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COLONIAL SELECT
VALUE FUND
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SEMIANNUAL REPORT
APRIL 30, 1997
[graphic omitted]
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NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
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<PAGE>
COLONIAL SELECT VALUE FUND HIGHLIGHTS
NOVEMBER 1, 1996 - APRIL 30, 1997
INVESTMENT OBJECTIVE: Colonial Select Value Fund seeks long-term growth by
investing primarily in middle capitalization equities.
THE FUND IS DESIGNED TO OFFER:
|X| Opportunity for long-term growth of capital
|X| A disciplined investment strategy that stays on course
|X| Broad diversification to reduce risk
PORTFOLIO MANAGER COMMENTARY: "Because we're price-sensitive investors, we don't
believe in overpaying for the stocks. We have a highly-diversified portfolio
which reduce our overall risk. "
-- Daniel Rie
COLONIAL SELECT VALUE FUND PERFORMANCE
CLASS A CLASS B
Six-month distributions declared per share $2.183 $2.183
Six-month total returns, assuming 2.36% 1.95%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
Net asset value per share on 4/30/97 $16.30 $16.03
TOP FIVE HOLDINGS+ TOP FIVE SECTORS++
(as of 4/30/97) (as of 4/30/97)
1. SunAmerica, Inc. 2.8% 1. Consumer Cyclicals 20.2%
2. Travelers, Inc. 2.7% 2. Health Care 16.7%
3. Eastman Kodak Co. 2.7% 3. Financials 13.6%
4. Omnicom Group, Inc. 2.5% 4. Technologies 12.4%
5. Fred Meyer, Inc. 2.3% 5. Services 6.2%
Note: This semiannual report is the first since the Fund's name was changed on
March 3, 1997 from Colonial Growth Shares Fund to Colonial Select Value Fund.
The Fund's investment objective remains the same and there have been no major
changes in Fund holdings. We believe that this new name better reflects the
Fund's investment strategy.
+ Holdings and sector breakdowns are calculated as a percent of total net
assets. Because the Fund is actively managed, there can be no guarantee the Fund
will continue to hold these securities or invest in these sectors in the future.
++ Industry sectors in the following financial statements are based upon the
standard industrial classifications (SIC) published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon Colonial's defined criteria used in the investment process.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Harold W. Cogger]
THE MARKET: HOW HIGH IS HIGH? These have been good times to be an investor.
Though very favorable news alternates with rumblings of interest rate increases,
the Dow Jones Industrial Average and other market indicators seemed to set new
records with regularity over the last six months. But, the stock market
averages, as usual, were not representative of what happened to all or even most
stocks. In fact, many companies and industry groups turned in miniscule gains or
even loss while the bull galloped along: such areas as high-technology computer
chip firms, heavy machinery manufacturers and even major consumer goods
companies didn't participate or show gains. These results reflect the unusual
narrowness of this bull market. There will always be market "favorites." But
because of good diversification and a price- sensitive investing approach, our
New Value funds -- like Colonial Select Value Fund -- can be a reasonable way of
dealing with most markets.
WHAT IS NEW VALUE INVESTING? The world's economies are in a rapid state of
change. Technology has created a different global marketplace; reducing past
emphasis on steel, textiles and heavy manufacturing in favor of computer
software and service industries. Traditional "value investing" focuses on cheap,
overlooked or "out of favor" stocks that could hold promise of a future
comeback. In today's changing marketplace, a traditional value portfolio
manager's choices in the hunt for these types of stocks are limited.
Therefore at Colonial, we look for relative value -- rather than just "cheap"
stocks. We search for stocks with attractive current prices, a consistent record
of operating performance, and/or favorable future growth prospects. Our approach
is designed to pursue consistent fund performance, with greater diversification
and opportunity for our investors -- while respecting your concerns about risk.
Detailed information on your Fund's performance -- including an interview with
your portfolio management team -- appears on the following pages. Thank you for
choosing Colonial Select Value Fund for your mutual fund investment program.
We appreciate your continuing confidence.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
June 13, 1997
As market and economic conditions change, there can be no assurance that the
trends described above will continue.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
DANIEL RIE manages Colonial Select Value Fund. Dr. Rie is Senior Vice President
and Director of the Adviser (Colonial Management Associates, Inc.) and head of
Colonial's Equity Group. He has managed this Fund since 1986. What follows is a
discussion of the Fund's performance for the six months ended April 30, 1997.
"A MARKET WHERE BEING BIG WAS BETTER..."
When you look at the stock market today, what everyone sees are new record
highs. But, let's go back over recent history: there have been several quick
selloffs where some stock disappointments (or interest rate nervousness) drove
levels down 75 to 100 points or more in a single day. This is not a market where
one can get too comfortable. In fact, it has really been a narrow market where
the large-capitalization, Fortune 100 stocks have benefitted. There was a
startling 7.5% difference between the large-company S&P 500 and the S&P Midcap
400 Index -- the one we measure ourselves against. Even well-known healthcare
and market-favorite technology stocks have fallen from their highs, despite the
Dow being at 7000+. The rising market did not spread its gains to everyone.
"WE'RE LOOKING AT ALMOST 1,500 COMPANIES."
Our New Value investing strategy gives us a wide selection of investments from
which to choose. Our focus on mid-capitalization companies covers the great
majority of investment opportunities and allows us to eliminate some of the top
industrial giants and the smaller and newer companies who have yet to prove
themselves.
Because we're price-sensitive investors, we're always looking for companies that
are selling at a reasonable price with good future prospects. We search for
relative value, as opposed to growth portfolio managers that have been known to
chase a stock on its way up. We look for firms with a consistent record of
earnings, good distribution of their products and stable management. The most
important benefit of our investment strategy in looking for relative value is
that it helps us in strong as well as in weak or negative markets.
"WE FOUND VALUE IN THE CAPITAL GOODS AREA..."
Our strongest performance was in the capital goods sector -- which represents
about 4% of the portfolio. Firms like Tyco International, Halliburton and
Harnischfeger Industries (the latter is a new holding during the period) all
performed very well. They are "basic industry" companies -- involved in oil
pipelines, construction and industrial machinery.
We were also pleased with our utilities holdings. They were about 3% of the
portfolio and performed well -- while most of the world's utilities sectors were
down.
Of course, some sectors lost ground, particularly technology stocks. Two of our
disappointments in this area were Computer Associates and Sun Microsystems.
"OUR OUTLOOK REMAINS QUITE POSITIVE."
We believe we're seeing a new market environment -- one that will remain
positive, supported by the majority of investors. Positive factors include:
strong underlying economic fundamentals, low or almost non-existent inflation,
moderate interest rates with low unemployment, a rapidly- growing service
economy and a more competitive industrial base. We believe there are many
companies with real "value" yet to be discovered in the current economy.
So, despite a market that seems to want to establish new highs, our outlook
remains quite positive. We will continue to search for quality at a reasonable
price.
COLONIAL SELECT VALUE FUND'S INVESTMENT PERFORMANCE
VS. THE STANDARD & POOR'S MIDCAP 400 INDEX
Change in Value of $10,000 from 4/30/87 -- 4/30/97
Based on NAV and MOP for Class A Shares
NAV MOP S&P 400
----------------------------------------------------
Apr 30, 97 10,000 9,425 10,000
Jul 31, 87 10,943 10,313 10,543
Oct 31, 87 8,383 7,901 8,182
Jan 31, 88 9,023 8,504 8,764
Apr 30, 88 10,231 9,642 9,519
Jul 31, 88 10,387 9,790 9,724
Oct 31, 88 10,808 10,186 9,929
Jan 31, 89 11,564 10,899 10,819
Apr 30, 89 12,381 11,669 11,695
Jul 31, 89 13,859 13,062 12,931
Oct 31, 89 13,747 12,957 12,968
Jan 31, 90 12,959 12,214 12,567
Apr 30, 90 13,231 12,470 12,783
Jul 31, 90 14,263 13,443 13,767
Oct 31, 90 11,259 10,611 11,231
Jan 31, 91 13,573 12,793 14,055
Apr 30, 91 14,979 14,118 16,011
Jul 31, 91 15,512 14,620 16,854
Oct 31, 91 15,977 15,058 18,357
Jan 31, 92 17,170 16,183 19,897
Apr 30, 92 17,002 16,024 19,220
Jul 31, 92 17,184 16,196 19,783
Oct 31, 92 17,297 16,302 20,049
Jan 31, 93 19,324 18,213 22,154
Apr 30, 93 18,592 17,523 22,007
Jul 31, 93 19,371 18,257 23,080
Oct 31, 93 20,374 19,202 24,366
Jan 31, 94 21,488 20,252 25,513
Apr 30, 94 20,386 19,214 24,165
Jul 31, 94 20,327 19,158 23,894
Oct 31, 94 20,939 19,735 24,946
Jan 31, 95 20,030 18,878 24,290
Apr 30, 95 22,364 21,078 26,530
Jul 31, 95 25,661 24,186 29,745
Oct 31, 95 26,894 25,348 30,238
Jan 31, 96 28,315 26,686 31,936
Apr 30, 96 30,737 28,970 34,438
Jul 31, 96 29,833 28,118 32,053
Oct 31, 96 32,618 30,742 35,484
Jan 31, 97 34,513 32,529 38,931
Apr 30, 97 33,387 31,467 37,925
A $10,000 investment in Class B shares made on June 8, 1992 (inception) at net
asset value (NAV) would have been valued at $18,973 on April 30, 1997. The same
investment after deducting the applicable contingent deferred sales charge
(CDSC) would have grown to $18,773 on April 30, 1997.
The Standard & Poor's Midcap 400 Index is an unmanaged index that tracks the
performance of middle capitalization U.S. stocks. Unlike mutual funds, an index
does not incur fees or charges and it is not possible to invest in an index.
AVERAGE ANNUAL TOTAL RETURNS
As of 3/31/97 (Most Recent Quarter End)
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CLASS A SHARES CLASS B SHARES
NAV MOP NAV W/CDSC
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1 YEAR 10.17% 3.83% 9.35% 4.53%
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5 YEARS 13.75 12.41 -- --
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10 YEARS 12.24 11.58 -- --
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Since inception -- -- 13.68 13.43
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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 charge
of 5.75%. The CDSC returns reflect charges of: 5% for one year; 2% since
inception. Performance for different share classes will vary based on
differences in sales charges and fees associated with each class.
<PAGE>
INVESTMENT PORTFOLIO
APRIL 30, 1997 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 93.0% SHARES VALUE
CONSTRUCTION - 0.8%
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION - 0.3%
Halliburton Co. 16 $ 1,116
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SPECIAL TRADE CONTRACTORS - 0.5%
Apogee Enterprises, Inc. 147 2,205
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FINANCE, INSURANCE & REAL ESTATE - 13.7%
DEPOSITORY INSTITUTIONS - 2.8%
City National Corp. 97 2,209
Greenpoint Financial Corp. 99 5,466
North Fork Bancorporation, Inc. 101 4,014
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11,689
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INSURANCE CARRIERS - 7.0%
MGIC Investment Corp. 35 2,827
Sunamerica, Inc. 258 11,850
Travelers Group, Inc. 209 11,551
Value Health, Inc. (a) 28 566
Vesta Insurance Group, Inc. 65 2,726
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29,520
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NONDEPOSITORY CREDIT INSTITUTIONS - 3.1%
Aames Financial Corp. 258 3,974
Household International, Inc. 43 3,801
The Money Store, Inc. 248 5,372
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13,147
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SECURITY BROKERS & DEALERS - 0.8%
Franklin Resources, Inc. 61 3,618
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MANUFACTURING - 41.1%
APPAREL - 0.9%
Tommy Hilfiger Corp. (a) 92 3,645
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CHEMICALS & ALLIED PRODUCTS - 9.8%
Alza Corp. (a) 236 6,894
Avon Products, Inc. 56 3,439
Biomet, Inc. (a) 340 5,165
Goodrich (B.F.) Co. 168 6,679
Johnson & Johnson 52 3,197
Jones Medical Industries, Inc. 70 2,450
NCH Corp. (a) 39 739
Pfizer, Inc. 66 6,346
Watson Pharmaceuticals, Inc. (a) 184 6,585
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41,494
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ELECTRONIC & ELECTRICAL EQUIPMENT - 2.4%
American Power Conversion (a) 214 4,123
Harman International Industries, Inc. 100 3,833
SCI Systems, Inc. (a) 38 2,371
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10,327
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FABRICATED METAL - 1.2%
Crane Co. 133 4,963
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FOOD & KINDRED PRODUCTS - 2.8%
Interstate Bakeries Corp. 151 7,854
Philip Morris Co., Inc. 99 3,898
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11,752
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FURNITURE & FIXTURES - 2.9%
Furniture Brands International, Inc. (a) 275 4,060
Herman Miller, Inc. 256 8,282
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12,342
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LUMBER & WOOD PRODUCTS - 0.6%
Oakwood Homes Corp. 117 2,375
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MACHINERY & COMPUTER EQUIPMENT - 4.6%
Camco International, Inc. 39 1,726
Diebold, Inc. 105 3,502
JLG Industries, Inc. 173 2,164
Storage Technology Corp. (a) 71 2,476
Sun Microsystems, Inc. (a) 258 7,440
Tyco International Ltd. 20 1,220
Western Digital Corp. (a) 18 1,103
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19,631
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MEASURING & ANALYZING INSTRUMENTS - 5.8%
Advanced Technology Laboratories, Inc. (a) 91 3,024
Dentsply International, Inc. 41 2,030
Dynatech Corp. (a) 49 1,710
Eastman Kodak Co. 136 11,330
Steris Corp. (a) 56 1,834
Sybron Corp. (a) 42 1,400
United States Surgical Corp. 98 3,350
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24,678
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MISCELLANEOUS MANUFACTURING - 0.8%
Callaway Golf Co. 120 3,591
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PAPER PRODUCTS - 2.0%
Fort Howard Corp. (a) 242 8,320
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PETROLEUM REFINING - 1.2%
Kerr-McGee Corp. 87 5,241
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PRIMARY METAL - 2.0%
Mueller Industries, Inc. (a) 74 2,775
Texas Industries, Inc. 134 3,073
USX-US Steel Group 96 2,802
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8,650
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PRINTING & PUBLISHING - 2.7%
Meredith Corp. 136 3,201
New York Times Co., Class A (a) 112 4,835
Reynolds & Reynolds Co. 114 2,370
Times Mirror Co., Class A 21 1,160
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11,566
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RUBBER & PLASTIC - 0.4%
Wynn's International, Inc. 64 1,542
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TRANSPORTATION EQUIPMENT - 1.0%
Harley-Davidson, Inc. 80 3,176
Varlen Corp. 41 861
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4,037
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MINING & ENERGY - 3.1%
CRUDE PETROLEUM & NATURAL GAS - 0.7%
Apache Corp. 82 2,778
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OIL & GAS EXTRACTION - 2.4%
Devon Energy Corp. 43 1,409
Parker and Parsley Petroleum 81 2,657
SEACOR SMIT, Inc. (a) 111 4,777
Snyder Oil Corp. 84 1,332
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10,175
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RETAIL TRADE - 8.2%
APPAREL & ACCESSORY STORES - 0.8%
Ross Stores, Inc. 60 1,696
TJX Companies, Inc. 32 1,531
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3,227
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FOOD STORES - 0.4%
Whole Foods Market, Inc. (a) 83 1,918
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GENERAL MERCHANDISE STORES - 5.2%
Dollar General Corp. 41 1,293
Federated Department Stores, Inc. (a) 119 4,043
Meyer (Fred), Inc. (a) 237 9,755
Proffitt's, Inc. (a) 57 2,134
Sears, Roebuck & Co. 103 4,954
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22,179
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RESTAURANTS - 1.4%
Boston Chicken, Inc. (a) 142 3,381
Cracker Barrel Old Country Stores, Inc. 60 1,605
Papa John's International, Inc. (a) 38 981
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5,967
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MISCELLANEOUS RETAIL - 0.4%
Zale Corp. (a) 88 1,621
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SERVICES - 19.8%
BUSINESS SERVICES - 3.8%
Omnicom Group, Inc. 198 10,515
Paychex, Inc. 74 3,469
Robert Half International, Inc. (a) 57 2,245
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16,229
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COMPUTER RELATED SERVICES - 6.8%
Adobe Systems, Inc. 168 6,553
BMC Software, Inc. 205 8,875
Cadence Design Systems, Inc. 219 6,997
Fiserv, Inc. 78 2,956
Shared Medical Systems, Inc. 52 2,190
Wang Laboratories, Inc. (a) 85 1,479
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29,050
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COMPUTER SOFTWARE - 0.5%
Sterling Software, Inc. (a) 71 2,156
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HEALTH SERVICES - 5.9%
Amerisource Health Corp., Class A (a) 20 879
Lincare Holdings, Inc. (a) 242 9,495
Living Centers of America, Inc. (a) 47 1,677
PhyCor, Inc. (a) 70 1,866
Tenet Healthcare Corp. (a) 211 5,496
Universal Health Services, Inc., Class B (a) 150 5,662
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25,075
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MOTION PICTURES - 0.5%
Hollywood Entertainment Corp. (a) 85 1,821
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PERSONAL SERVICES - 2.3%
Service Corporation International 285 9,748
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TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 5.1%
COMMUNICATIONS - 1.1%
Cincinnati Bell, Inc. 84 4,676
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ELECTRIC, GAS & SANITARY SERVICES - 0.9%
NGC Corp. 86 1,520
United Waste Systems, Inc. (a) 63 2,126
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3,646
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GAS SERVICES - 1.9%
Williams Companies, Inc. 179 7,873
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MOTOR FREIGHT & WAREHOUSING - 0.7%
Consolidated Freightways Corp. (a) 41 455
CNF Transportation, Inc. 83 2,463
USFreightways Corp. 3 92
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3,010
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TRANSPORTATION SERVICES - 0.5%
Expeditors International of Washington, Inc. 85 2,128
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WHOLESALE TRADE - 1.2%
DURABLE GOODS - 1.0%
Patterson Dental Co. (a) 53 1,772
Tech Data Corp. (a) 110 2,693
Ultramed, Inc. (b) 450 (c)
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4,465
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NONDURABLE GOODS - 0.2%
Richfood Holdings, Inc. 35 713
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TOTAL INVESTMENTS (cost of $348,089)(d) 393,904
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<PAGE>
SHORT TERM OBLIGATIONS - 6.7% PAR VALUE
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Repurchase agreement with Chase Securities, Inc.,
dated 4/30/97, due 5/01/97 at 5.340% collateralized
by U.S. Treasury notes with various maturities to
2016, market value $29,546 (repurchase proceeds
$28,725) $28,721 $ 28,721
OTHER ASSETS & LIABILITIES, NET - 0.3% 1,138
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NET ASSETS - 100% $423,763
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NOTES TO INVESTMENT PORTFOLIO:
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(a) Non-income producing.
(b) Ultramed Inc. is a restricted security which was acquired on August 14, 1987
at a cost of $450. The fair value is determined under the direction of the
Trustees. This security represents 0.0% of the Fund's net assets at April
30, 1997.
(c) Rounds to less than one.
(d) Cost for federal income tax purposes is $348,205.
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1997 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $348,089) $393,904
Short-term obligations 28,721
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422,625
Receivable for:
Fund shares sold $1,932
Dividends 107
Interest 4
Foreign tax reclaims 4
Reimbursement due from Adviser 63
Other 11 2,121
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Total Assets 424,746
LIABILITIES
Payable for:
Fund shares repurchased 973
Accrued Deferred Trustees fees 4
Other 6
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Total Liabilities 983
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NET ASSETS $423,763
========
Net asset value & redemption price per share -
Class A ($276,429/16,960) $16.30
========
Maximum offering price per share - Class A
($16.30/0.9425) $17.29 (a)
========
Net asset value & offering price per share -
Class B ($147,334/9,190) $16.03 (b)
========
COMPOSITION OF NET ASSETS
Capital paid in $353,308
Net investment loss (623)
Accumulated net realized gain 25,263
Net unrealized appreciation 45,815
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$423,763
========
(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>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Dividends $ 1,325
Interest 1,021
---------
2,346
EXPENSES
Management fee $ 821
Service fee 500
Distribution fee - Class B 553
Transfer agent 644
Bookkeeping fee 78
Registration fee 18
Custodian fee 8
Audit fee 17
Trustees fee 10
Reports to shareholders 6
Legal fee 5
Other 10 2,670
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Net Investment Loss (324)
---------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 25,443
Foreign currency transactions (3)
-------
Net Realized Gain 25,440
Net unrealized appreciaion (depreciation) during
the period on:
Investments (17,556)
Foreign currency transactions 2
-------
Net Unrealized Loss (17,554)
---------
Net Gain 7,886
---------
Net Increase in Net Assets from Operations $ 7,562
=========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months ended Year ended
(in thousands) April 30 October 31
------------ --------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
Operations:
Net investment income (loss) $ (324) $ 84
Net realized gain 25,440 47,958
Net unrealized appreciation (depreciation) (17,554) 11,344
---------- ---------
Net Increase from Operations 7,562 59,386
Distributions:
From net investment income - Class A --- (501)
In excess of net investment income - Class A --- (281)
From net realized gains - Class A (31,180) (14,913)
From net investment income - Class B --- (25)
In excess of net investment income - Class B --- (15)
From net realized gains - Class B (16,942) (5,989)
---------- ---------
(40,560) 37,662
---------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 80,784 108,391
Value of distributions reinvested - Class A 28,041 13,988
Cost of shares repurchased - Class A (62,829) (87,207)
---------- ---------
45,996 35,172
---------- ---------
Receipts for shares sold - Class B 50,980 76,766
Value of distributions reinvested - Class B 15,974 5,706
Cost of shares repurchased - Class B (32,821) (40,788)
---------- ---------
34,133 41,684
---------- ---------
Net Increase from Fund Share Transactions 80,129 76,856
---------- ---------
Total Increase 39,569 114,518
NET ASSETS
Beginning of period 384,194 269,676
---------- ---------
End of period (including net investment
loss and net of overdistributed net
investment income of $623 and
$296, respectively.) $ 423,763 $ 384,194
========== =========
NUMBER OF FUND SHARES
Sold - Class A 4,833 6,491
Issued for distributions reinvested - Class A 1,706 912
Repurchased - Class A (3,762) (5,261)
---------- ---------
2,777 2,142
---------- ---------
Sold - Class B 3,039 4,585
Issued for distributions reinvested - Class B 985 374
Repurchased - Class B (2,024) (2,463)
---------- ---------
2,000 2,496
---------- ---------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
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In the opinion of management of Colonial Select Value Fund (the Fund),
formerly Colonial Growth Shares Fund, a series of Colonial Trust III,
the accompanying financial statements contain all normal and recurring
adjustments necessary for the fair presentation of the financial position
of the Fund at April 30, 1997, and the results of its operations, the
changes in its net assets and the financial highlights for the six months
then ended.
NOTE 2. ACCOUNTING POLICIES
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ORGANIZATION: The Fund 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 middle capitalization 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.
The per share data was calculated using average shares outstanding during the
period. In addition, Class B net investment income per share data reflects the
distribution fee applicable to Class B shares only.
Class B ratios are calculated by adjusting the expense and net investment income
ratios for the Fund for the entire period by the distribution fee applicable to
Class B shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; premium and
market discount are not amortized or accreted.
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 dividend and interest
income and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) on investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward currency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily
resulting in unrealized gains (losses) which become realized at the time the
foreign 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 the 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 3. 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 0.60% annually of the Fund's
average net assets during the preceding twelve months. The fee is subject to a
maximum performance adjustment, determined monthly, of +/- 1/12 of 0.20% based
on the comparative experience of the Fund and the Standard and Poor's Index of
500 common stocks during the preceding twelve months. For the six months ended
April 30, 1997, the total fee included a downward performance adjustment of
$250,358.
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.
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 six months ended April 30, 1997, the Fund has
been advised that the Distributor retained net underwriting discounts of $62,420
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $156,909 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the average net assets
attributable to Class B shares. The plan also requires the payment of a service
fee to the Distributor as follows:
Value of shares outstanding on the
20th of each month which were issued Annual Fee Rate
------------------------------------ ---------------
Prior to April 1, 1989 0.15%
On or after April 1, 1989 0.25%
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
- -------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the six months ended April 30, 1997, purchases and
sales of investments, other than short-term obligations, were $166,673,939 and
$127,518,937, respectively.
Unrealized appreciation (depreciation) at April 30, 1997, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 69,000,851
Gross unrealized depreciation (23,301,407)
------------
Net unrealized appreciation $ 45,699,444
============
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 off-shore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended April 30, 1997.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended
April 30 Year ended October 31
--------------------------------- ------------------------------
1997 1996
Class A Class B Class A Class B
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 18.040 $ 17.840 $ 16.140 $ 16.040
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a) 0.009 (0.053) 0.043 (0.081)
Net realized and unrealized gain (a) 0.434 0.426 3.162 3.129
---------- ---------- ---------- ----------
Total from Investment Operations 0.443 0.373 3.205 3.048
---------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- -- (0.042) (0.005)
In excess of net investment income -- -- (0.023) (0.003)
From net realized gains (2.183) (2.183) (1.240) (1.240)
---------- ---------- ---------- ----------
Total Distributions
Declared to Shareholders (2.183) (2.183) (1.305) (1.248)
---------- ---------- ---------- ----------
Net asset value -
End of period $ 16.300 $ 16.030 $ 18.040 $ 17.840
========== ========== ========== ==========
Total return (b) 2.36% (c) 1.95% (c) 21.28% 20.31%
========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 1.02%(e) 1.77%(e) 1.17% 1.92%
Net investment income(d) 0.11%(e) (0.64)%(e) 0.25% (0.50)%
Portfolio turnover 34%(c) 34%(c) 100% 100%
Average commission rate(f) $ 0.0368 $ 0.0368 $ 0.0392 $ 0.0392
Net assets at end of period (000) $ 276,429 $ 147,334 $ 255,911 $ 128,283
(a) Per share data was calculated using average shares outstanding during the period.
(b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred
sales charge.
(c) Not annualized.
(d) The benefits derived from custody credits and directed brokerage arrangements had no impact. Prior years' ratios are net
of benefits received, if any.
(e) Annualized.
(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>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - CONTINUED
Year ended October 31
- -------------------------------------------------------------------------------
1995 1994
Class A Class B Class A Class B
- ------------- ------------ ------------ ------------
<S> <C> <C> <C>
$ 14.020 $ 13.940 $ 15.240 $ 15.180
- ---------- ---------- ---------- ----------
0.174 0.065 0.096 (0.008)
3.326 3.317 0.275 0.288
- ---------- ---------- ---------- ----------
3.500 3.382 0.371 0.280
- ---------- ---------- ---------- ----------
(0.165) (0.067) (0.071) --
-- -- -- --
- ---------- ---------- ---------- ----------
(1.215) (1.215) (1.520) (1.520)
- ---------- ---------- ---------- ----------
(1.380) (1.282) (1.591) (1.520)
- ---------- ---------- ---------- ----------
$ 16.140 $ 16.040 $ 14.020 $ 13.940
========== ========== ========== ==========
28.44% 27.50% 2.78% 2.12%
========== ========== ========== ==========
1.12% 1.90% 1.22% 1.97%
1.24% 0.46% 0.69% (0.06)%
92% 92% 121% 121%
- ---------- ---------- ---------- ----------
-- -- -- --
$ 194,393 $ 75,283 $ 160,495 $ 53,218
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS - CONTINUED
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Year ended Period ended Year ended
October 31 October 31 March 31
---------------------------- ---------------------------- ------------
1993 1992 (b) 1992
Class A Class B Class A Class B (c) Class A
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 13.830 $ 13.780 $ 14.240 $ 13.570 $ 12.800
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a) 0.110 0.001 0.066 (0.002) 0.168
Net realized and unrealized gain (a) 2.240 2.244 0.074 0.212 1.502
---------- ---------- ---------- ---------- ----------
Total from Investment
Operations 2.350 2.245 0.140 0.210 1.670
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.095) -- (0.093) -- (0.183)
From net realized gains (0.845) (0.845) (0.457) -- (0.047)
---------- ---------- ---------- ---------- ----------
Total Distributions Declared
to Shareholders (0.940) (0.845) (0.550) -- (0.230)
---------- ---------- ---------- ---------- ----------
Net asset value -
End of period $ 15.240 $ 15.180 $ 13.830 $ 13.780 $ 14.240
========== ========== ========== ========== ==========
Total return (d) 17.79% 16.99% 1.02% (e) 1.55% (e) 13.24%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.19% 1.94% 1.19% (f) 1.94% (f) 1.18%
Net investment income 0.64% (0.11)% 0.83% (f) 0.08% (f) 1.24%
Portfolio turnover 66% 66% 68% (f) 68% (f) 38%
Net assets at end
of period (000) $ 169,913 $ 41,989 $ 150,260 $ 26,364 $ 149,341
(a) Per share data was calculated using average shares outstanding during the period. For the year ended March 31, 1992, the per
share data was calculated using the SEC method.
(b) The Fund changed its fiscal year end from March 31 to October 31 in 1992.
(c) Class B shares were initially offered on June 8, 1992. Per share amounts reflect activity from that date.
(d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred
sales charge.
(e) Not annualized.
(f) Annualized.
</TABLE>
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Select Value Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Select Value Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call Colonial at
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Select Value 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
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; 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.
Retired (formerly Chairman of the Board and 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
Retired Partner, Peat Marwick Main & Co. (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) 1997
A Liberty Financial Company (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
SV-03/665D-0497 M (6/97)
