[Front Cover]
[logo: Colonial flag]
Colonial Small
Stock Fund
Semiannual Report
December 31, 1996
[photo: Sailboat racing through sparkling water, sails full of wind.]
---------------------------------
Not FDIC- May lose value
Insured No bank guarantee
---------------------------------
<PAGE>
Colonial Small Stock Fund Highlights
July 1, 1996 - December 31, 1996
Investment Objective: Colonial Small Stock Fund seeks long-term growth by
investing primarily in smaller capitalization equities.
The Fund is Designed to Offer:
[check-mark] Diversification
[check-mark] Dynamic investment opportunities
[check-mark] Disciplined investment strategy
Portfolio Manager Commentary: "Despite a correction in small stock prices in
July, the market's rebound and investors' preference for value-oriented small
stocks during the second half of the period provided the Fund with a positive
investment environment. We believe that small cap stocks are currently
undervalued and present a compelling long-term investment opportunity."
- James Haynie & Michael Rega
Colonial Small Stock Fund Performance
Class A* Class B Class D
Inception dates 7/25/86 11/9/92 1/15/96
- --------------------------------------------------------------------------------
6-month total returns, assuming 7.26% 6.88% 6.91%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 12/31/96 $27.43 $26.57 $27.25
*Formerly Colonial Small Stock Index Trust. Name and objective changed 11/2/92.
Top Five Holdings** Top Five Sectors**
(as of 12/31/96) (as of 12/31/96)
1. Universal Health 1. Technology .............. 18.8%
Services, Inc. .......... 2.1% 2. Financials .............. 16.8%
2. Fremont General Corp. ... 2.0% 3. Consumer Cyclicals ...... 14.2%
3. Advanced Technology 4. Health Care ............. 10.8%
Laboratories, Inc. ...... 1.9% 5. Capital Goods ........... 6.7%
4. Alex Brown, Inc. ........ 1.8%
5. Conseco, Inc. ........... 1.7%
**Because the Fund is actively managed, holdings and sectors will change.
Holding and sector weightings are calculated as a percent of total 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
<PAGE>
President's Message
To Fund Shareholders
[photo: Harold W. Cogger]
I am pleased to present your Fund's semiannual report for the six months
ended December 31, 1996. This report reflects on the investment environment
of the past six months and on the performance of your Fund.
Long-term interest rates were rising during most of the period, having a
negative effect on fixed income investments. However, with recent statistics
suggesting an easing pace of economic activity and a continued benign
inflation outlook, we are hopeful that bond market volatility will be
somewhat reduced in the months ahead.
There was some good news for the tax-exempt sector. Low supply and strong
retail market support enabled municipal bonds to outperform Treasury bonds
for much of the period. The post-election conditions should promote a period
of stability for the tax-exempt market as the flat tax initiative is now a
receding memory.
In the domestic stock market, generally favorable conditions prevailed in
1996, until July, when a price-based correction took place. Since then, the
market has rebounded nicely with the Dow Jones Industrial Average setting
several new records. Internationally, the Tiger countries of the Pacific Rim
continue to offer a good combination of growth and value. In the European
markets, short-term interest rates continue to be much lower than long-term
rates. We expect these conditions to prevail until we see an increase in
economic activity.
Our economic expectations include growth continuing at a slower, but more
sustainable rate, and our outlook for 1997 is relatively bright.
The following report will provide you with specific information on your
Fund's performance as well as an in-depth discussion with your portfolio
manager. As always, we thank you for the opportunity to help you meet your
investment goals through the Colonial family of funds.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
February 10, 1997
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
<PAGE>
Portfolio Management Report
James Haynie is portfolio co-manager of Colonial Small Stock Fund and vice
president of Colonial Management Associates, Inc. Michael Rega is the Fund's
portfolio co-manager and vice president of Colonial Management Associates,
Inc.
Q. What was your investment strategy during the past six months?
A. The Fund maintained its focus on value-oriented, small capitalization
stocks. We sought to identify stocks that reflected above average earnings
potential at reasonable prices. The Fund remained diversified across all
sectors of the small-cap universe in its efforts to replace fully valued
stocks with those characterized by greater potential for price appreciation.
Because this strategy's value lies in stock selection rather than in placing
sector bets, the Fund can be protected from negative performance that may
result from poor returns generated by a specific sector.
Q. What was the investment environment for small stocks during the period?
A. In general, the equity market enjoyed favorable conditions during the
period, with several stock indexes setting records. However, small stocks
experienced a correction in July, with the NASDAQ posting its largest
one-day decline since 1987. This event was driven primarily by investor
perceptions of growth-oriented small stocks' inability to sustain their
earnings momentum. This skeptical view was due in part to a five-month
period of rising long-term interest rates and the recognition of their
potential negative effect on companies' profitability and earnings.
Subsequent to this correction, the small company universe shifted to
value-oriented from growth-oriented stocks. The Fund's investment strategy
positioned it to benefit from the market's style rotation to value-oriented
small stocks.
Q. How did the Fund perform during the second half of 1996?
A. The Fund outperformed the Russell 2000 Index, an unmanaged index that tracks
the performance of small company stocks traded on the New York Stock
Exchange, the American Stock Exchange and NASDAQ. The total return for Class
A shares for six months, based on net asset value, was 7.26% while the
Russell 2000 Index posted a total return of 5.57%. While both the Fund and
the Russell 2000 Index have a value orientation, the Fund was able to
outperform the Index by virtue of its superior stock selection across a
number of industries during the period.
Q. What investments contributed to performance?
A. The Fund benefited from investments in the financial, retail and energy
sectors during the period. Financial holdings, such as The Money Store,
Fremont General and American Travellers, did well as a result of an improved
interest rate environment during the second half of 1996, enabling these
companies to continue producing solid earnings growth. In the retail
industry, the Fund's investment in Ross Stores performed well. This
California-based discount retail chain posted strong results through year
end, even as many retailers announced lower than expected holiday sales. The
chain benefited from a low unit pricing concept combined with improved
economic activity in the California market. The energy sector provided
shareholders with attractive returns as well, with oil and gas exploration
stocks such as Pride Petroleum and Parker & Parsley profiting from both
short- and long-term trends. In the short term, higher oil prices during
1996 provided these companies with a financial windfall. Over the longer
term, these stocks are expected to benefit from increased global energy
demand resulting, in part, from the industrialization of China, the Pacific
Rim and eastern Europe.
Q. What is your outlook for 1997?
A. We are cautiously optimistic because we believe that interest rates will be
the dominant determinant of equity market performance over the next six
months. We
4
<PAGE>
anticipate moderate economic growth and continued low levels of inflation,
and therefore, we see no reason to expect a spike in interest rates that
would be negative for the stock market. Small cap stocks should perform well
in a moderating economy. These small companies typically have a more focused
product base and are more nimble in bringing new products to market than
larger companies. This enables them to generate relatively better earnings
growth in a slower economic environment.
On March 3, 1997, the fund's name will be changed to cOlonial Small Cap Value
Fund to better reflect the Fund's value-oriented management style. There will
be no change to the Fund's objective or to the investment discipline that has
generated attractive returns to date.
Colonial Small Stock Fund Investment Performance vs. The Russell 2000 Index
Change in Value of $10,000 from 12/31/86 to 12/31/96
Based on NAV and MOP for Class A Shares
- --------------------------------MOUNTAIN CHART---------------------------------
Colonial Small Stock Fund Investment Performance vs.
The Russell 2000 Index
Change in Value of $10,000 from 12/31/86 to 12/31/96
Based on NAV and MOP for Class A Shares
CSSF Date NAV MOP Russell 2000
--------- --- --- ------------
Dec 31, 86 10000 9425 10000
Mar 31, 87 12172 11473 12421
Jun 30, 87 12155 11455 12333
Sep 30, 87 12858 12119 12855
Dec 31, 87 8924 8411 9120
Mar 31, 88 10896 10269 10861
Jun 30, 88 11890 11207 11580
Sep 30, 88 11624 10956 11474
Dec 31, 88 11355 10702 11402
Mar 31, 89 12588 11799 12281
Jun 30, 89 12850 12111 13063
Sep 30, 89 13315 12549 13942
Dec 31, 89 12694 11964 13256
Mar 31, 90 12551 11829 12958
Jun 30, 90 12912 12170 13450
Sep 30, 90 9884 9316 10159
Dec 31, 90 9691 9134 10674
Mar 31, 91 11618 10950 13848
Jun 30, 91 11060 10424 13628
Sep 30, 91 11385 10731 14743
Dec 31, 91 11529 10866 15589
Mar 31, 92 13488 12713 16756
Jun 30, 92 11787 11110 15069
Sep 30, 92 11873 11190 16059
Dec 31, 92 13909 13109 18458
Mar 31, 93 15152 14281 19247
Jun 30, 93 15161 14290 19669
Sep 30, 93 15993 15073 21389
Dec 31, 93 16528 15578 21943
Mar 31, 94 16719 15758 21359
Jun 30, 94 15936 15019 20523
Sep 30, 94 17389 16389 21949
Dec 31, 94 17570 16560 21543
Mar 31, 95 18918 17830 22538
Jun 30, 95 21279 20056 24651
Sep 30, 95 24510 23101 27085
Dec 31, 95 24167 22778 27672
Mar 31, 96 25889 24401 29084
Jun 30, 96 26665 25131 30539
Sep 30, 96 27269 25701 30643
Dec 31, 96 28602 26957 32237
- --------------------------------------------------------------------------------
A $10,000 investment in Class B shares made on November 9, 1992, (inception) at
net asset value (NAV) would have been valued at $22,327 on December 31, 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 $22,127
on December 31, 1996. A $10,000 investment in Class D shares made on January 15,
1996 (inception), at NAV would have been valued at $12,516 on December 31, 1996.
The same investment after deducting the applicable CDSC would have grown to
$12,291 on December 31, 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 December 31, 1996 (Most Recent Quarter End)
Class A Shares Class B Shares Class D Shares
Inception 7/25/86* Inception 11/9/92 Inception 1/15/96
MOP
NAV MOP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
1 year 18.35% 11.54% 17.50% 12.50% -- --
- --------------------------------------------------------------------------------
5 years 19.93% 18.52% -- -- -- --
- --------------------------------------------------------------------------------
Since inception 9.91% 9.29% 21.37% 21.10% 25.16%** 22.91%**
- --------------------------------------------------------------------------------
Since chg in policy 22.53% 20.80% -- -- -- --
- --------------------------------------------------------------------------------
*Name and objective changed 11/2/92.
**Cumulative since inception.
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 charge for Class A shares of
5.75%. The maximum CDSC for Class B shares is 5% for 1-year and 2% since
inception and 1% for Class D shares since inception.
5
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1996 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 90.4% SHARES VALUE
................................................................................
CONSTRUCTION - 1.4%
Building Construction
Beazer Homes USA, Inc. (a) 30 $ 555
Continental Homes Holding Corp. 60 1,275
Toll Brothers, Inc. (a) 87 1,697
------
3,527
------
................................................................................
FINANCE, INSURANCE & REAL ESTATE - 16.5%
Depository Institutions - 3.4%
CCB Financial Corp. 17 1,160
MAF Bancorp, Inc. 40 1,390
ONBANCorp., Inc. 30 1,114
Peoples Heritage Financial Group, Inc. 13 362
Riggs National Corp. 54 923
TCF Financial Corp. 30 1,305
Zions Bancorporation 19 1,976
------
8,230
------
Insurance Carriers - 9.8%
American Bankers Insurance Group, Inc. 42 2,147
Arbatax International, Inc. (a) 40 272
Capital RE Corp. 17 769
Conseco, Inc. 64 4,059
Enhance Financial Services Group, Inc. 62 2,270
Fremont General Corp. 155 4,805
Horace Mann Educators Corp. 25 1,009
Orion Capital Corp. 20 1,223
Penncorp Financial Group, Inc. 110 3,960
US Facilities Corp. 40 785
Vesta Insurance Group, Inc. 83 2,601
------
23,900
------
Nondepository Credit Institutions - 1.5%
Aames Financial Corp. 20 717
Imperial Credit Industries, Inc. (a) 64 1,340
Olympic Financial Ltd. (a) 32 453
The Money Store, Inc. 46 1,267
------
3,777
------
6
<PAGE>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
Security Brokers & Dealers - 1.8%
Alex Brown, Inc. 61 $ 4,437
-------
................................................................................
MANUFACTURING - 30.9%
Apparel - 0.6%
Nautica Enterprises, Inc. (a) 62 1,565
-------
Chemicals & Allied Products - 0.5%
ICN Pharmaceuticals, Inc. (a) 70 1,364
-------
Electronic & Electrical Equipment - 7.1%
Alliance Semiconductor Corp. (a) 10 71
Altron, Inc. (a) 38 787
Checkpoint Systems, Inc. (a) 50 1,237
Chips & Technologies, Inc. (a) 50 913
Computer Products, Inc. (a) 65 1,268
Digital Systems International, Inc. (a) 50 800
HADCO Corp. (a) 58 2,820
Harman International Industries, Inc. 25 1,391
Innovex, Inc. 40 1,080
Sanmina Corp. (a) 60 3,390
Standard Motor Products, Inc. 27 368
Technitrol, Inc. 38 1,458
U.S. Robotics, Inc. (a) 21 1,512
Xicor, Inc. (a) 19 196
-------
17,291
-------
Fabricated Metal - 0.6%
BMC Industries, Inc. 51 1,600
-------
Food & Kindred Products - 0.3%
Robert Mondavi Corp., Class A (a) 20 730
-------
Furniture & Fixtures - 1.7%
Bush Industries, Inc. 35 674
Furniture Brands International, Inc. (a) 100 1,397
Herman Miller, Inc. 27 1,534
LA-Z-Boy, Inc. 16 472
-------
4,077
-------
Lumber & Wood Products - 0.2%
Oakwood Homes Corp. 22 503
-------
Machinery & Computer Equipment - 3.0%
Boca Research, Inc. (a) 45 467
Camco International, Inc. 42 1,919
Cascade Communications Corp. (a) 12 661
7
<PAGE>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
................................................................................
MANUFACTURING - CONT.
Machinery & Computer Equipment - Cont.
In Focus Systems, Inc. (a) 30 $ 649
Kaydon Corp. 15 707
Mylex Corp. (a) 30 375
Novellus Systems, Inc. (a) 20 1,084
Toro Co. 38 1,387
-------
7,249
-------
Measuring & Analyzing Instruments - 9.2%
Advanced Technology Laboratories, Inc. (a) 148 4,573
Bio-Rad Laboratories, Inc.,
Class A (a) 46 1,380
Coherent, Inc. (a) 50 2,113
Credence Systems Corp. (a) 89 1,781
Esterline Technologies Corp. (a) 79 2,053
Invacare Corp. 50 1,375
Maxxim Medical, Inc. (a) 23 281
Media General, Inc.
Class A 22 659
Mentor Corp. 45 1,328
Nellcor Puritan Bennett, Inc. (a) 32 691
Perceptron, Inc. (a) 30 1,028
Quickturn Design Systems, Inc. (a) 50 1,025
Tracor, Inc. (a) 25 531
Ultratech Stepper, Inc. (a) 47 1,116
VISX, Inc. (a) 67 1,478
Watkins-Johnson Co. 22 527
Zygo Corp. (a) 13 681
-------
22,620
-------
Miscellaneous Manufacturing - 0.1%
K2, Inc. 6 165
-------
Paper Products - 1.8%
ACX Technologies, Inc. (a) 75 1,491
Mercer International, Inc. (a) 90 922
Paragon Trade Brands, Inc. (a) 66 1,971
-------
4,384
-------
Primary Metal - 3.6%
Inland Steel Industries, Inc. 100 2,000
Mueller Industries, Inc. (a) 30 1,155
Oregon Metallurgical Corp. 10 329
Precision Castparts Corp. 17 829
Quanex Corp. 35 958
Texas Industries, Inc. 39 1,974
8
<PAGE>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
Titan Wheel International, Inc. 68 $ 867
Wolverine Tube, Inc. (a) 22 776
------
8,888
------
Printing & Publishing - 0.9%
Day Runner, Inc. (a) 108 2,100
------
Stone, Clay, Glass & Concrete - 0.7%
Global Industrial Technologies, Inc. (a) 72 1,593
------
Transportation Equipment - 0.6%
Orbital Sciences Corp. (a) 41 709
Varlen Corp. 39 798
------
1,507
------
................................................................................
MINING & ENERGY - 3.0%
Metal Mining - 1.0%
Cleveland-Cliffs, Inc. 53 2,405
------
Oil & Gas Extraction - 2.0%
Parker and Parsley Petroleum 70 2,573
Pride Petroleum Services, Inc. (a) 100 2,325
------
4,898
------
................................................................................
RETAIL TRADE - 7.4%
Apparel & Accessory Stores - 2.5%
Claire's Stores, Inc. 141 1,838
Finish Line, Inc., Class A (a) 20 423
Ross Stores, Inc. 60 3,000
Wet Seal, Inc., Class A (a) 42 893
------
6,154
------
Food Stores - 0.2%
Ruddick Corp. 32 448
------
General Merchandise Stores - 0.5%
Neiman Marcus Group, Inc. (a) 20 510
Waban, Inc. (a) 29 754
------
1,264
------
Home Furnishings & Equipment - 1.5%
CompUSA, Inc. (a) 180 3,713
------
Miscellaneous Retail - 1.5%
Lewis Galoob Toys, Inc. (a) 177 2,478
Tiffany & Co. 30 1,099
------
3,577
------
9
<PAGE>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
................................................................................
RETAIL TRADE - CONT.
Restaurants - 1.2%
Applebee's International, Inc. 60 $ 1,650
CKE Restaurants, Inc. 2 58
Foodmaker, Inc. (a) 150 1,331
-------
3,039
-------
................................................................................
SERVICES - 17.2%
Amusement & Recreation - 0.3%
Anchor Gaming (a) 19 745
-------
Auto Repair Services & Parking - 1.1%
National Auto Credit, Inc. (a) 32 383
PHH Corp. (a) 55 2,369
-------
2,752
-------
Business Services - 9.0%
Acxiom Corp. (a) 129 3,091
Computer Horizons Corp. (a) 37 1,428
Computervision Corp. (a) 60 555
Control Data Systems, Inc. (a) 74 1,628
Interim Services, Inc. (a) 40 1,420
Logicon, Inc. 58 2,132
McAfee Associates, Inc. (a) 31 1,353
National Data Corp. 45 1,957
Norrell Corp. 50 1,363
Robert Half International, Inc. (a) 40 1,375
SPSS, Inc. (a) 30 836
Sotheby's Holdings, Inc. 115 2,144
Sterling Commerce, Inc. (a) 37 1,294
Sterling Software, Inc. (a) 23 729
Uniforce Temporary Personnel, Inc. 30 615
-------
21,920
-------
English, Accounting, Research & Management - 0.5%
Jacobs Engineering Group, Inc. (a) 55 1,306
-------
Health Services - 5.8%
Access Health, Inc. (a) 13 591
Apria Healthcare Group, Inc. (a) 27 512
Express Scripts, Inc. (a) 23 825
Grancare, Inc. (a) 100 1,787
Lincare Holdings, Inc. (a) 20 820
Regency Health Services, Inc. (a) 100 962
Renal Treatment Centers, Inc. (a) 16 408
Rotech Medical Corp. (a) 148 3,108
Universal Health Services, Inc., Class B (a) 178 5,087
-------
14,100
-------
10
<PAGE>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
Motion Pictures - 0.5%
Regal Cinemas, Inc. (a) 38 $1,153
------
................................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 8.3%
Air Transportation - 2.2%
Airborne Freight Corp. 82 1,914
Alaska Air Group, 60 1,260
Comair Holdings, Inc. 27 646
Ogden Corp. 86 1,609
------
5,429
------
Auto Dealers & Gas Stations - 0.2%
Discount Auto Parts, Inc. (a) 20 468
------
Communications - 0.8%
Billing Information Concepts (a) 70 2,013
------
Electric, Gas & Sanitary Services - 0.5%
Newpark Resources, Inc. (a) 11 417
Unit Corp. (a) 71 697
------
1,114
------
Electric Services - 1.7%
Commonwealth Energy System Cos 22 517
Sierra Pacific Resources 100 2,875
TNP Enterprises, Inc. 26 723
------
4,115
------
Gas Services - 1.4%
Eastern Enterprises 40 1,415
ONEOK, Inc. 65 1,950
------
3,365
------
Motor Freight & Warehousing - 0.3%
Consolidated Freightways Corp. (a) 12 103
Consolidated Freightways, Inc. 23 516
------
619
------
Transportation Services - 0.4%
GATX Corp. 22 1,067
------
Water Transportation - 0.8%
APL Ltd. 80 1,890
------
................................................................................
11
<PAGE>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
- --------------------------------------------------------------------------------
WHOLESALE TRADE - 5.7%
Durable Goods - 4.4%
Bell Industries, Inc. 33 $ 709
Ethan Allen Interiors, Inc. 60 2,310
Fisher Scientific International 63 2,964
Kent Electronics Corp. (a) 80 2,060
Marshall Industries (a) 22 674
Physician Sales & Service, Inc. (a) 55 792
Wyle Electronics Co. 32 1,280
---------
10,789
---------
Nondurable Goods - 1.3%
Cardinal Health, Inc. 21 1,231
Universal Corp. 60 1,928
---------
3,159
---------
TOTAL INVESTMENTS (cost of $177,910)(b) 221,009
---------
SHORT-TERM OBLIGATIONS - 9.9% 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 $24,449 (repurchase proceeds $24,127) $ 24,118 24,118
OTHER ASSETS & LIABILITIES, NET - (0.3)% (604)
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 244,523
NOTES TO INVESTMENT PORTFOLIO: =========
- --------------------------------------------------------------------------------
(a) Non-incoming producing
(b) Cost for federal income tax purposes is $177,917
See notes to financial statements.
12
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1996 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $177,910) $221,009
Short-term obligations 24,118
--------
245,127
Receivable for:
Fund shares sold $ 833
Dividends 135
Interest 5
Other 50 1,023
-------- --------
Total Assets 246,150
LIABILITIES
Payable for:
Fund shares repurchased 1,602
Accrued:
Transfer Agent fees 20
Deferred Trustees fees 2
Other 3
-----
Total Liabilities 1,627
--------
NET ASSETS $244,523
========
Net asset value & redemption price per share - Class A
($106,470/3,881) $ 27.43
========
Maximum offering price per share - Class A
($27.43/0.9425) $ 29.10(a)
========
Net asset value & offering price per share - Class B
($129,436/4,871) $ 26.57(b)
========
Net asset value & redemption price per share - Class D
($4,714/173) $ 27.25(b)
========
Maximum offering price per share - Class D
($27.25/0.9900) $ 27.53
========
Net asset value, offering and redemption
price per share - Class Z ($3,903/142) $ 27.55
========
COMPOSITION OF NET ASSETS
Capital paid in $ 200,511
Accumulated net investment loss (421)
Accumulated net realized gains 1,334
Net unrealized appreciation 43,099
----------
$ 244,523
==========
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less
any applicable contingent deferred sales charge.
See notes to financial statements.
13
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Dividends $ 728
Interest 630
--------
1,358
EXPENSES
Management fee $ 631
Service fee - Class A, Class B, Class D 259
Distribution fee - Class B 416
Distribution fee - Class D 13
Transfer agent 325
Bookkeeping fee 42
Trustees fee 10
Custodian fee 5
Audit fee 15
Legal fee 6
Registration fee 38
Reports to shareholders 8
Other 11 1,779
-------- --------
Net Investment Loss (421)
--------
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 6,607
Net unrealized appreciation 10,458
--------
Net Gain 17,065
--------
Net Increase in Net Assets from Operations $ 16,644
========
See notes to financial statements.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months ended Year ended
(in thousands) December 31 June 30
--------- ---------
INCREASE (DECREASE) IN NET ASSETS 1996 1996
Operations:
Net investment loss $ (421) $ (246)
Net realized gain 6,607 6,194
Net unrealized appreciation 10,458 16,571
--------- ---------
Net Increase from Operations 16,644 22,519
Distributions:
From net realized gains - Class A (3,482) (2,786)
From net realized gains - Class B (4,515) (2,652)
From net realized gains - Class D (160) --
From net realized gains - Class Z (133) (127)
--------- ---------
8,354 16,954
--------- ---------
Fund Share Transactions (a):
Receipts for shares sold - Class A 170,288 181,243
Value of distributions reinvested - Class A 3,097 2,440
Cost of shares repurchased - Class A (161,354) (143,861)
--------- ---------
12,031 39,822
--------- ---------
Receipts for shares sold - Class B 45,823 85,137
Value of distributions reinvested - Class B 4,261 2,027
Cost of shares repurchased - Class B (20,357) (27,703)
--------- ---------
29,727 59,461
--------- ---------
Receipts for shares sold - Class D 3,230 2,803
Value of distributions reinvested - Class D 127 --
Cost of shares repurchased - Class D (1,384) (186)
--------- ---------
1,973 2,617
--------- ---------
Receipts for shares sold - Class Z 230 3,511
Value of distributions reinvested - Class Z 133 127
Cost of shares repurchased - Class Z (208) (328)
--------- ---------
155 3,310
--------- ---------
Net Increase from Fund Share
Transactions 43,886 105,210
--------- ---------
Total Increase 52,240 122,164
NET ASSETS
Beginning of period 192,283 70,119
--------- ---------
End of period (including net investment
losses of $421 and none,
respectively) $ 244,523 $ 192,283
========= =========
(a) Class Z shares were initially offered on July 31, 1995 and Class D
shares were initially offered on January 15, 1996.
Continued on next page.
See notes to financial statements.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(continued)
(Unaudited)
Six months ended Year ended
December 31 June 30
------ ------
1996 1996
NUMBER OF FUND SHARES (a)
Sold - Class A 6,444 7,161
Issued for distributions reinvested - Class A 112 101
Repurchased - Class A (6,070) (5,693)
------ ------
486 1,569
------ ------
Sold - Class B 1,787 3,410
Issued for distributions reinvested - Class B 159 86
Repurchased - Class B (807) (1,113)
------ ------
1,139 2,383
------ ------
Sold - Class D 123 105
Issued for distributions reinvested - Class D 4 --
Repurchased - Class D (52) (7)
------ ------
75 98
------ ------
Sold - Class Z 9 144
Issued for distributions reinvested - Class Z 5 5
Repurchased - Class Z (8) (13)
------ ------
6 136
------ ------
(a) Class Z shares were initially offered on July 31, 1995 and Class D
shares were initially offered on January 15, 1996.
See notes to financial statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (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, 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 long-term growth by investing primarily in smaller capitalization
equities. 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.
17
<PAGE>
Notes to Financial Statements/December 31, 1996
-----------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
.............................................................................
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.
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 fee 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 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
18
<PAGE>
Notes to Financial Statements/December 31, 1996
-----------------------------------------------------------------------------
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 six months ended December 31, 1996, the Fund
has been advised that the Distributor retained net underwriting discounts of
$47,128 on sales of the Fund's Class A shares and received contingent
deferred sales charges (CDSC) of $104,789 and $4,107, 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 4. PORTFOLIO INFORMATION
.............................................................................
Investment activity: During the six months ended December 31, 1996, purchases
and sales of investments, other than short-term obligations, were $77,334,483
and $38,168,199, respectively.
Unrealized appreciation (depreciation) at December 31, 1996, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 53,465,390
Gross unrealized depreciation (10,373,508)
-----------
Net unrealized appreciation $ 43,091,882
===========
Other: 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 six months ended December 31, 1996.
19
<PAGE>
FINANCIAL HIGHLIGHTS (a)
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
(unaudited)
Six months ended December 31
----------------------------------------------------------------
1996
Class A Class B Class D Class Z
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 26.480 $25.770 $26.400 $26.550
--------- --------- -------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) -- (0.097) (0.100) 0.033
Net realized and
unrealized gain 1.930 1.877 1.930 1.947
--------- --------- -------- -----------
Total from Investment
Operations 1.930 1.780 1.830 1.980
--------- --------- -------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized
gains (0.980) (0.980) (0.980) (0.980)
--------- --------- -------- -----------
Net asset value -
End of period $ 27.430 $26.570 $27.250 $27.550
========= ========= ======== ===========
Total return (b) 7.26%(c) 6.88%(c) 6.91%(c) 7.43%(c)
========= ========= ======== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.28%(d)(e) 2.03%(d)(e) 2.03%(d)(e) 1.03%(d)(e)
Net investment
income (loss) 0.01%(d)(e) (0.74)%(d)(e) (0.74)%(d)(e) 0.26%(d)(e)
Portfolio turnover 41%(e) 41%(e) 41%(e) 41%(e)
Average commission
rate (f) $ 0.0361 $0.0361 $0.0361 $0.0361
Net assets at end
of period (000) $106,470 $129,436 $4,714 $3,903
</TABLE>
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c) Not annualized
(d) The benefits derived from custody credits and directed brokerage arrange-
ments had no impact. Prior years' ratios are net of benefits received, if
any.
(e) Annualized.
(f) 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.
(g) Class D shares were initially offered on January 15, 1996. Per share amounts
reflect activity from that date.
(h) Class Z shares were initially offered on July 31, 1995. Per share amounts
reflect activity from that date.
(i) Includes distribution from Advo, Inc., which amounted to $0.047 per share.
20
<PAGE>
FINANCIAL HIGHLIGHTS (a) - continued
<TABLE>
<CAPTION>
Year ended June 30
- ---------------------------------------------------------------------------------------------
1996 1995
Class A Class B Class D(g) Class Z(h) Class A Class B
- ---------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 22.260 $21.840 $22.550 $24.790 $16.670 $16.470
- ---------- ------------ ----------- ----------- ----------- -----------
0.036(i) (0.147)(i) (0.072)(i) 0.096(i) 0.002 (0.139)
5.479 5.372 3.922 2.959 5.588 5.509
- ---------- ------------ ----------- ----------- ----------- -----------
5.515 5.225 3.850 3.055 5.590 5.370
- ---------- ------------ ----------- ----------- ----------- -----------
(1.295) (1.295) -- (1.295) -- --
- ---------- ------------ ----------- ----------- ----------- -----------
$ 26.480 $25.770 $26.400 $26.550 $22.260 $21.840
========== ============ =========== =========== =========== ===========
25.31% 24.44% 17.07%(c) 12.81%(c) 33.53% 32.60%
========== ============ =========== =========== =========== ===========
1.38%(d) 2.13%(d) 2.15%(d)(e) 1.13%(d)(e) 1.45% 2.20%
0.15%(d) (0.60%)(d) (0.54)%(d)(e) 0.41%(d)(e) 0.01% (0.74)%
46% 46% 46% 46% 64% 64%
$0.0439 $0.0439 $0.0439 $0.0439 -- --
$89,924 $96,158 $ 2,585 $3,616 $40,661 $29,458
</TABLE>
21
<PAGE>
FINANCIAL HIGHLIGHTS (a) - continued
<TABLE>
<CAPTION>
Year ended June 30
-------------------------------------------------------------------
1994 1993 1992
Class A Class B Class A Class B(b) Class A
------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $15.860 $15.790 $12.330 $13.010 $11.570
======== ========== ========== ========== ===========
INCOME FROM INVESTMENT OPERATIONS:
Net investment
loss (0.047) (0.176) (0.083) (0.100) (0.127)
Net realized and
unrealized gain 0.857 0.856 3.613 2.880 0.887
-------- ---------- ----------- ---------- -----------
Total from Investment
Operations 0.810 0.680 3.530 2.780 0.760
-------- ---------- ----------- ---------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized
gains -- -- -- -- --
-------- ---------- ----------- ---------- -----------
Net asset value -
End of period $16.670 $16.470 $15.860 $15.790 $12.330
======== ========== ========== ========== ===========
Total return (c) 5.11% 4.31% 28.63% 21.73%(d) 6.57%
======== ========== ========== ========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.56% 2.31% 1.88% 2.63%(e) 2.13%
Interest expense -- -- 0.01% 0.01% 0.06%
Net investment
income (loss) (0.27)% (1.02)% (0.60)% (1.35)(e) (0.91)%
Portfolio turnover 35% 35% 29% 29% --
Net assets at end
of period (000) $24,760 $8,489 $23,716 $1,665 $22,002
</TABLE>
(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.
22
<PAGE>
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
</TABLE>
(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.
23
<PAGE>
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 add
ress. If you would like more than one report, please call Colonial at
1-800-426-3750 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.
24
<PAGE>
[Back cover]
[logo: Colonial flag] Colonial
Mutual Funds
Mutual Funds for
Planned Portfolios
Trustees
Robert J. Birnbaum
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.)
Tom Bleasdale
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore
Bank & Trust Company)
Lora S. Collins
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
James E. Grinnell
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
William D. Ireland, Jr.
Retired (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
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; 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 Copy Rights 1997
A Liberty Financial Company (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
SS-03/190D-1296 M (2/97)
25
