<PAGE>
------------------------------
[COLONIAL INVESTMENTS LOGO]
------------------------------
COLONIAL GLOBAL
NATURAL RESOURCES
FUND
------------------------------
ANNUAL REPORT
OCTOBER 31, 1996
------------------------------
[COVER PHOTO]
---------------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
---------------------------
<PAGE>
COLONIAL GLOBAL NATURAL RESOURCES FUND
HIGHLIGHTS
NOVEMBER 1, 1995 - OCTOBER 31, 1996
INVESTMENT OBJECTIVE: Colonial Global Natural Resources Fund seeks preservation
of capital purchasing power and long-term growth.
THE FUND IS DESIGNED TO OFFER:
[Check Mark] Preservation of purchasing power
[Check Mark] Growth potential
[Check Mark] Diversification to help reduce risk
PORTFOLIO MANAGER COMMENTARY: "Natural resources markets have benefited from the
resurgence in overall world growth. Strong economic development creates demand
for every type of resource, from timber and concrete for new buildings to copper
for electric wiring." --Susan Cordes
<TABLE>
COLONIAL GLOBAL NATURAL RESOURCES FUND PERFORMANCE
- --------------------------------------------------------------------------------
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception date 6/8/92 6/8/92
- --------------------------------------------------------------------------------
12-month distributions declared per share $0.710 $0.630
- --------------------------------------------------------------------------------
12-month total returns, assuming 21.69% 20.70%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset values per share at 10/31/96 $14.32 $14.23
- --------------------------------------------------------------------------------
<CAPTION>
Top Five Countries* Top Five Sectors*+
(as of 10/31/96) (as of 10/31/96)
1. United States ..............62.2% 1. Energy/Natural Resources .....41.8%
2. Canada .....................16.9% 2. Basic Materials ..............22.2%
3. Australia ...................3.0% 3. Basic Industry ...............10.9%
4. Netherlands .................2.6% 4. Capital Goods .................9.5%
5. United Kingdom ..............2.2% 5. Utility .......................7.3%
<FN>
*Country and sector breakdowns are calculated as a percent of total net assets.
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to hold these securities or invest in these countries and sectors in
the future.
+ Industry sectors in the following financial statements are based upon the
standard industrial classifications (SIC) published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon Colonial's defined criteria used in the investment process.
</TABLE>
2
<PAGE>
PRESIDENT'S MESSAGE
To Fund Shareholders
I am pleased to present your Fund's annual report for the
fiscal year ended October 31, 1996. This report gives us the
opportunity to share our analysis of your fund and the
investment environment over the past 12 months.
[President's Photo]
The Federal Reserve Board lowered short-term interest rates
in December 1995 and again in January 1996. Furthermore, in
the bond market, significantly stronger economic indicators
mid-way through the period stirred inflation fears and propelled long-term
interest rates upward. However, we believe that the bond market volatility
should be somewhat reduced in the months ahead.
In the U.S. stock market, generally favorable conditions prevailed throughout
most of the period with both large and small company stocks posting strong
returns until July, when a price-based correction took place. Since then, the
market has rebounded nicely with the Dow Jones Industrial Average setting
several new records.
Internationally, we are still seeing declining interest rates in most markets.
Japan's recovery is modest and interest rates are being held low. China is
reducing rates, now that inflation has declined into single digits. In Europe,
short-term interest rates are much lower than long-term ones, creating a steep
yield curve. We expect this situation to continue until we see an increase in
economic activity.
Our expectations include moderate economic growth continuing into the first half
of 1997. If our current projections hold, we may see the economy picking up
again in the second half of 1997.
In the following pages, you'll find detailed information on your Fund's
performance as well as an in-depth discussion with the portfolio manager.
As always, we appreciate the opportunity to help you meet your investment goals.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
December 10, 1996
Because market conditions change frequently, there can be no assurance that the
trends described will continue, come to pass or affect Fund performance.
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. NICOLAS GHAJAR is a
research analyst for the Fund.
Q. PLEASE DESCRIBE THE GLOBAL ECONOMIC ENVIRONMENT DURING THE PAST YEAR.
A. In the U.S., the continuing combination of low interest rates, low inflation
and slow but steady economic growth created a positive environment for large
domestic stocks, with both the Dow Jones Industrial Average and the Standard &
Poor's 500 Index reaching all-time highs. As Europe emerged from its recession
during the year, demand for basic resources grew. Market performance in Asia
continued its robust pace, with GDP growth in China and India in the 5% range
year to date through October 1996. The emerging markets also continued to
improve during the period.
Q. HOW DID NATURAL RESOURCES MARKETS PERFORM DURING THE PERIOD?
A. It was a good year for natural resources markets due to the resurgence in
overall world growth. Strong economic development creates demand for every type
of resource, from timber and concrete for new buildings to copper for electric
wiring. The energy sector benefited from a 38% increase in oil prices during the
year and high demand for natural gas due to the long, cold winter in North
America. Gold prices, which had traded in a narrow range for the past two years
(between $370 and $390 an ounce) staged a brief but dramatic rally during the
first six weeks of 1996, sparked by indications of decreased supply. The price
hit a six-year high of $418 at the beginning of February, but ended the period
back in its original trading range.
Q. HOW DID THE FUND PERFORM COMPARED TO THE STANDARD & POOR'S 500 INDEX?
A. Considering that the Standard & Poor's 500 Index outperformed all other major
indexes during the period, the Fund compared well. Class A shares returned 21.7%
for the year ended October 31, 1996 and the S&P 500 returned 24.1%. Strong
returns from technology stocks fueled the performance of the S&P 500. In
contrast, the Fund is limited to investments in energy and natural
resource-related stocks, but benefited from the excellent returns in the energy
sector, and from the rally in gold stocks. Oryx Energy, an oil exploration and
production company headquartered in Dallas, Texas had excellent performance
during the period as did Pennzoil Company, one of the Fund's largest holdings.
Q. WHAT ARE THE BENEFITS OF A GLOBAL NATURAL RESOURCES FUND?
A. Natural resource-related stocks are uniquely positioned to benefit from
worldwide growth trends. A global natural resources fund provides a relatively
conservative way for U.S. investors to participate in the growth potential of
these markets, reducing risk through broad diversification. As of October 31,
1996, the Fund owned more than 110 stocks representing 17 industries in 13
countries. This strategic diversification allows the Fund to benefit when
markets rise, but reduces exposure to any single country or industry.
4
<PAGE>
Q. WHAT IS YOUR MARKET OUTLOOK?
A. Looking ahead, we think U.S. economic growth may slow, but we expect growth
outside the U.S. to continue, particularly in developing countries. This should
continue to provide a good environment for basic resources and have a positive
effect on the earnings of natural resource-related companies.
Colonial Global Natural Resources Fund's Investment Performance
vs. The Standard & Poor's 500 Index
Change in Value of $10,000 from 6/30/92 - 10/31/96
Based on NAV and MOP for Class A Shares
6/92 10/96
$18,000 S&P 500
$19,375
$16,000
NAV
$14,000 $15,905
$12,000 MOP
$14,991
$10,000
<TABLE>
[Line Graph]
<CAPTION>
Label A B C
------------------------------------------------------------------
Label CGNRF A NAV MOP S&P 500
------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Jun 30, 92 10000 9425 10000
2 Jul 31, 92 10268.12 9677.706 10408
3 Aug 31, 92 10039.72 9462.438 10196
4 Sep 30, 92 10009.93 9434.359 10315
5 Oct 31, 92 9682.225 9125.497 10351
6 Nov 30, 92 9285.005 8751.117 10702
7 Dec 31, 92 9431.813 8889.483 10834
8 Jan 31, 93 9421.8 8880.046 10924
9 Feb 28, 93 9852.339 9285.829 11073
10 Mar 31, 93 10513.17 9908.659 11306
11 Apr 30, 93 11043.83 10408.81 11033
12 May 31, 93 11684.63 11012.77 11328
13 Jun 30, 93 11625.92 10957.43 11361
14 Jul 31, 93 12128.33 11430.96 11315
15 Aug 31, 93 12218.77 11516.19 11743
16 Sep 30, 93 11716.35 11042.66 11653
17 Oct 31, 93 12218.77 11516.19 11894
18 Nov 30, 93 11897.22 11213.13 11781
19 Dec 31, 93 12616.19 11890.76 11923
20 Jan 31, 94 13308.05 12542.83 12328
21 Feb 28, 94 12870.55 12130.49 11994
22 Mar 31, 94 12575.49 11852.4 11472
23 Apr 30, 94 12646.71 11919.53 11619
24 May 31, 94 12941.77 12197.62 11809
25 Jun 30, 94 12700.96 11970.66 11520
26 Jul 31, 94 13058.88 12307.99 11898
27 Aug 31, 94 13427.02 12654.97 12384
28 Sep 30, 94 13416.8 12645.33 12082
29 Oct 31, 94 13457.7 12683.88 12353
30 Nov 30, 94 12394.17 11681.51 11904
31 Dec 31, 94 12499.45 11780.73 12080
32 Jan 31, 95 11849.86 11168.49 12393
33 Feb 28, 95 12237.52 11533.86 12875
34 Mar 31, 95 12729.95 11997.98 13255
35 Apr 30, 95 13149.04 12392.97 13645
36 May 31, 95 13348.11 12580.6 14189
37 Jun 30, 95 13448.87 12675.56 14518
38 Jul 31, 95 13985.14 13181 14999
39 Aug 31, 95 13848.44 13052.16 15037
40 Sep 30, 95 13711.75 12923.32 15671
41 Oct 31, 95 13070.32 12318.78 15615
42 Nov 30, 95 13627.63 12844.04 16300
43 Dec 31, 95 14132.42 13319.8 16614
44 Jan 31, 96 14597.59 13758.23 17179
45 Feb 29, 96 14708.34 13862.62 17338
46 Mar 31, 96 15262.12 14384.55 17505
47 Apr 30, 96 15605.46 14708.15 17763
48 May 31, 96 15616.54 14718.59 18220
49 Jun 30, 96 15305.28 14425.23 18290
50 Jul 31, 96 14538.91 13702.92 17482
51 Aug 31, 96 15138.68 14268.21 17852
52 Sep 30, 96 15327.5 14446.16 18855
53 Oct 31, 96 15905.05 14990.51 19375
</TABLE>
Based on NAV and Maximum CDSC for Class B Shares
6/92 10/96
$18,000 S&P 500
$19,375
$16,000
NAV
$14,000 $15,399
$12,000 MOP
$15,199
$10,000
<TABLE>
[Line Graph]
<CAPTION> A B C D
----------------------------------------------------------------
Label CGNRF B NAV MOP S&P 500
----------------------------------------------------------------
<S> <C> <C> <C> <C>
1 6/30/92 10000 10000 10000
2 7/31/92 10268.39 10268.39 10408
3 8/31/92 10029.82 10029.82 10196
4 9/30/92 10000 10000 10315
5 10/31/92 9662.028 9662.028 10351
6 11/30/92 9254.474 9254.474 10702
7 12/31/92 9397.543 9397.543 10834
8 1/31/93 9377.591 9377.591 10924
9 2/28/93 9806.565 9806.565 11073
10 3/31/93 10464.99 10464.99 11306
11 4/30/93 10973.78 10973.78 11033
12 5/31/93 11602.27 11602.27 11328
13 6/30/93 11547.88 11547.88 11361
14 7/31/93 12036.95 12036.95 11315
15 8/31/93 12116.79 12116.79 11743
16 9/30/93 11617.75 11617.75 11653
17 10/31/93 12106.81 12106.81 11894
18 11/30/93 11777.44 11777.44 11781
19 12/31/93 12478.89 12478.89 11923
20 1/31/94 13163.77 13163.77 12328
21 2/28/94 12720.62 12720.62 11994
22 3/31/94 12418.46 12418.46 11472
23 4/30/94 12478.89 12478.89 11619
24 5/31/94 12770.98 12770.98 11809
25 6/30/94 12513.38 12513.38 11520
26 7/31/94 12856.48 12856.48 11898
27 8/31/94 13219.78 13219.78 12384
28 9/30/94 13209.68 13209.68 12082
29 10/31/94 13229.87 13229.87 12353
30 11/30/94 12180.36 12180.36 11904
31 12/31/94 12273.94 12273.94 12080
32 1/31/95 11624.69 11624.69 12393
33 2/28/95 12006 12006 12875
34 3/31/95 12480.05 12480.05 13255
35 4/30/95 12881.97 12881.97 13645
36 5/31/95 13067.47 13067.47 14189
37 6/30/95 13160.22 13160.22 14518
38 7/31/95 13675.5 13675.5 14999
39 8/31/95 13531.22 13531.22 15037
40 9/30/95 13397.25 13397.25 15671
41 10/31/95 12758.3 12758.3 15615
42 11/30/95 13283.89 13283.89 16300
43 12/31/95 13772.34 13772.34 16614
44 1/31/96 14226.73 14226.73 17179
45 2/29/96 14313.28 14313.28 17338
46 3/31/96 14843.4 14843.4 17505
47 4/30/96 15178.78 15178.78 17763
48 5/31/96 15167.96 15167.96 18220
49 6/30/96 14858.15 14858.15 18290
50 7/31/96 14111.45 14111.45 17482
51 8/31/96 14674.18 14674.18 17852
52 9/30/96 14858.15 14858.15 18855
53 10/31/96 15399.23 15199.23 19375
</TABLE>
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of the U.S. stock market. Unlike mutual funds, an index does not
incur fees or charges and it is not possible to invest in an index.
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS
As of 9/30/96 (Most Recent Quarter End)
- --------------------------------------------------------------------------------
<CAPTION>
CLASS A SHARES CLASS B SHARES
INCEPTION 6/8/92 6/8/92
NAV MOP NAV w/CDSC
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
1 YEAR 11.78% 5.36% 10.90% 5.90%
- --------------------------------------------------------------------------------
SINCE INCEPTION 10.57% 9.07% 9.76% 9.41%
- --------------------------------------------------------------------------------
<FN>
Past performance cannot predict future results. Returns 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) returns do not
include sales charges or contingent deferred sales charge (CDSC). Maximum
offering price (MOP) returns include the maximum sales charge of 5.75%. The CDSC
returns reflect charges of: one year, 5%; since inception, 2%. Performance for
different share classes will vary based on differences in sales charges and fees
associated with each class.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------
Label CGNRF A NAV MOP S&P 500
------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Jun 30, 92 10000 9425 10000
2 Jul 31, 92 10268.12 9677.706 10408
3 Aug 31, 92 10039.72 9462.438 10196
4 Sep 30, 92 10009.93 9434.359 10315
5 Oct 31, 92 9682.225 9125.497 10351
6 Nov 30, 92 9285.005 8751.117 10702
7 Dec 31, 92 9431.813 8889.483 10834
8 Jan 31, 93 9421.8 8880.046 10924
9 Feb 28, 93 9852.339 9285.829 11073
10 Mar 31, 93 10513.17 9908.6559 11306
11 Apr 30, 93 11043.83 10408.81 11033
12 May 31, 93 11684.63 11012.77 11328
13 Jun 30, 93 11625.92 10957.43 11361
14 Jul 31, 93 12128.33 11403.96 11315
15 Aug 31, 93 12218.77 11516.19 11743
16 Sep 30, 93 11716.35 11042.66 11653
17 Oct 31, 93 12218.77 11516.19 11894
18 Nov 30, 93 11897.22 11213.13 11781
19 Dec 31, 93 12616.19 11890.76 11923
20 Jan 31, 94 13308.05 12542.83 12328
21 Feb 28, 94 12870.55 12130.49 11994
22 Mar 31, 94 12575.49 11852.4 11472
23 Apr 30, 94 12646.71 11919.53 11619
24 May 31, 94 12941.77 12197.62 11809
25 Jun 30, 94 12700.96 11970.66 11520
26 Jul 31, 94 13058.88 12307.99 11898
27 Aug 31, 94 13427.02 12654.97 12384
28 Sep 30, 94 13416.8 12645.33 12082
29 Oct 31, 94 13457.7 12683.88 122353
30 Nov 30, 94 12394.17 11681.51 11904
31 Dec 31, 94 12499.45 11780.73 12080
32 Jan 31, 95 11849.86 11168.49 12393
33 Feb 28, 95 12237.52 11533.86 12875
34 Mar 31, 95 12729.95 11997.98 13255
35 Apr 30, 95 13149.04 12392.97 13645
36 May 31, 95 13348.11 12580.6 14189
37 Jun 30, 95 13448.87 12675.56 14518
38 Jul 31, 95 13985.14 13181 14999
39 Aug 31, 95 13848.44 13052.16 15037
40 Sep 30, 95 13711.75 12923.32 15671
41 Oct 31, 95 13070.32 12318.78 15615
42 Nov 30, 95 13627.63 12844.04 16300
43 Dec 31, 95 14132.42 13319.8 16614
44 Jan 31, 96 14597.59 13758.23 17179
45 Feb 28, 96 14708.34 13862.62 17338
46 Mar 31, 96 15262.12 14384.55 17505
47 Apr 30, 96 15605.46 14708.15 17763
48 May 31, 96 15616.54 14718.59 18220
49 Jun 30, 96 15305.28 14425.23 18290
50 Jul 31, 96 14538.91 13702.92 17482
51 Aug 31, 96 15138.68 14268.21 17852
52 Sep 30, 96 15327.5 14446.16 18855
53 Oct 31, 96 15905.05 14990.51 19375
<CAPTION>
----------------------------------------------------------------
Label CGNRF B NAV MOP S&P 500
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 6/30/92 10000 10000 10000
2 7/31/92 10268.39 10268.39 10408
3 8/31/92 10029.82 10029.82 10196
4 9/30/92 10000 10000 10315
5 10/31/92 9662.028 9662.028 10351
6 11/30/92 9254.474 9254.474 10702
7 12/31/92 9397.543 9397.543 10834
8 1/31/93 9377.591 9377.591 10924
9 2/28/93 9806.565 9806.565 11073
10 3/31/93 10464.99 10464.99 11306
11 4/30/93 10973.78 10973.78 11033
12 5/31/93 11602.27 11602.27 11328
13 6/30/93 11547.88 11547.88 11361
14 7/31/93 12036.95 12036.95 11315
15 8/31/93 12116.79 12116.79 11743
16 9/30/93 11617.75 11617.75 11653
17 10/31/93 12106.81 12106.81 11894
18 11/30/93 11777.44 11777.44 11781
19 12/31/93 12478.89 12478.89 11923
20 1/31/94 13163.77 13163.77 12328
21 2/28/94 12720.62 12720.62 11994
22 3/31/94 12418.46 12418.46 11472
23 4/30/94 12478.89 12478.89 11619
24 5/31/94 12770.98 12770.98 11809
25 6/30/94 12513.38 12513.38 11520
26 7/31/94 12856.48 12856.48 11898
27 8/31/94 13219.78 13219.78 12384
28 9/30/94 13209.68 13209.68 12082
29 10/31/94 13229.87 13229.87 122353
30 11/30/94 12180.36 12180.36 11904
31 12/31/94 12273.94 12273.94 12080
32 1/31/95 11624.69 11624.69 12393
33 2/28/95 12006 12006 12875
34 3/31/95 12480.05 12480.05 13255
35 4/30/95 12881.97 12881.97 13645
36 5/31/95 13067.47 13067.47 14189
37 6/30/95 13160.22 13160.22 14518
38 7/31/95 13975.5 13675.5 14999
39 8/31/95 13531.22 13531.22 15037
40 9/30/95 13397.25 13397.25 15671
41 10/31/95 12758.3 12758.3 15615
42 11/30/95 13283.89 13283.89 16300
43 12/31/95 137723.34 13772.34 16614
44 1/31/96 14226.73 14226.73 17179
45 2/28/96 14313.28 14313.28 17338
46 3/31/96 14843.3 14843.4 17505
47 4/30/96 15178.78 15178.78 17763
48 5/31/96 15167.96 15167.96 18220
49 6/30/96 14858.15 14858.15 18290
50 7/31/96 14111.45 14111.45 17482
51 8/31/96 14674.18 14674.18 17852
52 9/30/96 14858.15 14858.15 18855
53 10/31/96 15399.23 15199.23 19375
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
OCTOBER 31, 1996 (IN THOUSANDS)
<CAPTION>
COMMON STOCKS - 94.1% COUNTRY SHARES VALUE
================================================================================
<S> <C> <C> <C>
CONSTRUCTION - 4.8%
BUILDING CONSTRUCTION - 3.4%
Centex Corp. 5 $ 151
Champion Enterprises, Inc. (a) 13 250
Kaufman & Broad Home Corp. 27 318
Lennar Corp. 16 352
Pulte Corp. 39 1,025
------
2,096
------
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION - 1.4%
Koninklijke Boskalis Westminster NV Ne 29 580
Stork NV Ne 9 283
------
863
------
- -------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 0.3%
REAL ESTATE
Bandar Raya Developments Berhad Ma 86 167
------
- -------------------------------------------------------------------------------
MANUFACTURING - 36.9%
CHEMICALS & ALLIED PRODUCTS - 7.3%
BASF AG G 19 606
DSM NV Ne 8 726
E.I. DuPont De Nemours & Co. 8 751
Fuller (H.B.) Co. 12 501
Goodrich (B.F.) Co. 12 509
Norsk Hydro AS No 15 707
Smith International, Inc. 19 733
------
4,533
------
FABRICATED METAL - 0.8%
Watts Industries, Inc., Class A 24 503
------
LUMBER & WOOD PRODUCTS - 1.3%
Donohue, Inc., Class A Ca 25 385
Pacific Forest Products Ltd. (a) Ca 32 422
------
807
------
MACHINERY & COMPUTER EQUIPMENT - 1.8%
Camco International, Inc. 20 756
Pentair, Inc. 15 373
------
1,129
------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/October 31, 1996
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
===============================================================================
<S> <C> <C> <C>
PAPER PRODUCTS - 3.2%
Fort Howard Corp. (a) 21 $ 530
Mead Corp. 10 579
Potlatch Corp. 8 342
Stone-Consolidated Corp. (a) Ca 36 435
Tembec, Inc., Class A (a) Ca 18 125
------
2,011
------
PETROLEUM REFINING - 15.6%
Amerada Hess Corp. 14 781
Ashland Oil, Inc. 12 514
Atlantic Richfield Co. 4 550
British Petroleum Co., PLC ADR UK 4 470
Chevron Corp. 7 467
Mobil Corp. 4 490
Murphy Oil Corp. 13 637
OMV Handels AG Aus 6 550
Pennzoil Co. 22 1,127
Phillips Petroleum Co. 8 332
Quaker State Corp. 40 675
Repsol SA ADS Sp 19 610
Shell Canada Ltd. Ca 12 425
Tosco Corp. 7 410
Unocal Corp. 13 458
USX-Marathon Group 54 1,173
------
9,669
------
PRIMARY METAL - 3.7%
Acerinox SA Sp 3 341
Alumax, Inc. (a) 9 283
Brush Wellman, Inc. 25 476
Chaparral Steel Co. 40 530
KM Europa Metal AG G 3 221
Oregon Metallurgical Corp. 6 179
Steel Technologies, Inc. 20 256
------
2,286
------
PRIMARY SMELTING - 0.3%
Capral Aluminum Ltd. (a) Au 73 217
------
RUBBER & PLASTIC - 1.6%
AEP Industries, Inc. 10 457
Hanna (M.A.) Co. 25 539
------
996
------
</TABLE>
7
<PAGE>
Investment Portfolio/October 31, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
===============================================================================
<S> <C> <C> <C>
MANUFACTURING - CONT.
STONE, CLAY, GLASS & CONCRETE - 1.3%
Global Industrial Technologies, Inc. (a) 43 $ 801
- -------------------------------------------------------------------------------
MINING & ENERGY - 41.5%
CRUDE PETROLEUM & NATURAL GAS - 6.7%
Anadarko Petroleum Corp. 10 643
Apache Corp. 11 394
Burlington Resources, Inc. 25 1,264
Occidental Petroleum Corp. 35 860
Ranger Oil Ltd. Ca 90 674
Triton Energy Corp. (a) 8 344
-----
4,179
-----
GOLD & SILVER MINING - 7.5%
Ashanti Goldfields Co., Ltd. GDS Gh 10 160
Barrick Gold Corp. Ca 29 770
Cambior, Inc. Ca 36 495
Newmont Mining Corp. 16 732
Pegasus Gold, Inc. 47 468
Placer Dome, Inc. Ca 26 631
Sons of Gwalia Ltd. Au 136 878
TVX Gold, Inc. Ca 70 518
-----
4,652
-----
METAL MINING - 6.6%
Acacia Resources Ltd. (a) Au 130 244
Battle Mountain Gold Co. 29 220
Elandsrand Gold Mining Co. Ltd. SA 27 141
Franco-Nevada Mining Corporation Ltd. Ca 16 696
Freeport-McMoRan Copper & Gold, Inc.
Class A 27 769
Noranda, Inc. Ca 30 653
Prime Resource Group, Inc. Ca 100 734
Santa Fe Pacific Gold Corp. (a) 52 615
Stillwater Mining Co. (a) 2 36
-----
4,108
-----
NONMETALLIC, EXCEPT FUELS - 2.1%
De Beers Consolidated Mines Ltd., ADR (a) SA 16 469
Hecla Mining Co. (a) 20 115
Potash Corp. of Saskatchewan, Inc. Ca 2 142
Vulcan Materials Co. 9 559
-----
1,285
-----
</TABLE>
8
<PAGE>
Investment Portfolio/October 31, 1996
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
===============================================================================
<TABLE>
<CAPTION>
<S> <C> <C> <C>
OIL & GAS EXTRACTION - 17.3%
Alberta Energy Co., Ltd. Ca 31 $ 660
Elan Energy, Inc. (a) Ca 57 555
Elf Gabon SA Fr (b) 104
ENSCO International, Inc. (a) 16 692
Falcon Drilling Company, Inc. (a) 25 867
Global Marine, Inc. (a) 15 279
Helmerich & Payne 27 1,445
Noble Drilling Corp. (a) 12 220
Oryx Energy Co. 72 1,392
Parker and Parsley Petroleum 33 943
Petro Canada Ca 69 920
Pioneer International Ltd. Au 192 510
Reading & Bates Corp. (a) 12 331
Rowan Companies, Inc. (a) 10 228
Santa Fe Energy Resources, Inc. 19 273
Union Texas Petroleum Holdings, Inc. 23 500
Wascana Energy, Inc. (a) Ca 80 843
-------
10,762
-------
OIL & GAS FIELD SERVICES - 1.3%
Petroleum Geo-Services A/S (a) No 18 591
Schlumberger Ltd. 3 248
-------
839
-------
- -------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 9.6%
ELECTRIC, GAS & SANITARY SERVICES - 4.0%
Cabot Oil and Gas Corp., Class A 25 392
NGC Corp. 29 526
PanEnergy Corp. 27 1,032
Philip Environmental, Inc. (a) Ca 33 338
Wessex Water PLC UK 34 197
-------
2,485
-------
ELECTRIC SERVICES - 2.5%
Allegheny Power System, Inc. 32 956
Texas Utilities Co. 15 599
-------
1,555
-------
GAS SERVICES - 2.1%
Eastern Enterprises 7 258
MCN Corp. 4 107
Washington Gas & Light Co. 41 911
-------
1,276
-------
</TABLE>
9
<PAGE>
Investment Portfolio/October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
================================================================================
<S> <C> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
SANITARY SERVICES - 1.0%
Severn Trent Water PLC UK 64 $ 641
-------
- --------------------------------------------------------------------------------
WHOLESALE TRADE - 1.0%
DURABLE GOODS
Commercial Metals Co. 21 636
-------
TOTAL COMMON STOCKS (cost of $49,528) 58,496
-------
PREFERRED STOCK - 0.1%
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.1%
ELECTRIC, GAS & SANITARY SERVICES
Hyder PLC, 7.875% (cost of $41) UK 30 50
-------
</TABLE>
CORPORATE FIXED - INCOME
BONDS & NOTES - 0.1%
<TABLE>
<CAPTION>
CURRENCY PAR VALUE
================================================================================
<S> <C> <C> <C>
MANUFACTURING - 0.1%
LUMBER & WOOD PRODUCTS
Donohue, Inc.:
Series A,
8.000% 03/01/97 CD 37 28
Series B,
8.000% 03/01/98 CD 37 29
-------
TOTAL CORPORATE FIXED - INCOME
BONDS & NOTES (cost of $55) 57
-------
TOTAL INVESTMENTS - 94.3% (cost of $49,624)(c) 58,603
-------
SHORT-TERM OBLIGATIONS - 5.4%
================================================================================
Repurchase agreement with Lehman Brothers, Inc. dated
10/31/96, due 11/01/96 at 5.530%, collateralized by
U.S. Treasury bonds and notes with various maturities
to 2023, market value $3,413 (repurchase proceeds
$3,348) 3,347 3,347
-------
OTHER ASSETS & LIABILITIES, NET - 0.3% 187
================================================================================
NET ASSETS - 100.0% $62,137
=======
<FN>
NOTES TO INVESTMENT PORTFOLIO:
================================================================================
(a) Non-income producing.
(b) Rounds to less than one.
(c) Cost for federal income tax purposes is approximately the same.
</TABLE>
10
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1996
- --------------------------------------------------------------------------------
<CAPTION>
Summary of Securities by Country/
Country/Currency Currency Value % of Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $38,662 66.0%
Canada Ca/CD 10,478 17.9%
Australia Au 1,849 3.2%
Netherlands Ne 1,589 2.7%
United Kingdom UK 1,358 2.3%
Norway No 1,298 2.2%
Spain Sp 951 1.6%
Germany G 827 1.4%
South Africa SA 610 1.0%
Austria Aus 550 0.9%
Malaysia Ma 167 0.3%
Ghana Gh 160 0.3%
France Fr 104 0.2%
------- -----
$58,603 100.0%
======= =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------- ---------------------------
ADR American Depository Receipt
ADS American Depository Shares
GDS Global Depository Shares
</TABLE>
See notes to financial statements.
11
<PAGE>
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1996
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $49,624) $58,603
Short-term obligations 3,347
-------
61,950
Cash including foreign currencies (cost $13) $ 14
Receivable for:
Investments sold 847
Fund shares sold 96
Dividends 39
Foreign tax reclaims 18
Interest 1
Deferred organization expenses 8
Other 14 1,037
---- -------
Total Assets 62,987
LIABILITIES
Foreign currencies (cost $225) 224
Payable for:
Investments purchased 487
Fund shares repurchased 122
Accrued:
Deferred Trustees fees 2
Other 15
----
Total Liabilities 850
-------
NET ASSETS $62,137
=======
Net asset value & redemption price per share -
Class A ($36,655/2,560) $ 14.32
=======
Maximum offering price per share - Class A
($14.32/0.9425) $ 15.19(a)
=======
Net asset value & offering price per share -
Class B ($25,482/1,791) $ 14.23(b)
=======
COMPOSITION OF NET ASSETS
Capital paid in $47,383
Overdistributed net investment income (1)
Accumulated net realized gain 5,774
Net unrealized appreciation on:
Investments 8,979
Foreign currency transactions 2
-------
$62,137
=======
<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.
</TABLE>
See notes to financial statements.
12
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 1,090
Interest 163
-------
Total investment income (net of nonrebatable
foreign taxes withheld at source which
amounted to $60) 1,253
EXPENSES
Management fee $ 434
Service fee 145
Distribution fee - Class B 180
Transfer agent 190
Bookkeeping fee 30
Registration fee 26
Custodian fee 21
Audit fee 35
Trustees fee 16
Reports to shareholders 10
Legal fee 4
Amortization of deferred
organization expenses 15
Other 5 1,111
------ -------
Net Investment Income 142
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 5,771
Foreign currency transactions (13)
------
Net Realized Gain 5,758
Net unrealized appreciation (depreciation) during
the period on:
Investments 4,839
Foreign currency transactions (4)
Net Unrealized Appreciation 4,835
-------
Net Gain 10,593
-------
Net Increase in Net Assets from Operations $10,735
=======
</TABLE>
See notes to financial statements.
13
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Year ended
(in thousands) October 31
====================
INCREASE (DECREASE) IN NET ASSETS 1996 1995
<S> <C> <C>
Operations:
Net investment income $ 142 $ 293
Net realized gain 5,758 2,578
Net unrealized appreciation (depreciation) 4,835 (4,704)
-------- --------
Net Increase (Decrease) from Operations 10,735 (1,833)
Distributions:
From net investment income - Class A (199) (289)
From net realized gains - Class A (1,554) (642)
From net investment income - Class B -- (38)
From net realized gains - Class B (1,048) (424)
-------- --------
7,934 (3,226)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 10,375 5,815
Value of distributions reinvested - Class A 1,543 807
Cost of shares repurchased - Class A (11,267) (10,146)
-------- --------
651 (3,524)
-------- --------
Receipts for shares sold - Class B 10,576 7,844
Value of distributions reinvested - Class B 897 413
Cost of shares repurchased - Class B (10,149) (8,567)
-------- --------
1,324 (310)
-------- --------
Net Increase (Decrease) from Fund
Share Transactions 1,975 (3,834)
-------- --------
Total Increase (Decrease) 9,909 (7,060)
NET ASSETS
Beginning of period 52,228 59,288
-------- --------
End of period (net of overdistributed and
including undistributed net investment
income of $1 and $73, respectively) $ 62,137 $ 52,228
======== ========
NUMBER OF FUND SHARES
Sold - Class A 754 463
Issued for distributions reinvested - Class A 122 73
Repurchased - Class A (834) (816)
-------- --------
42 (280)
-------- --------
Sold - Class B 784 635
Issued for distributions reinvested - Class B 71 35
Repurchased - Class B (755) (692)
-------- --------
100 (22)
-------- --------
</TABLE>
See notes to financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Global 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's investment objective is to
seek preservation of capital purchasing power and long-term growth. 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there were
no sales during the day, at current quoted bid prices.
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
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.
15
<PAGE>
Notes to Financial Statements/October 31, 1996
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
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 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.
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 amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: 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.
16
<PAGE>
Notes to Financial Statements/October 31, 1996
- --------------------------------------------------------------------------------
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 (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract was opened,
exposure is typically limited to the change in value of the contract (in U.S.
dollars) over the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on 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
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.
17
<PAGE>
Notes to Financial Statements/October 31, 1996
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer Agent), an
affiliate of the Adviser, provides shareholder services for a monthly fee equal
to 0.25% annually of the Fund's average net assets and receives 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, 1996, the Fund has been
advised that the Distributor retained net underwriting discounts of $14,260 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $91,343 on Class B share redemptions.
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% of the average net assets attributable to Class B
shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended October 31, 1996, purchases and sales
of investments, other than short-term obligations, were $45,912,512 and
$47,220,875, respectively.
<TABLE>
Unrealized appreciation (depreciation) at October 31, 1996, based on cost of
investments for federal income tax purposes was:
<S> <C>
Gross unrealized appreciation $10,088,031
Gross unrealized depreciation (1,108,848)
===========
Net unrealized appreciation $ 8,979,183
</TABLE>
OTHER: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of foreign currency
exchange or the imposition of other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
18
<PAGE>
Notes to Financial Statements/October 31, 1996
- --------------------------------------------------------------------------------
NOTE 4. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended October 31, 1996.
19
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (a)
Selected data for a share of each class outstanding throughout each period are
as follows:
<CAPTION>
Year ended October 31
============================================
1996 1995
Class A Class B Class A Class B
======= ======= ======= =======
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $12.430 $12.380 $13.160 $13.110
======= ======= ======= =======
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.075 (0.026) 0.102 0.009
Net realized and
unrealized gain (loss) 2.525 2.506 (0.496) (0.489)
------- ------- ------- -------
Total from Investment
Operations 2.600 2.480 (0.394) (0.480)
------- ------- ------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net
investment income (0.080) -- (0.106) (0.020)
From net
realized gains (0.630) (0.630) (0.230) (0.230)
------- ------- ------- -------
Total Distributions Declared
to Shareholders (0.710) (0.630) (0.336) (0.250)
------- ------- ------- -------
Net asset value -
End of period $14.320 $14.230 $12.430 $12.380
======= ======= ======= =======
Total return (c) 21.69% 20.70% (2.88)% (3.56)%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.61%(e) 2.36% (e) 1.66%(e) 2.41%(e)
Net investment income 0.56%(e) (0.19)%(e) 0.82%(e) 0.07%(e)
Portfolio turnover 84% 84% 65% 65%
Average
commission rate (g) $0.0268 $0.0268 -- --
Net assets at end
of period (000) $36,655 $25,482 $31,297 $20,931
<FN>
(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) Not annualized.
(e) The benefits derived from custody credits and directed brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(f) Annualized.
(g) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades on which
commissions are charged.
</TABLE>
20
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (a) - CONTINUED
<CAPTION>
Period ended
Year ended October 31 October 31
================================== ================
1994 1993 1992(a)
Class A Class B Class A Class B Class B
======= ======= ======= ======= =======
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $12.160 $12.130 $ 9.750 $ 9.720 $10.000 $10.000
======= ======= ======= ======= ======= =======
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.114 0.019 0.099 0.018 0.042 0.012
Net realized and
unrealized gain (loss) 1.104 1.097 2.429 2.431 (0.292) (0.292)
------- ------- ------- ------- ------- -------
Total from Investment
Operations 1.218 1.116 2.528 2.449 (0.250) (0.280)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net
investment income (0.118) (0.036) (0.118) (0.039) -- --
From net
realized gains (0.100) (0.100) -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions Declared
to Shareholders (0.218) (0.136) (0.118) (0.039) -- --
Net asset value -
End of period $13.160 $13.110 $12.160 $12.130 $ 9.750 $ 9.720
======= ======= ======= ======= ======= ======
Total return (c) 10.14% 9.28% 26.20% 25.30% (2.50)%(d) (2.80)(d)
======= ======= ======= ======= ====== =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.70% 2.45% 1.88% 2.63% 2.45%(f) 3.20%(f)
Net investment income 0.90% 0.15% 0.92% 0.17% 1.07%(f) 0.32%(f)
Portfolio turnover 15% 15% 14% 14% 89%(f) 89%(f)
Average commission
rate(g) -- -- -- -- -- --
Net assets at end
of period (000) $36,830 $22,458 $31,098 $ 7,179 $27,790 $4,444
<FN>
(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) Not annualized.
(e) The benefits derived from custody credits and directed brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(f) Annualized.
(g) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades on which
commissions are charged.
</TABLE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
100% of the ordinary income distributed by the Fund in the year ended
October 31, 1996 qualifies for the corporate dividends received deduction.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO 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, 1996, 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, 1996 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 10, 1996
22
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Global Natural Resources Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Global Natural Resources Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-426-3750 and additional reports will be sent to
you.
This report has been prepared for shareholders of Colonial Global Natural
Resources 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
MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore
Bank & Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly Dean,
Simon Graduate School of Business, University of Rochester; Chairman and Chief
Executive Officer, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC., Distributor [copyright] 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
NR-02/962C-1096 M (12/96)
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