[Front Cover]
[Photo: Paper money from foreign countries]
COLONIAL INTERNATIONAL FUND FOR GROWTH Annual report
October 31, 1997
Not FDIC May Lose Value
Insured No Bank Guarantee
<PAGE>
COLONIAL INTERNATIONAL FUND FOR GROWTH
HIGHLIGHTS
NOVEMBER 1, 1996 - OCTOBER 31, 1997
Investment Objective: Colonial International Fund for Growth seeks long-term
growth by investing primarily in non-U.S. equities.
The Fund is Designed to Offer:
[checkmark] Long-term growth potential
[checkmark] Worldwide diversification
[checkmark] Experienced professional management
Portfolio Management Commentary: "We believe that investors are poised to shift
their attention to smaller and mid-sized company stocks. Those stocks are more
attractively priced, have good earnings growth potential and strong operating
characteristics. We believe that the Fund is well positioned to take advantage
of this shift."
-- Bruno Bertocci & David Harris
Colonial International Fund for Growth Performance
Class A Class B Class C(1)
Inception dates 12/1/93 12/1/93 7/1/94
- --------------------------------------------------------------------------------
Twelve-month distributions
declared per share $0.734 $0.645 $0.666
- --------------------------------------------------------------------------------
Twelve-month total returns,
assuming reinvestment of
all distributions and no
sales charge or contingent
deferred sales charge (CDSC) 3.61% 2.74% 2.63%
- --------------------------------------------------------------------------------
Net asset value per share on
10/31/97 $9.88 $9.66 $9.68
(1) On July 1, 1997, Class D shares were redesignated Class C shares.
Top Five Holdings(2) Top Five Countries(2)
(as of 10/31/97) (as of 10/31/97)
............................. .............................
1. Promise Co., Ltd. 2.5% 1. Japan 20.4%
2. Telecom Italia 2.3% 2. United Kingdom 9.3%
3. British Gas Co. 2.1% 3. Germany 8.2%
4. Deutsche Bank AG 2.1% 4. France 7.9%
5. Merita Ltd. Class A 2.0% 5. Finland 7.9%
(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.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
Throughout much of the 12 months ended October 31,
1997, international stock market performance was
modest as international stocks lagged U.S. stocks. [Photo:
However, because many of the world's economies are Harold W. Cogger]
less mature than the U.S. economy, stronger growth
prospects provide international stocks with
considerable opportunities for price gains.
Beginning in July, a currency crisis in Southeast Asia had a negative spillover
effect on many stock markets worldwide. During the "sorting out" period, these
events provided Colonial International Fund for Growth with an opportunity to
purchase stocks offering good long-term growth potential at appealing prices.
In addition to providing attractive growth prospects, an international fund
offers an opportunity to diversify your core portfolio. 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 international
stocks remain attractive.
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
<PAGE>
PORTFOLIO MANAGEMENT REPORT
Bruno Bertocci and David Harris are portfolio co-managers of Colonial
International Fund for Growth and are vice presidents of Colonial Management
Associates, Inc. They are also investment management principals of a division of
Stein Roe & Farnham, Inc.
International stocks offer diversification and value
Gains in international stock prices continued to be smaller than those for their
U.S. counterparts for the thirteenth consecutive quarter, ended September 30,
1997, as U.S. stock market returns continued to exceed their long-term
historical average. We do not believe that this trend is sustainable and expect
that over time, investors will shift their attention to more attractively priced
investments in international markets.
We remain committed to our value-oriented investment strategy. We continued to
favor smaller companies that are not closely followed by the equity analyst
community and that may be overlooked by many investors. These stocks have a
tendency to be underpriced relative to their operating and/or financial
strength. For example, we own Bucher Holding, a smaller Swiss company that
manufactures a variety of food processing equipment and specialized industrial
machinery, including a line of ski slope grooming equipment. This company has an
extremely strong balance sheet with significant cash holdings that could be used
to repurchase stock. While share buybacks are not currently allowed under Swiss
law, pending reform could eliminate tax restrictions causing Bucher's share
price to increase.
Emerging market stocks continue to meet our investment criteria
Our investment criteria remained value-oriented. In the past, Southeast Asia was
a source of attractively priced stocks with long-term growth potential and
strong financial and operating characteristics. Earlier in the year as
valuations became less compelling, we reduced our positions in Southeast Asia.
In our opinion, heightened investor enthusiasm had caused many of these stocks
to shift from under- to over-valued. However, as the Southeast Asian currency
crisis emerged during the last part of the period, dramatic reductions in share
prices have made many of these stocks attractive once again, despite near-term
economic uncertainty.
4
<PAGE>
One such investment, Matahari, is the largest retailer in Indonesia. This
company operates specialty department and grocery stores. We sold our shares
early in the year when the stock reached its fair value price. However, as the
Indonesian market declined, the stock price fell 75% from a high in March and we
began to buy shares again in September. We believe that while Indonesia's
economic environment is less favorable than it was, Matahari is well positioned
to capitalize on economic growth when it resumes.
The Fund performed slightly behind the Index
During the 12-month period ended October 31, 1997, the MSCI EAFE Index posted a
total return of 4.6% measured in U.S. dollars. Positive returns were
concentrated in Europe, particularly in the largest capitalization companies.
Colonial International Fund for Growth had a total return of 3.6%, for Class A
shares at net asset value, slightly behind the Index. Returns were held back by
the Fund's exposure outside of Europe. The Fund's strategy is to diversify
across countries and industries to reduce risk and invest in rapidly growing
economies. The Fund's Asian exposure has aided returns in the past because of
the high economic growth in the region. We believe, in the long term, that Asia
will recover and that the current slowdown is more than reflected in share
prices. We also believe that the Fund's investments in smaller and
mid-capitalization companies will add to returns in the future.
Investors with a long-term outlook
Our strategy focuses on buying shares of smaller, less well-known companies with
good long-term growth potential. We have a strong understanding of their
businesses and we purchase these companies at a price that suggests management
can create shareholder value. Although we remain confident in the long-term
value of this strategy, it hampered the Fund's performance during the period.
However, we believe the strategy will reward the patient investor in the long
term.
5
<PAGE>
Colonial International Fund for Growth's Investment Performance vs. The Morgan
Stanley Capital International EAFE (GDP) Index and The Morgan Stanley Capital
International EAFE Net Dividends (ND) Index
Change in Value of $10,000 from 12/1/93 - 10/31/97
Class A Shares
Based on NAV and POP
As of Date NAV POP MSCI EAFE GDP MSCI EAFE ND
Nov. 30, 93 10,000 9,425 10,000 10,000
Dec. 31, 93 10,530 9,925 10,703 10,722
Jan. 31, 94 10,990 10,358 11,522 11,629
Feb. 28, 94 10,670 10,056 11,459 11,596
Mar. 31, 94 10,040 9,463 11,294 11,097
Apr. 30, 94 10,270 9,679 11,865 11,568
May 31, 94 10,270 9,679 11,592 11,501
June 30, 94 10,060 9,481 11,587 11,664
July 31, 94 10,350 9,755 11,856 11,776
Aug. 31, 94 10,690 10,075 12,057 12,055
Sep. 30, 94 10,350 9,755 11,633 11,675
Oct. 31, 94 10,370 9,774 11,987 12,064
Nov. 30, 94 9,900 9,331 11,452 11,484
Dec. 31, 94 9,730 9,171 11,539 11,556
Jan. 31, 95 9,100 8,577 11,244 11,112
Feb. 28, 95 8,950 8,435 11,231 11,080
Mar. 31, 95 9,010 8,492 11,740 11,771
Apr. 30, 95 9,240 8,709 12,264 12,214
May 31, 95 9,290 8,756 12,146 12,068
June 30, 95 9,220 8,690 12,010 11,857
July 31, 95 9,770 9,208 12,795 12,595
Aug. 31, 95 9,780 9,217 12,261 12,114
Sep. 30, 95 9,890 9,321 12,406 12,351
Oct. 31, 95 9,760 9,199 12,047 12,019
Nov. 30, 95 9,850 9,284 12,301 12,354
Dec. 31, 95 10,100 9,519 12,827 12,851
Jan. 31, 96 10,070 9,491 12,990 12,904
Feb. 29, 96 10,040 9,462 13,029 12,948
Mar. 31, 96 10,260 9,670 13,202 13,223
Apr. 30, 96 10,730 10,122 13,613 13,607
May 31, 96 10,650 10,037 13,412 13,357
June 30, 96 10,730 10,113 13,517 13,432
July 31, 96 10,280 9,688 13,129 13,039
Aug. 31, 96 10,410 9,811 13,122 13,068
Sep. 30, 96 10,520 9,915 13,482 13,415
Oct. 31, 96 10,260 9,670 13,335 13,278
Nov. 30, 96 10,660 10,047 13,905 13,806
Dec. 31, 96 10,523 9,918 13,806 13,628
Jan. 31, 97 10,609 9,999 13,545 13,151
Feb. 28, 97 10,738 10,120 13,640 13,367
Mar. 31, 97 10,716 10,100 13,900 13,415
Apr. 30, 97 10,684 10,070 13,866 13,486
May 31, 97 11,502 10,841 14,588 14,364
June 30, 97 12,105 11,408 15,457 15,156
July 31, 97 12,148 11,449 15,797 15,401
Aug. 31, 97 11,254 10,607 14,664 14,251
Sep. 30, 97 11,685 11,013 15,606 15,049
Oct. 31, 97 10,631 10,020 14,453 13,892
Class B Shares
Based on NAV and POP
As of Date NAV POP MSCI EAFE GDP MSCI EAFE ND
Nov. 30, 93 10,000 10,000 10,000 10,000
Dec. 31, 93 10,530 10,530 10,703 10,722
Jan. 31, 94 10,980 10,980 11,522 11,629
Feb. 28, 94 10,650 10,650 11,459 11,596
Mar. 31, 94 10,020 10,020 11,294 11,097
Apr. 30, 94 10,240 10,240 11,865 11,568
May 31, 94 10,230 10,230 11,592 11,501
June 30, 94 10,020 10,020 11,587 11,664
July 31, 94 10,290 10,290 11,856 11,776
Aug. 31, 94 10,630 10,630 12,057 12,055
Sep. 30, 94 10,280 10,280 11,633 11,675
Oct. 31, 94 10,300 10,300 11,987 12,064
Nov. 30, 94 9,830 9,830 11,452 11,484
Dec. 31, 94 9,650 9,650 11,539 11,556
Jan. 31, 95 9,020 9,020 11,244 11,112
Feb. 28, 95 8,860 8,860 11,231 11,080
Mar. 31, 95 8,920 8,920 11,740 11,771
Apr. 30, 95 9,140 9,140 12,264 12,214
May 31, 95 9,190 9,190 12,146 12,068
June 30, 95 9,120 9,120 12,010 11,857
July 31, 95 9,650 9,650 12,795 12,595
Aug. 31, 95 9,650 9,650 12,261 12,114
Sep. 30, 95 9,760 9,760 12,406 12,351
Oct. 31, 95 9,620 9,620 12,047 12,019
Nov. 30, 95 9,710 9,710 12,301 12,354
Dec. 31, 95 9,940 9,940 12,827 12,851
Jan. 31, 96 9,900 9,900 12,990 12,904
Feb. 29, 96 9,870 9,870 13,029 12,948
Mar. 31, 96 10,080 10,080 13,202 13,223
Apr. 30, 96 10,540 10,540 13,613 13,607
May 31, 96 10,450 10,450 13,412 13,357
June 30, 96 10,520 10,520 13,517 13,432
July 31, 96 10,080 10,080 13,129 13,039
Aug. 31, 96 10,200 10,200 13,122 13,068
Sep. 30, 96 10,300 10,300 13,482 13,415
Oct. 31, 96 10,040 10,040 13,335 13,278
Nov. 30, 96 10,430 10,430 13,905 13,806
Dec. 31, 96 10,283 10,283 13,806 13,628
Jan. 31, 97 10,369 10,369 13,545 13,151
Feb. 28, 97 10,486 10,486 13,640 13,367
Mar. 31, 97 10,454 10,454 13,900 13,415
Apr. 30, 97 10,411 10,411 13,866 13,486
May 31, 97 11,201 10,201 14,588 14,364
June 30, 97 11,768 11,768 15,457 15,156
July 31, 97 11,810 11,810 15,797 15,401
Aug. 31, 97 10,934 10,935 14,664 14,251
Sep. 30, 97 11,351 11,351 15,606 15,049
Oct. 31, 97 10,315 10,026 14,453 13,892
A $10,000 investment in Class C shares made on July 1, 1994 (inception), at net
asset value (NAV) would have been valued at $10,294 on October 31, 1997. The
Fund's performance has been compared to the Morgan Stanley Capital International
EAFE (GDP) Index in the past. Going forward, we believe it is more appropriate
to compare the Fund to the Morgan Stanley Capital International EAFE ND Index,
which is more widely recognized and tracks the performance of international
stocks by market capitalization, rather than by gross domestic product. Both
Morgan Stanley Indexes are unmanaged and unlike mutual funds, indexes do not
incur fees or charges and it is not possible to invest in indexes.
Average Annual Total Returns
As of 9/30/97 (most recent quarter end)
- ----------------------------------------------------------------------------
Class A Class B Class C(1)
Inception 12/1/93 12/1/93 7/1/94
NAV POP NAV w/CDSC NAV POP w/CDSC
- ----------------------------------------------------------------------------
1 year 11.08% 4.69% 10.21% 5.21% 10.08% 9.08%
- ----------------------------------------------------------------------------
Since inception 4.14 2.55 3.36 2.64 3.90 3.90
- ----------------------------------------------------------------------------
(1) 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 charges of 5%
for one year and 3% since inception 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.
6
<PAGE>
INVESTMENT PORTFOLIO
OCTOBER 31, 1997 (IN THOUSANDS)
COMMON STOCKS - 98.1% COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------
AGRICULTURE, FORESTRY & FISHING - 0.1%
Agricultural Services
PT Chareon Pokphand Indonesia In 625 $ 91
-----
CONSTRUCTION - 2.0%
Building Construction - 0.0%
Property Perfect Public Co., Ltd. (a) Th 410 26
-----
Heavy Construction-Non Building Construction - 2.0%
Compagnie Generale des Eaux Fr 10 1,111
Kaneshita Construction Ja 59 395
Sino Thai Engineering & Construction
Public Co., Ltd. (a) Th 114 92
-----
1,598
-----
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 23.9%
Depository Institutions - 12.0%
Banco Latinoamericano
de Exportaciones SA Pt 26 1,050
Banco Popolare di Milano It 215 1,185
Banque Nationale de Paris (a) Fr 35 1,523
Deutsche Bank AG G 25 1,615
Generale de Banque SA Be 2 796
Generale de Banque VVPR STRIP (a) Be (b) (b)
HSBC Holdings PLC HK 28 634
Kookmin Bank (a) Ko 1 5
Korea Exchange Bank Ko 175 803
Merita Ltd. Class A (a) Fi 324 1,582
Siam Commercial Bank Th 110 211
-----
9,404
-----
Financial Services - 0.8%
Industrial Finance Corp. of Thailand Th 389 323
PT Putra Surya Multidana (a) In 945 325
-----
648
-----
Holding Companies - 2.0%
Fortis Amev NV Ne 40 1,560
-----
Insurance Carriers - 1.2%
Reinsurance Australia Corp. Au 368 949
-----
7
<PAGE>
Investment Portfolio/October 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - CONT
Investment Companies - 2.4%
Fleming Russia Securities Fund (a) Ru 25 $ 544
Japan OTC Equity Fund, Inc. (a) Ja 1 351
World Equity Benchmark Share - Japan Ja 89 1,001
-----
1,896
-----
Nondepository Credit Institutions - 2.5%
Promise Co., Ltd. Ja 33 1,943
-----
Real Estate - 2.3%
Diligentia AB (a) Sw 98 1,326
IOI Properties Berhad Ma 176 139
Kawasan Industri Jababeka In 823 343
-----
1,808
-----
Security Brokers & Dealers - 0.7%
Kokusai Securities Ja 80 579
-----
- --------------------------------------------------------------------------------
MANUFACTURING - 38.9%
Apparel - 0.9%
Tokyo Style Ja 66 697
-----
Chemicals & Allied Products - 7.0%
Henkel KGAA Vorzug G 25 1,293
Indian Petrochemicals Corp., Ltd. In 54 443
Kemira Oy Fi 79 800
Norsk Hydro A/S No 25 1,371
PT Evershine Textile Industry In 1,442 230
SmithKline Beecham PLC (a) UK 150 1,419
-----
5,556
-----
Communications Equipment - 3.1%
Koor Industries Ltd. ADR Is 23 492
LG Electronics Ko 41 552
Matsushita Electric Industrial Co. Ja 82 1,377
-----
2,421
-----
Electronic Components - 3.8%
Alcatel Alsthom Fr 10 1,235
Murata Manufacturing Co., Ltd. Ja 31 1,248
Samsung Electronics GDS (a) Ko 3 67
Samsung Electronics Old Preferred GDS Ko 42 422
-----
2,972
-----
Food & Kindred Products - 0.8%
Perdigao SA Comercio e Industria (a) Br 245,000 433
8
<PAGE>
Investment Portfolio/October 31, 1997
- --------------------------------------------------------------------------------
Food & Kindred Products - Cont
Vitasoy International Holdings Ltd. HK 567 $ 206
-----
639
-----
Household Appliances - 0.9%
Moulinex (a) Fr 30 684
-----
Machinery & Computer Equipment - 7.7%
AGIV AG G 46 968
Bucher Holding Sz 1 803
Canon, Inc. Ja 51 1,238
Hitachi Ltd. Ja 130 1,000
Mannesmann AG G 3 1,283
Mori Seiki Ja 67 758
-----
6,050
-----
Paper Products - 4.1%
Enso-Gutzeit Oy Fi 136 1,284
Metro Pacific Corp. Ph 5,885 393
Metsa-Serla Oy Fi 174 1,532
-----
3,209
-----
Petroleum Refining - 3.9%
Neste Oy Fi 36 903
YPF Sociedad Anonima ADR Ar 43 1,389
Yukong Ltd. (a) Ko 57 761
-----
3,053
-----
Primary Metal - 3.2%
Avesta Sheffield (a) Sw 137 1,022
Ssab Svenskt Stal AB Sw 67 1,109
TransTec PLC UK 233 410
-----
2,541
-----
Stone, Clay, Glass & Concrete - 2.4%
Companion Building Materials, Ltd. HK 6,720 239
Freidrich Grohe AG G 4 1,180
N.V. Koninklijke Sphinx Gustavsberg Ne 50 490
-----
1,909
-----
Textile Mill Products - 0.0%
Empresa Nacional de Credito (a)(c) Br 1,100 (b)
-----
Transportation Equipment - 1.1%
Suzuki Motor Co., Ltd. Ja 83 883
-----
9
<PAGE>
Investment Portfolio/October 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------
MINING & ENERGY - 5.3%
Coal Mining - 0.6%
Samchully Co. Ko 15 $ 465
-----
Crude Petroleum & Natural Gas - 3.6%
Compagnie Francaise de Petroleum
Total B Fr 14 1,546
Saga Petroleum A/S No 64 1,254
-----
2,800
-----
Metal Mining - 1.1%
Billiton PLC (a) UK 160 463
Southern Peru Copper Pe 26 410
-----
873
-----
- --------------------------------------------------------------------------------
RETAIL TRADE - 6.3%
Auto Dealers & Gas Stations - 1.7%
Inchcape PLC UK 360 1,306
-----
Food Stores - 2.0%
Jusco Co., Ltd. Ja 69 1,543
-----
General Merchandise Stores - 2.6%
Globex Utilidades SA Br 46 490
Ito-Yokado Co., Ltd. Ja 26 1,293
PT Matahari Putra Prima In 817 159
-----
1,942
-----
- --------------------------------------------------------------------------------
SERVICES - 3.3%
Business Services - 1.5%
Ing C. Olivetti & SPA (a) It 1,920 1,168
-----
Health Services - 1.8%
Biora AB ADR (a) Sw 19 369
Novartis Sz 1 1,034
-----
1,403
-----
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 14.3%
Air Transportation - 1.2%
Helikopter Service A/S No 78 967
-----
Communications - 8.7%
DDI Corp. Ja (b) 575
Portugal Telecom SA Pt 24 978
Royal Koninklijke PTT Nederland NV Ne 28 1,055
SK Telecom Ko (b) 43
10
<PAGE>
Investment Portfolio/October 31, 1997
- --------------------------------------------------------------------------------
Telecom Argentina SA ADR Ar 27 $ 685
Telecom Italia It 273 1,100
Telecom Italia SPA It 111 692
Tele-Communications International, Inc. (a) It 80 1,288
Telecomunicacoes Brasileiras ADR Br 4 405
-----
6,821
-----
Gas Services - 2.9%
British Gas Co. UK 388 1,675
Centrica PLC (a) UK 400 561
-----
2,236
-----
Water Transportation - 1.5%
Danzas Holding AG Sz 3 570
Hong Kong Ferry Holdings Co. HK 330 453
Precious Shipping Public Co., Ltd. Th 224 173
-----
1,196
-----
- --------------------------------------------------------------------------------
WHOLESALE TRADE - 4.0%
Durable Goods
Brierley Investments Ltd. NZ 1,210 934
Celsis International PLC (a) UK 324 529
Powerscreen International PLC UK 71 828
Yamazen Corp. (a) Ja 312 843
-----
3,134
-----
TOTAL COMMON STOCKS (cost of $80,398) 76,970
------
RIGHTS - 0.1%
- --------------------------------------------------------------------------------
RETAIL TRADE - 0.1%
General Merchandise Stores
PT Matahari Putra Prima In 1,634 91
-----
TOTAL RIGHTS (cost of $74) 91
-----
WARRANTS - 0.0%
- --------------------------------------------------------------------------------
CONSTRUCTION - 0.0%
Heavy Construction-Non Building Construction
Compagnie Generale des Eaux (a) Fr 9 5
-----
TOTAL WARRANTS (cost of $0) 5
-----
TOTAL INVESTMENTS - 98.2% (cost of $80,472) (d) 77,066
-----
11
<PAGE>
Investment Portfolio/October 31, 1997
------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 2.3% PAR VALUE
------------------------------------------------------------------------------
Repurchase agreement with Greenwich Capital
Markets, Inc., dated 10/31/97 due 11/03/97 at 5.625%,
collateralized by U.S. Treasury notes with
various maturities to 2016, market value $1,828
(repurchase proceeds $1,781) $ 1,780 $ 1,780
------------
OTHER ASSETS & LIABILITIES, NET- (0.5)% (396)
------------------------------------------------------------------------------
NET ASSETS - 100% $ 78,450
============
NOTES TO INVESTMENT PORTFOLIO:
------------------------------------------------------------------------------
(a) Non-income producing.
(b) Rounds to less than one.
(c) Represents fair value as determined in good faith under the direction of
the Trustees.
(d) Cost for federal income tax purposes is $81,173.
Summary of Securities by
Country Country Value % of Total
--------------------------------------------------------------------
Japan Ja $ 15,724 20.4
United Kingdom UK 7,191 9.3
Germany G 6,339 8.2
France Fr 6,104 7.9
Finland Fi 6,101 7.9
Italy It 5,433 7.1
Sweden Sw 3,826 5.0
Norway No 3,592 4.7
Korea Ko 3,118 4.1
Netherlands Ne 3,105 4.0
Switzerland Sz 2,407 3.1
Argentina Ar 2,074 2.7
Portugal Pt 2,028 2.6
Indonesia In 1,682 2.2
Hong Kong HK 1,532 2.0
Brazil Br 1,328 1.7
Australia Au 949 1.2
New Zealand NZ 934 1.2
Thailand Th 825 1.1
Belgium Be 796 1.0
Russia Ru 544 0.7
Israel Is 492 0.7
Peru Pe 410 0.5
Philippines Ph 393 0.5
Malaysia Ma 139 0.2
----------- -----
$ 77,066 100.0
=========== =====
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
12
<PAGE>
Investment Portfolio/October 31, 1997
-------------------------------------------------------------------------------
Acronym Name
ADR American Depositary Receipt
GDS Global Depositary Shares
STRIP Separately Traded Receipt of Interest
and Principal
See notes to financial statements.
13
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1997
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $80,472) $77,066
Short-term obligations 1,780
-------
78,846
Receivable for:
Investments sold $ 176
Dividends 97
Foreign tax reclaims 56
Fund shares sold 31
Deferred organization expenses 16
Other 3 379
------ -------
Total Assets 79,225
LIABILITIES
Payable for:
Fund shares repurchased 375
Investments purchased 340
Payable to Adviser 24
Accrued Deferred Trustees fees 2
Other 34
------
Total Liabilities 775
-------
NET ASSETS $78,450
=======
Net asset value & redemption price per share -
Class A ($27,875/2,822) $ 9.88
=======
Maximum offering price per share - Class A
($9.88/0.9425) $ 10.48(a)
=======
Net asset value & offering price per share -
Class B ($49,840/5,160) $ 9.66(b)
=======
Net asset value & offering price per share -
Class C ($735/76) $ 9.68(b)
=======
(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 YEAR ENDED OCTOBER 31, 1997
(in thousands)
INVESTMENT INCOME
Dividends $ 1,610
Interest 134
-------
Total Investment Income (net of nonrebatable foreign
taxes withheld at source which amounted to $202) 1,744
EXPENSES
Management fee $ 838
Service fee 232
Distribution fee - Class B 446
Distribution fee - Class C 7
Transfer agent 323
Bookkeeping fee 42
Trustees fee 15
Custodian fee 133
Audit fee 27
Legal fee 5
Registration fee 36
Reports to shareholders 15
Amortization of deferred
organization expenses 16
Other 5
-------
2,140
Fees waived by the Adviser (61) 2,079
------- -------
Net Investment Loss (335)
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 9,049
Foreign currency transactions (196)
-------
Net Realized Gain 8,853
Change in net unrealized depreciation
during the period on:
Investments (5,114)
Foreign currency transactions (6)
-------
Net Change in Unrealized Depreciation (5,120)
-------
Net Gain 3,733
-------
Increase in Net Assets from Operations $ 3,398
=======
See notes to financial statements.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended October 31
-----------------------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
Operations:
Net investment loss $ (335) $ (67)
Net realized gain 8,853 9,394
Net unrealized depreciation (5,120) (3,824)
--------- --------
Net Increase from Operations 3,398 5,503
--------- --------
Distributions:
From net investment income - Class A (273) --
From net realized gains - Class A (1,966) --
From net investment income - Class B (5) --
From net realized gains - Class B (3,855) --
From net investment income - Class C (2) --
From net realized gains - Class C (61) --
---------
--------
(2,764) --
--------- --------
Fund Share Transactions: (a)
Receipts for shares sold - Class A 15,576 8,026
Value of distributions reinvested - Class A 2,094 -
Cost of shares repurchased - Class A (21,883) (20,637)
--------- --------
(4,213) (12,611)
--------- --------
Receipts for shares sold - Class B 21,374 11,432
Value of distributions reinvested - Class B 3,444 --
Cost of shares repurchased - Class B (35,636) (28,533)
--------- --------
(10,818) (17,101)
--------- --------
Receipts for shares sold - Class C 4,405 352
Value of distributions reinvested - Class C 52 --
Cost of shares repurchased - Class C (4,659) (110)
--------- --------
(202) 242
--------- --------
Net Decrease from Fund Share Transactions (15,233) (29,470)
--------- --------
Total Decrease (17,997) (23,967)
NET ASSETS
Beginning of period 96,447 120,414
--------- --------
End of period (including undistributed net
income of $457 and $281, respectively.) $ 78,450 $96,447
========= ========
Statement of Changes in Net Assets continued on next page.
(a) Effective July 1, 1997, Class D shares were redesignated Class C shares.
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year ended October 31
---------------------
(in thousands) 1997 1996
NUMBER OF FUND SHARES (a)
Sold - Class A 1,487 777
Issued for distributions reinvested - Class A 217 -
Repurchased - Class A (2,089) (2,012)
-------- -------
(385) (1,235)
-------- -------
Sold - Class B 2,050 1,132
Issued for distributions reinvested - Class B 362 -
Repurchased - Class B (3,484) (2,838)
-------- -------
(1,072) (1,706)
-------- -------
Sold - Class C 438 35
Issued for distributions reinvested - Class C 5 -
Repurchased - Class C (462) (11)
-------- -------
(19) 24
-------- -------
(a) Effective July 1, 1997, Class D shares were redesignated Class C shares.
See notes to financial statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Organization: Colonial International Fund for Growth (the Fund), a series of
Colonial Trust III, is a non-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 non U.S. 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; 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
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.
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
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. Korean equity
securities that have reached the limit for aggregate foreign ownership and for
which premiums to the local exchange prices may be paid by foreign investors are
valued by applying a broker quoted premium to the local share price.
18
<PAGE>
Notes to Financial Statements/October 31, 1997
- --------------------------------------------------------------------------------
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 fees) 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.
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 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.
Deferred organization expenses: The Fund incurred expenses of $77,162 in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and are being amortized on a
straight-line basis over five years.
Distributions to shareholders: Distributions to shareholders are
recorded on the ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
Foreign currency transactions: Net realized and unrealized gains (losses) on
foreign currency transactions includes gains (losses) arising from the
fluctuation in exchange rates between trade and settlement
19
<PAGE>
Notes to Financial Statements/October 31, 1997
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
dates on securities transactions, gains (losses) arising from the disposition of
foreign currency and currency gains (losses) between the accrual and payment
dates on dividends and interest income and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) on investments.
Forward currency contracts: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange 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 or losses which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract was opened,
exposure is typically limited to the change in value of the contract (in U.S.
dollars) over the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
Other: Corporate actions are recorded on ex-date (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonrebatable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received. The Fund may be subject to
foreign taxes on income, gains on investments, or foreign currency repatriation.
The Fund accrues foreign taxes as applicable based upon its current
interpretation of the tax rules and regulations that exist in the markets in
which it invests.
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
20
<PAGE>
Notes to Financial Statements/October 31, 1997
- --------------------------------------------------------------------------------
assets remains sufficient to protect the Fund. The Fund may experience costs and
delays in liquidating the collateral if the issuer defaults or enters
bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
Management fee: Colonial Management Associates, Inc. (the Adviser)
is the investment Adviser of the Fund and furnishes accounting and other
services and office facilities for a monthly fee equal to 0.90% 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.
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., formerly Colonial Investment Services, Inc. (the
Distributor), an affiliate of the Adviser, is the Fund's principal underwriter.
During the year ended October 31, 1997, the Fund has been advised that the
Distributor retained net underwriting discounts of $7,987 on sales of the Fund's
Class A shares and received contingent deferred sales charges (CDSC) of $361,028
on Class B share redemptions.
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.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
Expense limits: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes and
extraordinary expenses, if any) exceed 1.50% annually of the Fund's average net
assets.
21
<PAGE>
Notes to Financial Statements/October 31, 1997
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
Other: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
Investment activity: During the year ended October 31, 1997, purchases and sales
of investments, other than short-term obligations, were $20,671,377 and
$44,327,168, respectively.
Unrealized appreciation (depreciation) at October 31, 1997, based on cost of
investments for federal income tax purposes was approximately:
Gross unrealized appreciation $11,848,000
Gross unrealized depreciation (15,955,000)
------------
Net unrealized depreciation $(4,107,000)
------------
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 currency exchange or
the imposition of other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 4. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended October 31, 1997.
NOTE 5. COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
At October 31, 1997, net assets consisted of:
Capital paid in $ 74,233
Undistributed net investment income 457
Accumulated net realized gain 7,175
Net unrealized depreciation on:
Investments (3,406)
Foreign currency transactions (9)
------------
$ 78,450
============
22
<PAGE>
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 (b)
--------- ---------- --------------
Net asset value -
Beginning of period $10.260 $10.040 $ 10.090
------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a)(c) 0.014 (0.064) (0.064)
Net realized and
unrealized gain (c) 0.340 0.329 0.320
------- ------- --------
Total from Investment
Operations 0.354 0.265 0.256
------- ------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.089) -- (0.021)
From net realized gains (0.645) (0.645) (0.645)
------- ------- --------
Total Distributions
Declared to Shareholders (0.734) (0.645) (0.666)
------- ------- --------
Net asset value -
End of period $ 9.880 $ 9.660 $ 9.680
======= ======= ========
Total return (d)(e) 3.61% 2.74% 2.63%
======= ======= ========
RATIOS TO AVERAGE NET ASSETS
Expenses (f) 1.75% 2.50% 2.50%
Net investment
income loss (f) 0.13% (0.62)% (0.62)%
Fees waived or borne
by the Adviser (f) 0.07% 0.07% 0.07%
Portfolio turnover 23% 23% 23%
Average commission rate $0.0023 $0.0023 $ 0.0023
Net assets at end
of period (000) $27,875 $49,840 $ 735
(a) Net of fees and expenses waived or borne
by the Adviser which amounted to: $0.007 $0.007 $0.007
(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) Total return at net asset value assuming all distributions reinvested
and no initial sales charge or contingent deferred sales charge.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
23
<PAGE>
FINANCIAL HIGHLIGHTS
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 $9.760 $9.620 $9.670
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (c) 0.044(a) (0.032)(a) (0.032)(a)
Net realized and
unrealized gain (loss) (c) 0.456 0.452 0.452
------- ------- -------
Total from Investment
Operations 0.500 0.420 0.420
------- ------- -------
Net asset value -
End of period $10.260 $10.040 $10.090
======= ======= =======
Total return (d) 5.12%(e) 4.37%(e) 4.34%(e)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (f) 1.75% 2.50% 2.50%
Net investment
income (loss)(f) 0.43% (0.32)% (0.32)%
Fees waived or borne
by the Adviser 0.04% 0.04% 0.04%
Portfolio turnover 129% 129% 129%
Average commission rate (g) $0.0011 $0.0011 $0.0011
Net assets at end
of period (000) $32,912 $62,578 $ 957
(a) Net of fees and expenses waived
or borne by the Adviser which
amounted to: $0.004 $0.004 $0.004
(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) Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(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) 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.
24
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended October 31
- -----------------------------------------------------------
1995
Class A Class B Class C (b)
- ----------------- --------------- ---------------
$ 10.370 $ 10.300 $ 10.350
--------------- --------------- ---------------
0.019 (0.052) (0.052)
(0.629) (0.628) (0.628)
--------------- --------------- ---------------
(0.610) (0.680) (0.680)
--------------- --------------- ---------------
$ 9.760 $ 9.620 $ 9.670
=============== =============== ===============
(5.88)% (6.60)% (6.57)%
=============== =============== ===============
1.74% 2.49% 2.49%
0.20% (0.55)% (0.55)%
-- -- --
35% 35% 35%
-- -- --
$ 43,354 $ 76,376 $ 684
-- -- --
25
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
Period ended October 31
-----------------------------------------
1994 (a)
Class A Class B Class C (b)(c)
-------- -------- --------------
Net asset value -
Beginning of period $10.000 $10.000 $10.060
------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (d) 0.013 (0.058) (0.037)
Net realized and
unrealized gain (d) 0.357 0.358 0.327
------- -------- -------
Total from Investment
Operations 0.370 0.300 0.290
------- -------- -------
Net asset value -
End of period $10.370 $10.300 $10.350
======= ======== =======
Total return (e) 3.70%(f) 3.00%(f) 2.88%(f)
======= ======== =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.71%(g) 2.46%(g) 2.46%(g)
Net investment
income (loss) 0.14%(g) (0.61)%(g) (0.61)%(g)
Portfolio turnover 51%(g) 51%(g) 51%(g)
Net assets at end
of period (000) $62,251 $103,450 $ 570
(a) The Fund commenced investment operations on December 1, 1993.
(b) Effective July 1, 1997 Class D shares were redesignated Class C shares.
(c) Class C shares were initially offered on July 1, 1994. Per share amounts
reflect activity from that date.
(d) Per share data was calculated using average shares outstanding during the
period.
(e) Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(f) Not annualized.
(g) Annualized.
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST III AND THE SHAREHOLDERS OF
COLONIAL INTERNATIONAL FUND FOR GROWTH
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial International Fund for
Growth (a series of Colonial Trust III) at October 31, 1997, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and the financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of portfolio positions
at October 31, 1997 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 10, 1997
27
<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.
28
<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
29
<PAGE>
SHAREHOLDER COMMUNICATIONS TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
account:
Transaction Confirmations: Each time you make a purchase, sale or exchange, you
receive a confirmation statement within just a few days.
Quarterly Statements: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
Liberty Financial Investments Investor Opportunities: Mailed with your quarterly
account statements, this newsletter highlights timely investment strategies,
portfolio manager commentary and shareholder service updates.
Tax Forms and Year-End Tax Guide: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
Average Cost Basis Statements: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
30
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial International Fund for Growth is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial International Fund for Growth 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 International Fund
for Growth. 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 Investments 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
IN-02/345E-1097 (12/97)
