<PAGE>
[LOGO]
COLONIAL SMALL
STOCK FUND
[GRAPHIC]
ANNUAL REPORT
JUNE 30, 1995
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
Earning Your Trust for
More Than 60 Years
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (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.
Trustee (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, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JOHN A. MCNEICE, JR.
Chairman of the Board and Director, The Colonial Group, Inc. and Colonial
Management Associates, Inc. (formerly Chief Executive Officer, The Colonial
Group, Inc. and Colonial Management Associates, Inc.)
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. (C)1995
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
SS-02/164B-0695
<PAGE>
COLONIAL SMALL STOCK FUND HIGHLIGHTS
JULY 1, 1994 -- June 30, 1995
INVESTMENT OBJECTIVE: Colonial Small Stock Fund seeks long-term growth by
investing primarily in smaller capitalization stocks.
STRATEGY: The Fund pursues its objective by investing primarily in the common
stocks of companies with market capitalizations between $20 million and $1
billion.
THE FUND IS DESIGNED TO OFFER:
- Solid long-term growth potential
- Access to dynamic investment opportunities
- A disciplined investment strategy
PORTFOLIO MANAGER COMMENTARY: "Small-capitalization stocks continued to provide
investors with attractive returns during the Fund's most recent fiscal year.
Ironically, this came despite an economic slowdown over the first half of
calendar 1995. With small-cap stocks somewhat undervalued, we believe there is
plenty of room for growth in this sector."
COLONIAL SMALL STOCK FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception date 7/25/86 11/9/92
- ------------------------------------------------------------------------------
Total returns, assuming
reinvestment of all distributions and no
sales charge or contingent deferred sales charge
- - 6 months 21.16% 20.72%
- - 12 months 33.53% 32.60%
- ------------------------------------------------------------------------------
Net asset value per share at 6/30/95 $22.26 $21.84
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS TOP FIVE SECTORS*
- ---------------------------------- --------------------
<S> <C>
1. HADCO Corp. 1. Technology
2. Puritan-Bennett Corp. 2. Consumer Cyclical
3. U.S. Robotics Corp. 3. Financial
4. Titan Wheel International, Inc. 4. Health Care
5. Mercer International, Inc. 5. Capital Goods
</TABLE>
* Industry sectors in the following financial statements are based upon the
standard industrial classifications (SIC) published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon Colonial defined criteria as used in the investment process.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
During the 12 months ended June 30, 1995, equity investments provided attractive
returns for investors. Most impressive was the fact that this strong performance
was maintained despite a slowing of economic growth in the United States over
the second half of the fiscal year.
Almost all sectors of the stock market performed well during the period,
including foreign stocks, large-capitalization "blue chip" stocks, and the
small-capitalization stocks that are your Fund's primary focus. Although
conditions generally favored large-cap stocks during the fiscal year, small
stocks continued to reward investors with strong returns. Foreign stocks
benefited from recovering economies at home and the strength of local currencies
versus the U.S. dollar. The dollar weakened significantly over the second half
of the fiscal year. Blue chip stocks also did well because investors sought out
the stability provided by these stocks as the U.S. economy began to slow.
The Colonial Small Stock Fund management team, James Haynie and Mike Rega,
believe that economic conditions will favor small-capitalization stocks in the
months ahead. In fact, their research indicates that the current environment
offers some good buying opportunities for the Fund. In the following report, Jim
and Mike comment on the Fund's management strategy and on key issues affecting
the small capitalization market.
Respectfully,
/s/ John A. McNeice, Jr.
John A. McNeice, Jr.
President
August 11, 1995
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
JAMES HAYNIE is lead portfolio manager of Colonial Small Stock Fund. Jim is
a Vice President of Colonial Management Associates, Inc. He received a B.A.
in economics from Colorado College in 1984, and an M.B.A. from Dartmouth
College's Amos Tuck School in 1986.
MICHAEL REGA is the Fund's associate manager. Mike is an Equity Research Analyst
with Colonial Management Associates, Inc. He received his undergraduate degree
from Holy Cross College in 1982, and an M.B.A. in Finance and Computer Science
from Boston College in 1991.
FUND'S INVESTMENT OPTIONS BROADENED: During the period, the Fund's maximum
market capitalization was increased from $400 million to $1 billion at the time
of purchase. This opens the door to some exciting new investment opportunities
and will facilitate the Fund's desire to maintain a risk profile that is
consistent with other small-cap funds. The new maximum capitalization should
also help further diversify the portfolio while keeping our investments well
within the small stock universe.
SMALL STOCKS STRONG, BUT INVESTOR SENTIMENT SHIFTS: Despite the small stock
sector's strong performance over the past year, they lost the leadership
position they had held since the end of 1990. This was due to a change in
investor attitude. The weakness of the U.S. dollar made many small stock
investors uneasy, and the negative impact this had was compounded by uncertainty
about the U.S. economy. In general, such concerns are marked by a flight from
small capitalization stocks to the perceived safety of large-capitalization
"blue chip" investments. While their large-cap counterparts provided better
returns over the course of the fiscal year, small-caps remained an attractive
source of capital appreciation -- as reflected by the Fund's 12-month total
return for Class A shares of 33.59%.
FUND BENEFITS FROM TECHNOLOGY INVESTMENTS: Technology is one of the largest
sectors in the small stock universe, providing a diverse selection of investment
options that we have used to our advantage. At the end of the period, 27.8% of
the Fund's assets were invested in this sector. Small-cap technology companies
are fundamentally different from their large-cap counterparts. Many of these
smaller companies supply the technology that is used to fuel the growth of
large-cap companies -- their success therefore reflects the success of the
companies with which they do business.
NICHE PLAYERS PROVIDE OPPORTUNITIES: "Niche" players are an important source of
opportunity in the small stock market. These companies often fill smaller market
segments that have either been overlooked or abandoned by larger
4
<PAGE>
companies. For example, Comair Holdings, a regional airline based in Ohio, has
picked up many of the local routes that the larger airlines have given up.
LOOKING AHEAD: Our outlook for small caps remains positive -- so much so that we
view the relative weakness that affected the small-cap market in 1995 as a
buying opportunity. We believe investors currently are underestimating the
sector's long-term prospects. Once the market takes into account the fundamental
strength of these stocks, small caps should return to the leadership position
they enjoyed over the four previous years.
COLONIAL SMALL STOCK FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 7/86 - 6/95
Based on Maximum Offering Price for Class A Shares
<TABLE>
<S> <C>
Russell 2000 Index $23,982
Colonial Small Stock Fund at NAV $20,401
Colonial Small Stock Fund at MOP $19,228
</TABLE>
A $10,000 investment in Class B shares made on November 9, 1992, (inception) at
net asset value would have been valued at $16,787 on June 30, 1995. A $10,000
investment in Class B shares made on November 9, 1992, (inception) at the
maximum contingent deferred sales charge would have grown to $16,487 on June 30,
1995.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Inception 7/25/86 Inception 11/9/92
NAV MOP NAV W/CDSC
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 YEAR 33.53% 25.91% 32.60% 27.67%
- ------------------------------------------------------------------------------
5 YEARS 10.52% 9.22% -- --
- ------------------------------------------------------------------------------
SINCE INCEPTION 8.05% 7.33% 21.69% 20.86%
- ------------------------------------------------------------------------------
</TABLE>
The Russell 2000 Index TR is a total return index that tracks the performance of
2,000 small-capitalization stocks traded on the New York Stock Exchange, the
American Stock Exchange, and the NASDAQ. 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. Net asset
value (NAV) return does not include sales charges or contingent deferred sales
charges (CDSC). Maximum offering price (MOP) return includes the maximum sales
charge for Class A shares of 5.75%. The maximum CDSC for Class B shares is 5.00%
for 1-year and 3.00% 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
JUNE 30, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 88.5% SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - 0.3%
BUILDING CONSTRUCTION - 0.3%
Schuler Homes, Inc. (a) 19 $ 234
------
- -------------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 11.2%
DEPOSITORY INSTITUTIONS - 2.2%
First Bank System, Inc. 12 484
First Federal Michigan Corp. 6 171
Peoples Heritage Financial Group, Inc. 27 407
TCF Financial Corp. 10 489
------
1,551
------
HOLDING & OTHER INVESTMENT COMPANIES - 2.2%
CCB Financial Corp. 7 292
MGI Properties, Inc. 12 181
Mercer International, Inc. (a) 50 1,050
------
1,523
------
INSURANCE AGENTS & BROKERS - 0.6%
US Facilities Corp. 25 406
------
INSURANCE CARRIERS - 3.0%
American Bankers Insurance Group, Inc. 23 743
Capital RE Corp. 15 380
Selective Insurance Group, Inc. 1 33
United American Healthcare Corp. (a) 15 257
Vesta Insurance Group, Inc. 20 687
------
2,100
------
NONDEPOSITORY CREDIT INSTITUTIONS - 1.9%
Foothill Group, Inc., Class A 26 671
The Money Store, Inc. 19 670
------
1,341
------
REAL ESTATE - 0.0%
Vista Properties, Inc., Class A (a) (b) (b)
SECURITY BROKERS & DEALERS - 1.3%
Advest Group, Inc. (a) 25 196
Alex Brown, Inc. 7 282
Morgan Keegan, Inc. 36 444
------
922
------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 52.4%
APPAREL - 2.0%
Cyrk International, Inc. (a) 10 $ 89
Nautica Enterprises, Inc. (a) 14 507
Norton McNaughton, Inc. (a) 27 419
Oxford Industries, Inc. 23 418
-------
1,433
-------
CHEMICALS - 1.0%
Cytec Industries, Inc. (a) 8 323
Helene Curtis Industries, Inc. 10 274
ICN Pharmaceuticals, Inc. (a) 8 132
-------
729
-------
ELECTRONIC & ELECTRICAL EQUIPMENT - 15.0%
California Microwave, Inc. (a) 10 251
Cascade Communications Corp. (a) 8 346
Duracraft Corp. (a) 25 655
HADCO Corp. (a) 55 1,368
Hutchinson Technology, Inc. (a) 15 637
Lattice Semiconductor Corp. (a) 15 516
OPTI, Inc. (a) 20 455
Pacific Scientific Co. 10 182
Pairgain Technologies, Inc. (a) 5 96
Park Electrochemical Corp. 16 820
Photronics, Inc. (a) 14 434
Proteon, Inc. (a) 120 705
Sanmina Corp. (a) 20 760
Silicon Valley Group, Inc. (a) 22 812
Standard Motor Products, Inc. 15 304
U.S. Robotics, Corp. (a) 12 1,253
Unitrode Corp. (a) 11 301
Watkins-Johnson Co. 15 645
-------
10,540
-------
FABRICATED METAL - 2.3%
Amcast Industrial Corp. 10 186
BMC Industries, Inc. 25 638
Butler Manufacturing Co. 8 349
Ekco Group, Inc. 27 161
Shelter Components Corp. 21 251
-------
1,585
-------
FOOD & KINDRED PRODUCTS - 0.9%
Hudson Foods, Inc. 44 612
-------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1995
- -------------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - CONT.
FURNITURE & FIXTURES - 0.2%
Pulaski Furniture Co. 9 $ 161
-------
LEATHER - 1.2%
Vista Resources, Inc. (a) 7 150
Wolverine World Wide, Inc. 35 717
-------
867
-------
LUMBER & WOOD PRODUCTS - 0.4%
Oakwood Homes Corp. 11 282
-------
MACHINERY & COMPUTER EQUIPMENT - 10.1%
Digital Link Corp. (a) 6 170
Electroglas, Inc. (a) 6 344
Esterline Technologies Corp. (a) 43 964
Exabyte Corp. (a) 33 458
Hunt Manufacturing Co. 18 275
Indresco, Inc. (a) 30 465
JLG Industries, Inc. 33 874
J. Ray McDermott, S.A. (a) 11 239
Kulicke & Soffa Industries, Inc. (a) 3 166
Kysor Industrial Corp. 7 145
Mylex Corp. (a) 20 265
Optical Data Systems, Inc. (a) 32 840
Proxima Corp. (a) 15 358
S3, Inc. (a) 5 180
Scotsman Industries, Inc. 23 427
Toro Co. 19 518
Wynn's International, Inc. 7 160
Xircom, Inc. (a) 20 201
-------
7,049
-------
MEASURING & ANALYZING INSTRUMENTS - 8.3%
Amsco International, Inc. (a) 25 347
Bio-Rad Laboratories, Inc.
Class A (a) 20 720
Credence Systems Corp. (a) 32 953
Fossil, Inc. (a) 18 339
Innovex, Inc. 30 405
Mentor Corp. 18 502
Oak Industries, Inc. (a) 7 183
Perceptron, Inc. (a) 20 425
Puritan-Bennett Corp. 35 1,352
Quickturn Design Systems, Inc. (a) 39 350
Tech-Sym Corp. (a) 8 211
-------
5,787
-------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
MISCELLANEOUS MANUFACTURING - 0.5%
Anthony Industries, Inc. 17 $ 319
-------
PAPER & PAPER MILLS - 1.7%
Chesapeake Corp. 16 498
Longview Fibre Co. 25 425
Shorewood Packaging Corp. (a) 16 234
-------
1,157
-------
PRIMARY METAL - 2.9%
Mueller Industries, Inc. (a) 15 739
Texas Industries, Inc. 6 233
Titan Wheel International, Inc. 42 1,081
-------
2,053
-------
PRINTING & PUBLISHING - 0.4%
Devon Group, Inc. (a) 10 295
-------
RUBBER & PLASTIC - 1.4%
Applied Extrusion Technologies, Inc. (a) 48 714
Carlisle Cos., Inc. 6 237
-------
951
-------
STONE, CLAY, GLASS & CONCRETE - 1.0%
Southdown, Inc. (a) 35 669
-------
TEXTILE MILL PRODUCTS - 1.4%
Fieldcrest Cannon, Inc. 17 370
Guilford Mills, Inc. 8 195
Johnston Industrial, Inc. 4 28
Masland Corp. 29 373
Signal Apparel Co. (a) 6 33
-------
999
-------
TRANSPORTATION EQUIPMENT - 1.7%
Automotive Industries Holdings, Class A (a) 10 271
Coachmen Industries, Inc. 9 140
Thor Industries, Inc. 11 221
Varlen Corp. 25 595
-------
1,227
-------
- -------------------------------------------------------------------------------------
RETAIL TRADE - 4.2%
APPAREL & ACCESSORY STORES - 0.6%
Claire's Stores, Inc. 25 453
-------
GENERAL MERCHANDISE STORES - 1.2%
Mac Frugals Bargains Close-Outs, Inc. (a) 50 875
-------
</TABLE>
9
<PAGE>
Investment Portfolio/June 30, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL TRADE - CONT.
HOME FURNISHINGS & EQUIPMENT - 0.2%
Rex Stores Corp. (a) 8 $ 113
------
MISCELLANEOUS RETAIL - 2.2%
Big B, Inc. 35 499
Blair Corp. 6 210
Damark International, Inc. (a) 40 237
Medicine Shoppe International, Inc. 17 597
------
1,543
------
- -------------------------------------------------------------------------------------
SERVICES - 12.4%
AMUSEMENT & RECREATION - 0.3%
Anchor Gaming (a) 10 223
------
BUSINESS SERVICES - 7.3%
America Online, Inc. (a) 4 158
FTP Software, Inc. (a) 20 600
FileNet Corp. (a) 24 973
Logicon, Inc. 16 703
Norrell Corp. 26 494
PHH Corporation 10 445
Software Spectrum, Inc. (a) 35 726
Sterling Software, Inc. (a) 23 887
Wall Data, Inc. (a) 10 153
------
5,139
------
HEALTH SERVICES - 4.8%
Apria Healthcare Group, Inc. (a) 27 771
Community Health Systems, Inc. (a) 15 508
Maxicare Health Plans, Inc. (a) 30 465
Regency Health Services, Inc. (a) 70 735
Rotech Medical Corp. (a) 33 916
------
3,395
------
- -------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 3.9%
AIR TRANSPORTATION - 1.4%
Comair Holdings, Inc. 25 958
------
ELECTRIC SERVICES - 0.3%
Commonwealth Energy System Cos. 6 238
------
SANITARY SERVICES - 0.5%
Southern California Water Co. 18 349
------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION SERVICES - 1.7%
Air Express International Corp. 25 $ 597
GATX Corp. 12 565
-------
1,162
-------
- -------------------------------------------------------------------------------------
WHOLESALE TRADE - 4.1%
DURABLE GOODS - 3.4%
Bell Industries, Inc. 31 654
CellStar Corp. (a) 12 281
Pioneer Standard Electronics, Inc. 28 680
Wyle Electronics Co. 27 762
-------
2,377
-------
NONDURABLE GOODS - 0.7%
Bindley Western Industries, Inc. 29 459
-------
TOTAL COMMON STOCKS (cost of $46,008) 62,076
-------
RIGHTS & WARRANTS (a) - 0.0%
- -------------------------------------------------------------------------------------
United States Home Corp., expires
6/21/98 (cost of $16) 2 18
-------
TOTAL INVESTMENTS - 88.5% (cost of $46,024) (c) 62,094
-------
SHORT-TERM OBLIGATIONS - 10.8% PAR
- -------------------------------------------------------------------------------------
Repurchase agreement with Lehman Government
Securities, Inc., dated 06/30/95 due 07/03/95 at
6.210%, collateralized by U.S. Treasury bills and
notes with various maturities to 1999, market
value $7,703 (repurchase proceeds $7,542) $ 7,538 7,538
-------
OTHER ASSETS & LIABILITIES, NET - 0.7% 487
- -------------------------------------------------------------------------------------
NET ASSETS - 100.0% $70,119
-------
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------------
</TABLE>
(a) Non-income producing.
(b) Rounds to less than one.
(c) Cost for federal income tax purposes is $46,075.
See notes to financial statements.
11
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1995
<TABLE>
<CAPTION>
(In thousands except for per share amounts and footnote)
<S> <C> <C>
ASSETS
Investments at value (cost $46,024) $62,094
Short-term obligations 7,538
-------
69,632
Receivable for:
Fund shares sold $1,627
Investments sold 811
Dividends 36
Interest 1
Other 17 2,492
------ -------
Total Assets 72,124
LIABILITIES
Payable for:
Investments purchased 1,828
Fund shares repurchased 164
Accrued:
Deferred Trustees fees 2
Other 11
------
Total Liabilities 2,005
-------
NET ASSETS $70,119
-------
Net asset value & redemption price per share -
Class A ($40,661/1,826) $22.26
-------
Maximum offering price per share - Class A
($22.26/0.9425) $23.62 (a)
-------
Net asset value & offering price per share -
Class B ($29,458/1,349) $21.84 (b)
-------
COMPOSITION OF NET ASSETS
Capital paid in $51,664
Accumulated net investment loss (1)
Accumulated net realized gain 2,386
Net unrealized appreciation 16,070
-------
$70,119
-------
</TABLE>
[FN]
(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.
12
<PAGE>
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
(In thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 390
Interest 292
-------
Total Investment Income 682
EXPENSES
Management fee $ 279
Service fee 118
Distribution fee - Class B 128
Transfer agent 154
Bookkeeping fee 28
Trustees fee 2
Custodian fee 4
Audit fee 29
Legal fee 6
Registration fee 29
Reports to shareholders 5
Other 24 806
------- -------
Net Investment Loss (124)
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 3,335
Net unrealized appreciation
during the period 11,220
-------
Net Gain 14,555
-------
Net Increase in Net Assets From Operations $14,431
-------
</TABLE>
See notes to financial statements.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(In thousands) Year ended June 30
------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
<S> <C> <C>
Operations:
Net investment loss $ (124) $ (116)
Net realized gain 3,335 2,151
Net unrealized appreciation (depreciation) 11,220 (1,170)
------- -------
Net Increase from Operations 14,431 865
Fund Share Transactions:
Receipts for shares sold - Class A 16,058 9,439
Cost of shares repurchased - Class A (9,202) (9,547)
------- -------
6,856 (108)
------- -------
Receipts for shares sold - Class B 29,658 9,179
Cost of shares repurchased - Class B (14,075) (2,058)
------- -------
15,583 7,121
------- -------
Net Increase from Fund Share Transactions 22,439 7,013
------- -------
Total Increase 36,870 7,878
NET ASSETS
Beginning of period 33,249 25,371
------- -------
End of period (including undistributed net
investment losses of $1 and $12, respectively) $70,119 $33,249
------- -------
NUMBER OF FUND SHARES
Sold - Class A 823 545
Repurchased - Class A (483) (555)
------- -------
340 (10)
------- -------
Sold - Class B 1,587 530
Repurchased - Class B (753) (120)
------- -------
834 410
------- -------
</TABLE>
See notes to financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Small Stock Fund, (the Fund), is a series of Colonial
Trust VI, a Massachusetts business trust, registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end, management
investment company. 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 following
significant accounting policies are consistently followed by the Fund in the
preparation of its financial statements and conform to generally accepted
accounting principles.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there were
no sales during the day, at current quoted bid prices.
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
or sold.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B 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.
Per share data was calculated using the average shares outstanding during the
period. In addition, Class B net investment income per share data reflects the
distribution fee per share applicable to Class B shares only.
Class B ratios are calculated by adjusting the expense and net investment income
ratios for the Fund for the entire period by the distribution fee applicable to
Class B shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
15
<PAGE>
Notes to Financial Statements/June 30, 1995
- --------------------------------------------------------------------------------
OTHER: Corporate actions are recorded on the ex-date. Interest income is
recorded on the accrual basis.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 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 equal to 0.60% annually of the Fund's
average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc., (the Transfer Agent),
an affiliate of the Adviser, provides shareholder services for a monthly fee
equal to 0.25% annually of the Fund's average net assets, and receives a
reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: The Adviser, through
Colonial Investment Services, Inc., (the Distributor), is the Fund's principal
underwriter. For the year ended June 30, 1995, the Distributor retained net
underwriting discounts of $22,750 on sales of the Fund's Class A shares and
received contingent deferred sales charges (CDSC) of $77,729 on Class B share
redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee 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% of the average net assets attributable to Class B
shares.
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.
0THER: 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.
16
<PAGE>
Notes to Financial Statements/June 30, 1995
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended June 30, 1995, purchases and sales of
investments, other than short-term obligations, were $45,781,421 and
$26,716,891, respectively.
Unrealized appreciation (depreciation) at June 30, 1995, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $18,049,368
Gross unrealized depreciation (2,030,569)
-----------
Net unrealized appreciation $16,018,799
-----------
</TABLE>
OTHER: The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
NOTE 4. RESULTS OF SPECIAL SHAREHOLDERS MEETING (UNAUDITED)
- --------------------------------------------------------------------------------
On February 15, 1995, a special meeting of shareholders was held and a new
Management Agreement between the Trust and Colonial Management Associates, Inc.
was approved that became effective upon the completion of the merger of The
Colonial Group, Inc. and Apple Merger Corporation, a subsidiary of Liberty
Financial Companies, Inc. on March 24, 1995. Out of the shares of beneficial
interest outstanding on December 9, 1994, 1,565,884 voted for the new Management
Agreement, 23,007 voted against and 58,484 abstained. Of the shares of
beneficial interest outstanding that abstained, 9,999 represented broker
non-votes.
17
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended June 30
----------------------------------------------
1995 1994
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $16.670 $16.470 $15.860 $15.790
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.002 (0.139) (0.047) (0.176)
Net realized and unrealized gain 5.588 5.509 0.857 0.856
------- ------- ------- -------
Total from Investment Operations 5.590 5.370 0.810 0.680
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- -- -- --
------- ------- ------- -------
Net asset value -
End of period $22.260 $21.840 $16.670 $16.470
------- ------- ------- -------
Total return (c) 33.59% 32.67% 5.11% 4.31%
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.45% 2.20% 1.56% 2.31%
Interest expense -- -- -- --
Net investment income (loss) 0.01% (0.74)% (0.27)% (1.02)%
Portfolio turnover 64% 64% 35% 35%
Net assets at end of period (000) $40,661 $29,458 $24,760 $ 8,489
</TABLE>
[FN]
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Class B shares were initially offered on November 9, 1992. Per share data
reflects 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) Not annualized.
(e) Annualized.
18
<PAGE>
FINANCIAL HIGHLIGHTS (a) - continued
<TABLE>
<CAPTION>
Year ended June 30
------------------------------------------------
1993 1992 1991
Class A Class B (b) Class A Class A
------- ----------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $12.330 $13.010 $11.570 $13.560
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.083) (0.100) (0.127) 0.045
Net realized and unrealized gain 3.613 2.880 0.887 (1.992)
------- ------- ------- -------
Total from Investment Operations 3.530 2.780 0.760 (1.947)
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- -- -- (0.043)
------- ------- ------- -------
Net asset value -
End of period $15.860 $15.790 $12.330 $11.570
------- ------- ------- -------
Total return (c) 28.63% 21.37% (d) 6.57% (14.34)%
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.88% 2.63% (e) 2.13% 1.91%
Interest expense 0.01% 0.01% 0.06% 0.03%
Net investment income (loss) (0.60)% (1.35)% (0.91)% 0.33%
Portfolio turnover 29% 29% (e) -- 79%
Net assets at end of period (000) $23,716 $ 1,655 $22,002 $28,943
</TABLE>
[FN]
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Class B shares were initially offered on November 9, 1992. Per share data
reflects 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) Not annualized.
(e) Annualized.
19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
COLONIAL SMALL STOCK FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Small Stock Fund (a series
of Colonial Trust VI) at June 30, 1995, 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 June 30, 1995 by correspondence with the custodian and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 11, 1995
20
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you activate any of these services,
or call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50;
$25 for an IRA account.
FREE EXCHANGES*: Exchange all or part of your account into the same share class
of another Colonial fund, by phone or mail, as your needs change over time.
EASY ACCESS TO YOUR MONEY*: 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 to Colonial within one year, you can reinvest in any
Colonial fund of the same share class without any penalty or sales charges.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Colonial 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. SWPs by check are processed on
the 10th of each month, including the April 1995 payment.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
LOW COST IRAS: Choose from a broad range of retirement plans,
including IRAs.
* Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial. Proceeds may be more or less than
your original cost. The exchange privilege may be terminated at any time.
Investors who purchase Class B or Class D shares, or $1 million or more of Class
A shares, may be subject to a contingent deferred sales charge.
21
<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 4 pm 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
22
<PAGE>
SHAREHOLDER SERVICES AND TRANSFER AGENT
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Small Stock 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 Small Stock 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.
23
