<PAGE>
COLONIAL
HIGH YIELD SECURITIES FUND
[GRAPHIC]
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL HIGH YIELD SECURITIES FUND HIGHLIGHTS
JANUARY 1, 1995 - DECEMBER 31, 1995
INVESTMENT OBJECTIVE: Colonial High Yield Securities Fund seeks high current
income and total return.
STRATEGY: The Fund pursues its objective by investing in lower-rated corporate
debt securities. These securities are considered to be highly speculative.
THE FUND IS DESIGNED TO OFFER:
- High monthly income and attractive long-term total return
- Broad diversification
- Expert portfolio management
PORTFOLIO MANAGER COMMENTARY: "In 1995 we were in the right sectors at the right
time, taking advantage of developments in communications, energy and those high
quality bonds that were tied to the U.S. Treasury market."
COLONIAL HIGH YIELD SECURITIES FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
Inception date 3/31/80* 6/8/92
<S> <C> <C>
Distributions declared per share $ 0.617 $ 0.568
SEC Yield on 12/31/95 8.10% 7.75%
12-month total returns, assuming
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC) 17.65% 16.78%
Net asset value per share at 12/31/95 $ 6.75 $ 6.75
</TABLE>
* Date the Fund adopted its current investment policies.
The 30-day SEC yield on December 31, 1995 reflects the Fund's earning power, net
of expenses, expressed as an annualized percentage of the maximum offering price
per share at the end of the period.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS TOP FIVE SECTORS
(as of 12/31/95) (as of 12/31/95)
<S> <C> <C>
1. Trump Taj Mahal 1. Communications............. 29.3%
2. Bally's Grand 2. Manufacturing.............. 27.0%
3. Continental Cablevision 3. Services................... 16.5%
4. AK Steel Holding Corp. 4. Mining and Energy.......... 9.6%
5. Boyd Gaming Corp. 5. Government................. 6.1%
</TABLE>
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to hold these securities or maintain these sector weightings in the
future.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO]
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 pick up 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. Also, 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
ANDREA FEINGOLD is the Portfolio Manager of Colonial High Yield Securities Fund.
Andrea is a Vice President of Colonial Management Associates, Inc., and is a
Chartered Financial Analyst.
Q: DURING THE PERIOD 1/1/95 TO 12/31/95, HOW HAS THE FUND PERFORMED?
A: The Fund's Class A shares had a total return of 17.65% compared to 16.44% for
the average high yield corporate bond fund tracked by Lipper Analytical
Services, Inc., an independent mutual fund service.
Q: HOW DID THE FUND PERFORM RELATIVE TO THE FIRST BOSTON HIGH YIELD INDEX?
A: During the period, the Fund outperformed the First Boston High Yield 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 17.65%, while the First
Boston High Yield Index posted a return of 17.38%.
Q: HOW DO YOU MANAGE THE PORTFOLIO TO MAXIMIZE TOTAL RETURN?
A: We start by looking at our expectations about the economy. We then translate
our expectations about the economy into how they might impact various industry
sectors. Next we look at bonds in these sectors that should benefit from the
current environment, taking into account any specific company issues that may
have an effect on the bond.
In selecting bonds we look for those companies that have strong management teams
and clearly defined strategies that will benefit both the companies and their
bonds. In many cases, we also look for good asset value, which will help protect
the bondholders. By taking all these factors into account, our intent is to
select strong bond issues that will maximize total return while protecting the
Fund against risk.
Q: WHAT SECTORS HAVE BEEN POSITIVE CONTRIBUTORS TO THE FUND'S PERFORMANCE DURING
THE PERIOD?
A: We increased the Fund's weightings in a variety of communications companies
including both wired and wireless cable, paging, and wired and wireless
competitive access providers (CAPs). Companies in these industries are evolving
and have created increased competition in their respective marketplaces. And, as
you would expect, increased use of developing communications technology has had
a positive effect on the value of their bond issues.
As was expected, with interest rate declines, cyclical issues proved to be
underperformers over the period. During the year, the Fund reduced or eliminated
holdings in cyclical companies which included retail, textile manufacturing,
steel, paper and forest products. Reducing our exposure to this sector proved to
be a wise move.
- --------------------------------------------------------------------------------
4
<PAGE>
Q: WHAT IS YOUR OUTLOOK FOR THE COMING YEAR?
A: Looking ahead, we expect continued slow growth in the economy with inflation
remaining in check. With this in mind, we are remaining fully invested and
committed to those high yield issues that have cleaned up their balance sheets
and have taken advantage of strong corporate earnings to reduce borrowing. We
believe that these companies will be well positioned to weather any potential
further slowing in the economy.
COLONIAL HIGH YIELD SECURITIES FUND INVESTMENT PERFORMANCE
VS. THE FIRST BOSTON HIGH YIELD 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
<TABLE>
<CAPTION>
Label CHYSF MOP NAV 1st Boston
- ----- ----- --- --- ----------
<S> <C> <C> <C> <C>
1 12/85 9525 10000 10000
2 9589 10067 10100
3 9935 10430 10524
4 10090 10593 10882
5 10247 10758 11092
6 10392 10910 11243
7 10458 10980 11299
8 10432 10952 11079
9 10506 11030 11267
10 10595 11124 11357
11 10809 11348 11578
12 10851 11392 11532
13 12/86 10936 11481 11564
14 11234 11794 12041
15 11449 12020 12195
16 11579 12157 12267
17 11404 11973 11899
18 11331 11896 11856
19 11494 12068 12090
20 11584 12162 12212
21 11661 12242 12338
22 11401 11970 12036
23 11000 11548 11575
24 11280 11843 12023
25 12/87 11406 11974 12318
26 11723 12307 12739
27 12044 12644 13108
28 12076 12678 13019
29 12176 12783 13111
30 12294 12907 13177
31 12462 13084 13456
32 12599 13227 13609
33 12635 13265 13570
34 12723 13358 13693
35 12847 13487 13881
36 12866 13508 13912
37 12/88 12888 13531 14000
38 13015 13665 14282
39 13126 13781 14347
40 13110 13764 14244
41 13094 13747 14210
42 13266 13927 14548
43 13477 14149 14758
44 13425 14094 14791
45 13430 14100 14789
46 13319 13983 14453
47 12933 13578 14091
48 12899 13542 14119
49 12/89 12896 13539 14055
50 12535 13160 13560
51 12047 12648 13309
52 12281 12894 13692
53 12239 12944 13749
54 12634 13264 14035
55 12888 13531 14477
56 13102 13755 14945
57 12389 13007 14255
58 11554 12131 13168
59 11028 11577 12837
60 10998 11547 13095
61 12/90 10980 11528 13158
62 11173 11730 13518
63 11922 12517 14685
64 12656 13287 15595
65 13351 14076 16242
66 13556 14232 16323
67 13851 14541 16751
68 14455 15175 17317
69 14627 15357 17632
70 14957 15703 18033
71 15553 16328 18630
72 15784 16572 18779
73 12/91 15798 16586 18916
74 16566 17393 19686
75 16960 17806 20164
76 17413 18281 20464
77 17565 18441 20481
78 17858 18748 20760
79 18040 18940 20966
80 18338 19253 21289
81 18639 19568 21583
82 18857 19797 21723
83 18638 19568 21497
84 18917 19861 21819
85 12/92 19140 20094 22066
86 19633 20612 22668
87 19979 20976 23117
88 20329 21343 23605
89 20590 21617 23739
90 20945 21989 24086
91 21397 22464 24522
92 21569 22645 24777
93 21712 22795 24987
94 21792 22878 25130
95 22387 23504 25590
96 22631 23759 25912
97 12/93 22909 24051 26238
98 23485 24656 26706
99 23493 24664 26746
100 22966 24111 25959
101 22601 23728 25611
102 22709 23842 25757
103 22819 23957 25585
104 22827 23965 25705
105 22834 23973 25890
106 22877 24018 25994
107 22848 23988 26012
108 22643 23772 25710
109 12/94 22830 23969 25983
110 23054 24204 26256
111 23646 24826 26901
112 23800 24987 27205
113 24365 25580 27809
114 24895 26137 28594
115 25016 26263 28782
116 25438 26706 29228
117 25479 26750 29310
118 25869 27159 29647
119 26184 27490 29976
120 26344 27658 30117
121 12/95 26859 28198 30500
</TABLE>
A $10,000 investment in Class B shares made on June 8, 1992 (inception), at net
asset value would have been valued at $14,581 on December 31, 1995. The same
investment after deducting the applicable CDSC would have grown to $14,281 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
Objective Change 3/31/80* Inception 6/8/92
NAV MOP NAV W/CDSC
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 YEAR 17.65% 12.06% 16.78% 11.78%
- -----------------------------------------------------------------------------
5 YEARS 19.59% 18.43% -- --
- -----------------------------------------------------------------------------
10 YEARS 10.92% 10.38% -- --
- -----------------------------------------------------------------------------
SINCE INCEPTION/ 12.93% 12.58% 11.15% 10.51%
OBJECTIVE CHANGE
- -----------------------------------------------------------------------------
</TABLE>
* The date Fund adopted its current investment objective.
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.
- --------------------------------------------------------------------------------
5
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
BONDS & NOTES - 95.9% PAR VALUE
- ------------------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS & NOTES - 89.8%
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 27.0%
CHEMICALS - 8.4%
Agricultural Minerals Co., Limited
Partnership,
10.750% 09/30/03 $ 12,000 $ 13,140
Applied Extrusion Technologies, Inc.,
11.500% 04/01/02 7,000 7,490
Energy Ventures, Inc.,
10.250% 03/15/04 3,850 4,081
Huntsman Corp.,
11.000% 04/15/04 9,000 10,316
N.L. Industries, Inc.:
11.750% 10/15/03 6,500 6,939
stepped coupon, (13.000% 10/15/98)
(a) 10/15/05 10,000 7,725
Revlon Consumer Products Corp.,
Series B:
9.375% 04/01/01 3,000 3,038
10.500% 02/15/03 10,000 10,225
Revlon Worldwide Corp.,
(b) 03/15/98 8,000 5,920
--------
68,874
--------
ELECTRONIC & ELECTRICAL EQUIPMENT - 2.2%
Amphenol Corp.:
10.450% 11/01/01 4,000 4,400
12.750% 12/15/02 4,000 4,560
Berg Electronics, Inc.,
11.375% 05/01/03 8,000 8,800
--------
17,760
--------
FABRICATED METAL - 0.3%
Fairchild Industries, Inc.,
12.250% 02/01/99 2,100 2,242
--------
FOOD & KINDRED PRODUCTS - 3.2%
Doskocil Companies, Inc.,
9.750% 07/15/00 8,000 7,640
Gillett Holdings, Inc.,
12.250% 06/30/02 6,984 7,316
Pilgrim's Pride Corp.,
10.875% 08/01/03 3,600 3,303
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Van De Kamps, Inc.,
12.000% 09/15/05(c) $ 8,000 $ 8,280
--------
26,539
--------
MISCELLANEOUS MANUFACTURING - 1.7%
American Standard Co.:
11.375% 05/15/04 7,500 8,287
stepped coupon, (10.500% 06/01/98)
(a) 06/01/05 6,500 5,574
--------
13,861
--------
PAPER PRODUCTS - 3.5%
Container Corp. of America,
Series A,
11.250% 05/01/04 6,000 6,165
Gaylord Container Corp.,
stepped coupon, (12.750% 05/15/96)
(a) 05/15/05 4,000 3,920
Repap Wisconsin, Inc.,
9.250% 02/01/02 8,500 8,033
Stone Container Corp.,
10.750% 10/01/02 10,000 10,325
--------
28,443
--------
PETROLEUM REFINING - 0.7%
Flores & Rucks, Inc.,
13.500% 12/01/04 5,000 5,688
--------
PRIMARY METAL - 2.7%
A.K. Steel Corp.,
10.750% 04/01/04 13,000 14,397
Inland Steel Co.,
12.750% 12/15/02 2,000 2,250
Magma Copper Co.,
12.000% 12/15/01 5,000 5,544
--------
22,191
--------
PRINTING & PUBLISHING - 0.3%
K-III Communications Corp.,
10.625% 05/01/02 2,000 2,130
--------
RUBBER & PLASTIC - 1.2%
Atlantis Group, Inc.,
11.000% 02/15/03 3,200 2,784
Berry Plastics Corp.,
12.250% 04/15/04 3,500 3,745
Calmar, Inc.,
11.500% 08/15/05(c) 3,000 3,045
--------
9,574
--------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS &
NOTES - CONT. PAR VALUE
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - CONT.
Stone, Clay, Glass & Concrete - 1.8%
Owens-Illinois, Inc.:
9.950% 10/15/04 $ 4,000 $ 4,240
10.500% 06/15/02 6,000 6,413
11.000% 12/01/03 4,000 4,520
--------
15,173
--------
TRANSPORTATION EQUIPMENT - 1.0%
Aftermarket Technology Corp.,
Series B,
12.000% 08/01/04 7,500 7,913
--------
.................................................................................................
MINING & ENERGY - 9.6%
Crude Petroleum & Natural Gas - 1.5%
Triton Energy Corp.:
(b) 11/01/97 11,000 9,488
stepped coupon, (9.750% 12/15/96)
(a) 12/15/00 3,000 2,820
--------
12,308
--------
OIL & GAS EXTRACTION - 7.0%
Falcon Drilling Co., Inc., Series B,
9.750% 01/15/01 5,000 5,100
Gulf Canada Resources Ltd.:
9.250% 01/15/04 13,000 13,390
9.625% 07/01/05(d) 2,000 2,085
Maxus Energy Corp.,
11.250% 05/01/13 353 359
Mesa Capital Corp.,
12.750% 06/30/98 11,000 9,762
Nuevo Energy Co.,
12.500% 06/15/02 4,000 4,370
OPI International, Inc.,
12.875% 07/15/02 3,000 3,397
Plains Resources, Inc.,
12.000% 10/01/99 3,000 3,142
Rowan Companies, Inc.,
11.875% 12/01/01 4,500 4,882
Santa Fe Energy Resources, Inc.,
11.000% 05/15/04 5,000 5,519
TransTexas Gas Corp.,
11.500% 06/15/02 5,000 5,150
--------
57,156
--------
OIL & GAS FIELD SERVICES - 1.1%
Tuboscope Vetco International Corp.,
10.750% 04/15/03 5,000 4,950
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
United Meridian Corp.,
10.375% 10/15/05 $ 3,500 $ 3,692
--------
8,642
--------
.................................................................................................
RETAIL TRADE - 4.8%
FOOD STORES - 3.7%
Dominick's Finer Foods, Inc.,
10.875% 05/01/05 10,000 10,650
Pathmark Stores, Inc.:
9.625% 05/01/03 6,000 5,820
11.625% 06/15/02 8,500 8,606
stepped coupon, (10.750% 11/01/99)
(a) 11/01/03 9,000 5,513
--------
30,589
--------
MISCELLANEOUS RETAIL - 1.1%
Barry's Jewelers, Inc.,
12.625% 05/15/96 9 9
Thrifty Payless Holdings, Inc.,
11.750% 04/15/03 8,250 8,951
--------
8,960
--------
.................................................................................................
SERVICES - 16.5%
AMUSEMENT & RECREATION - 9.3%
Bally's Grand, Inc., Series B,
10.375% 12/15/03 15,000 15,300
Boyd Gaming Corp.,
10.750% 09/01/03 13,440 14,045
Empress River Casino Finance Corp.,
10.750% 04/01/02 3,500 3,587
Falcon Holdings Group, PIK,
11.000% 09/15/03 2,718 2,609
GNF Corp., Series B,
10.625% 04/01/03 9,000 8,370
Grand Casinos, Inc.,
10.125% 12/01/03 2,250 2,346
Harrah's Operating, Inc.,
10.875% 04/15/02 5,000 5,387
Showboat, Inc.,
13.000% 08/01/09 5,725 6,469
Stratosphere Corp.,
14.250% 05/15/02 2,000 2,270
Trump Taj Mahal Funding, Inc., PIK,
11.350% 11/15/99 16,178 15,571
--------
75,954
--------
BUSINESS SERVICES - 0.6%
Darling International, Inc.,
11.000% 07/15/00 261 261
Figgie International, Inc.,
9.875% 10/01/99 3,800 3,791
</TABLE>
9
<PAGE>
Investment Portfolio/December 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS &
NOTES - CONT. PAR VALUE
- --------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES - CONT.
Business Services - Cont.
Southeastern Public Service Co.,
11.875% 02/01/98 $ 1,255 $ 1,255
--------
5,307
--------
HEALTH SERVICES - 5.3%
Community Health Systems, Inc.,
10.250% 11/30/03 6,000 6,480
Genesis Health Ventures, Inc.,
9.750% 06/15/05 6,000 6,330
Integrated Health Services, Inc.,
10.750% 07/15/04 2,000 2,140
OrNda Health Corp.:
11.375% 08/15/04 8,000 8,980
12.250% 05/15/02 5,000 5,500
Tenet Healthcare Corp.,
10.125% 03/01/05 7,000 7,753
Wright Medical Technology,
10.750% 07/01/00 6,000 6,120
--------
43,303
--------
HOTELS, CAMPS & LODGING - 1.3%
HMC Acquisition Properties,
9.000% 12/15/07(c) 3,500 3,535
HMH Properties, Inc.,
9.500% 05/15/05 7,000 7,140
--------
10,675
--------
............................................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 31.4%
AIR TRANSPORTATION - 0.9%
US Air, Inc.,
10.375% 03/01/13 5,000 4,700
World Corp., Inc.,
13.875% 08/15/97 2,500 2,506
--------
7,206
--------
BROADCASTING - 6.1%
Act III Broadcasting, Inc.,
10.250% 12/15/05 8,000 8,180
Allbritton Communications Co.,
11.500% 08/15/04 8,500 8,967
NWCG Holding Corp.,
(b) 06/15/99 11,000 7,590
SCI Television, Inc.,
11.000% 06/30/05 12,250 13,016
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Sinclair Broadcast Group, Inc.,
10.000% 12/15/03 $ 4,500 $ 4,601
Young Broadcasting Corp.:
10.125% 02/15/05 1,000 1,056
11.750% 11/15/04 6,000 6,713
--------
50,123
--------
CABLE - 11.9%
Bell Cablemedia, Inc.,
stepped coupon, (11.950% 07/15/99)
(a) 07/15/04 10,500 7,429
CF Cable TV, Inc.,
9.125% 07/15/07 2,000 2,050
Cablevision Systems Corp.:
9.875% 02/15/13 4,185 4,457
9.875% 04/01/23 2,000 2,065
10.750% 04/01/04 8,000 8,440
Comcast Corp.,
10.625% 07/15/12 9,000 10,159
Comcast UK Cable Partners Ltd.,
stepped coupon, (11.200%, 11/15/00)
(a) 11/15/07 4,000 2,320
Continental Cablevision, Inc.:
9.500% 08/01/13 4,500 4,770
11.000% 06/01/07 13,500 15,103
Diamond Cable Corp.,
stepped coupon, (11.750% 12/15/00)
(a) 12/15/05 3,000 1,766
Groupe Videotron,
10.625% 02/15/05(d) 10,000 10,750
Insight Communications Co.,
stepped coupon, (11.250% 02/29/96)
8.250% 03/01/00 5,250 5,316
Jones Intercable, Inc.,
9.625% 03/15/02 3,000 3,225
Marcus Cable Co.,
11.875% 10/01/05 4,500 4,843
Rogers Cablesystems, Inc.,
10.000% 03/15/05 3,000 3,221
Telewest Communication PLC,
stepped coupon, (11.000% 10/01/00)
(a) 10/01/07 13,250 7,967
Videotron Holding Co.:
stepped coupon, (11.125% 07/01/99)
(a) 07/01/04 1,250 869
stepped coupon, (11.000% 08/15/00)
(a) 08/15/05 4,000 2,490
--------
97,240
--------
</TABLE>
11
<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.
GAS SERVICES - 1.2%
California Energy Co., Inc.,
9.875% 06/30/03 $ 6,750 $ 7,054
Midland Funding Corp.,
10.330% 07/23/02 2,771 2,854
--------
9,908
--------
TELECOMMUNICATIONS - 11.3%
American Telecasting, Inc., Units,
stepped coupon, (14.500% 08/15/00)
(a) 08/15/05(c)(e) 9 5,493
CAI Wireless Systems, Inc.,
12.250% 09/15/02 6,000 6,420
Echostar Communications Corp.
stepped coupon, (12.875% 06/01/99)
(a) 06/01/04 8,000 5,440
GST Telecommunications, Inc., Units,
stepped coupon, (13.875% 12/15/00)
(a) 12/15/05(c)(f) 1 5,448
Intelcom (USA) Inc.,
stepped coupon, (13.500% 09/15/00)
(a) 09/15/05(c) 3,000 1,710
MFS Communications Company, Inc.,
stepped coupon, (9.375% 01/15/99)
(a) 01/15/04 11,000 8,855
Metrocall, Inc.,
10.375% 10/01/07 8,000 8,520
Mobilemedia Corp.,
9.375% 11/01/07 5,500 5,637
Nextel Communications, Inc.,
stepped coupon, (9.750% 02/15/99)
(a) 08/15/04 8,500 4,632
Paging Network, Inc.,
10.125% 08/01/07 7,000 7,630
Panamsat Limited Partnership Corp.,
stepped coupon, (11.375% 08/01/98)
(a) 08/01/03 14,000 11,410
PriCellular Wireless Corp.,
stepped coupon, (14.000% 11/15/97)
(a) 11/15/01 4,000 3,480
USA Mobile Communications Holdings, Inc.:
9.500% 02/01/04 500 495
14.000% 11/01/04 1,500 1,751
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Winstar Communications, Inc., Units,
stepped coupon, (14.000% 10/15/00)
(a) 10/15/05(c)(g) $ 5 $ 8,348
Wireless One, Inc., Units,
13.000% 10/15/03(h) 6 6,890
--------
92,159
--------
..............................................................................................
WHOLESALE TRADE - 0.5%
NONDURABLE GOODS
SD Warren Co.,
12.000% 12/15/04 4,000 4,380
--------
TOTAL CORPORATE FIXED INCOME BONDS & NOTES
(cost of $706,607) 734,298
--------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 6.1 %
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
7.250% 05/15/04 10,000 11,100
7.625% 02/15/25 5,000 6,114
8.500% 11/15/00 20,000 22,625
--------
39,839
--------
U.S. Treasury Notes:
5.875% 11/15/05 5,000 5,113
7.750% 01/31/00 5,000 5,431
--------
10,544
--------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(cost of $48,481) 50,383
--------
TOTAL BONDS & NOTES (cost of $755,088) 784,681
--------
<CAPTION>
PREFERRED STOCKS - 0.7% SHARES
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 0.2%
PRINTING & PUBLISHING
K-III Communications Corp., 60 1,635
--------
Sr. Exchangeable $2.850
..............................................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.5%
CABLE
Cablevision Systems Corp.,
11.75%, Series G (c) 40 4,150
--------
TOTAL PREFERRED STOCKS (cost of $5,500) 5,785
--------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -----------------------------------------------------------------------------------------
COMMON STOCKS - 0.5% SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 0.3%
CHEMICALS - 0.0%
UCC Investors Holdings, Inc. (i) (j) 15 $ 208
---------
FOOD & KINDRED PRODUCTS - 0.1%
Darling International, Inc. (j) 18 472
Dr. Pepper Bottling Co. (c) (j) 80 280
---------
752
---------
MEASURING & ANALYZING INSTRUMENTS - 0.2%
Bucyrus-Erie Co. (j) 135 1,094
---------
.........................................................................................
RETAIL TRADE - 0.2%
MISCELLANEOUS RETAIL - 0.1%
Barry's Jewelers, Inc. (j) 95 382
Macleod-Stedman, Inc. (i) (j) 425 4
Pharmhouse Corp. (j) 1 2
---------
388
---------
RESTAURANTS - 0.1%
Host Marriott Corp. (j) 8 100
Marriott International, Inc. 8 288
---------
388
---------
.........................................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.0%
COMMUNICATIONS - 0.0%
EchoStar Communications Corp. (j) 9 218
---------
ELECTRIC SERVICES - 0.0%
Great Bay Power Corp. (i) (j) 15 121
---------
GAS SERVICES - 0.0%
United Gas Holdings Corp. (c) (i) (j) 22 312
---------
LOCAL & SUBURBAN TRANSIT - 0.0%
Greyhound Lines, Inc., 12.500% Escrow
Receipt (i) (j) 2 (k)
Greyhound Lines, Inc., 13.000% Escrow
Receipt (i) (j) 1 (k)
---------
(k)
---------
MOTOR FREIGHT & WAREHOUSING - 0.0%
St. Johnsbury Trucking Co. (i) (j) 79 157
Sun Carriers, Inc. (c) (i) (j) 326 3
---------
160
---------
TOTAL COMMON STOCKS (cost of $6,808) 3,641
---------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -----------------------------------------------------------------------------------------
WARRANTS (j) - 0.0%
- -----------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 0.0%
RUBBER & PLASTIC
BPC Holdings Corp.,
expires 04/15/04 4 $ 44
---------
OIL & GAS EXTRACTION
Forest Oil Corp.,
expires 10/01/96 18 16
---------
.........................................................................................
RETAIL TRADE - 0.0%
FOOD STORES
Southland Corp.,
expires 03/05/96 10 20
---------
.........................................................................................
SERVICES - 0.0%
HEALTH SERVICES - 0.0%
Wright Medical Technology,
expires 06/15/03 (c) 1 238
---------
HOTELS, CAMPS & LODGING - 0.0%
Capital Gaming International, Inc.,
expires 02/01/99 (c) 6 1
---------
TOTAL WARRANTS (cost of $121) 319
---------
TOTAL INVESTMENTS - 97.1% (cost of $767,517) (l) 794,426
---------
<CAPTION>
SHORT -TERM OBLIGATIONS - 1.7% PAR
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with Bankers Trust
Securities Corp., dated 12/29/95, due 01/02/96
at 5.700%, collateralized by U.S. Treasury notes
with various maturities to 2000, market value $9,620
(repurchase proceeds $9,424) $9,418 9,418
Repurchase agreement with Chase
Securities, Inc., dated 12/29/95, due 01/02/96
at 5.500%, collateralized by a U.S. Treasury note
maturing in 1996, market value $4,868
(repurchase proceeds $4,764) 4,761 4,761
---------
TOTAL SHORT-TERM OBLIGATIONS 14,179
---------
OTHER ASSETS & LIABILITIES, NET - 1.2% 9,368
- -----------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 817,973
=========
</TABLE>
15
<PAGE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Currently zero coupon. Shown parenthetically is the interest to be paid and
the date the Fund will begin accruing this rate.
(b) Zero coupon bond.
(c) Security is exempt from registration under Rule 144A of the Securities Act
of 1993. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At year end, the
value of these securities amounted to $40,843 or 5.0% of net assets.
(d) This security is Canadian. Par amount is stated in U.S. dollars.
(e) Each unit consists of one senior discount note and one warrant to purchase
common stock.
(f) Each unit consists of eight senior discount notes and one convertible senior
subordinated discount note.
(g) Each unit consists of two senior discount notes and one convertible senior
subordinated discount note.
(h) Each unit consists of one senior discount note and three warrants to
purchase common stock.
(i) The value of this security represents fair value as determined in good faith
under the direction of the Trustees.
(j) Non-income producing.
(k) Rounds to less than one.
(l) Cost for federal income tax purposes is $767,842.
Acronym Name
------- ---------------
PIK Payment-In-Kind
See notes to financial statements.
16
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $767,517) $ 794,426
Short-term obligations 14,179
---------
808,605
Receivable for:
Interest $ 16,123
Investments sold 3,047
Fund shares sold 2,095
Dividends 1
Other 39 21,305
--------- ---------
Total Assets 829,910
LIABILITIES
Payable for:
Investments purchased 9,811
Fund shares repurchased 2,083
Accrued:
Deferred Trustees fees 4
Other 39
---------
Total Liabilities 11,937
---------
NET ASSETS $ 817,973
=========
Net asset value & redemption price per share -
Class A ($466,905/69,210) $ 6.75
=========
Maximum offering price per share - Class A
($6.75/0.9525) $ 7.09(a)
=========
Net asset value & offering price per share -
Class B ($351,068/52,043) $ 6.75(b)
=========
COMPOSITION OF NET ASSETS
Capital paid in $ 865,563
Undistributed net investment income 99
Accumulated net realized loss (74,598)
Net unrealized appreciation 26,909
---------
$ 817,973
=========
</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.
17
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 76,048
Dividends 272
---------
Total investment income 76,320
EXPENSES
Management fee $ 4,423
Service fee 1,846
Distribution fee - Class B 2,254
Transfer agent 2,107
Bookkeeping fee 267
Trustees fee 43
Custodian fee 19
Audit fee 48
Legal fee 11
Registration fee 63
Reports to shareholders 19
Other 49 11,149
--------- ---------
Net Investment Income 65,171
---------
NET REALIZED & UNREALIZED GAIN (LOSS) ON
PORTFOLIO POSITIONS
Net realized loss on:
Investments (6,728)
Foreign currency transactions (3)
---------
Net Realized Loss (6,731)
Net unrealized appreciation during
the period on:
Investments 57,928
Foreign currency transactions 3
---------
Net Unrealized Appreciation 57,931
---------
Net Gain 51,200
---------
Net Increase in Net Assets from Operations $ 116,371
=========
</TABLE>
See notes to financial statements.
18
<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 $ 65,171 $ 55,891
Net realized loss (6,731) (18,758)
Net unrealized appreciation (depreciation) 57,931 (40,420)
--------- ---------
Net Increase (Decrease) from Operations 116,371 (3,287)
Distributions:
From net investment income - Class A (40,139) (38,370)
From net investment income - Class B (25,372) (20,184)
In excess of net investment income - Class A (922) --
In excess of net investment income - Class B (583) --
--------- ---------
49,355 (61,841)
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 125,401 101,116
Value of distributions reinvested - Class A 18,081 15,346
Cost of shares repurchased - Class A (95,780) (128,358)
--------- ---------
47,702 (11,896)
--------- ---------
Receipts for shares sold - Class B 112,679 122,449
Value of distributions reinvested - Class B 13,181 9,440
Cost of shares repurchased - Class B (48,173) (78,401)
--------- ---------
77,687 53,488
--------- ---------
Net Increase from Fund Share Transactions 125,389 41,592
--------- ---------
Total Increase (Decrease) 174,744 (20,249)
NET ASSETS
Beginning of period 643,229 663,478
--------- ---------
End of period (including undistributed net
investment income of $99 and $340, respectively) $ 817,973 $ 643,229
========= =========
NUMBER OF FUND SHARES
Sold - Class A 19,185 15,239
Issued for distributions reinvested - Class A 2,749 2,325
Repurchased - Class A (14,576) (19,165)
--------- ---------
7,358 (1,601)
--------- ---------
Sold - Class B 17,179 18,466
Issued for distributions reinvested - Class B 2,003 1,434
Repurchased - Class B (7,357) (11,706)
--------- ---------
11,825 8,194
--------- ---------
</TABLE>
See notes to financial statements.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1. ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
ORGANIZATION: Colonial High Yield Securities 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 high current
income and total return by investing primarily in lower rated 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 principals requires management to make
estimates and assumptions that affect the reported amounts of 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 significant accounting policies 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. The value of all assets and liabilities quoted in foreign
currencies are translated into U.S. dollars at that day's exchange rate.
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.
20
<PAGE>
Notes to Financial Statements/December 31, 1995
- --------------------------------------------------------------------------------
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.
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 character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the Fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gain (loss) on
foreign currency transactions includes the fluctuation in exchange rates on
gains (losses) between trade and settlement dates on securities transactions,
gains (losses) arising from the disposition of foreign currency and currency
gains (losses) between the accrual and payment dates on dividend and interest
income and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) from investments.
OTHER: Corporate actions are recorded on the ex-date (except for certain
foreign securities which are recorded as soon after ex-date as the Fund
becomes aware of such), net of nonrebatable tax withholdings. Where a high
level of uncertainty as to collection exists, income on securities is recorded
net of all tax withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-
market daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
21
<PAGE>
Notes to Financial Statements/December 31, 1995
- -------------------------------------------------------------------------------
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 and receives a monthly
fee equal to 0.25% 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. For the year ended December 31, 1995, the Fund has been
advised that the Distributor retained net underwriting discounts of $148,590 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $634,558 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 only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
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 $772,119,258 and
$673,013,408, respectively, of which $66,504,656 and $74,806,551, respectively,
were U.S. government securities.
Unrealized appreciation (depreciation) at December 31, 1995, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 33,910,945
Gross unrealized depreciation (7,326,834)
----------------------
Net unrealized appreciation $ 26,584,111
======================
</TABLE>
22
<PAGE>
Notes to Financial Statements/December 31, 1995
- -------------------------------------------------------------------------------
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>
1997 $ 4,192,000
1998 5,104,000
1999 38,162,000
2000 4,852,000
2002 9,495,000
2003 16,521,000
-------------------
$ 78,326,000
-------------------
</TABLE>
Of the loss carryforwards expiring in 1997, 1998, and 1999, $855,000,
$4,129,000, and $40,000, respectively, were acquired in the merger with Colonial
VIP High Income Fund (CVIPHIF).
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 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.
23
<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 $ 6.300 $ 6.300 $ 6.950 $ 6.950
============ ============ ============ ============
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.615 0.566 0.599 0.549
Net realized and
unrealized gain (loss) 0.452 0.452 (0.622) (0.622)
------------ ------------ ------------ ------------
Total from Investment
Operations 1.067 1.018 (0.023) (0.073)
------------ ------------ ------------ ------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment income (0.603) (0.555) (0.627) (0.577)
In excess of net investment income (0.014) (0.013) -- --
------------ ------------ ------------ ------------
Total from Distributions
Declared to Shareholders (0.617) (0.568) (0.627) (0.577)
------------ ------------ ------------ ------------
Net asset value - End of period $ 6.750 $ 6.750 $ 6.300 $ 6.300
============ ============ ============ ============
Total return (b) 17.65% 16.78% (0.34%) (1.09%)
============ ============ ============ ============
RATIOS TO AVERAGE NET ASSETS
Expenses 1.21%(d) 1.96%(d) 1.23% 1.98%
Net investment income 9.14%(d) 8.39%(d) 9.03% 8.28%
Portfolio turnover 95% 95% 123% 123%
Net assets at end
of period (000) $ 466,905 $ 351,068 $ 389,791 $ 253,438
</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 contingent deferred sales charge.
(c) Not annualized.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
(e) Annualized.
24
<PAGE>
FINANCIAL HIGHLIGHTS -- CONT.
<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>
Net asset value -
Beginning of period $ 6.400 $ 6.400 $ 5.860 $ 6.360 $ 4.640
============ ============ ============ ============ ============
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.634 0.585 0.669 0.332 0.726
Net realized and
unrealized gain (loss) 0.576 0.576 0.531 0.057 1.207
------------ ------------ ------------ ------------ ------------
Total from Investment
Operations 1.210 1.161 1.200 0.389 1.933
------------ ------------ ------------ ------------ ------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment income (0.660) (0.611) (0.660) (0.349) (0.713)
In excess of net investment income -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total from Distributions
Declared to Shareholders (0.660) (0.611) (0.660) (0.349) (0.713)
------------ ------------ ------------ ------------ ------------
Net asset value - End of period $ 6.950 $ 6.950 $ 6.400 $ 6.400 $ 5.860
============ ============ ============ ============ ============
Total return (b) 19.69% 18.83% 21.15% 5.53%(c) 43.88%
============ ============ ============ ============ ============
RATIOS TO AVERAGE NET ASSETS
Expenses 1.23% 1.98% 1.26% 2.01%(e) 1.36%
Net investment income 9.55% 8.80% 10.64% 9.89%(e) 13.41%
Portfolio turnover 122% 122% 66% 66% 37%
Net assets at end
of period (000) $ 440,942 $ 222,536 $ 346,225 $ 94,653 $ 299,587
</TABLE>
25
<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, 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 and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion exppressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 9, 1996
26
<PAGE>
SHAREHOLDER SERVICES AND TRANSFER AGENT
The Transfer Agent for Colonial High Yield Securities Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
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.
This report has been prepared for shareholders of Colonial High Yield Securities
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.
27
<PAGE>
[MUTUAL FUNDS LOGO]
Mutual Funds for
Planned Portfolios
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, 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 J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
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
HY-02/715B-1295 (2/96)
28
