[Front Cover]
[Photo: Partial view of the earth as viewed from space]
COLONIAL GLOBAL UTILITIES FUND Annual report
October 31, 1997
Not FDIC May Lose Value
Insured No Bank Guarantee
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COLONIAL GLOBAL UTILITIES FUND HIGHLIGHTS
NOVEMBER 1, 1996 - OCTOBER 31, 1997
Investment Objective: Colonial Global Utilities Fund seeks current income and
long-term growth of capital and income.
The Fund is Designed to Offer:
[checkmark] Long-term growth potential
[checkmark] Worldwide diversification
[checkmark] Experienced professional management
Portfolio Manager Commentary: "The Fund's diversification of markets, utility
sectors and political/economic environments continued to provide shareholders
with a conservative way to participate in growing worldwide demand for electric,
gas and telecommunication services."
- Ophelia Barsketis and Deborah Jansen
Colonial Global Utilities Fund Performance
Class A Class B Class C(1)
Inception dates 10/15/91 3/27/95 3/27/95
- --------------------------------------------------------------------------------
Twelve-month distributions declared
per share $0.348 $0.247 $0.247
- --------------------------------------------------------------------------------
Twelve-month total returns, assuming
reinvestment of all distributions and 17.40% 16.43% 16.53%
no sales charge or contingent deferred
sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 10/31/97 $13.72 $13.72 $13.72
(1) On July 1, 1997, Class D shares were redesignated Class C shares.
Top Five Common Stock Holdings(2) Top Five Countries(2)
(as of 10/31/97) (as of 10/31/97)
................................. .................................
1. Portugal Telecom S.A. 2.8% 1. United States 49.4%
2. AES Corp. 2.7% 2. Mexico 5.6%
3. Lucent Technologies 2.4% 3. Brazil 5.4%
4. Ameritech Corp 2.4% 4. Argentina 4.1%
5. MCN Corp 2.3% 5. United Kingdom 3.9%
(2)Holdings are shown as a percentage of total net assets. Countries are shown
as a percentage of total investments. 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.
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PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present the annual report for
Colonial Global Utilities Fund. This report
reflects on the investment environment for the [Photo:
12 months ended October 31, 1997 and on the Harold W. Cogger]
performance of your Fund.
Both international and domestic stock markets were generally strong during much
of the period and the Fund's investment in utility stocks of established
international and U.S. companies offered shareholders a way to participate in
the global economy. Many of the world's economies are less mature than the U.S.
economy. Significant unmet needs for basic utility services provide
international utility stocks with considerable opportunities for price gains.
While traditional utility investments in the U.S. market have recently
experienced limited performance, their outlook is improving based on attractive
economic fundamentals. These include low inflation, low interest rates and
significant progress towards restructuring in the face of utility deregulation
and increased competition.
While many markets experienced price gains during the period, a currency crisis
in Southeast Asia during the final months had a negative spillover effect on
many stock markets worldwide. During the "sorting out" period, the Fund's
emphasis on a diversified portfolio of fundamentally strong, value-oriented
utility stocks in well-established markets served to stabilize returns and
shield investors from much of this volatility.
In addition to providing attractive growth potential, a global fund offers an
opportunity to diversify your core portfolio by adding international
investments. World stock markets do not tend to move in step with the domestic
stock market, and many international markets have historically outperformed the
U.S. market. We believe, looking ahead, economic growth prospects worldwide
remain attractive and point to opportunities for future gains.
The following report will provide you with specific information on your Fund's
performance as well as an in-depth report from your portfolio manager. Thank you
for giving us the opportunity to serve your investment needs. Respectfully,
/s/ Harold W. Cogger
- --------------------
Harold W. Cogger
President
December 10, 1997
Because market conditions change frequently, there can be no assurance that the
trends described will continue.
3
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PORTFOLIO MANAGEMENT REPORT
Ophelia Barsketis and Deborah Jansen are portfolio co-managers of Colonial
Global Utilities Fund. Ms. Barsketis is Senior Vice President of Stein Roe &
Farnham, Inc., the portfolio's advisor. Ms. Jansen is Vice President of Stein
Roe & Farnham, Inc.
Generally favorable economic conditions prevailed
Low inflation, low or falling interest rates in many areas of the world and good
economic growth, particularly in the U.S., Europe and Latin America, combined to
provide a favorable environment during most of the period. In the U.S., those
utility companies that have cut costs and restructured their operations to
increase their competitiveness in advance of deregulation performed well. A
number of European utility stocks benefited from improving economic growth and
efforts to privatize many state-owned utilities. Latin American utilities that
sought to fulfill pent up demand for basic electric and telephone services also
performed well.
However, during the last several months of the year, a currency crisis in
Southeast Asia had a negative spillover effect on markets worldwide and
volatility increased. This event did not cause us to alter our investment
strategy -- we maintained our conservative focus on a diversified group of
well-managed utility companies with good growth prospects in a variety of
countries. We believe that these market events may present the Fund with buying
opportunities over the near term and we will look closely at stocks in areas
where economic growth and market prospects appear favorable.
Telecommunication stocks offered good values
The portfolio is divided among the three major utility sectors: electricity,
telecommunications and gas/water. During the period, the telecommunications
sector offered the best value, often at the expense of the electric sector,
particularly in the U.S. where coming deregulation and increased competition
limited upside potential.
The portfolio benefited from a number of stocks in the telecommunications
sector. Two European utilities, Compagnie Generale des Eaux (French water) and
Telecom Italia (Italian telephone) were large holders of cellular licenses and
provided the Fund with an indirect way to participate in the sector's growth. We
also held Airtouch, a U.S. company with cellular operations in 12
4
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nations, good management and a strong balance sheet, and Iusacell, a Mexican
cellular operator.
Performance reflects diversification across markets and sectors
For the 12-month period, the Fund generated a total return of 17.40% for Class A
shares, based on net asset value. The Fund outperformed both the Standard and
Poor's Utilities Index and the Morgan Stanley Capital International World Index
ND which posted total returns of 9.90% and 16.77% for the period, respectively.
Shareholders benefited from the portfolio's conservative investment approach,
including its variety of holdings across markets and utility sectors.
Fundamental outlook for many utility stocks is positive
The utility supply and demand balance in many emerging nations is so tight that
any event that limits a utility's ability to service its customers has a broad
impact. For example, a recent storm in Brazil knocked out two electric
transmission towers and the affected area was subjected to rotating brownouts,
including first class hotels in the downtown areas that were left without
running water. Many utility services we take for granted, running water, a
private telephone and uninterrupted electricity, are less reliable in these
countries and utilities that are able to efficiently service this pent up demand
should do well.
Elsewhere in the world, privatization and deregulation present utility companies
with new opportunities. We have already found value in the independent power
producer (IPP) sector of the electric sector. As utility companies worldwide are
unable to generate sufficient electricity to keep pace with growth in electric
transmission needs, IPPs are able to fill this gap by providing an independent
source of electricity. The portfolio has owned IPP stocks, such as AES Corp.
(U.S.), and has avoided large exposure to traditional domestic electric utility
stocks, which we believe have less attractive earnings growth potential.
5
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Colonial Global Utilities Fund Investment Performance(1) vs.
Morgan Stanley Capital International World Index ND and the
Standard & Poor's Utilities Index
Change in Value of $10,000 from 10/31/91 - 10/31/97
Based on NAV and POP for Class A Shares
AS OF DATE NAV POP S&P Utilities MSCI World Index
10/91 10,000 9,425 10,000 10,000
11/91 10,048 9,470 9,903 9,561
12/91 10,508 9,904 10,635 10,254
1/92 10,356 9,760 10,063 10,061
2/92 10,315 9,722 9,782 9,885
3/92 10,203 9,616 9,643 9,416
4/92 10,367 9,771 10,269 9,544
5/92 10,636 10,024 10,254 9,921
6/92 10,688 10,073 10,394 9,585
7/92 11,137 10,496 11,222 9,607
8/92 11,199 10,555 11,132 9,837
9/92 11,199 10,555 11,213 9,744
10/92 11,083 10,445 11,113 9,477
11/92 11,243 10,596 11,092 9,643
12/92 11,596 10,930 11,496 9,718
1/93 11,855 11,174 11,674 9,748
2/93 12,311 11,603 12,510 9,976
3/93 12,605 11,880 12,736 10,551
4/93 12,517 11,797 12,475 11,037
5/93 12,517 11,798 12,463 11,289
6/93 12,893 12,151 13,038 11,191
7/93 13,026 12,277 13,340 11,419
8/93 13,571 12,790 13,986 11,939
9/93 13,615 12,832 13,951 11,716
10/93 13,660 12,874 13,927 12,036
11/93 13,153 12,396 13,224 11,352
12/93 13,341 12,574 13,156 11,905
1/94 13,643 12,859 13,241 12,688
2/94 13,278 12,515 12,493 12,521
3/94 12,772 12,038 12,070 11,978
4/94 12,812 12,075 12,372 12,345
5/94 12,559 11,837 12,037 12,374
6/94 12,422 11,707 12,067 12,337
7/94 12,719 11,987 12,472 12,569
8/94 12,805 12,069 12,434 12,945
9/94 12,537 11,816 12,124 12,602
10/94 12,647 11,920 12,219 12,957
11/94 12,424 11,710 12,044 12,392
12/94 12,427 11,713 12,111 12,509
1/95 12,698 11,968 13,054 12,319
2/95 12,799 12,063 13,029 12,495
3/95 12,827 12,089 12,946 13,094
4/95 13,088 12,336 13,430 13,548
5/95 13,536 12,756 13,849 13,661
6/95 13,564 12,784 13,908 13,653
7/95 13,766 12,974 14,266 14,333
8/95 13,708 12,920 14,556 14,011
9/95 14,012 13,206 15,468 14,416
10/95 13,953 13,150 15,797 14,186
11/95 14,222 13,404 15,969 14,675
12/95 14,670 13,826 17,092 15,101
1/96 14,889 14,033 17,316 15,371
2/96 14,815 13,963 16,638 15,462
3/96 14,677 13,833 16,279 15,716
4/96 14,937 14,078 16,473 16,082
5/96 15,142 14,272 16,436 16,093
6/96 15,181 14,308 17,100 16,171
7/96 14,687 13,843 15,993 15,596
8/96 15,058 14,192 16,366 15,772
9/96 15,223 14,348 16,523 16,387
10/96 15,626 14,727 17,345 16,498
11/96 16,433 15,488 17,733 17,419
12/96 16,531 15,580 17,626 17,137
1/97 17,090 16,107 17,712 17,340
2/97 17,082 16,100 17,564 17,536
3/97 16,940 15,966 17,032 17,186
4/97 17,286 16,292 16,746 17,745
5/97 18,016 16,980 17,492 18,837
6/97 18,561 17,494 18,032 19,773
7/97 19,070 17,973 18,426 20,680
8/97 18,008 16,972 18,118 19,294
9/97 19,038 17,943 18,898 20,339
10/97 18,345 17,290 19,062 19,265
A $10,000 investment in Class B shares made on 3/27/95, (inception) at net asset
value (NAV) would have been valued at $14,096 on 10/31/97. The same investment
after deducting the applicable contingent deferred sales charge (CDSC) would
have grown to $13,796 on 10/31/97. A $10,000 investment in Class C shares made
on 3/27/95, (inception) at NAV would have been valued at $14,096 on 10/31/97.
The Morgan Stanley Capital International World Index ND is an unmanaged index
that tracks the performance of global stocks. The Standard & Poor's Utilities
Index is an unmanaged index that tracks the performance of domestic utility
stocks. Unlike mutual funds, indexes are not investments, do not incur fees or
expenses and are not professionally managed.
Average Annual Total Returns
As of 9/30/97 (most recent quarter end)
- --------------------------------------------------------------------------------
Class A(1) Class B Class C(2)
Inception 10/15/91 3/27/95 /27/95
NAV POP NAV w/CDSC NAV POP w/CDSC
- --------------------------------------------------------------------------------
1 year 25.06% 17.87% 24.13% 19.13% 24.13% 23.13%
- --------------------------------------------------------------------------------
5 years 11.20 9.89 -- -- -- --
- --------------------------------------------------------------------------------
Since inception 11.37 10.27 16.34 15.38 16.34 16.34
- --------------------------------------------------------------------------------
(1) The Fund initially commenced operations as the Liberty Financial Utilities
Fund on 10/15/91. Performance shown is based, in part, on the performance
of the Liberty Financial Utilities Fund.
(2) On July 1, 1997, Class D shares were redesignated Class C shares.
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. Public offering price (POP) returns include the maximum sales charges
of 5.75% for Class A shares. The CDSC returns reflect the maximum applicable
charges of 5% for 1 year and 3% since inception for Class B shares and 1% for
Class C shares for 1 year. Performance for different share classes will vary
based on differences in sales charges and fees associated with each class.
6
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LFC UTILITIES TRUST
INVESTMENT PORTFOLIO
OCTOBER 31, 1997 (IN THOUSANDS)
COMMON STOCKS - 81.2% COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 70.8%
Communications - 29.7%
Airtouch Communications (a) 86 $ 3,310
American Telephone & Telegraph 72 3,524
Ameritech Corp. 61 3,972
Grupo Iusacell SP ADR (a) Mx 153 2,754
GTE Corp. 69 2,907
Hellenic Telecom ORD Gr 63 1,307
Lucent Technologies, Inc. 49 4,006
Nokia Oy Ab ADR Fi 44 3,848
Portugal Telecom S.A. ADR Pt 113 4,649
Telebras ADR Bz 25 2,538
Telecom Italia (Saving Shares) It 797 3,223
Telefonica de Argentina ADR Ar 42 1,181
Telefonica de Espana ADR Sp 34 2,805
Telefonos de Mexico ADS Mx 72 3,127
Tellabs, Inc. (a) 45 2,403
WorldCom, Inc. 114 3,833
-------
49,387
-------
Electric Services - 29.4%
AES Corp. (a) 114 4,509
Chilgener Ch 115 3,133
Edison International 121 3,111
Electric de Portugal ADR (a) Pt 41 1,439
Energetica de Minas (CEM3) (a) Bz 66,200 2,282
FPL Group, Inc. 65 3,360
Hong Kong Electric ADR HK 914 3,098
Iberdrola SA Sp 260 3,112
Light-Servicos de Eletricidade S.A. Bz 8,250 2,732
National Power PLC ADR UK 101 3,362
NIPSCO Industries, Inc. 82 3,603
Pinnacle West Capital Corp. 89 3,105
Scottish Power UK 411 3,064
Texas Utilities Co. 83 2,978
VEBA AG G 53 3,004
Viag AG G 7 3,087
-------
48,979
-------
Gas Services - 11.7%
CMS Energy Corp. 87 3,186
Columbia Gas System 43 3,107
MCN Corp. 111 3,850
7
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Investment Portfolio/October 31, 1997
- -----------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
Gas Services - cont.
Questar Corp. 84 $ 3,245
UGI Corp. 127 3,413
YPF SA ADR Ar 85 2,720
-------
19,521
- --------------------------------------------------------------------------------
SERVICES - 10.4%
Conglomerates and Miscellaneous Services - 3.9%
Grupo Carso S.A. de CV Mx 530 3,368
USA Waste Services, Inc. (a) 85 3,145
-------
6,513
-------
Water Services - 6.5%
American Water Works Co., Inc. 115 2,602
CIA Saneamento Basico de Sp Bz 8,100 1,432
Compagnie Generale des Eaux Fr 28 3,274
Culligan Water Technologies, Inc. (a) 82 3,491
-------
10,799
-------
TOTAL COMMON STOCKS (cost of $110,934) 135,199
-------
CONVERTIBLE PREFERRED STOCKS - 5.9%
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 5.9%
Communications - 4.1%
LM Ericsson 4.250% Sw 626 3,909
Nortel Inversora S.A 10.000% Ar 61 2,837
------
6,746
------
Electric - 1.8%
Calenergy Capital Trust II 6.250(b)% 60 3,053
------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost of $7,101) 9,799
------
CORPORATE FIXED-INCOME BONDS - 7.4% CURRENCY PAR
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 7.4%
Communications - 2.2%
Telekom Malaysian Berhad,
7.125% 08/01/05 Ma $4,000 3,703
------
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Investment Portfolio/October 31, 1997
- --------------------------------------------------------------------------------
Electrical Services - 5.2%
Financiera Energetica,
9.000% 11/08/99(c) Co $4,000 $4,060
Hydro-Quebec,
8.050% 07/07/24 Ca 4,000 4,540
--------
8,600
--------
TOTAL CORPORATE FIXED-INCOME BONDS
(cost of $12,441) 12,303
--------
CORPORATE CONVERTIBLE BONDS - 3.7%
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 3.7%
Gas Services
SFP Pipeline Holdings,
(cost of $4,404) 11.160% 08/15/10 3,700 6,179
--------
SHORT-TERM OBLIGATIONS - 1.0%
- --------------------------------------------------------------------------------
Associates Corp. of North America,
(cost of $1,699) 5.600% 11/03/97 1,700 1,699
--------
TOTAL INVESTMENTS - 99.2%
(cost of $136,579)(d) 165,179
--------
OTHER ASSETS & LIABILITIES, NET - 0.8% 1,362
- --------------------------------------------------------------------------------
NET ASSETS - 100% $166,541
==========
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Calenergy Capital Trust II is a restricted security which was acquired on
February 20, 1997 at a cost of $3,014. This security represents 1.8% of the
Portfolio's net assets at October 31, 1997.
(c) Financiera Energetica is a restricted security which was acquired on June
1, 1995 at a cost of $4,126. This security represents 2.4% of the
Portfolio's net assets at October 31, 1997.
(d) Cost for federal income tax purposes is the same.
9
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Investment Portfolio/October 31, 1997
- --------------------------------------------------------------------------------
Summary of Securities by Country/
Country/Currency Currency Value % of Total
- --------------------------------------------------------------------------
United States $ 81,591 49.4
Mexico Mx 9,249 5.6
Brazil Bz 8,984 5.4
Argentina Ar 6,738 4.1
United Kingdom UK 6,426 3.9
Germany G 6,091 3.7
Portugal Pt 6,088 3.7
Spain Sp 5,917 3.6
Canada Ca 4,540 2.7
Colombia Co 4,060 2.5
Sweden Sw 3,909 2.4
Finland Fi 3,848 2.3
Malaysia Ma 3,703 2.2
France Fr 3,274 2.0
Italy It 3,223 1.9
Chile Ch 3,133 1.9
Hong Kong HK 3,098 1.9
Greece Gr 1,307 0.8
---------- -----
$165,179 100.0
========== =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
-------------- ---------------------------
ADR American Depository Receipt
ADS American Depository Shares
See notes to financial statements
10
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LFC UTILITIES TRUST
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1997
(in thousands)
Assets
Investments at value (cost $136,579) $ 165,179
Receivable for:
Investments sold $ 726
Interest 346
Dividends 334
Cash 44
Other assets 14 1,464
----- ----------
Total Assets 166,643
Liabilities
Payable for:
Management, accounting
and transfer agent fees 85
Other 17
-----
Total Liabilities 102
----------
NET ASSETS applicable to
investors' beneficial interest $ 166,541
==========
See notes to financial statements.
11
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LFC UTILITIES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
(in thousands)
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $274) $ 4,374
Interest 2,244
--------------
Total Investment Income 6,618
EXPENSES
Management fee $ 967
Custodian & accounting fees 54
Audit & legal fees 18
Transfer agent fees 7
Other 11 1,057
--------------- --------------
Net Investment Income 5,561
--------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 12,403
Foreign currency transactions (109)
---------------
Net realized gain from investments
and foreign currency transactions 12,294
Change in unrealized appreciation (depreciation)
during the period on:
Investments 11,793
Translation of other assets and liabilities (12)
---------------
Net unrealized appreciation from
investments and foreign currency
translations 11,781
--------------
Net gain 24,075
--------------
Increase in Net Assets from Operations $ 29,636
==============
See notes to financial statements.
12
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LFC UTILITIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended October 31
--------------------------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
Operations:
Net investment income $ 5,561 $ 8,645
Net realized gain from investments
and foreign currency transactions 12,294 2,350
Change in unrealized appreciation from
investments and foreign currency
translations 11,781 12,784
--------------- --------------
Increase from Operations 29,636 23,779
--------------- --------------
Transactions in investors' beneficial interest:
Contributions 120 38
Withdrawals (35,537) (65,100)
--------------- --------------
Net transactions in investors' beneficial
interest (35,417) (65,062)
--------------- --------------
Total Decrease (5,781) (41,283)
--------------- --------------
NET ASSETS
Beginning of period 172,322 213,605
--------------- --------------
End of period $ 166,541 $ 172,322
=============== ==============
See notes to financial statements.
13
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LFC UTILITIES TRUST
FINANCIAL HIGHLIGHTS
Year ended October 31
-------------------------------------------------------------------------------
1997 1996 1995 1994
RATIOS TO AVERAGE NET ASSETS
Expenses 0.60% 0.60% 0.63%(a) 0.61%
Net investment income 3.16% 4.47% 5.97%(b) 5.48%
Portfolio turnover 48% 34% 46% 34%
Average broker commission (c) $0.0035 $0.0214 -- --
Year ended
October 31
----------
1993
RATIOS TO AVERAGE NET ASSETS
Expenses 0.64%
Net investment income 5.29%
Portfolio turnover 41%
(a) If the Portfolio had paid all of its expenses and there had been no
reimbursement from the Investment Adviser, this ratio would have been
0.64%.
(b) Computed giving effect to the Investment Adviser's expense limitation
undertaking.
(c) 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.
14
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LFC UTILITIES TRUST
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Organization: LFC Utilities Trust (the Portfolio) was organized on August 14,
1991 as a trust under Massachusetts law and is registered under the Investment
Company Act of 1940 as an open-end investment company. The Declaration of Trust
permits the Trustees to issue non-transferable interests in the Portfolio. The
Portfolio commenced operations on August 23, 1991.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
Valuation of investments: All securities are valued as of October 31, 1997.
Domestic securities traded on national securities exchanges are valued at the
last reported sales price or, if there are no sales, at the latest bid
quotation. Each domestic over-the-counter security for which the last sales
price is available from Nasdaq is valued at that price. All other domestic
over-the-counter securities for which reliable quotations are available are
valued at the latest bid quotation. Domestic securities convertible into equity
securities and long-term debt obligations are valued at a fair value using a
procedure determined in good faith by the Board of Trustees, which has
authorized the use of valuations provided by a pricing service. Foreign security
valuations are generally based upon market quotations which, depending upon
local convention or regulation, may be last sale price, last bid or asked price,
or the mean between last bid and asked price as of, in each case, the close of
the appropriate exchange or other designated time.
Other assets and securities of the Portfolio are valued by a method that the
Board of Trustees believes represents a fair value.
Federal income taxes: The Portfolio has complied and intends to comply with the
applicable provisions of the Internal Revenue Service Code. Accordingly, no
provisions for federal income taxes is considered necessary.
15
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Notes to Financial Statements/October 31, 1997
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
Foreign currency translations: The books and records of the Portfolio are
maintained in U.S. dollars. All assets and liabilities of the Portfolio
denominated in foreign currencies are translated into U.S. dollar amounts using
a rate that represents the mid-point between bid and asked market rates for such
currencies. Purchases and sales of foreign securities and income derived from
foreign securities are converted at the prevailing rate of exchange on the
respective dates of such transactions. The Portfolio may enter into "forward
currency contracts" for purchases and sales of securities denominated in foreign
currency.
Other: Investment transactions are accounted for on the trade date.
Interest income and expenses are recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date.
NOTE 2. INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
Realized gains and losses are computed on the identified cost basis for both
financial reporting and federal income tax purposes. The cost of investments
purchased and proceeds from investments sold, excluding short-term investments,
for the year ended October 31, 1997 were $81,199,268 and $111,763,277,
respectively.
Unrealized appreciation(depreciation) at October 31, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $32,470,247
Gross unrealized depreciation (3,870,092)
--------------
Net unrealized appreciation $28,600,155
--------------
NOTE 3. TRANSACTIONS WITH AFFILIATED INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
The Portfolio has a management agreement with Stein Roe & Farnham, Inc.
(Stein Roe), an indirect majority-owned subsidiary of Liberty Mutual
Insurance Company (Liberty Mutual) under which Stein Roe provides
investment management and administrative services. The investment
management fee paid to Stein Roe is accrued daily and paid monthly at an
annual rate of 0.55 percent of the Portfolio's average daily net assets up to
$400 million and 0.50 percent of its average daily net assets thereafter.
The transfer agent fees are paid to Stein Roe Services, Inc., an indirect,
majority-owned subsidiary of Liberty Mutual. For the year ended October 31,
1997, the Portfolio incurred charges of $7,305.
Stein Roe also provides the Portfolio with certain accounting services. For the
year ended October 31, 1997, the Portfolio incurred charges of $28,094.
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE TRUSTEES AND INVESTORS
LFC UTILITIES TRUST:
We have audited the accompanying statement of assets and liabilities of LFC
Utilities Trust including the Investment Portfolio, as of October 31, 1997, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of LFC
Utilities Trust as of October 31, 1997, the result of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 1, 1997
17
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1997
(in thousands except for per share amounts and footnotes)
ASSETS
Investment in LFC Utilities Trust, at value $166,539
Receivable for Fund shares sold 5
--------
Total Assets 166,544
LIABILITIES
Payable for:
Fund shares repurchased $ 71
Distributions 27
Accrued:
Administration fee 15
Distribution fee 3
Bookkeeping fee 4
Service fee 36
Transfer Agent fee 29
Deferred Trustee Fees 2
Other 29
-----
Total Liabilities 216
--------
NET ASSETS $166,328
========
Net asset value & redemption price per share -
Class A ($162,267/11,825) $ 13.72
========
Maximum offering price per share - Class A
($13.72/0.9425) $ 14.56(a)
========
Net asset value & offering price per share -
Class B ($3,243/236) $ 13.72(b)
========
Net asset value & offering price per share -
Class C ($818/60) $ 13.72(b)
========
COMPOSITION OF NET ASSETS
Capital paid in $ 126,347
Undistributed net investment income 440
Accumulated net realized gain 10,943
Net unrealized appreciation (depreciation) on:
Investments 28,600
Foreign currency transactions (2)
--------
$ 166,328
========
(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.
18
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
(in thousands)
INVESTMENT INCOME
Dividend income from LFC Utilities Trust $ 4,374
Interest income from LFC Utilities Trust 2,243
Expenses allocated from LFC Utilities Trust (1,057)
--------
Investment Income from LFC Utilities Trust
(net of nonrebatable foreign taxes withheld
at source which amounted to $274) 5,560
EXPENSES
Administration fee $ 176
Service fee 439
Distribution fee - Class B 21
Distribution fee - Class C 5
Audit 11
Transfer agent 495
Bookkeeping fee 47
Trustees fee 17
Custodian fee 6
Registration fee 20
Reports to shareholders 12
Other 21 1,270
-------- --------
Net Investment Income 4,290
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 12,403
Foreign currency transactions (110)
-------
Net Realized Gain 12,293
Change in net unrealized appreciation
(depreciation) during the period on:
Investments 11,793
Foreign currency transactions (12)
-------
Net Change in Unrealized Appreciation 11,781
--------
Net Gain 24,074
--------
Increase in Net Assets from Operations $ 28,364
========
See notes to financial statements.
19
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended October 31
-------------------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
Operations:
Net investment income $ 4,290 $ 7,121
Net realized gain 12,293 2,350
Net unrealized appreciation 11,781 12,784
-------- --------
Net Increase from Operations 28,364 22,255
Distributions:
From net investment income - Class A (4,558) (6,447)
From net investment income - Class B (45) (30)
From net investment income - Class C (13) (12)
-------- --------
23,748 15,766
-------- --------
Fund Share Transactions: (a)
Receipts for shares sold - Class A 4,239 5,017
Value of distributions reinvested - Class A 4,093 5,659
Cost of shares repurchased - Class A (39,270) (68,398)
-------- --------
(30,938) (57,722)
-------- --------
Receipts for shares sold - Class B 2,324 1,225
Value of distributions reinvested - Class B 37 23
Cost of shares repurchased - Class B (950) (541)
-------- --------
1,411 707
-------- --------
Receipts for shares sold - Class C 306 353
Value of distributions reinvested - Class C 10 10
Cost of shares repurchased - Class C (171) (120)
-------- --------
145 243
-------- --------
Net Decrease from Fund Share Transactions (29,382) (56,772)
-------- --------
Total Decrease (5,634) (41,006)
NET ASSETS
Beginning of period 171,962 212,968
-------- --------
End of period (including undistributed
net investment income of $440 and $865,
respectively) $ 166,328 $171,962
======== ========
(a) Effective July 1, 1997, Class D shares were redesignated Class C shares.
Statement of Changes in Net Assets continued on following page.
See notes to financial statements.
20
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(in thousands) Year ended October 31
---------------------------
NUMBER OF FUND SHARES (a) 1997 1996
Sold - Class A 317 434
Issued for distributions reinvested - Class A 313 494
Repurchased - Class A (2,954) (5,903)
-------- ---------------
(2,324) (4,975)
-------- ---------------
Sold - Class B 175 105
Issued for distributions reinvested - Class B 3 2
Repurchased - Class B (70) (46)
-------- ---------------
108 61
-------- ---------------
Sold - Class C 23 31
Issued for distributions reinvested - Class C 1 1
Repurchased - Class C (13) (11)
-------- ---------------
11 21
-------- ---------------
(a) Effective July 1, 1997, Class D shares were redesignated Class C shares.
See notes to financial statements.
21
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Organization: Colonial Global Utilities Fund (the Fund), a series of
Colonial Trust III, is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended,
as an open-end, management investment company. The Fund invests all
all of its assets in interests in the LFC Utilities Trust (the Portfolio),
a Massachusetts business trust, having the same investment objective
as the Fund. The Fund records its share of the investment income,
expenses and realized and unrealized gains and losses recorded by the
Portfolio on a daily basis. The investment income, expenses and realized
and unrealized gains and losses are allocated daily to investors in the
Portfolio based upon the value of their investments in the Portfolio. Such
investments are adjusted on a daily basis. The value of the Fund's investment
in the Portfolio reflects the Fund's proportionate interest in the net assets
of the Portfolio (99.9% at October 31, 1997). The performance of the Fund is
directly affected by the performance of the Portfolio.
The financial statements of the Portfolio, including the portfolio of invest-
ments are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The Fund may issue
an unlimited number of shares. The Fund offers three classes of shares:
Class A, Class B and Class 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.
Effective July 1, 1997, Class D shares were redesignated Class C shares. 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 accounting policies that are consistently followed
by the Fund in the preparation of its financial statements.
Security valuation and transactions: Valuation of securities by the
Portfolio is discussed in Note 1 of the Portfolio's Notes to Financial
Statements which are included elsewhere in this report.
22
<PAGE>
Notes to Financial Statements/October 31, 1997
- -----------------------------------------------------------------------------
Determination of class net asset values and financial highlights: All
income, expenses (other than the Class B and Class C distribution fees) and
realized and unrealized gains (losses) are allocated to each class proportion-
ately on a daily basis for purposes of determining the net asset value of
each class.
The per share data was calculated using the average shares outstanding
during the period. In addition, Class B and Class C net investment income
per share data reflects the distribution fee per share 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 distribu-
tion 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.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
Administrator fee: Colonial Management Associates, Inc. (the Admin-
istrator), an affiliate of Stein Roe, is the administrator of the Fund and
furnishes accounting and other services and office facilities for a monthly
fee equal to 0.10% annually of the Fund's average net assets.
Bookkeeping fee: The Administrator provides bookkeeping and pricing services for
$18,000 per year plus 0.0233% of the Fund's average net assets over $50 million.
Transfer agent fee: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Administrator, provides shareholder services
for a monthly fee equal to 0.20% annually of the Fund's average
net assets and receives reimbursement for certain out-of-pocket expenses.
Underwriting discounts, service and distribution fees: Liberty
Financial Investments, Inc., formerly Colonial Investments Services, Inc.
(the Distributor), an affiliate of the Administrator, is the Fund's principal
underwriter. For the year ended October 31, 1997, the Fund has been
23
<PAGE>
Notes to Financial Statements/October 31, 1997
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
advised that the Distributor retained net underwriting discounts of $12,373
on sales of the Fund's Class A shares and received $3,547 and $243 of
contingent deferred sales charges (CDSC) on Class B and Class C share
redemptions, respectively.
The CDSC and the fees received from the 12b-1 plan are used principally
as repayment to the Distributor for amounts paid by the Distributor to
dealers who sold such shares.
The Fund has adopted a 12b-1 plan which requires the payment of a service
fee to the Distributor equal to 0.25% annually of the Fund's net assets as of
the 20th of each month. The plan also requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the average net assets
attributable to Class B and Class C shares.
Other: The Fund pays no compensation to its officers, all of whom are
employees of the Administrator.
The Fund's Trustees may participate in a deferred compensation plan
which may be terminated at any time. Obligations of the plan will be paid
solely out of the Fund's assets.
NOTE 3. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one
of the following options determined at the inception of the loan: (1) federal
funds rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR off-
shore loan rate plus 1/2 of 1%. There were no borrowings under the line of
credit during the year ended October 31, 1997.
24
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
Year ended October 31
--------------------------------
1997
Class A Class B Class C (a)
------- ------- -------
Net asset value -
Beginning of period $ 12.000 $12.010 $12.000
---------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (b)(c) 0.328 0.225 0.225
Net realized and
unrealized gain (b) 1.740 1.732 1.742
---------- -------- -------
Total from Investment
Operations 2.068 1.957 1.967
---------- -------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.348) (0.247) (0.247)
---------- -------- -------
Net asset value -
End of period $ 13.720 $13.720 $13.720
========== ======== =======
Total return (d) 17.40% 16.43% 16.53%
========== ======== =======
RATIOS TO AVERAGE NET ASSETS
Expenses (c) 1.31% 2.06% 2.06%
Net investment income (c) 2.46% 1.71% 1.71%
Net assets at end
of period (000) $ 162,267 $ 3,243 $ 818
(a) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
LFC Utilities Trust.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
25
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended October 31
---------------------------------------
1996
Class A Class B Class C (b)
---------- ---------- ------------
Net asset value -
Beginning of period $ 11.080 $11.080 $11.080
-------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(c)(d) 0.427 0.340 0.340
Net realized and
unrealized gain (loss)(c) 0.878 0.889 0.879
-------- ------- -------
Total from Investment
Operations 1.305 1.229 1.219
-------- ------- -------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net investment income (0.385) (0.299) (0.299)
From net realized gains -- -- --
-------- ------- -------
Total Distributions
Declared to Shareholders (0.385) (0.299) (0.299)
-------- ------- -------
Net asset value -
End of period $ 12.000 $12.010 $12.000
======== ======= =======
Total return (f) 11.99% 11.25% 11.16%
======== ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.38%(c) 2.13%(c) 2.13%(c)
Net investment income 3.70%(c) 2.95%(c) 2.95%(c)
Fees and expenses waived
or borne by Liberty Securities
and LFC Utilities Trust -- -- --
Net assets at end
of period (000) $169,840 $ 1,538 $ 584
(a) Net of fees and expenses waived or
borne by Liberty Securities
which amounted to -- -- --
(b) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(c) Per share data was calculated using average shares outstanding during the
period.
(d) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
LFC Utilities Trust.
(e) Class B and Class C shares were initially offered on March 27, 1995. Per
share data reflects activity from that date.
(f) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(g) Total return would have been lower had Liberty Securities and LFC Utilities
Trust not waived certain expenses.
(h) Not annualized.
(i) Annualized.
26
<PAGE>
COLONIAL GLOBAL UTILITIES FUND
FINANCIAL HIGHLIGHTS - CONT
Year ended October 31
- --------------------------------------------------------------------------------
1995 1994 1993
Class A Class B(e) Class C(b)(e) Class A Class A
------- ---------- ------------- ------- -------
$ 10.610 $10.420 $10.420 $ 12.150 $ 10.430
- -------- ------- ------- -------- --------
0.536 0.248 0.248 0.550 0.570
0.520 0.665 0.665 (1.430) 1.790
- -------- ------- ------- -------- --------
1.056 0.913 0.913 (0.880) 2.360
- -------- ------- ------- -------- --------
(0.517) (0.253) (0.253) (0.500) (0.610)
(0.069) -- -- (0.160) (0.030)
- -------- ------- ------- -------- --------
(0.586) (0.253) (0.253) (0.660) (0.640)
- -------- ------- ------- -------- --------
$ 11.080 $11.080 $11.080 $ 10.610 $ 12.150
======== ======= ======= ======== ========
10.32%(g) 8.82%(h) 8.82%(h) (7.40)% 23.30%
======== ======= ======= ======== ========
1.29%(d) 2.05%(d)(i) 2.05%(d)(i) 1.20% 1.13%
5.14%(d) 3.73%(d)(i) 3.73%(d)(i) 4.90% 4.80%
0.03% 0.02%(i) 0.02%(i) -- --
$211,916 $ 745 $ 307 $260,450 $304,500
$ 0.002 -- -- -- --
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST III AND THE SHAREHOLDERS OF
COLONIAL GLOBAL UTILITIES FUND
In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Colonial Global Utilities Fund (a series of Colonial Trust III) at October 31,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the two years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of investments owned at October 31, 1997, provide a reasonable
basis for the opinion expressed above. The Financial Highlights for each of the
periods ended October 31, 1994 were audited by another Independent Accountant
whose report, dated December 15, 1994, expressed an unqualified opinion on those
statements.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 10, 1997
28
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your fund has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Colonial Investors Service Center directly at
1-800-345-6611.
Affordable Additional Investments: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
Free Exchanges(1): Exchange all or part of your account into the same share
class of another fund distributed by Liberty Financial Investments, by phone or
mail.
Easy Access to Your Money(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
One-Year Reinstatement Privilege: If you need access to your money, but then
choose to return it within one year, you can reinvest in any fund distributed by
Liberty Financial Investments of the same share class without any penalty or
sales charge.
Fundamatic: Make periodic investments as low as $50 from your checking account
to your Fund account.
Systematic Withdrawal Plan (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
processing date will be the previous business day. Dividends and capital gains
must be reinvested.
Automated Dollar Cost Averaging: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Financial Investments. Minimum for each transfer is $100.
Retirement Plans: Choose from a broad range of retirement plans, including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at any
time. Exchanges are not available on all funds. Investors who purchase Class B
or C shares, or $1 million or more of Class A shares, may be subject to a
contingent deferred sales charge.
29
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
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 service 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 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET.
Colonial Telephone Transaction Department - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
Literature - 1-800-426-3750
To request literature on any fund distributed by Liberty Financial Investments,
call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
30
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Global Utilities Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Global Utilities Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call 1-800-426-3750 and
additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Global Utilities
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund.
31
<PAGE>
[Back Cover]
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, 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
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
[Liberty Financial Logo] Liberty Financial Investments, Inc. (C) 1997
Distributor for Colonial Funds,
Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621
GU-02/348E-1097 (12/97)
