<PAGE>
COLONIAL
U.S. GOVERNMENT FUND
[PHOTO]
ANNUAL REPORT
AUGUST 31, 1996
NOT FDIC-INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
<PAGE>
COLONIAL U.S. GOVERNMENT FUND HIGHLIGHTS
SEPTEMBER 1, 1995 - AUGUST 31, 1996
INVESTMENT OBJECTIVE: Colonial U.S. Government Fund seeks as high a level of
current income and total return as is consistent with prudent risk, by investing
exclusively in U.S. government securities.
THE FUND IS DESIGNED TO OFFER:
- Attractive monthly income and total return
- High quality portfolio
- Diversification
PORTFOLIO MANAGER COMMENTARY: "While economic and market conditions for fixed
income investing were mixed during this 12 month period, your Fund benefited
from being actively managed throughout the shifting environment to help reduce
risk and improve performance." -- Leslie Finnemore
<TABLE>
<CAPTION>
COLONIAL U.S. GOVERNMENT FUND PERFORMANCE
CLASS A CLASS B
<S> <C> <C>
Inception dates 10/13/87 6/8/92
Distributions declared per share $0.409 $0.360
SEC yields on 8/31/96* 5.97% 5.50%
Total returns, assuming
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
12 months 3.51% 2.74%
Net asset value per share at 8/31/96 $ 6.37 $ 6.37
</TABLE>
* The 30-day SEC yields reflect the portfolio's earning power, net of expenses,
expressed as an annualized percentage of the maximum offering price per share at
the end of the period.
<TABLE>
<CAPTION>
SECTOR BREAKDOWN **
<S> <C>
FNMAs ...................... 45.62%
GNMAs ...................... 30.18%
Treasury Securities ........ 18.16%
FHLMCs ..................... 3.74%
Other Agency Securities .... 2.30%
<CAPTION>
AVERAGE LIFE BREAKDOWN **
<S> <C>
0 - 1 year ........ 0.36%
1 - 5 years ....... 37.62%
5 - 10 years ...... 59.98%
Over 10 years ..... 2.04%
</TABLE>
** Sector and average life breakdowns are based on total senior securities.
Because the Fund is actively managed, sector and average life breakdowns will
change.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO]
I am pleased to present your Fund's annual report for the period ended August
31, 1996. This report gives us the opportunity to share our analysis of the
investment environment over the past 12 months.
In the bond market, after the Federal Reserve Board lowered short-term interest
rates in December and January, significantly stronger economic indicators
mid-way through the period stirred inflation fears and propelled long-term
interest rates upward. Bond market volatility will continue, based upon receipt
of conflicting economic reports and changing expectations of Federal Reserve
Board activity.
While market conditions put pressure on municipal bond prices, there was some
good news for the tax-exempt sector. Some of the significant reasons that
municipal bonds outperformed Treasury bonds were technical factors, such as low
supply and strong retail market support. Other reasons include fundamental
factors, such as the easing of fears generated by tax-reform proposals,
particularly those promoting a flat tax.
In the stock market, generally favorable conditions prevailed throughout most of
the period, with both large and small company stocks posting strong performance
until July, when a price-based correction took place. While stock indices
generally posted negative total returns for July, the equity markets rebounded
in August.
Our expectations for the remainder of 1996 include a moderating economy. We
believe that the economy will continue to grow, although at a slower pace than
was indicated earlier this year. The lack of any appreciable wage and price
pressure should put the bond market's fears of inflation to rest. Therefore, we
are optimistic that market psychology will shift and volatility will decline by
year-end.
As always, we thank you for the opportunity to help you meet your investment
goals through Colonial Mutual Funds.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
October 11, 1996
3
<PAGE>
PORTFOLIO MANAGER REPORT
LESLIE FINNEMORE is lead portfolio manager of Colonial U.S. Government Fund and
is a vice president of Colonial Management Associates, Inc.
Q: HOW DID THE U.S. GOVERNMENT MARKET PERFORM DURING THE PAST TWELVE MONTHS?
A: The market environment shifted midway through the period. The first half of
the period had slower economic growth, low inflation and declining interest
rates, all of which contributed to price increases in the fixed income markets.
The second half of the period had increasing interest rates, based on changing
expectations regarding the economy's strength as a result of strong employment
growth, retail sales, housing activity and auto sales. Market psychology moved
from expectations of Federal Reserve Board easing or lowering short-term
interest rates, to expectations of the Fed tightening or raising short-term
interest rates, all of which contributed to higher volatility and price declines
for fixed income securities.
Q: WHAT WAS THE FUND'S INVESTMENT STRATEGY DURING THE PERIOD?
A: The most important element of our active strategy is managing the
mortgage-backed sector of the portfolio, as these securities exhibit shifting
risk characteristics when interest rates fluctuate. At the end of 1995, we
increased our holdings of mortgages to over 90% of the Fund's assets to take
advantage of the market's expectations of risk in the mortgage market.
Expectations of slower economic growth, Fed easing and lower interest rates led
to attractive compensation for refinancing risks that never materialized. We
have since brought the Fund's exposure to mortgages back to 75%. The Fund's
duration, which measures its sensitivity to changes in interest rates, remained
relatively stable at about four years for most of the period, which we view as
market neutral. Shareholders were rewarded by the Fund's investment in short and
intermediate-term securities, mortgage-backed investments and our active
management style that maintained a reduced risk profile in a shifting
environment.
Q: HOW DID THE FUND'S PERFORMANCE COMPARE TO THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT BOND INDEX?
A: The Fund underperformed the Lehman Brothers Intermediate Government Bond
Index, a broad-based, unmanaged index that tracks the performance of government
bonds with maturities of ten years or less. The total return for the Fund's
Class A shares, based on net asset value, was 3.51% while the return on the
Index was 4.46%. This underperformance may be attributable to the Fund having a
longer duration than the Index. However, the Fund did outperform the total
return of 3.02% posted by the average Intermediate U.S. Government Fund tracked
by Lipper Analytical Services, Inc. The Fund was ranked 38 out of 121 of the
funds in its investment category.
4
<PAGE>
Q: WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1996?
A: We believe that the economy is still sending enough mixed messages regarding
its direction to keep uncertainty, and therefore volatility, relatively high.
While we continue to expect short-term price fluctuation, we anticipate that
economic fundamentals such as low inflation and moderate growth could prevail,
resulting in a natural, mid-cycle correction that may not require Fed
intervention. We will continue to actively manage the Fund by keeping the
duration neutral to slightly positive and by emphasizing opportunities in
mortgage-backed securities. Beginning January 1, 1997, the Fund will no longer
be an eligible investment for Federal Credit Unions or National Banks.
COLONIAL U.S. GOVERNMENT FUND'S INVESTMENT PERFORMANCE VS.
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX
Change in Value of $10,000 from 10/87 - 8/96
Based on Net Asset Value (NAV) and Maximum Offering
Price (MOP) for Class A Shares
<TABLE>
<CAPTION>
Label A B C
- ---------------------------------------------------------------------
Label
- ---------------------------------------------------------------------
<S> <C> <C> <C>
1 CUSGF-A
- ---------------------------------------------------------------------
2 LEHMAN NAV MOP
- ---------------------------------------------------------------------
3 10000 10000 9525
- ---------------------------------------------------------------------
4 10060 10198 9714
- ---------------------------------------------------------------------
5 10158 10300 9810
- ---------------------------------------------------------------------
6 10410 10586 10083
- ---------------------------------------------------------------------
7 10521 10718 10209
- ---------------------------------------------------------------------
8 10476 10665 10158
- ---------------------------------------------------------------------
9 10458 10681 10174
- ---------------------------------------------------------------------
10 10408 10653 10147
- ---------------------------------------------------------------------
11 10578 10860 10344
- ---------------------------------------------------------------------
12 10546 10827 10312
- ---------------------------------------------------------------------
13 10560 10837 10322
- ---------------------------------------------------------------------
14 10743 10984 10462
- ---------------------------------------------------------------------
15 10891 11147 10618
- ---------------------------------------------------------------------
16 10797 11082 10556
- ---------------------------------------------------------------------
17 10808 11033 10508
- ---------------------------------------------------------------------
18 10915 11138 10608
- ---------------------------------------------------------------------
19 10869 11102 10575
- ---------------------------------------------------------------------
20 10920 11113 10586
- ---------------------------------------------------------------------
21 11140 11332 10794
- ---------------------------------------------------------------------
22 11355 11536 10988
- ---------------------------------------------------------------------
23 11645 11763 11204
- ---------------------------------------------------------------------
24 11881 11893 11328
- ---------------------------------------------------------------------
25 11721 11827 11265
- ---------------------------------------------------------------------
26 11777 11860 11297
- ---------------------------------------------------------------------
27 12024 12028 11456
- ---------------------------------------------------------------------
28 12143 12129 11553
- ---------------------------------------------------------------------
29 12178 12197 11617
- ---------------------------------------------------------------------
30 12103 12146 11569
- ---------------------------------------------------------------------
31 12147 12215 11635
- ---------------------------------------------------------------------
32 12162 12250 11668
- ---------------------------------------------------------------------
33 12121 12267 11685
- ---------------------------------------------------------------------
34 12381 12498 11904
- ---------------------------------------------------------------------
35 12543 12623 12024
- ---------------------------------------------------------------------
36 12719 12822 12213
- ---------------------------------------------------------------------
37 12673 12768 12161
- ---------------------------------------------------------------------
38 12787 12841 12231
- ---------------------------------------------------------------------
39 12965 12989 12372
- ---------------------------------------------------------------------
40 13160 13213 12585
- ---------------------------------------------------------------------
41 13342 13378 12742
- ---------------------------------------------------------------------
42 13479 13506 12864
- ---------------------------------------------------------------------
43 13561 13578 12933
- ---------------------------------------------------------------------
44 13636 13670 13021
- ---------------------------------------------------------------------
45 13777 13782 13127
- ---------------------------------------------------------------------
46 13855 13876 13217
- ---------------------------------------------------------------------
47 13866 13931 13269
- ---------------------------------------------------------------------
48 14016 14085 13416
- ---------------------------------------------------------------------
49 14282 14241 13565
- ---------------------------------------------------------------------
50 14525 14419 13734
- ---------------------------------------------------------------------
51 14691 14516 13827
- ---------------------------------------------------------------------
52 14864 14635 13939
- ---------------------------------------------------------------------
53 15225 14862 14157
- ---------------------------------------------------------------------
54 15078 14799 14096
- ---------------------------------------------------------------------
55 15125 14861 14155
- ---------------------------------------------------------------------
56 15065 14839 14134
- ---------------------------------------------------------------------
57 15200 14923 14214
- ---------------------------------------------------------------------
58 15427 15095 14378
- ---------------------------------------------------------------------
59 15649 15218 14495
- ---------------------------------------------------------------------
60 15949 15277 14552
- ---------------------------------------------------------------------
61 16112 15447 14713
- ---------------------------------------------------------------------
62 16334 15551 14812
- ---------------------------------------------------------------------
63 16138 15500 14764
- ---------------------------------------------------------------------
64 16070 15494 14758
- ---------------------------------------------------------------------
65 16280 15612 14870
- ---------------------------------------------------------------------
66 16582 15753 15005
- ---------------------------------------------------------------------
67 16827 15873 15119
- ---------------------------------------------------------------------
68 16889 15924 15167
- ---------------------------------------------------------------------
69 17021 16021 15260
- ---------------------------------------------------------------------
70 16974 16050 15288
- ---------------------------------------------------------------------
71 17220 16235 15464
- ---------------------------------------------------------------------
72 17255 16280 15507
- ---------------------------------------------------------------------
73 17512 16396 15618
- ---------------------------------------------------------------------
74 17583 16442 15661
- ---------------------------------------------------------------------
75 17624 16464 15682
- ---------------------------------------------------------------------
76 17537 16389 15611
- ---------------------------------------------------------------------
77 17610 16496 15712
- ---------------------------------------------------------------------
78 17784 16652 15861
- ---------------------------------------------------------------------
79 17540 16491 15708
- ---------------------------------------------------------------------
80 17284 16182 15413
- ---------------------------------------------------------------------
81 17172 16068 15305
- ---------------------------------------------------------------------
82 17184 16078 15314
- ---------------------------------------------------------------------
83 17188 16063 15300
- ---------------------------------------------------------------------
84 17413 16274 15501
- ---------------------------------------------------------------------
85 17464 16310 15535
- ---------------------------------------------------------------------
86 17320 16219 15448
- ---------------------------------------------------------------------
87 17323 16229 15458
- ---------------------------------------------------------------------
88 17246 16163 15395
- ---------------------------------------------------------------------
89 17302 16202 15433
- ---------------------------------------------------------------------
90 17584 16476 15694
- ---------------------------------------------------------------------
91 17923 16752 15956
- ---------------------------------------------------------------------
92 18022 16845 16045
- ---------------------------------------------------------------------
93 18231 17044 16235
- ---------------------------------------------------------------------
94 18745 17510 16678
- ---------------------------------------------------------------------
95 18864 17600 16764
- ---------------------------------------------------------------------
96 18873 17611 16775
- ---------------------------------------------------------------------
97 19029 17757 16913
- ---------------------------------------------------------------------
98 19156 17930 17079
- ---------------------------------------------------------------------
99 19366 18132 17271
- ---------------------------------------------------------------------
100 19602 18390 17516
- ---------------------------------------------------------------------
101 19796 18622 17737
- ---------------------------------------------------------------------
102 19963 18772 17880
- ---------------------------------------------------------------------
103 19752 18449 17572
- ---------------------------------------------------------------------
104 19662 18320 17450
- ---------------------------------------------------------------------
105 19604 18220 17355
- ---------------------------------------------------------------------
106 19594 18147 17285
- ---------------------------------------------------------------------
107 19793 18358 17486
- ---------------------------------------------------------------------
108 19855 18397 17523
- ---------------------------------------------------------------------
</TABLE>
- - $19,877
LEHMAN
- - $18,380
NAV
- - $17,507
MOP
10/87
8/96
A $10,000 investment in Class B shares made on June 8, 1992, (inception) at NAV
would have been valued at $11,801 on August 31, 1996. The same investment after
deducting the applicable CDSC would have grown to $11,618 on August 31, 1996.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
as of September 30, 1996 (most recent quarter end)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Inception 10/13/87 Inception 6/8/92
NAV MOP NAV w/CDSC
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 YEAR 4.18% (0.76)% 3.41% (1.48)%
- --------------------------------------------------------------------------------
5 YEARS 5.32% 4.30% -- --
- --------------------------------------------------------------------------------
SINCE INCEPTION 7.38% 6.80% 4.29% 3.91%
- --------------------------------------------------------------------------------
</TABLE>
The Lehman Brothers Intermediate Government Bond Index is an unmanaged index
that tracks the performance of U.S. government securities. The performance of
the Index does not reflect fees or expenses associated with an actual
investment. Unlike mutual funds, an index does not incur fees or charges and it
is not possible to invest in an index.
Past performance cannot predict future results. Return and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. NAV returns do not include sales charges
or CDSC. MOP returns include the maximum sales charge of 4.75%. The CDSC returns
reflect the maximum charge of 5% for one year and 2% since inception.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
5
<PAGE>
INVESTMENT PORTFOLIO
AUGUST 31, 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
U.S. GOVERNMENT & AGENCY
OBLIGATIONS - 99.8% PAR VALUE
- --------------------------------------------------------------------------------------------
GOVERNMENT AGENCIES - 81.7%
MATURITIES
COUPON FROM/TO
---------------- ----------------
Federal Home Loan Mortgage Corp.:
<S> <C> <C> <C>
7.500% 2016 $ 1,142 $ 1,142
8.000% 2003-2016 17,799 18,042
8.500% 2007-2017 4,456 4,592
8.750% 2005-2013 1,778 1,837
9.000% 2001-2022 7,433 7,736
9.250% 2008-2016 6,252 6,522
9.500% 2005-2016 2,368 2,536
9.750% 2016 129 137
10.000% 2019 2,951 3,202
10.250% 2009-2016 1,824 1,972
10.500% 2009-2021 3,183 3,471
11.250% 2005-2016 4,000 4,431
12.000% 2014 1 1
-------
55,621
-------
Federal National Mortgage Association,
6.240% 2000 25,000 24,500
-------
<CAPTION>
Federal National Mortgage Association:
<S> <C> <C> <C> <C>
6.000% 2008-2026 (a) 118,483 109,713
6.500% 2007-2026 (a) 377,859 359,971
7.000% 2007-2025 (a) 103,544 100,753
7.500% 2006-2009 3,273 3,276
8.000% 2008-2009 3,255 3,314
8.250% 2008 1,064 1,064
8.500% 2003-2021 9,478 9,746
9.000% 2002-2022 27,695 28,790
9.500% 2009-2021 2,776 2,963
10.000% 2001-2006 12,601 13,290
10.500% 2010-2016 5,327 5,817
11.000% 2015-2020 14,312 16,023
-------
654,720
-------
Government National Mortgage Association:
6.500% 2023-2026 (a) 26,151 24,259
7.000% 2022-2024 26,201 25,005
7.500% 2007-2009 16,174 16,235
8.000% 2004-2025 12,450 12,393
8.500% 2017-2026 7,969 8,069
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/August 31, 1996
- -------------------------------------------------------------------------------
MATURITIES
COUPON FROM/TO
------------- ------------
<S> <C> <C> <C>
8.750% 2021-2022 $ 3,802 $ 4,004
8.850% 2018-2020 5,643 5,761
9.000% 2008-2025 33,757 35,156
9.250% 2016-2022 13,692 14,475
9.500% 2004-2025 160,970 173,274
10.000% 1998-2024 5,860 6,177
10.250% 2018 315 346
10.500% 2016-2020 13,860 15,359
10.625% 2010 96 107
10.750% 2024 2,426 2,478
11.000% 2009-2021 16,914 19,016
11.250% 2015 164 185
11.500% 2010-2021 24,039 27,344
11.750% 2013-2015 387 448
12.000% 2011-2019 24,048 27,844
12.250% 2013-2015 1,051 1,224
12.500% 2013-2015 15,971 18,632
12.750% 2010-2014 153 180
13.000% 2010-2015 5,389 6,367
13.500% 2010-2015 3,891 4,649
14.000% 2012-2014 165 199
14.500% 2012 60 73
15.000% 2011-2012 126 155
---------
449,414
---------
U.S. Small Business Administration:
7.600% 01/01/12 4,235 4,187
8.200% 10/01/11 4,013 4,083
8.250% 11/01/11 8,045 8,191
8.650% 11/01/14 5,710 5,896
8.850% 08/01/11 1,603 1,669
9.150% 07/01/11 3,694 3,883
9.450% 08/01/10 1,414 1,490
9.500% 04/01/10 2,695 2,862
9.650% 05/01/10 1,904 2,049
---------
34,310
---------
TOTAL GOVERNMENT AGENCIES (cost of $1,158,948) 1,218,565
---------
GOVERNMENT OBLIGATIONS (b) - 18.1%
U.S. Treasury bonds,
6.750% 08/15/26 13,000 12,411
---------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/August 31, 1996
- --------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS - CONT. PAR VALUE
- --------------------------------------------------------------------------
U.S. Treasury notes:
<S> <C> <C> <C>
6.500% 05/31/01 $29,000 $ 28,737
6.500% 08/15/05 14,846 14,412
6.625% 06/30/01 36,600 36,440
6.875% 05/15/06 158,082 157,243
7.000% 07/15/06 21,000 21,082
------------
257,914
------------
TOTAL GOVERNMENT OBLIGATIONS (cost of $334,195) 270,325
------------
TOTAL INVESTMENTS (cost of $1,493,143) 1,488,890
------------
<CAPTION>
SHORT-TERM OBLIGATIONS - 9.4%
-------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with Bankers
Trust Securities Corp. dated 8/30/96,
due 9/03/96 at 5.240%, collateralized
by U.S. Treasury notes with various
maturities to 2017, market value $146,750.
(repurchase proceeds $140,670) 140,588 140,588
------------
OTHER ASSETS & LIABILITIES, NET - (9.2%) (136,964)
-------------------------------------------------------------------------
NET ASSETS - 100.0% $ 1,492,514
============
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
-------------------------------------------------------------------------
(a) These securities, or a portion thereof, have been purchased on a
delayed delivery basis whereby the terms that are fixed are the
purchase price, interest rate and the settlement date. The exact
quantity purchased may be slightly more or less than the amount shown.
(b) These securities, with a total market value of $270,325 and are being
used to collateralize the delayed delivery purchases indicated in note
(a) above.
(c) Cost for federal income tax purposes is $1,493,954.
See notes to financial statements.
8
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
AUGUST 31, 1996
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $1,493,143) $ 1,488,890
Short-term obligations 140,588
-----------
1,629,478
Receivable for:
Investments sold $ 176,029
Interest 12,838
Fund shares sold 242
Other 337 189,446
---------- -----------
Total Assets 1,818,924
LIABILITIES
Payable for:
Investments purchased 315,400
Distributions 7,691
Fund shares repurchased 3,237
Accrued:
Transfer Agent Out of Pocket fees 32
Deferred Trustees fees 10
Other 40
----------
Total Liabilities 326,410
-----------
NET ASSETS $ 1,492,514
===========
Net asset value & redemption price
per share - Class A ($920,999/144,507) $ 6.37
===========
Maximum offering price per share -
Class A ($6.37/0.9525) $ 6.69 (a)
===========
Net asset value & offering price
per share - Class B ($571,515/89,671) $ 6.37 (b)
===========
COMPOSITION OF NET ASSETS
Capital paid in $ 1,633,556
Overdistributed net investment income (5,068)
Accumulated net realized loss (131,721)
Net unrealized depreciation (4,253)
-----------
$ 1,492,514
===========
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
9
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1996
<TABLE>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME $ 124,751
Interest 3,988
---------
Dollar roll fee income 128,739
EXPENSES
Management fee $ 9,755
Distribution fee - Class B 4,856
Service fee 4,245
Transfer agent 3,657
Bookkeeping fee 536
Custodian fee 210
Registration fee 107
Trustees fee 93
Audit fee 75
Reports to shareholders 28
Legal fee 19
Other 123 23,704
-------- ---------
Net Investment Income 105,035
---------
NET REALIZED & UNREALIZED LOSS ON PORTFOLIO POSITIONS
Net realized loss (23,368)
Net unrealized depreciation during
the period (23,219)
--------
Net Loss (46,587)
---------
Net Increase in Net Assets From Operations $ 58,448
=========
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands) Year ended August 31
---------------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
<S> <C> <C>
Operations:
Net investment income $ 105,035 $ 119,465
Net realized loss (23,368) (55,099)
Net unrealized appreciation (depreciation) (23,219) 74,212
----------- -----------
Net Increase from Operations 58,448 138,578
Distributions:
From net investment income - Class A (63,093) (59,237)
In excess of net investment income - Class A (2,852) --
From net investment income - Class B (34,034) (43,146)
In excess of net investment income - Class B (1,539) --
----------- -----------
(43,070) 36,195
----------- -----------
Fund Share Transactions:
Receipts for shares sold - Class A 112,816 23,802
Receipts for shares issued in the merger
with Liberty Financial U.S. Government
Securities Fund -- 657,855
Value of distributions reinvested - Class A 39,474 32,004
Cost of shares repurchased - Class A (368,789) (331,156)
----------- -----------
(216,499) 382,505
----------- -----------
Receipts for shares sold - Class B 28,322 24,592
Value of distributions reinvested - Class B 19,710 23,538
Cost of shares repurchased - Class B (161,195) (195,780)
----------- -----------
(113,163) (147,650)
----------- -----------
Net Increase (Decrease) from
Fund Share Transactions (329,662) 234,855
----------- -----------
Total Increase (Decrease) (372,732) 271,050
NET ASSETS
Beginning of period 1,865,246 1,594,196
----------- -----------
End of period (net of overdistributed
net investment income of $5,068 and
$658, respectively) $ 1,492,514 $ 1,865,246
=========== ===========
NUMBER OF FUND SHARES
Sold - Class A 17,280 3,736
Issued in the merger with Liberty Financial
U.S. Government Securities Fund -- 102,622
Issued for distributions reinvested - Class A 6,011 4,983
Repurchased - Class A (56,357) (51,715)
----------- -----------
(33,066) 59,626
----------- -----------
Sold - Class B 4,313 3,844
Issued for distributions reinvested - Class B 3,001 3,685
Repurchased - Class B (24,628) (30,739)
----------- -----------
(17,314) (23,210)
----------- -----------
</TABLE>
See notes to financial statements.
11
<PAGE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(in thousands) Year ended August 31
-------------------------------
<S> <C> <C>
NET CHANGE IN CASH
Cash flows from operating activities:
Interest received $ 121,608
Dollar roll fee income received 4,529
Operating expenses paid (24,073)
-----------
Net cash provided by operating activities $ 102,064
Cash flows from investing activities:
Purchases of securities and short-term obligations (4,999,189)
Proceeds from sales of securities and short-term
obligations 5,329,718
-----------
Net cash provided by investing activities 330,529
---------
NET CASH PROVIDED BY OPERATING AND
INVESTING ACTIVITIES 432,593
Cash flows from financing activities:
Proceeds from shares sold 141,323
Cost of shares repurchased (529,904)
Cash dividends paid (44,012)
-----------
Net cash used by financing activities (432,593)
---------
Net change in cash $ 0
Cash - beginning of period 0
---------
Cash - end of period $ 0
=========
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH PROVIDED BY
OPERATING AND INVESTING ACTIVITIES:
Net increase in net
assets resulting from operations $ 58,448
Decrease in investments $ 802,989
Increase in interest and fees receivable (1,566)
Increase in receivable
from investments securities sold (126,206)
Decrease in payable for
investment securities purchased (300,703)
Decrease in other assets 17
Decrease in accrued expenses and liabilities (386)
-----------
Total 374,145
---------
Net cash provided by operating
and investing activities $ 432,593
=========
</TABLE>
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial U.S. Government Fund (the Fund), a series of
Colonial Trust II, 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 as high a level of current income and
total return as is consistent with prudent risk. The Fund may issue an
unlimited number of shares. The Fund offers Class A shares sold with a
front-end sales charge and Class B shares which 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.
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 revenue 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: Debt securities generally are
valued by a pricing service based upon market transactions for normal,
institutional-size trading units of similar securities. When management
deems it appropriate, an over-the-counter or exchange bid quotation is
used.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued
at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income
tax purposes.
The Fund may enter into dollar roll transactions. A dollar roll
transaction involves a sale by the Fund of securities that it holds with
an agreement by the Fund to repurchase substantially similar securities
at an agreed upon price and date. During the period between the sale and
repurchase, the Fund will not be entitled to accrue interest and receive
principal payments on the securities sold. Dollar roll transactions
involve the risk that the market value of the securities sold by the
Fund may decline below the
13
<PAGE>
Notes to Financial Statements/August 31, 1996
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
repurchase price of those securities. In the event the buyer of
securities under a dollar roll transaction files for bankruptcy or
becomes insolvent, the Fund's use of proceeds of the transaction may be
restricted pending a determination by or with respect to the other
party.
The Fund may trade securities on other than normal settlement terms.
This may increase the risk if the other party to the transaction fails
to deliver and causes the Fund to subsequently invest at less
advantageous prices.
The Fund maintains U.S. government securities or other liquid high grade
debt obligations as collateral with respect to dollar roll transactions
and securities traded on other than normal settlement terms.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All
income, expenses (other than the Class B distribution fee), 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.
Class B per share data and ratios are calculated by adjusting the
expense and net investment income per share data and ratios for the Fund
for the entire period by the annualized distribution fee applicable to
Class B 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.
STATEMENT OF CASH FLOWS: Information on financial transactions which
have been settled through the receipt or disbursement of cash is
presented in the Statement of Cash Flows. The cash amount shown in the
Statement of Cash Flows is the amount included in other assets in the
Fund's Statement of Assets and Liabilities and represents cash on hand
at its custodian bank account and does not include any short-term
investments as of August 31, 1996.
INTEREST INCOME, FEE INCOME, DEBT DISCOUNT AND PREMIUM: Interest income
is recorded on the accrual basis. Fee income attributable to mortgage
dollar roll transactions is recorded on the accrual basis over the term
of the transaction. Original issue discount is accreted to interest
income over the life of a security with a corresponding increase in the
cost basis; premium and market discount are not amortized or accreted.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records
distributions daily and pays monthly.
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. These differences are
14
<PAGE>
Notes to Financial Statements/August 31, 1996
- --------------------------------------------------------------------------------
primarily due to differing treatments for mortgage backed securities for book
and tax purposes and expired capital loss carryforwards. Permanent book and tax
basis differences will result in reclassifications to capital accounts.
OTHER: 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 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee based on the Fund's average net assets as
follows:
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $1 billion........ 0.60%
Next $500 million....... 0.55%
Over $1.5 billion....... 0.50%
</TABLE>
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus a percentage of the Fund's average net assets as follows:
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
------------------- ---------------
<S> <C>
First $50 million....... No charge
Next $950 million....... 0.035%
Next $1 billion......... 0.025%
Next $1 billion......... 0.015%
</TABLE>
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer Agent), an
affiliate of the Adviser, provides shareholder services for a monthly fee equal
to 0.18% annually of the Fund's average net assets and receives a reimbursement
for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the year ended August 31, 1996,
15
<PAGE>
Notes to Financial Statements/August 31, 1996
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
the Fund has been advised that the Distributor retained net underwriting
discounts of $45,903 on sales of the Fund's Class A shares and received
contingent deferred sales charges (CDSC) of $2,452,811 on Class B share
redemptions.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually of the Fund's net assets as of the 20th
of each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: For the year ended August 31, 1996, purchases and sales of
investments, other than short-term obligations and mortgage dollar roll
transactions, were $1,748,144,803 and $2,212,383,882, respectively.
Unrealized appreciation (depreciation) at August 31, 1996, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 15,818,633
Gross unrealized depreciation (20,882,538)
------------
Net unrealized depreciation $ (5,063,905)
============
</TABLE>
Information regarding dollar roll transactions that are other than normal
settlement are as follows:
<TABLE>
<S> <C>
Maximum amount outstanding during the period $406,163,125
Average amount outstanding during the period $206,935,073
Amount outstanding at August 31, 1996 $ 16,723,125
</TABLE>
The average amount outstanding during the period was calculated by summing
borrowings at the end of each day and dividing the sum by the number of days in
the period ended August 31, 1996.
16
<PAGE>
Notes to Financial Statements/August 31, 1996
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS: At August 31, 1996, capital loss carry-forwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
------------------- -------------
<S> <C>
1997............... $ 2,528,000
1998............... 706,000
1999............... 2,970,000
2000............... 5,878,000
2001............... 29,729,000
2002............... 7,249,000
2003............... 67,291,000
2004............... 32,546,000
-------------
$ 148,897,000
=============
</TABLE>
Of the loss carryforwards expiring in 1997, 1998, 1999, 2000, 2001, and 2002,
$25,000, $130,000, and $1,184,000, none, none, and none, respectively, were
acquired in the merger with VIP Federal Securities Fund and $2,439,000, none,
$938,000, $5,252,000, $25,355,000 and $4,423,000, respectively, were acquired in
the merger with Liberty Financial U.S. Government Securities Fund. Their
availability may be limited in a given year.
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
NOTE 4. MERGER INFORMATION
- --------------------------------------------------------------------------------
On March 24, 1995, Liberty Financial U.S. Government Securities Fund (LFUSGSF)
was merged into the Fund by a non-taxable exchange of 102,621,829 shares of the
Fund (valued at $657,854,682) for the 74,665,826 of LFUSGSF shares then
outstanding. The assets of LFUSGSF acquired included unrealized depreciation of
$10,937,427. The aggregate net assets of the Fund and LFUSGSF immediately after
the merger were $2,014,746,627.
17
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended August 31
-----------------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 6.550 $ 6.550 $ 6.420 $ 6.420
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.390 0.341 0.447 0.399
Net realized and
unrealized gain (loss) (0.161) (0.161) 0.100 0.100
------- ------- ------- -------
Total from Investment
Operations 0.229 0.180 0.547 0.499
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.391) (0.344) (0.417) (0.369)
In excess of
net investment income (0.018) (0.016) -- --
From capital paid in -- -- -- --
------- ------- ------- -------
Total Distributions
Declared to Shareholders (0.409) (0.360) (0.417) (0.369)
------- ------- ------- -------
Net asset value -
End of period $ 6.370 $ 6.370 $ 6.550 $ 6.550
======= ======= ======= =======
Total return(c) 3.51 % 2.74 % 8.88 % 8.07 %
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.11 %(e) 1.86 %(e) 1.11 % 1.86 %
Net investment income 6.45 %(e) 5.70 %(e) 7.51 % 6.76 %
Portfolio turnover 123 % 123 % 140 % 140 %
Net assets at end
of period (in millions) $ 921 $ 572 $ 1,164 $ 701
</TABLE>
(a) Class B shares were initially offered on June 8, 1992. Per share amounts
reflect activity from that date.
(b) Because of differences between book and tax basis accounting,
approximately $0.056 and $0.014, respectively, were a return of capital
for federal income tax purposes.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(f) Annualized.
18
<PAGE>
FINANCIAL HIGHLIGHTS - CONTINUED
<TABLE>
<CAPTION>
Year ended August 31
----------------------------------------------------------------------------------
1994 1993 1992
Class A Class B Class A Class B Class A Class B (a)
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 6.880 $ 6.880 $ 6.980 $ 6.980 $ 7.020 $ 6.950
------- ------- ------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.415 0.365 0.541 0.490 0.614 0.122
Net realized and
unrealized gain (loss) (0.452) (0.452) (0.130) (0.130) (0.043) 0.029
------- ------- ------- -------- ------- -------
Total from Investment
Operations (0.037) (0.087) 0.411 0.360 0.571 0.151
------- ------- ------- -------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.400) (0.352) (0.511) (0.460) (0.611) (0.121)
In excess of
net investment income
From capital paid in (0.023) (0.021) -- -- -- --
------- ------- ------- -------- ------- -------
Total Distributions
Declared to Shareholders (0.423) (0.373) (0.511) (0.460) (0.611) (b) (0.121) (b)
------- ------- ------- -------- ------- -------
Net asset value -
End of period $ 6.420 $ 6.420 $ 6.880 $ 6.880 $ 6.980 $ 6.980
======= ======= ======== ======== ======= =======
Total return(c) (0.53)% (1.28)% 6.15 % 5.36 % 8.46 % 2.19 %(d)
======= ======= ======== ======== ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.11 % 1.86 % 1.10 % 1.85 % 1.09 % 1.84 %(f)
Net investment income 8.14 % 7.39 % 7.85 % 7.10 % 8.55 % 7.80 %(f)
Portfolio turnover 291 % 291 % 162 % 162 % 132 % 132 %
Net assets at end
of period (in millions) $ 758 $ 836 $ 1,202 $ 978 $ 1,102 $ 343
</TABLE>
- --------------------------------------------------------------------------------
State Tax Information for the Year Ended August 31, 1996 (unaudited) An average
of 22% of the Fund's investments as of the end of each quarter were in direct
obligations of the U.S. Treasury.
Approximately 24% of the Fund's distributions (19% of gross income) was derived
from interest on direct investments in U.S. Treasury bonds, notes and bills.
- --------------------------------------------------------------------------------
19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST II AND THE SHAREHOLDERS OF
COLONIAL U.S. GOVERNMENT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations, of cash
flows, and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Colonial U.S. Government
Fund (a series of Colonial Trust II) at August 31, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and the financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of portfolio positions
at August 31, 1996 by correspondence with the custodian and brokers, and the
application of alternative auditing procedures when confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
October 11, 1996
20
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL 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 Colonial 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 am to 8:00 pm ET, and Saturdays from February through
mid-April, 10:00 am to 2:00 pm ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
am to 8:00 pm ET. Transactions received after the close of the New York Stock
Exchange will receive the next business day's closing price.
COLONIAL LITERATURE DEPARTMENT - 1-800-248-2828
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
21
<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
Colonial 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.
COLONIAL SHAREHOLDER NEWS: 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.)
22
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial U.S. Government Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial U.S. Government Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call our Literature
Department at 1-800-248-2828 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial U.S. Government 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
objective, and operating policies of the Fund.
23
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
Mutual Funds for Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly 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.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC. Distributor (C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
UG-02/788C-0896 M (10/96)
