<PAGE>
LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present Colonial Small Stock Fund's semiannual report for the
six months ended December 31, 1994. The Fund's objective is to provide
shareholders with growth of principal through investments in companies with
market capitalizations between $20 million and $400 million.(1)
<TABLE>
FUND PERFORMANCE (7/1/94 - 12/31/94)(2)
<CAPTION>
CLASS A CLASS B
INCEPTION 7/25/86 11/9/92
- ------------------------------------------------------
<S> <C> <C>
Six-month total return, assuming
reinvestment of all distributions
and no sales charge or CDSC 10.26% 9.90%
- ------------------------------------------------------
Net asset value per share
at 12/31/94 $18.38 $18.10
- ------------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
The U.S. economy expanded in earnest during 1994. After several years of
lackluster growth, this was certainly a welcome development. However, along with
economic strength came renewed fears about inflation. The Federal Reserve Board
stepped in, raising short-term interest rates six times during the fiscal year.
The Fed's action has not yet had a significant impact on economic growth, as
demonstrated by the preliminary 1994 GDP of 4.0%.
Small capitalization stocks were strong performers in their own right and
relative to their large capitalization counterparts during the third quarter of
1994. They did not do as well during the fourth quarter, and over the entire
fiscal year their returns lagged returns for large-capitalization stocks by
about four percentage points. This reflected the fact that when investors are
uncertain about the direction the economy may take, they tend to seek refuge in
the perceived safety offered by large-company stocks.
INVESTMENT STRATEGY
During the fiscal year, Portfolio Manager James Haynie invested in a
diversified selection of common stocks. On December 31, 1994, the Fund owned 130
stocks in nine economic sectors. The top five sectors represented in the
portfolio were consumer non-durables (26.4% of investments), technology (24.3%),
manufacturing (21.4%), banking & finance (12.4%), and business services (7.5%).
Your Fund manager took advantage of attractive valuations in the technology
sector, which he believes will continue to benefit from strong earnings growth.
Investments had already been built up over the first half of 1994, and were
increased by 58% during the semiannual period. To position the Fund for the
later stages of the recovery, investments in some cyclical industries, including
homebuilding and transportation, were also increased.
Financial stocks did well during the first half of 1994. However, from July
through December the performance of these stocks declined, reflecting the impact
of the narrowing "yield gap" on the profitability of commercial banks. During
the period, the Fund's investments in this sector were reduced by 30%.
[PHOTO OF JOHN A. McNEICE, JR.]
[PHOTO (INSET)]
"John A. McNeice, Jr.
President"
Over the long term, the prospects for small capitalization companies appear
quite attractive. These companies are in a position to improve productivity and
profitability by taking advantage of technological innovations and opportunities
that may not be practical for larger companies.
If you would like to take further advantage of the growth opportunities small
stocks may offer, please contact your full-service financial adviser or call
Colonial at 1-800-426-3750.
Sincerely,
/s/ John A McNeice, Jr.
John A. McNeice, Jr.
President
February 10, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/94
CLASS A CLASS B
NAV MOP NAV W/CDSC
<C> <C> <C> <C> <C>
1 year 6.30% 0.19% 5.54% 0.54%
5 years 6.72% 5.46% - -
Since inception 6.10% 5.36% 16.64% 15.46%
Since adoption of current
investment policies 18.07% 14.88% - -
- -----------------------------------------------------------------
<FN>
(1) Investment objective changed 11/9/92.
(2) 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 returns do not
include sales charges or contingent deferred sales charges (CDSC). Maximum
offering price (MOP) returns include the maximum sales charge of 5.75%. CDSC
returns reflect the maximum charge of 5.00% for one year, 3.00% since
inception.
</TABLE>
<PAGE>
INVESTMENT PORTFOLIO (UNAUDITED, IN THOUSANDS) DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - 91.6% SHARES VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE - DEFENSE - 1.8%
Pacific Scientific Co . . . . . . . . . . . . . . 5 $ 206
Sparton Corp. (a) . . . . . . . . . . . . . . . . 8 34
Thiokol Corp . . . . . . . . . . . . . . . . . . 8 231
Transtechnology Corp . . . . . . . . . . . . . . 7 84
UNC, Inc. (a) . . . . . . . . . . . . . . . . . . 43 257
--------
812
- ------------------------------------------------------------------------
BANKING & FINANCIAL SERVICES - 11.4%
BANKS & BANK HOLDING COMPANIES - 3.6%
First Fed Michigan Corp . . . . . . . . . . . . . 16 330
Peoples Heritage Savings. . . . . . . . . . . . . 27 325
Rochester Community Savings Bank(a) . . . . . . . 30 464
The Money Store, Inc. . . . . . . . . . . . . . . 26 475
--------
1,594
--------
BROKERAGE - 0.8%
Advest Group, Inc. (a). . . . . . . . . . . . . . 30 153
Alex Brown, Inc. . . . . . . . . . . . . . . . . 7 207
--------
360
--------
FINANCE COMPANIES - 2.0%
Foothill Group, Inc., Class A. . . . . . . . . . 26 394
McDonald & Company Investment, Inc. . . . . . . . 11 120
MDC Holdings, Inc. . . . . . . . . . . . . . . . 17 85
Morgan Keegan, Inc. . . . . . . . . . . . . . . 24 284
--------
883
--------
INSURANCE - 1.8%
Capital RE Corp. . . . . . . . . . . . . . . . . 17 454
United American
Health Care Corp. (a) . . . . . . . . . . . . . 15 366
--------
820
--------
INVESTMENT COMPANIES - 0.5%
Inter-Regional Financial Group, Inc . . . . . . . 4 90
Pilgrim Regional Bank Shares, Inc . . . . . . . . 13 116
--------
206
--------
REAL ESTATE - 0.4%
MGI Properties . . . . . . . . . . . . . . . . . 12 169
--------
SAVINGS & LOANS - 2.3%
Metropolitan Financial Corp. . . . . . . . . . . 26 605
Pacific Crest Capital, Inc. (a) . . . . . . . . . 2 9
TCF Financial Corp. . . . . . . . . . . . . . . . 10 425
--------
1,039
- ------------------------------------------------------------------------
CONSUMER NON-DURABLES - 24.2%
COMMUNICATIONS & MEDIA - 0.5%
National Auto Credit, Inc. (a) . . . . . . . . . 20 240
--------
CONSUMER PRODUCTS - 3.2%
Fieldcrest Cannon, Inc. . . . . . . . . . . . . . 37 946
Helene Curtis Industries, Inc. . . . . . . . . . 8 254
Vista Resources, Ltd. (a) . . . . . . . . . . . . 10 212
--------
1,412
--------
ENTERTAINMENT & LEISURE - 1.7%
Webb Corp. . . . . . . . . . . . . . . . . . . . 11 187
WYLE Laboratories . . . . . . . . . . . . . . . . 30 587
--------
774
--------
FOOD, BEVERAGE & TOBACCO - 2.2%
Hudson Foods, Inc. . . . . . . . . . . . . . . . 34 864
Orange Company, Inc. (a). . . . . . . . . . . . . 9 50
TII Industries, Inc. (a). . . . . . . . . . . . . 7 44
--------
958
--------
HEALTH CARE - 7.3%
Abbey Healthcare Group, Inc. (a). . . . . . . . . 20 453
AMSCO International, Inc. (a) . . . . . . . . . . 25 228
Bindley Western Industries, Inc. . . .. . . . . . 49 758
Community Health Systems (a). . . . . . . . . . . 15 409
Healthdyne, Inc. (a). . . . . . . . . . . . . . . 13 104
Omnicare, Inc. . . . . . . . . . . . . . . . . . 14 619
Perry Drug Stores, Inc. (a) . . . . . . . . . . . 36 397
Rotech Medical Corp. (a). . . . . . . . . . . . . 9 257
--------
3,225
--------
OTHER CONSUMER NON-DURABLES - 1.8%
AZTAR Corp. (a) . . . . . . . . . . . . . . . . . 64 383
MASLAND Corp. (a) . . . . . . . . . . . . . . . . 28 437
--------
820
--------
RETAIL TRADE - 7.5%
Big B, Inc. . . . . . . . . . . . . . . . . . . . 39 540
Blair Corp. . . . . . . . . . . . . . . . . . . . 6 244
Bradlees. . . . . . . . . . . . . . . . . . . . . 37 430
Damark International, Inc. (a). . . . . . . . . . 70 581
Delchamps, Inc. . . . . . . . . . . . . . . . . . 6 84
J. Baker, Inc. . . . . . . . . . . . . . . . . . 29 436
Medicine Shoppe International, Inc. . . . . . . . 17 455
Rex Stores Corp. (a). . . . . . . . . . . . . . . 8 132
Sports and Recreation (a) . . . . . . . . . . . . 9 236
Standard Motor Products, Inc. . . . . . . . . . . 3 55
Strawbridge & Clothier, CL A. . . . . . . . . . . 7 156
--------
3,349
- ------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
2
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - 91.6% SHARES VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
ENERGY - 0.9%
OIL & GAS SERVICES
Commonwealth Energy System Co . . . . . . . . . . 6 $ 229
Tesoro Petroleum Corp. (a). . . . . . . . . . . . 20 185
--------
414
- ------------------------------------------------------------------------
MANUFACTURING - 19.7%
APPAREL - 3.3%
Barry R G Corp. (a) . . . . . . . . . . . . . . . 16 178
Oxford Industries, Inc. . . . . . . . . . . . . . 23 501
Signal Apparel Co. (a). . . . . . . . . . . . . . 6 50
Wolverine World Wide, Inc. . . . . . . . . . . . 28 722
--------
1,451
--------
BUILDING & HOUSING- 3.1%
Anthony Industries, Inc. . . . . . . . . . . . . 20 326
Hughes Supply, Inc. . . . . . . . . . . . . . . . 5 98
Puerto Rican Cement Co., Inc. . . . . . . . . . . 7 200
Pulaski Furniture Co. . . . . . . . . . . . . . . 9 141
Schuler Homes Inc. . . . . . . . . . . . . . . . 28 400
Texas Industries, Inc. (a). . . . . . . . . . . . 6 212
U.S. Home Corp. . . . . . . . . . . . . . . . . . 2 13
--------
1,390
--------
CAPITAL GOODS - 4.0%
Esco Electronics Corp. (a). . . . . . . . . . . . 23 168
Megatest (a). . . . . . . . . . . . . . . . . . . 18 116
Scotsman Industries, Inc. . . . . . . . . . . . . 23 396
Syquest Technology Inc. (a) . . . . . . . . . . . 29 513
Toro Co. . . . . . . . . . . . . . . . . . . . . 8 230
Twin Disc, Inc. . . . . . . . . . . . . . . . . . 5 82
Varlen Corp. . . . . . . . . . . . . . . . . . . 10 260
--------
1,765
--------
CHEMICALS - 0.1%
Publicker Industries, Inc. (a). . . . . . . . . . 26 61
--------
COMPUTER - 1.2%
Warner Computer Systems . . . . . . . . . . . . . 13 29
Xircom, Inc. (a) . . . . . . . . . . . . . . . . 27 486
--------
515
--------
CONSUMER DURABLES - 3.8%
Dovatron International Inc. (a) . . . . . . . . . 10 245
Ekco Group, Inc. (a) . . . . . . . . . . . . . . 27 175
Nautica Enterprises, Inc. (a) . . . . . . . . . . 9 272
Oakwood Homes Corp. . . . . . . . . . . . . . . . 21 511
Thor Industries, Inc. . . . . . . . . . . . . . . 11 218
Walbro Corp. . . . . . . . . . . . . . . . . . . 6 114
Wynn's International, Inc. . . . . . . . . . . . 7 152
--------
1,687
--------
DIVERSIFIED - 0.8%
Bairnco Corp. . . . . . . . . . . . . . . . . . . 15 60
Core Industries, Inc. . . . . . . . . . . . . . . 13 125
Kysor Industrial Corp. . . . . . . . . . . . . . 7 155
--------
340
--------
METALS & MINERALS - 2.1%
Amcast Industrial Corp. . . . . . . . . . . . . . 10 207
Carlisle Companies, Inc . . . . . . . . . . . . . 6 224
Titian Wheel, Inc . . . . . . . . . . . . . . . . 18 500
--------
931
--------
OTHER MANUFACTURING - 0.3%
Johnston Industrial, Inc. . . . . . . . . . . . . 14 147
--------
PAPER & FOREST PRODUCTS - 1.0%
Republic Gypsum Co. . . . . . . . . . . . . . . . 13 129
Shorewood Packaging Corp. (a) . . . . . . . . . . 16 326
--------
455
- ------------------------------------------------------------------------
PIPELINES - 0.5%
Offshore Pipelines, Inc. (a). . . . . . . . . . . 11 244
- ------------------------------------------------------------------------
SERVICES - 7.0%
BUSINESS - 4.6%
America Online, Inc. (a). . . . . . . . . . . . . 7 381
Autotote Corp. CL A (a) . . . . . . . . . . . . . 20 228
Filenet Corp. (a) . . . . . . . . . . . . . . . . 24 651
Norand (a). . . . . . . . . . . . . . . . . . . . 6 227
Safeguard Scientifics Inc. (a). . . . . . . . . . 31 541
--------
2,028
--------
DISTRIBUTORS - 1.9%
Computer Task Group, Inc. . . . . . . . . . . . . 17 154
Pioneer Standard Electronics, Inc . . . . . . . . 43 673
--------
827
--------
POLLUTION CONTROL - 0.5%
Groundwater Technology, Inc. (a). . . . . . . . . 16 216
- ------------------------------------------------------------------------
TECHNOLOGY - 22.2%
BIO-TECHNOLOGY - 0.4%
ICN Pharmaceuticals, Inc. (a) . . . . . . . . . . 8 140
Xoma Corp. (a). . . . . . . . . . . . . . . . . . 20 54
--------
194
--------
ELECTRONICS - 18.9%
Aspect Communications (a) . . . . . . . . . . . . 9 302
Bell Industries, Inc. . . . . . . . . . . . . . . 39 797
BMC Industries, Inc. . . . . . . . . . . . . . . 15 241
Centigram Communications Corp. (a). . . . . . . . 18 253
Credence Systems Corp. (a). . . . . . . . . . . . 7 165
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONT. SHARES VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY - CONT.
ELECTRONICS - CONT.
Duracraft Corp. (a) . . . . . . . . . . . . . . . 7 $ 223
Lattice Semiconductor Corp. . . . . . . . . . . . 15 251
Logicon, Inc. . . . . . . . . . . . . . . . . . . 13 384
Oak Industries, Inc. (a). . . . . . . . . . . . . 13 300
OLICOM A/S (a) . . . . . . . . . . . . . . . . . 50 513
Optical Data Systems, Inc. (a). . . . . . . . . . 12 350
Park Electrochemical Corp. . . . . . . . . . . . 21 631
Photronics, Inc. (a). . . . . . . . . . . . . . . 9 280
Sanmina Corp. (a) . . . . . . . . . . . . . . . . 25 681
Silicon Valley Group, Inc. (a). . . . . . . . . . 44 916
Tech-Sym Corp. (a) . . . . . . . . . . . . . . . 8 181
Unitrode Corp. (a). . . . . . . . . . . . . . . . 20 367
U.S. Robotics, Inc. (a) . . . . . . . . . . . . . 20 843
Watkins Johnson Co. . . . . . . . . . . . . . . . 26 759
--------
8,437
--------
SOFTWARE - 2.9%
Exabyte Corp. (a) . . . . . . . . . . . . . . . . 15 321
Excel Technology, Inc. (a). . . . . . . . . . . . 23 109
Sterling Software, Inc. (a) . . . . . . . . . . . 23 847
--------
1,277
- ------------------------------------------------------------------------
TRANSPORTATION - 3.2%
Air Express International Corp. . . . . . . . . . 35 708
Coachmen Industries, Inc. . . . . . . . . . . . 9 141
Comair Holdings, Inc. . . . . . . . . . . . . . . 31 548
Sea Containers Ltd., Class A. . . . . . . . . . . 2 29
--------
1,426
- ------------------------------------------------------------------------
UTILITIES - 0.7%
Electric
Southern California Water Co. . . . . . . . . . . 18 315
- ------------------------------------------------------------------------
Total common stocks (cost $33,220) (b). . . . . . 40,781
- ------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 12.0% PAR
- ------------------------------------------------------------------------
Repurchase agreement with Lehman
Government Securities, Inc., dated 12/30/94
due 01/03/95 at 5.850% collateralized
by U.S. Treasury notes with various
maturities to 1999, market value $5,058
(repurchase proceeds $5,338) . . . . . . . . . . $5,335 5,335
- ------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - (3.6)% (1,595)
- ------------------------------------------------------------------------
NET ASSETS - 100.0% $ 44,521
- ------------------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) Non-income producing.
(b) Cost for federal income tax purposes is $33,285.
</TABLE>
See notes to financial statements.
4
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
December 31, 1994
(in thousands except for per share amounts and footnote)
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $33,220) . . . . . . . . . $ 40,781
Short-term obligations . . . . . . . . . . . . . . . . 5,335
--------
46,116
Receivable for:
Fund shares sold. . . . . . . . . . . . $389
Dividends . . . . . . . . . . . . . . . 36
Investments sold. . . . . . . . . . . . 2
Other . . . . . . . . . . . . . . . . . 38 465
---- --------
Total assets. . . . . . . . . . . . . . . . . 46,581
LIABILITIES
Payable for:
Investments purchased . . . . . . . . . 1,796
Fund shares repurchased . . . . . . . . 253
Accrued deferred Trustees fees . . . . . 11
-----
Total liabilities . . . . . . . . . . . . . . 2,060
--------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . $ 44,521
========
Net asset value & redemption price per share -
Class A ($27,918/1,519) . . . . . . . . . . . . . . $18.38
--------
Maximum offering price per share - Class A
($18.38/0.9425) . . . . . . . . . . . . . . . . . . . $19.50*
--------
Net asset value & offering price per share -
Class B ($16,603/917) . . . . . . . . . . . . . . . . $18.10
--------
COMPOSITION OF NET ASSETS
Capital paid in . . . . . . . . . . . . . . . . . . . $ 36,958
Accumulated net investment loss . . . . . . . . . . . (45)
Accumulated net realized gain . . . . . . . . . . . . 47
Net unrealized appreciation . . . . . . . . . . . . . 7,561
--------
$ 44,521
========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS (UNAUDITED)
Six months ended December 31, 1994
(in thousands)
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends. . . . . . . . . . . . . . . . . . . . . . . $ 176
Interest . . . . . . . . . . . . . . . . . . . . . . . 121
--------
297
EXPENSES
Management fee. . . . . . . . . . . . . . . $ 116
Service fee . . . . . . . . . . . . . . . . 48
Distribution fee - Class B. . . . . . . . . 46
Transfer agent . . . . . . . . . . . . . . 63
Bookkeeping fee . . . . . . . . . . . . . . 14
Trustees fees . . . . . . . . . . . . . . . 5
Custodian fee . . . . . . . . . . . . . . . 1
Audit fee . . . . . . . . . . . . . . . . 15
Legal fee . . . . . . . . . . . . . . . . . 3
Registration fees . . . . . . . . . . . . . 13
Reports to shareholders . . . . . . . . . . 3
Other . . . . . . . . . . . . . . . . . . . 3 330
----- --------
Net investment loss . . . . . . . . . . . . . . (33)
--------
NET REALIZED AND UNREALIZED GAIN
ON PORTFOLIO POSITIONS
Net realized gain. . . . . . . . . . . . . . . . . . . 861
Net unrealized appreciation during the period. . . . . 2,711
--------
Net gain. . . . . . . . . . . . . . . . . . . . . 3,572
--------
Net increase in net assets from operations . . . . . . $ 3,539
========
<FN>
* On sales of $50,000 or more the offering price is reduced.
</TABLE>
See notes to financial statements.
5
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
(unaudited)
Six months Year
ended ended
December 31 June 30
----------- -----------
1994 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (33) $ (116)
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 861 2,151
Net unrealized appreciation (depreciation). . . . . . . . . . . . . . . . . . . . . 2,711 (1,170)
-------- -----------
Net increase from operations . . . . . . . . . . . . . . . . . . . . . . . . 3,539 865
-------- -----------
Fund share transactions
Receipts for shares sold - Class A. . . . . . . . . . . . . . . . . . . . . . . . . 4,547 9,439
Cost of shares repurchased - Class A. . . . . . . . . . . . . . . . . . . . . . . . (3,944) (9,547)
-------- -----------
603 (108)
-------- -----------
Receipts for shares sold - Class B. . . . . . . . . . . . . . . . . . . . . . . . . 10,132 9,179
Cost of shares repurchased - Class B. . . . . . . . . . . . . . . . . . . . . . . . (3,002) (2,058)
-------- -----------
7,130 7,121
-------- -----------
Net increase from Fund share transactions. . . . . . . . . . . . . . . . . . 7,733 7,013
-------- -----------
Total increase . . . . . . . . . . . . . . . . . . . . . . . . . . 11,272 7,878
NET ASSETS
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,249 25,371
-------- -----------
End of period (including net investment
losses of $45 and $12, respectively). . . . . . . . . . . . . . . . . . . . . . . $ 44,521 $ 33,249
======== ===========
NUMBER OF FUND SHARES
Sold - Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 545
Repurchased - Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (222) (555)
-------- -----------
33 (10)
-------- -----------
Sold - Class B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576 530
Repurchased - Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (174) (120)
-------- -----------
402 410
-------- -----------
Net increase in shares outstanding . . . . . . . . . . . . . . . . . . . . . 435 400
Outstanding at
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,001 1,601
-------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,436 2,001
======== ===========
</TABLE>
See notes to financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Colonial Small Stock Fund (the Fund), a
series of Colonial Trust VI, 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, 1994, 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
The Fund is 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 which are 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.
The 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 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.
- --------------------------------------------------------------------------------
OTHER
Corporate actions are recorded on the ex-date.
Interest income is recorded on the accrual basis.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
The Fund's custodian takes possession through the federal book-entry system
of securities collaterizing repurchase agreements. Collateral is
marked-to-market daily to ensure that the market value of the underlying assets
remains sufficient to protect the Fund. The Fund may experience costs and delays
in liquidating the collateral if the issuer defaults or enters bankruptcy.
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
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 its Colonial Investment Services (the Distributor)
division (effective March 1, 1995 a separate subsidiary of the Adviser), is the
Fund's principal underwriter. During the six months ended December 31, 1994, the
Distributor retained net underwriting discounts of $4,812 on sales of the Fund's
Class A shares and received contingent deferred sales charges (CDSC) of $27,696
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.
- --------------------------------------------------------------------------------
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 4. PORTFOLIO INFORMATION
During the six months ended December 31, 1994, purchases and sales of
investments, other than short-term obligations, were $16,123,496 and $7,390,460,
respectively.
<TABLE>
Unrealized appreciation (depreciation) at December 31, 1994, based on cost
of investments for federal income tax purposes was:
<S> <C>
Gross unrealized appreciation................ $10,040,367
Gross unrealized depreciation................ (2,544,298)
-----------
Net unrealized appreciation................ $7,496,069
===========
</TABLE>
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS
<TABLE>
At June 30, 1994, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<CAPTION>
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
------------------ -------------------------
<S> <C>
2001 $707,000
</TABLE>
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.
- --------------------------------------------------------------------------------
OTHER
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
9
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (a)
Selected data for a share of each class outstanding throughout each period are as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
DECEMBER 31 YEAR ENDED JUNE 30
-------------------- ------------------------------------------------------------------------
1994 1994 1993 1992 1991 1990
-------------------- ------------------ ----------------- ------- ------- -------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B (b) CLASS A CLASS A CLASS A
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period . . . . . . . . . . $16.670 $16.470 $15.860 $15.790 $12.330 $13.010 $11.570 $13.560 $13.540
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income . . . . 0.006 (0.060) (0.047) (0.176) (0.083) (0.100) (0.127) 0.045 0.048
Net realized and
unrealized gain (loss). . . 1.704 1.690 0.857 0.856 3.613 2.880 0.887 (1.992) 0.017
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations. . . . . . . . . 1.710 1.630 0.810 0.680 3.530 2.780 0.760 (1.947) 0.065
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions declared
to shareholders:
From net investment
income. . . . . . . . . . . -- -- -- -- -- -- -- (0.043) (0.045)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value -
End of period . . . . . . . . $18.380 $18.100 $16.670 $16.470 $15.860 $15.790 $12.330 $11.570 $13.560
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return (c). . . . . . . 10.26%(d) 9.90%(d) 5.11% 4.31% 28.63% 21.37%(d) 6.57% (14.34)% 0.49%
======= ======= ======= ======= ======= ======= ======= ======= =======
Ratios to average net
assets:
Expenses. . . . . . . . . . . 1.47%(e) 2.22%(e) 1.56% 2.31% 1.88% 2.63%(e) 2.13% 1.91% 1.67%
Interest expense. . . . . . . -- -- -- -- 0.01% 0.01% 0.06% 0.03% 0.02%
Net investment income . . . . 0.07%(e) (0.68)%(e) (0.27)% (1.02)% (0.60)% (1.35)%(e) (0.91)% 0.33% 0.35%
Portfolio turnover. . . . . . 43%(e) 43%(e) 35% 35% 29% 29% -- 79% 17%
Net assets at end of period
(000) . . . . . . . . . . . . $27,918 $16,603 $24,760 $ 8,489 $23,716 $ 1,655 $22,002 $28,493 $42,888
<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 amounts reflect activity from that date.
(c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or CDSC.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
[FIGURE 1]
ABOUT OUR COVER...
The symbol on the cover of this Report represents the Fund's primary investment
focus on common stocks.
- --------------------------------------------------------------------------------
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.
SHAREHOLDER SERVICES AND TRANSFER AGENT
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
This material may be used with potential investors if it is preceded or
accompanied by a current Fund prospectus containing more complete information
including fees, risks, and expenses.
The Fund's Trustees recently approved minor modifications to the wording of your
Fund's objective to more precisely describe the Fund's investment approach. No
Fund policies or practices were changed. As of 2/28/95, the Fund's objective
will be long-term growth by investing primarily in smaller-capitalization
equities.
Effective December 30, 1994, Stephen A. Lanzendorf no longer co-manages Colonial
Small Stock Fund. Until the designation of a new co-manager, the Fund will be
managed by James Haynie. Jim has been with Colonial since 1993, and he has
co-managed the Fund since that time.
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
COLONIAL
SMALL STOCK
FUND
- --------------------------------------------------------------------------------
SEMIANNUAL REPORT
DECEMBER 31, 1994
[COLONIAL MUTUAL FUNDS LOGO]
COLONIAL INVESTMENT SERVICES (C)1995
One Financial Center, Boston, Massachusetts 02111-2621
Printed on recycled paper
SS-03/575A-1294
