<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
DECEMBER 31, 1996 (UNAUDITED, IN THOUSANDS)
<CAPTION>
COMMON STOCKS - 94.5% COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSTRUCTION - 3.2%
BUILDING CONSTRUCTION - 2.6%
Empresas ICA Sociedad Controladora S.A.
de C.V. Mx 4 $ 58
Fujita Corp. Ja 37 106
Koninklijke Volker Stevin NV Ne 1 121
Maeda Corp. Ja 18 133
------
418
------
BUILDING CONSTRUCTION - 0.6%
Stork N.V. Ne 3 95
------
- -----------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 27.0%
DEPOSITORY INSTITUTIONS - 9.9%
Australia & New Zealand Banking Group Ltd. Au 17 107
Banco De Bilbao Sp 3 170
Bayer Hypotheken-und Wechsel-Bank AG G 5 163
Corporacion Bancaria de Espana SA Sp 8 338
Den Danske Bank De 1 64
Guoco Group Ltd. HK 54 302
Hokkaido Takushoku Bank Ja 70 136
Lloyds Bank PLC UK 19 139
Westpac Banking Corp. Au 35 196
------
1,615
------
FINANCIAL SERVICES - 1.0%
Sparekassen Bikuben De 4 168
------
HOLDING COMPANIES - 1.2%
Skandia Forsakrings AB Sw 7 197
------
INSURANCE AGENTS & BROKERS - 1.2%
Baloise Holdings Ltd. Sz (a) 200
------
INSURANCE CARRIERS - 4.2%
Assicurazioni Generali SPA It 4 68
International Nederlanden Groep Ne 9 315
Schweizerische Lebensversicherungs und
Rentenanstalt PC Sz (a) 127
Union des Assurances Federales Fr 1 172
------
682
------
</TABLE>
1
<PAGE>
<TABLE>
Investment Portfolio/December 31, 1996
<CAPTION>
- -----------------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - CONT.
INVESTMENT COMPANIES - 5.1%
Brazil Fund, Inc. (b) 7 $ 156
Chile Fund, Inc. (b) 4 90
Korea Fund, Inc. (b) 12 174
New South Africa Fund, Inc. (b) 2 22
Thai Fund (b) 10 167
The Malaysia Fund, Inc. (b) 12 215
------
824
------
NONDEPOSITORY CREDIT INSTITUTIONS - 2.3%
Nippon Shinpan Co. Ja 22 123
Orient Corp. Ja 47 252
------
375
------
REAL ESTATE - 2.1%
Cheung Kong (Holdings) Ltd. HK 12 107
New World Development Co. Ltd. HK 35 236
------
343
------
---------------------------------------------------------------------------------------
MANUFACTURING - 40.3%
CHEMICALS & ALLIED PRODUCTS - 9.9%
Bayer AG G 2 81
Christian Dior SA Fr 1 210
DSM NV Ne 2 158
Galenica Holding AG Sz (a) 142
Hoechst AG G 7 330
Imperial Chemical Industries PLC UK 11 145
Medeva PLC UK 43 189
Millenium Chemicals, Inc. 1 15
Sanofi SA Fr 4 348
------
1,618
------
ELECTRONIC & ELECTRICAL EQUIPMENT - 8.5%
Hitachi Maxwell Ja 23 508
Matsushaita Electric Industrial Co. Ja 10 163
Philips Electronics NV Ne 4 162
Stanley Electric Co. Ltd. Ja 21 123
TDK Corp. Ja 3 195
Telefonaktiebolaget LM Ericsson,
Class B Sw 7 225
------
1,376
------
FABRICATED METAL - 3.7%
Marine-Wendel Fr 1 118
Schmalbach Lubeca AG (c) G 2 405
Van Der Horst Ltd. Si 20 84
------
607
------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
FOOD & KINDRED PRODUCTS - 3.6%
Burns, Philip & Co. Ltd. Au 38 $ 67
Fraser & Neave Ltd. Si 14 144
Groupe Danone Fr 1 153
Nestle AG Sz (a) 160
Oesterreichische Brau-Beteiligungs Aus 1 64
----
588
----
MACHINERY & COMPUTER EQUIPMENT - 3.3%
ASK ASA (c) No 6 57
Hitachi Ltd. Ja 18 166
Komatsu Ltd. Ja 19 156
Mannesmann AG G (c) 86
Tandberg Data A/S (c) No 6 68
----
533
----
MEASURING & ANALYZING INSTRUMENTS - 2.0%
Fuji Photo Film Co. Ltd. Ja 10 329
----
PETROLEUM REFINING - 1.5%
British Petroleum Ltd. UK 20 240
----
PRIMARY METAL - 1.9%
ALFA S.A. de C.V. Mx 44 204
NKF Holding N.V. (c) Ne 3 104
----
308
----
PRINTING & PUBLISHING - 0.2%
Moore Corp. Ltd. (b) 2 39
----
RUBBER & PLASTIC - 0.3%
Fila Holding SPA (b) 1 41
----
STONE, CLAY, GLASS & CONCRETE - 0.9%
Holderbank Financiere Glarus AG Sz (a) 142
----
TEXTILE MILL PRODUCTS - 0.6%
Chargeurs International (c) Fr 1 35
Japan Wool Textile Co. Ja 7 58
----
93
----
TOBACCO PRODUCTS - 2.4%
B.A.T. Industries PLC UK 33 274
Hanson PLC UK 58 81
Imperial Tobacco Group PLC UK 6 37
----
392
----
</TABLE>
3
<PAGE>
<TABLE>
Investment Portfolio/December 31, 1996
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
TRANSPORTATION EQUIPMENT - 1.5%
Toyota Motor Corp. Ja 6 $172
Volvo AB Sw 3 73
----
245
----
------------------------------------------------------------------------------
MINING & ENERGY - 2.3%
OIL & GAS EXTRACTION
Brascan Ltd. Ca 9 210
Pioneer International Ltd. Au 54 161
----
371
----
------------------------------------------------------------------------------
RETAIL TRADE - 2.8%
FOOD STORES - 1.5%
Tesco PLC UK 40 243
----
MISCELLANEOUS RETAIL - 1.3%
Imasco Ltd. Ca 9 216
----
------------------------------------------------------------------------------
SERVICES - 1.1%
HEALTH SERVICES
Astria AB, Class B Sw 4 173
----
------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 13.8%
AIR TRANSPORTATION - 0.8%
Lufthansa AG G 10 136
----
COMMUNICATIONS - 5.7%
British Telecommunications PLC UK 32 216
PATHE SA (c) Fr 1 169
SEAT SPA It 23 9
Stet Societa' Finanziaria Telefonica S.P.A. It 23 104
Tele Denmark A/S ADR (b) 3 84
Telecom Italia SPA It 106 275
Telefonica de Argentina S.A. (b) 3 77
----
934
----
ELECTRIC SERVICES - 3.0%
China Light & Power Co. Ltd. HK 19 84
Hong Kong Electric Holdings Ltd. HK 25 83
Union Electrica Fenosa SA Sp 31 329
----
496
----
GAS SERVICES - 0.6%
Hong Kong and China Gas Co. Ltd. HK 50 97
----
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
-------------------------------------------------------------------------------
<S> <C> <C> <C>
MOTOR FREIGHT & WAREHOUSING - 1.4%
Seino Transportation Ja 20 $ 221
-------
SANITARY SERVICES - 2.3%
Anglian Water PLC UK 19 192
United Utilities PLC UK 17 181
-------
373
-------
- -------------------------------------------------------------------------------
WHOLESALE TRADE - 4.0%
DURABLE GOODS - 2.4%
CSR Ltd. Au 25 86
First Pacific Co. Ltd. HK 118 153
Ryosan Co. Ja 7 156
-------
395
-------
NONDURABLE GOODS - 1.6%
NV Koninklijke KNP BT Ne 6 131
Nagase & Co. Ja 16 133
-------
264
-------
TOTAL COMMON STOCKS (cost of $14,518) 15,387
-------
WARRANTS (c) - 0.0%
- -------------------------------------------------------------------------------
GAS SERVICES
Hong Kong & China Gas Co. Ltd.
(cost rounds to less than one) HK 4 2
-------
TOTAL INVESTMENTS - 94.5% (cost of $14,518)(d) 15,389
-------
SHORT-TERM OBLIGATIONS - 3.8% PAR
- -------------------------------------------------------------------------------
Repurchase agreement with Lehman Brothers, Inc.,
dated 12/31/96 due 01/02/97 at 6.900% collateralized
by U.S. Treasury notes with various maturities to
2022, market value $620 (repurchase proceeds $612) $612 612
-------
OTHER ASSETS & LIABILITIES, NET - 1.7% 283
- -------------------------------------------------------------------------------
NET ASSETS - 100% $16,284
-------
</TABLE>
5
<PAGE>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
================================================================================
(a) Rounds to less than one.
(b) This security is subject to the risks of the various countries in which the
issuer is investing. (See Notes to Financial Statements: Note 4 - Other.)
(c) Non-income producing.
(d) Cost for federal income tax purposes is the same.
<TABLE>
<CAPTION>
Summary of Securities
by Country Country Value % of Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Japan Ja $ 3,130 20.3
United Kingdom UK 1,937 12.6
France Fr 1,205 7.8
Germany G 1,201 7.8
Netherlands Ne 1,086 7.1
Multi-national (b) 1,065 6.9
Hong Kong HK 1,064 6.9
Spain Sp 837 5.4
Switzerland Sz 771 5.0
Sweden Sw 668 4.4
Australia Au 617 4.0
Italy It 456 3.0
Canada Ca 426 2.8
Mexico Mx 262 1.7
Denmark De 232 1.5
Singapore Si 228 1.5
Norway No 125 0.8
Austria Aus 64 0.4
United States 15 0.1
------- -----
$15,389 100.0
======= =====
</TABLE>
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
Acronym Name
------- ----
ADR American Depository Receipt
See notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1996 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $14,518) $15,389
Short-term obligations 612
-------
16,001
Cash held in foreign banks (cost $109) $113
Receivable for:
Investments sold 236
Dividends 94
Foreign tax reclaims 19
Expense reimbursement due from Adviser 9
Deferred organization expenses 45
Other 18 534
---- ------
Total Assets 16,535
LIABILITIES
Investments purchased 251
----
Total Liabilities 251
-------
NET ASSETS $16,281
=======
Net asset value & redemption price per share -
Class A ($15,744/1,469) $ 10.72
=======
Maximum offering price per share - Class A
($10.72/0.9425) $ 11.37(a)
=======
Net asset value & offering price per share -
Class B ($270/25) $ 10.71(b)
=======
Net asset value & redemption price per share -
Class D ($270/25) $ 10.71(b)
=======
Maximum offering price per share - Class D
($10.71/0.9900) $ 10.82
=======
COMPOSITION OF NET ASSETS
Capital paid in $15,188
Undistributed net investment income 43
Accumulated net realized gain 178
Net unrealized appreciation on:
Investments 871
Foreign currency transactions 4
-------
$16,284
=======
<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.
7
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $192
Interest 25
----
Total investment income (net of nonrebatable
foreign taxes withheld at source which
amounted to $20) 217
EXPENSES
Management fee $ 73
Service fee 19
Distribution fee - Class B 1
Distribution fee - Class D 1
Transfer agent 20
Bookkeeping fee 14
Trustees 4
Custodian fee (a)
Audit 7
Legal fee 2
Amortization of deferred
organization expenses 5
Other 4
----
150
Fees waived by the Adviser (13) 137
---- ----
Net Investment Income 80
----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 264
Foreign currency transactions (1)
----
Net Realized Gain 263
Net unrealized appreciation during
the period on: 498
----
Net Gain 761
----
Net Increase in Net Assets from Operations $841
====
<FN>
(a) Rounds to less than one.
</TABLE>
See notes to financial statements.
8
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
(Unaudited)
Six months
ended Period ended
(in thousands) December 31 June 30 (a)
=========== ============
INCREASE (DECREASE) IN NET ASSETS 1996 1996
<S> <C> <C>
Operations:
Net investment income $ 80 $ 82
Net realized gain (loss) 263 (29)
Net unrealized appreciation 498 500
------- -------
Net Increase from Operations 841 553
Distributions:
From net investment income - Class A (80) -
From net realized gains - Class A (121) -
From net realized gains - Class B (2) -
From net realized gains - Class D (2) -
------- -------
636 -
Fund Share Transactions:
Value of distributions reinvested - Class A 201 -
Value of distributions reinvested - Class B 2 -
Value of distributions reinvested - Class D 2 -
------- -------
Net Increase from Fund
Share Transactions 205 -
------- -------
Total Increase 841 553
NET ASSETS
Beginning of period 15,443 14,890
------- -------
End of period (including undistributed
net investment income of $43 and 39,
respectively) $16,284 $15,443
======= =======
NUMBER OF FUND SHARES
Issued for distributions reinvested - Class A 19 -
------- -------
Issued for distributions reinvested - Class B - -
------- -------
Issued for distributions reinvested - Class D - -
------- -------
<FN>
(a) The Fund commenced investment operations on March 25, 1996. The
activity shown is from the effective date of registration (March
31, 1996) with the Securities and Exchange Commission.
</TABLE>
See notes to financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial International Equity 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, 1996, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Organization: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end, management investment company. The Fund's investment objective is to
seek total return through a combination of long-term growth of capital and
income by investing primarily in equity securities of companies outside the
United States. The Fund may issue an unlimited number of shares. The Fund offers
three classes of shares: Class A, Class B and Class D. 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.
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.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
10
<PAGE>
Notes to Financial Statements/December 31, 1996
- --------------------------------------------------------------------------------
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
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 (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 and Class D distribution fees) and realized and
unrealized gains (losses) are allocated to each class proportionately on a daily
basis for purposes of determining the net asset value of each class.
Per share data was calculated using the average shares outstanding during the
period. In addition, Class B and Class D net investment income per share data
reflects the the distribution fee applicable to Class B and Class D shares only.
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 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.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis, premium and
market discount are not amortized or accreted.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $53,332 in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and are being amortized on a
straight-line basis over five years.
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 carryfowards) under income tax regulations.
11
<PAGE>
Notes to Financial Statements/December 31, 1996
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency transactions includes the fluctuation in exchange rates on
gains (losses) between trade and settlement dates on securities transactions,
gains (losses) arising from the disposition of foreign currency and currency
gains (losses) between the accrual and payment dates on dividends and interest
income and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) on investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward currency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily,
resulting in unrealized gains (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract was opened,
exposure is typically limited to the change in value of the contract (in U.S.
dollars) over the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on the ex-date (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonrebatable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received.
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 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
12
<PAGE>
Notes to Financial Statements/December 31, 1996
- --------------------------------------------------------------------------------
services and office facilities for a monthly fee equal to 0.95% 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 reimbursement
for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the period ended December 31, 1996, the Fund has been
advised that the Distributor retained no net underwriting discounts on sales of
the Fund's Class A shares and received no contingent deferred sales charges on
Class B and Class D 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% annually of the average net assets attributable to
Class B shares and Class D shares, only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold suchPshares. April 1, 1989
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service fees, distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 1.50% annually of the Fund's average net
assets.
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
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the period ended December 31, 1996, purchases and
sales of investments, other than short-term obligations, were $3,751,059 and
$3,624,697, respectively.
13
<PAGE>
Notes to Financial Statements/December 31, 1996
- --------------------------------------------------------------------------------
NOTE 4. PORTFOLIO INFORMATION - CONT.
- --------------------------------------------------------------------------------
<TABLE>
Unrealized appreciation (depreciation) at December 31, 1996, based on cost of
investments for both financial statement and federal income tax purposes was:
<S> <C>
Gross unrealized appreciation $1,816,269
Gross unrealized depreciation (945,715)
----------
Net unrealized appreciation $ 870,554
----------
</TABLE>
OTHER: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of foreign currency
exchange or the imposition of other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 5. 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 period ended December 31, 1996.
NOTE 6. OTHER RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
At December 31, 1996, Colonial Management Associates, Inc., owned 100% of the
Fund's shares outstanding.
NOTE 7. OTHER OPERATIONAL AND CAPITAL ACTIVITY
- --------------------------------------------------------------------------------
<TABLE>
For the period March 25, 1996 through March 31, 1996, the Fund had net
investment income of $12,879 and unrealized depreciation of $122,953. The
following is a summary of capital activity from March 25, 1996 through March 31,
1996.
<CAPTION>
Shares
<S> <C> <C>
Receipts for shares sold - Class A $14,500,000 1,450,000
Receipts for shares sold - Class B $ 250,000 25,000
Receipts for shares sold - Class D $ 250,000 25,000
</TABLE>
14
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout the period are as
follows:
<CAPTION>
(Unaudited)
Six months ended
December 31
--------------------------------------------
1996
Class A Class B Class D
------- ------- -------
<S> <C> <C> <C>
Net asset value -
Beginning of period $10.300 $10.280 $10.280
======= ======= =======
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(b) 0.054 0.016 0.016
Net realized and
unrealized gain (b) 0.505 0.498 0.498
------- ------- -------
Total from Investment
Operations 0.559 0.514 0.514
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.055) - -
From net realized gains (0.084) (0.084) (0.084)
------- ------- -------
Total Distributions
Declared to Shareholders (0.139) (0.084) (0.084)
------- ------- -------
Net asset value -
End of period $10.720 $10.710 $10.710
======= ======= =======
Total return (c)(d) 5.46%(e) 5.02%(e) 5.02%(e)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.75%(f)(g) 2.50%(f)(g) 2.50%(f)(g)
Fees and expenses waived
or borne by the Adviser 0.17%(f)(g) 0.17%(f)(g) 0.17%(f)(g)
Net investment income 1.06%(f)(g) 0.31%(f)(g) 0.31%(f)(g)
Portfolio turnover 25%(e) 25%(e) 25%(e)
Average commission rate $0.0239 $0.0239 $0.0239
Net assets at end
of period (000) $15,744 $ 270 $ 270
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.009 $ 0.009 $ 0.009
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) If the Adviser had not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) Annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
</TABLE>
15
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout the period
are as follows:
<CAPTION>
Period ended
June 30
------------------------------------------
1996 (c)
Class A Class B Class D
------- ------- -------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 9.930 $ 9.930 $ 9.930
======= ======= =======
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a)(b) 0.055 0.035 0.035
Net realized and
unrealized gain (b) 0.315 0.315 0.315
------- ------- -------
Total from Investment
Operations 0.370 0.350 0.350
------- ------- -------
Net asset value -
End of period $10.300 $10.280 $10.280
======= ======= =======
Total return (d)(e) 3.73%(f) 3.52%(f) 3.52%(f)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.75%(g)(h) 2.50%(g)(h) 2.50%(g)(h)
Fees and expenses waived
or borne by the Adviser 0.22%(g)(h) 0.22%(g)(h) 0.22%(g)(h)
Net investment income 2.17%(g)(h) 1.42%(g)(h) 1.42%(g)(h)
Portfolio turnover 4%(f) 4%(f) 4%(f)
Average commission rate $0.0126 $0.0126 $0.0126
Net assets at end
of period (000) $14,929 $ 257 $ 257
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.006 $ 0.006 $ 0.006
(b) Per share data was calculated using average shares outstanding during the
period.
(c) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) If the Adviser had not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) Annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
</TABLE>
16
