<PAGE>
[COLONIAL LOGO]
COLONIAL GLOBAL
UTILITIES FUND
ANNUAL REPORT
OCTOBER 31, 1995
<PAGE>
COLONIAL GLOBAL UTILITIES FUND HIGHLIGHTS
NOVEMBER 1, 1994 - OCTOBER 31, 1995
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: "Conditions for utility stocks and bonds have
been favorable in most of the world's economies. However, the real story is
the potential for future growth -- emerging countries are just starting to
develop their infrastructures, and this should create new opportunities for
investors in utility companies."
COLONIAL GLOBAL UTILITIES FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
<S> <C> <C> <C>
Inception date 10/15/91* 3/27/95 3/27/95
Distributions declared per share $0.586 $0.253 $0.253
Total return, assuming reinvestment
of all distributions and no sales charge or
contingent deferred sales charge (CDSC) --
12 months 10.32% 8.82% 8.82%
Net asset value per share at 10/31/95 $11.08 $11.08 $11.08
</TABLE>
* The Fund initially commenced operations as the Liberty Financial Utilities
Fund on 10/15/91. Performance shown is based in part on the performance of the
Liberty Financial Utilities Fund.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS** TOP FIVE COUNTRIES**
(as of 10/31/95) (as of 10/31/95)
<S> <C>
1. Powergen PLC 1. United States................ 61.3%
2. AT&T 2. Malaysia..................... 4.9%
3. SFP Pipeline 3. Spain........................ 4.1%
4. GTE Corp. 4. Germany...................... 4.0%
5. Empresa Nacional 5. United Kingdom............... 3.9%
</TABLE>
** There can be no guarantee the portfolio will continue to hold these
securities or invest in these countries in the future. The top five countries
are based on net assets.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO]
John A. McNeice, Jr.
President
During the 12 months ended October 31, 1995, the world's utility markets
generally provided attractive returns for investors. These returns reflected
moderate economic growth and low inflation in the major global economies,
including the United States and many European countries.
Of the world's utility markets, the strongest returns were posted in the U.S.
during the Fund's most recent fiscal year. However, attractive opportunities
were also found in other markets, including those of Western Europe, with
utilities in Sweden, Finland, and Switzerland doing especially well. Of
course, even in the most favorable economic environment, not all countries will
fare as well as others. Japanese and French utility stocks had to contend with
their share of problems during the year. Although emerging countries are a
relatively small component of the global utilities market, we believe they will
provide attractive opportunities in the future.
Robert Christensen and Ophelia Barsketis, Portfolio Co-managers of Colonial
Global Utilities Fund, believe that economic growth and inflation in most
markets will remain moderate in the months ahead, a development that would
continue to favor utility common stocks and bonds. In the following report,
Bob and Ophelia comment on the Fund's management strategy and on key issues
affecting utilities markets worldwide.
Respectfully,
/s/ JOHN A. MCNEICE, JR.
- -----------------------------
John A. McNeice, Jr.
President
December 19, 1995
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
ROBERT CHRISTENSEN, Portfolio Co-manager of Colonial Global Utilities Fund, has
been with Stein Roe & Farnham Inc., the Fund's adviser, since 1962. OPHELIA
BARSKETIS, Portfolio Co-manager of Colonial Global Utilities Fund, has been
with the Fund's adviser since 1983.
FUND IN TRANSITION FOR MUCH OF 1995: Although the Fund always had the ability
to invest in global utility markets, the foreign component of the portfolio
typically did not exceed 15% of investments prior to joining the Colonial
family of mutual funds in March of 1995. In keeping with the Fund's modified
objective, foreign investments have gradually been increased throughout 1995,
and now stand at 50% of total assets.
FUND PERFORMANCE VS. COMPARATIVE INDEX: During the period, the Fund
outperformed the Morgan Stanley Capital International World Index, an unmanaged
index that follows global stock markets. The Fund was overweighted in U.S.
investments and underweighted in Japanese investments relative to the Index,
and this contributed to the Fund's performance. The Fund's investments in
Central and South America (two regions not tracked by the Index) provided
strong returns. A third factor that contributed to performance was the Fund's
focus on utility stocks, which benefited from a worldwide decline in interest
rates. The Index tracks a broad based selection of industries.
U.S. ECONOMY FAVORABLE: We believe the economy is headed for the "soft landing"
that has been the Federal Reserve Board's goal for the last two years. In the
current environment, U.S. utility stocks have flourished, as demonstrated by
the performance of the Standard & Poor's Utilities Index, an unmanaged index
that tracks the performance of telephone, electric, and natural gas utilities.
For the 12 months ended October 31, 1995, the Index posted a total return of
29.38%.
EUROPEAN ECONOMIES GAINING STRENGTH: Economic growth rates in Europe were
moderate. The Bundesbank (Germany's central bank), which generally sets the
interest rate trend for Europe, did not cut rates aggressively. However,
interest rates moved lower, improving the environment in many European utility
markets. We took advantage of favorable conditions in Sweden, significantly
increasing investments in that country. Italian utilities were not as strong
as those of some other European countries, although some individual holdings,
like Telecom Italia, posted strong returns.
TELECOMMUNICATIONS IN EMERGING MARKETS HAVE GROWTH POTENTIAL: The
telecommunications industry has just begun to tap the growth potential of the
world's emerging markets. Accounting for 77% of the world's population, these
countries have just 5% of the world's telephone lines. Developing their
communications networks has become a priority for almost all of these
countries. Over the next five years, emerging countries plan on increasing the
number of phone lines by 11.7% per year -- an opportunity many telecom-
4
<PAGE>
munications companies will be taking advantage of.
LOOKING AHEAD: In the coming months, we will continue to look for promising
investments in utility markets worldwide and expect to maintain foreign
investments at approximately 50% of total investments.
COLONIAL GLOBAL UTILITIES FUND INVESTMENT PERFORMANCE VS.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX ND
Change in Value of $10,000 from 10/91 - 10/95
Based on NAV and MOP for Class A Shares
<TABLE>
<CAPTION>
DATE MOP NAV MSCI
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
10/91 9425 10000 10000
9425 10000 10000
9470 10048 9561
9904 10508 10254
9760 10356 10061
9722 10315 9884
9616 10203 9146
9771 10367 9544
10024 10636 9920
10073 10688 9585
10496 11137 9606
10555 11199 9837
10555 11199 9743
10445 11083 9476
10596 11243 9643
10930 11596 9718
11174 11855 9747
11603 12311 9975
11880 12605 10551
11797 12517 11037
11798 12517 11288
12151 12893 11191
12277 13026 11418
12790 13571 11939
12832 13615 11716
12874 13660 12036
12397 13153 11352
12574 13341 11905
12859 13643 12687
12515 13278 12520
12038 12772 11977
12075 12812 12345
11837 12559 12374
11707 12422 12337
11987 12719 12568
12069 12805 12944
11816 12537 12601
11920 12647 12957
11710 12424 12392
11713 12427 12509
11968 12698 12318
12063 12799 12495
12089 12827 13094
12336 13088 13547
12758 13536 13660
12784 13564 13653
12974 13766 14333
12920 13708 14010
13206 14012 14416
10/95 13139 13940 14185
</TABLE>
A $10,000 investment in Class B shares made on March 27, 1995, (inception) at
net asset value (NAV) would have been valued at $10,882 on October 31, 1995.
The same investment after deducting the applicable CDSC would have grown to
$10,382 on October 31, 1995. A $10,000 investment in Class D shares made on
March 27, 1995, (inception) at NAV would have been valued at $10,882 on October
31, 1995. The same investment after deducting the applicable CDSC would have
grown to $10,674 on October 31, 1995. The Morgan Stanley Capital International
World Index ND is an unmanaged index that tracks the performance of global
stocks.
AVERAGE ANNUAL TOTAL RETURNS
As of 9/30/95 (Most Recent Quarter End)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR 11.77% 5.34% -- -- -- --
- -------------------------------------------------------------------------------
SINCE INCEPTION 8.85% 7.24% 9.35% 4.35% 9.35% 7.26%
- -------------------------------------------------------------------------------
</TABLE>
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 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
OCTOBER 31, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
COUNTRY
COMMON STOCKS - 67.8% ABBREV. SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 4.0%
HOLDINGS & OTHER INVESTMENT COMPANIES
Equity Residential 114 $ 3,192
Marks Centers Trust 214 2,300
National Health Investors, Inc. 110 2,984
--------
8,476
--------
- --------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 2.4%
AIR CONDITIONING & WARM AIR HEATING EQUIPMENT - 1.8%
York International Corp. 90 3,937
--------
ELECTRONIC & ELECTRICAL EQUIPMENT - 0.6%
Kenetech Corp. 220 1,183
--------
- --------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 58.1%
COMMUNICATIONS - 16.2%
Ameritech Corp. 85 4,563
American Telephone & Telegraph Corp. 82 5,216
GTE Corp. 124 5,123
PacifiCorp 253 4,775
Tele Danamark ADS De 152 3,961
Telecom Italia (Mobile) (a) It 2,000 2,221
Telecom Italia (Saving Shares) (a) It 1,370 1,616
Telefonica de Argentina ADR Ar 156 3,243
Telefonica de Espana ADR Sp 101 3,804
--------
34,522
--------
ELECTRIC SERVICES - 24.8%
AES Corp. (a) 165 3,259
Cinergy Corp. 160 4,540
DPL, Inc. 140 3,325
Duke Power Co. 85 3,804
Empressa National ADR Sp 99 4,975
Entergy Corp 80 2,280
Hong Kong Electric ADR HK 1,200 4,082
Korea Electric Power ADR Ko 185 4,579
National Power PLC, ADR UK 133 1,656
NIPSCO Industries, Inc. 122 4,453
</TABLE>
6
<PAGE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
ELECTRIC SERVICES - CONT.
Powergen PLC, ADR UK 178 $ 6,590
Southern Co. 206 4,918
Utilicorp United, Inc. 153 4,418
--------
52,879
--------
GAS SERVICES - 13.2%
CMS Energy Corp. 150 4,144
MCN Corp. 200 4,350
Northwest Natural Gas Co. 90 2,880
Petronas Gas Berhad (a)(b) Ma 400 1,353
Questar Corp. 124 3,735
RWE (a) G 12 4,286
UGI Corp. 167 3,507
Westcoast Energy, Inc. 273 4,027
--------
28,282
--------
PIPELINES - 2.0%
Enron Global Power & Pipe 180 4,342
--------
TRANSPORTATION - 1.9%
Transportadora de Gas Del Sur ADS Ar 400 4,100
--------
----------------------------------------------------------------------------------------------------------------------------
SERVICES - 3.3%
BUSINESS SERVICES - 1.4%
Alcatel Alsthom ADR Fr 179 3,021
--------
ENERGY SERVICES - 1.9%
Veba AG (a) G 101 4,133
--------
TOTAL COMMON STOCKS (cost of $141,050) 144,875
--------
PREFERRED STOCKS - 6.0%
----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 1.9%
PAPER & PAPER MILLS
James River 9.000% 130 3,965
--------
----------------------------------------------------------------------------------------------------------------------------
TELEPHONE - 1.7%
TELEPHONE
Telephonos de Mexico PRIDES, 11.250% Mx 126 3,625
--------
----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 2.4%
ELECTRIC - 1.4%
Ericsson Cor 4.250% 1,000 3,000
--------
TRANSPORTATION SERVICES - 1.0%
GATX Corp., 3.875% 38 2,137
--------
TOTAL PREFERRED STOCKS (cost of $12,830) 12,727
--------
</TABLE>
7
<PAGE>
Investment Portfolio/October 31, 1995
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
CURRENCY
CORPORATE FIXED-INCOME BONDS - 18.6% ABBREV. PAR VALUE
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 1.4%
NONDEPOSITORY CREDIT INSTITUTIONS
Financiera Energetica,
9.000% 11/08/99(c) Co $ 3,000 $ 3,068
--------
----------------------------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 17.2%
COMMUNICATIONS - 5.8%
Compania De Telefonos Chile,
4.500% 01/15/03 Ch 4,000 4,205
Telekom Malaysian Berhad,
7.125% 08/01/05 Ma 4,000 4,114
Telstra Corp. Ltd.,
6.500% 07/31/03(d) Au 4,000 4,011
--------
12,330
--------
ELECTRICAL SERVICES - 11.4%
Duquense II Funding Corp.,
8.700% 06/01/16 3,471 3,670
Hydro Quebec,
8.050% 07/07/24 Ca 4,000 4,426
Long Island Lighting Co.,
8.500% 05/15/06 2,000 2,033
New York State Electric & Gas Corp.,
9.875% 02/01/20 1,540 1,643
Niagara Mohawk Power Co.,
7.375% 08/01/03 3,625 3,302
Old Dominion Electric Coop.,
8.760% 12/01/22 2,000 2,233
RGS I+M Funding,
9.810% 12/07/22 1,749 2,178
Tenaga Nasional Berhad,
7.875% 06/15/04(e) Ma 4,500 4,817
--------
24,302
--------
TOTAL CORPORATE FIXED-INCOME BONDS (cost of $39,751) 39,700
--------
CORPORATE CONVERTIBLE BONDS - 4.6%
----------------------------------------------------------------------------------------------------------------
TRANSPORATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 4.6%
GAS SERVICES
Consolidated National Gas,
7.250% 12/15/15 4,500 4,641
SFP Pipeline,
10.410% 08/15/10 4,100 5,207
--------
TOTAL CORPORATE CONVERTIBLE BONDS (cost of $9,486) 9,848
--------
</TABLE>
8
<PAGE>
Investment Portfolio/October 31, 1995
-----------------------------------------------------------------------------
COMMERCIAL PAPER - 2.1%
-----------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 2.1%
FINANCIAL SERVICES
Prudential Funding, (cost of $4,528)
0.000% 11/01/95 $ 4,528 $ 4,528
--------
TOTAL INVESTMENTS - 99.1% (cost of $207,645)(f)(g) 211,678
--------
OTHER ASSETS & LIABILITIES, NET - 0.9% 1,927
----------------------------------------------------------------------------------------------------------------
NET ASSETS - 100% $213,605
--------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Petronas Gas Berhad is a restricted security which was acquired on
various dates in July of 1995 through September 1995 at a cost of
$1,361. The fair value is determined under the direction of the
Trustees. This security represents 0.6% of the Portfolio's net assets
at October 31, 1995.
(c) Financiera Energetica is a restricted security which was acquired on
June 1, 1995 at a cost of $3,081. The fair value is determined under
the direction of the Trustees. This security represents 1.4% of the
Portfolio's net assets at October 31, 1995.
(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 Trustees. This security represents 1.9% of the
Portfolio's net assets at October 31, 1995.
(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 Trustees. This security represents 2.3% of the
Portfolio's net assets at October 31, 1995.
(f) The sum of all restricted securities represents 6.2% of the Portfolio's
net assets at October 31, 1995.
(g) Cost for federal income tax purposes is $207,716.
9
<PAGE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Summary of Securities by Country/
Country/Currency Currency Value % of Total
- --------------------------------------------------------------------
<S> <C> <C> <C>
United States $129,792 61.3%
Malaysia Ma 10,284 4.9%
Spain Sp 8,779 4.1%
Germany G 8,419 4.0%
United Kingdom UK 8,246 3.9%
Argentina Ar 7,343 3.5%
Korea Ko 4,579 2.2%
Canada Ca 4,426 2.1%
Chile Ch 4,205 2.0%
Hong Kong HK 4,082 1.9%
Australia Au 4,011 1.9%
Denmark De 3,961 1.9%
Italy It 3,837 1.8%
Mexico Mx 3,625 1.7%
Columbia Co 3,068 1.4%
France Fr 3,021 1.4%
-------- -----
$211,678 100.0%
======== =====
</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
PRIDES Preferred Redeemable Increased Dividend Equity Securities
</TABLE>
See notes to financial statements.
10
<PAGE>
LFC UTILITIES TRUST
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
(In thousands)
<S> <C> <C>
ASSETS
Investments at value (cost $207,645) $211,678
Receivable for:
Interest $ 1,122
Dividends 611
Investment sold 266
Deferred organization expenses 10
Cash and other assets 71 2,080
-------- --------
Total Assets 213,758
LIABILITIES
Payable for:
Management fee 101
Other 5
Accrued:
Accounting expenses 3
Other expenses 44
--------
Total Liabilities 153
--------
NET ASSETS applicable to investors' beneficial interests $213,605
========
</TABLE>
See notes to financial statements.
11
<PAGE>
LFC UTILITIES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 7,531
Interest 7,146
-------
Total Investment Income 14,677
EXPENSES
Management fee $ 1,282
Custodian & accounting fees 90
Audit & legal fees 12
Insurance expense 10
Trustees fees 6
Amortization of deferred organization expenses 10
-------
1,410
Fees waived by adviser (26) 1,384
------- -------
Net Investment Income 13,293
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (3,801)
Net unrealized appreciation during the period 14,432
-------
Net Gain 10,631
-------
Net Increase in Net Assets From Operations $23,924
=======
</TABLE>
See notes to financial statements.
12
<PAGE>
LFC UTILITIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands) Year ended October 31
----------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
<S> <C> <C>
Operations:
Net investment income $ 13,293 $ 15,803
Net realized gain (loss) (3,801) 1,054
Net unrealized appreciation (depreciation) 14,432 (38,421)
-------- --------
Net Increase (Decrease) from Operations 23,924 (21,564)
-------- --------
Transactions in investors' beneficial interest
Contributions 7,023 46,602
Withdrawals (78,000) (69,379)
-------- --------
Net transactions in investors' beneficial interest (70,977) (22,777)
-------- --------
Total Decrease (47,053) (44,341)
-------- --------
NET ASSETS
Beginning of period 260,658 304,999
-------- --------
End of period $213,605 $260,658
======== ========
</TABLE>
See notes to financial statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Period
ended
Year ended October 31 October 31
-------------------------------------------------- -----------
1995 1994 1993 1992 1991(a)
-------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.63%(c) 0.61% 0.64% 0.72%(c) 0.58%(b)(c)
Net investment income 5.97%(d) 5.48% 5.29% 6.36%(d) 6.46%(b)(d)
Portfolio turnover 46% 34% 41% 31% 0%
</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
reimbursement from the Investment Adviser, as described in Note 3, these
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.
13
<PAGE>
LFC UTILITIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
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 the 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.
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 year ended October 31, 1995 were $99,840,009 and $145,665,390,
respectively.
14
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) at October 31, 1995, based on cost
of investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 16,664,349
Gross unrealized depreciation (12,701,166)
------------
Net unrealized appreciation $ 3,963,183
============
</TABLE>
NOTE 3. TRANSACTIONS WITH AFFILIATES INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
The Portfolio has a managed agreement with Stein Roe & Farnham, Inc. (Stein
Roe), an 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. Prior to March 24, 1995 Stein Roe delegated the performance of its
administrative duties to Liberty Investment Services, Inc. (Liberty Services),
also a wholly owned subsidiary of Liberty Financial. Stein Roe assumed those
duties on March 24, 1995.
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.
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE TRUSTEES AND INVESTORS
LFC UTILITIES TRUST:
We have audited the accompanying statement of assets and liabilities of LFC
Utilities Trust including the Investment Portfolio, as of October 31, 1995, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Trust' s
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of LFC
Utilities Trust as of October 31, 1995, the result of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 11, 1995
16
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
(In thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments in LFC Utilities Trust, at value $213,604
Receivable for Fund shares sold $ 20
Deferred organization expenses 19 39
----- --------
Total Assets 213,643
LIABILITIES
Payable for:
Fund shares repurchased 414
Distributions 113
Accrued:
Administration fee 18
Bookkeeping fee 5
Service fee 45
Transfer Agent fee 36
Other 44
-----
Total Liabilities 675
--------
NET ASSETS $212,968
========
Net asset value & redemption price per share -
Class A ($211,916/19,124) $11.08
========
Maximum offering price per share - Class A
($11.08/0.9425) $11.76 (a)
========
Net asset value & offering price per share -
Class B ($745/67) $11.08 (b)
--------
Net asset value & offering price per share -
Class D ($307/28) $11.08 (b)
========
COMPOSITION OF NET ASSETS
Capital paid in $212,503
Undistributed net investment income 241
Accumulated net realized loss (3,809)
Net unrealized appreciation 4,033
--------
$212,968
========
</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 YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividend income from LFC Utilities Trust $ 7,531
Interest income from LFC Utilities Trust 7,146
Expenses allocated from LFC Utilities Trust (1,384) $13,293
------- -------
EXPENSES
Administration fee 212
Service fee 570
Distribution fee - Class B 2
Distribution fee - Class D 1
Transfer agent 589
Bookkeeping fee 42
Trustees fee 3
Custodian fee 4
Legal fee 2
Registration fee 67
Reports to shareholders 4
Amortization of deferred organization expenses 20
Other 79
-------
1,595
Fees waived by Liberty Securities and Stein Roe (33) 1,562
------- -------
Net Investment Income 11,731
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (3,800)
Net unrealized appreciation during the period 14,432
-------
Net Gain 10,632
-------
Net Increase in Net Assets From Operations $22,363
=======
</TABLE>
See notes to financial statements.
18
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands) Year ended October 31
----------------------------------
INCREASE (DECREASE) IN NET ASSETS 1995(a) 1994
<S> <C> <C>
Operations:
Net investment income $ 11,731 $ 14,120
Net realized gain (loss) (3,800) 1,054
Net unrealized appreciation (depreciation) 14,432 (38,421)
-------- --------
Net Increase (Decrease) from Operations 22,363 (23,247)
Distributions:
From net investment income - Class A (11,802) (12,796)
From net investment income - Class B (10) --
From net investment income - Class D (6) --
From net realized gains - Class A (1,042) (3,377)
In excess of net realized gains - Class A -- (802)
-------- --------
9,503 (40,222)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 5,919 45,864
Value of distributions reinvested - Class A 11,297 15,294
Cost of shares repurchased - Class A (75,218) (64,986)
-------- --------
(58,002) (3,828)
-------- --------
Receipts for shares sold - Class B 719 --
Value of distributions reinvested - Class B 8 --
-------- --------
727 --
-------- --------
Receipts for shares sold - Class D 294 --
Value of distributions reinvested - Class D 6 --
Cost of shares repurchased - Class D (10) --
-------- --------
290 --
-------- --------
Net Decrease from Fund Share Transactions (56,985) (3,828)
-------- --------
Total Decrease (47,482) (44,050)
NET ASSETS
Beginning of period 260,450 304,500
-------- --------
End of period (including undistributed net investment
income of $241 and $328, respectively) $212,968 $260,450
======== ========
NUMBER OF FUND SHARES (a)
Sold - Class A 556 4,028
Issued for distributions reinvested - Class A 1,064 1,370
Repurchased - Class A (7,047) (5,908)
-------- --------
(5,427) (510)
-------- --------
Sold - Class B 66 --
Issued for distributions reinvested - Class B 1 --
-------- --------
67 --
-------- --------
Sold - Class D 28 --
Issued for distributions reinvested - Class D 1 --
Repurchased - Class D (1) --
-------- --------
28 --
-------- --------
</TABLE>
(a) Class B and Class D shares were initially offered on March 27, 1995.
See notes to financial statements.
19
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Global Utilities Fund (the Fund), formerly Liberty
Financial Utilities Fund, a series of Colonial Trust III, 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 interests 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 October 31, 1995). 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 following significant accounting policies are consistently followed by
the Fund in the preparation of its financial statements and conform to generally
accepted accounting principles.
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.
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
20
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
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 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 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
ADMINISTRATOR FEE: Under an administration agreement, Liberty Investment
Services, Inc. (Liberty Services) provided certain administrative services to
the Fund for a fee accrued daily and paid monthly at an annual rate of 0.10% of
the Fund's average net assets. For the period ended March 24, 1995, the fee
amounted to $98,022. Effective March 27, 1995, Colonial Management Associates,
Inc. (the Administrator) became 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: Liberty Services provided financial reporting and recordkeeping
services to the Fund pursuant to a service agreement with the Fund. Under
this agreement, for the period ended March 24, 1995, the fee amounted to $6,750.
Effective March 27, 1995, 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: Liberty Services provided certain sub-transfer agency
services to the Fund pursuant to a service agreement with the Fund. Under this
agreement, for the period ended March 24, 1995, the fee amounted to $254,023.
Effective March 27, 1995, 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.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Securities
Corporation (Liberty Securities) was the principal underwriter of the shares of
the Fund. Effective March 27, 1995, Colonial Investment Services, Inc. (the
Distributor), an affiliate of the Administrator, became the Fund's principal
underwriter. The Fund had been advised that for the period from November 1, 1994
through March 24, 1995, Liberty Securities received $14,651 in aggregate
commissions from the Fund. For the period from March 27, 1995 through October
31, 1995, the Fund has been advised that the Distributor retained net
underwriting discounts of $12,722 on sales of the Fund's Class A shares and
received no contingent deferred sales charges (CDSC) on Class B or Class D share
redemptions.
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.
Under the terms of an underwriting agreement between the Fund and Liberty
Securities, Liberty Securities received a service fee at an annual rate of 0.25%
of the Fund's average net assets, accrued daily and paid monthly. For the period
ended
21
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
March 24, 1995, the fee amounted to $245,055. Effective March 27, 1995, 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% for Class B and Class D of the average net assets
attributable to Class B and Class D shares.
EXPENSE LIMITATIONS: Liberty Securities voluntarily agreed, until February 28,
1995, not to impose their fees under their administration agreement to the
extent those fees would cause the expenses of the Fund to exceed 1.25% per annum
of the Fund's average net assets.
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 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS: At October 31, 1995, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
<TABLE>
<CAPTION>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
<S> <C>
2003 $3,730,530
==========
</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 be taxable to
shareholders as ordinary income.
NOTE 4. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
50% of the distributions paid by the Fund from investment income earned in the
year ended October 31, 1995 qualify for the corporate dividends received
deduction. Approximately $0.069 per share of the gain distribution paid January
3, 1995 was derived from long term capital gains.
22
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended October 31(c)
--------------------------------------------
1995
Class A Class B(d) Class D(d)
------------ ---------- ----------
<S> <C> <C> <C>
Net asset value -
Beginning of period $10.610 $10.420 $10.420
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(b) 0.536 0.248 0.248
Net realized and
unrealized gain (loss) 0.520 0.665 0.665
------- ------- -------
Total from Investment
Operations 1.056 0.913 0.913
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.517) (0.253) (0.253)
From net realized gains (0.069) -- --
------- ------- -------
Total Distributions
Declared to Shareholders (0.586) (0.253) (0.253)
------- ------- -------
Net asset value -
End of period $11.080 $11.080 $11.080
======= ======= =======
Total return (e)(f) 10.32% 8.82% (g) 8.82% (g)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (b) 1.29% 2.05% (h) 2.05% (h)
Net investment income (b) 5.14% 3.73% (h) 3.73% (h)
Fees and expenses waived or
borne by Liberty Securities
and LFC Utilities Trust 0.03% 0.02% (h) 0.02% (h)
Net assets at end
of period (000) $211,916 $ 745 $ 307
(a) Net of fees and expenses waived or
borne by Liberty Securities
which amounted to........................... $ 0.002 -- --
(b) 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.
(c) Calculated using the average shares method.
(d) Class B and Class D shares were initially offered on March 27, 1995. Per share
amounts 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.
</TABLE>
23
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Period ended
Year ended October 31 October 31
-------------------------------------------- ------------
1994 1993 1992 1991(b)
Class A Class A Class A Class A
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 12.150 $ 10.430 $ 9.990 $ 10.000
-------- -------- -------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.550 0.570 0.590 (g) 0.020 (g)
Net realized and
unrealized gain (loss) (1.430) 1.790 0.460 (0.030)
-------- -------- -------- ---------
Total from Investment
Operations (0.880) 2.360 1.050 (0.010)
-------- -------- -------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income (0.500) (0.610) (0.610) --
From net realized gains (0.160) (0.030) -- --
-------- -------- -------- ---------
Total Distributions
Declared to Shareholders (0.660) (0.640) (0.610) --
-------- -------- -------- ---------
Net asset value -
End of period $ 10.610 $ 12.150 $ 10.430 $ 9.990
======== ======== ======== =========
Total return (c) (7.40)% 23.30% 10.80% (d) (2.10)% (d)(e)
======== ======== ======== =========
RATIOS TO AVERAGE NET ASSETS
Expenses (a) 1.20% 1.13% 1.25% (f) 1.25% (e)(f)
Net investment income (a) 4.90% 4.80% 5.81% (g) 5.75% (e)(g)
Net assets at end
of period (000) $260,450 $304,500 $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) The Fund commenced investment operations on August 23, 1991.
(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) Computed giving effect to Investment Adviser's and Administrator's expense
limitation undertaking.
24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST III AND THE SHAREHOLDERS OF
COLONIAL GLOBAL UTILITIES FUND
In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Colonial Global Utilities Fund (the "Fund") (a series of Colonial Trust III) at
October 31, 1995, the results of its operations, the changes in its net assets
and the financial highlights for the year then ended, in conformity with
generally accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of investments owned at October 31, 1995,
provides a reasonable basis for the opinion expressed above. The Statement of
Changes in Net Assets for the year ended October 31, 1994 and the Finanacial
Highlights for each of the periods then ended were audited by another
Independent Accountant whose report, dated December 15, 1994, expressed an
unqualified opinion on those statements.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 19, 1995
25
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50;
$25 for an IRA account.
FREE EXCHANGES*: Exchange all or part of your account into the same share class
of another Colonial fund, by phone or mail, as your needs change over time.
EASY ACCESS TO YOUR MONEY*: Make withdrawals from your account by phone, by mail
or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it to Colonial within one year, you can reinvest in any
Colonial fund of the same share class without any penalty or sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Colonial account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly, or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th of each month.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
LOW COST IRAs: Choose from a broad range of retirement plans,
including IRAs.
* Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial. Proceeds may be more or less than
your original cost. The exchange privilege may be terminated at any time.
Investors who purchase Class B or Class D shares (for applicable funds), or $1
million or more of Class A shares, may be subject to a contingent deferred sales
charge.
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Federal Securities Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Federal Securities Fund 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 Federal Securities
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund.
27
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
COLONIAL
MUTUAL FUNDS
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)
JOHN A. MCNEICE, JR.
Chairman of the Board and Director, The Colonial Group, Inc. and Colonial
Management Associates, Inc. (formerly Chief Executive Officer, The Colonial
Group, Inc. and Colonial Management Associates, Inc.)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC. (C)1995
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
GU-02/476B-1095 (12/95)
