<PAGE>
- --------------------------------------------------
COLONIAL MONEY MARKET FUND SEMIANNUAL REPORT
- --------------------------------------------------
December 31, 1998
-------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
-------------------------------
<PAGE>
COLONIAL MONEY MARKET FUND HIGHLIGHTS
JULY 1, 1998 - DECEMBER 31, 1998
INVESTMENT OBJECTIVE: Colonial Money Market Fund seeks maximum current income,
consistent with safety of preservation of capital and the maintenance of
liquidity.
STRATEGY: The Fund pursues its objective by investing all of its assets in the
SR&F Cash Reserves Portfolio (Portfolio), a money market fund with the same
investment objective as the Fund.
PORTFOLIO MANAGER COMMENTARY: "The portfolio's maturity was consistent
throughout most of the period. However, we lengthened the maturity slightly and
purchased some one-year notes to try to make up for income lost as a result of
the Federal Reserve Board's interest rate cuts. We took advantage of higher
interest rates, which are typical for year end, by investing our liquid assets
into relatively higher coupon securities. Looking ahead, we expect to maintain
the Fund's maturity at a neutral stance to provide flexibility in an uncertain
market."
- Jane Naeseth
COLONIAL MONEY MARKET FUND PERFORMANCE
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
Inception dates 1/30/81 6/8/92 7/1/94
- --------------------------------------------------------------------------------
Six-month distributions declared per share $0.025 $0.020 $0.023
- --------------------------------------------------------------------------------
7-day yields on 12/31/98(1) 4.80% 3.85% 4.40%
- --------------------------------------------------------------------------------
30-day yields on 12/31/98(1) 4.82% 3.86% 4.41%
- --------------------------------------------------------------------------------
PORTFOLIO BREAKDOWN(2) PORTFOLIO MATURITY(2)
(as of 12/31/98) (AS OF 12/31/98)
- --------------------------------------------------------------------------------
Commercial Paper ..............79.7% 0 - 4 days .....................1.7%
Letters of Credit .............14.0% 5 - 14 days ...................33.6%
Yankee Certificate of 15 - 29 days ..................46.6%
Deposit ........................4.1%
30 - 59 days ..................12.2%
Corporate Notes ................1.1%
60+ days ......................5.9%
Federal Agency
Discount Notes .................1.1%
(1)If the Advisor or its affiliates had not waived or borne certain Fund
expenses, the 7-day and 30-day yields would have been 4.61% and 4.63% for
Class A shares, 3.66% and 3.67% for Class B shares, and 3.61% and 3.62% for
Class C shares, respectively.
(2)Portfolio breakdown and maturity weightings are calculated as a percentage of
total market value of the investment portfolio. Because it is actively
managed, there can be no guarantee the Portfolio will continue to hold or
invest in these securities in the future.
An investment in the Fund is not insured or guaranteed by the U.S.
government. There can be no assurance that the $1.00 net asset value per
share will be maintained.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Stephen E. Gibson]
I am pleased to present the semiannual report for Colonial Money Market Fund for
the six-month period ended December 31, 1998.
Conditions for fixed-income investments varied considerably during the period.
While the environment for bonds was positive overall, a variety of domestic and
international factors created a volatile climate for bond fund investors. In the
U.S., the periodic fears of inflation that existed early in the period all but
vanished during the second half, as an increasing number of signs pointed toward
a gradually slowing U.S. economy. This environment set the stage for a series of
interest rate cuts by the Federal Reserve Board in the fall of 1998, helping
bond values end the period on a positive note.
Flight to quality was a theme that repeated itself at various times during the
period. Abroad, the economic and financial turmoil that began in Asia in the
fall of 1997 gradually spread to other less-developed markets in 1998. As a
result, investors worldwide were drawn to the relative safety and stability of
U.S. Treasury bonds. While returns on most types of fixed-income investments
were positive, investor demand for quality and stability made U.S. Treasury
bonds the biggest winners.
For investors seeking a relatively stable environment for their investment
dollars and the potential for current income, Colonial Money Market Fund remains
an attractive option for their investment portfolio.
Thank you for choosing Colonial Money Market Fund and for giving us the
opportunity to serve your investment needs.
Respectfully,
/s/Stephen E. Gibson
- ---------------------------
Stephen E. Gibson
President
February 11, 1999
On March 2, 1998, the Fund became a feeder fund for the SR&F Cash Reserves
Portfolio, a money market fund managed by Stein Roe & Farnham Incorporated.
Prior to this transition, approximately two-thirds of the portfolio holdings
represented a selection of short-term, U.S. government agency securities. The
Fund no longer invests primarily in U.S. government securities, but rather in
the Portfolio, which has the flexibility to search for the highest relative
yield among a variety of money market instruments.
Because market and economic conditions change frequently, there can be no
assurance that the trends described here will continue.
<PAGE>
SR&F CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998 (IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMERCIAL PAPER - 93.3% (a) PAR VALUE
- ---------------------------------------------------------------------------------------------------
CHEMICALS - PLASTICS - 2.0%
Formosa Plastic (LOC Bank of America),
<S> <C> <C> <C> <C> <C>
5.033% 3/26/99 $ 15,000 $ 14,827
---------
...................................................................................................
CONSULTING SERVICES - 1.9%
CSC Enterprises (gtd. by Computer
Sciences),
5.203% 2/2/99 14,700 14,633
---------
...................................................................................................
CONSUMER PRODUCTS - 2.5%
Fortune Brands,
5.169% 1/26/99 (b) 19,000 18,932
---------
...................................................................................................
FINANCIAL SERVICES - 73.0%
AUTO LENDING - 4.0%
American Honda Finance (gtd. by
American Honda Motor),
5.357-5.362% 1/27/99 30,000 29,885
---------
BANKS - 4.0%
Svenska Handelsbanken, Inc.,
(gtd. by Svenska Handelsbank),
5.617% 1/5/99 30,000 29,981
---------
DIVERSIFIED FINANCIAL SERVICES - 5.5%
Associates Corp. of North America,
5.083% 1/4/99 12,000 11,995
Finova Capital,
5.383-5.725% 01/28/99-01/29/99 30,000 29,875
---------
41,870
---------
LEASING - 4.7%
Enterprise Funding,
5.474-5.554% 01/08/99-01/20/99 (b) 35,898 35,841
---------
MORTGAGE BANKING - 4.6%
Countrywide Home Loans (gtd. by
Countrywide Credit Industries),
5.511% 1/21/99 35,000 34,894
---------
OTHER FINANCIAL - 4.7%
Asset Securitization,
5.506% 1/19/99 (b) $ 20,000 $ 19,946
Caterpillar Financial Services,
5.349% 1/13/99 15,700 15,672
---------
35,618
---------
SPECIAL PURPOSE ENTITIES - 45.5%
BAT Capital (gtd. by BAT Industries),
5.593-5.791% 01/07/99-01/14/99 35,000 34,933
Centric Capital,
5.616% 1/11/99 (b) 20,000 19,969
CSN Overseas (LOC Barclays Bank),
5.580% 01/12/99-01/13/99 35,000 34,939
International Securitization,
5.541-5.574% 01/13/99-01/21/99 (b) 26,000 25,930
Old Line Funding,
5.487% 1/22/99 (b) 35,000 34,889
Pooled Accounts Receivable Capital,
5.628-5.629% 1/19/99 (b) 25,400 25,329
Preferred Receivables Funding,
5.547% 1/5/99 (b) 7,810 7,805
Receivables Capital,
5.357% 1/29/99 (b) 35,000 34,856
Special Purpose Accounts Receivable,
5.282-5.612% 01/15/99-01/20/99 (b) 35,000 34,911
TEB Funding II (LOC Societe
Generale),
5.179% 5/28/99 21,250 20,812
Thames Asset Global Securitization,
No. 1,
5.421-5.548% 02/17/99-02/18/99 (b) 34,391 34,145
Windmill Funding,
5.536-5.620% 01/07/99-01/13/99 (b) 35,000 34,945
---------
343,463
---------
...................................................................................................
PIPELINES - 4.6%
Transportadora De Gas Del Sur (LOC Dresdner Bank),
5.299-5.429% 01/21/99-01/25/99 35,000 34,885
---------
...................................................................................................
RETAIL- CONVENIENCE STORE - 3.4%
Southland (gtd. by Ito-Yokado),
5.258-5.426% 01/12/99-02/18/99 25,550 25,452
---------
- ---------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 3.9%
GTE,
5.451-5.606% 01/14/99-01/29/99 (b) $ 30,000 $ 29,918
---------
...................................................................................................
UTILITY - ELECTRIC - 2.0%
Northern Indiana Public Service,
5.479% 1/20/99 15,000 14,957
---------
TOTAL COMMERCIAL PAPER 705,156
---------
CORPORATE NOTE - 1.1%
- ---------------------------------------------------------------------------------------------------
FINANCIAL SERVICES -1.1%
Transamerica Financial,
8.750% 10/1/99 7,800 8,013
---------
FEDERAL AGENCY DISCOUNT NOTE - 1.1%
- ---------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY - 1.1%
Federal Home Loan Bank,
5.208-5.389% 01/04/99-02/01/99 8,500 8,486
---------
YANKEE CERTIFICATE OF DEPOSIT - 4.1%
- ---------------------------------------------------------------------------------------------------
BANKS - 4.1%
Canadian Imperial Bank,
5.250% 2/4/99 31,000 31,000
---------
TOTAL INVESTMENTS - 99.6% 752,655
---------
OTHER ASSETS & LIABILITIES, NET - 0.4% 2,927
- ---------------------------------------------------------------------------------------------------
NET ASSETS - 100% $755,582
----------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a)The interest rate is the effective rate at the date of purchase except for
the corporate note and yankee certificate of deposit, for which the interest
rate represents the instrument's coupon rate.
(b)Represents private placement securities exempt from registration by Section
4(2) of the Securities Act of 1933. These securities generally are issued to
investors who agree that they are purchasing the securities for investment
and not with a view to public distribution. Any resale by the Portfolio must
be in an exempt transaction, normally to other institutional investors. At
December 31, 1998, the aggregate value of the Fund's private placement
securities was $357,416, which represented 47.3% of net assets. None of these
securities were deemed illiquid.
See notes to financial statements.
<PAGE>
SR&F CASH RESERVES PORTFOLIO
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1998 (UNAUDITED)
(in thousands)
ASSETS
Investments, at amortized cost $ 752,655
Cash $ 2,668
Interest receivable 429
Other assets 26 3,123
------- --------
Total Assets 755,778
LIABILITIES
Payable to investment Advisor 167
Other liabilities 29
-------
Total Liabilities 196
---------
NET ASSETS applicable to investors' beneficial interests $ 755,582
---------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Interest $ 21,170
EXPENSES
Management fees $ 924
Accounting fees 21
Audit and legal fees 9
Trustees' fees 7
Other 34 995
----- ---------
Net Investment Income 20,175
---------
NET REALIZED LOSSES ON PORTFOLIO POSITIONS
Net Realized Losses on Investments (4)
---------
Increase in Net Assets from Operations $ 20,171
---------
See notes to financial statements.
<PAGE>
SR&F CASH RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months
ended Period ended
(in thousands) December 31 June 30
-------------- -----------
INCREASE (DECREASE) IN NET ASSETS 1998 1998(a)
Operations:
Net investment income $ 20,175 $ 12,145
Net realized losses on investments (4) -
--------- --------
Net increase in net assets
resulting from operations 20,171 12,145
Transactions in investors'
beneficial interests:
Contributions 499,846 1,158,202
Withdrawals (450,712) (484,070)
--------- ---------
Net transactions in investors'
beneficial interest 49,134 674,132
--------- ---------
Net increase in net assets 69,305 686,277
NET ASSETS
Beginning of period 686,277 -
--------- ---------
End of period $ 755,582 $ 686,277
--------- ---------
(a) From commencement of operations on March 2, 1998.
FINANCIAL HIGHLIGHTS
(Unaudited)
Six months
ended Period ended
December 31 June 30
------------- ----------
RATIOS TO AVERAGE NET ASSETS 1998 1998 (a)
Expenses 0.26%(b) 0.26%(b)
Net investment income 5.27%(b) 5.45%(b)
(a) From commencement of operations on March 2, 1998.
(b) Annualized.
See notes to financial statements.
<PAGE>
SR&F CASH RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (UNAUDITED)
(All amounts, except per-share amounts, in thousands)
NOTE 1. ORGANIZATION OF THE SR&F CASH RESERVES PORTFOLIO
................................................................................
SR&F Cash Reserves Portfolio (the "Portfolio") is a series of SR&F Base Trust
(The "Trust"), a Massachusetts common law trust organized under an Agreement and
Declaration of Trust dated August 23, 1993. The Portfolio commenced operations
on March 2, 1998. At commencement, Stein Roe Cash Reserves Fund and Colonial
Money Market Fund contributed $493,224 and $187,537, respectively, in securities
and other assets in exchange for beneficial ownership of the Portfolio. The
Portfolio allocates income, expenses and realized gains and losses to each
investor on a daily basis, based on their respective percentage of ownership. At
December 31, 1998, Stein Roe Cash Reserves Fund and Colonial Money Market Fund
owned 65.8% and 34.2%, respectively, of the Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
................................................................................
The following summarizes the significant accounting policies of the Portfolio.
These policies are in conformity with generally accepted accounting principles,
which require management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME:
Investment transactions are accounted for on trade date. Interest income,
including discount accretion and premium amortization, is recorded daily on the
accrual basis. Realized gains or losses from investment transactions are
reported on an identified cost basis.
The Portfolio is permitted to invest in repurchase agreements involving
securities issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities. The Portfolio requires issuers of repurchase agreements to
transfer the securities underlying those agreements to the Portfolio's custodian
at the time of origination.
INVESTMENT VALUATIONS:
All securities are valued as of December 31, 1998. The Portfolio utilizes the
amortized cost method to value its investments. This technique approximates
market value and involves valuing a security initially at cost and, thereafter
assuming a constant amortization to maturity of any discount or premium. In the
event that a deviation of 0.50% or more exists between each Fund's $1.00
per-share net asset value, calculated at amortized cost, and the net asset value
calculated by reference to market quotations, the Board of Trustees would
consider what action, if any, should be taken. Other assets are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees.
The Funds attempt to maintain a per-share net asset value of $1.00, which
management believes will be possible under most conditions.
FEDERAL INCOME TAXES:
No provision is made for federal income taxes because the Portfolio is
treated as a partnership for federal income tax purposes and all of its
income is allocated to its owners based on their respective percentages of
ownership.
NOTE 3. PORTFOLIO COMPOSITION
................................................................................
Under normal market conditions, the Portfolio will invest a least 25% of its
total assets in securities of issuers in the financial services industry (which
includes, but is not limited to, banks, consumer and business credit
institutions, and other financial services companies). At December 31, 1998
74.1% of the Portfolio's net assets were invested in the financial services
industry. See the portfolio of investments for additional information regarding
portfolio composition.
NOTE 4. TRUSTEES FEES AND TRANSACTIONS WITH AFFILIATES
................................................................................
The Portfolio pays a monthly management fee to Stein Roe & Farnham Incorporated
(the "Advisor"), an indirect, wholly-owned subsidiary of Liberty Financial
Companies, Inc. ("Liberty"), for its services as investment advisor and manager.
The management fee for the Portfolio is computed at an annual rate of 0.25% of
the first $500 million of average daily net assets, and 0.225% thereafter. The
Advisor also provides accounting services.
Certain officers and trustees of the Trust are also officers of the Advisor. The
compensation of trustees not affiliated with the Advisor for the Portfolio for
the period ended December 31, 1998, was $7. No remuneration was paid to any
other trustee or officer of the Trust.
<PAGE>
COLONIAL MONEY MARKET FUND
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1998 (UNAUDITED)
(in thousands except for per share amounts)
ASSETS
Investment in SR&F Cash Reserves
Portfolio $ 258,483
Receivable for:
Fund shares sold $ 17,482
Other 10 17,492
-------- ---------
Total Assets 275,975
LIABILITIES
Payable for:
Fund shares repurchased 994
Distributions 173
Payable to Advisor 11
Accrued:
Deferred Trustees fees 5
Other 26
------------
Total Liabilities 1,209
---------
NET ASSETS $ 274,766
---------
Net asset value:
Class A ($185,390/185,377) $ 1.00 (a)
---------------
Class B ($87,086/87,082) $ 1.00 (a)
---------------
Class C ($2,290/2,290) $ 1.00 (a)
---------------
COMPOSITION OF NET ASSETS
Capital paid in $ 274,746
Undistributed net investment income 23
Accumulated net realized loss (3)
---------
$ 274,766
---------
(a)Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See notes to financial statements.
<PAGE>
COLONIAL MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Interest income from
SR&F Cash Reserves Portfolio $ 7,194
Expenses allocated from
SR&F Cash Reserves Portfolio (339)
--------
6,855
EXPENSES
Administration fee $ 322
Service fee - Class B 99
Service fee - Class C 4
Distribution fee - Class B 298
Distribution fee - Class C 13
Transfer agent 303
Bookkeeping fee 33
Trustees fee 8
Custodian fee 2
Audit fee 11
Legal fee 4
Registration fee 48
Reports to shareholders 3
Other 6
------
1,154
Fee waived by the Administrator (245)
Fee waived by the Distributor - Class C (10) 899
------ --------
Net Investment Income 5,956
--------
NET REALIZED LOSS ON PORTFOLIO POSITIONS
Net realized loss (2)
-------
Increase in Net Assets from Operations $ 5,954
=======
See notes to financial statements.
<PAGE>
COLONIAL MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Period ended
(in thousands) December 31 June 30 (a)
-----------------------------
INCREASE (DECREASE) IN 1998 1998
NET ASSETS
Operations:
<S> <C> <C>
Net investment income $ 5,956 $ 7,476
Net realized loss (2) --
-------- ----------
Net Increase from Operations 5,954 7,476
Distributions:
From net investment income - Class A (4,311) (5,343)
From net investment income - Class B (1,571) (1,940)
From net investment income - Class C (76) (126)
-------- ----------
(4) 67
-------- ----------
Fund Share Transactions:
Receipts for shares sold - Class A 499,364 1,173,914
Value of distributions reinvested - Class A 4,226 4,381
Cost of shares repurchased - Class A (446,855) (1,193,752)
-------- ----------
56,735 (15,457)
-------- ----------
Receipts for shares sold - Class B 122,476 182,273
Value of distributions reinvested - Class B 1,480 1,545
Cost of shares repurchased - Class B (98,680) (192,276)
-------- ----------
25,276 (8,458)
-------- ----------
Receipts for shares sold - Class C 4,132 10,122
Value of distributions reinvested - Class C 75 104
Cost of shares repurchased - Class C (5,221) (9,827)
-------- ----------
(1,014) 399
-------- ----------
Net Increase (Decrease) from Fund
Share Transactions 80,997 (23,516)
-------- ----------
Total Increase (Decrease) 80,993 (23,449)
NET ASSETS
Beginning of period 193,773 217,222
-------- ----------
End of period (undistributed net investment
income of $23 and $25, respectively) $274,766 $ 193,773
======== ==========
</TABLE>
(a)The Fund changed its fiscal year end from August 31 to June 30.
Information presented is for the period September 1, 1997 through June
30, 1998.
Statement of Changes in Net Assets continued on following page.
See notes to financial statements.
<PAGE>
COLONIAL MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS - CONT.
<TABLE>
<CAPTION>
(Unaudited)
Six months ended Period ended
(in thousands) December 31 June 30 (a)
--------------------------------
NUMBER OF FUND SHARES 1998 1998
<S> <C> <C>
Sold - Class A 499,371 1,173,913
Issued for distributions reinvested - Class A 4,225 4,381
Repurchased - Class A (446,855) (1,193,752)
--------- -----------
56,741 (15,458)
--------- -----------
Sold - Class B 122,476 182,273
Issued for distributions reinvested - Class B 1,480 1,545
Repurchased - Class B (98,680) (192,275)
--------- -----------
25,276 (8,457)
--------- -----------
Sold - Class C 4,132 10,122
Issued for distributions reinvested - Class C 75 104
Repurchased - Class C (5,221) (9,827)
--------- -----------
(1,014) 399
--------- -----------
</TABLE>
(a)The Fund changed its fiscal year end from August 31 to June 30. Information
presented is for the period September 1, 1997 through June 30, 1998.
See notes to financial statements.
<PAGE>
COLONIAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
................................................................................
In the opinion of the Administrator of Colonial Money Market Fund (the Fund), a
series of Colonial Trust II, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at December 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
................................................................................
ORGANIZATION: The Fund is a 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 invests all of its investable
assets in interests in the SR&F Cash Reserves Portfolio (the Portfolio), a
Massachusetts common trust, having the same investment objective as the Fund.
The value of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio (34.2% at December 31,
1998). The performance of the Fund is directly affected by the performance of
the Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The Fund may issue an
unlimited number of of shares. The Fund offers three classes of shares: Class A,
Class B, and Class C shares. Class A shares are sold with a front-end sales
charge and a 1.00% contingent deferred sales charge on purchases of $1 million
to $5 million. Class B shares are subject to an annual distribution fee and a
contingent deferred sales charge. Class B shares will convert to Class A shares
when they have been outstanding approximately eight years. Class C shares are
subject to a contingent deferred sales charge on redemptions made within one
year after purchase and a continuing service and 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 followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION AND TRANSACTIONS: Valuation of securities by the Portfolio is
discussed in Note 2 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class C service and 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.
Class B and Class C per share data and ratios are calculated by adjusting the
net investment income per share data and ratios for the Fund for the entire
period by the service fee and 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: The Fund declares and records distributions daily
and pays monthly.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
................................................................................
ADMINISTRATION FEE: Colonial Management Associates, Inc. (the Administrator)
provides accounting and other services and office facilities for a monthly fee
equal to 0.25% annually of the Fund's average net assets. The Administrator has
voluntarily agreed to waive a portion of the administration fee so that it does
not exceed 0.06% annually.
BOOKKEEPING FEE: The Administrator provides bookkeeping and pricing services for
$18,000 per year plus 0.0233% of the Fund's average net assets over $50 million.
TRANSFER AGENT: Liberty Funds Services, Inc., formerly Colonial Investors
Service Center, Inc. (the Transfer Agent), an affiliate of the Administrator,
provides shareholder services for a monthly fee equal to 0.20% annually of the
Fund's average net assets and receives reimbursement for certain out-of-pocket
expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc. (the
Distributor), a subsidiary of the Administrator, is the Fund's principal
underwriter. During the six months ended December 31, 1998, the Fund has been
advised that the Distributor received contingent deferred sales charges (CDSC)
of $37,401, $211,043 and $6,321 on Class A, Class B, and Class C shares
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 Class B and Class C 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. The Distributor has voluntarily
agreed to waive a portion of the Class C share distribution fee so that it does
not exceed 0.15% annually.
EXPENSE LIMITS: The Administrator has agreed, until further notice, to waive
fees and bear certain Fund expenses to the extent that total expenses (inclusive
of the Fund's proportionate share of the Portfolio's expenses and exclusive of
service and distribution fees, brokerage commissions, interest, taxes and
extraordinary expenses, if any) exceed 1.00% annually of the Fund's average net
assets.
For the six months ended December 31, 1998, the Fund's total expenses as defined
above did not exceed the 1.00% expense limit.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Administrator.
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.
The Fund had an agreement with its custodian bank under which $6,461 of
custodian fees were reduced by balance credits applied during the six months
ended December 31, 1998. The Fund could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an income
producing asset if it had not entered into such agreements.
NOTE 4. OTHER RELATED PARTY TRANSACTIONS
................................................................................
At December 31, 1998, Liberty Financial Investments, Inc. and Colonial
Management Associates, Inc. owned 1% and 11% respectively, of the Fund's shares
outstanding.
NOTE 5. RESULTS OF SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
................................................................................
On October 30, 1998, a Special Meeting of Shareholders of the Fund was held to
approve the following item, as described in the Proxy Statement for the Meeting.
On August 21, 1998, the record date for the Meeting, the Fund had outstanding
239,313,070 shares of beneficial interest. The votes cast at the Meeting were as
follows:
AUTHORITY
FOR WITHHELD
--- --------
To Elect a Board of Trustees:
Robert J. Birnbaum 139,377,390 1,729,325
Tom Bleasdale 139,377,390 1,729,325
John Carberry 139,377,390 1,729,325
Lora S. Collins 139,377,390 1,729,325
James E. Grinnell 139,377,390 1,729,325
Richard W. Lowry 139,377,390 1,729,325
Salvatore Macera 139,377,390 1,729,325
William E. Mayer 139,377,390 1,729,325
James L. Moody, Jr. 139,377,390 1,729,325
John J. Neuhauser 139,377,390 1,729,325
Thomas E. Stitzel 139,377,390 1,729,325
Robert L. Sullivan 139,377,390 1,729,325
Anne-Lee Verville 139,377,390 1,729,325
<PAGE>
COLONIAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
(Unaudited)
Six months ended December 31
----------------------------
1998
Class A Class B Class C
---------- ------------ ----------
Net asset value -
Beginning of period $ 1.000 $ 1.000 $ 1.000
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a)(e) 0.025 0.020 0.023(b)
------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.025) (0.020) (0.023)
======= ======= =======
Net asset value -
End of period $ 1.000 $ 1.000 $ 1.000
======= ======= =======
Total return (f)(g)(h) 2.50% 1.99% 2.30%
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (a)(e)(i)(j) 0.65% 1.65% 1.05%(b)
Net investment
income (a)(e)(i)(j) 4.94% 3.94% 4.54%(b)
Net assets at end
of period (000) $185,390 $ 87,086 $ 2,290
(a) Net of fees waived by the
Administrator which
amounted to 0.19%
(annualized) and $ 0.001 $ 0.001 $ 0.001
(b) Net of fees waived by the
Distributor which
amounted to 0.60%
(annualized) and $ 0.003 $ 0.003 $ 0.003
(c) The Fund changed its fiscal year end from August 31 to June 30.
Information presented is for the period September 1, 1997 through
June 30, 1998.
(d) Effective March 2, 1998, SR&F became the investment Advisor of the Fund.
(e) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and
expenses of SR&F Cash Reserves Portfolio.
(f) Total return at net asset value assuming all distributions reinvested
and no contingent deferred sales charge.
(g) Not annualized.
(h) Had the Administrator and Distributor not waived a portion of
expenses, total return would have been reduced.
(i) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(j) Annualized.
<PAGE>
COLONIAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS - CONT.
Period ended June 30
---------------------------------------
1998(c)(d)
Class A Class B Class C
---------- ------------- ----------
$ 1.000 $ 1.000 $ 1.000
---------- ------------- ----------
0.041 0.032 0.037 (b)
---------- ------------- ----------
(0.041) (0.032) (0.037)
---------- ------------- ----------
$ 1.000 $ 1.000 $ 1.000
---------- ------------- ----------
4.17% 3.28% 3.81%
---------- ------------- ----------
0.69% 1.69% 1.09% (b)
4.93% 3.93% 4.53% (b)
$128,658 $ 61,811 $ 3,304
$ 0.001 $ 0.001 $ 0.001
$ 0.005 $ 0.005 $ 0.005
<PAGE>
COLONIAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
Year ended August 31
-------------------------------------
1997
Class A Class B Class C (b)
---------- ---------- -------------
Net asset value -
Beginning of period $ 1.000 $ 1.000 $ 1.000
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.048 0.038 0.039
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.048) (0.038) (0.039)
------- ------- -------
Net asset value -
End of period $ 1.000 $ 1.000 $ 1.000
------- ------- -------
Total return (c) 4.90% 3.82% 3.97%
------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.72% (e) 1.72% (e) 1.64% (e)
Fees and expenses waived
or borne by the Advisor -- -- --
Net investment
income 4.73% (e) 3.73% (e) 3.81% (e)
Net assets at end
of period (000) 144,076 $ 70,242 $ 2,904
(a) Net of fees and expenses waived or borne by the Advisor which amounted
to:
$ -- $ -- $ --
(b) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years ratios' are net of benefits
received, if any.
<PAGE>
COLONIAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS - CONT.
Year ended August 31
- ------------------------------------------------------------------------------
1996 1995
Class A Class B Class C Class A Class B Class C
- ------------------------------------- -------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------- ----------- ---------- ------------ ---------- --------
0.048 0.038 0.038 0.050 0.040 0.040
- ---------- ----------- ---------- ------------ ---------- --------
(0.048) (0.038) (0.038) (0.050) (0.040) (0.040)
- ---------- ----------- ---------- ------------ ---------- --------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------- ----------- ---------- ------------ ---------- --------
4.93% 3.86% 3.85% 5.14% (d) 4.08% (d) 4.07%(d)
- ---------- ----------- ---------- ------------ ---------- --------
0.70% (e) 1.70% (e) 1.70% (e) 0.69% 1.69% 1.69%
-- -- -- 0.04% 0.04% 0.04%
4.76% (e) 3.76% (e) 3.76% (e) 4.96% 3.96% 3.96%
$115,063 $ 76,539 $ 4,435 $ 83,086 $55,441 $625
$ -- $ -- $ -- $0.000 $0.000 $0.000
<PAGE>
COLONIAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended August 31
----------------------------------------
1994
Class A Class B Class C (b)
----------- ------------ -----------
Net asset value -
Beginning of period $ 1.000 $ 1.000 $ 1.000
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.028 0.018 0.005
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.028) (0.018) (0.005)
------- ------- -------
Net asset value -
End of period $ 1.000 $ 1.000 $ 1.000
------- ------- -------
Total return (c)(d) 2.85% 1.82% 0.45(e)
------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.73% 1.73% 1.73%(f)
Fees and expenses waived
or borne by the Advisor 0.20% 0.20% 0.20%(f)
Net investment income 3.01% 2.01% 2.01%(f)
Net assets at end
of period (000) $97,115 $ 54,535 $ 518
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.002 $ 0.002 $ 0.002
(b) Class C shares were initially offered on July 1, 1994. Per share amounts
reflect activity from that date.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) Annualized.
<PAGE>
COLONIAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS - CONT.
Year ended
August 31
------------------------
1993
Class A Class B
------- -------
Net asset value -
Beginning of period $ 1.000 $ 1.000
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.023 0.013
-------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.023) (0.013)
Net asset value - End of period $ 1.000 $ 1.000
-------- --------
Total return (c)(d) 2.28% 1.27%
-------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.88% 1.88%
Fees and expenses waived or borne by the Advisor 0.20% 0.20%
Net investment income 2.26% 1.26%
Net assets at end of period (000) $ 44,693 $10,890
$ 0.002 $ 0.002
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
LIBERTY FUNDS DISTRIBUTOR INVESTOR OPPORTUNITIES: Mailed with your quarterly
account statements, this newsletter highlights timely investment strategies,
portfolio manager commentary and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your Fund has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Liberty Funds Services, Inc. directly at
1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES(1): Exchange all or part of your account into the same share
class of another fund distributed by Liberty Funds Distributor, Inc. by phone or
mail.
EASY ACCESS TO YOUR MONEY(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it within one year, you can reinvest in any fund distributed by
Liberty Funds Distributor of the same share class without any penalty or sales
charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Fund account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
processing date will be the previous business day. Dividends and capital gains
must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Funds Distributor. Minimum for each transfer is $100.
RETIREMENT PLANS: Choose from a broad range of retirement plans, including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at any
time. Exchanges are not available on all funds. Investors who purchase Class B
or C shares, or $1 million or more of Class A shares, may be subject to a
contingent deferred sales charge.
<PAGE>
HOW TO REACH US
BY PHONE OR BY MAIL
BY TELEPHONE
CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends and capital gains information ............ press |1|
For account information ............................................ press |2|
To speak to a service representative ............................... press |3|
For yield and total return information ............................. press |4|
For duplicate statements or new supply of checks ................... press |5|
To order duplicate tax forms and year-end statements .............. press |6|
(February through May)
To review your options at any time during your call .............. press |*|
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET.
LIBERTY TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
LITERATURE - 1-800-426-3750
To request literature on any fund distributed by Liberty Funds Distributor,
Inc., call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
LIBERTY FUNDS SERVICES, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Money Market Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Money Market 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 Money Market Fund.
This report may also be used as sales literature when preceded or accompanied by
the current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund and the most recent copy of the
Liberty Funds Distributor, Inc. Performance Update.
*Effective October 1, 1998, Colonial Investor Service Center, Inc. - the
Transfer Agent for Colonial, Crabbe Huson, Newport and Stein Roe Advisor
funds - changed its name to Liberty Funds Services, Inc.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
[logo]
LIBERTY
COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distibutor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
MM-03/458G-1298 (2/99) 99/128
