COLONIAL
HIGHT YIELD SECURITIES FUND
SEMIANNUAL REPORT
JUNE 30, 1996
NOT FDIC- | MAY LOSE VALUE
INSURED | NO BANK GUARANTEE
COLONIAL HIGH YIELD SECURITIES FUND HIGHLIGHTS
JANUARY 1, 1996 - JUNE 30, 1996
INVESTMENT OBJECTIVE: Colonial High Yield Securities Fund seeks high current
income and total return by investing primarily in lower rated corporate debt
securities
THE FUND IS DESIGNED TO OFFER:
X High current income and total return potential
X Diversification and thorough credit analysis
X Management by experienced high yield specialists
PORTFOLIO MANAGER COMMENTARY: "We remain committed to investing the Fund in the
higher quality portion of the high yield universe. While this sector of the
market underperformed during the first half of 1996, we believe that the Fund
should benefit from the lower volatility and better retention of value and
liquidity that this sector historically has provided."
-- Andrea Feingold
COLONIAL HIGH YIELD SECURITIES FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
<S> <C> <C> <C>
Inception dates 10/21/71* 6/8/92 1/15/96
Distributions declared per share $0.300 $0.275 $0.254**
SEC yields on June 30, 1996*** 8.72% 8.38% 8.27%
Total returns, assuming reinvestment
of all distributions and no sales charge
or contingent deferred sales charge (CDSC)
Six-months 3.14% 2.75% --
Net asset value per share at 6/30/96 $ 6.66 $ 6.66 $ 6.66
</TABLE>
* Colonial High Yield Securities Fund adopted its current investment policies on
3/31/80.
**Distributions declared are cumulative since inception.
***The 30-day SEC yields on June 30, 1996, reflect 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.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS TOP FIVE SECTORS
(as of 6/30/96) (as of 6/30/96)
<S> <C> <C> <C>
SCI Television 3.1% Manufacturing 25.4%
Revlon Consumer Products 2.8% Hotels/Gaming 13.9%
Mesa Corporation 2.7% Telecommunications 11.1%
Pathmark Stores 2.7% Mining & Energy 8.7%
Ornda Health Corp. 2.3% Trans., Elec., Gas
& Sanitation Services 8.5%
</TABLE>
Because the Fund is actively managed, portfolio holdings and sector breakdowns
will change. Sector classifications based upon Colonial's defined criteria are
used in the investment process.
2
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF PRESIDENT]
I am pleased to present your Fund's semiannual report for the period ended June
30, 1996. First, however, I would like to extend my thanks to President John A.
McNeice, Jr., who has retired after a career with Colonial that spanned 40
years. We look forward to his continued involvement on the executive committee
of the board of directors at our parent company, Liberty Financial Companies,
Inc.
In my new position, I am directing Colonial's focus on the delivery of
investment performance over the long term. To achieve this mission, we will
continue to seek the optimal combination of talented people and effective
investment disciplines.
The receipt of your semiannual report is a good time to reflect on market
conditions and the performance of your Fund during the past six months. Interest
rates rose fairly steadily during the first half of 1996. This increase was
caused in part by unemployment statistics that proved to be lower than
anticipated, causing a decline in bond prices.
While there may be some current stock market volatility, we expect corporate
earnings to continue to make progress, but at a slower pace than in 1995. We
also anticipate growth opportunities in certain foreign markets. In the
following pages, you'll find detailed information on your Fund's performance as
well as an in-depth discussion with the portfolio manager.
With over 12 years of service at Colonial and more than 25 years in the
industry, I am enthusiastic about -- and dedicated to achieving -- Colonial's
mission of providing you with superior investment returns. In my new role, I
look forward to communicating with you about your Colonial investment. We
appreciate the opportunity to help you meet your investment goals.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
August 12, 1996
Because market conditions change frequently, there can be no assurance that the
trends described here will continue, come to pass or affect Fund performance.
PORTFOLIO MANAGEMENT REPORT
ANDREA FEINGOLD is Portfolio Manager of Colonial High Yield Securities Fund. Ms.
Feingold is Vice President of Colonial Management Associates, Inc. and is a
Chartered Financial Analyst.
Q: WHAT WAS THE FUND'S INVESTMENT STRATEGY DURING THE FIRST HALF OF 1996?
A: We continued to manage the Fund to maximize total returns while protecting
against risk by emphasizing higher quality high yield bonds. Because many
statistical reports early in the period indicated a strengthening economy, our
top-down approach to selecting investments led us to emphasize those companies
that we expected to benefit from such economic conditions. While a strengthening
economy generally fosters fears of inflation, the high yield sector tends to
trade on the merits of individual companies' financial performance rather than
on changes in interest rates. As many of these companies enjoyed expectations of
improved revenues and cash flows during this period, high yield bonds
outperformed the bond market overall.
Q: WHAT EFFECT DID YOUR STRATEGY HAVE ON THE FUND'S SIX MONTH PERFORMANCE?
A: Overall, our strategy enabled the Fund to post a positive total return,
outperforming the Treasury market. However, the degree of performance was
limited by our emphasis on the higher quality range of the high yield market.
During the first half of 1996, the lower quality bonds in the portfolio posted
the highest total return, reflecting, in part, the equity-like nature of those
holdings. Over time, however, we expect that higher quality bonds will continue
to be less volatile, retaining their value and liquidity better than lower
quality bonds.
Q: HOW DID THE FUND PERFORM OVER THE PAST SIX MONTHS?
A: The Fund underperformed the CS First Boston High Yield
Index, which tracks the performance of high yield income funds. The total return
for Class A shares, based on net asset value, was 3.14% while the Index posted a
total return of 3.77%. This modest level of underperformance can be attributed
to the Fund's concentration in higher quality securities.
Q: WHAT INVESTMENTS HELPED THE FUND'S PERFORMANCE DURING THE PERIOD?
A: Investments in the gaming, telecommunications and energy industries were all
positive contributors. The Fund benefited from the ongoing consolidation in the
gaming industry, as Hilton Corp., an investment-grade company, acquired Bally's
Inc. Another investment that performed very well was Continental Cablevision,
which was acquired by USWest, another investment-grade company. In the energy
sector, the Fund's holdings benefited from an increase in global demand and the
resulting strength in oil and gas prices.
4
Q: WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1996?
A: We expect that the economy will slow down somewhat during the second half of
the year and that the high yield market will reflect an increased emphasis on
credit quality. With this in mind, we will continue to focus on sectors and
companies we expect will have stable cash flows in both up and down markets,
such as the telecommunication and media industries. We believe our emphasis on
higher quality bonds will leave us well positioned for the future.
COLONIAL HIGH YIELD SECURITIES FUND INVESTMENT PERFORMANCE
VS. THE CS FIRST BOSTON HIGH YIELD INDEX
Change in Value of $10,000 from 6/30/86 - 6/30/96
Based on Net Asset Value and Maximum Offering Price for Class A Shares
[CHANGE IN VALUE GRAPH]
<TABLE>
<CAPTION>
CHSYF Class A First Boston
Pre-load Post-load High Yield IX
- ----------------------------------------------------------------
<S> <C> <C> <C>
Jun 30,86 10,000 9,525 10,000
Sep 30,86 10,131 9,650 10,051
Dec 31,86 10,456 9,960 10,235
Mar 31,87 11,072 10,546 10,857
Jun 30,87 10,991 10,469 10,700
Sep 30,87 10,902 10,384 10,652
Dec 31,87 10,906 10,388 10,902
Mar 31,88 11,547 10,999 11,522
Jun 30,88 11,916 11,350 11,909
Sep 30,88 12,166 11,588 12,119
Dec 31,88 12,324 11,738 12,390
Mar 31,89 12,536 11,941 12,606
Jun 30,89 12,887 12,275 13,061
Sep 30,89 12,736 12,131 12,791
Dec 31,89 12,331 11,745 12,439
Mar 31,90 11,743 11,185 12,118
Jun 30,90 12,323 11,738 12,813
Sep 30,90 11,048 10,523 11,654
Dec 31,90 10,499 10,000 11,645
Mar 31,91 12,102 11,527 13,802
Jun 30,91 13,244 12,615 14,825
Sep 30,91 14,301 13,622 15,960
Dec 31,91 15,106 14,389 16,741
Mar 31,92 16,650 15,859 18,111
Jun 30,92 17,250 16,431 18,556
Sep 30,92 18,030 17,174 19,226
Dec 31,92 18,301 17,432 19,529
Mar 31,93 19,439 18,515 20,891
Jun 30,93 20,459 19,487 21,703
Sep 30,93 20,837 19,847 22,241
Dec 31,93 21,905 20,864 23,222
Mar 31,94 21,959 20,916 22,975
Jun 30,94 21,820 20,783 22,643
Sep 30,94 21,874 20,835 23,005
Dec 31,94 21,830 20,793 22,996
Mar 31,95 22,758 21,677 24,078
Jun 30,95 23,920 22,784 25,473
Sep 30,95 24,735 23,561 26,239
Dec 31,95 25,682 24,462 26,993
Mar 31,96 26,135 24,893 27,577
Jun 30,96 26,487 25,229 28,012
</TABLE>
A $10,000 investment in Class B shares made on 6/8/92 at net asset value (NAV)
would have been valued at $14,983 on 6/30/96. The same investment after
deducting the applicable contingent deferred sales charge (CDSC) would have
grown to $14,683 on 6/30/96. A $10,000 investment in Class D shares made on
1/15/96 at NAV would have been valued at $10,199 at 6/30/96. The same investment
after deducting the maximum sales charge and applicable CDSC would be valued at
$10,000 at 6/30/96. The CS First Boston High Yield Index is an unmanaged index
that tracks the performance of high yield income funds. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses and are not
professionally managed.
AVERAGE ANNUAL TOTAL RETURNS
As of June 30, 1996 (Most Recent Quarter End)
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS D SHARES
Inception 10/21/71* 6/8/92 1/15/96**
NAV MOP NAV w/CDSC NAV MOP w/CDSC
<C> <C> <C> <C> <C> <C> <C>
1 YEAR 10.74% 5.48% 9.92% 4.92% -- --
5 YEARS 14.87% 13.76% -- -- -- --
10 years 10.23% 9.70% -- -- -- --
SINCE INCEPTION/
CHANGE IN POLICY* 12.72% 12.38% 10.46% 9.91% 1.99% 0.00%
</TABLE>
*Colonial High Yield Securities Fund adopted its current investment policies on
3/31/80.
** Performance is cumulative for fund shares less than one year old. Return and
value of an investment will vary, resulting in a gain or loss on sale. All
results shown assume reinvestment of distributions. NAV returns do not include
sales charges or CDSC. MOP returns include the maximum sales charge of 4.75% for
Class A and 1% for Class D. The CDSC returns reflect the maximum charge of 5%
for one year and 3% since inception for Class B and 1% for Class D.
5
INVESTMENT PORTFOLIO
JUNE 30, 1996 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
CORPORATE FIXED INCOME BONDS & NOTES - 90.3% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - 1.0%
SPECIAL TRADE CONTRACTORS
Building Materials Corp. of America,
stepped coupon, (11.750% 07/01/99)
(a) 07/01/04 $ 11,500 $ 8,625
--------
- --------------------------------------------------------------------------------
MANUFACTURING - 26.8%
CHEMICALS - 7.6%
Agricultural Minerals Co., L.P.,
10.750% 09/30/03 9,050 9,503
Applied Extrusion Technologies Inc.,
11.500% 04/01/02 7,000 7,105
Energy Ventures, Inc.,
10.250% 03/15/04 3,850 3,975
G-I Holdings:
(b) 10/01/98 1,820 1,461
10.000% 02/15/06 10,233 10,028
N.L. Industries, Inc.,
11.750% 10/15/03 6,850 7,004
Revlon Consumer Products Corp.,
10.500% 02/15/03 13,000 13,081
Revlon Worldwide Corp.,
(b) 03/15/98 12,000 9,960
--------
62,117
--------
ELECTRONIC & ELECTRICAL EQUIPMENT - 1.1%
Amphenol Corp.:
10.450% 11/01/01 4,000 4,260
12.750% 12/15/02 4,000 4,405
--------
8,665
--------
FABRICATED METAL - 0.2%
Renco Metals, Inc.,
11.500% 07/01/03 1,500 1,500
--------
FOOD & KINDRED PRODUCTS - 1.8%
Foodbrands America, Inc.,
10.750% 05/15/06 8,210 8,241
Gillett Holdings, Inc.,
12.250% 06/30/02 5,021 5,234
Pilgrim's Pride Corp.,
10.875% 08/01/03 1,600 1,520
--------
14,995
--------
</TABLE>
6
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MACHINERY & COMPUTER EQUIPMENT - 1.1%
<S> <C> <C>
IMO Industries, Inc.,
11.750% 05/01/06(c) $ 8,750 $ 8,925
-----------
PAPER PRODUCTS - 4.8%
Florida Coast Paper LLC,
12.750% 06/01/03 9,000 9,360
Four M Corp.,
12.000% 06/01/06(c) 3,750 3,834
Gaylord Container Corp,
12.750% 05/15/05 13,700 14,402
Repap Wisconsin, Inc.,
9.250% 02/01/02 3,500 3,290
Stone Container Corp.,
10.750% 10/01/02 9,000 9,079
-----------
39,965
-----------
PETROLEUM REFINING - 1.7%
Flores & Rucks, Inc.,
13.500% 12/01/04 6,000 6,930
Texas Petrochemical Corp.,
11.125% 07/01/06 7,100 7,207
-----------
14,137
-----------
PRIMARY METAL - 3.4%
Algoma Steel, Inc.,
12.375% 07/15/05 8,140 7,977
Earle M. Jorgensen & Co.,
10.750% 03/01/00 9,000 8,910
Kaiser Aluminum & Chemical Corp.,
12.750% 02/01/03 8,500 9,031
Wheeling-Pittsburgh Steel Corp.,
9.375% 11/15/03 2,000 1,860
-----------
27,778
-----------
PRINTING & PUBLISHING - 0.4%
Marvel Entertainment Group, Inc.,
(b) 04/15/98 4,100 3,280
-----------
RUBBER & PLASTIC - 0.5%
Berry Plastics Corp.,
12.250% 04/15/04 3,500 3,763
-----------
</TABLE>
7
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS &
NOTES - CONT. PAR VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - CONT
STONE, CLAY, GLASS & CONCRETE - 2.2%
Owens-Illinois, Inc.:
9.950% 10/15/04 $ 10,000 $ 10,038
10.500% 06/15/02 6,000 6,165
11.000% 12/01/03 2,000 2,145
-----------
18,348
-----------
TRANSPORTATION EQUIPMENT - 2.0%
Aftermarket Technology Corp.,
Series B,
12.000% 08/01/04 7,500 8,100
Collins & Aikman Products,
11.500% 04/15/06 8,500 8,638
-----------
16,738
-----------
- -------------------------------------------------------------------------------------
MINING & ENERGY - 8.8%
OIL & GAS EXTRACTION - 7.2%
Falcon Drilling Co., Inc.,
Series B,
9.750% 01/15/01 5,500 5,562
Gulf Canada Resources Ltd.:
9.250% 01/15/04 15,500 15,074
9.625% 07/01/05(d) 2,700 2,666
Maxus Energy Corp.,
11.250% 05/01/13 353 358
Mesa Capital Corp.,
12.750% 06/30/98 13,500 13,551
Nevo Energy Co.:
9.500% 04/15/06 2,350 2,303
12.500% 06/15/02 4,242 4,560
OPI International, Inc.,
12.875% 07/15/02 3,000 3,323
Rowan Companies, Inc.,
11.875% 12/01/01 5,750 6,181
Santa Fe Energy Resources, Inc.,
11.000% 05/15/04 5,000 5,375
-----------
58,953
-----------
OIL & GAS FIELD SERVICES - 1.6%
Tuboscope Vetco International Corp.,
10.750% 04/15/03 5,000 5,100
United Meridian Corp.,
10.375% 10/15/05 8,000 8,200
-----------
13,300
-----------
</TABLE>
8
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETAIL TRADE - 4.1%
<S> <C> <C>
FOOD STORES - 3.8%
Dominick's Finer Foods, Inc.,
10.875% 05/01/05 $ 3,000 $ 3,165
Pathmark Stores, Inc.:
9.625% 05/01/03 12,000 11,250
11.625% 06/15/02 5,500 5,486
stepped coupon, (10.75% 11/01/99)
(a) 11/01/03 9,000 5,445
Smiths Food & Drug Centers,
11.250% 05/15/07 6,000 6,075
--------
31,421
--------
GENERAL MERCHANDISE STORES - 0.3%
Thrifty Payless Holdings, Inc.,
12.250% 04/15/04 1,949 2,185
--------
- --------------------------------------------------------------------------------
SERVICES - 16.6%
AMUSEMENT & RECREATION - 10.4%
Alliance Gaming Corp.,
12.875% 06/30/03 3,750 3,722
Empress River Casino Finance Corp.,
10.750% 04/01/02 10,400 10,920
Falcon Holdings PIK,
11.000% 09/15/03 2,868 2,739
GNF Corp., Series B,
10.625% 04/01/03 10,500 11,419
Grand Casinos, Inc.,
10.125% 12/01/03 2,000 2,045
Harvey Casinos Resorts,
10.625% 06/01/06 7,250 7,268
Majestic Star Casino LLC,
12.750% 05/15/03 2,875 3,105
Marvel Parent Holdings,
(b) 04/15/98 3,600 2,835
Showboat, Inc.,
13.000% 08/01/09 14,470 16,568
Stratosphere Corp.,
14.250% 05/15/02 3,500 3,885
Trump Castle Funding Mortgage,
11.750% 11/15/03 8,000 8,180
Trump Atlantic City Associates,
11.250% 05/01/06 13,175 13,211
--------
85,897
--------
</TABLE>
9
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS &
NOTES - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
SERVICES - CONT
BUSINESS SERVICES - 0.3%
Darling International, Inc.,
11.000% 07/15/00 $ 261 $ 258
Figgie International Inc.,
9.875% 10/01/99 1,800 1,805
--------
2,063
--------
HEALTH SERVICES - 2.4%
OrNda Health Corp.:
12.250% 05/15/02 6,380 6,898
11.375% 08/15/04 11,250 12,431
--------
19,329
--------
HOTELS, CAMPS & LODGING - 3.5%
Aztar Corp.,
13.750% 10/01/04 4,200 4,814
HMH Properties, Inc.,
9.500% 05/15/05 8,500 8,096
Showboat Marina,
13.500% 03/15/03 2,000 2,170
Station Casinos, Inc.,
10.125% 03/15/06 9,700 9,482
Wyndham Hotel Corp.,
10.500% 05/15/06 4,500 4,472
--------
29,034
--------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 33.0%
AIR TRANSPORTATION - 2.8%
Greenwich Air Services,
10.500% 06/01/06 5,310 5,277
U.S. Air, Inc.,
10.375% 03/01/13 17,654 17,477
--------
22,754
--------
BROADCASTING - 7.0%
Allbritton Communications Co.,
11.500% 08/15/04 8,500 8,670
NWCG Holding Corp.,
(b) 06/15/99 12,650 9,298
SCI Television, Inc.,
11.000% 06/30/05 15,575 16,179
Sinclair Broadcast Group, Inc.,
10.000% 12/15/03 4,500 4,286
</TABLE>
10
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Sullivan Broadcasting Group, Inc.,
10.250% 12/15/05 $ 12,500 $ 11,969
Young Broadcasting Corp.:
10.125% 02/15/05 1,000 957
11.750% 11/15/04 6,000 6,285
-----------
57,644
-----------
CABLE - 5.8%
Comcast Corp.,
10.625% 07/15/12 5,000 5,194
Comcast UK Cable Partners Ltd.,
stepped coupon, (11.200%, 11/15/00)
(a) 11/15/07 2,750 1,595
Diamond Cable Corp.,
stepped coupon, (11.750% 12/15/00)
(a) 12/15/05 3,000 1,763
Groupe Videotron,
10.625% 02/15/05(d) 10,000 10,438
Insight Communications Co.,
11.250% 03/01/00 9,000 9,180
International CableTel, Inc.:
stepped coupon, (12.750%,04/15/00)
(a) 04/15/05 1,500 962
stepped coupon, (11.500%, 02/01/01)
(a) 02/01/06 2,000 1,120
Marcus Cable Co.,
11.875% 10/01/05 8,500 8,819
People's Choice Units
stepped coupon, (13.125% 06/01/00)
(a) 06/01/04 2,500 1,475
Rogers Cablesystems, Inc.,
10.000% 03/15/05 4,485 4,451
Videotron Holding Co.:
stepped coupon, (11.125% 07/01/99)
(a) 07/01/04 1,250 919
stepped coupon, (11.000% 08/15/00)
(a) 08/15/05 3,000 1,916
-----------
47,832
-----------
COMMUNICATIONS - 3.3%
Brooks Fiber Properties, Inc.,
stepped coupon, (10.875% 03/01/01)
(a) 03/01/06 10,000 5,325
Century Communications,
11.875% 10/15/03 3,000 3,203
</TABLE>
11
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS &
NOTES - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT
COMMUNICATIONS - CONT
Intercel Inc.,
stepped coupon, (12.000% 05/01/01)
(a) 05/01/06 $ 4,000 $ 2,180
Intermedia Communications of Florida,
stepped coupon, (12.500% 05/15/01)
(a) 05/15/06 6,000 3,360
Millicom International Cellular,
stepped coupon (13.500% 06/01/01)
(a) 06/01/06(c) 3,750 1,983
Shared Technologies Fairchild, Inc.,
stepped coupon (12.250% 03/01/99)
(a) 03/01/06 12,000 9,060
UNC Inc.,
11.000% 06/01/06(c) 2,400 2,424
-----------
27,535
-----------
ELECTRIC, GAS & SANITARY SERVICES - 1.1%
Mesa Operating Co.:
10.625% 07/01/06 2,650 2,690
stepped coupon, (11.625% 07/01/01)
(a) 07/01/06 10,500 6,143
-----------
8,833
-----------
GAS SERVICES - 1.4%
California Energy Co., Inc.,
9.875% 06/30/03 8,750 8,881
Midland Funding Corp.,
10.330% 07/23/02 2,658 2,758
-----------
11,639
-----------
TELECOMMUNICATIONS - 11.6%
Echostar Communications Corp.,
stepped coupon, (12.875% 06/01/99)
(a) 06/01/04 21,000 15,435
IntelCom (USA) Inc.:
stepped coupon (12.500% 05/01/01)
(a) 05/01/06 6,900 3,795
stepped coupon, (13.500% 09/15/00)
(a) 09/15/05 12,000 7,200
</TABLE>
12
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
MFS Communications Company, Inc.:
stepped coupon, (9.375% 01/15/99)
(a) 01/15/04 $ 3,000 $ 2,261
stepped coupon, (8.875% 01/15/01)
(a) 01/15/06 13,000 7,897
Mobilemedia Corp.,
9.375% 11/01/07 3,000 2,670
Nextel Communications, Inc.,
stepped coupon ( 9.750% 02/15/99)
(a) 08/15/04 19,650 11,643
Paging Network, Inc.:
8.875% 02/01/06 5,500 4,984
10.125% 08/01/07 3,000 2,955
Panamsat Limited Partnership Corp.,
stepped coupon, (11.375% 08/01/98)
(a) 08/01/03 17,000 14,790
PriCellular Wireless Corp.,
stepped coupon, (14.000% 11/15/97)
(a) 11/15/01 4,000 3,600
USA Mobile Communications Holdings, Inc.:
9.500% 02/01/04 500 456
14.000% 11/01/04 1,500 1,680
Winstar Communications, Inc., Units,
stepped coupon, (14.000% 10/15/00):
(a) 10/15/05(e) 10,500 5,880
(a) 10/15/05(e) 4,750 3,230
Wireless One, Inc., Units,
13.000% 10/15/03(f) 6,500 6,825
-----------
95,301
-----------
TOTAL CORPORATE FIXED INCOME BONDS & NOTES
(cost of $741,147) 742,556
-----------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCKS - 4.6% SHARES
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 0.2%
PRINTING & PUBLISHING
K-III Communications, Corp.,
Sr. Exchangeable $2.850 60 1,582
------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 4.4%
COMMUNICATIONS
Cablevision Systems Corp.:
11.750%, Series G 107 10,000
11.125%, Series L (c) 136 12,354
K-III Communications Corp.,
10.000% (c) 15 1,373
</TABLE>
13
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PREFERRED STOCKS - CONT. SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT
COMMUNICATIONS - CONT
Time Warner, Inc.,
10.250% (c) 13 $12,456
-------
36,183
-------
TOTAL PREFERRED STOCKS (cost of $40,481) 37,765
-------
COMMON STOCKS - 0.2%
- --------------------------------------------------------------------------------
MANUFACTURING - 0.1%
CHEMICALS & ALLIED PRODUCTS - 0.0%
UCC Investors Holdings, Inc. (g) (h) 15 149
-------
FOOD & KINDRED PRODUCTS - 0.1%
Darling International, Inc. (h) 18 432
Dr. Pepper Bottling Co., (h) 80 280
-------
712
-------
- --------------------------------------------------------------------------------
RETAIL TRADE - 0.0%
MISCELLANEOUS RETAIL - 0.0%
Macleod-Stedman, Inc. (g) (h) 425 4
Pharmhouse Corp. (h) 1 3
-------
7
-------
RESTAURANTS - 0.0%
Host Marriott Corp. (h) 8 99
-------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.1%
COMMUNICATIONS - 0.0%
EchoStar Communications Corp. (h) 9 254
-------
ELECTRIC SERVICES - 0.0%
Great Bay Power Corp. (g) (h) (i) (i)
-------
GAS SERVICES - 0.1%
United Gas Holdings Corp. (g) (h) 22 312
-------
LOCAL & SUBURBAN TRANSIT - 0.0%
Greyhound Lines, Inc., 12.50% Escrow
Receipt (g) (h) 2 (i)
Greyhound Lines, Inc., 13% Escrow
Receipt (g) (h) 1 (i)
-------
(i)
-------
</TABLE>
14
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
MOTOR FREIGHT & WAREHOUSING - 0.0%
St. Johnsbury Trucking Co. (g) (h) 79 $ 79
Sun Carriers, Inc. (g) (h) 326 3
-------
82
-------
TOTAL COMMON STOCKS (cost of $2,150) 1,615
-------
WARRANTS (h) - 0.0%
- --------------------------------------------------------------------------------
MANUFACTURING - 0.0%
RUBBER & PLASTIC - 0.0%
BPC Holdings Corp.,
expires 04/15/04 4 70
-------
- --------------------------------------------------------------------------------
SERVICES - 0.0%
HEALTH SERVICES - 0.0%
Wright Medical Technology,
expires 06/15/03 1 187
-------
HOTELS, CAMPS & LODGING - 0.0%
Capital Gaming International, Inc.,
expires 02/01/99 6 1
-------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.0%
COMMUNICATIONS - 0.0%
American Telecasting, Inc.,
expires 08/10/00 (c) 9 216
Intermedia Communication of Florida, Inc.
expires 06/01/00 (c) 1 40
Wireless One, Inc.,
expires 10/19/00 20 146
-------
402
-------
TOTAL WARRANTS (cost of $468) 660
-------
TOTAL INVESTMENTS - 95.1% (cost of $784,246) (j) 782,596
-------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM OBLIGATIONS - 5.9% PAR
- -----------------------------------------------------------------------------------------------------
<S> <C>
Repurchase agreement with Chase Securities, Inc., dated 06/28/96, due 07/01/96
at 5.400%, collateralized by U.S. Treasury notes with various maturities to
1998, market value $49,276
(repurchase proceeds $48,222) $ 48,200 48,200
-------
</TABLE>
15
Investment Portfolio/June 30, 1996
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS & LIABILITIES, NET - (1.0)% $ (8,059)
- --------------------------------------------------------------------------------
NET ASSETS - 100% $ 822,737
---------
</TABLE>
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 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30,
1996, the value of these securities amounted to $43,605 or 5.3% of net
assets.
(d) This security is Canadian. Par amount is stated in U.S. dollars.
(e) Each unit consists of two senior discount notes and one convertible
senior subordinated discount note.
(f) Each unit consists of one senior discount note and three warrants to
purchase common stock.
(g) The value of this security represents fair value as determined in good
faith under the direction of the Trustees.
(h) Non-income producing.
(i) Rounds to less than one.
(j) Cost for federal income tax purposes is $784,800.
Acronym Name
-------------- ----------------------------------
PIK Payment-In-Kind
See notes to financial statements.
16
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $784,246) $ 782,596
Short-term obligations 48,200
-----------
830,796
Cash $ 4,736
Receivable for:
Investments sold 19,981
Interest 15,767
Fund shares sold 1,648
Other 30 42,162
---------- -----------
Total Assets 872,958
LIABILITIES
Payable for:
Investments purchased 39,798
Distributions 5,963
Fund shares repurchased 4,430
Accrued:
Deferred Trustees fees 5
Other 25
-------------
Total Liabilities 50,221
-----------
NET ASSETS $ 822,737
-----------
Net asset value & redemption price per share -
Class A ($466,953/70,154) $ 6.66
-----------
Maximum offering price per share - Class A
($6.66/0.9525) $ 6.99(a)
-----------
Net asset value & offering price per share -
Class B ($354,140/53,205) $ 6.66(b)
-----------
Net asset value & redemption price per share -
Class D ($1,644/247) $ 6.66(b)
-----------
Maximum offering price per share - Class D
($6.66/0.9900) $ 6.73
-----------
COMPOSITION OF NET ASSETS
Capital paid in $ 880,963
Undistributed net investment income 1,450
Accumulated net realized loss (58,026)
Net unrealized depreciation (1,650)
-----------
$ 822,737
-----------
</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
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Interest $ 40,186
Dividends 1,503
-------
Total investment income 41,689
EXPENSES
Management fee $ 2,456
Service fee 1,022
Distribution fee - Class B 1,312
Distribution fee - Class D 3
Transfer agent 1,192
Bookkeeping fee 148
Trustees fee 26
Custodian fee 8
Audit fee 25
Legal fee 9
Registration fee 38
Reports to shareholders 10
Other 34 6,283
------- -------
Net Investment Income 35,406
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 17,591
Foreign currency transactions (2)
-------
Net Realized Gain 17,589
Net unrealized depreciation during
the period (28,559)
-------
Net Loss (10,970)
-------
Net Increase in Net Assets from Operations $ 24,436
-------
</TABLE>
See notes to financial statements.
18
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six Months
ended Year ended
(in thousands) June 30 December 31
----------- -----------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
----------- -----------
<S> <C> <C>
Operations:
Net investment income $ 35,406 $ 65,171
Net realized gain (loss) 17,589 (6,731)
Net unrealized appreciation (depreciation) (28,559) 57,931
---------- ---------
Net Increase from Operations 24,436 116,371
Distributions:
From net investment income - Class A (20,818) (40,139)
In excess of net investment income - Class A (922)
From net investment income - Class B (14,230) (25,372)
In excess of net investment income - Class B -- (583)
From net investment income - Class D (29) --
----------- ---------
(10,641) 49,355
---------- ---------
Fund Share Transactions(a):
Receipts for shares sold - Class A 77,941 125,401
Value of distributions reinvested - Class A 7,550 18,081
Cost of shares repurchased - Class A (79,357) (95,780)
--------- ---------
6,134 47,702
--------- ---------
Receipts for shares sold - Class B 73,146 112,679
Value of distributions reinvested - Class B 5,482 13,181
Cost of shares repurchased - Class B (71,020) (48,173)
-------- ---------
7,608 77,687
-------- ---------
Receipts for shares sold - Class D 1,925 --
Value of distributions reinvested - Class D 15 --
Cost of shares repurchased - Class D (277) --
-------- ---------
1,663 --
------- ---------
Net Increase from Fund Share Transactions 15,405 125,389
------- ---------
Total Increase 4,764 174,744
NET ASSETS
Beginning of period 817,973 643,229
--------- ---------
End of period (including undistributed net
investment income of $1,450 and $99,
respectively) $ 822,737 $ 817,973
--------- ---------
</TABLE>
(a) Class D shares were initially offered on January 15, 1996.
Continued on next page.
See notes to financial statements.
19
STATEMENT OF CHANGES IN NET ASSETS - CONT.
<TABLE>
<S> <C> <C>
NUMBER OF FUND SHARES(a)
Sold - Class A 11,582 19,185
Issued for distributions reinvested - Class A 1,116 2,749
Repurchased - Class A (11,754) (14,576)
-------- -------
944 7,358
------- -------
Sold - Class B 10,858 17,179
Issued for distributions reinvested - Class B 810 2,003
Repurchased - Class B (10,506) (7,357)
-------- -------
1,162 11,825
-------- -------
Sold - Class D 286 --
Issued for distributions reinvested - Class D 2 --
Repurchased - Class D (41) --
-------- -------
247 --
-------- -------
</TABLE>
(a) Class D shares were initially offered on January 15, 1996.
See notes to financial statements.
20
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
...............................................................................
In the opinion of management of Colonial High Yield Securities Fund (the Fund),
a series of Colonial Trust I, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at June 30, 1996, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
...............................................................................
ORGANIZATION: The Fund 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 three classes of shares: Class A, Class B and Class D. Class A shares are
sold with a front-end sales charge and Class B shares 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. Class D shares are subject to a reduced front-end sales charge, a
contingent deferred sales charge on redemptions made within one year after
purchase, and a continuing distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent 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. 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.
21
Notes to Financial Statements/June 30, 1996
- -------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
...............................................................................
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 and Class D 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 and Class D 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 and Class D shares
only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; premium and
market discount are not amortized or accreted.
The value of additional securities received as an interest or dividend payment
is recorded as income and as the cost basis of such securities.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions daily
and pays monthly.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. 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.
22
Notes to Financial Statements/June 30, 1996
- -------------------------------------------------------------------------------
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.
NOTE 3. 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 FEE: Colonial Investors Service Center, Inc., (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for a monthly
fee equal to 0.25% annually of the Fund's average net assets and receives a
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 six months ended June 30, 1996, the Fund has
been advised that the Distributor retained net underwriting discounts of $73,193
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $647,650 and $5,053 on Class B and Class D share redemptions,
respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually of the Fund's net assets as of the 20th of
each month. The plan also requires the payment of a distribution fee to
23
Notes to Financial Statements/June 30, 1996
- -------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
...............................................................................
the Distributor equal to 0.75% of the average net assets attributable to
Class B shares.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
the Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
...............................................................................
INVESTMENT ACTIVITY: During the six months ended June 30, 1996, purchases and
sales of investments, other than short-term obligations were $594,937,205 and
$603,285,949, respectively, of which $16,675,000 and $65,771,484, respectively,
were U.S. government securities.
Unrealized appreciation (depreciation) at June 30, 1996, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 12,931,173
Gross unrealized depreciation (15,134,863)
---------------
Net unrealized depreciation $ (2,203,690)
---------------
</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>
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 be taxable to
shareholders as ordinary income.
24
Notes to Financial Statements/June 30, 1996
- -------------------------------------------------------------------------------
OTHER: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of currency exchange or
other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 5. LINE OF CREDIT
...............................................................................
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the six months ended June 30, 1996.
25
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each
period are as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended
June 30
------------------------------------------------------------
1996
Class A Class B Class D(a)
------------ ------------ ------------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 6.750 $ 6.750 $ 6.780
------------ ------------ ------------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.311 0.286 0.265
Net realized and
unrealized gain (loss) (0.101) (0.101) (0.131)
------------ ------------ ------------
Total from Investment
Operations 0.210 0.185 0.134
------------ ------------ ------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net
investment income (0.300) (0.275) (0.254)
In excess of net
investment income -- -- --
------------ ------------ ------------
Total from Distributions
Declared to Shareholders (0.300) (0.275) (0.254)
------------ ------------ ------------
Net asset value -
End of period $ 6.660 $ 6.660 $ 6.660
------------ ------------ ------------
Total return (b) 3.14%(c) 2.75%(c) 1.99%(c)
------------ ------------ ------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.21%(d)(e) 1.96%(d)(e) 1.96%(d)(e)
Net investment income 8.97(d)(e) 8.22%(d)(e) 8.22%(d)(e)
Portfolio turnover 77%(c) 77%(c) 77%(c)
Net assets at end
of period (000) $ 466,953 $ 354,140 $ 1,644
</TABLE>
(a) Class D shares were initially offered on January 15, 1996. 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 years' ratios are net of benefits
received, if any.
(e) Annualized.
26
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended December 31
- -------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
Class A Class B Class A Class B Class A Class B
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 6.300 $ 6.300 $ 6.950 $ 6.950 $ 6.400 $ 6.400
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
0.615 0.566 0.599 0.549 0.634 0.585
0.452 0.452 (0.622) (0.622) 0.576 0.576
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
1.067 1.018 (0.023) (0.073) 1.210 1.161
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(0.603) (0.555) (0.627) (0.577) (0.660) (0.611)
(0.014) (0.013) -- -- -- --
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(0.617) (0.568) (0.627) (0.577) (0.660) (0.611)
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ 6.750 $ 6.750 $ 6.300 $ 6.300 $ 6.950 $ 6.950
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
17.65% 16.78% (0.34%) (1.09%) 19.69% 18.83%
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
1.21%(d) 1.96%(d) 1.23% 1.98% 1.23% 1.98%
9.14%(d) 8.39%(d) 9.03% 8.28% 9.55% 8.80%
95% 95% 123% 123% 122% 122%
$ 466,905 $ 351,068 $ 389,791 $ 253,438 $ 440,942 $ 222,536
</TABLE>
27
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------
1992 1991
Class A Class B(a) Class A
------------ ------------ ------------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 5.860 $ 6.360 $ 4.640
------------ ------------ ------------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.669 0.332 0.726
Net realized and
unrealized gain (loss) 0.531 0.057 1.207
------------ ------------ ------------
Total from Investment
Operations 1.200 0.389 1.933
------------ ------------ ------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net
investment income (0.660) (0.349) (0.713)
In excess of net
investment income -- -- --
------------ ------------ ------------
Total from Distributions
Declared to Shareholders (0.660) (0.349) (0.713)
------------ ------------ ------------
Net asset value -
End of period $ 6.400 $ 6.400 $ 5.860
------------ ------------ ------------
Total return (b) 21.15% 5.53%(c) 43.88%
------------ ------------ ------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.26% 2.01%(d) 1.36%
Net investment income 10.64% 9.89%(d) 13.41%
Portfolio turnover 66% 66% 37%
Net assets at end
of period (000) $ 346,225 $ 94,653 $ 299,587
</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) Annualized.
28
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 withdrawals from your account by phone, by mail
or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it 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.
29
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
30
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.
31
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
COLONIAL INVESTMENT SERVICES, INC., Distributor (C)1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
HY-03/579C-0696 M (8/96)
