COLONIAL SMALL
STOCK FUND
[PHOTO MONTAGE]
ANNUAL REPORT
JUNE 30, 1996
NOT FDIC-|MAY LOSE VALUE
INSURED |NO BANK GUARANTEE
COLONIAL SMALL STOCK FUND HIGHLIGHTS
JULY 1, 1995 - JUNE 30,1996
INVESTMENT OBJECTIVE: Colonial Small Stock Fund seeks long-term growth by
investing primarily in smaller capitalization equities.
THE FUND IS DESIGNED TO OFFER:
x Diversification
x Dynamic investment opportunities
x Disciplined investment strategy
PORTFOLIO MANAGER COMMENTARY: "Small capitalization stocks provided very
attractive total returns during the past year. We currently believe this sector
of the equity market offers compelling buying opportunities, and we are
confident that the Fund will continue to offer distinct benefits to investors
who want a diversified investment portfolio."
- James Haynie
COLONIAL SMALL STOCK FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A* CLASS B CLASS D
<S> <C> <C> <C>
Inception dates 7/25/86 11/9/92 1/15/96
Total returns, assuming reinvestment of
all distributions and no sales charge or
contingent deferred sales charge (CDSC)
12 months 25.31% 24.44% --
Net asset value per share at 6/30/96 $26.48 $25.77 $26.40
</TABLE>
*Formerly Colonial Small Stock Index Trust. Name and objective changed 11/2/92.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS** TOP FIVE SECTORS**
(as of 6/30/96) (as of 6/30/96)
<S> <C> <C> <C>
1.CompUSA, Inc. 2.1% 1.Technology 24.8%
2.US Robotics Corp. 2.1% 2.Consumer Cyclicals 13.7%
3.Advanced Technology 1.9% 3.Health Care 10.6%
4.Universal Health Service 1.8% 4.Financials 10.4%
5.Alex Brown, Inc. 1.6% 5.Capital Goods 7.4%
</TABLE>
**Because the Fund is actively managed, holdings and sectors will change.
Holding and sector weightings are based on net assets. 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's defined
criteria as used in the investment process.
2
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF PRESIDENT]
I am pleased to present your Fund's annual report for the period ended June 30,
1996. First, however, I would like to extend my thanks to President John A.
McNeice, Jr., who has retired after a career with Colonial that spanned 40
years. We look forward to his continued involvement on the executive committee
of the board of directors at our parent company, Liberty Financial Companies,
Inc.
In my new position, I am directing Colonial's focus on the delivery of
investment performance over the long term. To achieve this mission, we will
continue to seek the optimal combination of talented people and effective
investment disciplines.
The receipt of your annual report is a good time to reflect on market conditions
and the performance of your Fund during the past year. The second half of 1995
saw a combination of falling interest rates and controlled inflation helping the
economy grow at a comfortable pace. Interest rates rose fairly steadily during
the first half of 1996. This increase was caused in part by unemployment
statistics that proved to be lower than anticipated, causing a decline in bond
prices.
While there may be some current stock market volatility, we expect corporate
earnings to continue to make progress, but at a slower pace than in 1995. We
also anticipate growth opportunities in certain foreign markets. In the
following pages, you'll find detailed information on your Fund's performance as
well as an in-depth discussion with the portfolio manager.
With over 12 years of service at Colonial and more than 25 years in the
industry, I am enthusiastic about -- and dedicated to achieving -- Colonial's
mission of providing you with superior investment returns. In my new role, I
look forward to communicating with you about your Colonial investment. We
appreciate the opportunity to help you meet your investment goals.
Respectfully,
/s/Harold W. Cogger
- -----------------------
Harold W. Cogger
President
August 12, 1996
Because market conditions change frequently, there can be no assurance that the
trends described here will continue, come to pass or affect Fund performance.
3
PORTFOLIO MANAGEMENT REPORT
JAMES HAYNIE is lead portfolio manager of Colonial Small Stock Fund and a vice
president of Colonial Management Associates, Inc. MICHAEL REGA is the Fund's
associate manager and a vice president of Colonial Management Associates, Inc.
Q: WHAT WAS YOUR INVESTMENT STRATEGY DURING THE TWELVE MONTHS?
J.H.: The Fund's strategy remained unchanged; we continued to employ a bottom-up
approach to identify good investment opportunities across all sectors. The Fund
seeks to replace fully valued stocks with those of companies that offer more
potential for appreciation, while maintaining diversification across both stocks
and industries. This strategy helps us insulate the Fund from negative
performance that may result from specific sector bets.
Q: WHAT WAS THE INVESTMENT ENVIRONMENT FOR SMALL STOCKS DURING THE PERIOD?
M.R.: The equity market in general was quite favorable during the past 12
months, with almost all stock indexes up in excess of 20%. While the small
capitalization sector underperformed the larger capitalization stocks, small
stocks still posted a gain close to 24%. The second half of 1995 saw small stock
price gains lag those of larger stocks, primarily because of earnings growth
expectations. While small stocks met expectations, large stocks' earnings gains
were greater than expected, leading that market sector to superior performance.
However, during the first half of 1996, a slowdown in large stock profitability
took place and small stocks proved to be the better performing sector during
March, April and May. Strong cash flows into the small stock sector also helped
drive performance.
Q: WHAT HAPPENED TO SMALL STOCKS LATE IN THE PERIOD?
J.H.: During June, small stocks weakened relative to the overall equity universe
because of two factors. First, the strong performance during the earlier part of
1996 was limited to a small segment of the market. As the top small stocks
dramatically rose in value, others did not follow. This momentum was not
sustainable and, as that handful of stocks fell, most small stocks followed.
Second, the equity market began to more adequately reflect the weakness in the
bond market. With long-term interest rates up over 100 basis points in the first
half of 1996, the stock market began to recognize the potential for higher rates
to negatively affect companies' profitability and earnings.
Q: HOW DID THE FUND PERFORM OVER THE PAST TWELVE MONTHS?
M.R.: The Fund outperformed the Russell 2000 Index, an unmanaged index that
tracks the performance of small capitalization stocks traded on the New York
Stock Exchange, the American Stock Exchange and NASDAQ. The total return for
Class A shares, based on net asset value, was 25.31%, while the Russell 2000
Index posted a total return of 23.90%.
The Fund outperformed the Index because of its ability to pick superior
performing stocks across a number of industries during the period. One such
stock was U.S. Robotics, accounting for 2% of the Fund's assets at June 30. This
technology-based company is the manufacturer of computer modems. During 1995 and
the first part of 1996, U.S. Robotics improved its product mix and enhanced its
profitability by entering the remote and network computer connection market.
4
Q: WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1996?
J.H.: We believe the small stock sector of the market is reasonably valued and
that current levels present attractive buying opportunities, in part because of
declines in small stock prices in late June and early July. We do not believe
this price-based correction is the beginning of a bear market, as there have
been no major geo-political events to change investors' fundamental perspectives
on the future. We do not see any events on the horizon that would cause us to
change our investment strategy in any meaningful way; we will continue to seek
long-term growth and identify value on a case-by-case basis across sectors.
COLONIAL SMALL STOCK FUND INVESTMENT PERFORMANCE VS. THE RUSSELL 2000 INDEX
Change in Value of $10,000 from 7/31/86 to 6/30/96
<TABLE>
<CAPTION>
CLASS A SHARES
COLONIAL COLONIAL
SMALL STOCK SMALL STOCK RUSSELL
FUND NAV FUND MOP 2000 INDEX
<S> <C> <C> <C>
Jul 31, 86 10000 9425 10000
Aug 31, 86 10025 9449 10318
Sep 30, 86 9512 8965 9681
Oct 31, 86 9798 9235 10065
Nov 30, 86 9815 9251 10030
Dec 31, 86 9587 9036 9740
Jan 31, 87 10362 9766 10867
Feb 28, 87 11155 10514 11781
Mar 31, 87 11670 10999 12098
Apr 30, 87 11409 10753 11749
May 31, 87 11316 10665 11711
Jun 30, 87 11653 10983 12012
Jul 31, 87 12284 11578 12387
Aug 31, 87 12512 11792 12753
Sep 30, 87 12328 11619 12521
Oct 31, 87 8458 7972 8686
Nov 30, 87 8099 7633 8221
Dec 31, 87 8556 8064 8883
Jan 31, 88 9048 8528 9271
Feb 29, 88 10033 9456 10106
Mar 31, 88 10446 9846 10579
Apr 30, 88 10824 10202 10819
May 31, 88 10613 10003 10529
Jun 30, 88 11400 10744 11279
Jul 31, 88 11294 10645 11172
Aug 31, 88 10880 10254 10887
Sep 30, 88 11144 10504 11176
Oct 31, 88 10924 10296 11052
Nov 30, 88 10492 9889 10686
Dec 31, 88 10886 10260 11105
Jan 31, 89 11340 10688 11602
Feb 28, 89 11512 10850 11686
Mar 31, 89 12002 11312 11962
Apr 30, 89 12156 11457 12484
May 31, 89 12592 11868 13021
Jun 30, 89 12320 11611 12724
Jul 31, 89 12665 11937 13215
Aug 31, 89 12756 12023 13538
Sep 30, 89 12765 12031 13581
Oct 31, 89 12074 11380 12777
Nov 30, 89 12338 11628 12863
Dec 31, 89 12170 11470 12912
Jan 31, 90 11377 10723 11784
Feb 28, 90 11687 11015 12149
Mar 31, 90 12033 11341 12622
Apr 30, 90 11513 10851 12210
May 31, 90 12334 11625 13074
Jun 30, 90 12380 11668 13101
Jul 31, 90 11887 11203 12524
Aug 31, 90 10353 9758 10856
Sep 30, 90 9476 8932 9896
Oct 31, 90 8929 8415 9292
Nov 30, 90 9385 8846 10000
Dec 31, 90 9292 8757 10397
Jan 31, 91 10032 9456 11337
Feb 28, 91 11112 10473 12601
Mar 31, 91 11139 10498 13488
Apr 30, 91 10746 10128 13454
May 31, 91 11112 10473 14096
Jun 30, 91 10604 9994 13274
Jul 31, 91 10815 10193 13740
Aug 31, 91 11090 10452 14249
Sep 30, 91 10916 10288 14360
Oct 31, 91 10879 10253 14740
Nov 30, 91 10631 10020 14058
Dec 31, 91 11053 10417 15184
Jan 31, 92 12455 11739 16414
Feb 29, 92 13170 12413 16893
Mar 31, 92 12932 12188 16321
Apr 30, 92 12125 11428 15749
May 31, 92 12080 11385 15959
Jun 30, 92 11300 10651 15204
Jul 31, 92 11740 11065 15733
Aug 31, 92 11172 10530 15289
Sep 30, 92 11383 10728 15642
Oct 31, 92 11759 11083 16139
Nov 30, 92 12767 12033 17374
Dec 31, 92 13335 12568 17979
Jan 31, 93 14362 13536 18588
Feb 28, 93 14169 13354 18158
Mar 31, 93 14527 13691 18748
Apr 30, 93 13940 13138 18233
May 31, 93 14527 13691 19040
Jun 30, 93 14536 13700 19159
Jul 31, 93 14673 13830 19423
Aug 31, 93 15159 14287 20262
Sep 30, 93 15333 14451 20834
Oct 31, 93 15782 14875 21370
Nov 30, 93 15471 14581 20667
Dec 31, 93 15846 14935 21374
Jan 31, 94 16534 15583 22044
Feb 28, 94 16574 15790 21964
Mar 31, 94 16030 15108 20804
Apr 30, 94 16213 15281 20928
May 31, 94 15901 14987 20693
Jun 30, 94 15278 14400 19990
Jul 31, 94 15645 14745 20319
Aug 31, 94 16690 15730 21451
Sep 30, 94 16671 15713 21379
Oct 31, 94 16790 15825 21295
Nov 30, 94 16488 15540 20435
Dec 31, 94 16845 15877 20984
Jan 31, 95 16864 15894 20719
Feb 28, 95 17569 16559 21581
Mar 31, 95 18138 17095 21953
Apr 30, 95 18449 17388 22441
May 31, 95 18926 17838 22826
Jun 30, 95 20401 19228 24011
Jul 31, 95 22757 21448 25394
Aug 31, 95 22995 21673 25919
Sep 30, 95 23499 22148 26382
Oct 31, 95 22546 21250 25202
Nov 30, 95 23371 22027 26261
Dec 31, 95 23170 21838 26954
Jan 31, 96 22881 21565 26925
Feb 29, 96 24020 22639 27764
Mar 31, 96 24821 23394 28329
Apr 30, 96 26134 24631 29844
May 31, 96 27080 25523 31020
Jun 30, 96 25565 24095 29746
</TABLE>
A $10,000 investment in Class B shares made on November 9, 1992, (inception) at
net asset value (NAV) would have been valued at $20,890 on June 30, 1996. A
$10,000 investment in Class B shares made on November 9, 1992, (inception) at
the maximum contingent deferred sales charges (CDSC) would have grown to $20,590
on June 30, 1996. A $10,000 investment in Class D shares made on January 15,
1996 (inception), at NAV would have been valued at $11,707 on June 30, 1996. The
same investment after deducting the applicable CDSC would have grown to $11,490
on June 30, 1996. The Russell 2000 Index is an unmanaged index that tracks the
performance of small capitalization stocks traded on the New York Stock
Exchange, the American Stock Exchange and the NASDAQ. Unlike mutual funds,
indexes are not investments, do not incur fees or charges and are not
professionally managed.
Average Annual Total Returns
As of June 30, 1996 (Most Recent Quarter End)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Class A Shares Class B Shares Class D
Inception 7/25/86* Inception 11/9/92 Inception 1/15/96
MOP
NAV MOP NAV w/CDSC NAV w/CDSC
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR 25.31% 18.10% 24.44% 19.44% -- --
- ---------------------------------------------------------------------------------
5 YEARS 19.24% 17.84% -- -- -- --
- ---------------------------------------------------------------------------------
SINCE INCEPTION 9.66% 9.01% 22.41% 21.92% 17.07%** 14.90%**
- ---------------------------------------------------------------------------------
SINCE CHG IN POLICY 23.62% 21.63% -- -- -- --
<FN>
*Name and objective changed 11/2/92.
**Cumulative since inception.
</TABLE>
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. NAV returns do not include sales charges
or CDSC. MOP returns include the maximum sales charges for Class A shares of
5.75%. The maximum CDSC for Class B shares is 5% for 1-year and 3% since
inception and 1% for Class D shares since inception.
5
INVESTMENT PORTFOLIO
JUNE 30, 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 85.7% SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - 1.5%
BUILDING CONSTRUCTION - 1.5%
Beazer Homes USA, Inc.(a) 20 $ 320
Continental Homes Holding Corp. 50 1,075
Toll Brothers, Inc.(a) 87 1,425
------
2,820
------
- -------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 10.5%
DEPOSITORY INSTITUTIONS - 1.8%
CCB Financial Corp. 7 359
Peoples Heritage Financial Group, Inc. 46 931
TCF Financial Corp. 21 685
Zions Bancorporation 19 1,382
------
3,357
------
INSURANCE CARRIERS - 5.8%
American Bankers Insurance Group, Inc. 33 1,457
Arbatex International, Inc.(a) 40 192
Capital RE Corp. 15 536
Enhance Financial Services Group, Inc. 40 1,120
Fremont General Corp. 75 1,725
Horace Mann Educators Corp. 17 540
Penncorp Financial Group, Inc. 50 1,588
US Facilities Corp. 40 695
United Companies Financial Corp. 52 1,768
Vesta Insurance Group, Inc. 47 1,552
------
11,173
------
NONDEPOSITORY CREDIT INSTITUTIONS - 1.2%
Aames Financial Corp. 20 717
Olympic Financial Ltd.(a) 25 575
The Money Store, Inc. 46 1,015
------
2,307
------
SECURITY BROKERS & DEALERS - 1.7%
Alex Brown, Inc. 53 2,994
Morgan Keegan, Inc. 22 287
------
3,281
------
MANUFACTURING - 34.7%
APPAREL - 1.4%
Gymboree Corp.(a) 32 976
Nautica Enterprises, Inc.(a) 62 1,783
------
2,759
------
</TABLE>
6
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1996
- -------------------------------------------------------------------------
<S> <C> <C>
CHEMICALS & ALLIED PRODUCTS - 1.7%
Alpharma, Inc., Class A 25 $ 497
ICN Pharmaceuticals, Inc.(a) 94 2,196
NABI, Inc.(a) 50 475
------
3,168
------
ELECTRONIC & ELECTRICAL EQUIPMENT - 10.1%
Alliance Semiconductor Corp.(a) 40 335
Altron, Inc.(a) 38 759
Checkpoint Systems, Inc.(a) 50 1,719
Chips & Technologies, Inc.(a) 70 683
Computer Products, Inc.(a) 25 428
Digital Systems International, Inc.(a) 90 1,361
HADCO Corp.(a) 102 2,193
Harman International Industries, Inc. 16 788
Innovex, Inc. 40 705
Kemet Corp.(a) 130 2,600
Lattice Semiconductor Corp.(a) 40 965
Sanmina Corp.(a) 50 1,350
Standard Motor Products, Inc. 15 268
Technitrol, Inc. 32 1,252
U.S. Robotics, Inc.(a) 46 3,933
------
19,339
------
FABRICATED METAL - 1.0%
BMC Industries, Inc. 51 1,461
Butler Manufacturing Co. 13 425
------
1,886
------
FOOD & KINDRED PRODUCTS - 0.3%
Robert Mondavi Corp., Class A(a) 20 630
------
FURNITURE & FIXTURES - 0.5%
Bush Industries, Inc. 14 476
LA Z Boy Chair Co. 16 482
------
958
------
LUMBER & WOOD PRODUCTS - 0.2%
Oakwood Homes Corp. 22 453
------
MACHINERY & COMPUTER EQUIPMENT - 4.7%
Boca Research, Inc.(a) 45 821
Cascade Communications Corp.(a) 24 1,632
In Focus Systems, Inc.(a) 30 728
JLG Industries, Inc. 30 2,242
Kaydon Corp. 15 645
Kysor Industrial Corp. 7 170
Mylex Corp.(a) 20 355
</TABLE>
7
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
COMMON STOCKS -CONT. SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
MACHINERY & COMPUTER EQUIPMENT -CONT.
Novellus Systems, Inc.(a) 8 $ 288
Proteon, Inc.(a) 49 190
Silicon Valley Group, Inc.(a) 54 1,020
Toro Co. 29 944
------
9,035
------
MEASURING & ANALYZING INSTRUMENTS - 7.0%
Advanced Technology Laboratories, Inc.(a) 98 3,559
Bio-Rad Laboratories, Inc.,
Class A(a) 38 1,346
CredenceSystems Corp.(a) 89 1,189
Esterline Technologies Corp.(a) 79 1,965
Maxxim Medical, Inc.(a) 23 385
Mentor Corp. 36 918
Nellcor Puritan Bennett, Inc.(a) 16 766
Perceptron, Inc.(a) 30 1,095
Quickturn Design Systems, Inc.(a) 39 571
Tracor, Inc.(a) 25 431
Ultratech Stepper, Inc.(a) 32 600
Watkins-Johnson Co. 22 589
------
13,414
------
MISCELLANEOUS MANUFACTURING - 0.4%
International Imaging Materials, Inc.(a) 15 356
K2, Inc. 17 471
------
827
------
PAPER PRODUCTS - 2.0%
ACX Technologies, Inc.(a) 96 1,900
Mercer International, Inc.(a) 80 1,080
Paragon Trade Brands, Inc.(a) 41 884
------
3,864
------
PRIMARY METAL - 3.4%
Mueller Industries, Inc.(a) 36 1,494
Quanex Corp. 35 827
Texas Industries, Inc. 34 2,340
Titan Wheel International, Inc. 68 1,088
Wolverine Tube, Inc.(a) 22 770
------
6,519
------
PRINTING & PUBLISHING - 0.5%
Day Runner, Inc.(a) 40 1,035
------
STONE, CLAY, GLASS & CONCRETE - 0.6%
Global Industrial Technologies, Inc.(a) 72 1,152
------
</TABLE>
8
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION EQUIPMENT - 0.9%
Polaris Industries, Inc. 25 $ 836
Varlen Corp. 39 815
------
1,651
------
- -------------------------------------------------------------------------
MINING - 2.0%
METAL MINING - 0.7%
Cleveland-Cliffs, Inc. 33 1,291
------
OIL & GAS EXTRACTION - 1.3%
Benton Oil & Gas Co.(a) 50 1,100
Pride Petroleum Services, Inc.(a) 100 1,425
------
2,525
------
- -------------------------------------------------------------------------
RETAIL TRADE - 7.8%
APPAREL & ACCESSORY STORES - 2.5%
Claire's Stores, Inc. 90 2,486
Finish Line, Inc., Class A(a) 5 143
Ross Stores, Inc. 60 2,085
------
4,714
------
AUTO DEALERS & GAS STATIONS - 0.3%
Discount Auto Parts, Inc.(a) 20 508
------
BUILDING, HARDWARE & GARDEN SUPPLY - 0.5%
Orchard Supply Hardware Store(a) 35 1,054
------
FOOD STORES - 0.2%
Ruddick Corp. 32 392
------
GENERAL MERCHANDISE STORES - 0.6%
Neiman Marcus Group, Inc.(a) 20 540
Waban, Inc.(a) 29 692
------
1,232
------
HOME FURNISHINGS & EQUIPMENT - 2.1%
CompUSA, Inc.(a) 120 4,095
------
MISCELLANEOUS RETAIL - 0.6%
Tiffany & Co. 15 1,095
------
RESTAURANTS - 1.0%
Applebee's International, Inc. 60 1,943
------
- -------------------------------------------------------------------------
SERVICES - 17.5%
AMUSEMENT & RECREATION - 1.8%
Anchor Gaming(a) 32 1,928
Grand Casinos, Inc.(a) 60 1,545
------
3,473
------
</TABLE>
9
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
COMMON STOCKS -CONT. SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
SERVICES - CONT.
AUTO REPAIR SERVICES & PARKING - 0.6%
National Auto Credit, Inc.(a) 52 $ 591
PHH Corporation(a) 10 570
------
1,161
------
BUSINESS SERVICES - 9.1%
Acxiom Corp.(a) 42 1,433
Advo, Inc. 25 259
Borland International, Inc.(a) 65 593
Computer Horizons Corp.(a) 37 1,465
Computervision Corp.(a) 60 600
Control Data Systems, Inc.(a) 74 1,582
Logicon, Inc. 52 1,542
Macromedia, Inc.(a) 24 525
McAfee Associates, Inc.(a) 41 1,985
National Data Corp. 45 1,541
Norrell Corp. 25 1,228
Robert Half International, Inc.(a) 40 1,115
SPSS, Inc.(a) 30 750
Sierra On-Line, Inc.(a) 10 439
Sterling Software, Inc.(a) 23 1,775
Uniforce Temporary Personnel, Inc. 30 570
------
17,402
------
HEALTH SERVICES - 5.5%
Apria Healthcare Group, Inc.(a) 27 857
Community Health Systems, Inc.(a) 25 1,294
Lincare Holdings, Inc.(a) 20 785
PHP Healthcare Corp.(a) 10 315
Regency Health Services, Inc.(a) 100 1,137
Rotech Medical Corp.(a) 138 2,691
Universal Health Services, Inc., Class B(a) 133 3,480
------
10,559
------
MOTION PICTURES - 0.5%
Regal Cinemas, Inc.(a) 25 1,144
------
- -------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 7.0%
AIR TRANSPORTATION - 1.1%
Alaska Air Group 50 1,369
Comair Holdings, Inc. 27 727
------
2,096
------
</TABLE>
10
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS - 1.5%
U.S. Long Distance Corp.(a) 70 $2,485
Xpedite Systems, Inc.(a) 11 294
------
2,779
------
ELECTRIC, GAS & SANITARY SERVICES - 0.2%
Unit Corp.(a) 71 468
------
ELECTRIC SERVICES - 1.2%
Commonwealth Energy System Cos. 13 324
Sierra Pacific Resources 50 1,269
TNP Enterprises, Inc. 26 749
------
2,342
------
GAS SERVICES - 1.6%
Eastern Enterprises 20 665
ONEOK Inc. 95 2,375
------
3,040
------
SANITARY SERVICES - 0.2%
Southern California Water Co. 18 396
------
TRANSPORTATION SERVICES - 0.3%
GATX Corp. 12 579
------
WATER TRANSPORTATION - 0.9%
APL Ltd. 65 1,698
------
- -------------------------------------------------------------------------
WHOLESALE TRADE - 4.7%
DURABLE GOODS - 3.5%
Bell Industries, Inc. 33 556
Fisher Scientific International 53 1,991
Kent Electronics Corp.(a) 40 1,250
Marshall Industries(a) 22 616
Pioneer Standard Electronics, Inc. 27 353
Wyle Electronics Co. 62 2,057
------
6,823
------
NONDURABLE GOODS - 1.2%
Cardinal Health, Inc. 14 1,016
Universal Corp. 50 1,325
------
2,341
------
TOTAL INVESTMENTS (cost of $132,137)(b) 164,778
-------
</TABLE>
11
Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 13.5% PAR VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with Chase
Securities Inc., dated 6/28/96, due 7/01/96
at 5.40% collateralized by U.S. Treasury notes
with various maturities to 1998, market value
$26,492 (repurchase proceeds $25,925) $25,913 $ 25,913
OTHER ASSETS & LIABILITIES, NET - 0.8% 1,592
- --------------------------------------------------------------------------
NET ASSETS - 100.0% $192,283
--------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------
(a) Non-incoming producing.
(b) Cost for federal income tax purposes is $132,145.
See notes to financial statements.
12
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1996
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $132,137) $164,778
Short-term obligations 25,913
--------
190,691
Receivable for:
Fund shares sold $1,206
Dividends 65
Interest 12
Receivable from custodian bank 753
Other 17 2,053
------ --------
Total Assets 192,744
LIABILITIES
Payable for:
Fund shares repurchased 415
Accrued:
Service fee 20
Transfer Agent Out-of-Pocket fees 10
Deferred Trustees fees 2
Other 14
---
Total Liabilities 461
--------
NET ASSETS $192,283
--------
Net asset value & redemption price per share - Class A
($89,924/3,395) $ 26.48
--------
Maximum offering price per share - Class A
($26.48/0.9425) $ 28.10 (a)
--------
Net asset value & offering price per share - Class B
($96,158/3,732) $ 25.77 (b)
--------
Net asset value & redemption price per share - Class D
($2,585/98) $ 26.40 (b)
--------
Maximum offering price per share - Class D
($26.40/0.9900) $ 26.67
--------
Net asset value, offering and redemption
price per share - Class Z ($3,616/136) $ 26.55
--------
COMPOSITION OF NET ASSETS
Capital paid in $156,625
Accumulated net realized gains 3,017
Net unrealized appreciation 32,641
--------
$192,283
--------
<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.
</TABLE>
See notes to financial statements.
13
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Dividends $ 748
Special dividend from Advo, Inc. 250
Interest 872
------
1,870
EXPENSES
Management fee $734
Service fee - Class A, Class B, Class D 300
Distribution fee - Class B 436
Distribution fee - Class D 3
Transfer agent 409
Bookkeeping fee 52
Trustees fee 15
Custodian fee 10
Audit fee 31
Legal fee 12
Registration fee 87
Reports to shareholders 15
Other 12 2,116
----- -----
Net Investment Loss (246)
-----
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 6,194
Net unrealized appreciation 16,571
-------
Net Gain 22,765
-------
Net Increase in Net Assets from Operations $22,519
-------
</TABLE>
See notes to financial statements.
14
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) June 30
-------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
<S> <C> <C>
Operations:
Net investment loss $ (246) $ (124)
Net realized gain 6,194 3,335
Net unrealized appreciation 16,571 11,220
--------- ---------
Net Increase from Operations 22,519 14,431
Distributions:
From net investment income - Class A -- --
From net realized gains - Class A (2,786) --
From net investment income - Class B -- --
From net realized gains - Class B (2,652) --
From net investment income - Class Z -- --
From net realized gains - Class Z (127) --
--------- ---------
16,954 14,431
--------- ---------
Fund Share Transactions (a):
Receipts for shares sold - Class A 181,243 16,058
Value of distributions reinvested - Class A 2,440 --
Cost of shares repurchased - Class A (143,861) (9,202)
--------- ---------
39,822 6,856
--------- ---------
Receipts for shares sold - Class B 85,137 29,658
Value of distributions reinvested - Class B 2,027 --
Cost of shares repurchased - Class B (27,703) (14,075)
--------- ---------
59,461 15,583
--------- ---------
Receipts for shares sold - Class D 2,803 --
Value of distributions reinvested - Class D -- --
Cost of shares repurchased - Class D (186) --
--------- ---------
2,617 --
--------- ---------
Receipts for shares sold - Class Z 3,511 --
Value of distributions reinvested - Class Z 127 --
Cost of shares repurchased - Class Z (328) --
--------- ---------
3,310 --
--------- ---------
Net Increase from Fund Share
Transactions 105,210 22,439
--------- ---------
Total Increase 122,164 36,870
NET ASSETS
Beginning of period 70,119 33,249
--------- ---------
End of period (including undistributed
net investment losses of none and
$1, respectively) $ 192,283 $ 70,119
--------- ---------
<FN>
(a) Class Z shares were initially offered on July 31, 1995 and Class D
shares were initially offered on January 15, 1996.
</TABLE>
Continued on next page.
See notes to financial statements.
15
STATEMENT OF CHANGES IN NET ASSETS
(continued)
<TABLE>
<CAPTION>
Year ended
June 30
-------------------
1996 1995
<S> <C> <C>
NUMBER OF FUND SHARES (a)
Sold - Class A 7,161 823
Issued for distributions reinvested - Class A 101 --
Repurchased - Class A (5,693) (483)
------ ------
1,569 340
------ ------
Sold - Class B 3,410 1,587
Issued for distributions reinvested - Class B 86 --
Repurchased - Class B (1,113) (753)
------ ------
2,383 834
------ ------
Sold - Class D 105 --
Issued for distributions reinvested - Class D -- --
Repurchased - Class D (7) --
------ ------
98 --
------ ------
Sold - Class Z 144 --
Issued for distributions reinvested - Class Z 5 --
Repurchased - Class Z (13) --
------ ------
136 --
------ ------
<FN>
(a) Class Z shares were initially offered on July 31, 1995 and Class D
shares were initially offered on January 15, 1996.
</TABLE>
See notes to financial statements.
16
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION: Colonial Small Stock Fund (the Fund), a series of Colonial Trust
VI, is a diversified portfolio of a Massachusetts business trust, registered
under the Investment Company Act of 1940, as amended, as an open-end, management
investment company. The Fund's objective is to seek long-term growth. The Fund
may issue an unlimited number of shares. The Fund offers four classes of shares:
Class A, Class B, Class D and Class Z. Class A shares are sold with a front-end
sales charge and 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 D shares are
subject to a reduced front-end sales charge, a contingent deferred sales charge
on redemptions made within one year after purchase and a continuing distribution
fee. Class Z shares are offered continuously at net asset value. There are
certain restrictions on purchasing Class Z shares, please refer to a prospectus.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities 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, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class A, Class B and Class D service fee and Class B
and Class D distribution fees), 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.
17
Notes to Financial Statements/June 30, 1996
NOTE 1. ACCOUNTING POLICIES - CONT.
Per share data was calculated using the average shares outstanding during the
period. In addition, Class A, Class B, and Class D net investment income per
share data reflects the service fee applicable to Class A, Class B and Class D
shares and the distribution fee applicable to Class B and Class D shares only.
Class A, Class B and Class D ratios are calculated by adjusting the expense and
net investment income ratios for the Fund for the entire period by the service
fee applicable to Class A, Class B and Class D shares and by the distribution
fees applicable to Class B and Class D 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. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
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.
18
Notes to Financial Statements/June 30, 1996
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the year ended June 30, 1996, the Fund has been
advised that the Distributor retained net underwriting discounts of $109,928 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $137,948 and $97 on Class B and Class D share redemptions,
respectively.
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 attributable to
Class A, Class B and Class D, as of the 20th of each month. The plan also
requires the payment of a distribution fee to the Distributor equal to 0.75%
annually of the average net assets attributable to Class B shares and Class D
shares, respectively.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY: During the year ended June 30, 1996, purchases and sales of
investments, other than short-term obligations, were $130,104,251 and
$50,185,998, respectively.
Unrealized appreciation (depreciation) at June 30, 1996, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $41,145,934
Gross unrealized depreciation (8,512,521)
-----------
Net unrealized appreciation $32,633,413
-----------
</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. LINE OF CREDIT
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended June 30, 1996.
19
FINANCIAL HIGHLIGHTS (a)
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended June 30
---------------------------------------------------------------
1996
Class A Class B Class D (b) Class Z (c)
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 22.260 $21.840 $22.550 $ 24.790
-------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) 0.036 (d) (0.147) (d) (0.072) (d) 0.096 (d)
Net realized and
unrealized gain 5.479 5.372 3.922 2.959
-------- ------- ------- --------
Total from Investment
Operations 5.515 5.225 3.850 3.055
-------- ------- ------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized gains (1.295) (1.295) -- (1.295)
-------- ------- ------- --------
Net asset value -
End of period $ 26.480 $25.770 $26.400 $ 26.550
-------- ------- ------- --------
Total return (e) 25.31% 24.44% 17.07% (f) 12.81% (f)
-------- ------- ------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.38% (g) 2.13% (g) 2.15% (g)(h) 1.13% (g)(h)
Net investment
income (loss) 0.15% (g) (0.60)% (g) (0.54)% (g)(h) 0.41% (g)(h)
Portfolio turnover 46% 46% 46% 46%
Average commission
rate (i) $ 0.044 $ 0.044 $ 0.044 $ 0.044
Net assets at end
of period (000) $ 89,924 $96,158 $ 2,585 $ 3,616
<FN>
(a) Per share data was calculated using average shares outstanding during
the period.
(b) Class D shares were initially offered on January 15, 1996. Per share
amount reflect activity from that date.
(c) Class Z shares were initially offered on July 31, 1995. Per share
amounts reflect activity from that date.
(d) Includes distribution from Advo, Inc., which amounted to $0.047 per
share.
(e) Total return at net asset value assuming all distributions reinvested
and no initial sales charge or contingent deferred sales charge.
(f) Not annualized
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(h) Annualized.
(i) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
on which commissions are charged.
</TABLE>
20
FINANCIAL HIGHLIGHTS - continued
<TABLE>
<CAPTION>
Year ended June 30
----------------------------------------------------------------------
1995 1994
Class A Class B Class A Class B
------------ ---------------- -------------- --------------
<S> <C> <C> <C>
$ 16.670 $ 16.470 $ 15.860 $ 15.790
------------ ---------------- -------------- --------------
0.002 (0.139) (0.047) (0.176)
5.588 5.509 0.857 0.856
------------ ---------------- -------------- --------------
5.590 5.370 0.810 0.680
------------ ---------------- -------------- --------------
- - - -
------------ ---------------- -------------- --------------
$ 22.260 $ 21.840 $ 16.670 $ 16.470
------------ ---------------- -------------- --------------
33.53% 32.60% 5.11% 4.31%
------------ ---------------- -------------- --------------
1.45% 2.20% 1.56% 2.31%
- - - -
0.01% (0.74)% (0.27)% (1.02)%
64% 64% 35% 35%
$ 40,661 $ 29,458 $ 24,760 $ 8,489
</TABLE>
- ----------------------------------------------------------------------
Federal income tax information (unaudited) 99.85% of the gain distribution paid
by the Fund in December 1995 was derived from long term gains
21
FINANCIAL HIGHLIGHTS (a) - continued
<TABLE>
<CAPTION>
Year ended June 30
--------------------------------------------------------
1993 1992
Class A Class B(b) Class A
----------- ---------- -----------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 12.330 $ 13.010 $ 11.570
----------- ---------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
loss (0.083) (0.100) (0.127)
Net realized and
unrealized gain 3.613 2.880 0.887
----------- ---------- -----------
Total from Investment
Operations 3.530 2.780 0.760
----------- ---------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized
gains -- -- --
----------- ---------- -----------
Net asset value -
End of period $ 15.860 $ 15.790 $ 12.330
----------- ---------- -----------
Total return (c) 28.63% 21.73% (d) 6.57%
----------- ---------- -----------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.88% 2.63% (e) 2.13%
Interest expense 0.01% 0.01% 0.06%
Net investment
loss (0.60)% (1.35)%(e) (0.91)%
Portfolio turnover 29% 29% --
Net assets at end
of period (000) $ 23,716 $ 1,665 $ 22,002
<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.
</TABLE>
22
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, 1996, the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and the financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of portfolio positions
at June 30, 1996 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 12, 1996
23
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can 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 charge.
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. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th of each month.
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 (for applicable funds), or $1
million or more of Class A shares, may be subject to a contingent deferred sales
charge.
24
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.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
am to 8:00 pm ET. Transactions received after the close of the New York Stock
Exchange will receive the next business day's closing price.
COLONIAL LITERATURE DEPARTMENT -1-800-248-2828
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
25
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
Colonial account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale, or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
COLONIAL SHAREHOLDER NEWS: Mailed with your quarterly account statements, this
newsletter highlights timely investment strategies, portfolio manager
commentary, and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
26
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Small Stock Fund is:
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.
27
[COLONIAL MUTUAL FUNDS LOGO]
Mutual Funds for
Planned Portfolios
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)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC., Distributor (C)1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
SS-02/457C-0696 M (8/96)
