<PAGE>
FPO
COLONIAL GLOBAL UTILITIES FUND HIGHLIGHTS
NOVEMBER 1, 1995 - APRIL 30, 1996
Investment Objective: Colonial Global Utilities Fund seeks current income and
long- term growth of capital and income.
The Fund is Designed to Offer:
- Long-term growth potential
- Worldwide diversification
- Experienced professional management
Portfolio Management Commentary: "This six-month period was an excellent
demonstration of the benefits of a global utilities portfolio. With almost 60%
exposure outside the U.S., the Fund was able to provide positive returns and
outperform the domestic utility index."
Colonial Global Utilities Fund Performance
<TABLE>
<CAPTION>
Class A Class B Class D
Inception dates 10/15/91 3/27/95 3/27/95
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Distributions declared per share* $0.214 $0.172 $0.172
- -----------------------------------------------------------------------------------
Total returns, assuming reinvestment
of all distributions and no sales charge or
contingent deferred sales charge (CDSC) --
6 months 7.05% 6.65% 6.65%
- -----------------------------------------------------------------------------------
Net asset value per share at 4/30/96 $11.64 $11.64 $11.64
Top Five Holdings**
(as of 4/30/96)
- -----------------------------------------------------------------------------------
<CAPTION>
Top Five Countries**
(as of 4/30/96)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
<C> <C>
1. Korea Electric Power ADR 2.5%
2. Telefonica de Espana ADR 2.5%
3. Transportadora de Gas 2.4%
4. Veba AG 2.3%
5. Powergen Plc ADR Final 2.3%
</TABLE>
<TABLE>
<C> <C>
1. United States 40.9%
2. Malaysia 5.8%
3. Germany 4.6%
4. Spain 4.4%
5. Canada 4.1%
</TABLE>
* Distributions declared for the period.
** Holdings and country breakdown are based on net assets. Because the Fund is
actively managed, holdings and country breakdown will change.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
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,
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
Ophelia Barsketis, co-portfolio manager of Colonial Global Utilities Fund, has
been with Stein Roe & Farnham, Inc., the Fund's adviser, since 1983. Deborah
Lee, co-portfolio manager of the Fund, has been with Stein Roe & Farnham, Inc.,
since 1987.
Q. Ophelia, please describe the environment for global utility stocks and the
Fund's performance during the six-month period.
O.B. Utility stocks are sensitive to movements in interest rates, and generally
perform best when rates are declining. In the U.S., rates remained relatively
low but rose during the period. The Standard & Poor's Utilities Index, a common
measure of U.S. utility stock performance, was up 4.85% during the period.
However, in some places outside the U.S., the interest rate picture was much
brighter. An improvement in general global economic conditions had a positive
effect on utility stocks in many countries, notably in Europe and Latin America.
The Fund's exposure to foreign utilities helped it outperform domestic utility
funds. For the six-month period ending April 30, 1996 the Fund's Class A shares
returned 7.05%, compared to the Standard & Poor's Utilities Index which returned
4.85%.
Q. What are the advantages of investing in international utility stocks?
O.B. This six-month period was an excellent demonstration of the benefits of a
global utilities portfolio. With almost 60% exposure outside the U.S., the Fund
was able to provide positive returns while many domestic utility stocks
declined. Utility companies are conservative by nature. They are usually large
and well capitalized, and offer high earnings growth potential, particularly in
developing countries. A global utilities fund provides a relatively conservative
way to add international exposure to a U.S. portfolio.
Q. Deborah, what regions and specific holdings contributed to the Fund's
performance during the period?
D.L. The Fund's strong performance was primarily due to our 25% weighting in
Europe and 8% exposure to Latin America. Telefonica, the Spanish telephone
company, rose 26% during the first four months of 1996, and the Spanish electric
utility Endesa also performed well. Other good European performers were Telecom
Italia and Olivetti in Italy and Veba, a utility company in Germany. In Latin
America, we caught the market upturn and benefited from strong telephone and gas
company performance in Argentina as well as fixed income investments in Chile.
Q. Bob Christensen retired as portfolio manager of the Fund at the end of March.
Have you made any changes in the way the Fund is managed?
O.B. No, we have maintained the investment philosophy and conservative style Bob
used in managing the Fund because it has worked well. The largest country
expsoure in the portfolio is the U.S. market, and 20% is typically allocated to
global fixed income securities. We generally diversify our equity holdings
equally among the telephone, electricity and gas sectors. We are disciplined,
and if a holding grows too big, we trim our position. We believe the best way to
evaluate a company's prospects is by interviewing top management, so we spend a
lot of time visiting companies in which we're invested and those that are
potential portfolio candidates.
4
<PAGE>
Colonial Global Utilities Fund Investment Performance vs.
the Standard & Poor's Utility Index
Change in Value of $10,000 from 10/91 -
4/96 Based on NAV and MOP for Class A Shares
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CGUF class a nav mop S&P utility
- -----------------------------------------------------------
<S> <C> <C> <C>
10/91 10,000 9,425 10,000
10,047.81 9,470.06 9,907.99
10,507.72 9,903.53 10,635.43
10,355.83 9,760.37 10,062.93
10,315.34 9,722.21 9,782.28
10,202.78 9,616.12 9,642.59
10,367.12 9,771.01 10,269.14
10,635.7 10,024.14 10,254.16
10,687.53 10,072.99 10,393.94
11,136.53 10,496.18 11,221.61
11,199.19 10,555.24 11,132.28
11,199.04 10,555.1 11,212.56
11,082.72 10,445.46 11,112.99
11,242.56 10,596.11 11,092.07
11,596.43 10,929.64 11,495.93
11,855.39 11,173.71 11,674.37
12,311.08 11,603.19 12,509.99
12,605.17 11,880.37 12,736.33
12,516.65 11,796.94 12,475.1
12,517.33 11,797.58 12,462.62
12,892.7 12,151.37 13,038.16
13,025.53 12,276.56 13,339.99
13,570.72 12,790.4 13,985.88
13,615.27 12,832.4 13,951.21
13,659.51 12,874.09 13,926.52
13,153.08 12,396.78 13,224.48
13,340.91 12,573.80 13,156.11
13,643.31 12,858.82 13,241.09
13,278.43 12,514.92 12,493.13
12,772.37 12,037.96 12,069.5
12,811.54 12,074.87 12,372.3
12,559.26 11,837.11 12,037.25
12,421.55 11,707.31 12,066.78
12,718.64 11,987.31 12,471.83
12,804.79 12,068.52 12,433.82
12,536.59 11,815.74 12,123.6
12,647.1 11,919.89 12,218.64
12,424.04 11,709.66 12,043.54
12,427.24 11,712.68 12,110.99
12,698.89 11,967.76 13,053.96
12,798.75 12,062.82 13,028.87
12,826.96 12,089.41 12,946.39
13,088.46 12,335.87 13,430.22
13,535.83 12,757.52 13,848.54
13,564.09 12,784.15 13,908.26
13,766.04 12,974.49 14,265.54
13,708.08 12,919.87 14,555.99
14,011.88 13,206.2 15,468.38
13,952.73 13,150.45 15,796.75
14,222.18 13,404.41 15,968.95
14,669.79 13,826.28 17,091.9
14,888.91 14,032.8 17,316.31
14,814.52 13,962.68 16,637.69
14,677.29 13,833.34 16,279.13
14,936.63 14,077.78 16,473.17
</TABLE>
S&P UTILITIES
$16,473
- --------------------------------------------------------------------------------
$15,000
- --------------------------------------------------------------------------------
$10,000
- --------------------------------------------------------------------------------
$5,000
NAV
$14,937
MOP
$14,078
10/91
4/96
A $10,000 investment in Class B shares made on March 27, 1995, (inception) at
net asset value (NAV) would have been valued at $11,606 on April 30, 1996. The
same investment after deducting the applicable contingent deferred sales charge
(CDSC) would have grown to $11,206 on April 30, 1996. A $10,000 investment in
Class D shares made on March 27, 1995, (inception) at NAVwould have been valued
at $11,606 on April 30, 1996. The same investment after deducting the applicable
CDSC would have grown to $11,490 on April 30, 1996.
<TABLE>
<CAPTION>
Average Annual Total Returns
As of 3/31/96 (Most Recent Quarter End)
- --------------------------------------------------------------------------------
Class A* Class B Class D
Inception 10/15/91 3/27/95 3/27/95
NAV MOP NAV w/CDSC NAV MOP w/CDSC
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
1 year 14.43% 7.85% 13.68% 8.68% 13.68% 11.55%
- --------------------------------------------------------------------------------
Since inception 8.95% 7.51% 13.88% 8.97% 13.88% 11.77%
- --------------------------------------------------------------------------------
</TABLE>
The S&P Utilities Index is an unmanaged index that tracks the performance of
domestic utility stocks. The performance of the Index does not reflect fees or
expenses associated with an actual investment. Past performance cannot predict
future results. Return and value of an investment will vary, resulting in a gain
or loss on sale. All results shown assume reinvestment of distributions. NAV
return does not include sales charges or CDSC. Maximum offering price (MOP)
return includes the maximum sales charge of 5.75%. The CDSC returns reflect the
maximum applicable charge of 5.00% since inception for Class B shares and 1.00%
for Class D shares since inception. Performance for different share classes will
vary based on differences in sales charges and fees associated with each class.
*Performance shown is based in part on the performance of the Liberty Financial
Utilities Fund.
5
<PAGE>
LFC UTILITIES TRUST
INVESTMENT PORTFOLIO
APRIL 30, 1996 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 69.0% COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - 3.6%
HOLDINGS & OTHER INVESTMENT COMPANIES - 1.8%
York International Corp. 70 $ 3,360
---------
COMPUTERS - 1.8%
Olivetti It 5,500 3,515
---------
- -------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 59.8%
COMMUNICATIONS - 15.8%
Ameritech Corp. 61 3,567
Frontier Corp. 117 3,706
GTE Corp. 91 3,925
Lucent Technology, Inc. (a) 99 3,467
PacifiCorp 160 3,200
Portugal Telecom S.A. ADR Po 140 3,028
Telecom Italia (Saving Shares) (a) It 1,370 2,268
Telefonica de Argentina ADR Ar 92 2,700
Telefonica de Espana ADR Sp 90 4,741
---------
30,602
---------
ELECTRIC SERVICES - 25.5%
AES Corp. (a) 155 3,526
Cinergy Corp. 100 2,900
Citizens Utilities 80 3,760
DPL, Inc. 130 2,974
Duke Power Co. 71 3,337
Empressa National ADR Sp 59 3,695
Entergy Corp 70 1,855
Hong Kong Electric ADR HK 1,200 3,816
Korea Electric Power ADR Ko 175 4,856
National Power PLC, ADR UK 133 3,495
NIPSCO Industries, Inc. 96 3,430
Powergen PLC, ADR UK 128 4,399
Southern Co. 170 3,740
Utilicorp United, Inc. 123 3,459
---------
49,242
---------
</TABLE>
6
<PAGE>
Investment Portfolio/April 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
GAS SERVICES - 14.2%
CMS Energy Corp. 125 $ 3,641
MCN Corp. 148 3,649
Northwest Natural Gas Co. 90 2,925
Petronas Gas Berhad Ma 580 2,558
Questar Corp. 114 3,990
RWE (a) G 110 4,261
UGI Corp. 127 2,842
Westcoast Energy, Inc. Ca 235 3,647
---------
27,513
---------
PIPELINES - 1.9%
Enron Global Power & Pipe 150 3,713
---------
TRANSPORTATION - 2.4%
Transportadora de Gas Del Sur ADS Ar 360 4,635
---------
- -------------------------------------------------------------------------------
SERVICES - 5.6%
BUSINESS SERVICES - 1.7%
Alcatel Alsthom ADR Fr 179 3,401
---------
ENERGY SERVICES - 2.3%
Veba AG G 91 4,489
---------
WATER SERVICES - 1.6%
Generale Des Eaux Fr 28 3,040
---------
TOTAL COMMON STOCKS (cost of $118,263) 133,510
---------
PREFERRED STOCKS - 3.6%
-------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 3.6%
COMMUNICATIONS - 2.2%
Nokia ADS Fi 116 4,220
---------
ELECTRICAL WORK - 1.4%
Ericsson Corp. 4.250% Sw 1,000 2,812
---------
TOTAL PREFERRED STOCKS (cost of $6,479) 7,032
</TABLE>
---------
7
<PAGE>
Investment Portfolio/April 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE FIXED-INCOME BONDS - 18.8% CURRENCY PAR VALUE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 2.1%
NONDEPOSITORY CREDIT INSTITUTIONS
Financiera Energetica
9.000% 11/08/99(b) Co 4,000 $ 4,120
--------
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 16.7%
COMMUNICATIONS - 6.5%
Telecom New Zealand,
6.750% 10/11/05 NZ 5,000 4,869
Telekom Malaysian Berhad,
7.125% 08/01/05(c) Ma 4,000 3,923
Telstra Corp. Ltd.,
6.500% 07/31/03(d) Au 4,000 3,867
--------
12,659
--------
ELECTRICAL SERVICES - 10.2%
Chilgener S.A.,
6.500% 01/15/06 Ch 4,000 3,704
Hydro Quebec,
8.050% 07/07/24 Ca 4,000 4,257
Niagara Mohawk Power Co.,
7.375% 08/01/03 3,625 3,213
Shikoku Power,
6.250% 08/12/03 Ja 4,000 3,819
Tenaga Nasional Berhad,
7.875% 06/15/04(e) Ma 4,500 4,649
--------
19,642
--------
TOTAL CORPORATE FIXED-INCOME BONDS (cost of $37,769) 36,421
--------
CORPORATE CONVERTIBLE BONDS - 4.9%
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 4.9%
GAS SERVICES
Consolidated National Gas,
7.250% 12/15/15 4,500 4,652
SFP Pipeline,
10.410% 08/15/10 3,700 4,791
--------
TOTAL CORPORATE CONVERTIBLE BONDS (cost of $9,048) 9,443
--------
</TABLE>
8
<PAGE>
Investment Portfolio/April 30, 1996
- -------------------------------------------------------------------------------
COMMERCIAL PAPER - 2.8%
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 2.8%
FINANCIAL SERVICES
Lehman Brothers Holdings (cost of $5,410)
5.400% 05/01/96 $5,410 $ 5,410
--------
TOTAL INVESTMENTS - 99.1% (cost of $176,969)(f) 191,816
--------
OTHER ASSETS & LIABILITIES, NET - 0.9% 1,648
- --------------------------------------------------------------------------------
NET ASSETS - 100% $193,464
--------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Financiera Energetica is a restricted security which was acquired on June
1, 1995 at a cost of $4,126. The fair value is determined under the
direction of the Board of Trustees. This security represents 2.1% of the
Fund's net assets at April 30, 1996.
(c) Telekom Malaysian Berhad is a restricted security which was acquired on
August 3, 1995 at a cost of $3,987. The fair value is determined under the
direction of the Board of Trustees. This security represents 2.0% of the
Fund's net assets at April 30, 1996.
(d) Telestra Corp. Ltd. is a restricted security which was acquired on June 1,
1995 at a cost of $3,942. The fair value is determined under the direction
of the Board of Trustees. This security represents 2.0% of the Fund's net
assets at April 30, 1996.
(e) Tenega Nasional Berhad is a restricted security which was acquired on May
22, 1995 at a cost of $4,656. The fair value is determined under the
direction of the Board of Trustees. This security represents 2.4% of the
Fund's net assets at April 30, 1996.
(f) Cost for federal income tax purposes is the same.
9
<PAGE>
Investment Portfolio/April 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Summary of Securities by Country/
Country/Currency Currency Value % of Total
- ---------------------------------------------------------------
<S> <C> <C> <C>
United States $ 89,032 46.5
Malaysia Ma 11,131 5.8
Germany G 8,750 4.6
Spain Sp 8,436 4.4
Canada Ca 7,905 4.1
United Kingdom UK 7,893 4.1
Argentina Ar 7,335 3.8
France Fr 6,441 3.4
Italy It 5,783 3.0
New Zealand NZ 4,869 2.5
Korea Ko 4,856 2.5
Finland Fi 4,220 2.2
Colombia Co 4,120 2.1
Australia Au 3,867 2.0
Japan Ja 3,819 2.0
Hong Kong HK 3,816 2.0
Chile Ch 3,703 1.9
Portugal Po 3,028 1.6
Sweden Sw 2,812 1.5
-------- -----
$191,816 100.0
======== =====
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
------- ----
<S> <C>
ADR American Depository Receipt
ADS American Depository Shares
</TABLE>
See notes to financial statements
10
<PAGE>
LFC UTILITIES TRUST
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1996 (UNAUDITED)
(in thousands)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $176,969) $191,816
Receivable for:
Interest $1,171
Dividends 494
Deferred organization expenses 4
Cash and other assets 100 1,769
------ --------
Total Assets 193,585
LIABILITIES
Payable for:
Management fee 87
Other 3
Accrued:
Accounting expenses 3
Other expenses 28
------
Total Liabilities 121
--------
NET ASSETS applicable to
investors' beneficial interest $193,464
========
</TABLE>
See notes to financial statements.
11
<PAGE>
LFC UTILITIES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
(in thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 2,934
Interest 1,839
FX Gains/Losses (7)
-------
Total Investment Income 4,766
EXPENSES
Management fee $ 566
Custodian & accounting fees 30
Audit & legal fees 7
Transfer Agent fees 4
Amortization of deferred
organization expenses 6
Trustees fees 2
Miscellaneous 1 616
------- -------
Net Investment Income 4,150
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain 146
Net unrealized appreciation during
the period 10,812
-------
Net Gain 10,958
-------
Net Increase in Net Assets from Operations $15,108
=======
</TABLE>
See notes to financial statements.
12
<PAGE>
LFC UTILITIES TRUST
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 $ 4,150 $ 13,293
Net realized gain (loss) 146 (3,801)
Net unrealized appreciation 10,812 14,432
-------- --------
Net Increase from Operations 15,108 23,924
-------- --------
Transactions in investors' beneficial interests
Contributions 421 7,023
Withdrawals (35,670) (78,000)
-------- --------
Net transactions in investors' beneficial
interest (35,249) (70,977)
-------- --------
Total Decrease (20,141) (47,053)
-------- --------
NET ASSETS
Beginning of period 213,605 260,658
-------- --------
End of period $193,464 $213,605
======== ========
</TABLE>
See notes to financial statements.
13
<PAGE>
LFC UTILITIES TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited)
Period ended Year ended
April 30 October 31
-----------------------------------------------
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.60%(b) 0.63%(c) 0.61% 0.64%
Net investment income 4.03%(b) 5.97%(d) 5.48% 5.29%
Portfolio turnover 22% 46% 34% 41%
</TABLE>
<TABLE>
<CAPTION>
Year Period
ended ended
October 31 October 31
------------------------
1992 1991(a)
---- -------
<S> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.72%(c) 0.58%(b)(c)
Net investment income 6.36%(d) 6.46%(b)(d)
Portfolio turnover 31% ---
</TABLE>
(a) The Portfolio commenced investment operations on August 23, 1991.
(b) Annualized
(c) If the Portfolio had paid all of its expenses and there had been no
reimburse ment from the Investment Adviser, as described in Note 3, these
ratios would have been 0.64%, 0.86% and 4.54% (annualized), respectively.
(d) Computed giving effect to the Investment Adviser's expense limitation
undertaking.
See notes to financial statements.
14
<PAGE>
LFC UTILITIES TRUST
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (UNAUDITED)
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: LFC Utilities Trust (the Portfolio) was organized on August 14,
1991 as a trust under Massachusetts law and is registered under the Investment
Company Act of 1940 as an open-end investment company. The Declaration of Trust
permits the Trustees to issue non-transferable interests in the Portfolio. The
Portfolio commenced operations on August 23, 1991.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
VALUATION OF INVESTMENTS: Equity securities listed on an exchange and
over-the-counter equity securities quoted on the NASDAQ system are valued on the
basis of the last sale on the date as of which the valuation is made, or,
lacking any sales, at the current bid prices. Over-the-counter equity securities
not quoted on the NASDAQ system are valued at the latest bid quotations.
Long-term debt securities are valued primarily on the basis of valuations
furnished by the independent pricing service which utilizes both dealer-supplied
quotations and electronic data processing techniques which take into account
various factors. Securities for which there are not such reliable quotations or
valuations are valued at fair value, as determined in good faith by, or under
the direction of, the Trustees of the Portfolio.
Short-term obligations with less than 60 days remaining to maturity are valued
on the amortized cost basis.
ORGANIZATION EXPENSES: Expenses incurred in connection with the organization of
the Portfolio have been deferred and are being amortized on a straight line
basis over five years.
FEDERAL INCOME TAXES: The Portfolio has complied and intends to comply with the
applicable provisions of the Internal Revenue Service Code. Accordingly, no
provisions for federal income taxes is considered necessary.
OTHER: Investment transactions are accounted for on the trade date.
Interest income and expenses are recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date. Discounts are amortized on a
yield to maturity basis.
15
<PAGE>
Notes to Financial Statements/April 30, 1996
- --------------------------------------------------------------------------------
NOTE 2. INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
Realized gains and losses are computed on the identified cost basis for both
financial reporting and federal income tax purposes. The cost of investments
purchased and proceeds from investment sold, excluding short-term investments,
for the six months ended April 30, 1996 were $44,155,816 and $72,233,923,
respectively.
Unrealized appreciation (depreciation) at April 30, 1996, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $18,510,494
Gross unrealized depreciation (3,663,968)
-----------
Net unrealized appreciation $14,846,526
===========
</TABLE>
NOTE 3. TRANSACTIONS WITH AFFILIATES INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
The Portfolio has a management agreement with Stein Roe & Farnham, Inc. (Stein
Roe), and indirect wholly-owned subsidiary of Liberty Financial Services Inc.
(Liberty Financial) under which Stein Roe provides investment management
services. The investment management fee paid to Stein Roe is accrued daily and
paid monthly at an annual rate of 0.55 percent of the Portfolio's average daily
net assets up to $400 million and 0.50 percent of its average daily net assets
thereafter.
EXPENSE LIMITATIONS: Stein Roe and Liberty Services had voluntarily agreed,
until March 24, 1995, not to impose their fees under their management and
administration agreements with the Colonial Global Utilities Fund (the Fund)
(formerly Liberty Financial Utilities Fund), which invests all its assets in the
Portfolio, and the Portfolio, to the extent those fees would cause the aggregate
expenses, as defined, of the Fund and the Portfolio to exceed the rate of 1.25
percent per annum of the Fund's average daily net assets and to guarantee
payments of expenses in excess of that rate.
16
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1996 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments in LFC Utilities Trust, at value $193,463
Receivable for Fund shares sold $204
Deferred organization expenses 9
Other 23 236
---- --------
Total Assets 193,699
LIABILITIES
Payable for:
Fund shares repurchased 537
Distributions 68
Accrued:
Administration fee 16
Distribution fee 1
Bookkeeping fee 4
Service fee 41
Transfer Agent fee 32
----
Total Liabilities 699
--------
NET ASSETS $193,000
========
Net asset value & redemption price per share -
Class A ($191,322/16,436) $ 11.64
========
Maximum offering price per share - Class A
($11.64/0.9425) $ 12.35 (a)
========
Net asset value & offering price per share -
Class B ($1,141/98) $ 11.64 (b)
========
Net asset value & redemption price per share -
Class D ($537/46) $ 11.64 (b)
========
Maximum offering price per share - Class D
($11.64/0.99) $ 11.76
========
COMPOSITION OF NET ASSETS
Capital paid in $182,082
Overdistributed net investment income (216)
Accumulated net realized loss (3,703)
Net unrealized appreciation 14,837
--------
$193,000
========
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
17
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Dividend income from LFC Utilities Trust $ 2,934
Interest income from LFC Utilities Trust 1,839
Expenses allocated from LFC Utilities Trust (616) $ 4,157
------- -------
EXPENSES
Administration fee 103
Distribution fee - Class B 4
Distribution fee - Class D 1
Audit 9
Transfer agent 296
Bookkeeping fee 27
Trustees fee 7
Custodian fee 11
Service fee 256
Legal fee 5
Registration fee 23
Reports to shareholders 14
Amortization of deferred organization expenses 10
Other 26 792
------- -------
Net Investment Income 3,365
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain 147
Net unrealized appreciation during the period 10,804
-------
Net Gain 10,951
-------
Net Increase in Net Assets from Operations $14,316
=======
</TABLE>
See notes to financial statements.
18
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
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(a)
<S> <C> <C>
Operations:
Net investment income $ 3,365 $ 11,731
Net realized gain (loss) 147 (3,800)
Net unrealized appreciation 10,804 14,432
-------- --------
Net Increase from Operations 14,316 22,363
Distributions:
From net investment income - Class A (3,841) (11,802)
From net realized gains - Class A ---- (1,042)
From net investment income - Class B (16) (10)
From net investment income - Class D (6) (6)
-------- --------
10,453 9,503
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 3,061 5,919
Value of distributions reinvested - Class A 3,354 11,297
Cost of shares repurchased - Class A (37,400) (75,218)
-------- --------
(30,985) (58,002)
-------- --------
Receipts for shares sold - Class B 747 719
Value of distributions reinvested - Class B 10 8
Cost of shares repurchased - Class B (405) ----
-------- --------
352 727
-------- --------
Receipts for shares sold - Class D 263 294
Value of distributions reinvested - Class D 6 6
Cost of shares repurchased - Class D (57) (10)
-------- --------
212 290
-------- --------
Net Decrease from Fund Share Transactions (30,421) (56,985)
-------- --------
Total Decrease (19,968) (47,482)
NET ASSETS
Beginning of period 212,968 260,450
-------- --------
End of period (net of overdistributed and
including undistributed net investment
income of $216 and $241, respectively) $193,000 $212,968
======== ========
</TABLE>
(a) Class B and Class D shares were initially offered on March 27, 1995.
Statement of Changes in Net Assets continued on following page.
See notes to financial statements.
19
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
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 266 556
Issued for distributions reinvested - Class A 296 1,064
Repurchased - Class A (3,250) (7,047)
------ ------
(2,688) (5,427)
------ ------
Sold - Class B 65 66
Issued for distributions reinvested - Class B 1 1
Repurchased - Class B (35) ----
------ ------
31 67
------ ------
Sold - Class D 22 28
Issued for distributions reinvested - Class D 1 1
Repurchased - Class D (5) (1)
------ ------
18 28
------ ------
</TABLE>
(a) Class B and Class D shares were initially offered on March 27, 1995.
See notes to financial statements.
20
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial Global Utilities 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 invests all of its investable
assets in interest in the LFC Utilities Trust (the Portfolio), a Massachusetts
business trust, having the same investment objective as the Fund. The value of
the Fund's investment in the Portfolio reflects the Fund's proportionate
interest in the net assets of the Portfolio (99.9% at April 30, 1996). The
performance of the Fund is directly affected by the performance of the
Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. 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 period. Actual results
could differ from those estimates. The following is a summary of accounting
policies that are consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION AND TRANSACTIONS: Valuation of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
21
<PAGE>
Notes to Financial Statements/April 30, 1996
- --------------------------------------------------------------------------------
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class D 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.
The per share data was calculated using the average shares outstanding during
the period. In addition, Class B and Class D net investment income per share
data reflects the distribution fee per share applicable to Class B and Class D
shares only.
Class B and Class D ratios are calculated by adjusting the expense and net
investment income 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.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred $99,000 of expenses in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and are being amortized on a
straight-line basis over five years.
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.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
ADMINISTRATOR FEE: Colonial Management Associates, Inc. (the Admin- istrator) is
the administrator of the Fund and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.10% annually of the Fund's
average net assets.
BOOKKEEPING FEE: The Administrator provides bookkeeping and pricing services for
$18,000 per year plus 0.0233% 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 Administrator, provides shareholder services and
receives a monthly fee equal to 0.20% annually of the Fund's average net assets
and receives a reimbursement for certain out of pocket expenses.
22
<PAGE>
Notes to Financial Statements/April 30, 1996
- --------------------------------------------------------------------------------
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 six months ended April 30, 1996, the Fund
has been advised that the Distributor retained net underwriting discounts of
$12,943 on sales of the Fund's Class A shares and received $701 and $535
contingent deferred sales charge (CDSC) on Class B and Class D share
redemptions, respectively.
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 to dealers
who sold such shares.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually of the Fund's net assets as of the 20th
of each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B and Class D shares.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the 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
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS: At October 31, 1995, capital loss carry-forwards
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>
2003 $3,731,000
==========
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may may be
taxable to shareholders as ordinary income.
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 off-shore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the six month ended April 30, 1996.
23
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS (b)
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 D
---------------------------------------
<S> <C> <C> <C>
Net asset value -
Beginning of period $11.080 $11.080 $11.080
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a)(c) 0.187 0.144 0.144
Net realized and
unrealized gain (loss) 0.587 0.588 0.588
------- ------- -------
Total from Investment
Operations 0.774 0.732 0.732
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.214) (0.172) (0.172)
From net
realized gains -- -- --
------- ------- -------
Total Distributions
Declared to
Shareholders (0.214) (0.172) (0.172)
Net asset value -
End of period $ 11.640 $11.640 $11.640
======== ======= =======
Total return (e)(f) 7.05%(g) 6.65%(g) 6.65%(g)
======== ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (c) 1.36%(h) 2.11%(h) 2.11%(h)
Net investment income (c) 3.27%(h) 2.52%(h) 2.52%(h)
Fees and Expenses waived
or borne by Liberty Securities
and LFC Utilities Trust -- -- --
Net assets at end
of period (000) $191,322 $ 1,141 $ 537
(a) Net of fees and expenses waived or
borne by Liberty Securities
which amounted to -- -- --
</TABLE>
(b) Per share data was calculated using average shares outstanding during the
period.
(c) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
LFC Utilities Trust.
24
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS (b) - CONT
Selected data for a share of each class outstanding throughout period are as
follows:
<TABLE>
<CAPTION>
Year ended October 31
- ----------------------------------------------------------------
1995 1994 1993
Class A Class B(d) Class D(d) Class A Class A
- ----------------------------------- --------------------
<S> <C> <C> <C> <C>
$ 10.610 $10.420 $10.420 $ 12.150 $ 10.430
- -------- ------- ------- -------- --------
0.536 0.248 0.248 0.550 0.570
0.520 0.665 0.665 (1.430) 1.790
- -------- ------- ------- -------- --------
1.056 0.913 0.913 (0.880) 2.360
- -------- ------- ------- -------- --------
(0.517) (0.253) (0.253) (0.500) (0.610)
(0.069) -- -- (0.160) (0.030)
- -------- ------- ------- -------- --------
(0.586) (0.253) (0.253) (0.660) (0.640)
$ 11.080 $11.080 $11.080 $ 10.610 $ 12.150
======== ======= ======= ======== ========
10.32% 8.82%(g) 8.22%(g) (7.40)% 23.30%
======== ======= ======= ======== ========
1.29% 2.05%(h) 2.05%(h) 1.20% 1.13%
5.14% 3.73%(h) 3.73%(h) 4.90% 4.80%
0.03% 0.02%(h) 0.02%(h) -- --
$211,916 $ 745 $ 307 $260,450 $304,500
$ 0.002 -- -- -- --
</TABLE>
(d) Class B and Class D shares were initially offered on March 27, 1995. Per
share data reflect activity from that date.
(e) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(f) Total return would have been lower had Liberty Securities and LFC Utilities
Trust not waived certain expenses.
(g) Not annualized.
(h) Annualized.
25
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended Period ended
October 31 October 31
---------- ------------
1992 1991(g)
Class A Class A
---------- ------------
<S> <C> <C>
Net asset value -
Beginning of period $ 9.990 $10.000
--------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income(a)(b) 0.590 0.020
Net realized and
unrealized gain (loss) 0.460 (0.030)
--------- -------
Total from Investment
Operations 1.050 (0.010)
--------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.610) --
--------- -------
Net asset value -
End of period $ 10.430 $ 9.990
========= =======
Total return (c)(d) 10.80% (2.10)%(e)
========= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (a) 1.25%(f) 1.25 (e)(f)
Net investment
income (a) 5.81 (b) 5.81 (e)(b)
Net assets at end
of period (000) $118,977 $ 6,617
</TABLE>
(a) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
LFC Utilities Trust.
(b) Computed giving effect to the Investment Adviser's and Administrator's
expense limitation undertaking.
(c) Total return based on net asset value with all distributions reinvested.
(d) Total return would have been lower had the Administrator not waived
certain expenses.
(e) Annualized.
(f) If the Fund had paid all of its expenses excluding distribution fees
waived and there had been no reimbursement from the Investment Adviser and
the Administrator, these ratios would have been 1.61% and 9.81% for the
periods ended October 31, 1992 and 1991, respectively.
(g) The Fund commenced investment operations on August 23 ,1991.
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Global Utilities Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Global Utilities 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 Global Utilities
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund.
27
<PAGE>
Mutual Funds 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
Printed on recycled paper
Printed on recycled paper
NOT FDIC- INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Colonial Investment Services, Inc., Distributor (C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
GU-03/218C-0496 M (6/96)
