<PAGE>
[COLONIAL FUND LOGO]
------------------------------
THE
COLONIAL FUND
------------------------------
SEMIANNUAL REPORT
APRIL 30, 1996
<PAGE>
THE COLONIAL FUND HIGHLIGHTS
NOVEMBER 1, 1995 - APRIL 30, 1996
INVESTMENT OBJECTIVE: The Colonial Fund seeks primarily income and capital
growth and, secondarily, capital preservation.
THE FUND IS DESIGNED TO OFFER:
- Long-term returns
- Protection in down markets
- Quarterly dividend income
PORTFOLIO MANAGER COMMENTARY: "We believe an emphasis on stocks of mid-sized
companies gives us greater ability to predict an individual stock's performance
and control volatility, as we maintain a broadly diversified portfolio to
minimize risk."
THE COLONIAL FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception dates 4/30/82* 5/5/92
Six-month distributions declared per share $ 0.713 $ 0.679
Total returns, assuming reinvestment of all
distributions and no sales charge or
contingent deferred sales charge (CDSC) --
6 months 10.31% 9.92%
Net asset value per share at 4/30/96 $ 9.10 $ 9.09
</TABLE>
* Date Fund adopted current investment policies.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS** TOP FIVE SECTORS**+
(as of 4/30/96) (as of 4/30/96)
.......................................... ....................................
<S> <C> <C> <C>
1. Textron, Inc. ................ 2.92% 1. Financials ............. 17.06%
2. CIGNA Corp. .................. 2.29% 2. Utilities .............. 11.20%
3. Phelps Dodge Corp. ........... 2.15% 3. Technology ............. 9.81%
4. Goodyear Tire & Rubber ....... 2.12% 4. Consumer Cyclicals ..... 8.21%
5. Sun Microsystems ............. 2.05% 5. Health Care ............ 7.91%
</TABLE>
Percentages are based on total investments.
** There can be no guarantee the Fund will continue to hold these securities or
invest in these sectors in the future.
+Industry sectors in the following financial statements are based upon the
standard industrial classifications (SIC) published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon Colonial defined criteria as used in the investment process.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF HAROLD W. COGGER]
I am pleased to present your Fund's semiannual report for the period ended April
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 superior
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 6 months. Falling
interest rates and minimal inflation helped the economy grow at a comfortable
pace throughout 1995 and created a positive environment for financial
investments. The stock market received additional impetus from strong growth of
corporate profits.
While there may be some current market volatility, we expect moderate growth and
low inflation to continue and believe that reductions in interest rates may take
place later in the year. Earnings should continue to make progress but at a
slower pace than in 1995. Opportunities are not confined to the U.S., as we
anticipate growth 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 competitive 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
June 14, 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.
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
DANIEL RIE is senior vice president of Colonial Management Associates, Inc. and
lead portfolio manager of The Colonial Fund. Dan also directs Colonial's equity
investment group. He has more than 21 years of financial management experience.
Q. DAN, PLEASE DESCRIBE THE ECONOMIC ENVIRONMENT FOR STOCKS DURING THIS
SIX-MONTH PERIOD.
A. In the U.S., low interest rates, low inflation and slow but steady economic
growth created a positive environment for stocks. Many companies reported strong
earnings growth during the period, and both the Dow Jones Industrial Average and
the Standard & Poor's 500 continued to reach new all-time highs. In general,
during the beginning of the six-month period the market favored growth and large
capitalization stocks. However, since the beginning of 1996 the market has
favored growth stocks of small and mid-capitalization companies. During this
particular cycle, the stocks in which the Fund invests -- value-oriented stocks
of mid-cap companies -- were out of favor. Foreign equity holdings benefitted
from declining interest rates in Europe. This factor had a positive effect on
economic growth and stock performance, and helped the Fund's holdings in Spain
and in the Netherlands.
Q. HOW DID THE FUND'S RETURN COMPARE TO THE INDEX USED TO EVALUATE ITS
PERFORMANCE?
A. The Standard & Poor's 500 Index returned 13.76% for the six-month period. The
Fund's Class A shares returned 10.31% for the same period, which was consistent
with our expectations. The managed Index, comprised solely of U.S. stocks and
heavily weighted in large-cap growth companies, responded better than the Fund's
holdings to market conditions that were favorable to U.S. stocks. In contrast,
the Fund held about 17% of its assets in U.S. government bonds and foreign
stocks. These investments can act as a cushion to the value of Fund shares when
U.S. markets decline, but they can also limit performance in a strong U.S.
market, as they did during this period.
Q. WHICH MARKET SECTORS AND SPECIFIC STOCKS CONTRIBUTED TO THE FUND'S
PERFORMANCE DURING THE PERIOD?
A. Financial services and consumer cyclical stocks performed well during the six
months that ended April 30, 1996. At 17.06% of the Fund's net assets, financial
services stocks were the largest sector holding, while another significant
sector, consumer cyclicals, comprised 8.21% of the portfolio. During the
reporting period, Quick & Reilly Group, which provides discount brokerage
services throughout the U.S., was up 23%; Callaway Golf, a leader in golf clubs
and golf-related equipment, was up 64%; and Litton Industries, which is involved
in advanced electronics and marine engineering, was up 11%.
4
<PAGE>
Q. WHAT IS YOUR MARKET OUTLOOK?
A. Looking ahead, we believe that the U.S. economy will continue to grow at a
steady but slower pace, which should provide a relatively favorable environment
for stocks. When value stocks return to favor, the Fund will be well-positioned
to take advantage of improved market conditions.
THE COLONIAL FUND INVESTMENT PERFORMANCE VS.
THE STANDARD & POOR'S 500 INDEX AND STANDARD
& POOR'S 400 INDEX
Change in Value of $10,000 from 4/86 - 4/96
Based on NAV and MOP for Class A Shares
<TABLE>
<S> <C> <C> <C> <C> <C>
NAV MOP S&P 500 S&P 400
1 4/86 10000 9425 10000 10000
2 6/86 10563 9955 10709.85 10671.15
3 9/86 10389 9791 9962.76 9853.16
4 12/86 10771 10152 10517.97 10081.7
5 3/87 12215 11512 12763.82 12190.28
6 6/87 12239 11535 13404.53 12086.87
7 9/87 12749 12016 14288.8 12627.72
8 12/87 10656 10044 11070.21 9875.91
9 3/88 11864 11182 11698.46 11162.37
10 6/88 12443 11727 12475.73 11776.64
11 9/88 12617 11891 12518.1 11621.53
12 12/88 12975 12229 12903.71 11936.94
13 3/89 13803 13010 13818.16 13076.56
14 6/89 14573 13735 15035.64 14384.73
15 9/89 15659 14759 16643.35 15955.57
16 12/89 15570 14675 16985.36 16179.98
17 3/90 15280 14401 16474.4 15675.33
18 6/90 15543 14649 17508.33 16605.02
19 9/90 13680 12894 15105.25 13653.61
20 12/90 14402 13574 16457.34 15351.65
21 3/91 16272 15337 18843.93 18875.96
22 6/91 16549 15598 18798.91 18737.38
23 9/91 17519 16512 19801.99 20521.46
24 12/91 18165 17121 21460.38 23042.57
25 3/92 18687 17612 20919.17 22296.12
26 6/92 19051 17955 21316.21 22213.81
27 9/92 19288 18178 21988.57 23077.51
28 12/92 20519 19340 23093.14 25787.65
29 3/93 22074 20805 24100.95 26633.67
30 6/93 22175 20900 24216.46 27254.25
31 9/93 23148 21817 24840.12 28264.36
32 12/93 23486 22136 25415.56 29386.31
33 3/94 22916 21599 24453.45 28270.18
34 6/94 22589 21290 24555.63 27239.36
35 9/94 23237 21901 25753.76 29083.52
36 12/94 22992 21670 25749.42 28333.04
37 3/95 24785 23359 28253.77 30624.66
38 6/95 27026 25472 30947.15 33326.21
39 9/95 28852 27193 33404.69 36578.95
40 12/95 29569 27869 35414.14 37101.71
41 3/96 30888 29111 37314.57 39385.68
42 4/96 31476 29666 37864.2 40588.58
</TABLE>
A $10,000 investment in Class B shares made on May 5, 1992 (inception), at net
asset value would have been valued at $15,802 on April 30, 1996. The same
investment after deducting the applicable contingent deferred sales charge
(CDSC) would have grown to $15,502 by April 30, 1996. The Standard & Poor's 500
Index is an unmanaged index that tracks the performance of the U.S. stock
market. The Standard & Poor's Midcap 400 Index is an unmanaged index that tracks
the performance of middle capitalization U.S. Stocks. Going forward the Fund
will compare its performance to the S&P 400.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
As of 3/31/96 (Most Recent Quarter End)
- ---------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Objective Change 4/30/82* Inception 5/5/92
NAV MOP NAV w/CDSC
- ---------------------------------------------------------------------------
<C> <C> <C> <C> <C>
1 YEAR 24.62% 17.46% 23.58% 18.58%
- ---------------------------------------------------------------------------
5 YEARS 13.68% 12.34% -- --
- ---------------------------------------------------------------------------
10 YEARS 11.78% 11.12% -- --
- ---------------------------------------------------------------------------
SINCE INCEPTION/
OBJECTIVE CHANGE 15.28% 14.79% 11.87% 11.32%
- ---------------------------------------------------------------------------
</TABLE>
* Date Fund adopted current investment objective.
Past performance cannot predict future results. Return and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) return does not
include sales charges or CDSC. Maximum offering price (MOP) return includes the
maximum sales charge of 5.75%. The CDSC returns reflect charges of: one year,
5%; since inception, 3%.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
5
<PAGE>
INVESTMENT PORTFOLIO
APRIL 30, 1996 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 87.0% COUNTRY SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C> <C>
CONSTRUCTION - 0.7%
BUILDING CONSTRUCTION - 0.6%
GTM Entrepose SA Fr 8 $ 515
Koninklijke Volker Stevin NV Ne 74 5,045
Lennar Corp. 53 1,325
---------
6,885
---------
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION - 0.1 %
Cubiertas y Mzov SA Sp 20 1,278
---------
- -------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 17.2%
DEPOSITORY INSTITUTIONS - 3.8%
Astoria Financial Corp. 34 1,826
Banco de Santander SA Sp 18 836
Bank of Boston Corp. 50 2,419
Bank of Montreal Ca 398 9,560
Banque Nationale de Belgique Be 1 1,612
Canadian Imperial Bank of Commerce Ca 273 8,490
First Empire State Corp. 4 952
J.P. Morgan & Co., Inc. 83 6,966
National Australia Bank Ltd. Au 1,000 8,990
Nations Bank Corp. 19 1,483
Toronto Dominion Bank Ca 50 867
---------
44,001
---------
HOLDING & OTHER INVESTMENT COMPANIES - 1.0%
Amev NV Ne 99 7,043
Manufactured Home Communities, Inc. 31 576
Sofina SA Be 8 4,286
---------
11,905
---------
INSURANCE AGENTS & BROKERS - 0.1%
Acordia, Inc. 30 953
---------
INSURANCE CARRIERS - 9.3%
AFLAC, Inc. 67 2,065
Allstate Corp. 439 17,060
American Bankers Insurance Group, Inc. 161 6,367
CNA Financial Corp. (a) 24 2,373
Cigna Corp. 235 26,621
Conseco, Inc. 98 3,562
Horace Mann Educators Corp. 30 989
Lincoln National Corp. 147 7,074
Loews Corp. 190 14,449
</TABLE>
6
<PAGE>
Investment Portfolio/April 30, 1996
- -------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Old Republic International Corp. 130 $ 4,293
Orion Capital Corp. 11 509
Providian Corp. 82 3,759
Reinsurance Group of America 2 62
ReliaStar Financial Corp. 139 6,042
Safeco Corp. 217 7,161
USLife Corp. 157 4,424
Vesta Insurance Group, Inc. 61 1,973
--------
108,783
--------
NONDEPOSITORY CREDIT INSTITUTIONS - 0.8%
Green Tree Financial Corp. 288 9,734
--------
REAL ESTATE - 0.3%
New World Development Co., Ltd. HK 500 2,243
Societe Francaise d'Investissements
Immobiliers et de Gestion Fr 4 295
Stewart Enterprises, Inc.. 15 705
--------
3,243
--------
SECURITY BROKERS & DEALERS - 1.9%
A.G. Edwards, Inc. 308 7,249
Alex Brown, Inc. 231 12,497
John Nuveen & Co., Inc. 16 404
Quick & Reilly Group, Inc. 66 2,007
--------
22,157
--------
- -------------------------------------------------------------------------
MANUFACTURING - 46.1%
CHEMICALS & ALLIED PRODUCTS - 7.0%
ARCO Chemical Co. 13 669
Akzo Nobel NV Ne 63 3,677
American Home Products Corp. 60 6,330
Bristol-Myers Squibb Co. 14 1,110
Cabot Corp. 45 1,198
Dura Pharmaceuticals, Inc. 10 535
Eastman Chemical Co. 36 2,448
Goodrich (B.F.) Co. 50 1,999
Johnson & Johnson 213 19,684
Norsk Hydro A.S. No 30 1,362
Pfizer, Inc. 118 8,127
Pharmacia & Upjohn, Inc. 55 2,104
Rhone-Poulenc Rorer, Inc. Fr 168 10,435
Union Carbide Corp. 482 21,931
--------
81,609
--------
ELECTRONIC & ELECTRICAL EQUIPMENT - 0.9%
CTS Corp. 31 1,294
</TABLE>
7
<PAGE>
Investment Portfolio/April 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
ELECTRONIC & ELECTRICAL EQUIPMENT - CONT.
Helen of Troy Ltd. 17 $ 413
Komag, Inc. 265 8,861
--------
10,568
--------
FABRICATED METAL - 0.3%
Harsco Corp. 55 3,795
--------
FOOD & KINDRED PRODUCTS - 4.7%
Archer Daniels Midland Co. 1,129 21,300
Bongrain SA Fr (b) 222
CPC International, Inc. 16 1,092
Golden Enterprises, Inc. 5 41
H.J. Heinz Co. 35 1,169
IBP, Inc. 826 22,095
Korn-OG Foderstof Kompagniet AS (a) De 45 1,945
Seagram Co., Ltd. 204 6,911
--------
54,775
--------
FURNITURE & FIXTURES - 0.0%
Herman Miller, Inc. 10 300
--------
MACHINERY & COMPUTER EQUIPMENT - 7.8%
Bucher Holdings AG Sz 6 4,691
Dell Computer Corp. 151 6,909
Diebold, Inc. 15 577
Gateway 2000, Inc. 180 6,288
Hewlett-Packard Co. 117 12,409
International Business Machines Corp. 126 13,556
Kaydon Corp. 28 1,093
Seagate Technology, Inc. (a) 321 18,601
Silicon Valley Group, Inc. 95 2,533
Sun Microsystems, Inc. (a) 439 23,832
--------
90,489
--------
MEASURING & ANALYZING INSTRUMENTS - 4.2%
Baxter International, Inc. 439 19,443
Litton Industries, Inc. (a) 74 3,358
Medtronic, Inc. 335 17,802
Raytheon Co. 155 7,847
--------
48,450
--------
MISCELLANEOUS MANUFACTURING - 1.4%
Callaway Golf Co. 604 16,157
--------
</TABLE>
8
<PAGE>
Investment Portfolio/April 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
PAPER PRODUCTS - 0.0%
Schweitzer-Mauduit International, Inc. 2 $ 64
-------
PETROLEUM REFINING - 3.0%
Amoco Corp. 88 6,439
British Petroleum Co., PLC UK 13 1,424
Elcor Corp. 59 1,423
Exxon Corp. 187 15,895
Kerr-McGee Corp. 38 2,440
Mobil Corp. 54 6,175
Ultramar Corp. 49 1,540
-------
35,336
-------
PRIMARY METAL - 1.4%
AK Steel Holdings Corp. 43 1,649
Asarco, Inc. 365 12,097
Carpenter Technology Corp. 58 2,171
Texas Industries, Inc. 2 128
-------
16,045
-------
PRIMARY SMELTING - 2.2%
National Power PLC ADR UK 34 1,131
Phelps Dodge Corp. 341 25,041
-------
26,172
-------
PRINTING & PUBLISHING - 0.3%
CSS Industries, Inc. (a) 25 572
New York Times Co., Class A 20 650
Standard Register Co. 74 1,879
-------
3,101
-------
RUBBER & PLASTIC - 2.4%
Goodyear Tire & Rubber Co. 473 24,634
Nike, Inc., Class B 3 254
Wynn's International, Inc. 105 2,848
-------
27,736
-------
TEXTILE MILL PRODUCTS - 0.1%
Springs Industries, Inc. 24 1,086
-------
TOBACCO PRODUCTS - 2.0%
American Brands, Inc. 553 23,027
-------
TRANSPORTATION EQUIPMENT - 8.4%
General Dynamics Corp. 170 10,757
Harley-Davidson, Inc. 41 1,822
McDonnell Douglas Corp. 212 20,497
</TABLE>
9
<PAGE>
Investment Portfolio/April 30, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
TRANSPORTATION EQUIPMENT - CONT.
Paccar, Inc. 28 $ 1,406
Peugeot SA Fr 20 2,792
Polaris Industries, Inc. 21 722
Societe Europeane de Propulsion SA Fr 2 217
TRW, Inc. 160 15,029
Textron, Inc. 397 34,000
Thiokol Corp. 219 9,367
Toyota Motor Corp. ADR Ja 27 1,228
--------
97,837
--------
- ---------------------------------------------------------------------------
MINING - 0.4%
METAL MINING
Cleveland-Cliffs, Inc. 42 1,745
Cyprus Amax Minerals Co. 136 3,692
--------
5,437
--------
- ---------------------------------------------------------------------------
RETAIL TRADE - 2.6%
APPAREL & ACCESSORY STORES - 0.0%
DEB Shops, Inc. 25 123
--------
GENERAL MERCHANDISE STORES - 2.4%
Dillard Department Stores, Inc. 301 12,090
Waban, Inc. (a) 625 15,303
--------
27,393
--------
HOME FURNISHINGS & EQUIPMENT - 0.2%
CompUSA, Inc. 83 2,881
--------
- ---------------------------------------------------------------------------
SERVICES - 2.4%
AMUSEMENT & RECREATION - 0.4%
Grand Casinos, Inc. 135 4,369
--------
BUSINESS SERVICES - 1.1%
Computer Associates International, Inc. 106 7,800
Interpublic Group of Companies, Inc. 30 1,407
Omnicom Group, Inc. 80 3,470
--------
12,677
--------
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 0.3%
International-Muller NV Ne 36 3,161
--------
HEALTH SERVICES - 0.3%
Sun Healthcare Group, Inc. 261 3,954
--------
</TABLE>
10
<PAGE>
Investment Portfolio/April 30, 1996
- ---------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
HOTELS, CAMPS & LODGING - 0.0%
Harbour Centre Development HK 416 $ 565
--------
MOTION PICTURES - 0.3%
King World Productions, Inc. 68 2,975
--------
- ---------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 15.8%
AIR TRANSPORTATION - 0.8%
British Airways PLC ADR UK 7 524
Federal Express Corp. (a) 104 8,366
--------
8,890
--------
COMMUNICATIONS - 1.2%
NYNEX Corp. 124 6,067
Southern New England
Telecommunications Corp. 19 845
Southwestern Bell Corp. Communications, Inc. 137 6,835
--------
13,747
--------
ELECTRIC, GAS & SANITARY SERVICES - 1.4%
Enova Corp. 49 1,047
Gas y Electrica Series 2 SA Sp 224 11,901
Illinova Corp. 97 2,466
Teco Energy, Inc. 36 842
--------
16,256
--------
ELECTRIC SERVICES - 6.3%
Allegheny Power System, Inc. 64 1,872
Boston Edison Co. 74 1,814
Carolina Power & Light Co. 189 6,800
DQE, Inc. 79 2,083
Empresa Nacional de Electrica ADR Sp 23 1,422
Florida Progress Corp. 110 3,613
Houston Industries, Inc. 288 6,165
NIPSCO Industries, Inc. 33 1,166
New England Electric System 126 4,427
New York State Electric & Gas Corp. 180 4,118
Northern States Power Co. 60 2,814
Pinnacle West Capital Corp. 126 3,349
Portland General Corp. 75 2,191
Texas Utilities Co. 277 11,149
Unicom Corp. 669 18,384
Union Electrica Fenosa SA Sp 177 1,059
Western Resources, Inc. 31 919
Wisconsin Energy Corp. 25 663
--------
74,008
--------
</TABLE>
11
<PAGE>
Investment Portfolio/April 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
GAS SERVICES - 0.9%
Consolidated Natural Gas Co. 193 $ 9,022
Laclede Gas Co. 47 1,093
-----------
10,115
-----------
RAILROAD - 2.8%
CSX Corp. 136 6,970
Conrail, Inc. 297 20,723
Norfolk Southern Corp. 53 4,443
-----------
32,136
-----------
SANITARY SERVICES - 1.5%
Severn Trent Water PLC UK 403 3,626
United Utilities PLC UK 1,096 9,793
Yorkshire Water PLC UK 412 4,170
-----------
17,589
-----------
TRANSPORTATION SERVICES - 0.1%
Cross Harbour Tunnel Co. HK 307 603
-----------
WATER TRANSPORTATION - 0.8%
American Presidents Cos. 256 6,100
Overseas Shipholding Group, Inc. 45 900
Tidewater, Inc. 48 2,048
-----------
9,048
-----------
- --------------------------------------------------------------------------------
WHOLESALE TRADE - 1.8%
DURABLE GOODS - 1.4%
Beers N.V. (a) Ne 43 7,196
Marshall Industries 32 1,030
Pioneer Standard Electronics, Inc. 480 7,794
-----------
16,020
-----------
NONDURABLE GOODS - 0.4%
Bergen Brunswig Corp., Class A 91 2,485
International Multifoods Corp. 52 985
Nash Finch Co. 60 1,041
-----------
4,511
-----------
TOTAL COMMON STOCKS (cost of $777,606) $ 1,011,944
-----------
</TABLE>
12
<PAGE>
Investment Portfolio/April 30, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
MATURITIES
BONDS AND NOTES - 8.3% COUPON FROM/TO PAR VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 8.2%
GOVERNMENT AGENCIES - 5.1%
Federal National Mortgage Association,
6.500% 2007-2009 $ 61,617 $ 59,672
-----------
GOVERNMENT OBLIGATIONS - 3.1%
U.S. Treasury Notes, 7.875% 04/15/98 35,085 36,253
-----------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (cost of $99,197) 95,925
-----------
CORPORATE ADJUSTABLE RATE BONDS & NOTES - 0.1%
- ---------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.1%
PIPELINES
SFP Pipeline Holdings (c)
(cost of $720) 11.163% 08/15/10 600 774
-----------
TOTAL BONDS & NOTES (cost of $99,917) 96,699
-----------
TOTAL INVESTMENTS - 95.3% (cost of $877,523)(d) 1,108,643
-----------
SHORT-TERM OBLIGATIONS - 4.5%
- ---------------------------------------------------------------------------------
Repurchase agreement with Bankers Trust
Securities Corp., dated 4/30/96, due 5/01/96
at 5.320% collateralized by U.S. Treasury
notes with various maturities to 2001, market
value $53,725 (repurchase proceeds $52,591) $ 52,583 52,583
-----------
OTHER ASSETS & LIABILITIES, NET - 0.2% 2,737
- ---------------------------------------------------------------------------------
NET ASSETS - 100% $ 1,163,963
-----------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Rounds to less than one.
(c) Interest rates change quarterly. The rate listed is as of April 30, 1996.
(d) Cost for federal income tax purposes is $877,524.
13
<PAGE>
Investment Portfolio/April 30, 1996
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO - CONT.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Summary of Securities by Country Country Value % of Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 984,439 88.8
Netherlands Ne 26,122 2.4
United Kingdom UK 20,668 1.9
Canada Ca 18,917 1.7
Spain Sp 16,496 1.5
France Fr 14,476 1.3
Australia Au 8,990 0.8
Belgium Be 5,898 0.5
Switzerland Sz 4,691 0.4
Hong Kong HK 3,411 0.3
Denmark De 1,945 0.2
Norway No 1,362 0.1
Japan Ja 1,228 0.1
----------- -----
$ 1,108,643 100.0
----------- -----
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------- ----
ADR American Depository Receipt
See notes to financial statements.
14
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1996 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $877,523) $1,108,643
Short-term obligations 52,583
----------
1,161,226
Cash held in foreign banks (cost $99) $ 99
Receivable for:
Fund shares sold 2,250
Dividends 1,342
Interest 476
Foreign tax recaims 150
Other 69 4,386
----------- ----------
Total Assets 1,165,612
LIABILITIES
Payable for:
Fund shares repurchased 1,538
Accrued:
Deferred Trustees fees 5
Other 106
-----------
Total Liabilities 1,649
----------
NET ASSETS $1,163,963
----------
Net asset value & redemption price per share -
Class A ($729,150/80,107) $ 9.10
----------
Maximum offering price per share - Class A
($9.10/0.9425) $ 9.66(a)
----------
Net asset value & offering price per share -
Class B ($423,058/46,548) $ 9.09(b)
----------
Net asset value, offering and redemption price
per share - Class Z ($11,755/1,290) $ 9.11
----------
COMPOSITION OF NET ASSETS
Capital paid in $ 897,724
Undistributed net investment income 82
Accumulated net realized gain 35,063
Net unrealized appreciation (depreciation) on:
Investments 231,120
Foreign currency transactions (26)
----------
$1,163,963
----------
</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.
15
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 10,595
Interest 5,262
---------
Total investment income (net of nonrebatable
foreign taxes withheld at source which
amounted to $242) 15,857
EXPENSES
Management fee $ 3,027
Service fee - Class A 799
Service fee - Class B 483
Distribution fee - Class B 1,463
Transfer agent 1,629
Bookkeeping fee 192
Registration fee 59
Custodian fee 54
Audit fee 22
Trustees fee 20
Reports to shareholders 10
Legal fee 4
Other 40 7,802
--------- ---------
Net Investment Income 8,055
---------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 34,354
Foreign currency transactions (42)
---------
Net Realized Gain 34,312
Net unrealized appreciation (depreciation) during
the period on:
Investments 63,461
Foreign currency transactions (9)
---------
Net Unrealized Appreciation 63,452
---------
Net Gain 97,764
---------
Net Increase in Net Assets from Operations $ 105,819
---------
</TABLE>
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Year ended
(in thousands) April 30 October 31
---------------- ------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
<S> <C> <C>
Operations:
Net investment income $ 8,055 $ 19,847
Net realized gain 34,312 73,801
Net unrealized appreciation 63,452 85,099
----------- -----------
Net Increase from Operations 105,819 178,747
Distributions:
From net investment income - Class A (5,852) (15,424)
From net realized gains - Class A (47,071) (34,321)
From net investment income - Class B (1,817) (5,439)
From net realized gains - Class B (25,891) (16,631)
From net investment income - Class Z (102) (15)
From net realized gains - Class Z (684) --
----------- -----------
24,402 106,917
----------- -----------
Fund Share Transactions (a):
Receipts for shares sold - Class A 49,343 73,553
Receipts for shares issued in the
acquisition of Liberty Financial
Growth and Income Fund -- 36,806
Value of distributions reinvested - Class A 48,043 44,428
Cost of shares repurchased - Class A (51,420) (114,120)
----------- -----------
45,966 40,667
----------- -----------
Receipts for shares sold - Class B 59,557 76,326
Value of distributions reinvested - Class B 26,159 20,808
Cost of shares repurchased - Class B (25,125) (42,629)
----------- -----------
60,591 54,505
----------- -----------
Receipts for shares sold - Class Z 8,082 3,600
Value of distributions reinvested - Class Z 786 15
Cost of shares repurchased - Class Z (965) --
----------- -----------
7,903 3,615
----------- -----------
Net Increase from Fund Share
Transactions 114,460 98,787
----------- -----------
Total Increase 138,862 205,704
NET ASSETS
Beginning of period 1,025,101 819,397
----------- -----------
End of period (including undistributed net
investment income of $82 and $136,
respectively) $ 1,163,963 $ 1,025,101
----------- -----------
</TABLE>
(a) Class Z shares were initially offered on July 31, 1995.
Statement of Changes in Net Assets continued on following page.
See notes to financial statements.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Year ended
(in thousands) April 30 October 31
---------------- ----------
NUMBER OF FUND SHARES (a) 1996 1995
<S> <C> <C>
Sold - Class A 5,539 8,868
Issued in acquisition of Liberty Financial
Growth and Income Fund -- 4,730
Issued for distributions reinvested - Class A 5,626 5,968
Repurchased - Class A (5,751) (13,808)
------ -------
5,414 5,758
------ -------
Sold - Class B 6,663 9,250
Issued for distributions reinvested - Class B 3,070 2,814
Repurchased - Class B (2,820) (5,252)
------ -------
6,913 6,812
------ -------
Sold - Class Z 897 407
Issued for distributions reinvested - Class Z 92 2
Repurchased - Class Z (108) --
------ -------
881 409
------ -------
</TABLE>
(a) Class Z shares were initially offered on July 31, 1995.
See notes to financial statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of The Colonial Fund (the Fund), a series
of Colonial Trust III, 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, 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
seeks primarily income and capital growth and, secondarily, capital
preservation. The Fund may issue an unlimited number of shares.
The Fund offers three classes of shares: Class A, Class B and Class Z.
Class A shares are sold with a front-end sales charge; 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 Z shares are offered
continuously at net asset value. There are certain restrictions on the
purchase of Class Z shares, please refer to a prospectus.
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 revenue and expenses
during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
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.
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.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
19
<PAGE>
Notes to Financial Statements/April 30, 1996
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific identifi-
cation 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 A and Class B service fee and Class B
distribution fee), realized and unrealized gains (losses) are allocated to each
class proportionately on a daily basis for purposes of determining the net
asset value of each class.
Class A, Class B and Class Z per share data was calculated using the average
shares outstanding during the period. In addition, net investment income
per share data reflects the service fee applicable to both Class A and Class B
shares and the distribution fee applicable to Class B shares only.
Class A and Class B ratios are calculated by adjusting the expense and net
investment income ratios for the Fund for the entire period by the service
fee applicable to both Class A and Class B shares and by the distribution fee
applicable to Class B shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is
recorded on the accrual basis. Original issue discount is accreted to interest
income over the life of a security with a corresponding increase in the cost
basis; premium and market discount are not amortized or accreted.
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.
20
<PAGE>
Notes to Financial Statements/April 30, 1996
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains
(losses) on foreign currency transactions includes the fluctuation in ex-
change 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 dividends and interest income and foreign withholding
taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included
with the net realized and unrealized gains (losses) on investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency
contracts to purchase or sell foreign currencies at predetermined exchange
rates in connection with the settlement of purchases and sales of securities.
The Fund may also enter into forward currency contracts to hedge certain
other foreign currency denominated assets. The contracts are used to
minimize the exposure to foreign exchange rate fluctuations during the
period between trade and settlement date of the contracts. All contracts are
marked-to-market daily, resulting in unrealized gains or losses which become
realized at the time the forward currency contracts are closed or mature.
Realized and unrealized gains (losses) arising from such transactions are
included in net realized and unrealized gains (losses) on foreign currency
transactions. Forward currency contracts do not eliminate fluctuations in
the prices of the Fund's portfolio securities. While the maximum potential
loss from such contracts is the aggregate face value in U.S. dollars at the
time the contract was opened, exposure is typically limited to the change in
value of the contract (in U.S. dollars) over the period it remains open. Risks
may also arise if counterparties fail to perform their obligations under the
contracts.
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
21
<PAGE>
Notes to Financial Statements/April 30, 1996
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
services and office facilities for a monthly fee equal to 0.55% annually of the
Fund's average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services
for $27,000 per year plus 0.035% of the Fund's average net assets over
$50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services and
receives a monthly fee equal to 0.25% annually of the Fund's average net
assets and receives a reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial
Investment Services, Inc. (the Distributor), an affiliate of the Adviser, is the
Fund's principal underwriter. For the six months ended April 30, 1996, the
Fund has been advised that the Distributor retained net underwriting
discounts of $155,650 on sales of the Fund's Class A shares and received
contingent deferred sales charges (CDSC) of $363,540 on Class B share
redemptions.
The Fund has adopted a 12b-1 plan which requires the payment of a
distribution fee to the Distributor equal to 0.75% annually of the average net
assets attributable to Class B shares. The plan also requires the payment to
the Distributor of a service fee on Class A and Class B shares as follows:
<TABLE>
<CAPTION>
Value of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
- ----------------------------- -------
<S> <C>
Prior to April 1, 1989 0.15%
On or after April 1, 1989 0.25%
</TABLE>
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers
who sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which
may be terminated at any time. Obligations of the plan will be paid solely out
of the Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY: During the six months ended April 30, 1996, purchases
and sales of investments, other than short-term obligations, were $262,317,178
and $210,473,505, of which none and $4,068,382, respectively,
were U.S. government securities.
22
<PAGE>
Notes to Financial Statements/April 30, 1996
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) at April 30, 1996, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $242,112,230
Gross unrealized depreciation (10,993,081)
------------
Net unrealized appreciation $231,119,149
------------
</TABLE>
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
foreign currency exchange or the imposition of 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 April 30, 1996.
NOTE 6. MERGER INFORMATION
On March 24, 1995, Liberty Financial Growth and Income Fund (LFGIF) was
merged into the Fund by a non-taxable exchange of 4,730,303 shares of the
Fund (valued at $36,806,337) for the 3,433,000 of LFGIF shares then
outstanding. The assets of LFGIF acquired included unrealized appreciation
of $1,319,964. The aggregate net assets of the Fund and LFGIF immediately
after the merger were $879,529,274.
23
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended
April 30
----------------------------------------------------------
1996
Class A Class B Class Z
--------------------- ---------------------- -----------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 8.940 $ 8.930 $ 8.940
-------- -------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income 0.078 0.044 0.088
Net realized and
unrealized gain (loss) 0.795 0.795 0.805
-------- -------- ---------
Total from Investment
Operations 0.873 0.839 0.893
-------- -------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.077) (0.043) (0.087)
From net
realized gains (0.636) (0.636) (0.636)
-------- -------- ---------
Total Distributions
Declared to
Shareholders (0.713) (0.679) (0.723)
-------- -------- ---------
Net asset value -
End of period $ 9.100 $ 9.090 $ 9.110
-------- -------- ---------
Total return (c) 10.31% (d) 9.92% (d) 10.56% (d)
-------- -------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.15% (e)(f) 1.92% (e)(f) 0.92% (e)(f)
Net investment
income 1.73% (e)(f) 0.96% (e)(f) 1.96% (e)(f)
Portfolio turnover 41% (e) 41% (e) 41% (e)
Average commission rate (g) $ 0.036 $ 0.036 $ 0.036
Net assets at end
of period (000) $729,150 $423,058 $ 11,755
</TABLE>
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Class Z shares were initially offered on July 31, 1995. Per share amounts
reflect activity from that date.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Not annualized.
24
<PAGE>
FINANCIAL HIGHLIGHTS (a) - CONT.
<TABLE>
<CAPTION>
Year ended October 31
-------------------------------------------------------------------
1995 1994
Class A Class B Class Z(b) Class A Class B
-------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 8.060 $ 8.050 $ 8.780 $ 8.410 $ 8.400
-------- -------- ------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income 0.200 0.137 0.041 0.171 0.109
Net realized and
unrealized gain (loss) 1.393 1.395 0.167 (0.116) (0.111)
-------- -------- ------- -------- --------
Total from Investment
Operations 1.593 1.532 0.208 0.055 (0.002)
-------- -------- ------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.212) (0.151) (0.048) (0.160) (0.103)
From net
realized gains (0.501) (0.501) -- (0.245) (0.245)
-------- -------- ------- -------- --------
Total Distributions
Declared to
Shareholders (0.713) (0.652) (0.048) (0.405) (0.348)
-------- -------- ------- -------- --------
Net asset value -
End of period $ 8.940 $ 8.930 $ 8.940 $ 8.060 $ 8.050
-------- -------- ------- -------- --------
Total return (c) 21.72% 20.84% 2.02(d) 0.74% (0.04)%
-------- -------- ------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.16% (f) 1.93% (f) 0.93% (e)(f) 1.14% 1.89%
Net investment
income 2.43% (f) 1.66% (f) 2.66% (e)(f) 2.07% 1.32%
Portfolio turnover 66% 66% 66% 54% 54%
Average commission rate (g) -- -- -- -- --
Net assets at end
of period (000) $667,611 $353,831 $ 3,659 $555,275 $264,122
</TABLE>
(e) Annualized.
(f) The benefits derived from custody credits and directed brokerage arrange-
ments had no impact. Prior years' ratios are net of benefits received, if
any.
(g) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades on which
commissions are charged.
25
<PAGE>
FINANCIAL HIGHLIGHTS (a) - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Year ended October 31
---------------------------------------------------------
1993(b) 1992(b) 1991(b)
Class A Class B Class A Class B(c) Class A
------------------- -------------------- --------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.390 $ 7.390 $ 7.050 $ 7.440 $ 5.700
-------- -------- -------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income 0.156 0.104 0.173 0.052 0.218
Net realized and
unrealized gain (loss) 1.293 1.282 0.489 (0.044) 1.509
-------- -------- -------- ------- --------
Total from Investment
Operations 1.449 1.386 0.662 0.008 1.727
-------- -------- -------- ------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.147) (0.094) (0.185) (0.058) (0.222)
From net
realized gains (0.282) (0.282) (0.137) (0.155)
-------- -------- -------- ------- --------
Total Distributions
Declared to
Shareholders (0.429) (0.376) (0.322) (0.058) (0.377)
-------- -------- -------- ------- --------
Net asset value -
End of period $ 8.410 $ 8.400 $ 7.390 $ 7.390 $ 7.050
-------- -------- -------- ------- --------
Total return (d) 20.21% 19.38% 9.65% (0.31)%(e) 31.23%
-------- -------- -------- ------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.10% 1.85% 1.09% 1.84%(f) 1.06%
Net investment
income 1.94% 1.19% 2.52% 1.77%(f) 3.35%
Portfolio turnover 14% 14% 37% 37% 36%
Net assets at end
of period (000) $520,706 $124,161 $413,228 $15,582 $366,808
</TABLE>
(a) Per share data was calculated using average shares outstanding during the
period.
(b) All per share amounts have been restated to reflect the 3 for 1 stock split
effective December 10, 1993.
(c) Class B shares were initially offered on May 5, 1992. Per share amounts
reflect activity from that date.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Not annualized.
(f) Annualized.
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for The Colonial Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The Colonial 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 The Colonial Fund. This report
may also be used as sales literature when preceded or accompanied by the current
prospectus which provides details of sales charges, investment objectives and
operating policies of the Fund.
27
<PAGE>
[COLONIAL MUTUAL LOGO]
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly Dean,
Simon Graduate School of Business, University of Rochester; Chairman and Chief
Executive Officer, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
TF-03/245C-0496 M (6/96)
Printed on recycled paper
