<PAGE>
[LOGO]
--------------------
COLONIAL GLOBAL
EQUITY FUND
--------------------
ANNUAL REPORT
October 31, 1995
[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL GLOBAL EQUITY FUND HIGHLIGHTS
November 1, 1994 - October 31, 1995
INVESTMENT OBJECTIVE: Colonial Global Equity Fund seeks long- term growth by
investing primarily in global equities.
THE FUND IS DESIGNED TO OFFER:
- Opportunity for long-term growth
- Diversification to help reduce risk
- Experienced professional management
PORTFOLIO MANAGEMENT COMMENTARY: "For equity investors, the United States and
Europe were the places to be during 1995 -- and we were well positioned to take
advantage of favorable developments in both regions, as reflected in the Fund's
total return for the 12- month period."
<TABLE>
COLONIAL GLOBAL EQUITY FUND PERFORMANCE
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception date 6/8/92 6/8/92
Distributions declared per share $1.142 $1.051
Total return, assuming
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC) --
12 months 8.23% 7.43%
Net asset value per share at 10/31/95 $12.45 $12.39
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS* TOP FIVE COUNTRIES*
(as of 10/31/95) (as of 10/31/95)
<S> <C> <C>
1. IBP, Inc. 1. United States.......... 34.8%
2. McDonnell Douglas Corp. 2. Japan.................. 15.8%
3. Aoyama Trading 3. United Kingdom......... 7.2%
4. Cigna Corp. 4. Germany................ 6.4%
5. Acerinox 5. Netherlands............ 4.8%
<FN>
* There can be no guarantee the Fund will continue to hold these securities or
invest in these countries in the future. The top five countries are based on
total investments.
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
To Fund Shareholders
[PICTURE OF JOHN A. MCNEICE, JR.]
During the 12 months ended October 31, 1995, many of the world's equity markets
provided attractive returns for investors. This performance reflected moderate
economic growth and low inflation in the major global economies, including the
United States and many European countries.
Of the world's equity markets, the strongest returns were posted in the United
States during the Fund's most recent fiscal year. Attractive opportunities
were also found in other markets, including those of Western Europe. Stocks in
Sweden, The Netherlands, and the United Kingdom did especially well. In the Far
East, investments in Japan and Hong Kong were strong performers. Of course,
even in the most favorable economic environment, not all countries will fare as
well as others. Among the developed countries, Italy and France had their share
of economic problems. Also, many emerging countries, including Malaysia, Mexico,
and Brazil, had to contend with volatile economic conditions. However, we
believe these countries will provide attractive investment opportunities in the
future.
Susan Cordes, Daniel Rie, and Peter Wiley, Co-portfolio Managers of Colonial
Global Equity Fund, believe that economic growth and inflation in the world's
economies will remain moderate in the months ahead. This should have a
favorable impact on the performance of many global equity markets. In the
following report, Susan, Dan, and Peter comment on the Fund's management
strategy and on key issues affecting equity markets worldwide.
Respectfully,
/S/ John A. McNeice, Jr.
John A. McNeice, Jr.
President
December 11, 1995
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT REPORT
DANIEL Rie is Co-manager and Senior Vice President of Colonial Management
Associates, Inc., and directs Equity Investments. SUSAN CORDES is Co-manager
and Vice President of Colonial Management Associates, Inc. PETER WILEY is
Co-manager and Assistant Vice President of Colonial Management Associates, Inc.
U.S. ECONOMY FAVORABLE: The U.S. economy was far more vigorous 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 the
economy is still headed for the "soft landing" that has been the Federal
Reserve Board's goal for the last two years. Although there have been some
downturns, the market has remained strong, as demonstrated by the performance
of the Dow Jones Industrial Average, which continued to reach new all-time
highs throughout the fiscal year. U.S. equities have flourished in this
environment, and we increased U.S. investments.
EUROPEAN ECONOMIES GAIN STRENGTH: Economic growth rates in Europe were
moderate, producing some attractive opportunities for the Fund. The Bundesbank
(Germany's central bank), which generally sets the interest rate trend for
Europe, appears reluctant to cut rates aggressively. However, rates in most
European countries have declined. Although the environment in many European
markets improved as interest rates moved lower, that was not the case across
the board. Our positions in Italy, France, and Austria produced negative
returns, reflecting unfavorable conditions in those countries. However, the
returns from the balance of the 14 European countries represented in the
portfolio were positive, with Sweden leading the way with a return of 66.8%.
EMERGING MARKETS WEAK, BUT FUTURE PROSPECTS POSITIVE: Many emerging markets
weakened over the past 12 months. There was a significant decline in the value
of the Mexican peso, sparking a downward spiral in Mexico's economy. Markets
of the Far East also had to contend with currency- related problems, as many
local currencies in that region are keyed on the U.S. dollar. Recent declines
in the value of the dollar translated into disappointing results from stocks in
many of these markets. However, not every economy in the region produced
negative returns -- our investments in Hong Kong returned 18.9%.
LOOKING AHEAD: During the period, the Fund outperformed the Morgan Stanley
Capital International World GDP Index, a broad based, unmanaged index. The
Fund was able to outperform the Index because its portfolio is more diverse
than the Index. The Fund is an actively managed portfolio of stocks from
global markets, including emerging markets, and short-term
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
securities. The Index does not include emerging markets or short-term
investments.
In the coming months, we will continue to look for promising investments in
global stock markets. We will monitor developments in emerging markets, as
well as in more developed economies, and adjust the portfolio as new
opportunities present themselves.
<TABLE>
COLONIAL GLOBAL EQUITY FUND'S INVESTMENT PERFORMANCE VS.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD (GDP) INDEX
Change in Value of $10,000 from 6/92 - 10/95
CLASS A SHARES
<CAPTION>
CGEF MOP NAV Index
<S> <C> <C> <C>
06/92 10,000 10,000 10,000
06/92 9,425 10,000 10,000
09/92 9,187 9,747 9,845
12/92 9,133 9,690 9,725
03/93 9,934 10,540 10,555
06/93 10,116 10,734 11,147
09/93 11,080 11,756 11,751
12/93 12,348 13,101 11,913
03/94 11,974 12,705 12,137
06/94 11,845 12,567 12,274
09/94 12,370 13,124 12,514
12/94 12,148 12,889 12,384
03/95 12,452 13,211 12,898
06/95 13,285 14,095 13,511
09/95 13,918 14,768 14,096
10/95 13,602 14,431 13,807
</TABLE>
<TABLE>
CLASS B SHARES
<CAPTION>
CGEF CDSC NAV Index
<S> <C> <C> <C>
06/92 10,000 10,000 10,000
06/92 10,000 10,000 10,000
09/92 9,727 9,727 9,845
12/92 9,646 9,646 9,725
03/93 10,472 10,472 10,555
06/93 10,646 10,646 11,147
09/93 11,641 11,641 11,988
12/93 12,956 12,956 11,913
03/94 12,523 12,523 12,137
06/94 12,363 12,363 12,274
09/94 12,892 12,892 12,514
12/94 12,632 12,632 12,384
03/95 12,937 12,937 12,898
06/95 13,766 13,766 13,511
09/95 14,401 14,401 14,096
10/95 13,761 14,061 13,807
</TABLE>
<TABLE>
AVERAGE ANNUAL TOTAL RETURN
As of 9/30/95 (Most Recent Quarter End)
- -----------------------------------------------------------------------
<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 12.52% 6.05% 11.71% 6.71%
- -----------------------------------------------------------------------
SINCE INCEPTION 12.14% 10.15% 11.26% 10.55%
- -----------------------------------------------------------------------
</TABLE>
The Morgan Stanley Capital International World (GDP) Index is an unmanaged index
that tracks the performance of global stocks.
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>
<TABLE>
INVESTMENT PORTFOLIO
OCTOBER 31, 1995 (IN THOUSANDS)
<CAPTION>
COMMON STOCKS - 90.4% COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 0.7%
AGRICULTURE - CROPS - 0.1%
Perlis Plantations Berhad Ma 35 $ 104
------
FISHING, HUNTING & TRAPPING - 0.6%
Pescanova SA Sp 11 169
Sanford Ltd. NZ 110 247
------
416
------
- --------------------------------------------------------------------------------
CONSTRUCTION - 3.6%
BUILDING CONSTRUCTION - 2.4%
Daikyo, Inc. Ja 133 890
Hollandsche Beton Groep NV Ne 1 211
Koninklijke Volker Stevin NV Ne 9 579
------
1,680
------
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION - 0.9%
Dyckerhoff und Widmann AG G 1 148
Granite Construction, Inc. 6 170
Koninklijke Boskalis Westminster NV Ne 4 43
Strabag Oesterreich AG Aus 2 161
Yondenko Corp. Ja 16 138
------
660
------
SPECIAL TRADE CONTRACTORS - 0.3%
Kyudenko Company Ja 16 214
------
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 20.2%
DEPOSITORY INSTITUTIONS - 5.0%
Bank of Montreal Ca 7 164
Bank of Nova Scotia Ca 5 107
Credito Fondiario e Industrustiale It 19 29
Deposit Guaranty Corp. 6 267
HSBC Holdings PLC HK (a) 1
Jyske Bank De 12 768
Krung Thai Bank Pub Co Ltd. Th 50 197
N.S. Bancorp, Inc. 4 145
National Westminster Bank PLC UK 28 274
SFFed Corp. 5 156
Thai Military Bank Ltd. Th 90 354
United Overseas Bank Si (a) 2
Westpac Banking Corp. Au 264 1,083
------
3,547
------
HOLDING & OTHER INVESTMENT COMPANIES - 6.2%
Clemente Global Growth Fund, Inc. (b) 40 330
Emerging Germany Fund, Inc. G 24 177
Emerging Tiger Fund, Inc. (b) 18 218
First Australia Fund, Inc. Au 58 476
</TABLE>
6
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
First Philippine Fund, Inc. Ph 41 $ 627
France Growth Fund, Inc. Fr 14 139
Irish Investment Fund, Inc. Ir 46 522
Korean Investment Fund, Inc. (c) Ko (a) 4
Pakistan Investment Fund, Inc. (c) Pa 53 318
Templeton Dragon Fund, Inc. (b) 63 755
Thai Fund Th 8 193
Thai Investment & Securities Co. Ltd. Th 5 137
The Asia Tiger Fund, Inc. (b) 21 213
The India Fund, Inc. (c) Id 35 293
------
4,402
------
INSURANCE CARRIERS - 5.5%
Cigna Corp. 21 2,072
Fremont General Corp. 13 370
International Nederlanden Groep Ne 13 775
Maxicare Health Plan, Inc. (c) 13 217
Mercury General Corp. 4 177
Schweizerische Lebensversicherungs und
Rentenanstalt Sz 1 269
------
3,880
------
NONDEPOSITORY CREDIT INSTITUTIONS - 0.6%
Orient Corp. Ja 88 400
------
REAL ESTATE - 2.3%
Cheung Kong (Holdings) Ltd. HK 142 801
New World Development Co., Ltd. HK 203 790
Sun Hung Kai Properties Ltd. HK 1 7
------
1,598
------
SECURITY BROKERS & DEALERS - 0.6%
Inter-Regional Financial Group, Inc. 7 228
Lehman Brothers Holdings, Inc. 9 205
------
433
------
- --------------------------------------------------------------------------------
MANUFACTURING - 48.4%
APPAREL - 0.0%
Stefanel SPA It 17 27
------
CHEMICALS - 7.4%
BASF AG G 5 1,171
Bayer AG G 3 793
DSM NV Ne 7 492
Dow Chemical Co. 14 974
Eastman Chemical Co. 12 720
Helene Curtis Industries, Inc. 1 30
Shiseido Co. Ltd. Ja 40 404
Union Carbide Corp. 12 454
Wellman, Inc. 8 193
------
5,231
------
</TABLE>
7
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCKS - 90.4% COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
ELECTRONIC & ELECTRICAL EQUIPMENT - 3.1%
Harman International Industries, Inc. 14 $ 627
Matsushita Electric Industrial Co. Ja 41 583
Philips Electronics NV Ne 24 947
-----
2,157
-----
FABRICATED METAL - 2.1%
Compagnie Generale D'Industrie
et de Participations Fr 2 423
Elco Looser Holdings AG (c) Sz (a) 154
GFI Industries SA Fr 4 351
Kitz Corp. Ja 64 276
Oerlikon-Buehrle Holdings AG (c) Sz 1 71
Oriental Holdings Berhad Ma 43 198
-----
1,473
-----
FOOD & KINDRED PRODUCTS - 6.0%
Associated British Foods PLC UK 38 422
Eridania Beghin-Say SA It 1 116
Fraser & Neave Ltd. Si 30 354
IBP, Inc. 37 2,191
Kinki Coca Cola Bottling Ja 55 663
Kulim (Malaysia) Berhad Ma 1 1
Oesterreichische Brau-Beteiligungs AG Au 2 97
Tate & Lyle PLC UK 52 370
-----
4,214
-----
MACHINERY & COMPUTER EQUIPMENT - 5.5%
Cummins Engine Co., Inc. 4 137
Hewlett-Packard Co. 2 222
Hitachi Ltd. Ja 122 1,255
International Business Machines Corp. 13 1,235
Kaydon Corp. 11 312
Seagate Technology, Inc. (c) 16 721
-----
3,882
-----
MEASURING & ANALYZING INSTRUMENTS - 2.7%
Amsco International, Inc. (c) 20 320
Avimo Singapore Ltd. Si 1 1
Fuji Photo Film Co. Ltd. Ja 64 1,586
-----
1,907
-----
PAPER & PAPER MILLS - 4.6%
Boise Cascade Corp. 7 268
Champion International Corp. 33 1,771
Emin Leydier Fr 2 171
Empresa Nacional de Cellulosa SA (c) Sp 15 275
Papierwerke Waldhof PWA G 3 487
Willamette Industries, Inc. 5 261
-----
3,233
-----
PETROLEUM REFINING - 0.2%
YPF Sociedad Anonima ADR Ar 10 163
-----
</TABLE>
8
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
PRIMARY METAL - 4.9%
Acerinox SA Sp 19 $1,955
Interprovincial Steel Ca 14 271
Texas Industries, Inc. 8 421
Thyssen AG G 4 677
Titan Wheel International, Inc. 8 109
------
3,433
------
PRIMARY SMELTING - 1.7%
Phelps Dodge Corp. 19 1,217
------
RUBBER & PLASTIC - 1.1%
Nike, Inc., Class B 14 772
------
STONE, CLAY, GLASS & CONCRETE - 2.2%
Cementos de Mexico SA (c) Mx 14 43
Indresco, Inc. (c) 48 824
Industrie Zignago S. Margherita SPA It 36 170
Radex Heraklith Industriebeteiligungs AG Au 4 122
Semen Cibinong In 72 187
Wienerberger Baustoffindustrie AG Au 1 181
------
1,527
------
TEXTILE MILL PRODUCTS - 0.0%
Winsor Industrial Corp. Ltd. HK (a) (a)
------
TOBACCO PRODUCTS - 0.6%
B.A.T. Industries PLC UK 51 421
------
TRANSPORTATION EQUIPMENT - 6.3%
Equipements et Composants pour
l'Industrie Automobile Fr 2 276
Futaba Industrial Ja 19 287
Honda Motor Co. Ltd. Ja 40 697
McDonnell Douglas Corp. 26 2,134
Montupet Fr 2 219
Peugeot SA Fr 6 804
------
4,417
------
- --------------------------------------------------------------------------------
MINING & ENERGY - 1.3%
NONMETALLIC, EXCEPT FUELS - 0.8%
Potash Corp. of Saskatchewan, Inc. Ca 3 174
Sungei Way Holdings Berhad Ma 115 385
------
559
------
OIL & GAS EXTRACTION - 0.5%
Goal Petroleum Group PLC UK 140 150
Santos Ltd. Au 85 230
------
380
------
- --------------------------------------------------------------------------------
RETAIL TRADE - 4.4%
Apparel & Accessory Stores - 3.0%
Aoyama Trading Ja 78 2,112
------
</TABLE>
9
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1995
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCKS - 90.4% COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL TRADE - CONT.
AUTO DEALERS & GAS STATIONS - 0.0%
Sime Darby (Hong Kong) Ltd. HK 32 $ 35
------
GENERAL MERCHANDISE STORES - 0.7%
Fuji Ja 10 218
Jardine Strategic Holdings Ltd. Si 90 241
------
459
------
OTHER RETAIL - 0.7%
Imasco Ltd. Ca 29 522
------
- --------------------------------------------------------------------------------
SERVICES - 1.2%
AMUSEMENT & RECREATION - 0.1%
Furama Hotel Entertainment HK 50 57
Genting International Ltd. Si (a) (a)
------
57
------
BUSINESS SERVICES - 1.1%
Central Security Patrols Ja 37 334
News Corp. Ltd. Au 30 135
System Software Associates, Inc. 11 333
------
802
------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 9.1%
AIR TRANSPORTATION - 2.4%
Air Canada Corp. (c) Ca 22 83
British Airways PLC UK 17 119
Crossair AG Sz (a) 175
Det Danske Luftfarts (c) De 7 620
Lufthansa AG G 4 541
Malaysian Airline System Berhad Ma 55 150
------
1,688
------
COMMUNICATIONS - 0.6%
PT Voksel Electric In 90 99
Southern New England
Telecommunications Corp. 10 343
------
442
------
ELECTRIC SERVICES - 1.3%
China Light & Power Co. Ltd. HK (a) 1
Lech-Elektrizitaetswerke G (a) 71
Pinnacle West Capital Corp. 17 462
Union Electrica Fenosa SA Sp 79 370
------
904
------
GAS SERVICES - 0.2%
BC Gas, Inc. Ca 10 110
------
SANITARY SERVICES - 4.0%
North West Water PLC UK 40 374
Northumbrian Water Group PLC UK 80 1,252
</TABLE>
10
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Severn Trent Water PLC UK 40 $ 401
Southern Water PLC UK 37 412
Yorkshire Water PLC UK 40 386
-------
2,825
-------
TRANSPORTATION SERVICES - 0.5%
GATX Corp. 8 366
-------
WATER TRANSPORTATION - 0.1%
Neptune Orient Lines Ltd. Si 77 86
-------
- --------------------------------------------------------------------------------
WHOLESALE TRADE - 1.5%
DURABLE GOODS
SA D'ieteren NV Be 3 244
Wyle Electronics Co. 18 810
-------
1,054
-------
TOTAL COMMON STOCKS (cost of $56,630) (d) 63,809
SHORT-TERM OBLIGATIONS - 6.3% PAR
- --------------------------------------------------------------------------------
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 $4,568 (repurchase proceeds $4,474) $4,473 4,473
-------
OTHER ASSETS & LIABILITIES, NET - 3.3% 2,350
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $70,632
=======
</TABLE>
11
<PAGE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Rounds to less than one.
(b) This security is subject to the risks of the various countries in which the
issuer is investing. (See notes to Financial Statements: Note 3 - Other.)
(c) Non-income producing.
(d) Cost for federal income tax purposes is $56,632.
<TABLE>
<CAPTION>
Summary of Securities by Country Country Value % of Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 22,234 34.8
Japan Ja 10,057 15.8
United Kingdom UK 4,581 7.2
Germany G 4,065 6.4
Netherlands Ne 3,047 4.8
Spain Sp 2,769 4.3
France Fr 2,383 3.7
Australia Au 1,924 3.0
Hong Kong HK 1,692 2.6
Multi-national (b) 1,516 2.4
Canada Ca 1,431 2.2
Denmark De 1,388 2.2
Thailand Th 881 1.4
Malaysia Ma 838 1.3
Singapore Si 684 1.1
Switzerland Sz 669 1.0
Philippines Ph 627 1.0
Austria Au 561 0.9
Ireland Ir 522 0.8
Italy It 342 0.5
Pakistan Pa 318 0.5
India Id 293 0.5
Indonesia In 286 0.4
New Zealand NZ 247 0.4
Belgium Be 244 0.4
Argentina Ar 163 0.3
Mexico Mx 43 0.1
Korea Ko 4 0.0
======== =====
$ 63,809 100.0
======== =====
</TABLE>
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
See notes to financial statements.
12
<PAGE>
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1995
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $56,630) $ 63,809
Short-term obligations 4,473
---------
68,282
Cash held in foreign banks (cost $323) $ 323
Receivable for:
Investments sold 1,983
Dividends 74
Foreign tax reclaims 69
Fund shares sold 36
Expense reimbursement due from Adviser 10
Interest 1
Deferred organization expenses 14
Other 3 2,513
-------- ---------
Total Assets 70,795
LIABILITIES
Payable for:
Fund shares repurchased 92
Capital gains tax 51
Accrued:
Deferred Trustees fees 1
Other 19
Total Liabilities -------- 163
NET ASSETS $ 70,632
=========
Net asset value & redemption price per share -
Class A ($11,501/924) $ 12.45
=========
Maximum offering price per share - Class A
($12.45/0.9425) $ 13.21(a)
=========
Net asset value & offering price per share -
Class B ($59,131/4,773) $ 12.39(b)
=========
COMPOSITION OF NET ASSETS
Capital paid in $ 59,820
Overdistributed net investment income (129)
Accumulated net realized gain 3,754
Net unrealized appreciation on:
Investments 7,179
Foreign currency transactions 8
---------
$ 70,632
=========
<FN>
(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.
</TABLE>
13
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 1,721
Interest 240
-------
Total investment income (net of nonrebatable
foreign taxes withheld at source which
amounted to $160) 1,961
EXPENSES
Management fee $ 535
Service fee 177
Distribution fee - Class B 453
Transfer agent 223
Bookkeeping fee 34
Trustees fee 11
Custodian fee 56
Audit fee 38
Legal fee 7
Registration fee 27
Reports to shareholders 9
Amortization of deferred
organization expenses 9
Other 21
-------
1,600
Fees waived by the Adviser (184) 1,416
Net Investment Income ------- --------
545
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 3,978
Foreign currency transactions (146)
-------
Net Realized Gain 3,832
Net unrealized appreciation (depreciation) during
the period on:
Investments 653
Foreign currency transactions (16)
-------
Net Unrealized Appreciation 637
--------
Net Gain 4,469
--------
Net Increase in Net Assets from Operations $ 5,014
========
</TABLE>
See notes to financial statements.
14
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
(in thousands) Year ended October 31
---------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
<S> <C> <C>
Operations:
Net investment income $ 545 $ 439
Net realized gain 3,832 5,468
Net unrealized appreciation (depreciation) 637 (1,535)
-------- --------
Net Increase from Operations 5,014 4,372
Distributions:
From net investment income - Class A (175) (80)
From net realized gains - Class A (809) (11)
From net investment income - Class B (533) (361)
From net realized gains - Class B (4,674) (163)
-------- --------
(1,177) 3,757
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 3,736 11,660
Value of distributions reinvested - Class A 915 79
Cost of shares repurchased - Class A (3,545) (3,294)
-------- --------
1,106 8,445
-------- --------
Receipts for shares sold - Class B 9,028 32,682
Value of distributions reinvested - Class B 4,883 485
Cost of shares repurchased - Class B (16,872) (14,311)
-------- --------
(2,961) 18,856
-------- --------
Net Increase (Decrease) from Fund Share Transactions (1,855) 27,301
-------- --------
Total Increase (Decrease) (3,032) 31,058
NET ASSETS
Beginning of period 73,664 42,606
-------- --------
End of period (net of overdistributed and including
undistributed net investment income of $129 and $96, $ 70,632 $ 73,664
respectively) ======== ========
NUMBER OF FUND SHARES
Sold - Class A 310 937
Issued for distributions reinvested - Class A 82 7
Repurchased - Class A (297) (265)
-------- --------
95 679
-------- --------
Sold - Class B 754 2,643
Issued for distributions reinvested - Class B 440 40
Repurchased - Class B (1,419) (1,170)
-------- --------
(225) 1,513
-------- --------
</TABLE>
See notes to financial statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE 1. ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
ORGANIZATION: Colonial Global Equity Fund (the 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 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.
16
<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 $43,895 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 and 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)
17
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
on foreign currency transactions. Forward currency contracts do not eliminate
fluctuations in the prices of the Fund's portfolio securities. While the
maximum potential loss from such contracts is the aggregate face value in U.S.
dollars at the time the contract was opened, exposure is typically limited to
the change in value of the contract (in U.S. dollars) over the period it
remains open. Risks may also arise if counterparties fail to perform their
obligations under the contracts.
OTHER: Corporate actions are recorded on 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 may be
subject to foreign taxes on income, gains on investments, or foreign currency
repatriation. The Fund accrues foreign taxes as applicable based upon its
current interpretation of the tax rules and regulations that exist in the
markets in which it invests.
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
investment 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 reimburse- ment 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 $7,204 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $174,737 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.
18
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
EXPENSE LIMITS: Effective August 1, 1995 and until further notice, the
Adviser has agreed to bear certain Fund expenses to the extent that total
expenses (exclusive of service and distribution fees, brokerage commissions,
interest, taxes and extraordinary expenses, if any) exceed 1.40% annually of
the Fund's average net assets.
Prior to August 1, 1995 the expense limit was 1.00% of the Fund's average net
assets.
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.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended October 31, 1995, purchases and
sales of investments, other than short-term obligations, were $49,483,788 and
$58,162,376, 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 $10,530,824
Gross unrealized depreciation (3,353,598)
-----------
Net unrealized appreciation $ 7,177,226
===========
</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.
19
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (b)
Selected data for a share of each class outstanding throughout each
period are as follows:
<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 $ 12.690 $ 12.630 $ 11.760 $ 11.720
======== ======== ======== ========
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.167 0.076 0.170 0.077
Net realized and
unrealized gain (loss) 0.735 0.735 0.969 0.959
-------- -------- -------- --------
Total from Investment
Operations 0.902 0.811 1.139 1.036
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.198) (0.107) (0.166) (0.083)
From net
realized gains (0.944) (0.944) (0.043) (0.043)
-------- -------- -------- --------
Total Distributions
Declared to Shareholders (1.142) (1.051) (0.209) (0.126)
-------- -------- -------- --------
Net asset value -
End of period $ 12.45 $ 12.39 $ 12.69 $ 12.630
======== ======== ======== ========
Total return (d)(e) 8.23% 7.43% 9.76% 8.88%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Operating expenses 1.36%(f) 2.11%(f) 1.25% 2.00%
Interest expense -- -- -- --
Fees waived by the Adviser 0.26%(f) 0.26%(f) 0.36% 0.36%
Net investment income 1.40% 0.65% 1.38% 0.63%
Portfolio turnover 74% 74% 52% 52%
Net assets at end
of period (000) $ 11,501 $ 59,131 $ 10,525 $ 63,139
<FN>
(a) Net of fees and expenses waived
or borne by the Adviser
which amounted to $ 0.031 $ 0.031 $ 0.045 $ 0.045
(b) Per share data was calculated using average shares outstanding during the period.
(c) The Fund commenced investment operations on June 8, 1992.
(d) Total return at net aset value assuming all distributions reinvested and no initial sales
charge or contingent deferred sales charge.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total return would have been
reduced.
(f) The benefits derived from custody credits and direct brokerage arrangements, if any, had no
impact on the Fund's gross expense ratios.
(g) Not annualized.
(h) Annualized.
</TABLE>
20
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (b) - continued
<CAPTION>
Year ended Period ended
October 31 October 31
------------------- -------------------
1993 1992 (c)
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C>
$ 9.340 $ 9.310 $10.000 $10.000
======= ======= ======= =======
0.182 0.104 0.088 0.059
2.461 2.447 (0.748) (0.749)
------- ------- ------- -------
2.643 2.551 (0.660) (0.690)
------- ------- ------- -------
(0.223) (0.141) -- --
-- -- -- --
------- ------- ------- -------
(0.223) (0.141) -- --
------- ------- ------- -------
$11.760 $11.720 $ 9.340 $ 9.310
======= ======= ======= =======
28.77% 27.70% (6.59)%(g) (6.90)%(g)
======= ======= ======= =======
1.25% 2.00% 1.25%(h) 2.00%(h)
0.01% 0.01% -- --
0.51% 0.51% 0.67%(h) 0.67%(h)
1.75% 1.00% 2.25%(h) 1.50%(h)
58% 58% 14%(h) 14%(h)
$ 1,769 $40,837 $ 164 $32,099
$ 0.053 $ 0.053 $ 0.053 $ 0.026
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
99.9% of the gain distribution paid by the Fund in December 1994
was derived from long-term gains.
67% 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.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST III AND THE SHAREHOLDERS OF
COLONIAL GLOBAL EQUITY 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 Equity 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, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 11, 1995
22
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Global Equity Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Global Equity Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call our Literature
Department at 1-800-248-2828 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Global Equity 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.
23
<PAGE>
[LOGO] COLONIAL
MUTUASL 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. [COPYRIGHT]1995
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
GE-02/417B-1095 (12/95)
- --------------------------------------------------------------------------------
[LOGO]PRINTED ON RECYCLED PAPER
</TABLE>
