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COLONIAL GLOBAL UTILITIES FUND SEMIANNUAL REPORT
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APRIL 30, 2000
[Graphic Omitted]
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PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
During the six-month period ended April 30, 2000, global stock markets moved in
tandem, offering solid growth for much of the period. From early March through
the end of the period, however, volatility sent most major markets into negative
territory. Utilities, a traditionally defensive sector, performed well overall,
led by telecommunications and gas companies that benefited from strong demand.
Colonial Global Utilities Fund maintained its emphasis on a diversified
portfolio of high-quality stocks with attractive growth prospects. As industries
like telecommunications continued to expand globally, they brought growth
potential. We continue to believe that a long-term approach combined with broad
diversification among countries remains one of the best strategies for balancing
the risks and potential rewards of global investing.
We expect a positive global economic growth environment for the remainder of the
Fund's fiscal year, based on the strength in the U.S. economy with support from
improved Southeast Asian economies. Prospects in Europe and Latin America are
also much improved, and the outlook for Japan is hopeful. The investment
environment may be somewhat challenging, however, given actual and anticipated
interest rate increases this year. Nonetheless, if our expectations for
globalization and resulting growth pan out, a sound investment environment for
global utility investing should transpire over the longer-term.
The following report details the strategies employed by your Fund's portfolio
managers during the period. For more information, contact your financial advisor
or visit us on the Internet at www.libertyfunds.com for updates on the Fund. 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 16, 2000
Because market and economic conditions change frequently, there
can be no assurance that the trends described above or on the following pages
will continue or come to pass.
---------------------------------
Not FDIC May lose value
Insured No Bank Guarantee
---------------------------------
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HIGHLIGHTS
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> EARLY MARKET STRENGTH FOR THE UTILITY SECTOR WAS FOLLOWED BY VOLATILITY IN
THE LAST WEEKS OF THE SIX-MONTH PERIOD as rising interest rates created a
drag on utility stock prices. A few select companies supported the
performance of the utilities group.
> GLOBAL MARKET VOLATILITY NEAR THE END OF PERIOD.
The reasons were varied, and their effects spilled over from country to
country. The Fund gave back most of its early gains, but maintained strong
performance in comparison to its benchmark index.
> TELECOMMUNICATIONS AND SELECTED GAS COMPANIES BOASTED STRONGEST GROWTH
because of global demand and a favorable supply-demand environment,
respectively.
COLONIAL GLOBAL UTILITIES FUND OUTPERFORMED INDEX
11/1/99 - 4/30/00
Colonial Global Utilities Fund,
Class A shares, without sales charge 14.69%
MSCI World Index 7.49%
S&P Utility Index 8.65%
Total Returns
Past performance is no guarantee of future results. The Morgan Stanley Capital
International (MSCI) World Index is an unmanaged index that tracks the
performance of global stocks. S&P Utility Index is an unmanaged index that
tracks the performance of domestic utility stocks. Unlike mutual funds, indexes
are not investments, do not incur fees or expenses, and are not professionally
managed. It is impossible to invest directly in an index.
NET ASSET VALUE PER SHARE ON 4/30/00
Class A $17.57
Class B $17.51
Class C $17.53
DISTRIBUTIONS DECLARED PER SHARE FROM 11/1/99 TO 4/30/00
Class A $1.700
Class B $1.665
Class C $1.665
<PAGE>
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PORTFOLIO MANAGER'S REPORT
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TOP FIVE SECTORS
4/30/00 VS. 10/31/99
FUND AS OF FUND AS OF
4/30/00 10/31/99
TELECOM/TELEPHONE 57% 50%
ELECTRIC 19% 22%
GAS 14% 12%
BROADCASTING 3% 3%
MISCELLANEOUS - MANUFACTURING 2% 2%
Unlike sectors in the following financial statements which are based upon
standard industrial classifications, sectors on this page are based upon the
Advisor's defined criteria as used in the investment process.
Sector breakdowns are calculated as a percentage of the total equity holdings.
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to hold or invest in these sectors in the future.
BOUGHT
--------------------------------------------------------------------------------
Montana Power (2.3% of net assets). This once sleepy power company stumbled onto
a winning way to use their existing assets to participate in the communications
industry.
RISING INTEREST RATES HURT UTILITY STOCK PRICES
The Fund's Class A total return for the six-month period ended April 30, 2000
was 14.69%, without a sales charge. The S&P Utility Index returned 8.65% for the
same period. Although the Fund's performance remained strong throughout the
period, most major markets experienced volatility near the period's end and
rising interest rates had a negative effect on utility stocks.
TELECOMMUNICATIONS AND GAS COMPANIES OFFERED THE GREATEST GROWTH POTENTIAL
We maintained an overweight position in telecommunications and companies that
have telecommunications exposure or provide related products, such as equipment.
Although companies in these sectors suffered along with a decline in technology
stocks later in the period, we believe these industries boast strong growth
potential. Therefore, we expect that much of the portfolio's assets will
continue to be allocated to these areas, with selectivity being the key. For
example, we own Enron and Williams Companies (4.4% and 1.9% of net assets,
respectively), both traditional gas companies that have successfully branched
out into the telecommunications business. The stability of the gas operations is
a nice counterpart to their telecommunications operations. Other
telecommunications holdings include Nokia and Ericsson (3.7% and 4.2% of net
assets, respectively). These companies have strong global exposure and growth
potential.
Rising gas prices helped holdings such as El Paso Energy and Kinder Morgan (1.9%
and 3.0% of net assets, respectively). These companies have been good long-term
performers for the portfolio due to excellent managements and strong operations.
Over half of the Fund's holdings are in the U.S., as that is the largest pool of
utility stock choices. However, we are sensitive to our diversification and
maintained positions in Europe, Asia and Latin America. In emerging markets, we
focused on countries exhibiting strength such as Mexico and South Korea and
avoided countries such as Peru and Columbia, which are small, illiquid markets.
GLOBALLY DIVERSIFIED COMPANIES ALLOWED FOR STRONG GROWTH
Investing with a global perspective allows us to benefit from companies that
operate in multiple economies. Therefore, we focus less on owning companies
whose success is captive to the rise and fall of their home-country economy and
more on those companies that are driven by the strength of multiple economies,
such as AES (3.3% of net assets), a global independent power producer. The
company has worldwide diversification and does a good job of managing risk.
Another example is Vodafone Airtouch (2.8% of net assets), a global cellular
player in Europe and the United States. The company is large and liquid with
good management and a strong balance sheet.
A POSITIVE GLOBAL OUTLOOK
We will continue to position the Fund within those utility components we believe
have the greatest growth potential. We have a positive outlook for the growth
potential of the telecommunications and gas industries and are less optimistic
about the electric industry because of challenging regulatory issues and
uncertainties arising from industry restructuring. We have positioned holdings
accordingly based on this outlook.
World GDP growth is currently stronger than expected which ordinarily should
allow for a good investing environment for the Fund through the end of the year.
However, there are some threats in the form of additional interest rate
increases to ward off inflation pressures in the U.S. Interest rate increases --
and the specter of more to come -- have affected and will continue to affect the
financial markets in a negative way. Nonetheless, we are focusing on global
growth utilities, and we have positioned the Fund in what we believe are
well-managed, quality companies.
/s/ Ophelia Barsketis /s/ Deborah Jansen
OPHELIA BARSKETIS and DEBORAH JANSEN are co-managers of Colonial Global
Utilities Fund and are senior vice presidents of Stein Roe & Farnham
Incorporated.
International investing offers significant long-term growth potential, but also
involves certain risks. The Fund may be affected by political, business and
economic conditions in the countries in which it invests. Additionally, because
the Fund focuses on solely utility securities, it may involve special risks due
to limited diversification.
TOP 10 HOLDINGS AS OF 4/30/00
Enron 4.4%
-----------------------------------------
Ericsson 4.2%
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Nokia 3.7%
-----------------------------------------
Grupo Televisa 3.4%
-----------------------------------------
AES 3.3%
-----------------------------------------
Sonera Group 3.3%
-----------------------------------------
Sprint 3.0%
-----------------------------------------
Kinder Morgan 3.0%
-----------------------------------------
Vodafone 2.8%
-----------------------------------------
AT&T Wireless 2.8%
-----------------------------------------
Portfolio holdings are calculated as a percentage of total net assets.
TOP FIVE COUNTRIES AS OF 4/30/00
U.S. 63.6%
-----------------------------------------
U.K. 10.3%
-----------------------------------------
Finland 7.2%
-----------------------------------------
Mexico 4.4%
-----------------------------------------
Switzerland 4.3%
-----------------------------------------
Country breakdowns are calculated as a percentage of total investments.
Because the Fund is actively managed, there can be no guarantee that it will
continue to hold these securities or invest in these countries in the future.
SOLD
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Real Estate Investment Trust holdings (REITs) when we were able to find higher
returns in our traditional utility arena. We also sold FPL Group, a Florida
electric company, when it became a merger & acquisition play and Telstra Corp.,
an Australian phone company, when it did not live up to its anticipated growth.
<PAGE>
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PERFORMANCE INFORMATION
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AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/00
Share Class A B C
Inception 10/15/91 3/27/95 3/27/95
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Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
--------------------------------------------------------------------------------
Six months (cumulative) 14.69% 8.09% 14.15% 9.15% 14.28% 13.28%
--------------------------------------------------------------------------------
1 year 20.47 13.54 19.53 14.53 19.59 18.59
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5 years 17.56 16.18 16.66 16.45 16.69 16.69
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Life of Fund 13.43 12.64 12.91 12.91 12.92 12.92
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AVERAGE ANNUAL TOTAL RETURNS AS OF 3/31/00
Share Class A B C
--------------------------------------------------------------------------------
Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
--------------------------------------------------------------------------------
Six months (cumulative) 33.99% 26.28% 33.39% 28.39% 33.45% 32.45%
--------------------------------------------------------------------------------
1 year 37.60 29.69 36.47 31.47 36.53 35.53
--------------------------------------------------------------------------------
5 years 20.23 18.81 19.33 19.14 19.35 19.35
--------------------------------------------------------------------------------
Life of Fund 14.80 14.00 14.29 14.29 14.29 14.29
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Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 5.75% charge for Class A shares, the appropriate Class B contingent
deferred sales charge for the holding period after purchase as follows: through
first year - 5%, second year - 4%, third year - 3%, fourth year - 3%, fifth year
- 2%, sixth year - 1%, thereafter - 0% and the Class C contingent deferred sales
charge of 1% for the first year only. Performance results reflect any voluntary
waivers or reimbursement of Fund expenses by the Advisor or its affiliates.
Absent these waivers or reimbursement arrangements, performance would have been
lower.
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 is based, in part, on the performance of the Liberty
Financial Utilities Fund, which had a different expense structure than the Fund.
Class B and 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 of the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to inception of
the newer class shares would have been lower.
<PAGE>
INVESTMENT PORTFOLIO
April 30,2000 (Unaudited)
(In thousands)
COMMON STOCKS - 93.1% COUNTRY SHARES VALUE
-------------------------------------------------------------------------------
MANUFACTURING - 10.6%
COMMUNICATIONS EQUIPMENT - 6.0%
Nokia Oyj ADR Fi 134 $ 7,621
Tellabs, Inc. (a) 83 4,571
--------
12,192
--------
ELECTRONIC & ELECTRICAL EQUIPMENT - 1.8%
Alcatel Alsthom Compagnie Generale 83 3,758
--------
MISCELLANEOUS MANUFACTURING - 2.0%
Tyco International Ltd. 87 4,015
--------
TOBACCO PRODUCTS - 0.8%
Grupo Carso S.A.,
Series A-1 Mx 492 1,675
--------
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MINING & ENERGY - 4.4%
OIL & GAS FIELD SERVICES
Enron Corp. 128 8,906
--------
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TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 78.1%
BROADCASTING - 3.4%
Grupo Televisa SA GDR (a) Mx 110 6,946
--------
COMMUNICATIONS - 2.4%
Metromedia Fiber Network, Inc.,
Class A (a) 162 5,014
--------
ELECTRIC, GAS, & SANITARY SERVICES - 4.5%
Calpine Corp. (a) Mx 56 5,151
Constellation Energy Group 120 3,981
--------
9,132
--------
ELECTRIC SERVICES - 14.7%
AES Corp. (a) 76 6,817
Montana Power Co. 105 4,622
National Grid Group PLC KB 554 4,488
Peco Energy Co. 106 4,398
Pinnacle West Capital Corp. 128 4,496
Scottish Power PLC KB 660 5,266
--------
30,087
--------
GAS SERVICES - 9.1%
Coastal Corp. 94 4,713
El Paso Energy Corp. 94 3,974
Kinder Morgan Energy Partners, L.P. 157 6,135
Williams Companies, Inc. 103 3,854
--------
18,676
--------
TELECOMMUNICATION - 44.0%
AT&T Corp. 89 4,176
AT&T Wireless Group (a) 180 5,651
BroadWing, Inc. (a) 129 3,661
Colt Telecom Group ADR (a) KB 29 4,935
Chemical Banking Corp. (a) 14 1,995
Cox Communications, Inc. Class A (a) 83 3,541
Embratel Participacoes S.A. ADR Bz 86 1,940
Korea Telecom Corp. ADR Ko 81 2,794
Level 3 Communications, Inc. (a) 38 3,391
Worldcom (a) 87 3,933
NTL, Inc. (a) 49 3,749
Nippon Telegraph & Telephone Corp. Ja (c) 1,858
SBC Communications, Inc., Class A 94 4,101
Sonera Group Oyj Fi 122 6,707
Sprint Corp. 101 6,199
Sprint Corp. (PCS Group) (a) 71 3,900
Tele Danmark A/S ADR De 54 2,034
Tele Norte Leste Participacoes S.A. ADR Bz 285 4,573
Telecom Corp. of New Zealand ADR NZ 131 4,456
Telefonica de Espana ADR Sp 70 4,668
Telefonos de Mexico SA Mx 33 1,953
US WEST, Inc. 59 4,164
Vodafone AirTouch PLC ADR KB 122 5,722
--------
90,101
--------
TOTAL COMMON STOCKS
(cost of $142,216) 190,502
--------
CONVERTIBLE PREFERRED STOCK - 4.2%
-------------------------------------------------------------------------------
MANUFACTURING - 1.9%
COMMUNICATIONS EQUIPMENT
LM Ericsson Telecommunications, 4.250%
(cost of $1,116) Sw 353 8,602
--------
TOTAL INVESTMENTS - 97.3%
(cost of $143,332) (b) 199,104
--------
SHORT-TERM OBLIGATIONS - 5.2% PAR VALUE
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Repurchase agreement with SBC Warburg Ltd.,
dated 04/28/00, due 05/01/00 at 5.710%,
collateralized by U.S. Treasury notes with
various maturities to 2025, market value
$10,856 (repurchase proceeds $10,616) $10,611 $ 10,611
--------
OTHER ASSETS & LIABILITIES, NET - (2.5)% (5,033)
-------------------------------------------------------------------------------
NET ASSETS - 100.0% $204,682
========
NOTES TO INVESTMENT PORTFOLIO:
-------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
(c) Rounds to less than one.
SUMMARY OF SECURITIES
BY COUNTRY COUNTRY VALUE % OF TOTAL
-------------------------------------------------------------------------------
United States $117,695 59.1
United Kingdom KB 20,411 10.3
Mexico Mx 15,725 7.9
Finland Fi 14,328 7.2
Switzerland Sw 8,602 4.3
Brazil Bz 6,513 3.3
Spain Sp 4,688 2.4
New Zealand NZ 4,456 2.2
Korea Ko 2,794 1.4
Denmark De 2,034 1.0
Japan Ja 1,858 0.9
-------- -----
$199,104 100.0
======== =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
ACRONYM NAME
--------------------- ---------------------------------
ADR American Depositary Receipt
GDR Global Depositary Receipt
KB British Pounds
See notes to investment portfolio.
<PAGE>
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STATEMENT OF ASSETS AND LIABILITIES
-------------------------------------------------------------------------------
April 30, 2000
(Unaudited)
(In thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $143,332) $199,104
Short-term obligations 10,611
--------
209,715
Cash including foreign currencies
(cost of $64) $ 59
Receivable for:
Dividends 310
Fund shares sold 293
Interest 5
Other 14 681
------ --------
Total assets 210,396
LIABILITIES
Payable for:
Investment purchased 5,426
Fund shares repurchased 40
Accrued:
Management fee 71
Transfer agent fee 66
Administration fee 44
Bookkeeping fee 7
Service fee 1
Distribution fee -- Class B 1
Deferred Trustees fee 3
Other 55
------
Total liabilities 5,714
--------
Net Assets $204,682
========
Net asset value & redemption price per share -- Class A ($189,805/
10,800) $ 17.57
========
Maximum offering price per share -- Class A ($17.57/0.9425) $ 18.64
========
Net asset value & offering price per share -- Class B ($13,962/797) $ 17.51
========
Net asset value & offering price per share -- Class C ($915/52) $ 17.53
========
(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>
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STATEMENT OF OPERATIONS
-------------------------------------------------------------------------------
For the Six Months Ended April 30, 2000
(Unaudited)
(In thousands)
INVESTMENT INCOME
Dividends $ 1,468
Interest 151
--------
Total investment income (net of
nonreclaimable foreign taxes withheld
at source which amounted to $48) 1,619
EXPENSES
Management fee $ 414
Administrative fee 259
Service fee 259
Distribution fee -- Class B 40
Distribution fee -- Class C 4
Transfer agent fee 298
Bookkeeping fee 41
Registration fee 23
Audit fee 10
Trustees fee 10
Reports to shareholders 8
Legal fee 6
Custodian fee 13
Other (82) 1,303
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Net Investment Income 316
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 27,446
Foreign currency transactions (47)
-------
Net Realized Gain 27,399
Net change in unrealized appreciation/
depreciation during the period on:
Investments (1,053)
Foreign currency transactions (11)
-------
Net Change in Unrealized Appreciation/
Depreciation (1,064)
--------
Net Gain 26,335
--------
Increase in Net Assets from Operations $ 26,651
========
See notes to financial statements.
<PAGE>
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STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
(In thousands)
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
INCREASE (DECREASE) IN NET ASSETS 2000 1999
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 316 $ 2,149
Net realized gain 27,399 18,754
Net change in unrealized appreciation/
depreciation (1,064) 9,378
-------- --------
Net Increase from Operations 26,651 30,281
DISTRIBUTIONS:
From net investment income -- Class A (511) (1,671)
From net realized gains -- Class A (16,869) (6,355)
From net investment income -- Class B (7) (18)
From net realized gains -- Class B (766) (199)
From net investment income -- Class C (1) (3)
From net realized gains -- Class C (117) (38)
-------- --------
8,380 21,997
-------- --------
FUND SHARE TRANSACTIONS:
Receipts for shares sold -- Class A 4,564 5,807
Value of distributions reinvested -- Class A 16,842 7,677
Cost of shares repurchased -- Class A (14,362) (25,660)
-------- --------
7,044 (12,176)
-------- --------
Receipts for shares sold -- Class B 6,525 3,058
Value of distributions reinvested -- Class B 734 194
Cost of shares repurchased -- Class B (934) (1,349)
-------- --------
6,325 1,903
-------- --------
Receipts for shares sold -- Class C 161 150
Value of distributions reinvested -- Class C 109 38
Cost of shares repurchased -- Class C (643) (99)
-------- --------
(373) 89
-------- --------
Net Increase (Decrease) from Fund Share
Transactions 12,996 (10,184)
-------- --------
Total Increase 21,376 11,813
NET ASSETS
Beginning of period 183,306 171,493
-------- --------
End of period (including undistributed net
investment income of $129 and $332,
respectively) $204,682 $183,306
======== ========
NUMBER OF FUND SHARES
Sold -- Class A 252 362
Issued for distributions reinvested -- Class A 989 493
Repurchased -- Class A (796) (1,598)
-------- --------
445 (743)
-------- --------
Sold -- Class B 354 190
Issued for distributions reinvested -- Class B 43 13
Repurchased -- Class B (51) (84)
-------- --------
346 119
-------- --------
Sold -- Class C 9 9
Issued for distributions reinvested -- Class C 6 3
Repurchased -- Class C (34) (6)
-------- --------
(19) 6
-------- --------
See notes to financial statements.
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
April 30, 2000 (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, 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, 2000, 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. On February 26, 1999,
LFC Utilities Trust (the Portfolio) collapsed into Global Utilities Fund (the
Fund) therefore terminating their master/feeder structure. 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. A
1.00% contingent deferred sales charge is assessed 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. Effective February 1, 2000, Class B shares will convert to Class A
shares as follows:
CONVERTS TO
ORIGINAL PURCHASE CLASS A SHARES
----------------- --------------
Less than $250,000 8 years
$250,000 to less than $500,000 4 years
$500,000 to less than $1,000,000 3 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.
The per share data was calculated using the average shares outstanding during
the period. In addition, Class B and Class C net investment income per share
data reflects the distribution fee 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.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Stein Roe & Farnham 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.
ADMINISTRATIVE FEE
Colonial Management Associates, Inc. (the Administrator), an affiliate of the
Advisor, provides accounting and other services and office facilities for a
monthly fee equal to 0.25% annually of the Fund's average net assets.
BOOKKEEPING FEE
The Administrator provides bookkeeping and pricing services for $27,000 per
year plus 0.035% annually of the Fund's average net assets over $50 million.
TRANSFER AGENT
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of the
Administrator, 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.
Effective January 1, 2000, the Transfer Agent fee was changed to a fee
comprised of 0.07% annually of average net assets plus charges based on the
number of shareholder accounts and transactions.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Liberty Funds Distributor, Inc. (the Distributor), a subsidiary of the
Administrator, is the Fund's principal underwriter. During the year ended
April 30, 2000, the Fund has been advised that the Distributor retained net
underwriting discounts of $8,680 on sales of the Fund's Class A shares and
received contingent deferred sales charges (CDSC) of $4, $7,622 and $158 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, 2000, purchases and sales of
investments, other than short-term obligations, were $92,686,940, and
$95,751,134, respectively.
Unrealized appreciation (depreciation) at April 30, 2000, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $62,593,572
Gross unrealized depreciation (6,821,286)
-----------
Net unrealized appreciation $55,772,286
===========
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
during the year ended April 30, 2000.
NOTE 6. COMPOSITION OF NET ASSETS
Capital paid in $121,576
Undistributed net investment income 129
Accumulated net realized gain 27,240
Net unrealized appreciation (depreciation) on:
Investments 55,772
Foreign currency transactions (35)
--------
$204,682
========
NOTE 7. OTHER RELATED PARTY TRANSACTIONS
At April 30, 2000, the Fund had one shareholder, Colonial Management
Associates who owned greater than 5% of the Fund's shares outstanding.
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED APRIL 30, 2000
---------------------------------------------------------
CLASS A CLASS B CLASS C
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.850 $ 16.840 $ 16.840
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a) 0.032 (0.036) (0.035)
Net realized and unrealized gain 2.388 2.371 2.390
--------- --------- ---------
Total from Investment Operations 2.420 2.335 2.355
--------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income (0.050) (0.015) (0.015)
From net realized gains (1.650) (1.650) (1.650)
--------- --------- ---------
Total Distributions Declared to Shareholders (1.700) (1.665) (1.665)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 17.570 $ 17.510 $ 17.530
========= ========= =========
Total return (b) (c) 14.69% 14.15% 14.28%
========= ========= =========
RATIOS TO AVERAGE NET ASSETS
Expenses (d)(e)(f) 1.26% 2.01% 2.01%
Net investment income (loss) (d)(e)(f) 0.31% (0.44)% (0.44)%
Portfolio turnover (c) 47% 47% 47%
Net assets at end of period (000) $189,805 $13,962 $ 915
(a) Per share data was calculated using average shares outstanding during the period.
(b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent
deferred sales charge.
(c) Not annualized.
(d) The benefits derived from custody credits and directed brokerage arrangements had no impact.
(e) Annualized.
(f) During the period ended April 30, 2000, the Fund experienced a one-time reduction in its expenses of four basis
points as a result of expenses accrued in a prior period. The Fund's ratios disclosed above reflect the actual
rate at which expenses were incurred throughout the current period without the reduction.
<CAPTION>
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998
------------------------------------------ -----------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 14.920 $ 14.910 $ 14.920 $ 13.720 $ 13.720 $ 13.720
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (a)(b) 0.195 0.075 0.075 0.234 0.123 0.123
Net realized and unrealized
gain 2.470 2.479 2.469 2.134 2.124 2.134
-------- -------- -------- -------- -------- --------
Total from Investment
Operations 2.665 2.554 2.544 2.368 2.247 2.257
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income (0.155) (0.044) (0.044) (0.248) (0.137) (0.137)
From net realized gains (0.580) (0.580) (0.580) (0.920) (0.920) (0.920)
-------- -------- -------- -------- -------- --------
Total Distributions Declared
to Shareholders (0.735) (0.624) (0.624) (1.168) (1.057) (1.057)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 16.850 $ 16.840 $ 16.840 $ 14.920 $ 14.910 $ 14.920
======== ======== ======== ======== ======== ========
Total return (c) 18.31% 17.50% 17.42% 18.09% 17.12% 17.20%
======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (b)(d) 1.33% 2.08% 2.08% 1.30% 2.05% 2.05%
Net investment income (b)(d) 1.21% 0.46% 0.46% 1.58% 0.83% 0.83%
Portfolio turnover 43% 43% 43% 48%(e) 48%(e) 48%(e)
Net assets at end of period
(000) $174,521 $ 7,594 $ 1,191 $165,566 $ 4,957 $ 970
(a) Per share data was calculated 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) The benefits derived from custody credits and directed brokerage arrangements had no impact.
(e) Portfolio turnover disclosed is for LFC Utilities Trust.
</TABLE>
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
YEAR ENDED OCTOBER 31, 1997 YEAR ENDED OCTOBER 31, 1996
------------------------------------------ ------------------------------------------
CLASS A CLASS B CLASS C(a) CLASS A CLASS B CLASS C(a)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.000 $ 12.010 $ 12.000 $ 11.080 $ 11.080 $ 11.080
-------- -------- -------- -------- -------- --------
INCOME FFROM INVESTMENT
OPERATIONS
Net investment income (b)(c) 0.328 0.225 0.225 0.427 0.340 0.340
Net realized and unrealized
gain 1.740 1.732 1.742 0.878 0.889 0.879
-------- -------- -------- -------- -------- --------
Total from Investment
Operations 2.068 1.957 1.967 1.305 1.229 1.219
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income (0.348) (0.247) (0.247) (0.385) (0.299) (0.299)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.720 $ 13.720 $ 13.720 $ 12.000 $ 20.010 $ 12.000
======== ======== ======== ======== ======== ========
Total return (d) 17.40% 16.43% 16.53% 11.99% 11.25% 11.16%
======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (c)(e) 1.31% 2.06% 2.06% 1.38% 2.13% 2.13%
Net investment income (c)(e) 2.46% 1.71% 1.71% 3.70% 2.95% 2.95%
Portfolio turnover (f) 48% 48% 48% 34% 34% 34%
Net assets at end of period
(000) $162,267 $ 3,243 $ 818 $169,840 $ 1,538 $ 584
(a) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(b) Per share data was calculated using average shares outstanding during the period.
(c) 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.
(e) The benefits derived from custody credits and directed brokerage arrangements had no impact.
(f) Portfolio turnover disclosed is for LFC Utilities Trust.
<CAPTION>
YEAR ENDED OCTOBER 31, 1995
------------------------------------------------------
CLASS A CLASS B(d) CLASS C(b)(d)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.610 $ 10.420 $ 10.420
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(c)(d) 0.536 0.248 0.248
Net realized and unrealized gain 0.520 0.665 0.665
-------- -------- --------
Total from Investment Operations 1.056 0.913 0.913
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income (0.517) (0.253) (0.253)
From net realized gains (0.069) -- --
-------- -------- --------
Total Distributions Declared to Shareholders (0.586) (0.253) (0.253)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 11.080 $ 11.080 $ 11.080
======== ======== ========
Total return (f)(g) 10.32% 8.82%(h) 8.82%(h)
======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (d)(k) 1.29% 2.05%(i) 2.05%(i)
Net investment income (d)(k) 5.14% 3.73%(i) 3.73%(i)
Fees and expenses waived or borne by Liberty
Securities and LFC Utilities Trust 0.03% 0.02%(i) 0.02%(i)
Portfolio turnover (j) 46% 46% 46%
Net assets at end of period (000) $211,916 $ 745 $ 307
(a) Net of fees and expenses waived or borne by Liberty
Securities which amounted to: $ 0.002 -- --
(b) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(c) Per share data was calculated using average shares outstanding during the period.
(d) 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.
(j) Portfolio turnover disclosed is for LFC Utilities Trust.
(k) The benefits derived from custody credits and directed brokerage arrangements had no impact.
</TABLE>
<PAGE>
TRUSTEES & TRANSFER AGENT
--------------------------------------------------------------------------------
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
Academic Vice President and Dean of Faculties, Boston College (formerly Dean,
Boston College School of Management)
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
--------------------------------------------------------------------------------
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
The Fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call 1-800-426-3750 and additional reports
will be sent to you.
This report has been prepared for shareholders of Colonial Global Utilities
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund and with the most
recent copy of the Liberty Funds Distributor, Inc. Performance Update.
SEMIANNUAL REPORT:
COLONIAL GLOBAL UTILITIES FUND
<PAGE>
Liberty offers the independent thinking and collective strength of six financial
specialists. Our distinguished product line helps financial advisors and their
clients build diversified investment portfolios for long-term financial goals.
--------------------------------------------------------------------------------
L I B E R T Y
---------------
F U N D S
--------------------------------------------------------------------------------
ALL-STAR INSTITUTIONAL MONEY MANAGEMENT APPROACH FOR INDIVIDUAL INVESTORS.
COLONIAL FIXED INCOME AND VALUE STYLE EQUITY INVESTING.
CRABBE A CONTRARIAN APPROACH TO FIXED INCOME AND EQUITY INVESTING.
HUSON
NEWPORT A LEADER IN INTERNATIONAL INVESTING.(SM)
STEIN ROE SOLUTIONS FOR GROWTH AND INCOME INVESTING.
ADVISOR
KEYPORT A LEADING PROVIDER OF INNOVATIVE ANNUITY PRODUCTS.
[GRAPHIC
OMITTED]
--------------------------------------------------------------------------------
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
BEFORE YOU INVEST, CONSULT YOUR FINANCIAL ADVISOR.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
------------------------------------------------
COLONIAL GLOBAL UTILITIES FUND SEMIANNUAL REPORT
------------------------------------------------
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ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR HOLLISTON, MA
PERMIT NO. 20
---------------
Liberty Funds Distributor, Inc. (C)2000
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
www.libertyfunds.com
733-03/345B-0500 (6/00) 00/944
