<PAGE>
---------------------------
[COLONIAL INVESTMENTS LOGO]
---------------------------
COLONIAL GLOBAL
EQUITY FUND
---------------------------
ANNUAL REPORT
OCTOBER 31, 1996
---------------------------
[COVER PHOTO]
----------------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
----------------------------
<PAGE>
COLONIAL GLOBAL EQUITY FUND HIGHLIGHTS
NOVEMBER 1, 1995 - OCTOBER 31, 1996
INVESTMENT OBJECTIVE: Colonial Global Equity Fund seeks long-term growth by
investing primarily in global equities.
THE FUND IS DESIGNED TO OFFER:
[Check mark] Opportunity for long-term growth
[Check mark] Diversification to help reduce risk
[Check mark] Experienced professional management
PORTFOLIO MANAGER COMMENTARY: "A global equity fund provides U.S. investors
with valuable international exposure through a broadly diversified portfolio."
-- Gita Rao
<TABLE>
COLONIAL GLOBAL EQUITY FUND PERFORMANCE
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception date 6/8/92 6/8/92
12-month distributions declared per share $0.797 $0.701
12-month total returns, assuming 15.10% 14.04%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
Net asset value per share at 10/31/96 $13.44 $13.35
<CAPTION>
TOP FIVE HOLDINGS* TOP FIVE COUNTRIES*
(as of 10/31/96) (as of 10/31/96)
<S> <C> <C> <C>
1. BASF AG .................... 3.2% 1. United States ............. 22.3%
2. Fuji Photo Film Co. ........ 2.6% 2. Japan ..................... 9.8%
3. Foreningsbanken ............ 2.4% 3. United Kingdom ............ 8.0%
4. Consolidated Natural Gas ... 2.3% 4. Netherlands ............... 4.8%
5. Safeway, Inc. .............. 2.2% 5. Germany ................... 4.6%
- ----------
<FN>
* Holdings and country 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 in
the future.
</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 [PRESIDENT'S PICTURE]
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 perfor-
mance 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
DANIEL RIE is co-manager of Colonial Global Equity Fund and Senior Vice
President of Colonial Management Associates, Inc. Dr. Rie also directs
Colonial's equity investment group. GITA RAO is co-manager of the Fund and Vice
President of Colonial Management Associates, Inc.
Q. DESCRIBE THE GLOBAL ECONOMIC ENVIRONMENT DURING THE YEAR.
A. International market conditions generally improved during the year, but the
best investment performance was found right here 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 throughout the year.
In Japan, market conditions improved modestly, but the weakening yen minimized
real gains to U.S. investors. Europe continued to see positive economic growth
as interest rates declined, particularly in Germany and Scandinavia. Performance
was strong in some Asian countries, notably Hong Kong and Singapore, and the
investment environment improved in the emerging markets of Latin America.
Q. HOW DID THE FUND PERFORM COMPARED TO THE MORGAN STANLEY CAPITAL INTERNATIONAL
WORLD (GDP) INDEX?
A. The Fund's Class A shares returned 15.10%, outperforming the Index which
returned 13.67% for the year. The Fund held 22% of its net assets in the U.S.,
10% in Japan and 38% in Europe as of October 31, 1996, compared to 34%, 18% and
42%, respectively, for the Index. The Fund's relative underweighting in Japan
and overweighting in Europe contributed to its performance. The Fund also
benefited from exposure to emerging markets not represented in the Index.
Q. WHICH MARKET SECTORS AND SPECIFIC STOCKS CONTRIBUTED TO FUND PERFORMANCE?
A. In Germany, BASF, a chemical company diversified into oil, natural gas,
agricultural and consumer products, had strong returns. In Japan, we emphasized
consumer-oriented companies. We added to our position in Fuji Photo Film Co.,
the Fund's second largest holding. Fuji is the world's second largest film
manufacturer and is gaining ground against Kodak in the U.S. as well as in the
fast-growing Southeast Asian market. Domestically, we concentrated on sectors
that are not sensitive to interest rate changes, such as consumer cyclicals.
Q. WHAT ARE THE BENEFITS OF A GLOBAL EQUITY FUND?
A. A global equity fund provides U.S. investors with valuable international
exposure through a broadly diversified portfolio. As of October 31, 1996,
Colonial Global Equity Fund owned more than 110 stocks representing 13 different
sectors in over 20 countries. Strong performance in one country can
counterbalance weak performance elsewhere in the world, providing greater growth
potential with lower overall risk.
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, creating a variety of opportunities for global
investors. In selecting stocks for the Fund, we look for growth at a reasonable
price. As international markets improve, we will be exploring new opportunities
and may increase our exposure to high quality companies in emerging markets.
COLONIAL GLOBAL EQUITY FUND'S INVESTMENT PERFORMANCE VS.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD (GDP) INDEX
CHANGE IN VALUE OF $10,000 FROM 6/30/92 - 10/31/96
CLASS A SHARES
Based on NAV and MOP
AVERAGE ANNUAL TOTAL RETURNS*
Inception 6/8/92 NAV MOP
1 YEAR 11.98% 5.54%
SINCE INCEPTION 12.09% 10.57%
6/92 10/96
$14,000 NAV $16,611
$12,000 MSCI $15,697
$10,000 MOP $15,655
<TABLE>
[LINE GRAPH]
<CAPTION>
Label A B C
------------------------------------------------------------------
Lable CGEF A NAV MOP MSCI World GDP
------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Jun 30, 92 10000 9425 10000
2 Jul 31, 92 10080.81 9501.161 9888
3 Aug 31, 92 9868.687 9301.237 10095
4 Sep 30, 92 9747.475 9186.995 9845
5 Oct 31, 92 9434.344 8891.869 9596
6 Nov 30, 92 9505.051 8958.511 9700
7 Dec 31, 92 9690.426 9133.227 9725
8 Jan 31, 93 9946.245 9374.336 9802
9 Feb 28, 93 10069.04 9490.068 10060
10 Mar 31, 93 10539.75 9933.71 10555
11 Apr 30, 93 10754.63 10136.24 11097
12 May 31, 93 11010.45 10377.35 11286
13 Jun 30, 93 10733.58 10116.4 11147
14 Jul 31, 93 10960.86 10330.61 11335
15 Aug 31, 93 11745.99 11070.59 11988
16 Sep 30, 93 11756.32 11080.33 11751
17 Oct 31, 93 12148.88 11450.32 12040
18 Nov 30, 93 11973.26 11284.8 11359
19 Dec 31, 93 13101.27 12347.94 11913
20 Jan 31, 94 13685.4 12898.49 12649
21 Feb 28, 94 13257.73 12495.41 12455
22 Mar 31, 94 12704.89 11974.36 12137
23 Apr 30, 94 12861.35 12121.83 12572
24 May 31, 94 12746.61 12013.68 12429
25 Jun 30, 94 12567.44 11844.81 12274
26 Jul 31, 94 13008.77 12260.77 12593
27 Aug 31, 94 13418.58 12647.01 12901
28 Sep 30, 94 13124.36 12369.71 12514
29 Oct 31, 94 13334.52 12567.78 12824
30 Nov 30, 94 12767.09 12032.98 12276
31 Dec 31, 94 12889.25 12148.11 12384
32 Jan 31, 95 12509.81 11790.5 12273
33 Feb 28, 95 12923.74 12180.62 12443
34 Mar 31, 95 13211.19 12451.54 12898
35 Apr 30, 95 13613.62 12830.83 13379
36 May 31, 95 13878.07 13080.08 13489
37 Jun 30, 95 14095.25 13284.77 13512
38 Jul 31, 95 15045.75 14180.62 14221
39 Aug 31, 95 14767.55 13918.42 13811
40 Sep 30, 95 14767.55 13918.42 14097
41 Oct 31, 95 14431.4 13601.6 13808
42 Nov 30, 95 14663.23 13820.1 14191
43 Dec 31, 95 15009.89 14146.82 14633
44 Jan 31, 96 15502.02 14610.65 14925
45 Feb 29, 96 15649.66 14749.8 14983
46 Mar 31, 96 15883.42 14970.12 15147
47 Apr 30, 96 16350.94 15410.76 15518
48 May 31, 96 16486.28 15538.31 15495
49 Jun 30, 96 16388.07 15445.76 15572
50 Jul 31, 96 15819.56 14909.93 15026
51 Aug 31, 96 16116.17 15189.5 15124
52 Sep 30, 96 16536.38 15585.54 15663
53 Oct 31, 96 16610.54 15655.43 15697
</TABLE>
CLASS B SHARES
Based on NAV and Maximum CDSC
AVERAGE ANNUAL TOTAL RETURNS*
Inception 6/8/92 NAV w/CDSC
1 YEAR 10.93% 5.93%
SINCE INCEPTION 11.18% 10.85%
6/92 10/96
$14,000 NAV $16,036
$12,000 w/CDSC $15,836
$10,000 MSCI $15,697
<TABLE>
[LINE GRAPH]
<CAPTION>
Label A B C
------------------------------------------------------------
Lable OGEF B NAV MOP MSCI World GDP
------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Jun 30, 92 10000 10000 10000
2 Jul 31, 92 10080.89 10080.89 9888
3 Aug 31, 92 9868.554 9868.554 10095
4 Sep 30, 92 9726.997 9726.997 9845
5 Oct 31, 92 9413.549 9413.549 9596
6 Nov 30, 92 9484.327 9484.327 9700
7 Dec 31, 92 9646.364 9646.364 9725
8 Jan 31, 93 9891.093 9891.093 9802
9 Feb 28, 93 10013.46 10013.46 10060
10 Mar 31, 93 10472.32 10472.32 10555
11 Apr 30, 93 10676.26 10676.26 11097
12 May 31, 93 10920.99 10920.99 11286
13 Jun 30, 93 10646.48 10646.48 11147
14 Jul 31, 93 10872.12 10872.12 11335
15 Aug 31, 93 11641.38 11641.38 11988
16 Sep 30, 93 11641.38 11641.38 11751
17 Oct 31, 93 12020.88 12020.88 12040
18 Nov 30, 93 11846.51 11846.51 11359
19 Dec 31, 93 12956.45 12956.45 11913
20 Jan 31, 94 13513.94 13513.94 12649
21 Feb 28, 94 13080.34 13080.34 12455
22 Mar 31, 94 12522.85 12522.85 12137
23 Apr 30, 94 12677.71 12677.71 12572
24 May 31, 94 12543.5 12543.5 12429
25 Jun 30, 94 12363.13 12363.13 12274
26 Jul 31, 94 12788.01 12788.01 12593
27 Aug 31, 94 13192.17 13192.17 12901
28 Sep 30, 94 12891.64 12891.64 12514
29 Oct 31, 94 13088.54 13088.54 12824
30 Nov 30, 94 12528.94 12528.94 12276
31 Dec 31, 94 12631.88 12631.88 12384
32 Jan 31, 95 12259.02 12259.02 12273
33 Feb 28, 95 12665.77 12665.77 12443
34 Mar 31, 95 12936.94 12936.94 12898
35 Apr 30, 95 13321.09 13321.06 13379
36 May 31, 95 13558.36 13558.36 13489
37 Jun 30, 95 13765.7 13765.7 13512
38 Jul 31, 95 14684.93 14684.93 14221
39 Aug 31, 95 14401.21 14401.21 13811
40 Sep 30, 95 14401.21 14401.21 14097
41 Oct 31, 95 14060.76 14060.76 13808
42 Nov 30, 95 14276.38 14276.38 14191
43 Dec 31, 95 14604.74 14604.74 14633
44 Jan 31, 96 15072.77 15072.77 14925
45 Feb 29, 96 15216.77 15216.77 14983
46 Mar 31, 96 15420.78 15420.78 15147
47 Apr 30, 96 15840.81 15840.81 15518
48 May 31, 96 15972.81 15972.81 15495
49 Jun 31, 96 15855.36 15855.36 15572
50 Jul 30, 96 15302.82 15302.82 15026
51 Aug 31, 96 15579.09 15579.09 15124
52 Sep 30, 96 15975.48 15975.48 15663
53 Oct 31, 96 16035.53 15835.53 15697
</TABLE>
* As of 9/30/96 (Most Recent Quarter End)
The Morgan Stanley Capital International World (GDP) Index is an unmanaged index
that tracks the performance of global stocks. Unlike mutual funds, an index does
not incur fees or charges and it is not possible to invest in an index.
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 charge or contingent deferred sales charges (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.
5
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
OCTOBER 31, 1996 (IN THOUSANDS)
<CAPTION>
COMMON STOCKS - 90.5%
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSTRUCTION - 1.7%
BUILDING CONSTRUCTION - 0.6%
Hollandsche Beton Groep NV Ne 3 $ 500
-------
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION - 0.7%
Stork N.V. Ne 18 574
-------
SPECIAL TRADE CONTRACTORS - 0.4%
Kyudenko Company Ja 16 181
Tele Danmark A/S, Series B (a) De 3 156
-------
337
-------
- -------------------------------------------------------------------------------
FINANCIAL, INSURANCE & REAL ESTATE - 23.7%
DEPOSITORY INSTITUTIONS - 12.4%
Argentaria SA Sp 34 1,327
Banca Popolare di Milano (BPM) It 147 723
BankAmerica Corp. 14 1,253
Barclays PLC UK 42 659
Deposit Guaranty Corp. 9 452
Development Bank of Singapore Ltd. Si 35 419
Foreningsbanken A Sw 498 2,043
HSBC Holdings PLC HK 24 489
Hang Seng Bank Ltd. HK 39 463
J.P. Morgan & Co., Inc. 6 510
National Westminster Bank PLC UK 28 320
Storebrand ASA (a) No 72 421
Westpac Banking Corp. Au 264 1,506
-------
10,585
-------
HOLDING COMPANIES - 0.2%
Power Corp. of Canada Ca 10 210
-------
INSURANCE CARRIERS - 3.3%
AXA Fr 14 888
Cigna Corp. 2 196
International Nederlanden Groep Ne 33 1,011
Schweirezerische Lebensversicherungs und
Rentenanstalt Sz 2 701
-------
2,796
-------
INVESTMENT COMPANIES - 5.9%
Chile Fund, Inc. Ch 24 511
First Australia Fund, Inc. Au 58 531
First Philippine Fund, Inc. Ph 41 632
Irish Investment Fund, Inc. Ir 46 650
</TABLE>
6
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1996
- -------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
Korea Fund, Inc. Ko 21 $ 353
Pakistan Investment Fund (a) Pa 53 285
Southern Africa Fund, Inc. SA 25 411
Templeton Dragon Fund, Inc. (b) 63 880
Thai Fund Th 28 526
The India Fund, Inc. (a) Id 35 245
------
5,024
------
REAL ESTATE - 1.9%
Cheung Kong (Holdings) Ltd. HK 92 738
New World Development Co., Ltd. HK 154 896
------
1,634
------
- -------------------------------------------------------------------------------
MANUFACTURING - 31.3%
CHEMICALS & ALLIED PRODUCTS - 6.2%
BASF AG G 84 2,679
Ciba-Geigy AG Sz (c) 405
DSM NV Ne 15 1,431
Roche Holding AG Genusscheine Sz (c) 754
------
5,269
------
ELECTRONIC & ELECTRICAL EQUIPMENT - 4.1%
Electrolux AB Fria Series B Sw 7 378
Hitachi Maxell Ja 52 1,026
Matsushita Electric Industrial Co. Ja 87 1,389
Philips Electronics Ne 15 534
Ericsson Sw 5 130
------
3,457
------
FABRICATED METAL - 1.1%
Compagnie Generale d'Industrie
et de Participations Fr 2 498
Oriental Holdings Berhad Ma 60 410
------
908
------
FOOD & KINDRED PRODUCTS - 3.4%
Associated British Foods PLC UK 179 1,230
Fraser & Neave Ltd. Si 40 397
Nestle AG Sz (c) 417
Tate & Lyle PLC UK 113 879
------
2,923
------
MACHINERY & COMPUTER EQUIPMENT - 1.3%
Hitachi Ltd. Ja 122 1,081
------
</TABLE>
7
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1996
- -------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
MEASURING & ANALYZING INSTRUMENTS - 3.9%
Fuji Photo Film Co., Ltd. Ja 78 $2,237
Sybron International Corp.-Wisconsin (a) 27 792
Thomson-CSF Fr 9 265
------
3,294
------
PAPER PRODUCTS - 0.5%
Carter Holt Harvey Ltd. NZ 190 427
------
Petroleum Refining - 2.3%
OMV Handels AG Aus 8 782
Pennzoil Co. 22 1,132
------
1,914
------
PRIMARY METAL - 3.0%
ALFA S.A. de C.V. Mx 243 1,011
Interprovincial Steel Ca 14 356
Texas Industries, Inc. 21 1,197
------
2,564
------
RUBBER & PLASTIC - 0.6%
Fila Holding SPA Fr 7 482
------
STONE, CLAY, GLASS & CONCRETE - 0.6%
Global Industrial Technologies, Inc.(a) 26 481
------
TOBACCO PRODUCTS - 1.7%
B.A.T. Industries PLC UK 51 356
Hanson PLC UK 500 659
Sampoerna International Finance Co. In 42 386
------
1,401
------
TRANSPORTATION EQUIPMENT - 2.6%
Chrysler Corp. 33 1,099
Fiat Auto SPA Ord It 199 527
Peugeot SA Fr 6 622
------
2,248
------
- -------------------------------------------------------------------------------
MINING & ENERGY - 4.8%
CRUDE PETROLEUM & NATURAL GAS - 0.5%
Ranger Oil Ltd. 55 413
------
METAL MINING - 0.8%
Trelleborg AB Class B Shares Sw 52 666
------
</TABLE>
8
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1996
- -------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
NONMETALLIC, EXCEPT FUELS - 0.2%
Potash Corp. of Saskatchewan, Inc. Ca 3 $ 177
------
OIL & GAS EXTRACTION - 2.7%
Elf Gabon SA Fr 4 876
Helmerich & Payne 19 1,045
Santos Ltd. Au 85 340
------
2,261
------
OIL & GAS FIELD SERVICES - 0.6%
Petroleum Geo-Services A/S(a) No 14 480
------
- -------------------------------------------------------------------------------
RETAIL TRADE - 7.7%
APPAREL & ACCESSORY STORES - 3.2%
Aoyama Trading Ja 60 1,534
GAP, Inc. 23 655
Hennes & Mauritz AB Sw 4 504
------
2,693
------
FOOD STORES - 2.5%
Loblaw Companies Ca 25 239
Safeway, Inc. (a) 44 1,869
------
2,108
------
GENERAL MERCHANDISE STORES - 1.2%
Dayton Hudson Corp. 21 727
Jardine Strategic Holdings Ltd. Si 90 292
------
1,019
------
MISCELLANEOUS RETAIL - 0.8%
Imasco Ltd. Ca 29 680
------
- -------------------------------------------------------------------------------
SERVICES - 2.4%
BUSINESS SERVICES - 1.8%
Cadence Design Systems, Inc. (a) 23 832
Paychex, Inc. 7 388
SAP AG G 2 322
------
1,542
------
HEALTH SERVICES - 0.1%
Astra B Fria Sw 2 100
------
OTHER SERVICES - 0.5%
VEBA AG G 8 405
------
- -------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1996
- -------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC
GAS & SANITARY SERVICES - 16.5%
AIR TRANSPORTATION - 1.7%
AMR Corp.(a) 9 $ 756
British Airways PLC UK 17 149
Lufthansa AG G 40 516
------
1,421
------
COMMUNICATIONS - 6.1%
British Telecommunications PLC UK 103 596
Hong Kong Telecommunications Ltd. HK 244 431
Nokia AB Fi 3 125
PT Indosat ADR (a) In 13 389
Telus Corporation Ca 62 975
Telecom Italia SPA It 377 841
Telecomunicacoes Brasileiras SA ADR Bz 8 596
Telefonica de Argentina SA ADR Ar 25 579
Vodafone Group UK 175 678
------
5,210
------
ELECTRIC, GAS & SANITARY SERVICES - 0.2%
Westcoast Energy, Inc. Ca 13 209
------
ELECTRIC SERVICES - 4.4%
Allegheny Power System, Inc. 27 801
Hong Kong Electric Holdings Ltd. HK 94 299
Oesterreichische Elektrizitaetswirtschafts AG Aus 7 466
Portland General Corp. 6 276
Texas Utilities Co. 15 595
Union Electrica Fenosa SA Sp 195 1,264
------
3,701
------
GAS SERVICES - 2.3%
Consolidated Natural Gas Co. 37 1,982
------
MOTOR FREIGHT & WAREHOUSING - 0.3%
Seino Transportation Ja 18 249
------
SANITARY SERVICES - 1.5%
United Utilities PLC UK 40 368
Yorkshire Water PLC UK 89 894
------
1,262
------
- -------------------------------------------------------------------------------
WHOLESALE TRADE - 2.4%
DURABLE GOODS - 0.7%
Fujitsu Business Systems Ja 25 631
------
</TABLE>
10
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1996
- -------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
NONDURABLE GOODS - 1.7%
Gillette Co. 9 $ 673
Universal Corp. 27 738
-------
1,411
-------
TOTAL INVESTMENTS (cost of $68,651) (d) 76,729
-------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM OBLIGATIONS - 9.4% PAR
- -------------------------------------------------------------------------------
<S> <C> <C>
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
$8,112, (repurchase proceeds $7,955) $7,954 7,954
-------
OTHER ASSETS & LIABILITIES, NET - 0.1% 123
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $84,806
=======
- -------------------------------------------------------------------------------
<FN>
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) This security is subject to the risks of the various countries in which the
issuer is investing. (See Notes to Financial Statements: Note 3.-Other.)
(c) Rounds to less than one.
(d) Cost for federal income tax purposes is the same.
</TABLE>
11
<PAGE>
<TABLE>
Investment Portfolio/October 31, 1996
- -----------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO - CONT.:
- -----------------------------------------------------------------------------
<CAPTION>
Summary of Securities by Country Country Value % of Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 18,862 24.6
Japan Ja 8,328 10.9
United Kingdom UK 6,788 8.8
Netherlands Ne 4,050 5.3
Germany G 3,922 5.1
Sweden Sw 3,821 5.0
France Fr 3,631 4.7
Hong Kong HK 3,316 4.3
Canada Ca 2,846 3.7
Spain Sp 2,591 3.4
Australia Au 2,377 3.1
Switzerland Sz 2,277 3.0
Italy It 2,091 2.7
Austria Aus 1,248 1.6
Singapore Si 1,108 1.4
Mexico Mx 1,011 1.3
Norway No 901 1.2
Multinational(b) 880 1.1
Indonesia In 775 1.0
Ireland Ir 650 0.8
Philippines Ph 632 0.8
Brazil Bz 596 0.8
Argentina Ar 579 0.8
Thailand Th 526 0.7
Chile Ch 511 0.7
New Zealand NZ 427 0.6
South Africa SA 411 0.5
Malaysia Ma 410 0.5
Korea Ko 353 0.5
Pakistan Pa 285 0.4
India Id 245 0.3
Denmark De 156 0.2
Finland Fi 125 0.2
------- -----
$76,729 100.0
======= =====
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
- ------- ----
ADR American Depository Receipt
See notes to financial statements.
12
<PAGE>
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1996
(in thousands except for per share amounts and footnotes)
<CAPTION>
ASSETS
<S> <C> <C>
Investments at value (cost $68,651) $76,729
Short-term obligations 7,954
-------
84,683
Receivable for:
Dividends $82
Fund shares sold 62
Foreign tax reclaims 60
Deferred organization expenses 5
Interest 1
Other 4 214
--- -------
Total Assets 84,897
LIABILITIES
Payable for:
Fund shares repurchased 61
Accrued:
Deferred Trustees fees 2
Other 28
---
Total Liabilities 91
-------
NET ASSETS $84,806
=======
Net asset value & redemption price per share-
Class A ($19,092/1,420) $ 13.44
=======
Maximum offering price per share - Class A
($13.44/0.9425) $ 14.26(a)
=======
Net asset value & offering price per share-
Class B ($65,714/4,921) $ 13.35(b)
=======
COMPOSITION OF NET ASSETS
Capital paid in $67,716
Overdistributed net investment income (75)
Accumulated net realized gain 9,097
Net unrealized appreciation (depreciation) on:
Investments 8,078
Foreign currency transactions (10)
-------
$84,806
=======
<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.
13
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
(in thousands)
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 1,664
Interest 338
-------
Total investment income (net of nonrebatable
foreign taxes withheld at source which
amounted to $156) 2,002
EXPENSES
Management fee $ 591
Service fee 198
Distribution fee - Class B 480
Transfer agent 244
Bookkeeping fee 37
Trustees fee 16
Custodian fee 56
Audit fee 35
Legal fee 5
Registration fee 30
Reports to shareholders 13
Amortization of deferred
organization expenses 9
Other 11
-----
Total operating expenses 1,725
Interest expense 1 1,726
----- -------
Net Investment Income 276
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 9,092
Foreign currency transactions (81)
------
Net Realized Gain 9,011
Net unrealized appreciation (depreciation)
during the period on:
Investments 899
Foreign currency transactions (18)
------
Net Unrealized Appreciation 881
-------
Net Gain 9,892
-------
Net Increase in Net Assets from Operations $10,168
=======
</TABLE>
See notes to financial statements.
14
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
(in thousands) Year ended October 31
----------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
<S> <C> <C>
Operations:
Net investment income $ 276 $ 545
Net realized gain 9,011 3,832
Net unrealized appreciation 881 637
-------- --------
Net Increase from Operations 10,168 5,014
Distributions:
From net investment income - Class A (105) (175)
In excess of net investment income - Class A (37) --
From net realized gains - Class A (618) (809)
From net investment income - Class B (133) (533)
In excess of net investment income - Class B (46) --
From net realized gains - Class B (3,141) (4,674)
-------- --------
6,088 (1,177)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 8,563 3,736
Value of distributions reinvested - Class A 713 915
Cost of shares repurchased - Class A (2,848) (3,545)
-------- --------
6,428 1,106
-------- --------
Receipts for shares sold - Class B 13,370 9,028
Value of distributions reinvested - Class B 3,088 4,883
Cost of shares repurchased - Class B (14,800) (16,872)
-------- --------
1,658 (2,961)
-------- --------
Net Increase (Decrease) from
Fund Share Transactions 8,086 (1,855)
-------- --------
Total Increase (Decrease) 14,174 (3,032)
NET ASSETS
Beginning of period 70,632 73,664
-------- --------
End of period (net of overdistributed
net investment income of $75 and
$129, respectively) $ 84,806 $ 70,632
======== ========
NUMBER OF FUND SHARES
Sold - Class A 658 310
Issued for distributions reinvested - Class A 59 82
Repurchased - Class A (221) (297)
-------- --------
496 95
-------- --------
Sold - Class B 1,042 754
Issued for distributions reinvested - Class B 257 440
Repurchased - Class B (1,151) (1,419)
-------- --------
148 (225)
-------- --------
</TABLE>
See notes to financial statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
NOTE 1. ACCOUNTING POLICIES
------------------------------------------------------------------------
ORGANIZATION: Colonial Global Equity Fund (the Fund), a series of
Colonial Trust III, is a diversified portfolio of a Massachusetts
business trust, registered under the Investment Company Act of 1940, as
amended, as an open-end, management investment company. The Fund's
investment objective is to seek long-term growth by investing primarily
in global equities. 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 revenues 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.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Portfolio positions which cannot be valued as set forth above are valued
at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income
tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All
income, expenses (other than the Class B distribution fee), realized and
unrealized gains (losses), are allocated to each class proportionately
on a daily basis for purposes of determining the net asset value of each
class.
16
<PAGE>
Notes to Financial Statements/October 31, 1996
------------------------------------------------------------------------
The per share data was calculated using average shares outstanding
during the period. In addition, Class B net investment income per share
reflects the distribution fee applicable to Class B shares only.
Class B ratios are calculated by adjusting the expense and net
investment income per share data and ratios for the Fund for the entire
period by the distribution fee applicable to Class B 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 $43,895 in
connection with its organization, initial registration with the
Securities and Exchange Commission and with various states, and the
initial public offering of its shares. These expenses were deferred and
are being amortized on a straight-line basis over five years.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are
recorded on the ex-date.
The 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.
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
17
<PAGE>
Notes to Financial Statements/October 31, 1996
------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
------------------------------------------------------------------------
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.
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.
18
<PAGE>
Notes to Financial Statements/October 31, 1996
------------------------------------------------------------------------
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 $11,961 on sales of the Fund's Class A shares
and received contingent deferred sales charges (CDSC) of $90,156 on
Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the
Distributor a service fee equal to 0.25% annually of the Fund's net
assets as of the 20th of each month. The plan also requires the payment
of a distribution fee to the Distributor equal to 0.75% of the average
net assets attributable to Class B shares 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.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive
fees and bear certain Fund expenses to the extent that total expenses
(exclusive of service and distribution fees, brokerage commissions,
interest, taxes and extraordinary expenses, if any) exceed 1.40%
annually of the Fund's average net assets.
For the year ended October 31, 1996, the Fund's operating expenses did
not exceed the 1.40% expense limit.
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: For the year ended October 31, 1996, purchases and
sales of investments, other than short-term obligations, were
$93,388,970 and $90,409,117, respectively.
<TABLE>
Unrealized appreciation (depreciation) at October 31, 1996, based on
cost of investments for both financial statement and federal income tax
purposes was:
<CAPTION>
<S> <C>
Gross unrealized appreciation $10,359,224
Gross unrealized depreciation (2,281,104)
-----------
Net unrealized appreciation $ 8,078,120
===========
</TABLE>
19
<PAGE>
Notes to Financial Statements/October 31, 1996
------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
------------------------------------------------------------------------
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.
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%.
The average daily loan balance for the year ended October 31, 1996 was
$10,929, at a weighted average interest rate of 5.6875%. The maximum
loan outstanding during the period was $1,000,000.
20
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS(b)
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
Year ended October 31
-------------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $12.450 $12.390 $12.690 $12.630
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.123 0.027 0.167 0.076
Net realized and unrealized
gain 1.664 1.634 0.735 0.735
------- ------- ------- -------
Total from Investment
Operations 1.787 1.661 0.902 0.811
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.098) (0.027) (0.198) (0.107)
In excess of net
investment income (0.035) (0.010) -- --
From net realized gains (0.664) (0.664) (0.944) (0.944)
------- ------- ------- -------
Total Distributions Declared
to Shareholders (0.797) (0.701) (1.142) (1.051)
------- ------- ------- -------
Net asset value -
End of period $13.440 $13.350 $12.450 $12.390
======= ======= ======= =======
Total return(c) 15.10% 14.04% 8.23%(d) 7.43%(d)
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Operating Expenses 1.58%(e) 2.33%(e) 1.36%(e) 2.11%(e)
Interest expense -- -- -- --
Fees and expenses waived or
borne by the Adviser -- -- 0.26%(e) 0.26%(e)
Net investment income 0.96%(e) 0.21%(e) 1.40%(e) 0.65%(e)
Portfolio turnover 125% 125% 74% 74%
Average commission rate (f) $0.0261 $0.0261 -- --
Net assets at end
of period (000) $19,092 $65,714 $11,501 $59,131
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
-- -- $ 0.031 $ 0.031
(b) Per share data was calculated using average shares outstanding during the period.
(c) Total return at net asset value assuming all distributions reinvested and no initial sales
charge or contingent deferred sales charge.
(d) Had the Adviser not waived or reimbursed a portion of expenses, total return would have been
reduced.
(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) 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>
21
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS(b) - CONTINUED
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
Year ended October 31
-------------------------------------------------
1994 1993
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $11.760 $11.720 $ 9.340 $ 9.310
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.170 0.077 0.182 0.104
Net realized and
unrealized gain (loss) 0.969 0.959 2.461 2.447
------- ------- ------- -------
Total from Investment
Operations 1.139 1.036 2.643 2.551
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.166) (0.083) (0.223) (0.141)
From net realized gains (0.043) (0.043) -- --
------- ------- ------- -------
Total distributions
Declared to Shareholders (0.209) (0.126) (0.223) (0.141)
------- ------- ------- -------
Net asset value -
End of period $12.690 $12.630 $11.760 $11.720
======= ======= ======= =======
Total return (d)(e) 9.76% 8.88% 28.77% 27.70%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Operating Expenses 1.25% 2.00% 1.25% 2.00%
Interest expense -- -- 0.01% 0.01%
Fees and expenses waived or borne by the
Adviser 0.36% 0.36% 0.51% 0.51%
Net investment income
Portfolio turnover 1.38% 0.63% 1.75% 1.00%
Net assets at end 52% 52% 58% 58%
of period (000) $10,525 $63,139 $ 1,769 $40,837
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to
$ 0.045 $ 0.045 $ 0.053 $ 0.053
(b) Per share data was calculated using average shares outstanding during the period.
(c) The Fund commenced investment operations on June 8, 1992.
(d) Total return at net asset value assuming all distributions reinvested and no initial sales
charge or contingent deferred sales charge.
</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.
- --------------------------------------------------------------------------------
22
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (b) - continued
<CAPTION>
Period ended
October 31
--------------------
1992(c)
Class A Class B
------- -------
<S> <C> <C>
Net asset value -
Beginning of period $10.000 $10.000
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.088 0.059
Net realized and
unrealized gain (loss) (0.748) (0.749)
------- -------
Total from Investment
Operations (0.660) (0.690)
------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- --
From net realized gains -- --
------- -------
Total Distributions
Declared to Shareholders -- --
------- -------
Net asset value -
End of period $ 9.340 $ 9.310
======= =======
Total return(d)(e) (6.59)%(f) (6.90)%(f)
======= =======
RATIOS TO AVERAGE NET ASSETS
Operating Expenses 1.25%(g) 2.00%(g)
Interest expense -- --
Fees and expenses waived or
borne by the Adviser 0.67%(g) 0.67%(g)
Net investment income 2.25%(g) 1.50%(g)
Portfolio turnover 14%(g) 14%(g)
Net assets at end of period (000) $ 164 $32,099
$ 0.026 $ 0.026
<FN>
(e) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) Annualized.
</TABLE>
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST III AND THE SHAREHOLDERS OF
COLONIAL GLOBAL EQUITY FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Colonial Global Equity Fund (a series of Colonial Trust III) at October
31, 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, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 10, 1996
24
<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
25
<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.)
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Global Equity Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Global Equity Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call our Literature
Department at 1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Global Equity Fund.
This report may also be used as sales literature when preceded or accompanied by
the current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund.
27
<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, CS 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
GE-02/961C-1096 M (12/96)
[Recycle Logo] Printed on recycled paper
