[front cover]
- ----------------------------------------------------------
COLONIAL INTERNATIONAL HORIZONS FUND Semiannual report
- ----------------------------------------------------------
April 30, 1999
- ------------------------------
Not FDIC | May Lose Value
Insured | No Bank Guarantee
- ------------------------------
<PAGE>
COLONIAL INTERNATIONAL HORIZONS FUND HIGHLIGHTS
NOVEMBER 1, 1998 - APRIL 30, 1999
Investment Objective: Colonial International Horizons Fund seeks preservation of
capital purchasing power and long-term growth.
The Fund is Designed to Offer:
[checkmark] Preservation of purchasing power
[checkmark] Growth potential
[checkmark] Diversification to help reduce risk
Portfolio Managers' Commentary: "Concerns about a potential global economic
slowdown lingered for much of the period. However, as the first quarter of 1999
progressed, rising commodity prices and an increasing number of favorable
economic trends created a positive shift in investor sentiment. Significant
adjustments to the structure of the portfolio during the period should help
position the Fund to participate in a more favorable global economic
environment."
-- Gita Rao and Nicolas Ghajar
Colonial International Horizons Fund Performance
<TABLE>
<CAPTION>
Class A Class B Class C Class Z
<S> <C> <C> <C> <C>
Inception dates 6/8/92 6/8/92 8/1/97 2/16/99
- -------------------------------------------------------------------------------
Six-month distributions declared
per share $0.948 $0.898 $0.908 --
- -------------------------------------------------------------------------------
Six-month total returns, assuming
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC) 11.96% 11.54% 11.62% 12.05%(1)
- -------------------------------------------------------------------------------
Net asset values per share on 4/30/99 $12.72 $12.59 $12.70 $12.73
</TABLE>
<TABLE>
<CAPTION>
Top Five Holdings Top Five Countries
- ------------------------------------- ------------------------------------
(as of 4/30/99) (as of 4/30/99)
<S> <C> <C> <C>
1. Cheung Kong Holdings 1.8% 1. United Kingdom 22.6%
2. Nippon Telegraph 1.3% 2. Japan 16.0%
3. AXA 1.2% 3. France 12.1%
4. Stora Enso Oyj 1.2% 4. Netherlands 6.7%
5. Smithkline Beecham 1.2% 5. Germany 5.6%
</TABLE>
Holdings 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.
(1) Please refer to page 5 for an explanation of how performance is calculated
for the period prior to the inception of Class Z shares.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[photo: Stephen E. Gibson]
In the six-month period ended April 30, 1999, global equity markets benefited
from improving economic conditions and rising stock markets. Although several
critical world economies, including Southeast Asia, Japan and Europe, have
further steps to take before they can achieve sustained economic growth, it has
been encouraging to see improvement.
During this reporting period, investors appeared to develop a more positive
outlook for the global economy. Last November, concerns about recessions in
Southeast Asia and Japan and the ability of U.S. companies to maintain profits
created a degree of uncertainty. Despite steadily declining interest rates in a
number of countries throughout the world, investors remained worried about the
direction of the global economy. However, during the first quarter of 1999,
rising commodity prices and a steady stream of positive economic news helped
create a more favorable outlook for global growth. In response, stocks of
economically sensitive U.S. companies rallied sharply late in the period, as did
stocks in many developing countries.
For investors seeking investment opportunities abroad, the Fund offers
diversification across a variety of international stock markets. The Fund also
provides shareholders with long-term growth potential and seeks to reduce risk.
We continue to believe that a long-term approach combined with broad
diversification among countries and industries remains one of the best
strategies for balancing the risks and rewards of international investing.
The following report will provide you with more specific information about your
Fund's performance and the strategies used during the period. As always, we
thank you for choosing Colonial International Horizons Fund and for giving us
the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
June 15, 1999
Because market and economic conditions change frequently, there can be no
assurance that the trends described above and on the following pages will
continue.
3
<PAGE>
PORTFOLIO MANAGERS' REPORT
Gita Rao is portfolio manager of Colonial International Horizons Fund and a
senior vice president of Colonial Management Associates, Inc. Nicolas Ghajar is
an associate portfolio manager of the Fund.
Period showed a dramatic shift in investor sentiment
Early in the period, investors believed that economic growth throughout the
world would slow. Concerns about the devaluation of Russia's currency,
slower-than-expected growth in Europe, the recession in Asia, and potentially
lower corporate earnings in the U.S. lingered through the final months of 1998
and into early 1999. However, as the first quarter of 1999 unfolded, a number of
signs indicated that the global economy was improving. U.S. economic reports
were better than expected, and inflation remained low; Brazil's currency
devaluation in January 1999 had minimal impact on the global economy; and in
Asia, struggling economies in some countries appeared to stabilize and turn
upward. In addition, an agreement reached among the Organization of Petroleum
Exporting Countries (OPEC) and non-OPEC oil producers to cut production enabled
oil prices to climb significantly during the period. Rising oil prices helped
the economies of developing nations that depend heavily on oil exports for
income. Collectively, these factors prompted a more favorable global economic
outlook late in the period. This, in turn, led to strong gains in emerging
markets.
Defensive stance hampered performance during the period
We entered the period defensively positioned. The Fund was underweighted in
emerging markets and held sizeable positions in less economically sensitive
industries such as consumer product stocks, telecommunications and electronics
- -- areas that tend to perform well in a slow growth environment. The Fund was
also underweighted in cyclical sectors such as energy. When expectations of
global economic growth shifted late in the period, stocks in emerging markets
and cyclical sectors rallied sharply. Our underweighting in these areas limited
our ability to fully participate in the rally. For the six-month period ended
April 30, 1999, Colonial International Horizons Fund posted a total return of
11.96% for Class A shares, based on net asset value.
Adjustments made to reposition the portfolio
Based on the shift in investor sentiment and the strength exhibited by select
markets and sectors during the period, we made some significant changes to the
structure of the portfolio. We increased our weightings in the U.K. and the U.S.
We also increased allocation to cyclical industries such as capital equipment,
which had benefited from increased demand abroad. In addition, we reduced our
allocation to the retail sector, particularly in Europe, where growth has
4
<PAGE>
slowed. Although stocks in emerging markets have risen dramatically over a few
short months, we do not anticipate making substantial reallocations to these
markets until we see evidence of more stable economic growth.
Companies that we recently added to the portfolio include Samsung (0.96% of
total net assets), which is based in South Korea. The company serves the strong
demand for computers in the Asian region, but is also a strong global player in
the electronics market throughout the world. A German-based company we found
attractive is Man AG (1.19% of total net assets). While the company has built
its reputation manufacturing forklifts, it is actually a well-diversified
machinery company that we believe is positioned to benefit from a pick up in
global economic growth.
Favorable forecast for global economies
We are cautiously optimistic about economic trends overseas, and believe the
U.S. should continue to show solid growth in 1999, provided that inflation
remains in check and interest rates do not spike. As we move into the second and
third quarters of 1999, investors should have a better idea whether stronger
global economic growth is sustainable. Going forward, we believe the adjustments
made to the portfolio during the period position it well for the current
economic scenario.
Average annual total returns
as of 4/30/99
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class A shares Class B shares Class C shares Class Z shares
Inception 6/8/92 6/8/92 8/1/97 2/16/99
NAV POP NAV w/CDSC NAV w/CDSC NAV
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
1 year 0.29% (5.48)% (0.43)% (5.06)% (0.26)% (1.19)% 0.37%
- --------------------------------------------------------------------------------
5 years 10.41 9.11 9.60 9.33 9.67 9.67 10.43
- --------------------------------------------------------------------------------
Life 11.28 10.32 10.46 10.46 10.50 10.50 11.29
- --------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 5.75% for Class
A shares. CDSC returns reflect charges of 5% for one year, 2% for five years for
Class B shares and 1% for one year for Class C shares. Performance for different
share classes will vary based on differences in sales charges and fees
associated with each class.
Class 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.
Class Z share performance information includes returns of the Fund's Class A
shares (as its expense structure more closely resembles that of the newer class)
for periods prior to its inception date. These Class A returns are not restated
to reflect any expense differential (e.g., Rule 12b-1 fees) between Class A and
Class Z shares. Had the expense differential been reflected, the returns for
periods prior to the inception date of the newer class shares would have been
higher.
5
<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 Liberty Funds Services, Inc. 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 Funds Distributor, Inc. 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 Funds Distributor 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 Funds Distributor. 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.
6
<PAGE>
INVESTMENT PORTFOLIO
APRIL 30, 1999 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 100.5% COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 0.7%
Agriculture - Crops
Tabacalera S.A. Sp 41 $ 801
-----------
- -------------------------------------------------------------------------------
CONSTRUCTION - 2.3%
Building Construction - 1.0%
Daiwa House Industry Co., Ltd. Ja 96 1,145
-----------
Heavy Construction-Non Building Construction - 1.2%
Compagnie Generale des Eaux Fr 4 1,008
Hyder PLC UK 28 349
-----------
1,357
-----------
Special Trade Contractors - 0.1%
Tomkins PLC(a) UK 38 161
-----------
- -------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 26.2%
Depository Institutions - 13.1%
Allied Irish Banks PLC Ir 50 815
Banca Nazionale del Lavoro It 90 306
Banco Comercial Portugues SA Pt 10 280
Banco Pinto & Sotto Mayor, SA Pt 40 740
Banco Popular Espanol SA Sp 4 252
Bank of Montreal Ca 5 221
Banque Nationale de Paris Fr 15 1,237
Bayerische HypoVereinsbank G 6 399
Cie Financiere de Paribas Fr 6 593
Commerzbank AG G 8 256
Corporacion Bancaria de Espana SA Sp 18 423
Credito Italiano It 203 1,032
Den Norske Bank ASA No 57 206
Deutsche Bank AG G 13 742
Generale Banque, VVPR Strips Be (b) (b)
Lloyds Bank PLC UK 70 1,127
Merita Ltd., Class A Fi 205 1,214
Royal Bank of Scotland Group PLC UK 21 495
Standard Chartered PLC UK 62 1,121
Svenska Handelsbanken Sw 21 774
The Bank of Tokyo Mitsubishi Ja 81 1,195
UBS AG Sz 2 705
Westpac Banking Corp. Au 130 995
-----------
15,128
-----------
</TABLE>
7
<PAGE>
Investment Portfolio/April 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - CONT.
Financial Services - 1.1%
Halifax PLC UK 93 $ 1,311
-----------
Holding & Other Investment Offices - 0.9%
Fortis AG-CVG Be 5 23
Fortis AG-STRIP VVPR Be 41 (b)
Zurich Allied AG Sz 2 1,032
-----------
1,055
-----------
Holding Companies - 3.2%
CGU PLC UK 35 553
Cheung Kong (Holdings) Ltd. HK 232 2,110
Fortis Amev NV Ne 30 1,080
-----------
3,743
-----------
Insurance Carriers - 2.1%
Assurances Generales de France, Fr 15 791
AXA Fr 11 1,410
Toro Assicurazioni It 16 240
-----------
2,441
-----------
Investment Companies - 3.6%
Henderson Japanese Smaller Companies Trust UK 1,250 935
Irish Investment Fund, Inc. Ir 63 1,135
Korea Fund, Inc. Ko 66 826
Morgan Stanley Emerging Mkts 12 145
Scudder New Asia Fund, Inc. 12 152
Templeton Emerging Markets Fund, Inc. 3 43
World Equity Benchmark Share - Japan Ja 83 992
-----------
4,228
-----------
Nondepository Credit Institutions - 1.8%
Nichiei Co., Ltd. Ja 11 979
Promise Co., Ltd. Ja 19 1,087
-----------
2,066
-----------
Real Estate - 0.4%
New World Development Co., Ltd. HK 205 508
-----------
</TABLE>
8
<PAGE>
Investment Portfolio/April 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANUFACTURING - 44.5%
<S> <C> <C> <C>
Chemicals & Allied Products - 8.3%
Akzo Nobel NV Ne 12 $ 561
BASF AG G 13 590
Bayer AG G 13 534
E.I. DuPont de Nemours & Co. 7 487
Glaxo Holdings PLC UK 35 1,035
Henkel KGAA G 9 708
Hoechst AG G 14 650
Kao Corp. Ja 44 1,116
Kemira Oyj Fi 47 305
Novartis Sz 1 854
Rhone Poulenc, Class A Fr 18 862
SmithKline Beecham PLC UK 105 1,386
Yamanouchi Pharmaceutical Co. Ja 18 570
-----------
9,658
-----------
Communications Equipment - 2.8%
Racal Electronics PLC UK 199 1,372
Sony Corp. Ja 8 747
Telefonaktiebolaget LM Ericsson, Class B Sw 43 1,127
-----------
3,246
-----------
Electronic Components - 3.8%
Alcatel Alsthom (Cie Gen El) Fr 6 752
Murata Manufacturing Co., Ltd. Ja 23 1,315
Royal Philips Electronics N.V. ADR Ne 15 1,272
Samsung Electronics Ko 25 1,116
-----------
4,455
-----------
Fabricated Metal - 0.8%
Amcor Ltd. Au 180 970
-----------
Food & Kindred Products - 4.2%
Bass PLC UK 53 831
Carlton Communications PLC UK 73 707
Diageo PLC UK 30 346
Eridania Beghin-Say S.A. Fr 4 500
Groupe Danone Fr 3 884
Kesko Oyj Fi 18 276
Montedison S.P.A. It 318 306
Parmalat Finanziara S.P.A. It 150 216
Perdiago S.A. Bz 245,000 303
Unilever NV Ne 7 482
-----------
4,851
-----------
Household Appliances - 0.5%
Electrolux AB, Series B Sw 26 537
-----------
</TABLE>
9
<PAGE>
Investment Portfolio/April 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
MANUFACTURING - CONT.
<S> <C> <C> <C>
Machinery & Computer Equipment - 3.8%
BTR Siebe PLC UK 108 $ 551
Canon, Inc. Ja 46 1,124
Hitachi Ltd. Ja 110 803
Mannesmann AG UK 5 653
Sumitomo Heavy Industries, Ltd. (a) Ja 530 1,274
-----------
4,405
-----------
Measuring & Analyzing Instrument - 0.4%
Fuji Photo Film Co., Ltd. Ja 11 415
-----------
Paper Products - 3.8%
Aracruz Celulose S.A., ADR Bz 27 540
Jefferson Smurfit Group PLC Ir 98 262
Mo och Domsjo AB, Class B Sw 17 446
Royal Koninklijke PTT Nederland NV Ne 31 1,281
Stora Enso Oyj, Class R Fi 119 1,391
TNT Post Group NV Ne 18 479
-----------
4,399
-----------
Petroleum Refining - 5.3%
BP Amoco PLC ADR UK 9 1,054
Chevron Corp. 6 589
Compagnie Francaise de Petroleum,
Total B Shares Fr 5 745
ENI It 45 296
Mobil Corp. 9 932
Petro-Canada Ca 16 224
Repsol S.A. Sp 23 372
Royal Dutch Petroleum Co. Ne 8 472
Royal Dutch Petroleum Co. Ne 10 569
YPF Sociedad Anonima ADR Ar 21 882
-----------
6,135
-----------
Primary Metal - 0.3%
Pirelli S.P.A. It 101 309
-----------
Printing & Publishing - 0.5%
Mondadori Arnoldo Editore S.P.A. It 30 533
-----------
Rubber & Plastic - 1.2%
Bridgestone Corp. Ja 34 911
Michelin, Class B Fr 10 433
-----------
1,344
-----------
</TABLE>
10
<PAGE>
Investment Portfolio/April 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Stone, Clay, Glass & Concrete - 3.6%
Cimentos de Portugal S.A. Pt 37 $ 1,021
CRH PLC UK 64 1,264
Hanson PLC UK 55 547
Holderbank Financiere Glaris AG Sz (b) 573
Lafarge S.A. Fr 8 775
-----------
4,180
-----------
Tobacco Products - 0.6%
Allied Zurich PLC UK 29 396
B.A.T. Industries PLC UK 29 251
-----------
647
-----------
Transportation Equipment - 4.6%
DaimlerChrysler AG UK 6 544
GKN PLC UK 78 1,332
Honda Motor Co. Ltd. Ja 23 1,013
MAN AG G 44 1,374
Toyota Motor Corp. Ja 11 312
Volvo AB Sw 30 801
-----------
5,377
-----------
- -------------------------------------------------------------------------------
MINING & ENERGY - 0.9%
Oil & Gas Field Services
Petroleum Geo-Services(a) No 61 1,032
-----------
- -------------------------------------------------------------------------------
RETAIL TRADE - 6.1%
Apparel & Accessory Stores - 0.9%
Hennes & Mauritz AB Sw 13 1,097
-----------
Food Stores - 1.7%
IFIL Finanziaria di Partecipazioni S.P.A. It 2 1
Koninklijke Ahold NV Ne 10 354
Tesco PLC UK 138 410
Vedior NV Ne 26 579
Vendex International NV Ne 26 658
-----------
2,002
-----------
General Merchandise Stores - 1.6%
Ito-Yokado Co., Ltd. Ja 18 1,105
Metro AG G 10 724
-----------
1,829
-----------
Miscellaneous Retail - 1.2%
Centros Comerciales Sp 20 478
Pinault-Printemps S.A. Fr 6 946
-----------
1,424
-----------
</TABLE>
11
<PAGE>
Investment Portfolio/April 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
MANUFACTURING - CONT.
<S> <C> <C> <C>
Restaurants - 0.7%
TelePizza S.A.(a) Sp 126 $ 801
-----------
- -------------------------------------------------------------------------------
SERVICES - 5.6%
Amusement & Recreation - 0.8%
Ladbroke Group PLC UK 194 945
-----------
Computer Related Services - 1.8%
Cap Gemini S.A. Fr 6 904
Dixons Group PLC UK 54 1,150
-----------
2,054
-----------
Computer Software - 2.0%
Ing C. Olivetti & S.P.A. It 352 1,224
Misys PLC UK 55 513
SAP AG G 2 561
-----------
2,298
-----------
Hotels, Camps & Lodging - 1.0%
Accor S.A. Fr 4 1,151
-----------
- -------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 14.2%
Broadcasting - 0.4%
Mediaset S.P.A. It 48 412
-----------
Communications - 1.0%
Vodafone Group PLC UK 61 1,124
-----------
Electric Services - 1.3%
Empresa Nacional de Electricidad Sp 45 993
Korea Eletric Power Corp., ADR Ko 32 526
-----------
1,519
-----------
Gas Services - 1.4%
BG PLC UK 160 900
Centrica PLC UK 332 674
-----------
1,574
-----------
</TABLE>
12
<PAGE>
Investment Portfolio/April 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Telecommunications - 10.1%
British Telecommunications PLC UK 60 $ 1,008
COLT Telecom Group PLC UK 59 1,102
France Telecom S.A. Fr 13 1,019
Hong Kong Telecommunications Ltd. HK 146 390
Nippon Telegraph & Telephone Corp. Ja (b) 1,469
NOKIA OYJ Fi 16 1,238
NTT Mobile Communication Network, Inc. Ja (b) 996
SK Telecom Co. Ltd. ADR Ko 57 797
Telecel-Comunicacaoes Pessoais, S.A. Pt 7 911
Telecom Argentina Stet - France Telecom S.A. Ar 15 518
Telecom Italia S.P.A. It 153 824
Telecomunicacoes Brasileiras S.A. Bz 11 1,003
Telecomunicacoes Brasileiras ADR Bz 11 1
Telefonos de Mexico S.A. Mx 109 411
-----------
11,687
-----------
TOTAL COMMON STOCKS (cost of $96,375) 116,354
-----------
PREFERRED STOCK - 0.1%
- -------------------------------------------------------------------------------
CONSTRUCTION - 0.1%
Heavy Construction-Non Building Construction
Hyder PLC, 7.875% (cost of $41) UK 30 58
-----------
WARRANTS - 0.0%
- -------------------------------------------------------------------------------
CONSTRUCTION - 0.0%
Heavy Construction-Non Building Construction
Compagnie Generale des Eaux-Vivendi Fr 9 21
-----------
- -------------------------------------------------------------------------------
FINANCE INSURANCE & REAL ESTATE - 0.0%
Depository Institutions
Siam Commercial Bank Public Co., Ltd. Th 37 (b)
TOTAL WARRANTS - 0.2% (cost of $6) 21
-----------
TOTAL INVESTMENTS - 100.6% (cost of $96,422)(d) 116,433
-----------
SHORT-TERM OBLIGATIONS - 0.9% PAR
- -------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp.,
dated 04/30/99 due 05/03/99 at 4.870%, collateralized by U.S.
Treasury bonds and note with various maturities to 2015, market
value $1,035 (repurchase proceeds $1,016) $1,016 1,016
-----------
</TABLE>
13
<PAGE>
Investment Portfolio/April 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
OTHER ASSETS & LIABILITIES, NET - 1.5% $ (1,719)
- -------------------------------------------------------------------------------
NET ASSETS - 100% $ 115,730
===========
</TABLE>
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 $96,435.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Summary of Securities by
Country Country Value % of Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
United Kingdom UK $ 26,205 22.5
Japan Ja 18,568 15.9
France Fr 14,031 12.1
Netherlands Ne 7,787 6.7
Germany G 6,538 5.6
Italy It 5,699 4.9
Sweden Sw 4,783 4.1
Finland Fi 4,424 3.8
Spain Sp 4,120 3.5
Korea Ko 3,265 2.8
Switzerland Sz 3,164 2.7
Hong Kong HK 3,008 2.6
Portugal Pt 2,952 2.5
United States 2,348 2.0
Ireland Ir 2,212 1.9
Australia Au 1,965 1.7
Brazil Bz 1,847 1.6
Argentina Ar 1,400 1.2
Norway No 1,238 1.1
Canada Ca 445 0.4
Mexico Mx 411 0.4
Belgium Be 23 0.0
Thailand Th - 0.0
----------- ---------
$116,433 100.0
=========== =========
</TABLE>
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
---------- ---------------------------------
<S> <C>
ADR American Depositary Receipt
GDS Global Depositary Shares
STRIP Separately Traded Receipt of
Interest and Principal
</TABLE>
See notes to financial statements.
14
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1999 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments at value (cost $96,422) $ 116,433
Short-term obligations 1,016
----------
117,449
Receivable for:
Investments sold $ 510
Dividends 399
Foreign tax reclaims 47
Fund shares sold 26
Other 12 994
------ ----------
Total Assets 118,443
LIABILITIES
Payable for:
Investments purchased 1,958
Fund shares repurchased 643
Accrued:
Deferred Trustee fees 3
Other 109
------
Total Liabilities 2,713
---------
NET ASSETS $ 115,730
=========
Net asset value & redemption price per share -
Class A ($55,867/4,391) $ 12.72(a)
=========
Maximum offering price per share - Class A
($12.72/0.9425) $ 13.50(b)
=========
Net asset value & offering price per share -
Class B ($55,761/4,428) $ 12.59(a)
=========
Net asset value & offering price per share -
Class C ($1,276/100) $ 12.70(a)
=========
Net asset value & offering price per share -
Class Z ($2,826/222) $ 12.73
=========
COMPOSITION OF NET ASSETS
Capital paid in $ 104,846
Overdistributed net investment income (180)
Accumulated net realized loss (8,936)
Net unrealized appreciation (depreciation) on:
Investments 20,011
Foreign currency (11)
----------
$ 115,730
=========
</TABLE>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
15
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 873
Interest 113
---------
Total investment income (net of nonreclaimable
foreign taxes withheld at source which
amounted to $115) 986
EXPENSES
Management fee $ 438
Service fee 145
Distribution fee - Class B 214
Distribution fee - Class C 5
Transfer agent 197
Bookkeeping fee 25
Registration fee 15
Custodian fee 75
Audit fee 17
Trustees fee 5
Reports to shareholders 6
Legal fee 1
Other 15 1,158
------- ---------
Net Investment Loss (172)
---------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments (8,970)
Foreign currency transactions 6
-------
Net Realized Loss (8,964)
Net change in unrealized appreciation
(depreciation) during the period on:
Investments 22,547
Foreign currency transactions (56)
-------
Net Change in Unrealized Appreciation 22,491
---------
Net Gain 13,527
---------
Increase in Net Assets from Operations $ 13,355
=========
</TABLE>
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Year ended
(in thousands) April 30 October 31
=============== ===========
INCREASE (DECREASE) IN NET ASSETS 1999(a) 1998
<S> <C> <C>
Operations:
Net investment loss $ (172) $ (76)
Net realized gain (loss) (8,964) 11,751
Net unrealized appreciation (depreciation) 22,491 (21,070)
-------- --------
Net Increase (Decrease) from Operations 13,355 (9,395)
Distributions:
From net investment income - Class A - (181)
In excess of net investment income - Class A - (185)
From net realized gains - Class A (4,278) (6,412)
From net realized gains - Class B (4,151) (4,631)
From net investment income - Class C - (1)
In excess of net investment income - Class C - (1)
From net realized gains - Class C (85) (30)
-------- --------
4,841 (20,836)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 62,777 41,507
Receipts for shares issued in the acquisition
of Colonial International Fund for Growth - 25,736
Value of distributions reinvested - Class A 3,628 5,525
Cost of shares repurchased - Class A (71,317) (39,191)
-------- --------
(4,912) 33,577
-------- --------
Receipts for shares sold - Class B 9,409 10,506
Receipts for shares issued in the acquisition
of Colonial International Fund for Growth - 44,615
Value of distributions reinvested - Class B 3,730 4,123
Cost of shares repurchased - Class B (17,282) (17,601)
-------- --------
(4,143) 41,643
-------- --------
Receipts for shares sold - Class C 396 589
Receipts for shares issued in the acquisition
of Colonial International Fund for Growth - 842
Value of distributions reinvested - Class C 80 32
Cost of shares repurchased - Class C (416) (219)
-------- --------
60 1,244
-------- --------
Receipts for shares sold - Class Z 2,691 -
-------- --------
2,691 -
-------- --------
Net Increase (Decrease) from Fund
Share Transactions (6,304) 76,464
-------- --------
Total Increase (Decrease) (1,463) 55,628
</TABLE>
(a) Class Z shares were initially offered on February 16, 1999.
Statement of Changes in Net Assets continued on following page.
See notes to financial statements.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Year ended
April 30 October 31
================ ============
(in thousands) 1999 (a) 1998
<S> <C> <C>
NET ASSETS
Beginning of period $ 117,193 $ 61,565
---------- ---------
End of period (net of overdistributed and
including underdistributed net investment
income of $180 and $182, respectively) $ 115,730 $117,193
========== =========
NUMBER OF FUND SHARES
Sold - Class A 5,131 3,227
Issued in the acquisition of Colonial
International Fund for Growth - 1,838
Issued for distributions reinvested - Class A 303 451
Repurchased - Class A (5,791) (3,039)
---------- ---------
(357) 2,477
---------- ---------
Sold - Class B 770 824
Issued in the acquisition of Colonial
International Fund for Growth - 3,211
Issued for distributions reinvested - Class B 314 340
Repurchased - Class B (1,417) (1,392)
---------- ---------
(333) 2,983
---------- ---------
Sold - Class C 32 44
Issued in the acquisition of Colonial
International Fund for Growth - 60
Issued for distributions reinvested - Class C 7 3
Repurchased - Class C (34) (18)
---------- ---------
5 89
---------- ---------
Sold - Class Z 222 -
---------- ---------
222 -
---------- ---------
</TABLE>
(a) Class Z shares were initially offered on February 16, 1999.
See notes to financial statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
................................................................................
In the opinion of management of Colonial International Horizons Fund (the Fund),
a series of Liberty Funds Trust III, formerly 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, 1999, and the results of its operations, the changes inits 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 four classes of shares:
Class A, Class B, Class C and Class Z. Class A shares are sold with a front-end
sales charge and a 1.00% contingent deferred sales charge on redemptions made
within eighteen months on an original purchase of $1 million to $5 million.
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 an annual distribution fee. Effective February 16, 1999, the Fund
began offering Class Z shares which are offered continuously at net asset value.
There are certain restrictions on the purchase of Class Z shares, please refer
to a prospectus.
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.
19
<PAGE>
Notes to Financial Statements/April 30, 1999
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
................................................................................
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 (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 is 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.
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.
20
<PAGE>
Notes to Financial Statements/April 30, 1999
- --------------------------------------------------------------------------------
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,
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 nonrebatable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs anl delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
21
<PAGE>
Notes to Financial Statements/April 30, 1999
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
................................................................................
Management fee: Colonial Management Associates, Inc. (the Advisor) is the
investment Advisor 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 Advisor 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 fee: Liberty Funds Services, Inc. (the Transfer Agent), an
affiliate of the Advisor, provides shareholder services for a monthly fee equal
to 0.236% annually of the Fund's average net assets and receives reimbursement
for certain out-of-pocket expenses.
Underwriting discounts, service and distribution fees: Liberty Funds
Distributor, Inc. (the Distributor), a subsidiary of the Advisor, is the Fund's
principal underwriter. During the six months ended April 30, 1999, the Fund has
been advised that the Distributor retained net underwriting discounts of $12,838
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $46, $106,928 and $83, on Class A, Class B and Class C share
redemptions, respectively.
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 Advisor.
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, 1999, purchases and
sales of investments, other than short-term obligations, were $36,614,074 and
$45,145,404, respectively.
22
<PAGE>
Notes to Financial Statements/April 30, 1999
- --------------------------------------------------------------------------------
NOTE 4. PORTFOLIO INFORMATION - CONT.
................................................................................
Unrealized appreciation (depreciation) at April 30, 1999, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $24,612,330
Gross unrealized depreciation (4,614,104)
------------
Net unrealized appreciation $19,998,226
============
Capital loss carryforwards: At April 30, 1999, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
2005 $ 4,354,000
This capital loss carryforward was acquired in the merger with Colonial
International Fund for Growth. The availability for use in offsetting any future
gains may be limited in a given year.
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 5. LINE OF CREDIT
................................................................................
The Fund may borrow up to 33-1/3% 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, 1999.
NOTE 6. MERGER INFORMATION
................................................................................
On July 24, 1998, Colonial International Fund for Growth (CIFFG) was merged into
the Fund by a non-taxable exchange of 1,837,762 Class A shares, 3,210,998 Class
B shares and 60,081 Class C shares of the Fund (valued at $25,735,942,
$44,614,889 and $841,510, respectively) for the 2,624,572, 4,629,964 and 87,046,
respectively, of CIFFG shares then outstanding. The assets of CIFFG acquired
included unrealized appreciation of $10,684,592. The aggregate net assets of the
Fund and CIFFG immediately after the merger were $132,217,563.
23
<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
---------------------------------------------------
1999
Class A Class B Class C Class Z(a)
------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $12.260 $12.140 $ 12.240 $ 11.950
------- -------- -------- --------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (loss)(a) 0.005 (0.041) (0.041) 0.010
Net realized and
unrealized loss 1.403 1.389 1.409 0.770
------- -------- -------- --------
Total from Investment
Operations 1.408 1.348 1.368 0.780
------- -------- -------- --------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
Net investment income (0.948) (0.898) (0.908) -
In excess of net investment income - - - -
From net realized gains - - - -
------- -------- -------- --------
Total Distributions Declared
to Shareholders (0.948) (0.898) (0.908) -
------- -------- -------- --------
Net asset value -
End of period $12.720 $12.590 $12.700 $12.730
======= ======== ======== ========
Total return (b) 11.96%(d) 11.54%(d) 11.62%(d) 6.53%(d)
======= ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 1.61%(f) 2.36%(f) 2.28% (f) 1.53%(f)
Net investment income (e) 0.08%(f) (0.67)%(f) (0.59)%(f) 0.16%(f)
Portfolio turnover 33%(d) 33%(d) 33% (d) 33%(d)
Net assets at end
of period (000) $ 55,867 $55,761 $ 1,276 $2,826
</TABLE>
(a) Class Z share were initially offered on February 16, 1999. Per share
amounts reflect activity from that date.
(b) Per share data was calculated using the average shares outstanding during
the period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokeage
arrangements had no impact.
(f) Annualized.
24
<PAGE>
FINANCIAL HIGHLIGHTS- CONT.
<TABLE>
<CAPTION>
Year ended October 31
- -------------------------------------
1998
Class A Class B Class C
- -------- --------- ----------
<S> <C> <C>
$15.260 $15.070 $15.220
- -------- -------- --------
0.032 (0.062) (0.061)
(0.222) (0.208) (0.181)
- -------- -------- --------
(0.190) (0.270) (0.242)
- -------- -------- --------
(0.074) - (0.039)
(0.076) - (0.039)
(2.810) (2.660) (2.660)
- -------- -------- --------
(2.960) (2.660) (2.738)
- -------- -------- --------
$ 12.110 $ 12.140 $ 12.240
======== ======== ========
(1.14)%(d) (1.76)%(d) (1.53)%(d)
======== ======== ========
1.68%(f) 2.43%(f) 2.43%(f)
0.24%(f) (0.51)%(f) (0.51)%(f)
100%(d) 100%(d) 100%(d)
</TABLE>
25
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each
period are as follows:
<TABLE>
<CAPTION>
Year ended October 31
--------------------------------
1997
Class A Class B Class C(a)
------- ------- ----------
<S> <C> <C> <C>
Net asset value -
Beginning of period $14.320 $14.230 $15.910
------- ------- -------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (b) 0.098 (0.011) (0.017)
Net realized and
unrealized gain (loss) 2.296 2.275 (0.673)(c)
------- ------- -------
Total from Investment
Operations 2.394 2.264 (0.690)
------- ------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
Net investment income (0.030) - -
From net realized gains (1.424) (1.424) -
------- ------- -------
Total Distributions Declared
to Shareholders (1.454) (1.424) -
------- ------- -------
Net asset value -
End of period $15.260 $15.070 $15.220
======= ======= =======
Total return (d) 17.87% 16.98% (4.34)%(e)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.62%(f) 2.37%(f) 2.39%(f)(g)
Net investment income (loss) 0.67%(f) (0.08)%(f) (0.42)%(f)(g)
Portfolio turnover 67% 67% 67%
Net assets at end
of period (000) $34,645 $26,817 $ 103
</TABLE>
(a) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(b) Per share data was calculated using the average shares outstanding during
the period.
(c) The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to the timing of sales
and repurchases of Fund shares in relation to fluctuating market values of
the investments of the Fund.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokeage
arrangements had no impact. Prior year's ratios are net of benefits
received, if any.
(g) Annualized.
26
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
<CAPTION>
Year ended October 31
- -------------------------------------------------------------------
1996 1995 1994
Class A Class B Class A Class B Class A Class B
- -------- ------- ------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
$12.430 $12.380 $13.160 $13.110 $12.160 $12.130
- ------- ------- ------- ------- ------- -------
0.075 (0.026) 0.102 0.009 0.114 0.019
2.525 2.506 (0.496) (0.489) 1.104 1.097
- ------- ------- ------- ------- ------- -------
2.600 2.480 (0.394) (0.480) 1.218 1.116
- ------- ------- ------- ------- ------- -------
(0.080) - (0.106) (0.020) (0.118) (0.036)
(0.630) (0.630) (0.230) (0.230) (0.100) (0.100)
- ------- ------- ------- ------- ------- -------
(0.710) (0.630) (0.336) (0.250) (0.218) (0.136)
- ------- ------- ------- ------- ------- -------
$14.320 $14.230 $12.430 $12.380 $13.160 $13.110
======= ======= ======= ======= ======= =======
21.69% 20.70% (2.88)% (3.56)% 10.14% 9.28%
======= ======= ======= ======= ======= =======
1.61%(f) 2.36%(f) 1.66% 2.41% 1.70% 2.45%
0.56%(f) (0.19)%(f) 0.82% 0.07% 0.90% 0.15%
84% 84% 65% 65% 15% 15%
$36,655 $25,482 $31,297 $20,931 $36,830 $22,458
</TABLE>
27
<PAGE>
HOW TO REACH US
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.
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 Funds Distributor,
Inc., call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
28
<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 Funds Distributor 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.)
29
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
30
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial International Horizons Fund is:
Liberty Funds Services, 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 the most recent
copy of the Liberty Funds Distributor, Inc. Performance Update.
*Effective October 1, 1998, Colonial Investors Service Center, Inc. -- the
Transfer Agent for Colonial, Crabbe Huson, Newport and Stein Roe Advisor
funds -- changed its name to Liberty Funds Services, Inc.
31
<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)
JOHN V. CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
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)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (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, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
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COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR]
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