<PAGE>
[GRAPHIC OMITTED]
- ------------------------------------------------------
COLONIAL INTERNATIONAL HORIZONS FUND SEMIANNUAL REPORT
- ------------------------------------------------------
April 30, 1998
-----------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
-----------------------------
<PAGE>
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COLONIAL INTERNATIONAL HORIZONS FUND HIGHLIGHTS
NOVEMBER 1, 1997 - APRIL 30, 1998
INVESTMENT OBJECTIVE: Colonial International Horizons Fund seeks preservation of
capital purchasing power and long-term growth.
THE FUND IS DESIGNED TO OFFER:
o Preservation of purchasing power
o Growth potential
o Diversification to help reduce risk
PORTFOLIO MANAGER COMMENTARY: "The Fund continued to invest in stocks that help
shield investors from inflation. We shifted our emphasis from natural resource
stocks to diversified, international stocks. These diversified stocks are
non-cyclical in nature which should offer investors increased protection from
inflation along with greater prospects for long-term growth. We believe that
increased diversification may shelter investors from weak commodity prices in
the wake of the Asian currency crisis."
-- Gita Rao
COLONIAL INTERNATIONAL HORIZONS FUND PERFORMANCE
Class A Class B Class C
Inception dates 6/8/92 6/8/92 8/1/97
- --------------------------------------------------------------------------------
Six-month distributions declared per share $2.74 $2.66 $2.71
- --------------------------------------------------------------------------------
Six-month total returns, assuming 10.37% 10.05% 10.20%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset values per share on 4/30/98 $13.76 $13.60 $13.73
TOP FIVE HOLDINGS TOP FIVE COUNTRIES
(as of 4/30/98) (as of 4/30/98)
- ------------------------------------- ------------------------------------
1. Eridania Beghin-Say, SA. ... 1.2% 1. United Kingdom ........... 13.1%
2. Jeronimo Martins, SGPS, SA . 1.1% 2. Japan .................... 12.8%
3. Saga Petroleum ASA ......... 1.1% 3. France ................... 9.2%
4. Kao Corp.. ................. 1.1% 4. Germany .................. 6.7%
5. Bass PLC ................... 1.1% 5. Italy .................... 6.5%
Holding and country breakdowns are calculated as a percentage of total net
assets. Because the Fund is actively managed, there can be no guarantee the Fund
will continue to hold these securities or invest in these countries in the
future.
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<PAGE>
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PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
---------------------------
[Photo of Harold W. Cogger]
---------------------------
I am pleased to present the semiannual report for Colonial International
Horizons Fund. This report reflects on the investment environment for the six
months ended April 30, 1998, and on the performance of your Fund.
Markets in the Pacific Rim continued to dominate headlines during the early part
of the period as the currency crisis in Southeast Asia generated a negative
spillover effect on many stock markets worldwide. During the "sorting out"
period, the portfolio's core natural resource stocks experienced lower prices as
investors worried that declining demand and depressed currencies in Asia would
lead to a global decline in economic activity. However, the Fund's increased
emphasis on a diversified portfolio of established non-U.S. companies may have
served to stabilize returns and shield investors from some of this volatility.
During the second half of the period, many global markets recovered and went on
to post strong gains, particularly in Europe and the U.S.
Our managers particularly like European markets, which they believe will benefit
from the coming economic unification. As of January 1, 1999, 11 European
economies and capital markets will begin to behave as a single unit. An economy
that is similar in size and greater in population than the U.S. will be formed,
offering investors many new opportunities.
In addition to providing attractive growth prospects, an international fund
offers the opportunity to diversify your core portfolio. World stock markets do
not always move in step with the domestic stock market, and international
markets can provide opportunities to outperform the U.S. market. 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
June 9, 1998
Because market conditions change frequently, there can be no assurance that the
trends described will continue.
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<PAGE>
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PORTFOLIO MANAGEMENT REPORT
GITA RAO is portfolio manager of Colonial International Horizons Fund and vice
president of Colonial Management Associates, Inc. NICOLAS GHAJAR is an associate
portfolio manager for the Fund.
VOLATILE INVESTMENT ENVIRONMENT HIGHLIGHTED BENEFITS OF DIVERSIFICATION
Investors continued to focus on the economies of the Pacific Rim during the
period as a Thai currency collapse last summer resulted in currency devaluations
throughout the region. During the first part of the period, shaken investor
confidence and the "Asian flu" spread to stock markets worldwide.
Commodity-oriented stocks such as natural resources and basic materials were
particularly hard hit as a result of declining Asian demand for building
materials, weakening currencies and increased fears of a global economic
slowdown. While the Fund continued to hold a core of natural resource stocks,
they represented a smaller proportion of the Fund's assets than in previous
periods because assets had been reallocated to other sectors and countries
worldwide. This reallocation increased the Fund's diversification. For example,
we added to our holdings in France, the U.K., Sweden, the Netherlands and
Germany, all countries with good prospects that we expect will benefit from
regional and worldwide growth trends. We also added to our investments in
consumer-oriented sectors such as food processors and distributors. These
sectors have historically been less sensitive to currency and interest rate
movements.
ATTRACTIVE VALUES FOUND IN EUROPEAN STOCKS
We increased our investments in Europe, a region with promising growth prospects
resulting from the upcoming European Monetary Union (EMU). We expect that
European unity will allow companies to become more effective global competitors
as opportunities for industry consolidation increase. We also believe that unity
may force widespread corporate restructuring, increasing efficiency and
enhancing shareholder values.
CORE NATURAL RESOURCE PORTFOLIO FOCUSED ON DIVERSIFIED ENERGY COMPANIES
The natural resource segment of the portfolio focused on well-diversified energy
companies that have reduced their sensitivity to oil price volatility. The
energy companies represented in the portfolio share certain characteristics --
they are large, well-capitalized, vertically integrated and financially
well-managed. In addition, they operate globally, decreasing their dependence on
a single, local economy.
PERFORMANCE HELD BACK BY UNDERPERFORMING SECTOR
For the six-month period the Fund generated a total return of 10.37% for Class A
shares, based on net asset value. The portfolio's core natural resource
component did not perform well as a result of the Asian currency crisis that
resulted in temporary worldwide deflation and declining commodity prices. During
the period, the Fund continued to reduce its exposure to this sector. These
assets were reallocated to sectors and countries that we believe offer better
opportunities for share price appreciation.
CONTINUED OPPORTUNITIES EXPECTED IN EUROPE
We will continue to focus on country and sector diversification as we believe
the Fund's increased diversity will aid in protecting shareholders from large
swings in share prices. We expect to capitalize on investment opportunities in
Europe as a result of the impending EMU. This union offers shareholders a way to
participate in a historical market expansion and increased global demand for
goods and services.
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<PAGE>
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COLONIAL INTERNATIONAL HORIZONS FUND'S INVESTMENT PERFORMANCE VS.
MORGAN STANLEY CAPITAL INTERNATIONAL EAFE (GDP)
Change in Value of $10,000 from 6/30/92 - 4/30/98
Class A Shares based on NAV and POP
MSCI
As of Date NAV POP EAFE (GDP)
- ------------- ------ ------ ----------
June 30, 1992 10,000 10,000 10,000
July 31, 1992 10,268 9,678 9,646
August 31, 1992 10,040 9,462 10,126
September 30, 1992 10,010 9,434 9,754
October 30, 1992 9,682 9,125 9,358
November 30, 1992 9,285 8,751 9,404
December 31, 1992 9,432 8,889 9,402
January 29, 1993 9,422 8,880 9,511
February 26, 1993 9,852 9,286 9,844
March 31, 1993 10,513 9,909 10,516
April 30, 1993 11,044 10,409 11,485
May 28, 1993 11,685 11,013 11,664
June 30, 1993 11,626 10,957 11,462
July 30, 1993 12,128 11,431 11,807
August 31, 1993 12,219 11,516 12,673
September 30, 1993 11,716 11,043 12,407
October 29, 1993 12,219 11,516 12,748
November 30, 1993 11,897 11,213 11,732
December 31, 1993 12,616 11,891 12,558
January 31, 1994 13,308 12,543 13,518
February 28, 1994 12,871 12,130 13,444
March 31, 1994 12,575 11,852 13,251
April 29, 1994 12,647 11,920 13,920
May 31, 1994 12,942 12,198 13,601
June 30, 1994 12,701 11,971 13,594
July 29, 1994 13,059 12,308 13,910
August 31, 1994 13,427 12,655 14,146
September 30, 1994 13,417 12,645 13,648
October 31, 1994 13,458 12,684 14,063
November 30, 1994 12,394 11,682 13,437
December 30, 1994 12,499 11,781 13,538
January 31, 1995 11,850 11,168 13,192
February 28, 1995 12,238 11,534 13,177
March 31, 1995 12,730 11,998 13,773
April 28, 1995 13,149 12,393 14,389
May 31, 1995 13,348 12,581 14,250
June 30, 1995 13,449 12,676 14,091
July 31, 1995 13,985 13,181 15,012
August 31, 1995 13,848 13,052 14,385
September 29, 1995 13,712 12,923 14,556
October 31, 1995 13,070 12,319 14,134
November 30, 1995 13,628 12,844 14,432
December 29, 1995 14,132 13,320 15,049
January 31, 1996 14,598 13,758 15,240
February 29, 1996 14,708 13,863 15,286
March 29, 1996 15,262 14,385 15,489
April 30, 1996 15,605 14,708 15,971
May 31, 1996 15,617 14,719 15,735
June 28, 1996 15,305 14,425 15,859
July 31, 1996 14,539 13,703 15,403
August 30, 1996 15,139 14,268 15,395
September 30, 1996 15,327 14,446 15,818
October 31, 1996 15,905 14,991 15,645
November 29, 1996 16,749 15,786 16,313
December 31, 1996 17,047 16,067 16,197
January 31, 1997 17,304 16,309 15,892
February 28, 1997 16,815 15,848 16,003
March 31, 1997 16,705 15,744 16,308
April 30, 1997 16,741 15,779 16,268
May 30, 1997 18,014 16,978 17,115
June 30, 1997 18,674 17,600 18,134
July 31, 1997 19,546 18,423 18,534
August 29, 1997 18,662 17,589 17,204
September 30, 1997 19,952 18,805 18,309
October 31, 1997 18,748 17,670 16,956
November 28, 1997 18,084 17,045 16,887
December 31, 1997 18,061 17,022 17,132
January 30, 1998 18,331 17,277 18,022
February 27, 1998 19,249 18,142 19,058
March 31, 1998 20,452 19,276 20,096
April 30, 1998 20,692 19,503 20,398
VALUE OF A $10,000 INVESTMENT
MADE ON 6/8/92 AT 4/30/98
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
NAV POP NAV W/CDSC NAV W/CDSC
- --------------------------------------------------------------------------------
$20,837 $19,639 $19,944 $19,844 $19,967 $19,967
AVERAGE ANNUAL TOTAL RETURNS
AS OF 4/30/98
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
Inception 6/8/92 6/8/92 8/1/97
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
1 YEAR 23.60% 16.49% 22.81% 17.81% 22.95% 21.95%
- --------------------------------------------------------------------------------
5 YEARS 13.38 12.05 12.56 12.31 12.58 12.58
- --------------------------------------------------------------------------------
LIFE 13.25 12.12 12.42 12.32 12.44 12.44
- --------------------------------------------------------------------------------
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charge or contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 5.75% for Class
A shares. The CDSC returns reflect charges of 5% for one year, 2% for five years
and 1% 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.
Class C share performance information includes returns of the Fund's Class B
shares (the oldest existing fund class) for periods prior to its inception date.
These Class B share returns are not restated to reflect any expense differential
(e.g., Rule 12b-1 fees) between Class B shares and Class C shares.
The Morgan Stanley Capital International EAFE (GDP) Index is an unmanaged index
that tracks the performance of international stocks. Unlike mutual funds, an
index does not incur fees or charges and it is not possible to invest in an
index.
- --------------------------------------------------------------------------------
<PAGE>
INVESTMENT PORTFOLIO
APRIL 30, 1998 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 96.5% COUNTRY VALUE SHARES
- --------------------------------------------------------------------------------
AGRICULTURE, FORESTRY & FISHING - 0.4%
AGRICULTURE - CROPS - 0.4%
Tabacalera S.A Sp 13 $ 269
-------
- --------------------------------------------------------------------------------
CONSTRUCTION - 1.9%
BUILDING CONSTRUCTION - 0.5%
Sulzer AG Sz 304
-------
HEAVY CONSTRUCTION-NON BUILDING CONSTRUCTION - 0.8%
Hyder PLC UK 28 450
-------
SPECIAL TRADE CONTRACTORS - 0.6%
Kinden Corp. Ja 32 418
-------
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 23.6%
DEPOSITORY INSTITUTIONS - 14.8%
Allied Irish Bank Ir 32 438
Banca Nazionale del Lavoro It 9 266
Banco Comercial Portugues S.A Pt 10 346
Banco Popolare di Milano (BPM) It 18 160
Banco Popular Espanol SA Sp 4 291
Banco Totta & Acores S.A Pt 11 414
Bank of Montreal Ca 5 289
Bayerische Hypotheken - Und Wechsel Bank G 6 328
Cie Financiere de Paribas Fr 6 592
Commerzbank AG G 8 304
Corporacion Bancaria de Espana SA Sp 6 508
Credito Italiano It 41 212
Den Norske Bank ASA No 57 299
Grupo Financiero Banamex Accival, S.A. de CV
(Banacci) Mx 115 355
Merita Ltd., Class A (a) Fi 88 588
National Westminster Bank PLC UK 15 300
Royal Bank of Scotland Group PLC UK 17 262
Skandinaviska Enskilda Banken Sw 24 392
Standard Chartered PLC UK 23 352
Svenska Handelsbanken Sw 8 363
The Bank of Tokyo Mitsubishi Ja 33 407
The Sanwa Bank Ltd. Ja 28 247
UBS-Union Bank of Switzerland Sz (b) 467
Unidanamark A/S (a) De 4 344
Westpac Banking Corp. Au 68 452
-------
8,976
-------
HOLDING COMPANIES - 0.5%
Fortis Amev NV Ne 5 286
-------
INSURANCE CARRIERS - 2.8%
AXA Fr 3 392
Allianz AG G 1 277
Royal & Sun Alliance Insurance Group PLC UK 28 313
Toro Assicurazioni It 16 280
Zurich Versicherungs-Gesellschaft Sz 1 426
-------
1,687
-------
INVESTMENT COMPANIES - 2.7%
Chile Fund, Inc. Ch 15 241
G.T. Global Eastern Europe Fund G 30 358
Irish Investment Fund, Inc. Ir 21 507
Templeton Dragon Fund, Inc. PR 48 521
-------
1,627
-------
NONDEPOSITORY CREDIT INSTUTIONS - 1.9%
Nichiei Co., Ltd. Ja 5 416
Promise Co., Ltd. Ja 8 404
Shohkoh Fund Ja 1 316
-------
1,136
-------
REAL ESTATE - 0.9%
New World Development Co., Ltd. HK 85 242
Swire Pacific Ltd., Series A HK 55 275
-------
517
-------
- --------------------------------------------------------------------------------
MANUFACTURING - 43.4%
CHEMICALS & ALLIED PRODUCTS - 8.4%
Akzo Nobel NV Ne 2 488
BASF AG G 7 305
Bayer AG G 5 233
E.I. DuPont De Nemours & Co. 7 502
Kao Corp. Ja 44 644
Kemira Oy Fi 21 227
Medeva PLC UK 190 564
Norsk Hydro AS No 4 214
Novartis Sz (b) 413
Rhone Poulenc, Class A Fr 6 311
Roche Holding AG Sz (b) 253
Yamanouchi Pharmaceutical Co. Ja 19 447
Zeneca Group PLC UK 12 517
-------
5,118
-------
COMMUNICATIONS EQUIPMENT - 2.7%
Matsushaita Electric Industrial Co. Ja 25 399
Racal Electronics PLC UK 67 374
Sony Corp. Ja 6 497
Ericsson (LM) ADR Sw 7 379
-------
1,649
-------
ELECTRONIC COMPONENTS - 1.7%
Alcatel Alsthom (Cie Gen El) Fr 3 558
TDK Corp. Ja 6 472
-------
1,030
-------
FABRICATED METAL - 0.5%
Amcor Ltd. Au 66 297
-------
FOOD & KINDRED PRODUCTS - 7.2%
Bass PLC UK 20 623
Bass PLC Class B UK 33 30
Coca-Cola Femsa S.A Mx 16 277
Eridania Beghin-Say SA Fr 3 713
Groupe Danone Fr 2 359
Kesko Oyj Fi 18 282
Montedison SPA It 318 401
Nestle AG Sz (b) 436
Parmalat Finanziara SPA It 150 335
Unigate PLC UK 43 521
Unilever NV Ne 5 367
-------
4,343
-------
HOUSEHOLD APPLIANCES - 0.6%
Electrolux AB, Series B Sw 4 353
-------
LEATHER - 0.4%
Yue Yuen Industrial Holdings HK 132 255
-------
MACHINERY & COMPUTER EQUIPMENT - 3.9%
Canon, Inc. Ja 18 424
Fujitsu Ltd. Ja 41 477
Mannesmann AG G 1 476
Oerlikon-Buehrle Holding AG Sz 2 367
Siebe PLC UK 27 603
-------
2,346
-------
MEASURING & ANALYZING INSTRUMENTS - 1.1%
Fuji Photo Film Co., Ltd. Ja 11 390
Incentive AB Class A Sw 3 310
-------
700
-------
MISCELLANEOUS MANUFACTURING - 0.5%
Polygram NV Ne 7 276
-------
PAPER PRODUCTS - 2.2%
Jefferson Smurfit Group PLC Ir 98 360
Mo och Domsjo AB. Class B (a) Sw 9 279
Royal Koninklijke PT Nederland NV Ne 6 320
Svenska Cellulosa AB, Class B Sw 13 383
-------
1,342
-------
PETROLEUM REFINING - 5.3%
British Petroleum Co., PLC UK 6 597
Chevron Corp. 3 281
ENI It 45 302
Mobil Corp. 6 497
Omv Handels AG Aus 2 360
Petro-Canada Ca 19 321
Repsol SA Sp 8 416
Royal Dutch Petroleum Co. Ne 8 447
-------
3,220
-------
PRIMARY METAL - 0.6%
Pirelli SPA It 101 334
-------
PRINTING & PUBLISHING - 0.6%
Mondadori (Arnoldo) Editore SPA It 30 339
-------
RUBBER & PLASTIC - 1.0%
Bridgestone Corp. Ja 13 295
Michelin Class B Fr 5 304
-------
599
-------
STONE, CLAY, GLASS & CONCRETE - 3.5%
CRH PLC Ir 23 327
Cemex, S.A Mx 87 434
Cimentos de Portugal SA Pt 10 362
Hanson PLC UK 80 472
Holderbank Financiere Glaris AG Sz 503
-------
2,098
-------
TOBACCO PRODUCTS - 0.7%
B.A.T. Industries PLC UK 45 424
-------
TRANSPORTATION EQUIPMENT - 2.5%
Honda Motor Co. Ltd. Ja 12 433
Toyota Motor Corporation Ja 11 286
Volkswagen Ag G 1 517
Volvo AB Sw 10 295
-------
1,531
-------
- --------------------------------------------------------------------------------
MINING & ENERGY - 4.4%
CRUDE PETROLEUM & NATURAL GAS - 1.1%
Saga Petroleum ASA No 33 652
-------
GOLD & SILVER MINING - 0.6%
American Barrick Resources Corp. Ca 18 396
-------
METAL MINING - 0.7%
Franco-Nevada Mining Corp. Ltd Ca 17 411
-------
OIL & GAS EXTRACTION - 1.2%
YPF SA ADR Ar 11 390
Pioneer International Ltd. Au 132 376
-------
767
-------
OIL & GAS FIELD SERVICES - 0.8%
Petroleum Geo-Services No 7 454
-------
- --------------------------------------------------------------------------------
RETAIL TRADE - 6.9%
APPAREL & ACCESORIES STORES - 0.5%
Hennes & Mauritz AB Sw 6 323
-------
AUTO DEALERS & GAS STATIONS - 0.8%
Arriva PLC UK 64 450
-------
FOOD STORES - 4.3%
IFIL Finanziaria di Partecipazioni SPA It 68 339
Jeronimo Martins, SGPS, S.A Pt 14 654
Koninklijke Ahold NV Ne 10 296
Tesco PLC UK 34 318
Valora Holding AG Sz 2 437
Vendex International NV Ne 8 519
-------
2,564
-------
MISCELLANEOUS RETAIL - 0.7%
Pinault-Printemps SA Fr 1 447
-------
RESTAURANTS - 0.6%
TelePizza S.A Sp 3 388
-------
SERVICES - 4.5%
COMPUTER RELATED SERVICES - 1.5%
Cap Gemini S.A. Fr 5 609
Orix Corporation Ja 4 275
-------
884
-------
COMPUTER SOFTWARE - 2.2%
Baan Co., N.V Ne 7 293
Computer 2000 AG G 1 379
Dassault Systemes S.A Fr 8 305
SAP AG G 1 355
-------
1,333
-------
HOTELS, CAMPS & LODGING - 0.8%
Accor SA Fr 2 512
-------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 11.4%
BROADCASTING - 0.5%
Mediaset SPA It 48 311
-------
ELECTRIC SERVICES - 0.6%
Empresa Nacional De Electricidad Sp 15 375
-------
SANITARY SERVICES - 1.2%
Severn Trent Water PLC UK 29 461
Wessex Water PLC UK 31 253
-------
714
-------
TELECOMMUNICATION - 7.7%
France Telecom S.A Fr 8 448
Hong Kong Telecommunications Ltd. HK 146 281
Nippon Telegraph & Telephone Corp. Ja (b) 524
Oy Nokia Ab, Class K Fi 8 532
Portugal Telecom S.A Pt 7 349
Telecel-Comunicacaoes Pessoais, SA Pt 3 448
Telecom Italia Mobile (TIM) SPA It 85 484
Telecom Italia SPA It 21 155
Telecomunicacoes Brasileiras SA Bz 4 487
Telefonica De Argentina S.A Ar 7 285
Telefonica de Espana Sp 3 350
Telefonos de Mexico S.A Mx 109 306
-------
4,648
-------
TRANSPORTATION SERVICES - 0.6%
New World Infrastructure Ltd. HK 150 322
-------
WHOLESALE TRADE - 0.8%
Gehe AG G 5 257
VEBA AG G 4 241
-------
497
-------
TOTAL COMMON STOCKS (cost of $50,343) 58,375
-------
PREFERRED STOCKS - 0.1%
- --------------------------------------------------------------------------------
CONSTRUCTION - 0.1%
HEAVY CONSTRUCTION-NON BUILDING CONSTRUCTION
Hyder PLC, 7.875% (cost of $41) UK 30 61
-------
TOTAL INVESTMENTS (cost of $50,384) - 96.5% (c) 58,436
-------
SHORT-TERM OBLIGATIONS - 3.2% PAR
- ---------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago
Corp., dated 04/30/98, due 05/01/98 at 5.52%,
collateralized by U.S. Treasury notes and
bill with various maturities to 2021, market
value $2,336 (repurchase proceeds $1,930) $1,930 1,930
-------
FOWARD CURRENCY CONTRACTS - 0.0% (d) (5)
- --------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.2% 127
- --------------------------------------------------------------------------------
NET ASSETS - 100% $60,488
=======
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non- income producing.
(b) Rounds to less than one
(c) Cost for federal income tax purposes is a approximately the same.
(d) As of April 30, 1998, the Fund had entered into the following foward
currency exchange contracts:
Net Unrealized
Appreciation
Contracts In Exchange Settlement (Depreciation)
to Deliver For Date (U.S$)
- --------------------------------------------------------------------------------
DM 567 US$ 316 05/04/1998 (b)
DM 677 US$ 377 05/05/1998 (b)
IL 2,296,897 US$ 1,295 05/07/1998 (1)
PE 26,718 US$ 145 05/05/1998 (b)
SK 170 US$ 22 05/04/1998 (b)
SP 44,952 US$ 295 05/05/1998 (1)
US$ 475 KB 7,934 05/07/1998 (1)
US$ 2,162 NG 1,071 05/05/1998 (b)
US$ 474 SF 317 05/05/1998 (2)
-------
(5)
-------
Summary of Securities by
Country Country Value % of Total
- --------------------------------------------------------------------------------
United Kingdom UK $ 7,945 13.6
Japan Ja 7,771 13.3
France Fr 5,550 9.5
Germany G 4,030 6.9
Italy It 3,918 6.7
Switzerland Sz 3,606 6.2
Netherlands Ne 3,292 5.6
Sweden Sw 3,077 5.3
Spain Sp 2,597 4.4
Portugal Pt 2,573 4.4
Ireland Ir 1,632 2.8
Finland Fi 1,629 2.8
Norway No 1,619 2.8
Canada Ca 1,417 2.4
Hong Kong HK 1,375 2.4
Mexico Mx 1,372 2.3
United States 1,280 2.2
Australia Au 1,125 1.9
Argentina Ar 675 1.2
Pacific Region PR 521 0.9
Brazil Bz 487 0.8
Austria Aus 360 0.6
Denmark De 344 0.6
Chile Ch 241 0.4
------- -----
$58,436 100.0
======= =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------------ -------------------------------
ADR American Depositary Receipt
ADS American Depositary Shares
GDS Global Depositary Shares
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1998 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $50,384) $58,436
Short-term obligations 1,930
-------
60,366
Cash including foreign currencies (cost $362) $ 364
Receivable for:
Investments sold 2,466
Fund shares sold 198
Dividends 184
Foreign tax reclaims 22
Other 9 3,243
------ -------
Total Assets 63,609
LIABILITIES
Payable for:
Investments purchased 2,708
Fund shares repurchased 407
Unrealized depreciation on foward
currency contracts 5
Accrued Deferred Trustees fees 1
------
Total Liabilities 3,121
-------
NET ASSETS $60,488
=======
Net asset value & redemption price per share -
Class A ($34,345/2496) $ 13.76
=======
Maximum offering price per share - Class A
($13.76/0.9425) $ 14.60(a)
=======
Net asset value & offering price per share -
Class B ($25,797/1,897) $ 13.60(b)
=======
Net asset value & offering price per share -
Class C ($346/25) $ 13.73(b)
=======
COMPOSITION OF NET ASSETS
Capital paid in $47,083
Overdistributed net investment income (25)
Accumulated net realized gain 5,385
Net unrealized appreciation (depreciation) on:
Investments 8,052
Foreign currency transactions (7)
-------
$60,488
=======
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Dividends $ 495
Interest 134
------
Total investment income (net of nonreclaimable
foreign taxes withheld at source which
amounted to $62) 629
EXPENSES
Management fee $ 218
Service fee 73
Distribution fee - Class B 93
Distribution fee - Class C 1
Transfer agent 95
Bookkeeping fee 15
Registration fee 16
Custodian fee 19
Audit fee 16
Trustees fee 9
Reports to shareholders 5
Legal fee 2
Other 5 567
-------- ------
Net Investment Income 62
------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 5,424
Foreign currency transactions (57)
--------
Net Realized Gain 5,367
Change in net unrealized appreciation (depreciation) during
the period on:
Investments 156
Foreign currency transactions (5)
--------
Net Change in Unrealized Appreciation 151
------
Net Gain 5,518
------
Increase in Net Assets from Operations $5,580
======
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months ended Year ended
(in thousands) April 30 October 31
---------------- ----------
INCREASE (DECREASE) IN NET ASSETS 1998 1997(a)
Operations:
Net investment income $ 62 $ 222
Net realized gain 5,367 11,224
Net unrealized appreciation (depreciation) 151 (1,087)
-------- --------
Net Increase from Operations 5,580 10,359
Distributions:
From net investment income - Class A (187) (73)
In excess of net investment income - Class A (6) --
From net realized gains - Class A (6,412) (3,435)
From net realized gains - Class B (4,631) (2,522)
From net realized gains - Class C (30) --
-------- --------
(5,686) 4,329
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 17,549 61,284
Value of distributions reinvested - Class A 5,370 2,968
Cost of shares repurchased - Class A (19,889) (68,973)
-------- --------
3,030 (4,721)
-------- --------
Receipts for shares sold - Class B 3,855 12,423
Value of distributions reinvested - Class B 4,123 2,056
Cost of shares repurchased - Class B (6,642) (14,766)
-------- --------
1,336 (287)
-------- --------
Receipts for shares sold - Class C 212 107
Value of distributions reinvested - Class C 31 --
-------- --------
243 107
-------- --------
Net Increase (Decrease) from Fund
Share Transactions 4,609 (4,901)
-------- --------
Total Decrease (1,077) (572)
NET ASSETS
Beginning of period 61,565 62,137
-------- --------
End of period (net of overdistributed and
including underdistributed net investment
income of $25 and $182, respectively) $ 60,488 $ 61,565
======== ========
(a) Class C shares were initially offered on August 1, 1997 Statement of Changes
in Net Assets continued on following page
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(Unaudited)
Six months ended Year ended
April 30 October 31
---------------- ----------
(in thousands) 1998 1997(a)
Sold - Class A 1,258 4,043
Issued for distributions reinvested - Class A 439 222
Repurchased - Class A (1,472) (4,554)
------ ------
225 (289)
------ ------
Sold - Class B 289 851
Issued for distributions reinvested - Class B 340 154
Repurchased - Class B (511) (1,017)
------ ------
118 (12)
------ ------
Sold - Class C 16 7
Issued for distributions reinvested - Class C 2 --
------ ------
18 7
------ ------
(a) Class C shares were initially offered on August 1, 1997
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial International Horizons Fund (the
Fund), a series of Colonial Trust III, the accompanying financial statements
contain all normal and recurring adjustments necessary for the fair
presentation of the financial position of the Fund at April 30, 1998, and the
results of its operations, the changes in its net assets and the financial
highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: The Fund is a 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 preservation of capital purchasing power and long-term growth. The
Fund may issue an unlimited number of shares. The Fund offers three classes of
shares: Class A, Class B, and Class C. Class A shares are sold with a front-end
sales charge and Class B shares are subject to an annual distribution fee and a
contingent deferred sales charge. Class B shares will convert to Class A shares
when they have been outstanding approximately eight years. Class C shares are
subject to a contingent deferred sales charge on redemptions made within one
year after purchase and a continuing distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are 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.
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 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.
The per share data was calculated using average shares outstanding during the
period. In addition, Class B and Class C net investment income per share data
reflects the distribution fee applicable to Class B and Class C shares only.
Class B and Class C ratios are calculated by adjusting the expense and net
investment income ratios for the Fund for the entire period by the distribution
fee applicable to Class B and Class C shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; premium and
market discount are not amortized or accreted.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are
recorded on the ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency transactions includes gains (losses) arising from the
fluctuation in exchange rates between trade and settlement dates on securities
transactions, gains (losses) arising from the disposition of foreign currency
and currency gains (losses) between the accrual and payment dates on 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 (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, the
actual 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 nonreclaimable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.75% annually of the Fund's
average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer Agent), an
affiliate of the Adviser, provides shareholder services for a monthly fee equal
to 0.25% annually of the Fund's average net assets and receives reimbursement
for certain out-of-pocket expenses.
Effective October 1, 1997 and continuing through September 1998, the Transfer
Agent fee will be reduced by 0.0012% in cumulative monthly increments, resulting
in a decrease in the fee from 0.25% to 0.236% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Financial
Investments, Inc., (the Distributor), a subsidiary of the Adviser, is the Fund's
principal underwriter. For the six months ended April 30, 1998, the Fund has
been advised that the Distributor retained net underwriting discounts of $2,815
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $56,488 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 only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the six months ended April 30, 1998, purchases and
sales of investments, other than short-term obligations, were $21,258,942 and
$15,375,819, respectively.
Unrealized appreciation (depreciation) at April 30, 1998, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 9,261,558
Gross unrealized depreciation (1,209,828)
-----------
Net unrealized appreciation $ 8,051,730
===========
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
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 six months ended April 30, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended April 30
-----------------------------------------------
1998
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net asset value -
Beginning of period $15.260 $15.070 $15.220
------- ------- -------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (a) 0.035 (0.014) (0.013)
Net realized and
unrealized gain (loss) 1.205 1.204 1.231
------- ------- -------
Total from Investment
Operations 1.240 1.190 1.218
------- ------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
Net investment income (0.078) -- (0.048)
In excess of net investment income (0.002) -- --
From net realized gains (2.660) (2.660) (2.660)
------- ------- -------
Total Distributions Declared
to Shareholders (2.740) (2.660) (2.708)
------- ------- -------
Net asset value -
End of period $13.760 $13.600 $13.730
======= ======= =======
Total return (d) 10.37%(e) 10.05%(e) 10.20%(e)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (f) 1.62%(g) 2.37%(g) 2.37%(g)
Net investment income (f) 0.54%(g) (0.21)%(g) (0.21)%(g)
Portfolio turnover 71%(e) 71%(e) 71%(e)
Average commision rate $0.0164 $0.0164 $0.0164
Net assets at end
of period (000) $34,345 $25,797 $ 346
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date
(c) The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to the timing of sales
and repurchases of Fund shares in relation to fluctuating market values of
the investments of the Fund.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(g) Annualized.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
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)
------- ------- -------
$14.320 $14.230 $15.910
------- ------- -------
0.098 (0.011) (0.017)
2.296 2.275 (0.(c))
------- ------- -------
2.394 2.264 (0.690)
------- ------- -------
(0.030) - -
- - -
(1.424) (1.424) -
------- ------- -------
(1.454) (1.424) -
------- ------- -------
$15.260 $15.070 $15.220
======= ======= =======
17.87% 16.98% (4.(e)%
======= ======= =======
1.62% 2.37% 2.(g)
0.67% (0.08)% (0.(g)%
67% 67% 67%
$0.0242 $0.0242 $0.0242
$34,645 $26,817 $ 103
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
Year ended October 31
---------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
Net asset value -
Beginning of period $12.430 $12.380 $13.160 $13.110
------- ------- ------- -------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (a) 0.075 (0.026) 0.102 0.009
Net realized and
unrealized gain (loss) 2.525 2.506 (0.496) (0.489)
------- ------- ------- -------
Total from Investment
Operations 2.600 2.480 (0.394) (0.480)
------- ------- ------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net
investment income (0.080) - (0.106) (0.020)
From net realized gains (0.630) (0.630) (0.230) (0.230)
------- ------- ------- -------
Total Distributions Declared
to Shareholders (0.710) (0.630) (0.336) (0.250)
------- ------- ------- -------
Net asset value -
End of period $14.320 $14.230 $12.430 $12.380
======= ======= ======= =======
Total return (b) 21.69% 20.70% (2.88)% (3.56)%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.61%(c) 2.36%(c) 1.66%(c) 2.41%(c)
Net investment income 0.56%(c) (0.19)%(c) 0.82%(c) 0.07%(c)
Portfolio turnover 84% 84% 65% 65%
Average
commission rate (d) $0.0268 $0.0268 - -
Net assets at end
of period (000) $36,655 $25,482 $31,297 $20,931
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(d) 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.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended October 31
-------------------------------------------
1994 1993
Class A Class B Class A Class B
------- ------- ------- -------
$12.160 $12.130 $ 9.750 $ 9.720
------- ------- ------- -------
0.114 0.019 0.099 0.018
1.104 1.097 2.429 2.431
------- ------- ------- -------
1.218 1.116 2.528 2.449
------- ------- ------- -------
(0.118) (0.036) (0.118) (0.039)
(0.100) (0.100) - -
------- ------- ------- -------
(0.218) (0.136) (0.118) (0.039)
------- ------- ------- -------
$13.160 $13.110 $12.160 $12.130
======= ======= ======= =======
10.14% 9.28% 26.20% 25.30%
======= ======= ======= =======
1.70% 2.45% 1.88% 2.63%
0.90% 0.15% 0.92% 0.17%
15% 15% 14% 14%
- - - -
$36,830 $22,458 $31,098 $ 7,179
<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
<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.
<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.)
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial International Horizons Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial International Horizons 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 International
Horizons 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 and with the most
recent copy of Liberty Financial Investments' Performance Update.
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board and Chief Executive Officer, Hannaford
Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
ROBERT L. SULLIVAN
Retired Partner, KPMG Peat Marwick LLP (formerly Management Consultant, Saatchi
and Saatchi Consulting Ltd. and Principal and International Practice Director,
Management Consulting, Peat Marwick Main & Co.)
[logo] LIBERTY FINANCIAL INVESTMENTS, INC. (C)1998
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
HZ-03/339F-0498 (6/98) 98/583
- --------------------------------------------------------------------------------
