<PAGE>
[graphic omitted]
COLONIAL GLOBAL UTILITIES FUND SEMIANNUAL REPORT
APRIL 30, 1999
-------------------------------
NOT FDIC May Lose Value
Insured No Bank Guarantee
-------------------------------
<PAGE>
COLONIAL GLOBAL UTILITIES FUND HIGHLIGHTS
NOVEMBER 1, 1998 - APRIL 30, 1999
INVESTMENT OBJECTIVE: Colonial Global Utilities Fund seeks current income and
long-term growth of capital and income.
THE FUND IS DESIGNED TO OFFER:
|X| Long-term growth potential
|X| Worldwide diversification
|X| Experienced professional management
PORTFOLIO MANAGERS' COMMENTARY: "The Fund was largely invested in U.S. and
core-European utilities, but began investing selectively in Asian and Latin
American stocks during the period. Although we are encouraged by improvements in
emerging markets, we plan to keep the Fund's exposure to these markets limited
until we are convinced that these economies have genuinely stabilized."
- Ophelia Barsketis and Deborah Jansen
COLONIAL GLOBAL UTILITIES FUND PERFORMANCE
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------
Inception dates 10/15/91 3/27/95 3/27/95
- -------------------------------------------------------------------------------
Six-month distributions declared $0.645 $0.596 $0.596
per share
- -------------------------------------------------------------------------------
Six-month total returns, assuming 12.63% 12.22% 12.21%
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC)
- -------------------------------------------------------------------------------
Net asset value per share on 4/30/99 $16.13 $16.11 $16.12
TOP FIVE COMMON STOCK HOLDINGS(1) TOP FIVE COUNTRIES(1)
(as of 4/30/99) (as of 4/30/99)
- --------------------------------- ---------------------------------
1. KN Energy 3.1% 1. United States 59.3%
2. Grupo Televisa 3.1% 2. Great Britain 8.6%
3. Swisscom. 3.1% 3. Finland 4.7%
4. Waste Management 3.0% 4. France 4.6%
5. Williams Cos. 3.0% 5. Mexico 3.1%
(1) Countries and holdings are shown 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.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of 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.
Last November, concerns about recessions in Southeast Asia and Japan, and about
the ability of U.S. companies to maintain profits, created a degree of
uncertainty. Despite steadily declining interest rates in a number of countries,
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 the developing markets of a number of
oil-producing countries. This rally caused utility stock prices to struggle
because investors rotated out of defensive investments, such as utilities, in
favor of larger growth stocks.
The Fund maintained its emphasis on a diversified portfolio of high-quality
stocks with attractive growth prospects. Since the world's markets are not
synchronized, the portfolio's asset allocation among international and U.S.
markets seeks to provide shareholders with a stabilizing effect during periods
of market uncertainty, as well as current income and long-term growth potential.
We continue to believe that a long-term approach combined with broad
diversification remains one of the best strategies for balancing the risks and
rewards of global 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 Global Utilities Fund and for giving us the
opportunity to serve your investment needs.
Sincerely,
/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 or on the pages that follow will
continue.
<PAGE>
PORTFOLIO MANAGERS' REPORT
OPHELIA BARSKETIS and DEBORAH JANSEN are portfolio co-managers of Colonial
Global Utilities Fund. Ms. Barsketis and Ms. Jansen are also senior vice
presidents of Stein Roe & Farnham Incorporated, the portfolio's Advisor.
PERFORMANCE REFLECTS FUND'S CONSERVATIVE APPROACH
The Fund generated a six-month total return of 12.63% for Class A shares, based
on net asset value. The Fund outperformed the Standard & Poor's Utility Index
and underperformed the Morgan Stanley Capital International World Index, which
posted total returns of 2.94% and 19.57%, respectively.(1)
- ------------
(1) The Morgan Stanley Capital International World Index ND is an unmanaged
index that tracks the performance of global stocks. The Standard & Poor's
Utilities Index is an unmanaged index that tracks the performance of
domestic utility stocks. Unlike mutual funds, indices are not investments,
do not incur fees or expenses, and it is not possible to invest in an index.
In an environment that favored more growth-oriented sectors, we were pleased
with the performance of the Fund. We attribute performance to the Fund's
diversification across a variety of countries and utilities sectors, and our
core holdings in quality companies. However, the beginning of 1999 proved a
difficult period for domestic and European utility stocks. Generally speaking,
utility stocks were depressed in recent months as investors sought stocks that
would benefit from a reacceleration of economic growth. Our limited exposure to
developing economies may have slightly hampered performance during the second
half of the period, but we believe our conservative investment strategy provided
greater flexibility in an uncertain investment environment and reduced
volatility for risk-averse investors.
FUND MANAGERS LOOKED TO DEVELOPING MARKETS
In the prior period, we reduced the Fund's direct exposure to Asian and emerging
markets in favor of large positions in U.S. and European utilities. Over the
course of this six-month period, the Fund maintained its overweighting in these
regions, but cautiously entered Asia and Latin America. Although a number of
global economies showed signs of positive growth, we did not invest more
substantially due to concerns that these markets were not yet out of the woods.
FOCUS ON TELECOMMUNICATIONS
Although we maintained a portfolio diversified among different regions and
subsectors of the utilities market, such as telephone, gas, electricity and
water, we held the largest percentage of the portfolio's assets in the
telecommunications sector. We looked for companies that offered attractive
opportunities driven by continuing economic growth as well as privatization,
deregulation and merger activity. Encouraged by signs of Mexico's improving
economy, we acquired Grupo Televisa (3.09% of net assets), the largest media
company in the Spanish-speaking world. We took advantage of the stock's
attractive price, and the company's earnings grew significantly during the
second half of the period. In the U.S., we own Tellabs, Inc. (2.67% of net
assets), a promising telecommunications equipment company. Core holdings, such
as AT&T (2.61% of net assets), continued to perform well for us. AT&T has
remained a solid but dynamic company, as evidenced by its recent agreement to
acquire MediaOne. No longer the "sleepy Ma Bell," AT&T plans to offer consumers
the ability to receive local phone service, long distance phone service, cable
and Internet access over a single line.
OPPORTUNITIES FOUND IN CHALLENGING MARKET
Electric utility stocks in the U.S. and Europe faced a number of challenges.
This sector continued to be affected by deregulation, privatization, and mergers
and acquisitions. While deregulation helped the performance of some electric
stocks, others struggled because these issues remained unresolved in some
regions. Some electric companies also have diversified into other sectors in
order to increase their growth potential. AES Corporation (2.90% of net assets),
a Virginia-based power producer, increased its market presence through a number
of acquisitions and project developments over the past few years. This holding
did not perform well early in the period due to its exposure to Asia and Latin
America, but it has rebounded nicely over the last few months. PECO Energy
Company (2.87% of net assets), a Philadelphia-based electric company, saw its
stock climb approximately 10% since Pennsylvania approved deregulation this past
January. On the other hand, the direction of electric utility stocks in Arizona
and Texas, such as Pinnacle West (2.85% of net assets) and Texas Utilities
(2.84% of net assets), remained unclear due to unresolved regulatory issues.
We saw an improvement in natural gas stocks (10% of net assets) during this
period due to price increases in oil and other energy commodities, as well as
growing demand for natural gas. In March and April, oil prices rose sharply
after the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC oil
producers agreed to cut production. In this sector, we acquired Williams
Companies, Inc. (2.95% of net assets), a domestic company that transports and
sells natural gas and petroleum products, and also manages a successful
telecommunications division.
ENCOURAGED BY SIGNS OF RECOVERY
We are encouraged by the early signs of recovery in a number of global
economies, and believe the U.S. should continue to show solid growth in 1999 -
provided that inflation remains in check and interest rates do not rise
significantly. Going forward, we plan to focus on domestic and European
utilities, while exploring quality companies in developing economies. We expect
that stocks of U.S. and European electric companies will continue to face
challenges if interest rates rise, as they have in the last few months. Although
deregulation and merger activity may ultimately lead to stock price gains, the
direction of electric utility stocks will remain uncertain until these issues
are resolved. As always, we will monitor opportunities that may arise as a
result of regulatory changes. We believe that the Fund continues to offer
risk-averse investors an opportunity to participate in the long-term growth
potential of U.S. and international utility stocks.
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/99
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
INCEPTION 10/15/91 3/27/95 3/27/95
NAV POP NAV W/CDSC NAV W/CDSC
- --------------------------------------------------------------------------------
1 YEAR 9.04% 2.77% 8.22% 3.22% 8.22% 7.22%
- --------------------------------------------------------------------------------
5 YEARS 13.75 12.41 13.04 12.81 13.06 13.06
- --------------------------------------------------------------------------------
LIFE 12.53 11.65 12.06 12.06 12.07 12.07
- --------------------------------------------------------------------------------
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. The CDSC returns reflect the maximum applicable charges of 5% for one
year and 2% for five years for Class B shares; and 1% for one year for Class C
shares. Performance for different share classes will vary based on differences
in sales charges and fees associated with each class.
The Fund initially commenced operations as the Liberty Financial Utilities Fund
on 10/15/91. Performance shown is based, in part, on the performance of the
Liberty Financial Utilities Fund, which had a different expense structure than
the Fund.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Class B and Class C share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception dates of the newer class shares. These Class A
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between Class A shares and the newer class shares. Had the expense
differential been reflected, the returns for periods prior to the inception date
of the newer class shares would have been lower.
<PAGE>
INVESTMENT PORTFOLIO
APRIL 30, 1999 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 93.7% COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
CONSTRUCTION - 2.8%
HEAVY CONSTRUCTION-NON BUILDING CONSTRUCTION
Vivendi Fr 22 $ 5,102
---------
...............................................................................
FINANCE, INSURANCE & REAL ESTATE - 1.9%
REAL ESTATE INVESTMENT TRUSTS
Liberty Property Trust 72 1,742
Prologis Trust 82 1,722
---------
3,464
---------
...............................................................................
MANUFACTURING - 8.9%
COMMUNICATIONS EQUIPMENT
Lucent Technologies, Inc. 84 5,033
Nokia Corp. ADR Fi 64 4,733
Portugal Telecom SA Pt 39 1,628
Tellabs, Inc. (a) 45 4,897
---------
16,291
---------
...............................................................................
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - 80.1%
BROADCASTING - 3.1%
Grupo Televisa SA (a) Mx 138 5,658
---------
Electric Services - 29.5%
AES Corp. (a) 106 5,315
British Energy PLC UK 608 5,168
CMS Energy Corp. 83 3,652
Edison International 213 5,211
Electricidade de Portugal SA ADR Pt 46 1,702
FPL Group, Inc. 91 5,136
National Power PLC ADR UK 53 1,865
NIPSCO Industries, Inc. 189 5,248
PECO Energy Co. 111 5,266
Pinnacle West Capital Corp. 134 5,213
Scottish Power PLC UK 420 3,464
Sierra Pacific Resources 47 1,681
Texas Utilities Co. 131 5,203
---------
54,124
---------
GAS SERVICES - 10.0%
Columbia Energy Group 74 3,556
Kinder Morgan Energy Partners, L.P. 97 3,621
KN Energy, Inc. 276 5,700
Williams Companies, Inc. 115 5,410
---------
18,287
---------
SANITARY SERVICES - 4.9%
American Water Works Co., Inc. 122 3,455
Waste Management, Inc. 98 5,543
---------
8,998
---------
TELECOMMUNICATIONS - 32.6%
AirTouch Communications, Inc. (a) 53 4,958
Ameritech Corp. 25 1,711
AT&T Corp. 95 4,775
COLT Telecom Group ADR (a) UK 70 5,339
France Telecom SA Fr 42 3,399
MCI WorldCom, Inc. (a) 57 4,660
SBC Communications, Inc., Class A 61 3,399
Sonera Group Oyj Fi 194 3,848
Sprint Corp. 48 4,933
Sprint PCS (a) 35 1,502
Swisscom AG (a) Sz 15 5,621
Tele Norte Leste Participacoes SA ADR Bz 106 1,800
Telecom Corporation of New Zealand NZ 125 5,128
Telecom Italia SPA It 637 3,428
Telefonica de Espana ADR Sp 37 5,156
---------
59,657
---------
TOTAL COMMON STOCKS (cost of $125,099) 171,581
---------
CONVERTIBLE PREFERRED STOCK - 1.9%
- -------------------------------------------------------------------------------
MANUFACTURING - 1.9%
COMMUNICATIONS EQUIPMENT
LM Ericsson Telecommunications
(cost of $1,482) 4.250% Sw 504 3,530
---------
CORPORATE FIXED-INCOME BOND - 2.5% CURRENCY PAR
- -------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - 2.5%
ELECTRICAL DISTRIBUTION
Hydro-Quebec,
(cost of $4,328) 8.050% 07/07/24 C$ $ 4,000 4,618
---------
TOTAL INVESTMENTS - 98.1% (cost of $130,909) 179,729
---------
SHORT-TERM OBLIGATIONS - 2.3%
- -------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp.,
dated 04/30/99, due 05/03/1999 at 4.870%, collateralized
by U.S. Treasury bonds and note with various maturities
to 2015, market value $4,129 (repurchase proceeds
$4,131) $ 4,129 $ 4,129
---------
FORWARD CURRENCY CONTRACTS - 0.0% (c) (17)
- -------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - (0.4)% (665)
- -------------------------------------------------------------------------------
NET ASSETS - 100% $ 183,176
---------
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
(c) As of April 30, 1999, the Fund had entered into the following forward
currency exchange contracts:
Net Unrealized
Contracts In Exchange Settlement (Depreciation)
to Deliver For Date (U.S.$)
---------- ----------- ---------- --------------
eu 1,084 US$ 1,160 05/28/1999 $ (10)
KB 533 US$ 864 05/04/1999 (7)
--------------
$ (17)
==============
Summary of Securities by Country/
Country Currency Value % of Total
- --------------------------------------------------------------------------------
United States $108,542 60.3
United Kingdom UK 15,836 8.8
Finland Fi 8,581 4.8
France Fr 8,501 4.7
Mexico Mx 5,658 3.1
Switzerland Sz 5,621 3.1
Spain Sp 5,156 2.9
New Zealand NZ 5,128 2.9
Canada C$ 4,618 2.6
Sweden Sw 3,530 2.0
Italy It 3,428 1.9
Portugal Pt 3,330 1.9
Brazil Bz 1,800 1.0
-------- -----
$179,729 100.0
======== =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------- ----------------------------
ADR American Depositary Receipts
KB British Pounds
eu European Monetary Unit
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1999 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $130,909) $ 179,729
Short-term obligations 4,129
---------
183,858
Unrealized appreciation on
forward currency contracts $ 2
Receivable for:
Investments sold 3,450
Dividends 660
Fund shares sold 161
Interest 103
Foreign tax reclaims 3
Other 14 4,393
------ ---------
Total Assets 188,251
LIABILITIES
Unrealized depreciation on
forward currency contracts 19
Payable to custodian bank 2,316
Payable for:
Investments purchased 2,215
Fund shares repurchased 283
Accrued:
Deferred Trustees fee 3
Other 239
------
Total Liabilities 5,075
---------
NET ASSETS $ 183,176
=========
Net asset value & redemption price per share -
Class A ($175,671/10,893) $ 16.13 (a)
=========
Maximum offering price per share - Class A
($16.13/0.9425) $ 17.11 (b)
=========
Net asset value & offering price per share -
Class B ($6,390/397) $ 16.11 (a)
=========
Net asset value & offering price per share -
Class C ($1,115/69) $ 16.12 (a)
=========
(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.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Dividends $ 1,552
Interest 249
--------
Total investment income (net of nonreclaimable
foreign taxes withheld at source which
amounted to $23) 1,801
EXPENSES
Management fee $ 121
Administration fee 136
Service fee 228
Distribution fee - Class B 21
Distribution fee - Class C 4
Transfer agent 234
Bookkeeping fee 28
Registration fee 18
Audit fee 8
Trustees fee 7
Reports to shareholders 7
Legal fee 6
Custodian fee 2
Other 363 1,183
------- --------
Net Investment Income 618
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 19,344
Foreign currency transactions (33)
-------
Net Realized Gain 19,311
Net change in unrealized appreciation
during the period on:
Investments 1,347
Foreign currency transactions 13
-------
Net Change in Unrealized Appreciation 1,360
--------
Net Gain 20,671
--------
Increase in Net Assets from Operations $ 21,289
========
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 1999 1998
Operations:
Net investment income $ 618 $ 2,806
Net realized gain 19,311 7,621
Net unrealized appreciation 1,360 18,825
--------- ---------
Net Increase from Operations 21,289 29,252
Distributions:
From net investment income - Class A (721) (2,908)
From net realized gains - Class A (6,355) (10,710)
From net investment income - Class B (5) (37)
From net realized gains - Class B (199) (224)
From net investment income - Class C (1) (9)
From net realized gains - Class C (38) (58)
--------- ---------
13,970 15,306
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 3,046 3,912
Value of distributions reinvested - Class A 6,798 12,984
Cost of shares repurchased - Class A (13,198) (28,521)
--------- ---------
(3,354) (11,625)
--------- ---------
Receipts for shares sold - Class B 1,474 2,120
Value of distributions reinvested - Class B 183 234
Cost of shares repurchased - Class B (656) (935)
--------- ---------
1,001 1,419
--------- ---------
Receipts for shares sold - Class C 62 274
Value of distributions reinvested - Class C 37 58
Cost of shares repurchased - Class C (33) (267)
--------- ---------
66 65
--------- ---------
Net Decrease from Fund
Share Transactions (2,287) (10,141)
--------- ---------
Total Increase 11,683 5,165
NET ASSETS
Beginning of period 171,493 166,328
--------- ---------
End of period (including undistributed
net investment income of $52 and $194,
respectively) $ 183,176 $ 171,493
========= =========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(Unaudited)
Six months ended Year ended
(in thousands) April 30 October 31
---------------- ----------
NUMBER OF FUND SHARES 1999 1998
Sold - Class A 194 263
Issued for distributions reinvested - Class A 439 944
Repurchased - Class A (838) (1,934)
--------- ---------
(205) (727)
--------- ---------
Sold - Class B 94 142
Issued for distributions reinvested - Class B 12 17
Repurchased - Class B (41) (63)
--------- ---------
65 96
--------- ---------
Sold - Class C 4 18
Issued for distributions reinvested - Class C 2 4
Repurchased - Class C (2) (17)
--------- ---------
4 5
--------- ---------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
...............................................................................
In the opinion of management of Colonial Global Utilities Fund (the Fund), a
series of Liberty Funds Trust III, formerly Colonial Trust III, the accomp-
anying 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 in its net assets
and the financial highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
...............................................................................
ORGANIZATION: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund's investment objective is to
seek current income and long-term growth of capital and income. 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 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
share 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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities generally are valued at
the last sale price or, in the case of unlisted or listed securities for which
there were no sales during the day, at current quoted bid prices.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
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.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded
on 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
fluctuations 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,
exposure is typically limited to the change in value of the contract (in U.S.
dollars) over the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on the ex-date (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of 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.
Interest income is recorded on the accrual basis.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
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 0.40% annually of the
Fund's average net assets.
BOOKKEEPING FEE: The Advisor provides bookkeeping and pricing services for
$27,000 per year plus a percentage of the Fund's average net assets as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $50 million No charge
Next $950 million 0.035%
Next $1 billion 0.025%
Next $1 billion 0.015%
Over $3 billion 0.001%
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 $10,590
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of none, $7,197 and $12 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 $46,894,105 and
$44,595,456, respectively.
Unrealized appreciation (depreciation) at April 30, 1999, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 52,258,209
Gross unrealized depreciation (3,437,818)
------------
Net unrealized appreciation $ 48,820,391
============
OTHER: The Fund concentrates its investments in utility securities,
subjecting it to greater risk than a fund that is more diversified.
There are certain additional risks involved when investing in foreign securities
that are not inherent with investments in domestic securities. These risks may
involve foreign currency exchange rate fluctuations, adverse political and
economic developments and the possible prevention of foreign currency exchange
or the imposition of other foreign governmental laws or restrictions.
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 for the
six months ended April 30, 1999.
NOTE 6. COMPOSITION OF NET ASSETS
...............................................................................
Capital paid in $ 115,049
Undistributed net investment income 52
Accumulated net realized gain 19,292
Net unrealized appreciation (depreciation) on:
Investments 48,820
Foreign currency transactions (37)
---------
$ 183,176
=========
NOTE 7. TERMINATION OF MASTER/FEEDER STRUCTURE
...............................................................................
On February 26, 1999, LFC Utilities Trust (the Portfolio) collapsed into Global
Utilities Fund (the Fund) therefore terminating their master/feeder structure.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
(Unaudited)
Six months ended April 30
----------------------------------
1999
Class A Class B Class C
-------- -------- --------
Net asset value - Beginning of period $ 14.920 $ 14.910 $ 14.920
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(b) 0.056 (0.003) (0.003)
Net realized and unrealized gain 1.799 1.799 1.799
-------- -------- --------
Total from Investment Operations 1.855 1.796 1.796
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.065) (0.016) (0.016)
From net realized gains (0.580) (0.580) (0.580)
-------- -------- --------
Total Distributions Declared to
Shareholders (0.645) (0.596) (0.596)
-------- -------- --------
Net asset value - End of period $ 16.130 $ 16.110 $ 16.120
======== ======== ========
Total return (c)(d) 12.63% 12.22% 12.21%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (b)(e)(f) 1.28% 2.03% 2.03%
Net investment (loss) (b)(e)(f) 0.71% (0.04)% (0.04)%
Portfolio turnover (d) 26% 26% 26%
Net assets at end of period (000) $175,671 $ 6,390 $ 1,115
(a) Per share data was calculated the using average shares outstanding during
the period.
(b) Per share amounts and ratios reflect income and expenses assuming inclusion
of the Fund's proportionate share of the income and expenses of LFC
Utilities Trust prior to the termination of their master/feeder fund
structure on February 26, 1999.
(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) Annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each
period are as follows:
Year ended October 31
------------------------------------
1998
Class A Class B Class C
------- ------- -------
Net asset value - Beginning of period $13.720 $13.720 $13.720
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(c) 0.234 0.123 0.123
Net realized and unrealized gain 2.134 2.124 2.134
------- ------- -------
Total from Investment Operations 2.368 2.247 2.257
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.248) (0.137) (0.137)
From net realized gains (0.920) (0.920) (0.920)
------- ------- -------
Total Distributions Declared to
Shareholders (1.168) (1.057) (1.057)
------- ------- -------
Net asset value - End of period $14.920 $14.910 $14.920
======= ======= =======
Total return (d) 18.09% 17.12% 17.20%
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (c) 1.30% 2.05% 2.05%
Net investment income (c) 1.58% 0.83% 0.83%
Net assets at end of period (000) $165,566 $4,957 $ 970
(a) Per share data was calculated using the average shares outstanding during
the period.
(b) Effective July 1, 1997, Class D shares were redesignated to Class C shares.
(c) Per share amounts and ratios reflect income and expenses assuming inclusion
of the Fund's proportionate share of the income and expenses of LFC
Utilities Trust.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended October 31
-----------------------------------
1997
Class A Class B Class C (b)
------- ------- -------
$ 12.000 $ 12.010 $ 12.000
-------- -------- --------
0.328 0.225 0.225
1.740 1.732 1.742
-------- -------- --------
2.068 1.957 1.967
-------- -------- --------
(0.348) (0.247) (0.247)
- - -
-------- -------- --------
(0.348) (0.247) (0.247)
-------- -------- --------
$ 13.720 $ 13.720 $ 13.720
======== ======== ========
17.40% 16.43% 16.53%
======== ======== ========
1.31% 2.06% 2.06%
2.46% 1.71% 1.71%
$ 162,267 $ 3,243 $ 818
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended October 31
-----------------------------------------
1996
Class A Class B Class C (b)
------------ ----------- ---------
Net asset value -
Beginning of period $ 11.080 $11.080 $ 11.080
-------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(c) 0.427 (d) 0.340 (d) 0.340 (d)
Net realized and
unrealized gain (loss) 0.878 0.889 0.879
-------- ------- --------
Total from Investment
Operations 1.305 1.229 1.219
-------- ------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.385) (0.299) (0.299)
From net realized gains - - -
-------- ------- --------
Total Distributions
Declared to Shareholders (0.385) (0.299) (0.299)
-------- ------- --------
Net asset value -
End of period $ 12.000 $12.010 $ 12.000
======== ======= ========
Total return (f) 11.99% 11.25% 11.16%
======== ======= ========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.38% (d) 2.13% (d) 2.13% (d)
Net investment income 3.70% (d) 2.95% (d) 2.95% (d)
Fees and expenses waived
or borne by Liberty Securities
and LFC Utilities Trust - - -
Net assets at end
of period (000) $ 169,840 $ 1,538 $ 584
(a) Net of fees and expenses waived or
borne by Liberty Securities
which amounted to: - - -
(b) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(c) Per share data was calculated using the average shares outstanding
during the period.
(d) Per share amounts and ratios reflect income and expenses assuming inclusion
of the Fund's proportionate share of the income and expenses of LFC
Utilities Trust.
(e) Class B and Class C shares were initially offered on March 27, 1995. Per
share data reflects activity from that date.
(f) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(g) Total return would have been lower had Liberty Securities and LFC Utilities
Trust not waived certain expenses.
(h) Not annualized.
(i) Annualized.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended October 31
----------------------------------------------------------
1995 1994
Class A Class B (e) Class C (b)(e) Class A
-------- -------- -------- -------
$ 10.610 $ 10.420 $10.420 $ 12.150
-------- -------- ------- --------
0.536 (d) 0.248 (d) 0.248 (d) 0.550
0.520 0.665 0.665 (1.430)
-------- -------- ------- --------
1.056 0.913 0.913 (0.880)
-------- -------- ------- --------
(0.517) (0.253) (0.253) (0.500)
(0.069) - - (0.160)
-------- -------- ------- --------
(0.586) (0.253) (0.253) (0.660)
-------- -------- ------- --------
$ 11.080 $ 11.080 $11.080 $ 10.610
======== ======== ======= ========
10.32% (g) 8.82% (h) 8.82% (h) (7.40)%
======== ======== ======= ========
1.29% (d) 2.05% (d)(i) 2.05% (d)(i) 1.20%
5.14% (d) 3.73% (d)(i) 3.73% (d)(i) 4.90%
0.03% 0.02% (i) 0.02% (i) -
$ 211,916 $ 745 $ 307 $260,450
$ 0.002 - - -
<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.
<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.
LIBERTY 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
<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.)
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Global Utilities Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Global Utilities Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call 1-800-426-3750 and
additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Global Utilities
Fund. It 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
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.
<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)
[logo] L I B E R T Y
COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distriburtor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
GU-03/121H-0499 (6/99) 99/708
