<PAGE>
- ----------------------------------------------------
COLONIAL TAX-MANAGED GROWTH FUND SEMIANNUAL REPORT
- ----------------------------------------------------
Managed by Stein Roe & Farnham, Inc.
April 30, 1997
---------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
---------------------------
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL TAX-MANAGED GROWTH FUND HIGHLIGHTS
DECEMBER 30, 1996 - APRIL 30, 1997
INVESTMENT OBJECTIVE: Colonial Tax-Managed Growth Fund seeks to maximize
long-term capital growth while reducing shareholder exposure to taxes.
The Fund is Designed to Offer:
[X] Premier growth management
[X] A sensitivity to taxes
[X] The potential for attractive returns before and after taxes
PORTFOLIO MANAGER COMMENTARY: "Our team approach leads to a disciplined,
consistent investment strategy and the resources needed to support
high-conviction investment ideas and a concentrated portfolio that may
outperform more broadly diversified funds over time." -- Mel Hughes
<TABLE>
COLONIAL TAX-MANAGED GROWTH FUND PERFORMANCE
<CAPTION>
- --------------------------------------------------------------------------------
Class A Class B Class D(1)
Inception Date 12/30/96 12/30/96 12/30/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Six-month total returns, assuming (.40)% (.60)% (.60)%
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC)
- --------------------------------------------------------------------------------
Six-month total returns assuming (6.12)% (5.57)% (2.68)%
maximum offering price (MOP) and CDSC(2)
- --------------------------------------------------------------------------------
Net asset value per share on 4/30/97 $10.04 $10.02 $10.02
- --------------------------------------------------------------------------------
</TABLE>
(1) On July 1, 1997, Class D shares will convert to Class C shares. If you own
Class D shares, you will receive a detailed letter explaining how this
conversion affects your account.
<TABLE>
<CAPTION>
Top Five Holdings (as of 4/30/97)(3) Top Five Sectors (as of 4/30/97)(3),(4)
<S> <C> <C> <C>
1. HFS, Inc. ..................... 3.2% 1. Manufacturing .............. 46.8%
2. Ericsson (LM) Tel Ad .......... 3.1% 2. Financials ................. 22.4%
3. Eli Lilly & Co ................ 3.0% 3. Services ................... 12.7%
4. Medtronic, Inc ................ 3.0% 4. Retail ..................... 5.3%
5. Smith-Kline Beecham ........... 3.0% 5. Communications ............. 2.0%
</TABLE>
(2) MOP returns include the maximum sales charge of 5.75% for Class A shares.
The CDSC returns reflect the maximum charge of 5% and 1%, respectively, for
Class B and Class D shares. Past performance cannot predict future results.
Returns and value will fluctuate, resulting in a gain or loss on sale.
(3) Holdings and sector breakdowns are calculated as a percentage of total net
assets. Because the Fund is actively managed, there can be no guarantee the Fund
will continue to hold these securities or invest in these sectors in the future.
(4) Industry sectors in the following financial statements are based upon the
standard industrial classifications (SIC) as published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon Stein Roe's defined criteria as used in the investment process.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present the first semiannual report for
Colonial Tax-Managed Growth Fund and I would like to
take this opportunity to welcome you as shareholders. [PHOTOGRAPH]
This report provides performance and investment strategy
information for the Fund since it commenced operations
in late December of last year.
This was a challenging investment environment in which to start a new fund. We
entered the stock market just as it was climbing to an all-time high, peaking in
mid-February. Then, as we anticipated, the Federal Reserve Board raised interest
rates in late March as a preemptive strike against inflation. The move triggered
the first significant stock market correction since the summer of 1996, and the
market lost 9.8% of its value.
The Fund's management team used this difficult market environment to
shareholders' tax advantage by making transactions that may offset future
capital gains. This report will provide you with a closer look at the Fund's
performance and the investment strategies used to help increase your long-term
growth potential while reducing your exposure to taxes.
We feel the long-term prospects for Colonial Tax-Managed Growth Fund are good.
We are optimistic that growth stocks will offer attractive potential in coming
years, as your portfolio manager's report explains. We look forward to updating
you on the Fund's performance six months from now, in the Fund's first annual
report.
Respectfully,
/s/ Harold W. Cogger
- -----------------------------------
Harold W. Cogger
President
June 13, 1997
Because market conditions change frequently, there can be no assurance that the
trends described in this report will continue, come to pass or affect the Fund's
performance.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT REPORT
MEL HUGHES and STEVE BERMAN are senior equity analysts at Stein Roe & Farnham,
Inc., and members of the nine-person investment management team for Colonial
Tax-Managed Growth Fund.
WE USED A CHALLENGING MARKET TO OUR SHAREHOLDERS' ADVANTAGE
The first third of 1997 was volatile. We invested new cash as the market hit its
high and then headed down.
Much of the stock market's positive performance was concentrated in the
large-cap "blue chip" stocks. In fact, the 100 largest stocks led mid-sized
stocks by as much as 13%.
OFFSETTING FUTURE CAPITAL GAINS
As a tax-managed fund investing within this volatile market environment, we took
pro-active measures to realize tax losses that could offset capital gains in the
future. These measures took the form of two tactics to "harvest losses." First,
we sold certain stocks whose fundamentals have deteriorated at a loss. Second,
we sold stocks that we felt were still attractive but had declined in price,
replacing them with similar stocks that we liked equally as well. In this way,
we preserved our upside potential while still being able to realize a tax loss.
An example of this latter technique was Bankers Trust. Although the company's
fundamentals were still favorable, the stock's price dropped. So we sold it at a
loss and purchased BankAmerica, which represents an upgrade in both investment
quality and growth potential.
Of course, the Fund's tax efficiency also benefits from our long-term vision and
growth investment style. Our long-term approach reduces portfolio turnover,
limiting taxable gains distributions to shareholders.
Growth stocks also tend to pay low dividends because these companies reinvest
earnings. Low dividends reduce the taxes shareholders pay on dividend earnings,
which for many shareholders are taxed at a higher rate than long-term capital
gains. The Fund's current dividend yield is 1.1%, which is about half of the
yield of the S&P 500 Index.
MAXIMIZING GROWTH POTENTIAL
Colonial Tax-Managed Growth Fund uses a team approach to pursue long-term growth
of capital and reduce shareholder exposure to taxes. We feel that this approach
delivers a more consistent investment strategy compared to a single manager
system. Our team is comprised of nine managers, averaging 13 years of
experience.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
Before adding a stock to the Fund, a manager must present a sound investment
case to the portfolio management team. The team must then agree on the merit of
the recommendation before adding it to the Fund. The team's diverse background
means each recommendation undergoes an intense review.
This process leads to higher conviction investment ideas and a concentrated
portfolio of 50 or fewer stocks. With strict sector diversification
requirements, we feel we can get adequate diversification with fewer stocks than
a typical stock fund. Each stock then has a meaningful impact on our overall
portfolio performance. We believe this strategy of a smaller portfolio of
high-potential stocks can, over time, outperform a more diversified portfolio.
FINDING VALUE AND OPPORTUNITY
Over the past four months, we overweighted the Fund's allocations in certain
sectors. While over 70% of the portfolio was invested in large cap stocks, we
also held nearly 30% in small- to mid-size companies -- an overweighted
percentage relative to the S&P 500 Index. This reflects the fact that we found
better value in small- to mid-size companies when compared to blue chips. We
believe this will prove to be an appropriate decision in the coming months.
We also over-weighted the Fund's portfolio in the financial services sector. We
found a number of companies in this sector with strong growth potential, selling
at more reasonable prices than the rest of the market. The financial services
sector stands to benefit as the population ages and more people begin to save
for retirement.
THE FUTURE OF GROWTH STOCKS
We believe the Federal Reserve Board may raise rates slightly at least once
more, slowing economic growth over the months to come without necessarily
leading to a recession. This slowing will, in turn, dampen corporate profits.
Because growth companies are not as sensitive to the economy as other types of
companies, their earnings growth tends to hold up relatively well in a slowing
economy. This only improves our outlook and confidence in the potential of
growth stocks, consistent with our objective to provide investors long-term
growth of capital and reduced exposure to taxes.
- --------------------------------------------------------------------------------
5
<PAGE>
INVESTMENT PORTFOLIO
APRIL 30, 1997 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 92.8% COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSTRUCTION - 1.5%
HEAVY CONSTRUCTION-NON BUILDING CONSTRUCTION - 1.5%
Flour Corp. 5 $ 300
------
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 22.4%
DEPOSITORY INSTITUTIONS - 10.2%
BankAmerica Corp. 5 561
Chase Manhattan Corp. 5 454
Citicorp 4 496
Great Western Financial Corp. 13 529
------
2,040
------
INSURANCE CARRIERS - 7.7%
Allstate Corp. 7 478
Nationwide Financial Services, Class A (a) 18 469
United Healthcare Corp. 12 583
------
1,530
------
NONDEPOSITORY CREDIT INSTITUTIONS - 4.5%
Federal National Mortgage Association 11 444
First USA, Inc. 9 452
------
896
------
- --------------------------------------------------------------------------------
MANUFACTURING - 46.8%
CHEMICALS & ALLIED PRODUCTS - 14.5%
Ecolab, Inc. 14 566
Eli Lilly & Co. 7 598
Monsanto Co. 10 406
Novartis ADR Sw 9 581
Procter & Gamble Co. 1 176
Smithkline Beecham - Sponsored ADR UK 7 581
------
2,908
------
ELECTRONIC & ELECTRICAL EQUIPMENT - 10.7%
General Electric Co. 4 421
Hubbell, Inc., Class B 12 518
Motorola, Inc. 10 590
Telefonakteibolaget LM Ericsson Sw 18 612
------
2,141
------
FOOD & KINDRED PRODUCTS - 2.9%
Nabisco Holdings Corp. 15 576
------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/April 30, 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
FURNITURE & FIXTURES - 2.6%
Lear Corp. (a) 15 $ 522
------
MACHINERY & COMPUTER EQUIPMENT - 7.0%
Baker Hughes, Inc. 7 241
Cisco Systems, Inc. (a) 11 579
US Filter (a) 19 583
------
1,403
------
MEASURING & ANALYZING INSTRUMENTS - 7.9%
Emerson Electric Co. 10 523
Medtronic, Inc. 9 595
Westinghouse Electric Corp. 27 466
------
1,584
------
PETROLEUM REFINING - 1.2%
Mobil Corp. 2 247
------
- --------------------------------------------------------------------------------
MINING & ENERGY - 1.5%
CRUDE PETROLEUM & NATURAL GAS - 1.5%
United Meridian Corp. (a) 10 292
------
- --------------------------------------------------------------------------------
RETAIL TRADE - 5.3%
BUILDING, HARDWARE & GARDEN SUPPLY - 2.7%
Home Depot, Inc. 9 539
------
GENERAL MERCHANDISE STORES - 2.6%
Wal-Mart Stores, Inc. 18 520
------
- --------------------------------------------------------------------------------
SERVICES - 12.7%
AMUSEMENT & RECREATION - 2.2%
Allen Telecom, Inc. (a) 25 433
------
BUSINESS SERVICES - 2.9%
CUC International, Inc. (a) 27 575
------
COMPUTER RELATED SERVICES - 2.2%
Electronic Data Systems Corp. 13 434
------
HOTELS, CAMPS & LODGING - 3.2%
Hospitality Franchise Systems, Inc. (a) 11 640
------
PERSONAL SERVICES - 2.2%
Service Corp. International 13 435
------
</TABLE>
7
<PAGE>
<TABLE>
Investment Portfolio/April 30, 1997
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 2.0%
COMMUNICATIONS - 2.0%
Clear Channel Communications, Inc.(a) 8 $ 398
-------
- --------------------------------------------------------------------------------
WHOLESALE TRADE - 0.6%
NONDURABLE GOODS - 0.6%
Gillette Co. 1 119
-------
TOTAL COMMON STOCKS (cost of $18,516)(b) 18,532
-------
SHORT-TERM OBLIGATIONS - 7.7% PAR
- --------------------------------------------------------------------------------
Repurchase agreement with Chase Securities, Inc.,
dated 04/30/97 due 05/01/97 at 5.340% collateralized
by U.S. Treasury notes with various maturities
to 2016, market value $1,579 (repurchase proceeds
$1,535) $ 1,535 1,535
-------
OTHER ASSETS & LIABILITIES, NET - (0.5)% (93)
- --------------------------------------------------------------------------------
NET ASSETS - 100% $19,974
-------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
Summary of Securities by Country Country Value % of Total
- --------------------------------------------------------------------------------
United States $16,758 90.5
Sweden Sw 1,193 6.4
United Kingdom UK 581 3.1
------- -------
$18,532 100.0
======= =======
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<CAPTION>
Acronym Name
- ------- ----
<S> <C>
ADR American Depository Receipt
</TABLE>
See notes to financial statements.
8
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnotes)
ASSETS
<S> <C> <C>
Investments at value (cost $18,516) $18,532
Short-term obligations 1,535
-------
20,067
Receivable for:
Fund shares sold 1,015
Expense reimbursement due
from Adviser/Administrator 49
Dividends 16
Other 7 1,087
----- -------
Total Assets 21,154
LIABILITIES
Payable for:
Investments purchased 1,108
Accrued:
Management fee 11
Administration fee 7
Service fee 4
Distribution fee - Class B 6
Distribution fee - Class D 1
Transfer agent fee 5
Bookkeeping fee 4
Other 34
-----
Total Liabilities 1,180
-------
NET ASSETS $19,974
=======
Net asset value & redemption price per share -
Class A ($5,959/593) $ 10.04
=======
Maximum offering price per share - Class A
($10.04/0.9425) $ 10.65(a)
=======
Net asset value & offering price per share -
Class B ($11,960/1,192) $ 10.02(b)
=======
</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.
Continued on next page.
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - CONT.
<TABLE>
<CAPTION>
<S> <C>
Net asset value & redemption price per share -
Class D ($903/90) $ 10.02(b)
=======
Maximum offering price per share - Class D
($10.02/0.9900) $ 10.12
=======
Net asset value & redemption price per share -
Class E ($135/13) $ 10.04
=======
Maximum offering price per share - Class E
($10.04/0.9500) $ 10.57(a)
=======
Net asset value & offering price per share -
Class F ($194/21) $ 10.03(b)
=======
Net asset value & redemption price
per share - Class G ($598/60) $ 10.05
=======
Maximum offering price per share - Class G
($10.05/0.9550) $ 10.52(a)
=======
Net asset value & offering price per share -
Class H ($225/22) $ 10.02(b)
=======
COMPOSITION OF NET ASSETS
Capital paid in $20,365
Accumulated net investment loss (16)
Accumulated net realized loss (391)
Net unrealized appreciation 16
-------
$19,974
=======
</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.
10
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED APRIL 30, 1997
(UNAUDITED)(a)
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 40
Interest 7
-----
Total Investment Income 47
EXPENSES
Management fee $ 17
Administration fee 12
Service fee 8
Distribution fee - Class B 12
Distribution fee - Class D 1
Distribution fee - Class E (b)
Distribution fee - Class F (b)
Distribution fee - Class G (b)
Distribution fee - Class H (b)
Transfer agent fee 9
Bookkeeping fee 10
Trustees fee 1
Custodian fee 2
Legal fee 1
Registration fee 27
Reports to shareholders (b)
Other 22
----
122
Fees and expenses waived or borne
by the Adviser/Administrator (58) 64
---- -----
Net Investment Loss (17)
-----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (391)
Net unrealized appreciation during the period 9
----
Net Loss (382)
-----
Net Decrease in Net Assets from Operations $(399)
=====
</TABLE>
(a) The Fund commenced investment operations on December 16, 1996. The activity
shown is from the effective date of registration (December 30, 1996) with
the Securities and Exchange Commission.
(b) Rounds to less than one.
See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Period ended
(in thousands) April 30
------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS 1997(a)
Operations:
Net investment loss $ (17)
Net realized loss (391)
Net unrealized appreciation 9
-------
Net Decrease from Operations (399)
-------
Fund Share Transactions:
Receipts for shares sold - Class A 5,719
Cost of shares repurchased - Class A (41)
-------
5,678
-------
Receipts for shares sold - Class B 12,100
Cost of shares repurchased - Class B (8)
-------
12,092
-------
Receipts for shares sold - Class D 838
Cost of shares repurchased - Class D (5)
-------
833
-------
Receipts for shares sold - Class E 36
-------
Receipts for shares sold - Class F 91
-------
Receipts for shares sold - Class G 508
-------
Receipts for shares sold - Class H 127
-------
Net Increase from Fund Share
Transactions 19,365
-------
Total Increase 18,966
NET ASSETS
Beginning of period 1,008
-------
End of period (net of accumulated net
investment loss of $17) $19,974
=======
NUMBER OF FUND SHARES
Sold - Class A 557
Repurchased - Class A (4)
-------
553
-------
Sold - Class B 1,183
Repurchased - Class B (1)
-------
1,182
-------
Sold - Class D 81
Repurchased - Class D (1)
-------
80
-------
Sold - Class E 3
-------
Sold - Class F 11
-------
Sold - Class G 50
-------
Sold - Class H 12
-------
</TABLE>
(a) The Fund commenced investment operations on December 16, 1996. The activity
shown is from the effective date of registration (December 30, 1996) with
the Securities and Exchange Commission.
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial Tax-Managed Growth 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 April 30, 1997, and the results of its
operations, the changes in its net assets and the financial highlights for the
period 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 investment objective is to
maximize long-term capital growth while reducing shareholder exposure to taxes.
The Fund may issue an unlimited number of shares. The Fund offers seven classes
of shares: Class A, Class B, Class D, Class E, Class F, Class G and Class H.
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. Class E, Class F, Class G
and Class H shares are trust shares. Class E and Class G shares are sold with a
front-end sales charge and are subject to an annual distribution fee and Class F
and Class H shares are subject to an annual distribution fee and a contingent
deferred sales charge. Class F and Class H shares will convert to Class E and
Class G shares, respectively, after they have been outstanding approximately
eight years.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates. The information contained in this report is
from the effective date of registration (December 30, 1996) with the Securities
and Exchange Commission through the period ended April 30, 1997. The following
is a summary of significant accounting policies that are consistently followed
by the Fund in the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities 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.
13
<PAGE>
Notes to Financial Statements/April 30, 1997
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at fair
value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than applicable 12b-1 fees) (see Note 3: Underwriting discounts,
service and distribution fees), 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.
Per share data was calculated using the average shares outstanding during the
period. Net investment income per share data reflects the distribution fee per
share where applicable.
Ratios are calculated by adjusting the expense and net investment income ratios
for the Fund for the entire period by the distribution fee where applicable.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
OTHER: Corporate actions are recorded on the ex-date. Interest income is
recorded on the accrual basis.
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.
14
<PAGE>
Notes to Financial Statements/April 30, 1997
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Stein Roe & Farnham, Inc. (the Adviser) is the the investment
Adviser of the Fund and receives a monthly fee equal to 0.60% annually of the
Fund's average daily net assets.
ADMINISTRATION FEE: Colonial Management Associates, Inc. (the Administrator)
provides accounting and other services for a monthly fee equal to 0.40% annually
of the Fund's average daily net assets.
BOOKKEEPING FEE: The Administrator 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 Administrator, provides shareholder services for a monthly fee
equal to 0.25% annually of the Fund's average net assets and receives
reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Administrator, is the
Fund's principal underwriter. For the period ended April 30, 1997, the Fund has
been advised that the Distributor retained net underwriting discounts of $12,184
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $125, $48, none and none on Class B, Class D, Class F and
Class H 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 the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B, Class D, Class F and Class H shares; 0.10% of the average net assets
attributable to Class E shares; and up to 0.25% of average net assets
attributable to Class G shares. The actual fee with respect to Class G shares
will be 0.10% on Class G assets attributable to shares outstanding for less than
five years and 0.25% on Class G assets attributable to shares outstanding five
years or more.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Adviser/Administrator have agreed, until further notice, to
waive fees and bear certain Fund expenses to the extent that total expenses
(exclusive of service fees, distribution fees, brokerage commissions, interest,
taxes and extraordinary expenses, if any) exceed 1.25% annually of the Fund's
average net assets.
15
<PAGE>
Notes to Financial Statements/April 30, 1997
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser or Administrator.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the period December 30, 1996 through April 30, 1997,
purchases and sales of investments, other than short-term obligations, were
$18,924,079 and $930,845, respectively.
Unrealized appreciation (depreciation) at April 30, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $724,607
Gross unrealized depreciation (709,006)
--------
Net unrealized appreciation $ 15,601
========
</TABLE>
OTHER: The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
NOTE 5. OTHER OPERATIONAL AND CAPITAL ACTIVITY
- --------------------------------------------------------------------------------
For the period December 16, 1996 through December 30, 1996, the Fund had net
investment income of $1,101 and unrealized appreciation of $6,829. The following
is a summary of capital activity from December 16, 1996 through December 30,
1996.
<TABLE>
<CAPTION>
Shares
<S> <C> <C>
Receipts for shares sold - Class A $400,000 40,000
Receipts for shares sold - Class B $100,000 10,000
Receipts for shares sold - Class D $100,000 10,000
Receipts for shares sold - Class E $100,000 10,000
Receipts for shares sold - Class F $100,000 10,000
Receipts for shares sold - Class G $100,000 10,000
Receipts for shares sold - Class H $100,000 10,000
</TABLE>
16
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout the period
is as follows:
<TABLE>
<CAPTION>
(Unaudited)
Period ended April 30
----------------------------------------------------
1997(b)
Class A Class B Class D Class E
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $10.080 $10.080 $10.080 $10.080
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a)(c) (0.004) (0.030) (0.030) (0.008)
Net realized and
unrealized loss (c) (0.036) (0.030) (0.030) (0.032)
------- ------- ------- -------
Total from Investment
Operations (0.040) (0.060) (0.060) (0.040)
------- ------- ------- -------
Net asset value -
End of period $10.040 $10.020 $10.020 $10.040
======= ======= ======= =======
Total return (d)(e)(f) (0.40)% (0.60)% (0.60)% (0.40)%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g)(h) 1.50% 2.25% 2.25% 1.60%
Net investment loss (g)(h) (0.12)% (0.87)% (0.87)% (0.22)%
Fees and expenses
waived or borne by the
Adviser/Administrator (g)(h) 1.62% 1.62% 1.62% 1.62%
Portfolio turnover (f) 13% 13% 13% 13%
Average commission rate $0.0698 $0.0698 $0.0698 $0.0698
Net assets at
end of period (000) $ 5,959 $11,960 $ 903 $ 135
</TABLE>
(a) Net of fees and expenses waived or borne by the Adviser/Administrator
which amounted to: $0.067 $0.067 $0.067 $0.067
(b) The Fund commenced investment operations on December 16, 1996. The activity
shown is from the effective date of registration (December 30, 1996) with
the Securities and Exchange Commission.
(c) Per share data was calculated using average shares outstanding during the
period.
(d) Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(e) Had the Adviser/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage arrange-
ments had no impact.
(h) Annualized.
Continued on next page.
17
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout the period
is as follows:
<TABLE>
<CAPTION>
(Unaudited)
Period ended April 30
--------------------------------------
1997(b)
Class F Class G Class H
------- ------- -------
<S> <C> <C> <C>
Net asset value -
Beginning of period $10.080 $10.080 $10.080
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a)(c) (0.030) (0.008) (0.030)
Net realized and
unrealized loss (c) (0.020) (0.022) (0.030)
------- ------- -------
Total from Investment
Operations (0.050) (0.030) (0.060)
------- ------- -------
Net asset value -
End of period $10.030 $10.050 $10.020
======= ======= =======
Total return (d)(e)(f) (0.50)% (0.30)% (0.60)%
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g)(h) 2.25 % 1.60 % 2.25 %
Net investment loss (g)(h) (0.87)% (0.22)% (0.87)%
Fees and expenses
waived or borne by the
Adviser/Administrator (g)(h) 1.62% 1.62% 1.62%
Portfolio turnover (f) 13% 13% 13%
Average commission rate $0.0698 $0.0698 $0.0698
Net assets at end
of period (000) $ 194 $ 598 $ 225
</TABLE>
(a) Net of fees and expenses waived or borne by the Adviser/Administrator
which amounted to: $0.067 $0.067 $0.067
(b) The Fund commenced investment operations on December 16, 1996. The activity
shown is from the effective date of registration (December 30, 1996) with
the Securities and Exchange Commission.
(c) Per share data was calculated using average shares outstanding during the
period.
(d) Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(e) Had the Adviser/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage arrange-
ments had no impact.
(h) Annualized.
18
<PAGE>
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IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Tax-Managed Growth Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Tax-Managed Growth Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call
Colonial at 1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Tax-Managed Growth
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.
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19
<PAGE>
[LOGO]COLONIAL
MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore
Bank & Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (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
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; 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.
Retired (formerly Chairman of the Board and 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
Retired Partner, Peat Marwick Main & Co. (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(R) 1997
A Liberty Financial Company (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
MG-03/671D-0497 M (6/97)
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