FIXED-INCOME BONDS & NOTES - 68.8% PAR VALUE
- --------------------------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - 2.0%
BUILDING CONSTRUCTION - 0.9%
USG Corp.,
9.250% 09/15/01 $ 1,500 $ 1,598
-----------
HEAVY CONSTRUCTION-NON BUILDING CONSTRUCTION - 1.1%
Foster Wheeler Corp.,
6.750% 11/15/05 2,000 2,048
-----------
- --------------------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 14.3%
DEPOSITORY INSTITUTIONS - 6.6%
Banc One Corp.,
7.000% 07/15/05 2,000 2,108
Capital One Bank, Inc.,
8.125% 03/01/00 2,000 2,141
First Bank System, Inc.,
7.625% 05/01/05 2,000 2,190
Great Western Financial Corp.,
8.600% 02/01/02 3,000 3,364
NCNB Corp.,
9.125% 10/15/01 2,000 2,293
-----------
12,096
-----------
FINANCIAL SERVICES - 1.3%
United States Leasing International Inc.,
8.750% 12/01/01 2,000 2,272
-----------
HOLDING & OTHER INVESTMENT COMPANIES - 2.0%
Countrywide Funding Corp.,
6.875% 09/15/05 3,500 3,624
-----------
NONDEPOSITORY CREDIT INSTITUTIONS - 3.2%
General Motors Acceptance Corp.,
8.400% 10/15/99 2,000 2,166
Green Tree Financial Corp.,
10.250% 06/01/02 3,000 3,633
-----------
5,799
-----------
SECURITY BROKERS & DEALERS - 1.2%
Lehman Brothers Holdings, Inc.,
8.500% 05/01/07 2,000 2,261
-----------
- --------------------------------------------------------------------------------------------
MANUFACTURING - 19.4%
CHEMICALS - 2.2%
Agricultural Minerals Co., L.P.,
10.750% 09/30/03 1,500 1,642
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Rohm & Haas Co.,
9.375% 11/15/19 $ 2,000 $ 2,439
-----------
4,081
-----------
FABRICATED METAL - 1.2%
Masco Corp.,
9.000% 10/01/01 2,000 2,277
-----------
FOOD & KINDRED PRODUCTS - 4.8%
Coca-Cola Bottling Co.,
9.000% 11/15/03 1,500 1,504
ConAgra, Inc.,
9.750% 03/01/21 2,000 2,616
Nabisco, Inc.,
6.850% 06/15/05 2,000 2,040
Ralston Purina Co.,
9.300% 05/01/21 2,000 2,499
-----------
8,659
-----------
LUMBER & WOOD PRODUCTS - 1.0%
Georgia Pacific Corp.,
9.625% 03/15/22 1,500 1,756
-----------
MACHINERY & COMPUTER EQUIPMENT - 1.4%
Tenneco Corp.,
10.000% 03/15/08 2,000 2,588
-----------
PAPER PRODUCTS - 2.0%
Buckeye Cellulose Corp.,
8.500% 12/15/05 2,000 2,045
Stone Container Corp.,
10.750% 10/01/02 1,500 1,549
-----------
3,594
-----------
PETROLEUM REFINING - 1.4%
Pennzoil Co.,
10.125% 11/15/09 1,025 1,324
Sun Co., Inc.,
9.375% 06/01/16 1,000 1,200
-----------
2,524
-----------
PRIMARY METAL - 1.3%
International Minerals & Chemicals Corp.,
9.875% 03/15/11 2,000 2,325
-----------
PRINTING & PUBLISHING - 0.9%
Viacom International, Inc.,
7.750% 06/01/05 1,500 1,592
-----------
RUBBER & PLASTIC - 2.1%
Armstrong World Industries, Inc.,
9.750% 04/15/08 2,050 2,644
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - CONT. PAR VALUE
- --------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - CONT.
RUBBER & PLASTIC - CONT.
Premark International, Inc.,
10.500% 09/15/00 $ 1,000 $ 1,174
-----------
3,818
-----------
STONE, CLAY, GLASS & CONCRETE - 1.1%
Owens-Illinois, Inc.,
10.000% 08/01/02 2,000 2,088
-----------
- --------------------------------------------------------------------------------------------
MINING & ENERGY - 8.0%
CRUDE PETROLEUM & NATURAL GAS - 0.9%
AmeriGas Partners, L.P.,
Series B,
10.125% 04/15/07 1,500 1,605
-----------
METAL MINING - 1.1%
Freeport-McMoran Resource Partners,
8.750% 02/15/04 2,000 2,050
-----------
OIL & GAS EXTRACTION - 6.0%
Gulf Canada Resources, Ltd.,
9.625% 07/01/05 (a) 2,000 2,085
NGC Corp.,
6.750% 12/15/05 2,000 2,055
Occidental Petroleum Corp.,
11.125% 08/01/10 2,500 3,507
Oryx Energy Co.,
10.000% 04/01/01 1,500 1,667
Santa Fe Energy Resources, Inc.,
11.000% 05/15/04 1,500 1,656
-----------
10,970
-----------
- --------------------------------------------------------------------------------------------
RETAIL TRADE - 2.7%
FOOD STORES - 1.4%
Dominick's Finer Foods, Inc.,
10.875% 05/01/05 1,000 1,065
Pathmark Stores, Inc.,
stepped coupon,
(10.750% 11/01/99) 11/01/03 (b) 2,500 1,531
-----------
2,596
-----------
GENERAL MERCHANDISE STORES - 1.3%
May Department Stores Co.,
8.375% 10/01/22 2,000 2,243
-----------
- --------------------------------------------------------------------------------------------
SERVICES - 3.6%
AMUSEMENT & RECREATION - 0.5%
Trump Taj Mahal Funding, Inc., PIK,
11.350% 11/15/99 1,000 962
-----------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH SERVICES - 1.9%
Columbia/HCA Healthcare Corp.,
6.910% 06/15/05 $ 2,000 $ 2,084
Tenet Healthcare Corp.,
10.125% 03/01/05 1,250 1,385
-----------
3,469
-----------
HOTELS, CAMPS & LODGING - 1.2%
Marriott International, Inc.,
7.125% 06/01/07 2,000 2,093
- --------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 18.8%
AIR TRANSPORTATION - 1.4%
Federal Express Corp.,
9.650% 06/15/12 2,000 2,501
-----------
COMMUNICATIONS - 7.5%
CBS, Inc.,
8.875% 06/01/22 2,000 2,015
Continental Cablevision, Inc.,
8.875% 09/15/05 1,500 1,579
Cox Communication, Inc.
6.875% 06/15/05 2,000 2,075
Mobilemedia Corp.,
9.375% 11/01/07 1,500 1,537
News America Holding Corp.,
8.625% 02/01/03 2,000 2,244
Tele-Communications, Inc.,
9.250% 01/15/23 2,000 2,191
Time Warner, Inc.
7.750% 06/15/05 2,000 2,087
-----------
13,728
-----------
ELECTRIC SERVICES - 3.9%
Boston Edison Co.,
9.875% 06/01/20 2,000 2,212
Commonwealth Edison Co.,
7.000% 07/01/05 2,000 2,057
9.875% 06/15/20 1,000 1,200
Utilicorp United, Inc.,
9.000% 11/15/21 1,500 1,680
-----------
7,149
-----------
GAS SERVICES - 2.0%
California Energy Co., Inc.,
9.875% 06/30/03 1,250 1,306
Panhandle Eastern Corp.,
8.625% 04/15/25 2,000 2,252
-----------
3,558
-----------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------------------
CORPORATE FIXED-INCOME BONDS & NOTES - CONT. PAR VALUE
- --------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
MOTOR FREIGHT & WAREHOUSING - 1.2%
Consolidated Freightways, Inc.,
9.125% 08/15/99 $ 2,000 $ 2,173
-----------
PIPELINES - 1.6%
McDermott, Inc.,
9.375% 03/15/02 2,500 2,876
-----------
RAILROAD - 1.2%
Union Pacific Corp.,
7.600% 05/01/05 2,000 2,184
-----------
TOTAL CORPORATE FIXED-INCOME BONDS & NOTES
(cost of $115,737) 125,157
-----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 26.2%
- --------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 5.2%
Federal Farm Credit Bank,
11.900% 10/20/97 5,000 5,555
-----------
Federal National Mortgage Association,
10.350% 12/10/15 2,000 2,906
-----------
Government National Mortgage Association:
Coupon Maturities
----------------------
10.000% 2017-2019 58 64
10.500% 2020 276 309
11.500% 2013 111 127
12.500% 2010-2014 368 434
13.000% 2011 57 68
14.000% 2011-2012 14 17
-----------
1,019
-----------
U.S. GOVERNMENT OBLIGATIONS - 21.0%
U.S. Treasury Bonds:
8.500% 11/15/00 11,217 12,689
10.750% 05/15/03 3,349 4,392
11.625% 11/15/02 4,000 5,382
12.000% 08/15/13 3,167 4,880
U.S. Treasury Notes:
6.500% 05/15/05 2,000 2,128
10.375% 11/15/12 1,488 2,057
11.875% 11/15/03 4,834 6,753
-----------
38,281
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(cost of $46,923) 47,761
-----------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------------------
PREFERRED STOCK - 0.7% SHARES
- --------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.7%
GAS SERVICES
Enron Capital Corp. 8.00% (cost of $1,250) 50 $ 1,275
-----------
TOTAL INVESTMENTS - 95.7% (cost of $163,910) (c) 174,193
-----------
SHORT-TERM OBLIGATIONS - 2.7% PAR
------------------------------------------------------------------------------------------
Repurchase agreement with Bankers Trust
Securities Corp. dated 12/29/95, due 1/02/96
at 5.700%, collateralized by U.S. Treasury notes
with various maturities to 2000, market
value $3,294 (repurchase proceeds $3,362)
$ 3,291 $ 3,291
Repurchase agreement with Chase Securities,
Inc. dated 12/29/95, due 1/02/96 at 5.500%,
collateralized by U.S. Treasury notes
with various maturities to 1996, market
value $1,666 (repurchase proceeds $1,699)
1,664 1,664
-----------
TOTAL SHORT-TERM OBLIGATIONS 4,955
-----------
OTHER ASSETS & LIABILITIES, NET - 1.6% 2,889
- --------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 182,037
-----------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) This is a Canadian security. Par amount is stated in US dollars.
(b) Currently zero coupon. Shown parenthetically is the next interest rate to be
paid and the date the Fund will begin accruing this rate.
(c) Cost for federal income tax purposes is the same.
Acronym Name
-------------- -------------------------------
PIK Payment-In-Kind
See notes to financial statements.
11
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
(in thousands except for per share amounts
and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $163,910) $ 174,193
Short-term obligations 4,955
---------
179,148
Receivable for:
Interest $ 2,870
Fund shares sold 197
Dividends 8
Other 29 3,104
--------- ---------
Total Assets 182,252
LIABILITIES
Payable for:
Fund shares repurchased 199
Accrued:
Deferred Trustees fees 2
Other 14
---------
Total Liabilities 215
---------
NET ASSETS $ 182,037
=========
Net asset value & redemption price per share -
Class A ($143,834/21,671) $ 6.64
=========
Maximum offering price per share - Class A
($6.64/0.9525) $ 6.97(a)
=========
Net asset value & offering price per share -
Class B ($38,203/5,756) $ 6.64(b)
=========
COMPOSITION OF NET ASSETS
Capital paid in $ 190,936
Undistributed net investment income 56
Accumulated net realized loss (19,238)
Net unrealized appreciation 10,283
---------
$ 182,037
=========
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
12
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $14,414
Dividends 100
-------
14,514
EXPENSES
Management fee $ 849
Service fee 426
Distribution fee - Class B 223
Transfer agent 384
Bookkeeping fee 69
Trustees fee 16
Custodian fee 8
Audit fee 40
Legal fee 9
Registration fee 24
Reports to shareholders 9
Other 27
-------
2,084
-------
Net Investment Income 12,430
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 847
Net unrealized appreciation during the period 17,487
-------
Net Gain 18,334
-------
Net Increase in Net Assets from Operations $30,764
-------
</TABLE>
See notes to financial statements.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) December 31
--------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
--------- ---------
<S> <C> <C>
Operations:
Net investment income $ 12,430 $ 12,533
Net realized gain (loss) 847 (1,616)
Net unrealized appreciation (depreciation) 17,487 (18,562)
--------- ---------
Net Increase (Decrease) from Operations 30,764 (7,645)
Distributions:
From net investment income - Class A (10,607) (11,213)
From net investment income - Class B (2,027) (1,553)
--------- ---------
18,130 (20,411)
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 25,742 10,341
Value of distributions reinvested - Class A 5,505 5,653
Cost of shares repurchased - Class A (31,959) (24,102)
--------- ---------
(712) (8,108)
--------- ---------
Receipts for shares sold - Class B 20,614 9,212
Value of distributions reinvested - Class B 1,165 834
Cost of shares repurchased - Class B (9,525) (4,402)
--------- ---------
12,254 5,644
--------- ---------
Net Increase (Decrease) from Fund
Share Transactions 11,542 (2,464)
--------- ---------
Total Increase (Decrease) 29,672 (22,875)
NET ASSETS
Beginning of period 152,365 175,240
--------- ---------
End of period (including undistributed net
investment income of $56 and $253, respectively) $ 182,037 $ 152,365
--------- ---------
NUMBER OF FUND SHARES
Sold - Class A 4,064 1,620
Issued for distributions reinvested - Class A 864 914
Repurchased - Class A (5,033) (3,874)
--------- ---------
(105) (1,340)
--------- ---------
Sold - Class B 3,230 1,470
Issued for distributions reinvested - Class B 182 135
Repurchased - Class B (1,489) (714)
--------- ---------
1,923 891
--------- ---------
</TABLE>
See notes to financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1. ACCOUNTING POLICIES
................................................................................
ORGANIZATION: Colonial Income Fund (the Fund), a series of Colonial Trust I, 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 objective is to seek as high a level of current
income and total return, as is consistent with prudent risk, by investing
primarily in corporate debt securities. 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: 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 securities for which there were no sales during the day, at current
quoted bid prices.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at fair
value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the 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 proportionately on a daily basis for
purposes of determining the net asset value of each class.
Class B per share data and ratios are calculated by adjusting the expense and
net investment income per share data and ratios for the Fund for the entire
period by the distribution fee applicable to Class B shares only.
15
<PAGE>
Notes to Financial Statements/December 31, 1995
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable and tax-exempt
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; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
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. 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.
OTHER: 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 0.50% 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 0.18% annually of the Fund's average net assets and receives a reimbursement
for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. During the year ended December 31, 1995, the Fund has
been advised that the Distributor retained net underwriting discounts of $24,221
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $81,803 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires payment of a service fee to the
Distributor 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% annually of the average net assets attributable to
Class B shares only.
16
<PAGE>
Notes to Financial Statements/December 31, 1995
- --------------------------------------------------------------------------------
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
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, 1995, purchases and
sales of investments, other than short-term obligations, were $149,748,420 and
$137,797,906, respectively, of which $2,513,732 and $2,765,781, respectively,
were U.S. government securities.
Unrealized appreciation (depreciation) at December 31, 1995, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 11,395,623
Gross unrealized depreciation (1,113,083)
--------------
Net unrealized appreciation $ 10,282,540
==============
</TABLE>
CAPITAL LOSS CARRYFORWARDS: At December 31, 1995, 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>
1996.................... $ 248,000
1997.................... 2,834,000
1998.................... 4,686,000
1999.................... 10,466,000
2002.................... 1,007,000
------------
$ 19,241,000
============
</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: The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
17
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each
period are as follows:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------------------
1995 1994
Class A Class B Class A Class B
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 5.950 $ 5.950 $ 6.720 $ 6.720
------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.472 0.425 0.487 0.440
Net realized and
unrealized gain (loss) 0.698 0.698 (0.761) (0.761)
------------ ------------ ------------ ------------
Total from Investment
Operations 1.170 1.123 (0.274) (0.321)
------------ ------------ ------------ ------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.480) (0.433) (0.496) (0.449)
------------ ------------ ------------ ------------
Net asset value -
End of period $ 6.640 $ 6.640 $ 5.950 $ 5.950
============ ============ ============ ============
Total return (b) 20.30% 19.42% (4.09%) (4.82%)
============ ============ ============ ============
RATIOS TO AVERAGE NET ASSETS
Expenses 1.09%(c) 1.84%(c) 1.11% 1.86%
Net investment income 7.45%(c) 6.70%(c) 7.80% 7.05%
Portfolio turnover 85% 85% 16% 16%
Net assets at end
of period (000) $ 143,834 $ 38,203 $ 129,560 $ 22,805
</TABLE>
(a) Class B shares were initially offered on May 5, 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 contingent deferred sales charge.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
(d) Not annualized.
(e) Annualized.
18
<PAGE>
FINANCIAL HIGHLIGHTS - CONTINUED
<TABLE>
<CAPTION>
Year ended December 31
------------------------------------------------------------------------------------------------
1993 1992 1991
Class A Class B Class A Class B (a) Class A
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
$ 6.460 $ 6.460 $ 6.460 $ 6.390 $ 5.970
------------ ------------ ------------ ------------ ------------
0.501 0.451 0.546 0.290 0.587
0.261 0.261 0.001 0.088 0.487
------------ ------------ ------------ ------------ ------------
0.762 0.712 0.547 0.378 1.074
------------ ------------ ------------ ------------ ------------
(0.502) (0.452) (0.547) (0.308) (0.584)
------------ ------------ ------------ ------------ ------------
$ 6.720 $ 6.720 $ 6.460 $ 6.460 $ 6.460
============ ============ ============ ============ ============
12.05% 11.23% 8.83% 6.00%(d) 18.80%
============ ============ ============ ============ ============
1.10% 1.85% 1.24% 1.99%(e) 1.25%
7.45% 6.70% 8.49% 7.74%(e) 9.46%
46% 46% 68% 68% 44%
$ 155,543 $ 19,787 $ 149,309 $ 6,092 $ 146,905
</TABLE>
19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST I AND THE SHAREHOLDERS
OF COLONIAL INCOME 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 Income Fund (a series of
Colonial Trust I) at December 31, 1995, 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, 1995
by correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 9, 1996
20
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends, and capital gains information ...... press 1
For account information ........................................ press 2
To speak to a Colonial representative .......................... press 3
For yield and total return information ......................... press 4
For duplicate statements or 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 am to 8:00 pm ET, and Saturdays from February through
mid-April, 10:00 am to 2:00 pm ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday,
9:00 am to 8:00 pm ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
COLONIAL LITERATURE DEPARTMENT - 1-800-248-2828
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
22
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50;
$25 for an IRA account.
FREE EXCHANGES*: Exchange all or part of your account into the same share class
of another Colonial Fund, by phone or mail, as your needs change over time.
EASY ACCESS TO YOUR MONEY*: Make withdrawls from your account by phone, by mail
or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it to Colonial within one year, you can reinvest in any
Colonial Fund of the same share class without any penalty or sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Colonial account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly, or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th of each month.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
LOW COST IRAS: Choose from a broad range of retirement plans, including IRAs.
* Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial. Proceeds may be more or less than
your original cost. The exchange privilege may be terminated at any time.
Investors who purchase Class B or Class D shares (for applicable funds), or $1
million or more of Class A shares, may be subject to a contingent deferred
sales charge.
21
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Income Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Income Fund mails one shareholder report to each shareholder address.
If you would like more than one report, please call our Literature Department
at 1-800-248-2828 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Income 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.
23
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechart, Price, & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin, & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior Vice-President--Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England--Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly
Dean, Simon Graduate School of Business, University of Rochester; Chairman and
Chief Executive Officer, C.S. First Boston Merchant Bank; and President and
Chief Executive Officer, The First Boston Corporation)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN L. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and
Consultant, The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
----------- --------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
----------- --------------------
COLONIAL INVESTMENT SERVICES, INC., Distributor (c) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
IF-02/624R-1295 (2/96)
