[LOGO]
-----------------
COLONIAL GLOBAL
UTILITIES FUND
-----------------
ANNUAL REPORT
October 31, 1996
-----------------
[graphic omitted]
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
<PAGE>
COLONIAL GLOBAL UTILITIES FUND HIGHLIGHTS
NOVEMBER 1, 1995 - OCTOBER 31, 1996
INVESTMENT OBJECTIVE: Colonial Global Utilities Fund seeks current
income and long-term growth of capital and income.
THE FUND IS DESIGNED TO OFFER:
X Long-term growth potential
X Worldwide diversification
X Experienced professional management
PORTFOLIO MANAGEMENT COMMENTARY: "A global utilities fund provides a relatively
conservative way for U.S. investors to participate in the growth potential of
these global markets."
- Ophelia Barsketis
COLONIAL GLOBAL UTILITIES FUND PERFORMANCE
CLASS A CLASS B CLASS D
Inception dates 10/15/91 3/27/95 3/27/95
12-month distributions declared per share $0.385 $0.299 $0.299
12-month total returns, assuming 11.99% 11.25% 11.16%
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC)
- ---------------------------------------------------------------------------
Net asset value per share at 10/31/96 $12.00 $12.01 $12.00
TOP FIVE EQUITY HOLDINGS* TOP FIVE COUNTRIES*
(as of 10/31/96) (as of 10/31/96)
................................... ....................................
1. Consolidated Natural Gas 2.9% 1. United States 44.5%
2. AES Corp. 2.8% 2. United Kingdom 7.7%
3. Lucent Technologies, Inc. 2.7% 3. Malaysia 6.6%
4. SFP Pipeline CV 2.6% 4. Spain 4.6%
5. Nokia Ab 2.5% 5. Argentina 3.7%
* Holdings and country breakdowns are based on total investments of the
portfolio. Because the portfolio is actively managed, holdings and country
breakdowns will change.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Harold W. Cogger]
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.
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 18, 1996
Because market conditions change frequently, there can be no assurance that the
trends described will continue, come to pass or affect Fund performance.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
OPHELIA BARSKETIS, portfolio co-manager of LFC Utilities Trust has been with
Stein Roe & Farnham Inc., the portfolio's adviser, since 1983. DEBORAH LEE,
co-manager of the portfolio, has been with Stein Roe & Farnham since 1987.
Q. PLEASE DESCRIBE THE GLOBAL ECONOMIC ENVIRONMENT OVER THE PAST YEAR AND ITS
EFFECT ON UTILITY STOCKS.
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 new all-time highs. Utility stocks performed much
better in the second half of the period after uncertainty surrounding interest
rates subsided.
Outside the U.S., improvements in the European economy benefited the
telecommunications and electric utilities sectors. The combination of
privatization, competition and regulatory changes in the utilities industry also
created positive conditions in Asia and the emerging markets of Latin America.
Q. HOW DID THE FUND PERFORM COMPARED TO THE MORGAN STANLEY CAPITAL INTERNATIONAL
WORLD INDEX?
A. The Fund's Class A shares returned 11.99%, while the Index, which tracks a
broader range of international equities, returned 16.30% for the year. The
Standard & Poor's Utilities Index, a common measure of the U.S. utility stock
performance, was up 9.80% during the period. The Fund's exposure to foreign
utilities helped it outperform domestic utility funds, but its concentration on
utilities limited performance relative to the broader market index.
Q. WHAT REGIONS AND SPECIFIC HOLDINGS CONTRIBUTED TO THE PORTFOLIO'S PERFORMANCE
DURING THE YEAR?
A. Some of the portfolio's best performing holdings were in Southern Europe. We
owned Telefonica de Espana and Telecom Italia, the Spanish and Italian telephone
companies, which increased in value by 12% and 62%, respectively, during the
year. Samchully, a Korean distributor of natural gas was another strong
performer. Samchully is benefiting from the South Korean government's major
initiative to improve air quality by mandating that all new structures use
natural gas instead of other fuels.
Q. WHAT ARE THE BENEFITS OF A GLOBAL UTILITIES FUND?
A. Utilities have traditionally been among the most conservative investments.
They tend to be large, well capitalized companies with steady earnings. A global
utilities fund provides a relatively conservative way for U.S. investors to
participate in the growth potential of these overseas markets. LFC Utilities
Trust controls risk through broad diversification. The largest country exposure
in the portfolio is the U.S. market, 20% is allocated to global fixed income
securities, and we divide our equity holdings equally among the telephone,
electricity and gas sectors.
Q. WHAT IS YOUR MARKET OUTLOOK?
A. Looking ahead, we will be very selective when choosing U.S. stocks since we
expect slow economic growth to continue in the first half of 1997. Overseas, we
believe market conditions will be more favorable due to the pick-up in the
global economy. Outside the U.S., utilities are considered growth industries.
The need for basic electric services throughout Latin America, for example, or
telephone service in China creates important opportunities for utility
investors.
<PAGE>
COLONIAL GLOBAL UTILITIES FUND INVESTMENT PERFORMANCE VS. MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD INDEX ND AND THE STANDARD & POOR'S UTILITIES INDEX
Change in Value of $10,000 from 10/31/91 - 10/31/96
Based on NAV and MOP for Class A Shares
NAV MOP MSCI S&P Utilities
- ------------------------------------------------------------------------------
Oct 31, 91 10000 9425 10000 10000
Nov 30, 91 10047.81 9470.06 9561 9908
Dec 31, 91 10507.72 9903.528 10254 10635
Jan 31, 92 10355.83 9760.368 10061 10063
Feb 29, 92 10315.34 9722.207 9885 9782
Mar 31, 92 10202.78 9612.12 9416 9643
Apr 40, 92 10367.12 9771.015 9544 10269
May 31, 92 10635.7 10024.14 9921 10254
Jun 30, 92 10687.53 10072.99 9585 10394
Jul 31, 92 11136.53 10496.18 9607 11222
Aug 31, 92 11199.19 10555.24 9837 11132
Sep 30, 92 11199.04 10555.1 9744 11213
Oct 31, 92 11082.72 10445.46 9477 11113
Nov 30, 92 11242.56 10596.11 9643 11092
Dec 31, 92 11596.43 10929.64 9718 11496
Jan 31, 93 11855.39 11173.71 9748 11674
Feb 28, 93 12311.08 11603.19 9976 12510
Mar 31, 93 12605.17 11880.37 10551 12736
Apr 30, 93 12516.65 11796.94 11037 12475
May 31, 93 12517.33 11797.58 11289 12463
Jun 30, 93 12892.7 12151.37 11191 13038
Jul 31, 93 13025.53 12276.56 11419 13340
Aug 31, 93 13570.72 12790.4 11939 13986
Sep 30, 93 13615.27 12832.4 11716 13951
Oct 31, 93 13659.51 12874.09 12036 13927
Nov 30, 93 13153.08 12396.78 11352 13224
Dec 31, 93 13340.91 12573.8 11905 13156
Jan 31, 94 13643.31 12858.82 12688 13241
Feb 28, 94 13278.43 12514.92 12521 12493
Mar 31, 94 12772.37 12037.96 11978 12070
Apr 30, 94 12811.87 12074.87 12345 12372
May 31, 94 12559.26 11837.11 12374 12037
Jun 30, 94 12421.55 11707.31 12337 12067
Jul 31, 94 12718.64 11987.31 12569 12472
Aug 31, 94 12804.79 12068.52 12945 12434
Sep 30, 94 12536.59 11815.74 12602 12124
Oct 31, 94 12647.1 11919.89 12957 12219
Nov 30, 94 12424.04 11709.66 12392 12044
Dec 31, 94 12427.24 11712.68 12509 12111
Jan 31, 95 12697.89 11967.76 12319 13054
Feb 28, 95 12798.75 12062.82 12495 13029
Mar 31, 95 12826.96 12089.41 13094 12946
Apr 30, 95 13088.46 12335.87 13548 13430
May 31, 95 13535.83 12757.52 13661 13849
Jun 30, 95 13564.09 12784.15 13653 13908
Jul 31, 95 13766.04 12974.49 14333 14266
Aug 31, 95 13708.08 12919.87 14011 14556
Sep 30, 95 14011.88 13206.2 14416 15468
Oct 31, 95 13952.73 13150.45 14186 15797
Nov 30, 95 14222.18 13404.41 14675 15969
Dec 31, 95 14669.79 13826.28 15101 17092
Jan 31, 96 14888.91 14032.8 15371 17316
Feb 29, 96 14814.52 13962.68 15462 16638
Mar 31, 96 14677.29 13833.34 15716 16279
Apr 30, 96 14936.63 14077.78 16082 16473
May 31, 96 15142.21 14271.53 16093 16436
Jun 30, 96 15181.37 14308.44 16171 17100
Jul 31, 96 14687.18 13842.67 15596 15993
Aug 31, 96 15058.09 14192.25 15772 16366
Sep 30, 96 15222.75 14347.45 16387 16523
Oct 31, 96 15625.83 14727.35 16498 17345
A $10,000 investment in Class B shares made on 3/27/95, (inception) at net asset
value (NAV) would have been valued at $12,107 on 10/31/96. The same investment
after deducting the applicable contingent deferred sales charge (CDSC) would
have grown to $11,707 on 10/31/96. A $10,000 investment in Class D shares made
on 3/27/95, (inception) at NAV would have been valued at $12,097 on 10/31/96.
The same investment after deducting the applicable CDSC would have grown to
$11,976 on 10/31/96. The Morgan Stanley Capital International World Index ND is
an unmanaged index that tracks the performance of global stocks. The Standard &
Poor's Utilities Index is an unmanaged index that tracks the performance of
domestic utility stocks. Unlike mutual funds, an index does not incur fees or
charges and it is not possible to invest in an index.
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
As of 9/30/96 (Most Recent Quarter End)
- ------------------------------------------------------------------------------
CLASS A* CLASS B CLASS D
INCEPTION 10/15/91 3/27/95 3/27/95
NAV MOP NAV W/CDSC NAV MOP W/CDSC
- ------------------------------------------------------------------------------
1 YEAR 8.64% 2.39% 7.83% 2.83% 7.83% 5.75%
- ------------------------------------------------------------------------------
SINCE INCEPTION 8.81% 7.52% 11.47% 8.97% 11.47% 10.74%
- ------------------------------------------------------------------------------
*The Fund initially commenced operations as the LFC Utilities Trust on 10/15/96.
Performance shown is based in part on the performance of the LFC Utilities
Trust. 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. NAV returns do not include sales charges
or CDSC. Maximum offering price (MOP) returns include the maximum sales charges
of 5.75% for Class A shares and 1% for Class D shares. The CDSC returns reflect
the maximum applicable charges of 5% for 1 year and 4% since inception for Class
B shares and 1% for Class D shares for 1 year. Performance for different share
classes will vary based on differences in sales charges and fees associated with
each class.
<PAGE>
LFC UTILITIES TRUST
INVESTMENT PORTFOLIO
OCTOBER 31, 1996 (IN THOUSANDS)
COMMON STOCKS - 67.3% COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
MANUFACTURING - 2.0%
AIR CONDITIONING & WARM AIR HEATING EQUIPMENT - 2.0%
York International Corp. 70 $ 3,386
--------
................................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 63.4%
COMMUNICATIONS - 23.7%
Ameritech Corp. 61 3,345
Frontier Corp. 86 2,500
GTECorp 91 3,812
Lucent Technologies, Inc. 99 4,639
MCI Communications Corp. 75 1,884
Olivetti Group (a) It 5,500 1,600
Oy Nokia Ab ADR Fn 93 4,294
Portugal Telecom S.A. ADR Pt 140 3,622
Telecom Italia (Saving Shares) It 1,370 2,611
Telecomunicacoes Brasileiras SA
Telebras ADR (a) Bl 25 1,863
Telefonica de Argentina ADR Ar 92 2,146
Telefonica de Espana ADR Sp 71 4,254
Telefonos de Mexico S.A. ADR Mx 47 1,434
WorldCom, Inc. (a) 114 2,779
--------
40,783
--------
ELECTRIC SERVICES - 24.5%
AES Corp. (a) 110 4,826
Cinergy Corp. 100 3,312
DPL, Inc. 130 3,104
Duke Power Co. 35 1,711
Empressa National ADR Sp 59 3,628
FPL Group, Inc. 65 2,990
Hong Kong Electric ADR HK 1,200 3,841
Korea Electric Power ADR Ko 175 3,150
National Power PLC ADR UK 133 3,594
NIPSCO Industries, Inc. 82 3,106
Powergen PLC ADR UK 128 4,271
Utilicorp United, Inc. 68 1,845
Veba AG G 53 2,847
--------
42,225
--------
GAS SERVICES - 15.2%
British Gas PLC UK 530 1,653
CMS Energy Corp. 102 3,210
MCN Corp. 111 3,058
Northwest Natural Gas Co. 135 3,426
Petronas Gas Berhad Ma 580 2,364
Questar Corp. 84 3,024
Samchully Co. Ko 27 2,204
Transportation de Gas Del Sur ADS Ar 360 4,185
UGI Corp. 127 3,000
--------
26,124
--------
................................................................................
SERVICES - 1.9%
WATER SERVICES - 1.9%
Compagnie Generale des Eaux Fr 28 3,349
--------
TOTAL COMMON STOCKS (cost of $100,096) 115,867
--------
CONVERTIBLE PREFERRED STOCKS - 4.4%
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 4.4%
COMMUNICATIONS - 4.4%
Citizens Utilities 5.000% 80 3,840
Ericsson Corp. 4.250% Sw 1,000 3,656
--------
7,496
--------
TOTAL CONVERTIBLE PREFERRED STOCKS (cost of $6,419) 7,496
--------
CORPORATE FIXED-INCOME BONDS - 21.5% CURRENCY PAR VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 21.5%
COMMUNICATIONS - 7.5%
Telekom Malaysian Berhad, 7.125% 8/01/05 Ma 4,000 4,061
Telecom New Zealand, 6.750% 10/11/05 NZ 5,000 4,976
Telstra Corp. Ltd., 6.500% 07/31/03(b) Au 4,000 3,960
--------
12,997
--------
ELECTRICAL SERVICES - 14.0%
Chilgener S.A., 6.500% 01/15/06 Ch 4,000 3,832
Financiera Energetica, 9.000% 11/08/99(c) Co 4,000 4,156
Hydro Quebec, 8.050% 07/07/24 Ca 4,000 4,379
National Grid Co. PLC, 5.500% 02/22/01 UK 3,750 3,621
Niagara Mohawk Power Co., 7.375% 08/01/03 3,625 3,371
Tenaga Nasional Berhad, 7.875% 06/15/04(d) Ma 4,500 4,753
--------
24,112
--------
TOTAL CORPORATE FIXED-INCOME BONDS (cost of $37,476) 37,109
--------
CORPORATE CONVERTIBLE BONDS - 5.4%
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 5.4%
GAS SERVICES - 5.4%
Consolidated Natural Gas, 7.250% 12/15/15 4,500 4,860
SFP Pipeline, 11.160% 08/15/10 3,700 4,514
--------
TOTAL CORPORATE CONVERTIBLE BONDS (cost of $9,048) 9,374
--------
TOTAL INVESTMENTS - 98.6% (cost of $153,039)(e) 169,846
--------
OTHER ASSETS & LIABILITIES, NET - 1.4% 2,476
- --------------------------------------------------------------------------------
NET ASSETS - 100% $172,322
--------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Telestra Corp. Ltd. is a restricted security which was acquired on
June 1, 1995 at a cost of $3,942. This security represents 2.3% of the
Portfolio's net assets at October 31, 1996.
(c) Financiera Energetica is a restricted security which was acquired on
June 1, 1995 at a cost of $4,126. This security represents 2.4% of the
Portfolio's net assets at October 31, 1996.
(d) Tenega Nasional Berhad is a restricted security which was acquired
on May 22, 1995 at a cost of $4,656. This security represents 2.8% of the
Portfolio's net assets at October 31, 1996.
(e) Cost for federal income tax purposes is the same.
<PAGE>
Summary of Securities by Country/
Country/Currency Currency Value % of Total
- ------------------------------------------------------------------------
United States $ 75,542 44.5%
United Kingdom UK 13,139 7.7%
Malaysia Ma 11,178 6.6%
Spain Sp 7,882 4.6%
Argentina Ar 6,331 3.7%
Korea Ko 5,354 3.2%
New Zealand NZ 4,976 2.9%
Canada Ca 4,379 2.6%
Finland Fn 4,294 2.5%
Italy It 4,211 2.5%
Colombia Co 4,156 2.4%
Australia Au 3,960 2.3%
Hong Kong HK 3,841 2.3%
Chile Ch 3,832 2.3%
Sweden Sw 3,656 2.2%
Portugal Pt 3,622 2.1%
France Fr 3,349 2.0%
Germany G 2,847 1.7%
Brazil Bl 1,863 1.1%
Mexico Mx 1,434 0.8%
--------- -----
$ 169,846 100.0%
========= =====
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
See notes to financial statements
<PAGE>
LFC UTILITIES TRUST
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1996
(in thousands)
ASSETS
Investments at value (cost $153,039) $169,846
Receivable for:
Investments sold $ 1,514
Interest 973
Dividends 372
Other assets 14 2,873
------- --------
Total Assets 172,719
LIABILITIES
Payable to custodian bank 269
Payable for:
Management, accounting and transfer
agent fees 84
Other 44
-------
Total Liabilities 397
--------
NET ASSETS applicable to
investors' beneficial interest $172,322
========
See notes to financial statements.
<PAGE>
LFC UTILITIES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
(in thousands)
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $427) $ 6,195
Interest 3,615
-------
Total Investment Income 9,810
EXPENSES
Management fee $ 1,064
Custodian & accounting fees 58
Audit & legal fees 15
Transfer agent fees 8
Amortization of deferred organization
expenses 10
Trustees fees 2
Other 8 1,165
-------- -------
Net Investment Income 8,645
-------
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 2,340
Foreign currency transactions 10
--------
Net realized gain from investments
and foreign currency transactions 2,350
Net unrealized appreciation during the
period on:
Investments 12,774
Translation of other assets and liabilities 10
--------
Net unrealized appreciation from
investments and foreign currency
transactions 12,784
-------
Net gain 15,134
-------
Net Increase in Net Assets from Operations $23,779
=======
See notes to financial statements.
<PAGE>
LFC UTILITIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended October 31
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
Operations:
Net investment income $ 8,645 $ 13,293
Net realized gain (loss) from investments
and foreign currency transactions 2,350 (3,801)
Net unrealized appreciation from
investments and foreign currency transactions 12,784 14,432
--------- ---------
Net Increase from Operations 23,779 23,924
--------- ---------
Transactions in investors' beneficial interests
Contributions 38 7,023
Withdrawals (65,100) (78,000)
--------- ---------
Net transactions in investors' beneficial
interest (65,062) (70,977)
--------- ---------
Total Decrease (41,283) (47,053)
--------- ---------
NET ASSETS
Beginning of period 213,605 260,658
--------- ---------
End of period $ 172,322 $ 213,605
========= =========
See notes to financial statements.
<PAGE>
LFC UTILITIES TRUST
FINANCIAL HIGHLIGHTS
Year ended October 31
-------------------------------------------
1996 1995 1994 1993
------- ------ ------ -----
RATIOS TO AVERAGE NET ASSETS
Expenses 0.60% 0.63%(a) 0.61% 0.64%
Net investment income 4.47% 5.97%(b) 5.48% 5.29%
Portfolio turnover 34% 46% 34% 41%
Year
ended
October 31
-------------
1992
------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.72%(a)
Net investment income 6.36%(b)
Portfolio turnover 31%
(a) If the Portfolio had paid all of its expenses and there had been no
reimbursement from the Investment Adviser, as described in Note 3, these
ratios would have been 0.64% and 0.86%, respectively.
(b) Computed giving effect to the Investment Adviser's expense limitation
undertaking.
See notes to financial statements.
<PAGE>
LFC UTILITIES TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES
..............................................................................
ORGANIZATION: LFC Utilities Trust (the Portfolio) was organized on August 14,
1991 as a trust under Massachusetts law and is registered under the Investment
Company Act of 1940 as an open-end investment company. The Declaration of Trust
permits the Trustees to issue non-transferable interests in the Portfolio. The
Portfolio commenced operations on August 23, 1991.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. 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
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
VALUATION OF INVESTMENTS: All securities are valued as of October 31, 1996.
Domestic securities traded on national securities exchanges are valued at the
last reported sales price or, if there are no sales, at the latest bid
quotation. Each domestic over-the-counter security for which the last sales
price is available from Nasdaq is valued at that price. All other domestic
over-the-counter securities for which reliable quotations are available are
valued at the latest bid quotation. Domestic securities convertible into equity
securities and long-term debt obligations are valued at a fair value using a
procedure determined in good faith by the Board of Trustees, which has
authorized the use of valuations provided by a pricing service. Foreign security
valuations are generally based upon market quotations which, depending upon
local convention or regulation, may be last sale price, last bid or asked price,
or the mean between last bid and asked price as of, in each case, the close of
the appropriate exchange or other designated time.
Other assets and securities of the Portfolio are valued by a method that the
Board of Trustees believes represents a fair value.
ORGANIZATION EXPENSES: Expenses incurred in connection with the organization of
the Portfolio were deferred and amortized on a straight line basis over five
years.
FEDERAL INCOME TAXES: The Portfolio has complied and intends to comply with the
applicable provisions of the Internal Revenue Service Code. Accordingly, no
provisions for federal income taxes is considered necessary.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Portfolio are
maintained in U.S. dollars. All assets and liabilities of the Portfolio
denominated in foreign currencies are translated into U.S. dollar amounts using
a rate that represents the mid-point between bid and asked market rates for such
currencies. Purchases and sales of foreign securities and income derived from
foreign securities are converted at the prevailing rate of exchange on the
respective dates of such transactions. The Portfolio may enter into "forward
currency contracts" for purchases and sales of securities denominated in foreign
currency.
OTHER: Investment transactions are accounted for on the trade date. Interest
income and expenses are recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date.
NOTE 2. INVESTMENT TRANSACTIONS
..............................................................................
Realized gains and losses are computed on the identified cost basis for both
financial reporting and federal income tax purposes. The cost of investments
purchased and proceeds from investments sold, excluding short-term investments,
for the year ended October 31, 1996 were $63,472,345 and $115,699,721,
respectively.
Unrealized appreciation (depreciation) at October 31, 1996, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 22,023,606
Gross unrealized depreciation (5,216,175)
------------
Net unrealized appreciation $ 16,807,431
============
NOTE 3. TRANSACTIONS WITH AFFILIATES INVESTMENT MANAGEMENT
..............................................................................
The Portfolio has a management agreement with Stein Roe & Farnham, Inc. (Stein
Roe), an indirect majority-owned subsidiary of Liberty Mutual Insurance Company
(Liberty Mutual) under which Stein Roe provides investment management and
administrative services. The investment management fee paid to Stein Roe is
accrued daily and paid monthly at an annual rate of 0.55 percent of the
Portfolio's average daily net assets up to $400 million and 0.50 percent of its
average daily net assets thereafter.
The transfer agent fees are paid to Stein Roe Services, Inc., an indirect,
majority-owned subsidiary of Liberty Mutual. For the year ended October 31,
1996, the Portfolio incurred charges of $7,500.
Stein Roe also provides the Portfolio with certain accounting services. For the
year ended October 31, 1996, the Portfolio incurred charges of $28,725.
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE TRUSTEES AND INVESTORS
LFC UTILITIES TRUST:
We have audited the accompanying statement of assets and liabilities of LFC
Utilities Trust including the Investment Portfolio, as of October 31, 1996, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of LFC
Utilities Trust as of October 31, 1996, the result of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 3, 1996
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1996
(in thousands except for per share amounts and footnotes)
ASSETS
Investment in LFC Utilities Trust, at value $ 172,321
Receivable for Fund shares sold 26
-----------
Total Assets 172,347
LIABILITIES
Payable for:
Fund shares repurchased 216
Distributions 51
Accrued:
Administration fee 14
Distribution fee 1
Bookkeeping fee 4
Service fee 36
Transfer Agent fee 29
Other 34
------
Total Liabilities 385
-----------
NET ASSETS $ 171,962
===========
Net asset value & redemption price per share -
Class A ($169,840,/14,149) $12.00
===========
Maximum offering price per share - Class A
($12.00/0.9425) $12.73(a)
===========
Net asset value & offering price per share -
Class B ($1,538/128) $12.01(b)
===========
Net asset value & redemption price per share -
Class D ($584/49) $12.00(b)
===========
Maximum offering price per share - Class D
($12.00/0.9900) $12.12
===========
COMPOSITION OF NET ASSETS
Capital paid in $ 155,731
Undistributed net investment income 865
Accumulated net realized loss (1,451)
Net unrealized appreciation on:
Investments 16,807
Foreign currency transactions 10
-----------
$ 171,962
===========
(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.
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
(in thousands)
INVESTMENT INCOME
Dividend income from LFC Utilities Trust $ 6,194
Interest income from LFC Utilities Trust 3,615
Expenses allocated from LFC Utilities Trust (1,165) $ 8,644
----------- ----------
EXPENSES
Administration fee 193
Service fee 480
Distribution fee - Class B 9
Distribution fee - Class D 3
Audit 16
Transfer agent 529
Bookkeeping fee 51
Trustees fee 10
Custodian fee 12
Legal fee 19
Registration fee 28
Reports to shareholders 15
Amortization of deferred organization expenses 19
Other 139 1,523
----------- ----------
Net Investment Income 7,121
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 2,340
Foreign currency transactions 10
-----------
Net Realized Gain 2,350
Net unrealized appreciation during
the period on:
Investments 12,774
Foreign currency transactions 10
-----------
Net Unrealized Appreciation 12,784
----------
Net Gain 15,134
----------
Net Increase in Net Assets from Operations $ 22,255
==========
See notes to financial statements.
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended October 31
------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995(a)
Operations:
Net investment income $ 7,121 $ 11,731
Net realized gain (loss) 2,350 (3,800)
Net unrealized appreciation 12,784 14,432
----------- ---------
Net Increase from Operations 22,255 22,363
Distributions:
From net investment income - Class A (6,447) (11,802)
From net realized gains - Class A ---- (1,042)
From net investment income - Class B (30) (10)
From net investment income - Class D (12) (6)
----------- ---------
15,766 9,503
----------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 5,017 5,919
Value of distributions reinvested - Class A 5,659 11,297
Cost of shares repurchased - Class A (68,398) (75,218)
----------- ---------
(57,722) (58,002)
----------- ---------
Receipts for shares sold - Class B 1,225 719
Value of distributions reinvested - Class B 23 8
Cost of shares repurchased - Class B (541) ----
----------- ---------
707 727
----------- ---------
Receipts for shares sold - Class D 353 294
Value of distributions reinvested - Class D 10 6
Cost of shares repurchased - Class D (120) (10)
----------- ---------
243 290
----------- ---------
Net Decrease from Fund Share Transactions (56,772) (56,985)
----------- ---------
Total Decrease (41,006) (47,482)
NET ASSETS
Beginning of period 212,968 260,450
----------- ---------
End of period (including undistributed
net investment income of $865 and $241,
respectively) $ 171,962 $ 212,968
=========== =========
(a) Class B and Class D shares were initially offered on March 27, 1995.
Statement of Changes in Net Assets continued on following page.
See notes to financial statements.
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(in thousands) Year ended October 31
------------------------
NUMBER OF FUND SHARES 1996 1995(a)
Sold - Class A 434 556
Issued for distributions reinvested - Class A 494 1,064
Repurchased - Class A (5,903) (7,047)
----------- ---------
(4,975) (5,427)
----------- ---------
Sold - Class B 105 66
Issued for distributions reinvested - Class B 2 1
Repurchased - Class B (46) ----
----------- ---------
61 67
----------- ---------
Sold - Class D 31 28
Issued for distributions reinvested - Class D 1 1
Repurchased - Class D (11) (1)
----------- ---------
21 28
----------- ---------
(a) Class B and Class D shares were initially offered on March 27, 1995.
See notes to financial statements.
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
NOTE 1. ACCOUNTING POLICIES
...............................................................................
ORGANIZATION: Colonial Global Utilities 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 invests all of its investable assets in
interests in the LFC Utilities Trust (the Portfolio), a Massachusetts business
trust, having the same investment objective as the Fund. The value of the Fund's
investment in the Portfolio reflects the Fund's proportionate interest in the
net assets of the Portfolio (99.9% at October 31, 1996). The performance of the
Fund is directly affected by the performance of the Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The Fund may issue an
unlimited number of shares. The Fund offers three classes of shares: Class A,
Class B and Class D. Class A shares are sold with a front-end sales charge, and
Class B shares are subject to an annual distribution fee and a contingent
deferred sales charge. Class B shares will convert to class A shares when they
have been outstanding approximately eight years. Class D shares are subject to a
reduced front-end sales charge, a contingent deferred sales charge on
redemptions made within one year after purchase and a continuing distribution
fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates. The following is a summary of accounting
policies that are consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION AND TRANSACTIONS: Valuation of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class D distribution fees), realized and
unrealized gains (losses) are allocated to each class proportionately on a daily
basis for purposes of determining the net asset value of each class.
The per share data was calculated using the average shares outstanding during
the period. In addition, Class B and Class D net investment income per share
data reflects the distribution fee per share applicable to Class B and Class D
shares only.
Class B and Class D ratios are calculated by adjusting the expense and net
investment income ratios for the Fund for the entire period by the distribution
fee applicable to Class B and Class D shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred $99,000 of expenses in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and were amortized on a straight-line
basis over five years.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
...............................................................................
ADMINISTRATOR FEE: Colonial Management Associates, Inc. (the Administrator) is
the administrator of the Fund and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.10% annually of the Fund's
average net assets.
BOOKKEEPING FEE: The Administrator provides bookkeeping and pricing services for
$18,000 per year plus 0.0233% of the Fund's average net assets over $50 million.
TRANSFER AGENT FEE: Colonial Investors Service Center, Inc. (the Transfer-
Agent), an affiliate of the Administrator, provides shareholder services for a
monthly fee equal to 0.20% 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 Administrator, 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 $19,572
on sales of the Fund's Class A shares and received $1,519 and $697 contingent
deferred sales charge (CDSC) on Class B and Class D share redemptions,
respectively.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually of the Fund's net assets as of the 20th
of each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B and Class D shares.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Administrator.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
...............................................................................
CAPITAL LOSS CARRYFORWARDS: At October 31, 1996, capital loss carry-forwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
------------- ------------
2003 $1,460,861
===========
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may may be
taxable to shareholders as ordinary income.
NOTE 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 off-shore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended October 31, 1996.
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS (b)
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended October 31
----------------------------------
1996
Class A Class B Class D
--------- -------- --------
Net asset value - Beginning of period $ 11.080 $ 11.080 $ 11.080
--------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(c) 0.427 0.340 0.340
Net realized and unrealized gain (loss) 0.878 0.889 0.879
--------- -------- --------
Total from Investment Operations 1.305 1.229 1.219
--------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.385) (0.299) (0.299)
From net realized gains -- -- --
--------- -------- --------
Total Distributions Declared to
Shareholders (0.385) (0.299) (0.299)
--------- -------- --------
Net asset value - End of period $ 12.000 $ 12.010 $ 12.000
========= ======== ========
Total return (e) 11.99% 11.25% 11.16%
========= ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.38%(c) 2.13%(c) 2.13%(c)
Net investment income 3.70%(c) 2.95%(c) 2.95%(c)
Fees and expenses waived
or borne by Liberty Securities
and LFC Utilities Trust -- -- --
Net assets at end of period (000) $ 169,840 $ 1,538 $ 584
(a) Net of fees and expenses waived or
borne by Liberty Securities
which amounted to -- -- --
(b) Per share data was calculated using average shares outstanding during the
period.
(c) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
LFC Utilities Trust.
(d) Class B and Class D shares were initially offered on March 27, 1995. Per
share data reflect activity from that date.
(e) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(f) Total return would have been lower had Liberty Securities and LFC Utilities
Trust not waived certain expenses.
(g) Not annualized.
(h) Annualized.
<PAGE>
<TABLE>
<CAPTION>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS (b) - CONT
Year ended October 31
----------------------------------------------------------------------------
1995 1994 1993
Class A Class B(d) Class D(d) Class A Class A
--------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 10.610 $ 10.420 $ 10.420 $ 12,150 $ 10.430
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(c) 0.536 0.248 0.248 0.550 0.570
Net realized and unrealized gain (loss) 0.520 0.665 0.665 (1.430) 1.790
--------- --------- --------- --------- ---------
Total from Investment Operations 1.056 0.913 0.913 (0.880) 2.360
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.517) (0.253) (0.253) (0.500) (0.610)
From net realized gains (0.069) -- -- (0.160) (0.030)
--------- --------- --------- --------- ---------
Total Distributions Declared to
Shareholders (0.586) (0.253) (0.253) (0.660) (0.640)
--------- --------- --------- --------- ---------
Net asset value - End of period $ 11.080 $ 11.080 $ 11.080 $ 10.610 $ 12.150
========= ========= ========= ========= =========
Total return (e) 10.32%(f) 8.82%(g) 8.82%(g) (7.40)% 23.30%
========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.29%(c) 2.05%(c)(h) 2.05%(c)(h) 1.20% 1.13%
Net investment income 5.14%(c) 3.73%(c)(h) 3.73%(c)(h) 4.90% 4.80%
Fees and expenses waived
or borne by Liberty Securities
and LFC Utilities Trust 0.03% 0.02%(h) 0.02%(h) -- --
Net assets at end of period (000) $ 211,916 $ 745 $ 307 $ 260,450 $ 304,500
(a) Net of fees and expenses waived or
borne by Liberty Securities
which amounted to $0.002 -- -- -- --
(b) Per share data was calculated using average shares outstanding during the period.
(c) The per share amounts and ratios reflect income and expenses assuming inclusion of the Fund's proportionate share of the
income and expenses of LFC Utilities Trust.
(d) Class B and Class D shares were initially offered on March 27, 1995. Per share data reflect activity from that date.
(e) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred
sales charge.
(f) Total return would have been lower had Liberty Securities and LFC Utilities Trust not waived certain expenses.
(g) Not annualized.
(h) Annualized.
</TABLE>
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each
period are as follows:
Year ended
October 31
----------
1992
Class A
----------
Net asset value - Beginning of period $ 9.990
----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(b) 0.590
Net realized and unrealized gain 0.460
----------
Total from Investment Operations 1.050
----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.610)
----------
Net asset value - End of period $ 10.430
==========
Total return (c)(d) 10.80%
==========
RATIOS TO AVERAGE NET ASSETS
Expenses (a) 1.25%(e)
Net investment income (a) 5.81%(b)
Net assets at end of period (000) $ 118,977
(a) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
LFC Utilities Trust.
(b) Computed giving effect to the Investment Adviser's and Administrator's
expense limitation undertaking.
(c) Total return based on net asset value with all distributions reinvested.
(d) Total return would have been lower had the Administrator not waived certain
expenses.
(e) If the Fund had paid all of its expenses excluding distribution fees waived
and there had been no reimbursement from the Investment Adviser and the
Administrator, the ratio would have been 1.61% for the period ended October
31, 1992.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST III AND THE SHAREHOLDERS OF
COLONIAL GLOBAL UTILITIES FUND
In our opinion, the accompanying statement of assets and liabilities, and
the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the
financial position of Colonial Global Utilities Fund (a series of Colonial
Trust III) at October 31, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the two years
in the period then ended, in conformity with generally accepted accounting
principles. These financial statements and the financial highlights
(hereafter referred to as "financial statements") are the responsibility
of the Fund's management; our responsibility is to express an opinion on
these financial statements based on our 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 investments owned at October 31, 1996, provide a
reasonable basis for the opinion expressed above. The Financial Highlights
for each of the periods ended October 31, 1994 were audited by another
Independent Accountant whose report, dated December 15, 1994, expressed an
unqualified opinion on those statements.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 18, 1996
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
Colonial account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale, or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
COLONIAL SHAREHOLDER NEWS: Mailed with your quarterly account statements, this
newsletter highlights timely investment strategies, portfolio manager
commentary, and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends, and capital gains information .......... press [1]
For account information ............................................ press [2]
To speak to a Colonial representative .............................. press [3]
For yield and total return information.............................. press [4]
For duplicate statements or new supply of checks ................... press [5]
To order duplicate tax forms and year-end statements ............... press [6]
(February through May)
To review your options at any time during your call ................ press [*]
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 am to 8:00 pm ET, and Saturdays from February through
mid-April, 10:00 am to 2:00 pm ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
am to 7:00 pm ET. Transactions received after the close of the New York Stock
Exchange will receive the next business day's closing price.
COLONIAL LITERATURE DEPARTMENT - 1-800-426-3750
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES*: Exchange all or part of your account into the same share class
of another Colonial fund, by phone or mail, as your needs change over time.
EASY ACCESS TO YOUR MONEY*: Make withdrawals from your account by phone, by mail
or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it to Colonial within one year, you can reinvest in any
Colonial fund of the same share class without any penalty or sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Colonial account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly, or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th of each month. Dividends and capital must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
LOW COST IRAS: Choose from a broad range of retirement plans, including IRAs.
* Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial. Proceeds may be more or less than
your original cost. The exchange privilege may be terminated at any time.
Exchanges are not available on all funds. Investors who purchase Class B or
Class D shares (for applicable funds), or $1 million or more of Class A shares,
may be subject to a contingent deferred sales charge.
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Global Utilities Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Global Utilities Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call our Literature
Department at 1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Global Utilities
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund.
<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 (C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
GU-02/963C-1096 M (12/96)
[recycle symbol] Printed on recycled paper
