<PAGE>
[COLONIAL LOGO]
-----------------
COLONIAL GLOBAL
NATURAL RESOURCES
FUND
-----------------
ANNUAL REPORT
OCTOBER 31, 1995
<PAGE>
COLONIAL GLOBAL NATURAL RESOURCES FUND
HIGHLIGHTS
NOVEMBER 1, 1994 - OCTOBER 31, 1995
INVESTMENT OBJECTIVE: Colonial Global Natural Resources Fund seeks preservation
of capital, purchasing power and long-term growth.
THE FUND IS DESIGNED TO OFFER:
- Potential preservation of purchasing power and growth
- Diversification to help reduce risk
- Experienced professional management
PORTFOLIO MANAGER COMMENTARY: "Colonial Global Natural Resources Fund
benefited from industry diversification during the Fund's most recent fiscal
year. Although prices for gold stocks were down and energy stocks were
relatively flat, forest products and chemicals contributed strong returns."
COLONIAL GLOBAL NATURAL RESOURCES FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception date 6/8/92 6/8/92
Distributions declared per share $0.336 $0.250
Total returns, assuming
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC) --
12 months (2.88)% (3.56)%
Net asset value per share at 10/31/95 $12.43 $12.38
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS* TOP FIVE COUNTRIES*
(as of 10/31/95) (as of 10/31/95)
<S> <C>
1. Exxon Corp. 1. United States.......... 57.3%
2. Triton Energy Corp. 2. Canada................. 15.3%
3. Indresco, Inc. 3. Australia.............. 9.7%
4. Burlington Northern Santa Fe 4. United Kingdom......... 5.8%
5. Occidental Petroleum Corp. 5. Spain.................. 2.4%
</TABLE>
* There can be no guarantee the Fund will continue to invest in these companies
or countries in the future. The percentage breakdown by country is based on
total investments.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO]
John A. McNeice, Jr.
President
During the 12 months ended October 31, 1995, global resource markets generally
provided attractive returns for investors. This reflected moderate economic
growth and low inflation in the world's major economies, including the United
States and many European countries.
In terms of performance, large capitalization "blue chip" stocks in the United
States set the pace for the rest of the equity market. Small capitalization
and foreign stocks also did well. While the returns from some resource stocks
were positive, as a group this class was not among the market leaders. In
fact, prices for gold and other precious metal stocks declined. This reflects
their traditional role as inflation hedges. With inflation under control in
most countries, there was not much interest in these stocks.
Susan Cordes, Portfolio Manager of Colonial Global Natural Resources Fund, and
Nick Ghajar, the Fund's research analyst, believe that economic growth and
inflation will remain moderate in the months ahead. While this will not have a
negative impact on the returns provided by resource stocks, we anticipate that
performance will remain relatively stable until investors once again become
concerned about inflation. However, it is important to remember that over the
long term, your Fund's portfolio of global resource stocks should provide
attractive returns. In the following report, Susan comments on the Fund's
management strategy and on key issues affecting natural resource stocks
worldwide.
Respectfully,
/s/ JOHN A. MCNEICE, JR
John A. McNeice, Jr.
President
December 11, 1995
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
SUSAN CORDES is Portfolio Manager of Colonial Global Natural Resources Fund.
She is a Vice President of Colonial Management Associates, Inc., and is
Co-manager of Colonial Global Equity Fund. NICOLAS GHAJAR is a research
analyst for Colonial Global Natural Resources Fund.
INVESTMENT STRATEGY -- SECTOR INTENSIVE, ISSUE DIVERSIFIED: The Fund's
investments are diversified over a variety of natural resources companies. The
Fund also diversifies investments geographically -- there are currently stocks
from 14 countries represented in the portfolio. While diversification is our
focus, we do have the flexibility to adjust the portfolio as conditions in
individual industries change. During the period, we increased our holdings in
forest products, to take advantage of favorable conditions, and reduced
investments in base metals.
U.S., EUROPEAN ECONOMIES FAVORABLE: The U.S. economy was stronger during the
third quarter of 1995 than it was in either of the prior two quarters --
industrial production increased at an annual rate of 5.7%. However, we believe
interest rates will continue to decline and inflation will remain under
control. Although the economic recovery in the U.S. has led the turnaround in
Europe, rates in many European countries have begun moving lower, although more
slowly than we would like. Nevertheless, there has been a marked improvement
in Europe's equity markets.
RESOURCE STOCKS TRAIL BROAD MARKET: Economic conditions favored most sectors
of the stock market, including finance and technology. However, unlike most
equity investments, resource stocks, which are considered to be good inflation
hedges, have historically provided their strongest returns during periods of
high inflation. Since inflation was not a major concern for investors during
the period, these stocks were not participants in the rally.
GOLD prices ranged from approximately $375 to $400 per ounce during the fiscal
year. This reflected two offsetting trends in the gold market -- a surge in
demand as prices neared periodic lows, followed by selloffs by central banks as
prices peaked. ENERGY prices were relatively flat, despite strong demand for
oil, OPEC's declining output, and continued economic sanctions against Iraq.
By the end of the period, crude oil prices had dipped below $18 per barrel.
Further, a warmer than average winter kept NATURAL GAS prices low. BASE METALS
experienced periodic price increases, but overall, prices declined.
Strong returns from some FOREST PRODUCTS and CHEMICAL investments partially
offset the impact of lackluster performance in other areas. Paper prices
recovered from a 20 year low, driven by the demand for linerboard from third
world markets, and a surge in housing starts, which was reflected in higher
lumber prices. Chemical companies benefited from an increase in
4
<PAGE>
demand and reduced operating expenses.
LOOKING AHEAD: As the emerging economies of the Pacific Rim and Asia continue
to expand, those countries may have a greater need for natural resources.
Increased demand should help to mitigate the dampening effect of low
inflation.
COLONIAL GLOBAL NATURAL RESOURCES FUND'S INVESTMENT PERFORMANCE
VS. THE STANDARD & POOR'S 500 INDEX
Change in Value of $10,000 from 6/92 - 10/95
Based on NAV and MOP for Class A Shares
<TABLE>
<CAPTION>
- -------------------------------------------------------
CGNRF class A MOP NAV S&P
- -------------------------------------------------------
<S> <C> <C> <C>
6/92 9425 10000 10000
7/92 9678 10268 10408
8/92 9462 10040 10196
9/92 9434 10010 10316
10/92 9125 9682 10351
11/92 8751 9285 10703
12/92 8889 9432 10835
1/93 8880 9422 10926
2/93 9286 9852 11074
3/93 9909 10513 11308
4/93 10409 11044 11034
5/93 11013 11685 11329
6/93 10957 11626 11362
7/93 11431 12128 11316
8/93 11516 12219 11745
9/93 11043 11716 11655
10/93 11516 12219 11896
11/93 11213 11897 11783
12/93 11891 12616 11925
1/94 12543 13308 12331
2/94 12130 12871 11996
3/94 11852 12575 11473
4/94 11920 12647 11620
5/94 12198 12942 11811
6/94 11971 12701 11521
7/94 12308 13059 11900
8/94 12655 13427 12386
9/94 12645 13417 12084
10/94 12684 13458 12355
11/94 11682 12394 11905
12/94 11781 12499 12081
1/95 11168 11850 12394
2/95 11534 12238 12876
3/95 11998 12730 13256
4/95 12393 13149 13646
5/95 12581 13348 14190
6/95 12676 13449 14520
7/95 13181 13985 15002
8/95 13052 13848 15039
9/95 12923 13712 15674
10/95 12319 13070 15617
</TABLE>
Based on NAV and Maximum CDSC for Class B Shares
<TABLE>
<CAPTION>
- ----------------------------------------------------
CGNRF class B CDSC NAV S&P
- ----------------------------------------------------
<S> <C> <C> <C>
6/92 10000 10000 10000
7/92 10268 10268 10408
8/92 10030 10030 10196
9/92 10000 10000 10316
10/92 9662 9662 10351
11/92 9254 9254 10703
12/92 9398 9398 10835
1/93 9378 9378 10926
2/93 9807 9807 11074
3/93 10465 10465 11308
4/93 10974 10974 11034
5/93 11602 11602 11329
6/93 11548 11548 11362
7/93 12037 12037 11316
8/93 12117 12117 11745
9/93 11618 11618 11655
10/93 12107 12107 11896
11/93 11777 11777 11783
12/93 12479 12479 11925
1/94 13164 13164 12331
2/94 12721 12721 11996
3/94 12418 12418 11473
4/94 12479 12479 11620
5/94 12771 12771 11811
6/94 12513 12513 11521
7/94 12856 12856 11900
8/94 13220 13220 12386
9/94 13210 13210 12084
10/94 13230 13230 12355
11/94 12180 12180 11905
12/94 12274 12274 12081
1/95 11625 11625 12394
2/95 12006 12006 12876
3/95 12480 12480 13256
4/95 12882 12882 13646
5/95 13067 13067 14190
6/95 13160 13160 14520
7/95 13675 13675 15002
8/95 13531 13531 15039
9/95 13397 13397 15674
10/95 12458 12758 15617
</TABLE>
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of the U.S. stock market.
AVERAGE ANNUAL TOTAL RETURN
As of 9/30/95 (Most Recent Quarter End)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 6/8/92 6/8/92
NAV MOP NAV W/CDSC
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year 2.20% (3.68)% 1.42% (3.55)%
- -------------------------------------------------------------------------------
Since inception 10.22% 8.27% 9.42% 8.68%
- -------------------------------------------------------------------------------
</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 charges of: one
year, 5.00%; since inception, 3.00%. Performance for different share classes
will vary based on differences in sales charges and fees associated with each
class.
5
<PAGE>
INVESTMENT PORTFOLIO
OCTOBER 31, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 94.4% COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 0.7%
REAL ESTATE - 0.7%
DBS Land Ltd. Si 121 $ 358
------
- -----------------------------------------------------------------------------
MANUFACTURING - 51.8%
CHEMICALS - 7.5%
Dow Chemical Co. 11 748
E.I. DuPont De Nemours & Co., Inc. 10 642
Norsk Hydro AS No 15 613
OM Group, Inc. 20 566
PPG Industries, Inc. 7 306
Smith International, Inc. 25 394
Sterling Chemicals, Inc. (a) 25 200
Wellman, Inc. 19 446
------
3,915
------
LUMBER & WOOD PRODUCTS - 4.3%
Georgia Pacific Corp. 7 561
Pacific Forest Products Ltd. (a) Ca 32 340
Quno Corp. (a) Ca 14 285
West Fraser Timber Co. Ltd. Ca 17 379
Weyerhaeuser Co. 15 671
------
2,236
------
MACHINERY & COMPUTER EQUIPMENT - 2.4%
KM Europa Metal AG (a) G 3 248
NN Ball and Roller, Inc. 27 558
Varco International, Inc. (a) 50 458
------
1,264
------
PAPER & PAPER MILLS - 7.8%
ACX Technologies, Inc. (a) 16 245
Abitibi Price, Inc. Ca 9 152
Asia Pacific Resources International
Holdings Ltd. (a) Id 31 227
Bowater, Inc. 9 407
Carter Holt Harvey NZ 191 456
Champion International Corp. 9 498
Emin Leydier Fr 2 184
Enso-Gutzeit Oy Fr 62 482
International Paper Co. 8 311
Longview Fibre Co. 32 458
Mead Corp. 4 248
Republic Gypsum Co. 23 264
Willamette Industries, Inc. 3 156
------
4,088
------
</TABLE>
6
<PAGE>
Investment Portfolio/October 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
PETROLEUM REFINING - 14.5%
Amoco Corp. 8 $ 511
Atlantic Richfield Co. 4 443
British Petroleum Co. PLC ADR UK 8 669
Burmah Castrol PLC UK 22 348
Diamond Shamrock, Inc. 18 463
Exxon Corp. 15 1,146
Imperial Oil Ltd. Ca 14 507
Lyondell Petrochemical Co. 5 115
Mobil Corp. 7 695
OMV Handels AG Au 6 481
Phillips Petroleum Co. 17 555
Repsol SA ADS Sp 19 554
Royal Dutch Petroleum Co. Ne 5 553
Shell Transport & Trading Co. PLC UK 44 511
------
7,551
------
PRIMARY METAL - 9.6%
AK Steel Holdings Corp. 13 412
Acerinox SA Sp 6 621
Alcan Aluminum Ltd. Ca 22 696
Aluminum Company of America 14 693
Asarco, Inc. 14 455
Brush Wellman, Inc. 18 300
Cominco Ltd. (a) Ca 25 485
J&L Specialty Steel, Inc. 23 375
Magma Copper Co., Class B 30 504
Quanex Corp. 12 233
Reynolds Metals Co. 5 247
------
5,021
------
PRIMARY SMELTING - 1.4%
Capral Aluminum Ltd. (a) Au 71 161
RTZ Corp., ADR UK 10 576
------
737
------
RUBBER & PLASTIC - 1.3%
AEP Industries, Inc. 14 313
Goodyear Tire & Rubber Co. 9 349
------
662
------
STONE, CLAY, GLASS & CONCRETE - 3.0%
Global Industrial Technologies, Inc. (a) 51 867
Holderbank Financiere Glarus-BR Sz 1 401
Medusa Corp. 13 320
------
1,588
------
- -----------------------------------------------------------------------------
MINING & ENERGY - 36.1%
CRUDE PETROLEUM & NATURAL GAS - 6.6%
Anadarko Petroleum Corp. 13 560
Apache Corp. 11 283
Occidental Petroleum Corp. 35 755
Ranger Oil Ltd. Ca 52 299
</TABLE>
7
<PAGE>
Investment Portfolio/October 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
COMMON STOCKS - cont. COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
MINING & ENERGY - CONT.
CRUDE PETROLEUM & NATURAL GAS - CONT.
Saga Petroleum A.S. No 44 $ 546
Triton Energy Corp. (a) 22 1,030
------
3,473
------
GOLD & SILVER MINING - 6.8%
Agnico-Eagle Mines, Ltd. Ca 25 276
American Barrick Resources Corp. Ca 23 529
Ashanti Goldfields Company Ltd. GDS (c) Gh 10 174
Gold Mines of Kalgoorlie Ltd. Au 652 520
Newmont Mining Corp. 16 598
Placer Dome, Inc. Ca 26 575
Sons of Gwalia Ltd. Au 126 625
TVX Gold, Inc. Ca 39 255
------
3,552
------
METAL MINING - 9.2%
Acacia Resources Ltd. (a) Au 130 212
Battle Mountain Gold Co. 52 396
Cyprus Amax Minerals Co. 24 630
Freeport-McMoRan Copper & Gold, Inc. 27 606
Goldfields Ltd. (a) Au 123 304
Kinross Gold Corp. (a) Ca 66 488
Mount Edon Gold Mines Au 156 372
Newcrest Mining Ltd. Au 114 469
Noranda, Inc. Ca 30 592
Santa Fe Pacific Gold Corp. 52 512
Western Mining Corporation Holdings
Ltd. Au 34 215
------
4,796
------
MISCELLANEOUS METAL ORES - 0.7%
Pasminco Ltd. Au 309 340
------
NONMETALLIC, EXCEPT FUELS - 1.8%
De Beers Construction Mines (a) 16 437
Vulcan Materials Co. 9 512
------
949
------
OIL & GAS EXTRACTION - 10.4%
Alberta Energy Co. Ltd. Ca 31 480
Canadian Natural Resources Ltd. (a) Ca 23 273
Elan Energy, Inc. (a) Ca 20 177
Energy Service Co., Inc. (a) 16 270
Global Marine, Inc. (a) 73 473
Lasmo PLC ADR UK 53 378
Oryx Energy Co. 46 532
Petro Canada Ca 48 512
Pioneer International Ltd. Au 192 469
</TABLE>
8
<PAGE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Santos Ltd. Au 234 $ 630
Sonat Offshore Drilling Co., Inc. 18 562
Talisman Energy, Inc. (a) Ca 15 263
Union Texas Petroleum Holdings, Inc. 23 421
-------
5,440
-------
OIL & GAS FIELD SERVICES - 0.6%
Schlumberger Ltd. 5 293
-------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 5.8%
ELECTRIC, GAS & SANITARY SERVICES - 0.7%
Welsh Water UK 27 325
Welsh Water PLC UK 30 49
-------
374
-------
ELECTRIC SERVICES - 0.8%
EVN Energie-Versorgung
Niederoesterreich AG Aus 4 431
-------
GAS SERVICES - 2.7%
Aquila Gas Pipeline Corp. 30 330
Eastern Enterprises 2 48
MCN Corp. 4 85
New Jersey Resources Corp. 10 260
Panhandle Eastern Corp. 27 676
-------
1,399
-------
RAILROAD - 1.6%
Burlington Northern, Inc. 10 828
-------
TOTAL COMMON STOCKS (cost of $45,155) 49,295
-------
WARRANTS (a)
- --------------------------------------------------------------------------------
MANUFACTURING - 0.0%
STONE, CLAY, GLASS & CONCRETE - 0.0%
Holderbank Financiere Glarus (cost of $3) Sz 3 3
-------
TOTAL INVESTMENTS - (cost of $45,158) (b) 49,298
-------
<CAPTION>
SHORT TERM OBLIGATIONS - 3.5% PAR
- --------------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with Bankers Trust
Securities Corp., dated 10/31/95, due 11/01/95
at 5.875%, collateralized by U.S. Treasury notes
with various maturities to 1997, market value $1,886
(repurchase proceeds $1,847) $1,847 1,847
-------
OTHER ASSETS & LIABILITIES, NET - 2.1% 1,083
- --------------------------------------------------------------------------------
NET ASSETS - 100% $52,228
-------
</TABLE>
9
<PAGE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Cost for federal income taxes is the same.
(c) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At year end, the
value of this security amounted to $174 or 0.33% of net assets.
<TABLE>
<CAPTION>
Summary of Securities by Country Country Value % of Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $28,230 57.3
Canada Ca 7,563 15.3
Australia Au 4,798 9.7
United Kingdom UK 2,856 5.8
Spain Sp 1,175 2.4
Norway No 1,159 2.4
France Fr 666 1.4
Netherlands Ne 553 1.1
New Zealand NZ 456 0.9
Austria Aus 431 0.9
Switzerland Sz 404 0.8
Singapore Si 358 0.7
Germany G 248 0.5
Indonesia Id 227 0.4
Ghana Gh 174 0.4
------- -----
$49,298 100.0
------- -----
</TABLE>
<TABLE>
<CAPTION>
ACRONYM NAME
------- ---------------------------
<S> <C>
ADR American Depository Receipt
ADS American Depository Shares
GDS Global Depository Shares
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
See notes to financial statements.
10
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $45,158) $49,298
Short-term obligations 1,847
-------
51,145
Cash held in foreign banks (cost $1,519) $1,527
Receivable for:
Investments sold 228
Dividends 76
Fund shares sold 74
Foreign tax reclaims 6
Deferred organization expenses 23
Other 7 1,941
------ -------
Total Assets 53,086
LIABILITIES
Payable for:
Investments purchased 490
Fund shares repurchased 349
Accrued:
Deferred Trustees fees 1
Other 18
------
Total Liabilities 858
-------
NET ASSETS $52,228
-------
Net asset value & redemption price per share -
Class A ($31,297/2,518) $12.43
-------
Maximum offering price per share - Class A
($12.43/0.9425) $13.19 (a)
-------
Net asset value & offering price per share -
Class B ($20,931/1,691) $12.38 (b)
-------
COMPOSITION OF NET ASSETS
Capital paid in $44,982
Undistributed net investment income 73
Accumulated net realized gain 3,027
Net unrealized appreciation on:
Investments 4,140
Foreign currency transactions 6
-------
$52,228
-------
</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.
11
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 1,181
Interest 213
-------
Total investment income (net of nonrebatable
foreign taxes withheld at source which
amounted to $40) 1,394
EXPENSES
Management fee $ 421
Service fee 140
Distribution fee - Class B 169
Transfer agent 188
Bookkeeping fee 29
Trustees fee 11
Custodian fee 33
Audit fee 38
Legal fee 6
Registration fee 28
Reports to shareholders 7
Amortization of deferred
organization expenses 14
Other 17 1,101
------- -------
Net Investment Income 293
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITION
Net realized gain (loss) on:
Investments 2,583
Foreign currency transactions (5)
-------
Net Realized Gain 2,578
Net unrealized appreciation (depreciation) during
the period on:
Investments (4,710)
Forward currency transactions 6
-------
Net Unrealized Depreciation (4,704)
-------
Net Loss (2,126)
-------
Net Decrease in Net Assets from Operations $(1,833)
-------
</TABLE>
See notes to financial statements.
12
<PAGE>
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 $ 293 $ 321
Net realized gain 2,578 1,152
Net unrealized appreciation (depreciation) (4,704) 2,748
-------- --------
Net Increase (Decrease) from Operations (1,833) 4,221
Distributions:
From net investment income - Class A (289) (308)
From net realized gains - Class A (642) (256)
From net investment income - Class B (38) (34)
From net realized gains - Class B (424) (63)
-------- --------
(3,226) 3,560
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 5,815 16,099
Value of distributions reinvested - Class A 807 491
Cost of shares repurchased - Class A (10,146) (13,429)
-------- --------
(3,524) 3,161
-------- --------
Receipts for shares sold - Class B 7,844 18,207
Value of distributions reinvested - Class B 413 91
Cost of shares repurchased - Class B (8,567) (4,008)
-------- --------
(310) 14,290
-------- --------
Net Increase (Decrease) from Fund Share
Transactions (3,834) 17,451
-------- --------
Total Increase (Decrease) (7,060) 21,011
NET ASSETS
Beginning of period 59,288 38,277
-------- --------
End of period (including undistributed net investment
income of $73 and $56, respectively) $ 52,228 $ 59,288
-------- --------
NUMBER OF FUND SHARES
Sold - Class A 463 1,268
Issued for distributions reinvested - Class A 73 40
Repurchased - Class A (816) (1,066)
-------- --------
(280) 242
-------- --------
Sold - Class B 635 1,431
Issued for distributions reinvested - Class B 35 7
Repurchased - Class B (692) (317)
-------- --------
(22) 1,121
-------- --------
</TABLE>
See notes to financial statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Global Natural Resources Fund (formerly Colonial Natural
Resources Fund), (the Fund), a series of Colonial Trust III, is a non-
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 may issue an unlimited number of shares. The Fund
offers Class A shares sold with a front-end sales charge and Class B shares
which 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. 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: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there were
no sales during the day, at current quoted bid prices.
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Portfolio positions which cannot be valued as set forth above are valued at fair
value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B distribution fee), realized and unrealized
gains (losses), are allocated to each class proportionately on a daily basis for
purposes of determining the net asset value of each class.
The per share data was calculated using the average shares outstanding during
the period. In addition, Class B net investment income per share data reflects
the distribution fee applicable to Class B shares only.
Class B 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 shares only.
14
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; premium and
market discount are not amortized or accreted.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $71,295 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 character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the Fund's capital accounts to
reflect income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: The Fund has adopted Statement of Position 93-4,
Foreign Currency Accounting and Financial Statement Presentation for Investment
Companies. Accordingly, net realized and unrealized gains (losses) on foreign
currency transactions includes the fluctuation in exchange rates on gains
(losses) between trade and settlement dates on securities transactions, gains
(losses) arising from the disposition of foreign currency and currency gains
(losses) between the accrual and payment dates on dividends and interest income
and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included
with the net realized and unrealized gains (losses) on investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward currency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily,
resulting in unrealized gains or losses which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the
15
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
time the contract was opened, exposure is typically limited to the change in
value of the contract (in U.S. dollars) over the period it remains open. Risks
may also arise if counterparties fail to perform their obligations under the
contracts.
OTHER: Corporate actions are recorded on ex-date (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonrebatable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is
marked-to-market daily to ensure that the market value of the underlying assets
remains sufficient to protect the Fund. The Fund may experience costs and
delays in liquidating the collateral if the issuer defaults or enters
bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the in-
vestment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.75% annually of the Fund's
average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer Agent),
an affiliate of the Adviser, provides shareholder services and receives a
monthly fee equal to 0.25% annually of the Fund's average net assets and
receives a reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the year ended October 31, 1995, the Fund has been
advised that the Distributor retained net underwriting discounts of $79,048 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $125,348 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually of the Fund's net assets as of the 20th of
each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% of the average net assets attributable to Class B
shares.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
the Fund's assets.
16
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended October 31, 1995, purchases and
sales of investments, other than short-term obligations, were $34,072,177 and
$37,490,683, respectively.
Unrealized appreciation (depreciation) at October 31, 1995, based on cost of
invest- ments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 6,481,481
Gross unrealized depreciation (2,341,765)
-----------
Net unrealized appreciation $ 4,139,716
===========
</TABLE>
OTHER: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of currency exchange or
the imposition of other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
17
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended October 31
-----------------------------------------
1995 1994
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $13.160 $13.110 $12.160 $12.130
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.102 0.009 0.114 0.019
Net realized and
unrealized gain (loss) (0.496) (0.489) 1.104 1.097
------- ------- ------- -------
Total from Investment
Operations (0.394) (0.480) 1.218 1.116
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.106) (0.020) (0.118) (0.036)
From net
realized gains (0.230) (0.230) (0.100) (0.100)
------- ------- ------- -------
Total Distributions
Declared to Shareholders (0.336) (0.250) (0.218) (0.136)
------- ------- ------- -------
Net asset value -
End of period $12.430 $12.380 $13.160 $13.110
======= ======= ======= =======
Total return (c) (2.88)% (3.56)% 10.14% 9.28%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.66%(d) 2.41%(d) 1.70% 2.45%
Net investment income 0.82%(d) 0.07%(d) 0.90% 0.15%
Portfolio turnover 65% 65% 15% 15%
Net assets at end
of period (000) $31,297 $20,931 $36,830 $22,458
</TABLE>
(a) Per share data was calculated using average shares outstanding during the
period.
(b) The Fund commenced investment operations on June 8, 1992.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) The benefits derived from custody credits and direct brokerage arrangements,
if any, had no impact on the Fund's gross expense ratio.
(e) Not annualized.
(f) Annualized.
18
<PAGE>
FINANCIAL HIGHLIGHTS (a) - CONTINUED
<TABLE>
<CAPTION>
Year ended Period ended
October 31 October 31
- ------------------ -------------------
1993 1992 (b)
Class A Class B Class A Class B
- ------- -------- ------- -------
<S> <C> <C> <C>
$ 9.750 $ 9.720 $10.000 $10.000
- ------- -------- ------- -------
0.099 0.018 0.042 0.012
2.429 2.431 (0.292) (0.292)
- ------- ------- ------- -------
2.528 2.449 (0.250) (0.280)
- ------- ------- ------- -------
(0.118) (0.039) -- --
-- -- -- --
- ------- ------- ------- -------
(0.118) (0.039) -- --
- ------- ------- ------- -------
$12.160 $12.130 $ 9.750 $ 9.720
======= ======= ======= =======
26.20% 25.30% (2.50)%(e) (2.80)%(e)
======= ======= ======= =======
1.88% 2.63% 2.45%(f) 3.20%(f)
0.92% 0.17% 1.07%(f) 0.32%(f)
14% 14% 89%(f) 89%(f)
$31,098 $ 7,179 $27,790 $ 4,444
</TABLE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
100% 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.
19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST III AND THE SHAREHOLDERS OF
COLONIAL GLOBAL NATURAL RESOURCES FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, 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 Natural Resources
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
periods indicated 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 audits. We conducted our audits 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 audits, which included confirmation of portfolio positions
at October 31, 1995 by correspondence with the custodian and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 11, 1995
20
<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.
21
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
<TABLE>
<S> <C>
For fund prices, dividends, and capital gains information.............press 1
For account information...............................................press 2
To speak to a Colonial representative.................................press 3
For yield and total return information................................press 4
For duplicate statements or new supply of checks......................press 5
To order duplicate tax forms and year-end statements..................press 6
(February through May)
To review your options at any time during your call...................press *
</TABLE>
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 am to 8:00 pm ET, and Saturdays from February through
mid-April, 10:00 am to 2:00 pm ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
am to 8:00 pm ET. Transactions received after the close of the New York Stock
Exchange will receive the next business day's closing price.
COLONIAL LITERATURE DEPARTMENT - 1-800-248-2828
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
22
<PAGE>
[COLONIAL 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
NR-02/418B-1095 (12/95)
