<PAGE>
[graphic omitted]
COLONIAL U.S. STOCK FUND ANNUAL REPORT
June 30, 1998
---------------------
- ---------------------------- Important information
Not FDIC May Lose Value about the Fund's name
Insured No Bank Guarantee on page 5.
- ---------------------------- ---------------------
<PAGE>
COLONIAL U.S. STOCK FUND HIGHLIGHTS
July 1, 1997 - June 30, 1998
INVESTMENT OBJECTIVE: Colonial U.S. Stock Fund seeks long-term growth and
income.
THE FUND IS DESIGNED TO OFFER:
o Long-term growth potential
o Disciplined value investment strategy
o Expert portfolio management
PORTFOLIO MANAGER COMMENTARY: "The stock market's performance over the past year
was led by a handful of large-capitalization stocks. Nevertheless, by
maintaining broad diversification across a variety of industries and making good
decisions on individual stock selection, the Fund performed well over the
12-month period." - Mark Stoeckle
COLONIAL U.S. STOCK FUND PERFORMANCE
CLASS A CLASS B CLASS C
Inception dates 7/1/92 7/1/92 7/1/94
- ------------------------------------------------------------------------------
Distributions declared per share $2.247 $2.200 $2.200
- ------------------------------------------------------------------------------
12-month total returns, assuming 28.66% 27.67% 27.73%
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC)
- ------------------------------------------------------------------------------
Net asset value per share on 6/30/98 $20.02 $19.68 $19.78
TOP FIVE HOLDINGS(1) TOP FIVE SECTORS(1)
(as of 6/30/98) (as of 6/30/98)
- ------------------------------------------------------------------------------
1. General Electric Co. 2.8% 1. Financials 20.4%
2. Travelers Group, Inc. 2.6% 2. Technologies 12.9%
3. Microsoft Corp. 2.4% 3. Consumer Cyclicals 10.9%
4. Chase Manhattan Corp. 2.4% 4. Capital Goods 10.3%
5. TJX Companies, Inc. 1.9% 5. Health Care 10.2%
(1) Holdings and sector breakdowns are calculated as a percentage of total net
assets. Because the Fund is actively managed, holdings and sector weightings
will change. 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 on this
page are based upon Colonial's defined criteria as used in the investment
process.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Stephen E. Gibson]
In June 1998, Harold Cogger retired as president of Colonial U.S. Stock Fund. I
would like to take this opportunity to thank him for his guidance over the past
few years and wish him well. As the new president of the Fund, I am pleased to
present the annual report for Colonial U.S. Stock Fund for the 12-month period
ended June 30, 1998.
U.S. corporations continued to benefit from a healthy economic environment in
the first half of 1998. Companies in a variety of industries prospered in a
favorable climate of low interest rates, low unemployment, almost non-existent
inflation and steady economic growth. Although large-capitalization stocks have
corrected in recent weeks, much of the stock market leadership for the year has
come from a relatively small group of U.S. multinational companies. As a
diversified equity fund targeting stocks of large companies, Colonial U.S. Stock
Fund capitalized on the overall stock market's upward movement, providing
investors with solid performance during the period.
Colonial's New Value(R) investment approach has worked well in the current bull
market. This disciplined process helps our portfolio managers maintain
diversification across a wide variety of industries while seeking stocks of
companies with attractive valuations, consistent track records of operating
performance, and favorable future growth prospects. We believe the New Value
approach will continue to serve shareholders well even as stock prices
experience increased volatility.
Thank you for choosing Colonial U.S. Stock Fund and for the opportunity to serve
your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
August 11, 1998
Because market and economic conditions change, there can be no assurance that
the trends discussed above or on the following pages will continue.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
MARK STOECKLE is portfolio manager of Colonial U.S. Stock Fund and is a vice
president of Colonial Management Associates, Inc. The following is a discussion
of the Fund's performance for the 12-month period ended June 30, 1998.
A RELATIVELY SMALL NUMBER OF LARGE COMPANY STOCKS DOMINATED THE MARKET
Despite the slowdown in Asia and its negative impact on worldwide markets in
late 1997 and the first half of 1998, U.S. stock prices, as measured by the S&P
500 Index, posted an impressive 30.16% return over the 12-month period.
Large-capitalization stocks continued to provide stronger returns in comparison
to smaller-capitalization stocks. Much of the gain in the large-cap market can
be attributed to the stellar performance of only a handful of the largest 500
stocks that comprise the S&P 500. The performance of this very narrow group of
stocks made it even more difficult for equity fund managers to outperform the
index, particularly if they did not hold at least some of these stocks in their
portfolios. While all sectors in which the Fund is invested provided positive
gains over the 12-month period, a few posted returns that were notably higher,
including consumer cyclicals (up 66.7%), financial services (up 48.8%), health
care (up 58.4%), technology (up 61.8%) and utilities (up 45.2%).(1)
GOOD STOCK SELECTION AND BROAD DIVERSIFICATION BENEFITED SHAREHOLDERS
For the 12-month period, the Fund generated a total return of 28.66% for Class A
shares, based on net asset value. This compares favorably with the performance
of the Lipper Growth and Income Fund category, which averaged 22.86% during the
period.(2)
The Fund's strong performance during the period can be attributed mainly to two
factors - broad sector diversification and good stock selection. Colonial's New
Value(R) management approach includes a mandate that we maintain a broadly
diversified portfolio, avoiding large bets in specific industries or sectors of
the economy. This helps reduce the risk that any single industry could adversely
affect the portfolio, while providing access to a wide array of investment
opportunities. Moreover, it encourages us to dig deeper into each industry in
search of solid companies that are attractively priced relative to their peers.
One stock that has performed well for the Fund is TJX Companies, Inc. (1.9% of
the Fund's total net assets) - the owner of discount retailers Marshall's and TJ
Maxx. Several factors helped push this stock to new heights over the period.
First, the healthy economy and strong consumer confidence bolstered the retail
industry. Second, many of the major department stores have stopped trying to
compete on price with discount stores. Third, TJX is simply a well-run company
with a strong management team. Finally, there is enough product differentiation
between the two chains so that, when the two are in close proximity to each
other, the same consumer can shop at both. Over the 12-month period, the stock
price increased 79%.
In the financial services sector, we also held shares of Citicorp (1.6% of total
net assets) and Travelers (2.6% of total net assets). In March 1998, a merger
between the two was announced. The news was well received by investors,
resulting in stock appreciation for both firms. The consolidation will enable
the new company, which will be called Citigroup, to cross sell the products of
both companies by leveraging the large customer base of each. Analysts
anticipate that, as products are sold through new distribution channels, revenue
growth should accelerate. Travelers stock rose 34% during the period, while
Citicorp gained 21%.
Another stock in the portfolio is EMC Corp. (1.7% of total net assets) - a very
successful yet relatively unknown technology company that has matured from a
young upstart to a major player in the information storage business. EMC
manufactures both the hardware and software that represent the storage component
of large-scale corporate computer systems. In addition, EMC has a strong
management team in place and one of the most effective sales forces in the
business. While most technology stocks have become expensive, EMC was a good
value in comparison to other stocks in the technology sector. Over the past 12
months, its price increased 129%.
LONG-TERM OUTLOOK REMAINS POSITIVE
It would be difficult for domestic equities to continue growing at the
impressive pace they have set over the last few years. Nevertheless, our
long-term outlook remains positive. Should current economic conditions remain
unchanged, we believe that well-managed companies should continue to find ways
to increase productivity and maintain reasonable earnings growth rates.
The extent of Asia's economic crisis and its impact on U.S. corporate earnings
is still uncertain. We may continue to see foreign investors moving money into
U.S. blue-chip companies as part of a flight-to-quality trend. While most large
multinational companies have at least some exposure to Asian countries, they
have had six to eight months to make appropriate adjustments. We are encouraged
to see that large-cap companies are continuing to look for ways to further
reduce costs and increase productivity. By using new technology, well-seasoned
management teams are focusing on what they do well and are shedding unproductive
assets. This type of strategy should continue to reward long-term shareholders.
Effective September 1, 1998, the Fund's name will change to Colonial U.S. Growth
& Income Fund from Colonial U.S. Stock Fund. This name change will not affect
how the Fund is managed. Colonial U.S. Growth and Income Fund will continue to
be managed for growth and income, seeking long-term appreciation by investing
primarily in large-capitalization equities.
(1) Sector performance based on the Standard & Poor's 500 Index.
(2) Source: Lipper Analytical Services, Inc. Lipper rankings are based on the
Lipper Growth and Income Fund category. The Fund's Class A shares ranking
for the one-year period is in the first quartile (ranked 119 out of 668
funds) and in the second quartile for the five-year period (78th of 275
funds). Rankings do not include any sales charges. Performance for different
share classes will vary with fees associated with each class. Past
performance cannot guarantee future results.
<PAGE>
COLONIAL U.S. STOCK FUND INVESTMENT PERFORMANCE VS. THE S&P 500 INDEX
Change in Value of $10,000 from 7/1/92 - 6/30/98
Based on NAV and POP for Class A Shares
NAV POP S&P 500 Index
- -----------------------------------------------------------------------
7/1/92 $10,000 $10,000 $10,000
7/31/92 10,420 9,820 10,408
8/31/92 10,140 9,556 10,195
9/30/92 10,210 9,622 10,315
10/30/92 10,290 9,698 10,350
11/30/92 10,660 10,047 10,702
12/31/92 10,957 10,327 10,833
1/29/93 11,087 10,450 10,924
2/26/93 11,077 10,440 11,072
3/31/93 11,598 10,931 11,306
4/30/93 11,358 10,705 11,033
5/28/93 11,749 11,073 11,327
6/30/93 11,889 11,206 11,360
7/30/93 11,789 11,111 11,314
8/31/93 12,231 11,528 11,743
9/30/93 12,412 11,699 11,653
10/29/93 12,493 11,774 11,894
11/30/93 12,282 11,575 11,780
12/31/93 12,511 11,792 11,923
1/31/94 12,770 12,035 12,328
2/28/94 12,470 11,753 11,993
3/31/94 12,016 11,325 11,471
4/29/94 12,037 11,344 11,618
5/31/94 12,181 11,481 11,808
6/30/94 11,895 11,211 11,519
7/29/94 12,144 11,446 11,897
8/31/94 12,684 11,955 12,384
9/30/94 12,528 11,808 12,081
10/31/94 12,694 11,964 12,352
11/30/94 12,279 11,573 11,903
12/30/94 12,469 11,752 12,079
1/31/95 12,780 12,046 12,392
2/28/95 13,381 12,612 12,875
3/31/95 13,704 12,916 13,254
4/28/95 14,004 13,199 13,644
5/31/95 14,582 13,744 14,189
6/30/95 14,850 13,996 14,518
7/31/95 15,332 14,450 14,999
8/31/95 15,242 14,366 15,036
9/29/95 15,769 14,862 15,671
10/31/95 15,668 14,767 15,615
11/30/95 16,239 15,305 16,299
12/29/95 16,146 15,218 16,613
1/31/96 16,584 15,630 17,178
2/29/96 16,851 15,882 17,338
3/29/96 16,863 15,894 17,505
4/30/96 17,483 16,478 17,763
5/31/96 17,920 16,890 18,220
6/28/96 17,650 16,635 18,289
7/31/96 16,699 15,739 17,482
8/30/96 17,223 16,233 17,851
9/30/96 17,980 16,946 18,855
10/31/96 18,443 17,383 19,375
11/29/96 19,797 18,659 20,838
12/31/96 19,326 18,215 20,425
1/31/97 20,652 19,465 21,701
2/28/97 20,692 19,502 21,871
3/31/97 19,963 18,815 20,974
4/30/97 21,170 19,952 22,225
5/30/97 22,430 21,140 23,584
6/30/97 23,322 21,981 24,632
7/31/97 25,448 23,985 26,592
8/29/97 24,491 23,083 25,103
9/30/97 25,860 24,373 26,477
10/31/97 24,624 23,208 25,594
11/28/97 25,554 24,085 26,778
12/31/97 26,124 24,622 27,237
1/30/98 26,394 24,876 27,538
2/27/98 28,313 26,685 29,523
3/31/98 29,707 27,998 31,034
4/30/98 29,692 27,984 31,352
5/29/98 28,927 27,264 30,814
6/30/98 30,007 28,281 32,065
CURRENT VALUE OF A $10,000 INVESTMENT MADE ON 7/1/92
As of 6/30/98
CLASS A SHARES CLASS B SHARES CLASS C SHARES
NAV POP NAV W/CDSC NAV W/CDSC
- ------------------------------------------------------------------------
$30,007 $28,281 $28,640 $28,540 $28,662 $28,662
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/98
- ----------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
INCEPTION 7/1/92 7/1/92 7/1/94
NAV POP NAV W/CDSC NAV W/CDSC
1 YEAR 28.66% 21.26% 27.67% 22.67% 27.73% 26.73%
- ----------------------------------------------------------------------------
5 YEARS 20.34 18.92 19.44 19.24 19.45 19.45
- ----------------------------------------------------------------------------
LIFE OF FUND 20.09 18.91 19.16 19.09 19.17 19.17
- ----------------------------------------------------------------------------
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 contingent deferred sales charges (CDSC). Public offering price (POP) returns
include the maximum sales charge of 5.75%. The CDSC returns reflect the maximum
charges of 5% for one year, 2% for five years and 1% since inception for Class B
shares, and 1% for one year for Class C shares. Performance for different share
classes will vary based on differences in sales charges and fees associated with
each class.
Performance results reflect any voluntary waivers or reimbursement of Fund
expenses by the Advisor. Absent these waivers or reimbursement arrangements,
performance results would have been lower.
Class C share performance information includes returns of the Fund's Class B
shares for periods prior to the Class C share inception date. These Class B
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between Class B shares and Class C shares.
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of widely held, large-capitalization U.S. stocks. Unlike mutual
funds, indexes are not investments, do not incur fees or expenses and are not
professionally managed. It is not possible to invest directly in an index.
Class C share performance information includes returns of the Fund's Class B
shares (the oldest existing fund class) for periods prior to its inception date.
These Class B share returns are not restated to reflect any expense differential
(e.g., Rule 12b-1 fees) between Class B shares and Class C shares.
<PAGE>
INVESTMENT PORTFOLIO
JUNE 30, 1998 (IN THOUSANDS)
COMMON STOCKS - 91.1% SHARES VALUE
- -----------------------------------------------------------------------------
AGRICULTURE, FORESTRY & FISHING - 0.4%
AGRICULTURE - CROPS
RJR Nabisco Holdings Corp. 170 $ 4,033
----------
- -----------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 22.7%
DEPOSITORY INSTITUTIONS - 6.5%
BankAmerica Corp. 118 10,226
Chase Manhattan Corp. 311 23,511
Citicorp 105 15,671
Comerica, Inc. 155 10,235
Dime Bancorp, Inc. 160 4,790
----------
64,433
----------
INSURANCE CARRIERS - 11.4%
Allmerica Financial Corp. 72 4,680
Allstate Corp. 48 4,349
American International Group, Inc. 72 10,512
Conseco, Inc. 211 9,864
Equitable Companies, Inc. 71 5,321
ITT Hartford Group, Inc. 73 8,395
Mercury General Corp. 167 10,735
Old Republic International Corp. 365 10,698
Travelers Group, Inc. 424 25,693
United Healthcare Corp. 188 11,957
Wellpoint Health Networks, Inc. 149 11,048
----------
113,252
----------
NONDEPOSITORY CREDIT INSTITUTIONS - 2.6%
American Express Co. 141 16,108
SLM Holding Corp. 208 10,182
----------
26,290
----------
SECURITY BROKERS & DEALERS - 2.2%
Bear Stearns Companies, Inc. 87 4,936
Lehman Brothers Holdings, Inc. 120 9,307
Morgan Stanley Dean Witter Discover & Co. 82 7,493
----------
21,736
----------
- -----------------------------------------------------------------------------
MANUFACTURING - 39.5%
APPAREL - 1.4%
VF Corp. 270 13,905
----------
CHEMICALS & ALLIED PRODUCTS - 9.5%
American Home Products Corp. 185 9,584
Dow Chemical Co. 99 9,601
Eli Lilly & Co. 90 5,951
Goodrich (B.F.) Co. 91 4,516
Johnson & Johnson 55 4,027
Merck & Co., Inc. 140 18,712
Procter & Gamble Co. 63 5,755
Rohm & Haas Co. 66 6,891
Schering-Plough Corp. 199 18,270
Warner-Lambert Co. 159 11,031
----------
94,338
----------
COMMUNICATIONS EQUIPMENT - 1.2%
Lucent Technologies, Inc. (a) 140 11,653
----------
ELECTRICAL INDUSTRIAL EQUIPMENT - 2.7%
General Electric Co. 302 27,464
----------
ELECTRONIC COMPONENTS - 0.6%
SCI Systems, Inc. (a) 157 5,922
----------
FABRICATED METAL - 0.8%
Danaher Corp. 220 8,079
----------
FOOD & KINDRED PRODUCTS - 2.2%
Hershey Foods, Corp. 17 1,180
Interstate Bakeries Corp. 145 4,805
Philip Morris Co., Inc. 416 16,388
----------
22,373
----------
FURNITURE & FIXTURES - 1.5%
Herman Miller, Inc. 228 5,534
Masco Corp. 155 9,377
----------
14,911
----------
MACHINERY & COMPUTER EQUIPMENT - 7.7%
Baker Hughes, Inc. 117 4,044
Caterpillar, Inc. 81 4,262
Compaq Computer Corp. 331 9,392
EMC Corp. (a) 378 16,939
Ingersoll Rand Co. 181 7,984
Sun Microsystems, Inc. (a) 224 9,747
Timken Co. 109 3,359
Tyco International Ltd. 270 17,010
Varco International, Inc. (a) 175 3,467
----------
76,204
----------
MEASURING & ANALYZING INSTRUMENTS - 1.7%
Honeywell, Inc. 34 2,808
Tektronix, Inc. 109 3,863
Thermo Electron Corp. (a) 299 10,225
----------
16,896
----------
PETROLEUM REFINING - 5.1%
Ashland Oil, Inc. 75 3,872
Atlantic Richfield Co. 88 6,875
Chevron Corp. 22 1,861
Exxon Corp. 156 11,096
Mobil Corp. 128 9,823
Texaco, Inc. 134 7,986
USX-Marathon Group 260 8,928
----------
50,441
----------
PRIMARY METAL - 0.4%
USX-US Steel Group 121 3,993
----------
TRANSPORTATION EQUIPMENT - 4.7%
Chrysler Corp. 133 7,498
Dana Corp. 90 4,815
Eaton Corp. 41 3,188
Ford Motor Co. 100 5,900
General Dynamics Corp. 182 8,472
Textron, Inc. 116 8,330
United Technologies Corp. 93 8,630
----------
46,833
----------
- -----------------------------------------------------------------------------
MINING & ENERGY - 1.5%
NONMETALLIC, EXCEPT FUELS - 0.3%
Vulcan Materials Co. 32 3,393
----------
OIL & GAS EXTRACTION - 0.5%
Transocean Offshore, Inc. 107 4,762
----------
OIL & GAS FIELD SERVICES - 0.7%
Schlumberger Ltd. 101 6,900
----------
- -----------------------------------------------------------------------------
RETAIL TRADE - 9.2%
APPAREL & ACCESSORY STORES - 1.9%
TJX Companies, Inc. 787 18,996
----------
FOOD STORES - 1.7%
Albertson's, Inc. 190 9,839
Safeway, Inc. (a) 174 7,077
----------
16,916
----------
GENERAL MERCHANDISE STORES - 2.9%
Dayton Hudson Corp. 318 15,413
Dillard Department Stores, Inc. 120 4,973
Federated Department Stores, Inc. (a) 163 8,782
----------
29,168
----------
HOME FURNISHINGS & EQUIPMENT - 0.3%
CompUSA, Inc. (a) 176 3,181
----------
MISCELLANEOUS RETAIL - 2.4%
CVS Corp. 180 7,009
Office Depot, Inc. (a) 537 16,949
----------
23,958
----------
- -----------------------------------------------------------------------------
SERVICES - 6.9%
BUSINESS SERVICES - 0.8%
Cendant Corp. 369 7,707
----------
COMPUTER RELATED SERVICES - 1.5%
Autodesk, Inc. 266 10,274
Cadence Design Systems, Inc. (a) 149 4,656
----------
14,930
----------
COMPUTER SOFTWARE - 4.0%
Computer Associates International, Inc. 120 6,668
Microsoft Corp. (a) 222 24,059
Oracle Systems Corp. (a) 350 8,597
----------
39,324
----------
HEALTH SERVICES - 0.6%
HEALTHSOUTH Corp. (a) 232 6,308
----------
- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 10.2%
Air Transportation - 1.2%
AMR Corp. (a) 28 2,364
Continental Airlines, Inc., Class B (a) 120 7,305
US Airways Group, Inc. (a) 33 2,615
----------
12,284
----------
ELECTRIC, GAS & SANITARY SERVICES - 0.2%
Sempra Energy (a) 86 2,395
----------
ELECTRIC SERVICES - 2.7%
FPL Group, Inc. 113 7,119
GPU, Inc. 229 8,655
MarketSpan Corp. 226 6,771
NIPSCO Industries, Inc. 168 4,704
----------
27,249
----------
MOTOR FREIGHT & WAREHOUSING - 0.8%
CNF Transportation 175 7,438
----------
TELECOMMUNICATIONS - 5.3%
Ameritech Corp. 210 9,442
AT&T Corp. 100 5,712
Bell Atlantic Corp. 61 2,782
BellSouth Corp. 55 3,672
MCI Communications Corp. 87 5,057
SBC Communications, Inc. 157 6,281
US West, Inc. 204 9,607
WorldCom, Inc. (a) 200 9,687
----------
52,240
----------
- -----------------------------------------------------------------------------
WHOLESALE TRADE - 0.7%
NONDURABLE GOODS
Bergen Brunswig Corp., Class A 102 4,744
Richfood Holdings, Inc. 123 2,554
----------
7,298
----------
TOTAL COMMON STOCKS (cost of $651,004) 907,203
----------
CORPORATE FIXED INCOME BONDS & NOTES - 2.9% PAR
- -----------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 1.0%
DEPOSITORY INSTITUTIONS - 0.4%
Fleet/Norstar Financial Group, Inc.,
8.625% 01/15/07 $ 3,000 3,446
----------
NONDEPOSITORY CREDIT INSTITUTIONS - 0.6%
General Motors Acceptance Corp.,
8.500% 01/15/03 4,000 4,359
Household Finance Co.,
8.250% 02/15/05 1,820 2,000
----------
6,359
----------
- -----------------------------------------------------------------------------
MANUFACTURING - 0.3%
MACHINERY & COMPUTER EQUIPMENT
Xerox Corp.,
8.125% 04/15/02 3,000 3,215
----------
- -----------------------------------------------------------------------------
MINING & ENERGY - 0.3%
CRUDE PETROLEUM & NATURAL GAS
Union Oil of California,
7.200% 05/15/05 3,000 3,126
----------
- -----------------------------------------------------------------------------
RETAIL TRADE - 0.3%
GENERAL MERCHANDISE STORES
Wal-Mart Stores, Inc.,
8.625% 04/01/01 3,000 3,214
----------
- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 1.0%
ELECTRIC SERVICES - 0.4%
Texas Utilities Electric Co.,
8.250% 04/01/04 3,000 3,280
----------
GAS SERVICES - 0.3%
Southern Natural Gas Co.,
8.625% 05/01/02 2,500 2,707
----------
RAILROAD - 0.3%
Norfolk Southern Corp.,
7.875% 02/15/04 3,000 3,234
----------
TOTAL CORPORATE FIXED INCOME
BONDS & NOTES (cost of $28,189) 28,581
----------
TOTAL INVESTMENTS - 94.0% (cost of $679,193) (b) 935,784
----------
SHORT-TERM OBLIGATIONS - 6.3%
- -----------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp., dated 6/30/98, due
7/01/98 at 6.100% collateralized by U.S. Treasury notes and bill with
various maturities to 2027, market value $64,383 (repurchase proceeds
$63,029)
63,018 63,018
----------
OTHER ASSETS & LIABILITIES, NET - (0.3)% (3,399)
- -----------------------------------------------------------------------------
NET ASSETS - 100.0% $ 995,403
==========
- -----------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- -----------------------------------------------------------------------------
(a) Non-incoming producing.
(b) Cost for federal income tax purposes is $679,233.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1998
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $679,193) $ 935,784
Short-term obligations 63,018
----------
998,802
Cash $ 4
Receivable for:
Fund shares sold 8,366
Dividends 801
Interest 688
Other 6 9,865
-------- ----------
Total Assets 1,008,667
LIABILITIES
Payable for:
Investments purchased 10,223
Fund shares repurchased 2,959
Accrued:
Deferred Trustees fees 3
Other 79
--------
Total Liabilities 13,264
----------
NET ASSETS $ 995,403
==========
Net asset value & redemption price per share - Class A
($306,864/15,327) $ 20.02
==========
Maximum offering price per share - Class A
($20.02/0.9425) $ 21.24(a)
==========
Net asset value & offering price per share - Class B
($660,305/33,559) $ 19.68(b)
==========
Net asset value & offering price per share - Class C
($28,234/1,428) $ 19.78(b)
==========
COMPOSITION OF NET ASSETS
Capital paid in $ 686,447
Overdistributed net investment income (597)
Accumulated net realized gains 52,962
Net unrealized appreciation 256,591
----------
$ 995,403
==========
(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.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
(in thousands)
INVESTMENT INCOME
Dividends $ 11,102
Interest 4,116
----------
15,218
EXPENSES
Management fee $ 6,292
Service fee 1,997
Distribution fee - Class B 3,820
Distribution fee - Class C 124
Transfer agent 2,271
Bookkeeping fee 285
Trustees fee 41
Custodian fee 33
Audit fee 30
Legal fee 7
Registration fee 122
Reports to shareholders 22
Other 41 15,085
------- ----------
Net Investment Income 133
----------
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 106,072
Net unrealized appreciation 82,936
----------
Net Gain 189,008
----------
Increase in Net Assets from Operations $ 189,141
==========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended June 30
------------------------------
INCREASE (DECREASE) IN NET ASSETS 1998 (a) 1997
Operations:
Net investment income $ 133 $ 829
Net realized gain 106,072 51,644
Net unrealized appreciation 82,936 98,331
--------- ---------
Net Increase from Operations 189,141 150,804
Distributions:
From net investment income - Class A (133) (829)
In excess of net investment income - Class A (467) (133)
From net realized gains - Class A (28,096) (14,099)
From net realized gains - Class B (54,761) (26,520)
From net realized gains - Class C (1,472) (730)
--------- ---------
104,212 108,493
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 101,316 53,358
Value of distributions reinvested - Class A 26,994 14,112
Cost of shares repurchased - Class A (72,950) (57,688)
--------- ---------
55,360 9,782
--------- ---------
Receipts for shares sold - Class B 211,504 80,246
Value of distributions reinvested - Class B 51,719 25,068
Cost of shares repurchased - Class B (80,862) (69,516)
--------- ---------
182,361 35,798
--------- ---------
Receipts for shares sold - Class C 19,023 8,192
Value of distributions reinvested - Class C 1,415 689
Cost of shares repurchased - Class C (5,871) (7,781)
--------- ---------
14,567 1,100
--------- ---------
Net Increase from Fund Share
Transactions 252,288 46,680
--------- ---------
Total Increase 356,500 155,173
NET ASSETS
Beginning of period 638,903 483,730
--------- ---------
End of period (net of overdistributed
net investment income of $597 and
$130, respectively) $ 995,403 $ 638,903
========= =========
(a) Class D shares were redesignated Class C shares on July 1, 1997.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year ended June 30
------------------------------
NUMBER OF FUND SHARES 1998 (a) 1997
Sold - Class A 5,358 3,447
Issued for distributions reinvested - Class A 1,536 945
Repurchased - Class A (3,855) (3,757)
--------- ---------
3,039 635
--------- ---------
Sold - Class B 11,217 5,207
Issued for distributions reinvested - Class B 2,981 1,724
Repurchased - Class B (4,344) (4,589)
--------- ---------
9,854 2,342
--------- ---------
Sold - Class C 1,003 534
Issued for distributions reinvested - Class C 81 47
Repurchased - Class C (319) (505)
--------- ---------
765 76
========= =========
(a) Class D shares were redesignated Class C shares on July 1, 1997.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1. ACCOUNTING POLICIES
- ------------------------------------------------------------------------------
ORGANIZATION: Colonial U.S. 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 investment objective is to seek long-term growth
and income. The Fund may issue an unlimited number of shares. The Fund offers
three classes of shares: Class A, Class B and Class C. Class A shares are sold
with a front-end sales charge and a 1.00% contingent deferred sales charge on
redemptions made within eighteen months on an original purchase of $1 million to
$5 million. Class B shares are subject to an annual distribution fee and a
contingent deferred sales charge and will convert to Class A shares when they
have been outstanding approximately eight years. Effective July 1, 1997, Class D
shares were redesignated to Class C shares which are subject to an annual
distribution fee and a contingent deferred sales charge on redemptions made
within one year after purchase.
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 generally 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.
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available 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 B and Class C 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 C net investment income per share data
reflects the distribution fee per share applicable to Class B and Class C shares
only.
Class B and Class C 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 C 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.
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.
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 0.80% 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.
Effective October 1, 1997 and continuing through September 1998, the Transfer
Agent fee will be reduced by 0.0012% in cumulative monthly increments, resulting
in a decrease in the fee from 0.25% to 0.236% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc. (the
Distributor), a subsidiary of the Adviser, is the Fund's principal underwriter.
For the year ended June 30, 1998, the Fund has been advised that the Distributor
retained net underwriting discounts of $200,651 on sales of the Fund's Class A
shares and received contingent deferred sales charges (CDSC) of $592,336 and
$3,460 on Class B and Class C 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 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 C 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 such shares.
EXPENSE LIMITS: Through December 31, 1997, the Adviser had agreed to waive fees
and bear certain Fund expenses to the extent that total expenses (exclusive of
the service fees, distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceeded 1.25% annually of the Fund's average
net assets. Effective January 1, 1998, the expense limit was eliminated.
For the period ended December 31, 1997, the Fund's operating expenses did not
exceed the 1.25% expense limit.
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, 1998, purchases and sales of
investments, other than short-term obligations, were $546,494,998 and
$397,402,620, respectively.
Unrealized appreciation (depreciation) at June 30, 1998 based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 269,911,300
Gross unrealized depreciation (13,360,720)
---------------
Net unrealized appreciation $ 256,550,580
===============
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 33 1/3% 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, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended June 30
----------------------------------
1998
Class A Class B Class C (b)
-------- ------- ----------
Net asset value -
Beginning of period $ 17.550 $17.370 $17.440
-------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (a) 0.097 (0.043) (0.044)
Net realized and unrealized gain 4.620 4.553 4.584
-------- ------- -------
Total from Investment Operations 4.717 4.510 4.540
-------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.010) -- --
In excess of net investment income (0.037) -- --
From net realized gains (2.200) (2.200) (2.200)
-------- ------- -------
Total Distributions Declared
to Shareholders (2.247) (2.200) (2.200)
-------- ------- -------
Net asset value - End of period $ 20.020 $19.680 $19.780
======== ======= =======
Total return (c) 28.66% 27.67% 27.73%
======== ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 1.41% 2.16% 2.16%
Net investment income (d) 0.53% (0.22)% (0.22)%
Portfolio turnover 53% 53% 53%
Net assets at end
of period (000) $306,864 $60,305 $28,234
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Class D shares were redesignated to Class C shares on July 1, 1997.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended June 30
- -----------------------------------------------------------------------
1997 1996
Class A Class B Class C Class A Class B Class C
- --------- -------- ------- ------- -------- -------
$ 14.470 $ 14.360 $14.410 $13.260 $ 13.180 $13.240
- --------- -------- ------- ------- -------- -------
0.099 (0.015) (0.015) 0.121 0.017 0.016
4.314 4.275 4.295 2.292 2.265 2.268
- --------- -------- ------- ------- -------- -------
4.413 4.260 4.280 2.413 2.282 2.284
- --------- -------- ------- ------- -------- -------
(0.072) -- -- (0.118) (0.017) (0.029)
(0.011) -- -- -- -- --
(1.250) (1.250) (1.250) (1.085) (1.085) (1.085)
- --------- -------- ------- ------- -------- -------
(1.333) (1.250) (1.250) (1.203) (1.102) (1.114)
- --------- -------- ------- ------- -------- -------
$ 17.550 $ 17.370 $17.440 $14.470 $ 14.360 $14.410
========= ======== ======= ======= ======== =======
32.13% 31.21% 31.24% 18.85% 17.91% 17.84%
========= ======== ======= ======= ======== =======
1.45% 2.20% 2.20% 1.45% 2.20% 2.20%
0.65% (0.10)% (0.10)% 0.87% 0.12% 0.12%
83% 83% 83% 89% 89% 89%
$ 215,680 $411,670 $11,553 $68,554 $306,718 $ 8,458
- ------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
51% of the ordinary income distributed by the Fund in the year ended
June 30, 1998 qualifies for the corporate dividends received deduction.
For the fiscal year ended June 30, 1998 the Fund earned $93,456,597 of
long term capital gains of which $34,443,015 and $59,013,582 are 28% and
20% rate gains, respectively.
- ------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended June 30
---------------------------------
1995
Class A Class B Class C
-------- -------- -------
Net asset value - Beginning of period $ 11.460 $ 11.400 $11.460
-------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) 0.165 0.075 0.074
Net realized and unrealized gain (loss) 2.530 2.513 2.534
-------- -------- -------
Total from Investment Operations 2.695 2.588 2.608
-------- -------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.160) (0.073) (0.093)
From net realized gains (0.735) (0.735) (0.735)
-------- -------- -------
Total Distributions Declared
to Shareholders (0.895) (0.808) (0.828)
-------- -------- -------
Net asset value - End of period $ 13.260 $ 13.180 $13.240
======== ======== =======
Total return (b) 24.84% 23.94% 24.01%
======== ======== =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.46% 2.21% 2.21%
Net investment income 1.37% 0.62% 0.62%
Portfolio turnover 84% 84% 84%
Net assets at end of period (000) $124,171 $218,201 $ 3,028
(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.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended June 30
-----------------------
1994
Class A Class B
-------- --------
$ 11.820 $ 11.770
-------- --------
0.142 0.053
(0.119) (0.122)
-------- --------
0.023 (0.069)
-------- --------
(0.138) (0.056)
(0.245) (0.245)
-------- --------
(0.383) (0.301)
-------- --------
$ 11.460 $ 11.400
======== ========
0.05% (0.71)%
======== ========
1.49% 2.24%
1.19% 0.44%
117% 117%
$ 97,180 $150,121
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
COLONIAL U.S 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 U.S. Stock Fund (the
"Fund") (a series of Colonial Trust VI) at June 30, 1998, 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, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 11, 1998
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial U.S. Stock Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial U.S. Stock Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call 1-800-426-3750 and
additional reports will be sent to you.
This report has been prepared for shareholders of Colonial U.S. 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 and by the most recent copy of our
Performance Update.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
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, & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
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, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
ROBERT L. SULLIVAN
Retired Partner, Peat Marwick Main LLP (formerly Management Consultant, Saatchi
and Saatchi Consulting Ltd. and Principal and International Practice Director,
Management Consulting, Peat Marwick Main & Co.)
[logo] L I B E R T Y
COLONIAL FUNDS o STEIN ROE ADVISOR FUNDS o NEWPORT FUNDS
Liberty Funds Distributor, Inc. (C)1998
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
SF-02/612F-0698 (8/98) 98/847
