<PAGE>
COLONIAL SELECT VALUE FUND SEMIANNUAL REPORT
APRIL 30, 1998
[GRAPHIC]
Not FDIC May Lose Value
Insured No Bank Guarantee
<PAGE>
COLONIAL SELECT VALUE FUND HIGHLIGHTS
NOVEMBER 1, 1997- APRIL 30, 1998
INVESTMENT OBJECTIVE: Colonial Select Value Fund seeks long-term growth by
investing primarily in middle capitalization equities.
THE FUND IS DESIGNED TO OFFER:
[CHECKMARK] Opportunity for long-term growth of capital
[CHECKMARK] A disciplined investment strategy
[CHECKMARK] Broad diversification to reduce risk
PORTFOLIO MANAGER COMMENTARY: "Mid-cap stocks have much to offer long-term
investors. As a sector of the market that tends to be overlooked, it's a great
pool of stocks on which to draw. We were able to find companies offering strong
growth potential at attractive prices within a number of industries."
- James Haynie & Michael Rega
COLONIAL SELECT VALUE FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Six-month distributions declared per share $ 1.850 $ 1.850 $ 1.850
Six-month total returns, assuming 22.03% 21.55% 21.58%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
Net asset value per share on 4/30/98 $ 22.80 $ 22.21 $ 22.69
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS(1) TOP FIVE SECTORS(1),(2)
(as of 4/30/98) (as of 4/30/98)
<S> <C> <C> <C>
1. Costco Cos., Inc. ........ 2.8% 1. Consumer Cyclicals ...... 19.2%
2. Lincare Holdings, Inc. ... 2.6% 2. Financial ............... 16.2%
3. Omnicom Group, Inc. ...... 2.5% 3. Technology .............. 12.6%
4. Kroger Corp. ............. 2.5% 4. Health Care ............. 10.0%
5. FortJames Corp. .......... 2.4% 5. Utilities ............... 8.0%
</TABLE>
(1) 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.
(2) 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 as used in the investment process.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF HAROLD W. COGGER]
I am pleased to present your Fund's semiannual report for the six-month
period ended April 30, 1998.
The economic environment we are enjoying couldn't be healthier for corporate
America. With low interest rates, low unemployment and low inflation, companies
within a variety of industries continue to prosper. As the U.S. stock market
continued to reach new heights over the past six months, equity investors have
certainly reaped the benefits. As a diversified equity fund that targets stocks
of medium-sized companies, Colonial Select Value Fund has provided investors
with exceptional returns over the last six months.
Currently, the stock prices of many companies are trading at a premium. Under
these conditions, it has become more and more of a "stock picker's" market.
Diligent analysis of individual companies, their industries and the prices at
which their stocks are trading relative to others in their industry is
critical.
The mid-cap sector represents a vast universe of less-recognized stocks. It is a
segment of the equity market that is ideally suited to Colonial's New Value(TM)
approach to stock selection. Operating under the premise that investment
opportunity can be found almost anywhere, the New Value approach helps our
portfolio managers maintain diversification across a wide variety of industries.
Equally important, it enables them to search for stocks of companies with
attractive current prices, a consistent track record of operating performance
and favorable future growth prospects. Needless to say, it's a strategy that has
produced some favorable results for our shareholders.
More detailed information about the Fund, its performance and the companies in
which it invested during the six-month period appear on the following pages.
Thank you for choosing Colonial Select Value Fund and for the opportunity to
serve your investment needs.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
June 9, 1998
As market and economic conditions change, there can be no assurance that the
trends described above and on the pages that follow will continue.
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
JAMES HAYNIE and MICHAEL REGA co-manage Colonial Select Value Fund and are vice
presidents of Colonial Management Associates, Inc. The following is a discussion
of the Fund's performance for the six-month period ended April 30, 1998.
Over the past six months, U.S. equity markets continued their climb. The S&P 400
Index, a commonly used indicator of mid-cap stock performance, gained 19.17%
through April 30, 1998 with most of this growth coming in the last four months
of the period. During the same six-month period, Colonial Select Value Fund
produced an impressive 22.03% total return on Class A shares, placing it in the
top 10% of the Lipper mid-cap fund category.(1)
NEW VALUE -- A STRATEGY THAT HAS SERVED INVESTORS WELL
Colonial's New Value strategy uses a disciplined stock selection process. By
employing this approach, we strive to maintain a broadly diversified portfolio
and avoid making large bets in specific industries or sectors of the economy.
The benefit is twofold. First, it enables us to reduce the risk that any single
industry could adversely affect the portfolio. Second, it encourages us to dig
deeper into each industry in search of stocks of companies that appear solid and
attractively priced relative to their peers.
THE MID-CAP UNIVERSE OFFERS AN ABUNDANCE OF OPPORTUNITIES
In general, we focus on stocks of medium-sized companies in the $400 million to
$8 billion market capitalization range. In doing so, the Fund is able to seek
growth potential from a universe of approximately 1,500 stocks. Through
extensive analysis, we continuously screen this vast universe of stocks under a
variety of measures to identify a pool of stocks trading at attractive
valuations within their industry group. In simpler terms, we look for bargains,
or stocks offering investment opportunities at a reasonable price. From this
list, we conduct more fundamental research to target companies with strong
management teams, established records of operational success and above average
future growth prospects.
One stock that has performed quite well is Nature's Bounty (0.34% of the Fund's
total net assets), a selection that has produced strong results since the time
we purchased it in early 1997. As a vitamin company, Nature's Bounty is well
positioned for future growth, particularly when you consider the demographics of
an aging baby boomer population and the healthy lifestyle choices consumers are
making. From early 1997 to April 30, 1998, the stock gained over 175%.
4
<PAGE>
Another stock that has been profitable for us is Diamond Offshore (0.67%
of the Fund's total net assets), a manufacturer of large, semi-submersible
oil rigs that we bought in February of this year. Here's a prime example of
the New Value investment style in action. The oil service industry had been
beaten down a bit and was not that attractive as a whole. However, rather
than avoid the industry all together, we noticed Diamond Offshore had
attractive valuations when compared to other oil service companies. We took a
closer look, speaking with the management team and studying the company's
operations, previous performance and future earnings potential. We discovered
that they had strong earnings and a majority of their business is in the
strong deep water market. We decided to buy it and we were rewarded with a
nice gain of 15% from February through the end of April.
CAREFUL STOCK SELECTION IS MORE IMPORTANT THAN EVER
While it would be difficult for domestic equity markets to continue at the pace
they have for the last few years, our outlook remains positive, as the economic
climate still favors stocks. It's our belief that pockets of opportunity will
always exist within a variety of industries, regardless of the direction of
broad markets. It's a challenge to find stocks with strong growth potential that
are overlooked by the market. These conditions help underscore the importance of
careful stock selection and the value of utilizing a disciplined investment
philosophy -- the New Value approach. Going forward, we will continue to seek
strong growth opportunities by identifying attractively priced stocks with
established records of success.
(1) Source: Lipper Analytical Services, Inc. Lipper rankings are based on the
Lipper Mid-cap Funds category. The Fund's Class A share ranking is in the first
decile for the six-month period (ranked 17 out of 300), in the first decile for
the one-year period (ranked 20 out of 276 funds), in the first decile for the
five-year period (ranked 5 out of 85 funds) and in the fourth decile for the
ten-year period (ranked 13 out of 37 funds).
5
<PAGE>
COLONIAL SELECT VALUE FUND INVESTMENT PERFORMANCE
VS. THE STANDARD & POOR'S MIDCAP 400 INDEX
Change in Value of $10,000 from 4/30/88 - 4/30/98
Based on NAV and POP for Class A Shares
[LINE GRAPH]
CURRENT VALUE OF A $10,000 INVESTMENT
Made on 4/30/88
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
NAV POP NAV w/CDSC NAV w/CDSC
<S> <C> <C> <C> <C> <C>
$49,913 $47,043 $47,780 $47,780 $49,681 $49,681
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/98
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
NAV POP NAV w/CDSC NAV w/CDSC
<S> <C> <C> <C> <C> <C> <C>
1 YEAR 52.95% 44.15% 51.80% 46.80% 52.24% 51.24%
5 YEARS 22.39 20.95 21.48 21.30 22.28 22.28
10 YEARS 17.44 16.75 16.93 16.93 17.39 17.39
</TABLE>
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 contingent deferred sales charge (CDSC). Public offering price (POP) returns
include the maximum sales charge of 5.75% for Class A shares. The CDSC returns
reflect charges of 5% for one year and 2% for five years for Class B shares, and
1% for one year for Class C shares. Performance for different share classes will
vary based on differences in sales charges and fees associated with each class.
Class B and C share (newer class shares) performance includes returns of the
Fund's Class A shares (the oldest existing fund class) for periods prior to the
inception dates of newer class shares. These Class A share returns are not
restated to reflect any expense differential (e.g. Rule 12b-1 fees) between
Class A shares and the newer class. Had the expense differential been reflected,
the returns for periods prior to the inception date of the newer class shares
would have been lower.
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.
6
<PAGE>
<TABLE>
<CAPTION>
CSVF Class A
AS OF DATE NAV POP S&P MIDCAP 400
<S> <C> <C> <C>
4/30/88 10000 10000 10000
10153 9570 10215
10564 9957 10430
11303 10653 11365
12102 11406 12286
13547 12768 13584
13437 12665 13623
12667 11938 13202
12933 12189 13429
13942 13140 14462
11005 10372 11798
13267 12504 14765
14641 13800 16820
15163 14291 17706
15617 14719 19284
16784 15818 20902
16619 15663 20191
16797 15831 20783
16907 15935 21062
18889 17802 23273
18173 17128 23118
18935 17846 24246
19915 18770 25597
21004 19796 26802
19927 18781 25385
19869 18726 25101
20467 19291 26206
19578 18453 25517
21860 20603 27870
25083 23641 31248
26288 24777 31765
27676 26085 33550
30045 28317 36178
29161 27484 33672
31883 30049 37276
33735 31796 40898
32634 30758 39841
39762 37475 48952
40903 38551 49453
43477 40977 51141
4/30/98 49913 47043 58932
</TABLE>
<PAGE>
INVESTMENT PORTFOLIO
APRIL 30, 1998 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 93.2% SHARES VALUE
---------------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - 1.3%
BUILDING CONSTRUCTION - 0.9%
Centex Corp. 174 $ 6,047
-----------
HEAVY CONSTRUCTION-NON BUILDING CONSTRUCTION - 0.3%
Halliburton Co. 32 1,738
-----------
SPECIAL TRADE CONTRACTORS - 0.1%
Apogee Enterprises, Inc. 50 731
-----------
---------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 16.2%
DEPOSITORY INSTITUTIONS - 8.4%
AmSouth Bancorporation 67 4,204
Associated Banc-Corp. 92 4,830
City National Corp. 97 3,592
Community First Bankshares, Inc. 82 4,116
Cullen/Frost Bankers, Inc. 35 2,024
First Tennessee National Corp. 38 1,302
Golden State Bancorp, Inc.(a) 155 6,045
Greenpoint Financial Corp. 197 7,834
Hibernia Corp. 160 3,262
North Fork Bancorporation, Inc. 203 7,522
Northern Trust Corp. 83 6,059
Peoples Heritage Financial Group, Inc. 65 3,136
Zions Bancorporation 60 3,042
-----------
56,968
-----------
INSURANCE CARRIERS - 3.2%
MGIC Investment Corp. 70 4,385
Protective Life Corp. 47 1,727
Sunamerica, Inc. 236 11,805
Vesta Insurance Group, Inc. 65 3,698
-----------
21,615
-----------
NONDEPOSITORY CREDIT INSTITUTION - 2.1%
Household International, Inc. 43 5,678
The Money Store, Inc. 263 8,653
-----------
14,331
-----------
SECURITY BROKERS & DEALERS - 2.5%
Franklin Resources, Inc. 122 6,548
Lehman Brothers Holdings, Inc. 100 7,106
T. Rowe Price Associates 43 3,231
-----------
16,885
-----------
</TABLE>
7
<PAGE>
Investment Portfolio/April 30, 1998
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
---------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 31.2%
APPAREL - 2.1%
Jones Apparel Group, Inc.(a) 103 $ 6,154
Tommy Hilfiger Corp.(a) 92 5,594
VF Corp. 45 2,340
-----------
14,088
-----------
CHEMICALS & ALLIED PRODUCTS - 3.5%
Dura Pharmaceuticals, Inc.(a) 133 3,524
Ecolab, Inc. 41 1,312
Goodrich (B.F.) Co. 168 9,014
NBTY, Inc. (a) 117 2,334
Watson Pharmaceuticals, Inc.(a) 184 7,921
-----------
24,105
-----------
COMMUNICATIONS EQUIPMENT - 0.3%
Harman International Industries, Inc. 50 2,159
-----------
ELECTRONIC COMPONENTS - 0.6%
Dallas Semiconductor Corp. 34 1,315
SCI Systems, Inc.(a) 77 3,163
-----------
4,478
-----------
FABRICATED METAL - 1.1%
Crane Co. 133 7,146
-----------
FOOD & KINDRED PRODUCTS - 2.0%
Interstate Bakeries Corp. 303 9,595
Philip Morris Co., Inc. 99 3,694
-----------
13,289
-----------
FURNITURE & FIXTURES - 3.4%
Furniture Brands International, Inc.(a) 187 5,493
Herman Miller, Inc. 512 15,444
Leggett & Platt, Inc. 44 2,280
-----------
23,217
-----------
LUMBER & WOOD PRODUCTS - 0.8%
Clayton Homes, Inc. 123 2,472
Oakwood Homes Corp. 117 3,306
-----------
5,778
-----------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/April 30, 1998
---------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - CONT.
MACHINERY & COMPUTER EQUIPMENT - 4.6%
Camco International, Inc. 70 $ 4,751
Diebold, Inc. 105 4,280
Flowserve Corp. 112 3,346
Storage Technology Corp.(a) 71 5,953
Sun Microsystems, Inc.(a) 258 10,635
Tyco International Ltd. 40 2,180
-----------
31,145
-----------
MEASURING & ANALYZING INSTRUMENTS - 3.3%
ATL Ultrasound, Inc.(a) 91 4,382
Biomet, Inc. 406 12,192
Dentsply International, Inc. 102 3,337
Dynatech Corp.(a) 49 2,399
SonoSight, Inc.(a) 30 249
-----------
22,559
-----------
MISCELLANEOUS MANUFACTURING - 0.5%
Callaway Golf Co. 120 3,275
-----------
PAPER PRODUCTS - 2.4%
Fort James Corp. 332 16,485
-----------
PETROLEUM REFINING - 0.8%
Kerr-McGee Corp. 87 5,729
-----------
PRIMARY METAL - 2.6%
Mueller Industries, Inc.(a) 74 5,009
Texas Industries, Inc. 134 8,609
USX-US Steel Group 96 3,748
-----------
17,366
-----------
PRINTING & PUBLISHING - 1.2%
New York Times Co. 112 7,931
Reynolds & Reynolds Co. 3 69
-----------
8,000
-----------
RUBBER & PLASTIC - 0.3%
Wynn's International, Inc. 96 2,157
-----------
TRANSPORTATION EQUIPMENT - 1.7%
Fleetwood Enterprises, Inc. 83 3,834
Harley-Davidson, Inc. 150 5,400
Varlen Corp. 62 2,163
-----------
11,397
-----------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/April 30, 1998
---------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
---------------------------------------------------------------------------------
<S> <C> <C>
MINING & ENERGY - 3.2%
CRUDE PETROLEUM & NATURAL GAS - 0.1%
Apache Corp. 20 $ 708
-----------
OIL & GAS EXTRACTION - 1.8%
Devon Energy Corp. 9 359
Noble Drilling Corp.(a) 156 5,047
SEACOR SMIT, Inc.(a) 111 6,513
-----------
11,919
-----------
OIL & GAS FIELD SERVICES - 1.3%
BJ Services Co.(a) 120 4,504
Diamond Offshore Drilling, Inc. 90 4,556
-----------
9,060
-----------
---------------------------------------------------------------------------------
RETAIL TRADE - 14.4%
APPAREL & ACCESSORY STORES - 1.5%
Ross Stores, Inc. 160 7,424
TJX Companies, Inc. 65 2,867
-----------
10,291
-----------
FOOD STORES - 2.5%
Kroger Corp.(a) 400 16,733
-----------
GENERAL MERCHANDISE STORES - 6.3%
Costco Cos., Inc.(a) 345 19,288
Federated Department Stores, Inc. (a) 119 5,848
Meyer (Fred), Inc.(a) 302 13,534
Proffitt's, Inc.(a) 114 4,539
-----------
43,209
-----------
HOME FURNISHINGS & EQUIPMENT - 1.2%
CompUSA, Inc.(a) 435 8,075
-----------
MISCELLANEOUS RETAIL - 2.4%
Office Depot, Inc.(a) 436 14,456
U.S. Office Products Co.(a) 102 1,799
-----------
16,255
-----------
RESTAURANTS - 0.5%
Brinker International, Inc.(a) 142 3,408
-----------
---------------------------------------------------------------------------------
SERVICES - 14.5%
BUSINESS SERVICES - 3.2%
Omnicom Group, Inc. 362 17,136
Robert Half International, Inc.(a) 83 4,476
-----------
21,612
-----------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/April 30, 1998
---------------------------------------------------------------------------------
<S> <C> <C>
SERVICES - CONT.
COMPUTER RELATED SERVICES - 1.5%
Cadence Design Systems, Inc.(a) 86 $ 3,104
Fiserv, Inc.(a) 10 654
Shared Medical Systems Corp. 52 3,793
Wang Laboratories, Inc.(a) 85 2,298
-----------
9,849
-----------
COMPUTER SOFTWARE - 4.8%
Adobe Systems, Inc. 59 2,974
BMC Software, Inc.(a) 82 7,707
Compuware Corp.(a) 296 14,477
Keane, Inc.(a) 77 3,859
Sterling Software, Inc.(a) 141 3,738
-----------
32,755
-----------
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 0.5%
Paychex, Inc. 68 3,674
-----------
HEALTH SERVICES - 4.5%
Lincare Holdings, Inc.(a) 216 17,499
PhyCor, Inc.(a) 70 1,595
Universal Health Services, Inc., Class B(a) 199 11,449
-----------
30,543
-----------
---------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 10.7%
BROADCASTING - 0.2%
Clear Channel Communications, Inc.(a) 12 1,131
-----------
ELECTRIC SERVICES - 5.1%
California Energy, Inc.(a) 177 5,784
Dominion Resources, Inc. 130 5,143
Energy East Corp. 112 4,689
Enova Corp. 163 4,360
Minnesota Power & Light Co. 156 6,347
Pinnacle West Capital Corp. 102 4,527
Utilicorp United, Inc. 54 2,047
Washington Water Power Co. 85 1,955
-----------
34,852
-----------
GAS SERVICES - 1.3%
Columbia Energy Group 42 3,412
KN Energy, Inc. 78 4,560
NGL Corp. 71 1,043
-----------
9,015
-----------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/April 30, 1998
---------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
---------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
MOTOR FREIGHT & WAREHOUSING - 1.9%
CNF Transportation 283 $ 10,919
Consolidated Freightways Corp.(a) 41 742
USFreightways Corp. 43 1,552
-----------
13,213
-----------
SANITARY SERVICES - 0.1%
Piedmont Natural Gas Co. 28 954
-----------
TELECOMMUNICATION - 1.6%
Aliant Communications, Inc. 10 284
Century Telephone Enterprises, Inc. 98 4,175
Cincinnati Bell, Inc. 167 6,388
-----------
10,847
-----------
TRANSPORTATION SERVICES - 0.5%
Expeditors International Washington, Inc. 85 3,617
-----------
---------------------------------------------------------------------------------
WHOLESALE TRADE - 1.7%
DURABLE GOODS - 1.4%
Patterson Dental Co.(a) 79 2,331
Tech Data Corp.(a) 139 6,933
Ultramed, Inc.(b) 450 (c)
-----------
9,264
-----------
NONDURABLE GOODS - 0.3%
AmeriSource Health Corp. , Class A(a) 20 1,074
Richfood Holdings, Inc. 35 960
-----------
2,034
-----------
TOTAL INVESTMENTS (cost of $418,640)(d) 633,706
-----------
SHORT TERM OBLIGATIONS - 6.4% PAR
---------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp.,
dated 4/30/98, due 5/01/98 at 5.52% collateralized by
U.S. Treasury notes and bill with various maturities
to 2021, market value $52,583 (repurchase proceeds
$43,460)
$ 43,453 43,453
-----------
OTHER ASSETS & LIABILITIES, NET - 0.4% 2,598
---------------------------------------------------------------------------------
NET ASSETS - 100% $ 679,757
-----------
</TABLE>
12
<PAGE>
Investment Portfolio/April 30, 1998
-----------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
-----------------------------------------------------------------------
(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, 1998.
(c) Rounds to less than one.
(d) Cost for federal income tax purposes is the same.
See notes to financial statements.
13
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1998 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $418,640) $ 633,706
Short-term obligations 43,453
---------
677,159
Receivable for:
Fund shares sold $ 2,815
Dividends 243
Interest 7
Foreign tax reclaims 4
Other 118 3,187
--------- ---------
Total Assets 680,346
LIABILITIES
Payable for:
Investments purchased 5
Fund shares repurchased 582
Accrued Deferred Trustees fees 2
---------
Total Liabilities 589
---------
NET ASSETS $ 679,757
---------
Net asset value & redemption price per share -
Class A ($417,100/18,295) $ 22.80
---------
Maximum offering price per share - Class A
($22.80/0.9425) $ 24.19(a)
---------
Net asset value & offering price per share -
Class B ($257,743/11,605) $ 22.21(b)
---------
Net asset value & offering price per share -
Class C ($4,914/216) $ 22.69(b)
---------
COMPOSITION OF NET ASSETS
Capital paid in $ 433,595
Overdistributed net investment income (14)
Accumulated net realized gain 31,110
Net unrealized appreciation 215,066
---------
$ 679,757
=========
</TABLE>
(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.
14
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
(in thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 1,789
Interest 619
---------
2,408
EXPENSES
Management fee $ 2,076
Service fee 723
Distribution fee - Class B 817
Distribution fee - Class C 7
Transfer agent 842
Bookkeeping fee 109
Registration fee 27
Custodian fee 9
Audit fee 16
Trustees fee 13
Reports to shareholders 8
Legal fee 4
Other 40 4,691
--------- ---------
Net Investment Loss (2,283)
---------
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 33,624
Net unrealized appreciation
during the period 86,035
---------
Net Gain 119,659
---------
Increase in Net Assets from Operations $ 117,376
---------
</TABLE>
See notes to financial statements.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Year ended
(in thousands) April 30 October 31
------------- -------------
INCREASE (DECREASE) IN NET ASSETS 1998 1997(a)
<S> <C> <C>
Operations:
Net investment loss $ (2,283) $ (1,292)
Net realized gain 33,624 50,191
Net unrealized appreciation 86,035 65,661
--------- ---------
Net Increase from Operations 117,376 114,560
Distributions:
From net realized gains - Class A (30,679) (31,180)
From net realized gains - Class B (17,924) (16,942)
From net realized gains - Class C (65) --
--------- ---------
68,708 66,438
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 52,009 138,708
Value of distributions reinvested - Class A 27,547 28,041
Cost of shares repurchased - Class A (46,911) (126,189)
--------- ---------
32,645 40,560
--------- ---------
Receipts for shares sold - Class B 53,711 92,343
Value of distributions reinvested - Class B 16,794 15,974
Cost of shares repurchased - Class B (29,421) (66,864)
--------- ---------
41,084 41,453
--------- ---------
Receipts for shares sold - Class C 4,549 562
Value of distributions reinvested - Class C 64 --
Cost of shares repurchased - Class C (491) (9)
--------- ---------
4,122 553
--------- ---------
Net Increase from Fund Share Transactions 77,851 82,566
--------- ---------
Total Increase 146,559 149,004
NET ASSETS
Beginning of period 533,198 384,194
--------- ---------
End of period (net of overdistributed
net investment income of $14 and
$11, respectively) $ 679,757 $ 533,198
--------- ---------
</TABLE>
(a) Class C shares were initially offered on August 1, 1997.
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Year ended
(in thousands) April 30 October 31
------------ ------------
NUMBER OF FUND SHARES 1998 1997(a)
<S> <C> <C>
Sold - Class A 2,476 7,894
Issued for distributions reinvested - Class A 1,391 1,707
Repurchased - Class A (2,239) (7,117)
------ ------
1,628 2,484
------ ------
Sold - Class B 2,593 5,238
Issued for distributions reinvested - Class B 868 985
Repurchased - Class B (1,455) (3,814)
------ ------
2,006 2,409
------ ------
Sold - Class C 209 28
Issued for distributions reinvested - Class C 3 --
Repurchased - Class C (23) (1)
------ ------
189 27
------ ------
</TABLE>
(a) Class C shares were initially offered on August 1, 1997.
See notes to financial statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Colonial Select Value Fund (the 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, 1998, 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
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 three classes
of shares: Class A, Class B, and Class C. Class A shares are sold with a
front-end sales charge and Class B shares are subject to an annual distribution
fee and a contingent deferred sales charge. Class B shares will convert to Class
A shares when they have been outstanding approximately eight years. Class C
shares are subject to a contingent deferred sales charge on redemptions made
within one year after purchase and a continuing distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the 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 generally 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.
18
<PAGE>
Notes to Financial Statements/April 30, 1998
Portfolio positions for which market quotations are not readily available 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 and Class C distribution fee), and 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 and Class C net investment income per share data
reflects the distribution fee applicable to Class B and Class C shares only.
Class B and Class C ratios are calculated by adjusting the expense and net
investment income ratios for the Fund for the entire period by the distribution
fee applicable to Class B and Class C 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.
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 gains (losses) arising from the
fluctuation in exchange rates 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.
19
<PAGE>
Notes to Financial Statements/April 30, 1998
NOTE 2. ACCOUNTING POLICIES - CONT.
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. Interest income is
recorded on the accrual basis.
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 0.70% 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.
20
<PAGE>
Notes to Financial Statements/April 30, 1998
Effective October 1, 1997 and continuing through September 1998, the Transfer
Agent fee will be reduced by 0.0012% in cumulative monthly increments, resulting
in a decrease in the fee from 0.25% to 0.236% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Financial
Investments, Inc. (the Distributor), a subsidiary of the Adviser, is the Fund's
principal underwriter. For the six months ended April 30, 1998, the Fund has
been advised that the Distributor retained net underwriting discounts of
$381,577 on sales of the Fund's Class A shares and received contingent deferred
sales charges (CDSC) of $128,891 and $1,123 on Class B and Class C share
redemptions, respectively.
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 and Class C shares. The plan also requires the payment
of a service fee to the Distributor as follows:
<TABLE>
<CAPTION>
Value of shares outstanding on the
20th of each month which were issued Annual Fee Rate
------------------------------------ ---------------
<S> <C>
Prior to April 1, 1989 0.15%
On or after April 1, 1989 0.25%
</TABLE>
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, 1998, purchases and
sales of investments, other than short-term obligations, were $139,200,642 and
$138,324,203, respectively.
Unrealized appreciation (depreciation) at April 30, 1998, based on cost of
investments for both financial statements and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 225,351,126
Gross unrealized depreciation (10,285,133)
-------------
Net unrealized appreciation $ 215,065,993
-------------
</TABLE>
21
<PAGE>
Notes to Financial Statements/April 30, 1998
NOTE 4. 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 5. 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 six months ended April 30, 1998.
22
<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
-------------------------------------
1998
Class A Class B Class C
--------- --------- ---------
<S> <C> <C> <C>
Net asset value - Beginning of period $ 20.430 $ 20.020 $ 20.410
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a) (0.052) (0.129) (0.132)
Net realized and unrealized gain 4.272 4.169 4.262
--------- --------- ---------
Total from Investment Operations 4.220 4.040 4.130
--------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized gains (1.850) (1.850) (1.850)
--------- --------- ---------
Net asset value - End of period $ 22.800 $ 22.210 $ 22.690
--------- --------- ---------
Total return (b)(c) 22.03% 21.55% 21.58%
--------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses(d)(e) 1.30% 2.05% 2.05%
Net investment income(d)(e) (0.49)% (1.24)% (1.24)%
Portfolio turnover(c) 24% 24% 24%
Average commission rate $ 0.0362 $ 0.0362 $ 0.0362
Net assets at end of period (000) $ 417,100 $ 257,743 $ 4,914
</TABLE>
(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.
(e) Annualized.
23
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended October 31
-------------------------------------
1997
Class A Class B Class C(a)
--------- --------- ---------
<S> <C> <C> <C>
Net asset value - Beginning of period $ 18.040 $ 17.840 $ 19.860
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) (0.002) (0.135) (0.053)
Net realized and unrealized gain 4.575 4.498 0.603(c)
--------- --------- ---------
Total from Investment Operations 4.573 4.363 0.550
--------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- -- --
In excess of net investment income -- -- --
From net realized gains (2.183) (2.183) --
--------- --------- ---------
Total Distributions
Declared to Shareholders (2.183) (2.183) --
--------- --------- ---------
Net asset value -
End of period $ 20.430 $ 20.020 $ 20.410
--------- --------- ---------
Total return (d) 28.29% 27.33% 2.77%(e)
--------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses(f) 1.03% 1.78% 1.81%(g)
Net investment income(f) (0.01)% (0.76)% (1.05)%(g)
Portfolio turnover 63% 63% 63%
Average commission rate (h) $ 0.0396 $ 0.0396 $ 0.0396
Net assets at end of period (000) $ 340,479 $ 192,161 $ 558
</TABLE>
(a) Class C shares were initially offered on August 1, 1997. Per share
amounts reflect activity from that date.
(b) Per share data was calculated using average shares outstanding during
the period.
(c) The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to the timing of
sales and repurchases of Fund shares in relation to fluctuating market
values of the investments of the Fund.
(d) Total return at net asset value assuming all distributions reinvested
and no initial sales charge or contingent deferred sales charge.
(e) Not annualized.
24
<PAGE>
FINANCIAL HIGHLIGHTS - continued
<TABLE>
<CAPTION>
Year ended October 31
---------------------------------------------------------
1996 1995
Class A Class B Class A Class B
----------- ----------- ---------- ------------
<S> <C> <C> <C>
$ 16.140 $ 16.040 $ 14.020 $ 13.940
----------- ----------- ---------- ------------
0.043 (0.081) 0.174 0.065
3.162 3.129 3.326 3.317
----------- ----------- ---------- ------------
3.205 3.048 3.500 3.382
----------- ----------- ---------- ------------
(0.042) (0.005) (0.165) (0.067)
(0.023) (0.003) -- --
(1.240) (1.240) (1.215) (1.215)
----------- ----------- ---------- ------------
(1.305) (1.248) (1.380) (1.282)
----------- ----------- ---------- ------------
$ 18.040 $ 17.840 $ 16.140 $ 16.040
----------- ----------- ---------- ------------
21.28% 20.31% 28.44% 27.50%
----------- ----------- ---------- ------------
1.17% 1.92% 1.12% 1.90%
0.25% (0.50)% 1.24% 0.46%
100% 100% 92% 92%
$ 0.0392 $ 0.0392 -- --
$ 255,911 $ 128,283 $ 194,393 $ 75,283
</TABLE>
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(g) Annualized.
(h) 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.
25
<PAGE>
FINANCIAL HIGHLIGHTS - continued
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<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 $ 15.240 $ 15.180 $ 13.830 $ 13.780
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a) 0.096 (0.008) 0.110 0.001
Net realized and unrealized gain 0.275 0.288 2.240 2.244
--------- --------- --------- ---------
Total from Investment Operations 0.371 0.280 2.350 2.245
--------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.071) -- (0.095) --
From net realized gains (1.520) (1.520) (0.845) (0.845)
--------- --------- --------- ---------
Total Distributions
Declared to Shareholders (1.591) (1.520) (0.940) (0.845)
--------- --------- --------- ---------
Net asset value -
End of period $ 14.020 $ 13.940 $ 15.240 $ 15.180
--------- --------- --------- ---------
Total return(b) 2.78% 2.12% 17.79% 16.99%
--------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.22% 1.97% 1.19% 1.94%
Net investment income 0.69% (0.06)% 0.64% (0.11)%
Portfolio turnover 121% 121% 66% 66%
Average commission rate -- -- -- --
Net assets at end of period (000) $ 160,495 $ 53,218 $ 169,913 $ 41,989
</TABLE>
(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.
26
<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 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.
27
<PAGE>
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, & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President--Operations, The Rockport
Company)
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, CS 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
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.)
[LIBERTY LOGO]
LIBERTY FINANCIAL INVESTMENTS, INC. (C) 1998
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com SV-03/289F-0498 (6/98) 98/578
