[front cover]
COLONIAL SMALL CAP VALUE FUND Annual report
JUNE 30, 1998
Not FDIC May Lose Value
Insured No Bank Guarantee
<PAGE>
Colonial Small Cap Value Fund Highlights
July 1, 1997-June 30, 1998
Investment Objective: Colonial Small Cap Value Fund seeks long-term growth by
investing primarily in smaller-capitalization equities.
The Fund is Designed to Offer:
[checkmark] Diversification
[checkmark] Dynamic investment opportunities
[checkmark] Disciplined investment strategy
Portfolio Manager Commentary: "In a favorable economic climate,
large-capitalization stocks have continued to dominate the stock market's
performance. While the performance of small-capitalization stocks has lagged the
broader market, these securities currently offer some of the best values we have
seen in 25 years. We were pleased that, during the period, the Fund outperformed
both the Russell 2000 Index and the Lipper Small Cap Fund category average."
-- James Haynie & Michael Rega
Colonial Small Cap Value Fund Performance
<TABLE>
<CAPTION>
Class A Class B Class C
Inception dates 7/25/86 11/9/92 1/15/96
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
12-month total returns, assuming 18.95% 18.05% 18.17%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- -------------------------------------------------------------------------------------
Net asset value per share on 6/30/98 $34.21 $32.67 $33.59
</TABLE>
<TABLE>
<CAPTION>
Top Five Holdings(1) Top Five Sectors(1)
(as of 6/30/98) (as of 6/30/98)
- ------------------------------------- --------------------------------------
<S> <C> <C> <C>
1.ESC Medical Systems Ltd. ......2.1% 1.Consumer Cyclicals.............18.6%
2.Showbiz Pizza Time.............1.9% 2.Financials.....................14.6%
3.Furniture Brands 3.Health Care ...................12.3%
International, Inc. ...........1.8% 4.Technologies...................11.6%
4.Ames Dept. Store ..............1.5% 5.Capital Goods...................9.9%
5.Universal Corp. Holdings...... 1.5%
</TABLE>
(1)Because the Fund is actively managed, holdings and sectors will change.
Holdings 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: Stephen E. Gibson]
In June 1998, Harold Cogger retired as president of Colonial Small Cap Value
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, I am pleased to
present the annual report for Colonial Small Cap Value Fund for the 12-month
period ended June 30, 1998.
During the year ended June 30, 1998, the economic environment was favorable for
corporate America. With low interest rates, low unemployment and low inflation,
companies in a variety of industries prospered, propelling the broader U.S.
equity markets to new heights. Although small-company stocks have experienced a
correction that began in April and has lasted through the first week of August,
Colonial Small Cap Value Fund provided investors with competitive returns during
the Fund's reporting period.
The small-company sector represents a large universe of stocks from which to
choose. With the stock prices of many blue-chip companies at an all-time high,
the small-company sector is ideally suited to Colonial's New Value(R) approach
to stock selection. Operating under the premise that investment opportunity can
be found almost anywhere, the New Value approach helps our portfolio managers
maintain diversification across a wide variety of industries. Equally important,
it enables them to search for stocks of companies with attractive valuations,
consistent track records of operating performance, and strong prospects for
earnings growth.
More detailed information about the Fund, its performance and the companies in
which it invested during the 12-month period appear on the following pages.
Thank you for choosing Colonial Small Cap Value Fund and for the opportunity to
serve your investment needs.
Respectfully,
[signature] 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.
3
<PAGE>
Portfolio Management Report
James Haynie and Michael Rega are portfolio co-managers of Colonial Small Cap
Value Fund and are vice presidents of Colonial Management Associates, Inc. The
following is a discussion of the Fund's performance for the 12-month period
ended June 30, 1998.
Performance of U.S. stocks showed continued strength
Despite the Asian currency crisis and its negative impact on worldwide markets
in late 1997 and the first half of 1998, U.S. stock prices continued their
strong upward trend over the past 12 months. While small-company stocks achieved
double-digit returns, investors continued to favor large-company issues. All
sectors of the small-cap market provided positive gains over the 12-month
period, but a few posted returns that were notably higher, including financial
services, consumer cyclicals, health care, technology and utilities.(1)
For the 12-month period, the Fund generated a total return of 18.95% for Class A
shares, based on net asset value. This compares favorably with the performance
of the Russell 2000 Index,(1) which posted a 16.5% return, and the Fund's Lipper
peer group, which averaged 17.6% for the period.(2)
Small-company stocks yet to make their move
Over different time periods, small-company stocks have outperformed
large-company stocks, and vice versa. While large-company stocks have dominated
over the past three years, we have been somewhat surprised that small-company
stocks continued to lag. Small-company stocks historically have performed best
at the beginning of an economic expansion. However, as industries and markets
have evolved and become more globalized over the past decade, the lines between
periods of economic expansion and contraction have started to blur. This has
been particularly true with the slow, steady growth we have experienced since
the last U.S. recession in the early 1990s. As a result, the cyclical nature of
the U.S. economy may no longer follow a traditional pattern to the extent it
once did, making investors less inclined to shift their equity focus in response
to a changing economic environment.
Uncertainty over Asia increases demand for U.S. stocks
Asia's economic crisis and the extent of its impact on U.S. corporate earnings
is still uncertain. However, equity investors who are nervous about global
markets have increasingly favored stocks of large, multinational U.S. companies.
Interestingly, the earnings of these large firms are more exposed to "Asian
risk" than earnings of many smaller U.S. companies. In addition, the prices of
large-cap stocks have risen to such high levels that we believe they have the
potential to decline to a greater degree than small-cap stocks in the event of a
market downturn.
Several growth opportunities identified
In the current economic environment, with low unemployment, rising wages and
strong consumer spending, the consumer cyclical sector has much to offer. One
stock that has performed well for the Fund is Furniture Brands International
(1.8% of total net assets), one of the largest furniture retailers in the U.S.
We acquired the stock for a number of reasons. First, it was reasonably valued
relative to its peers. Second, it benefited from strong demographic trends as
individuals bought new
4
<PAGE>
homes or refurbished existing ones. Third, the company streamlined its
operations and reduced its debt, which led to above-average profit growth. Since
the time we took a significant position in August, 1997, the stock rose more
than 59%.
Another stock in the portfolio is Ames Department Stores (1.5% of total net
assets). Ames came out of bankruptcy in 1994. Instead of buying shares
immediately, we waited to see if the company could achieve its business
objectives before taking advantage of its relatively inexpensive stock price. We
viewed Ames as a low-risk opportunity. Everything was in place to restart the
company, including a strong management team and newly remodeled stores. After
seeing some positive signs, we started buying shares in August, 1997. Since that
time, the stock has increased 94%.
The energy services sector is an area we believe has tremendous potential and
relatively little downside risk. In particular, deep-water oil rig stocks are
showing a lot of promise. While a recent drop in oil prices has caused many
investors to flee the industry, we believe this is a temporary move.
Fundamentally, these are very solid companies. Even if oil prices move lower,
these companies should not be severely impacted, as shallow and mid-range
projects would be cut well before deep-water projects. With some patience and a
watchful eye on oil prices, we plan to continue holding these issues for their
strong long-term growth potential and attractive relative value.
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
relatively stable -- with steady, slow growth, low inflation, low unemployment
and low interest rates -- well-managed companies should continue to find ways to
maintain reasonable earnings growth rates.
Small-company stocks currently offer strong upside potential and attractive
valuations. However, we may continue to see foreign investors moving money into
U.S. blue-chip companies in a flight to quality. Going forward, there are two
important points that small-company stock fund investors should keep in mind.
First, we believe prices of small-company stocks are as attractive as they have
been in the last 25 years. And second, small-company stocks have historically
outperformed large-company stocks over longer time periods, making them an
important component of a well-diversified portfolio.
(1) Based on Russell 2000 Index sector performance. The Russell 2000 Index(R) is
a tradename of the Frank Russell Company.
(2) Source: Lipper Analytical Services, Inc. Lipper rankings are based on the
Lipper Small Cap Funds category. The Fund's Class A shares ranking is in the
second quartile (ranked 251st of 621 funds) for the six-month period; in the
second quartile (207th of 524 funds) for the one-year period; in the first
quartile (27th of 168 funds) for the five-year period; and in the fourth
quartile (53rd of 59 funds) for the ten-year period. 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.
5
<PAGE>
Colonial Small Cap Value Fund Investment Performance vs. The Russell 2000 Index
Change in Value of $10,000 from 6/30/88 - 6/30/98
Based on NAV and POP for Class A Shares
[mountain chart]
<TABLE>
<CAPTION>
Date NAV POP Russell 2000
---- --- --- ------------
<S> <C> <C> <C>
Jun 30, 1988 10000 9425 10000
Sep 30, 1988 9775.889 9213.775 9909
Dec 30, 1988 9549.569 9000.469 9846
Mar 31, 1989 10528.4 9923.017 10605
Jun 30, 1989 10806.84 10185.44 11281
Sep 29, 1989 11197.92 10554.04 12040
Dec 29, 1989 10675.43 10061.59 11447
Mar 30, 1990 10555.48 9948.542 11190
Jun 29, 1990 10859.53 10235.11 11615
Sep 28, 1990 8312.826 7834.839 8773
Dec 31, 1990 8150.641 7681.979 9218
Mar 28, 1991 9771.142 9209.301 11958
Jun 28, 1991 9301.838 8766.983 11769
Sep 30, 1991 9575.185 9024.612 12731
Dec 31, 1991 9695.78 9138.272 13462
Mar 31, 1992 11343.9 10691.63 14470
Jun 30, 1992 9912.849 9342.86 13480
Sep 30, 1992 9985.206 9411.056 13868
Dec 31, 1992 11697.64 11025.03 15940
Mar 31, 1993 12742.79 12010.08 16621
Jun 30, 1993 12750.83 12017.66 16986
Sep 30, 1993 13450.28 12676.89 18471
Dec 31, 1993 13900.5 13101.22 18949
Mar 31, 1994 14061.29 13252.77 18445
Jun 30, 1994 13402.04 12631.43 17723
Sep 30, 1994 14624.07 13783.18 18954
Dec 30, 1994 14776.82 13927.15 18604
Mar 31, 1995 15910.4 14995.56 19463
Jun 30, 1995 17896.19 16867.16 21287
Sep 29, 1995 20613.58 19428.3 23390
Dec 29, 1995 20325.06 19156.37 23896
Mar 29, 1996 21773.22 20521.26 25116
Jun 28, 1996 22425.31 21135.86 26372
Sep 30, 1996 22933.44 21614.77 26462
Dec 31, 1996 24054.37 22671.25 27838
Mar 31, 1997 22703.89 21398.42 26399
Jun 30, 1997 26807.96 25266.5 30678
Sep 30, 1997 30701.56 28936.22 35244
Dec 31, 1997 29799.19 28085.73 34064
Mar 31, 1998 33881.78 31933.58 37490
Jun 30, 1998 31887 30054 35742
</TABLE>
[end mountain chart]
Current Value of a $10,000 Investment Made on 6/30/88
As of June 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class A Class B Class C
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$31,887 $30,054 $30,598 $30,598 $31,343 $31,343
</TABLE>
Average Annual Total Returns
As of June 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class A Shares Class B Shares Class C Shares
Inception 7/25/86(1) 11/9/92 1/15/96
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year 18.95% 12.11% 18.05% 13.05% 18.17% 17.17%
- -----------------------------------------------------------------------------
5 years 20.12 18.71 19.24 19.04 19.71 19.71
- -----------------------------------------------------------------------------
10 years 12.30 11.63 11.83 11.83 12.10 12.10
</TABLE>
(1) Investment policies changed November 2, 1992.
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 initial sales
charges or contingent deferred sales charges (CDSCs). Public offering price
(POP) returns include the maximum sales charge of 5.75%. The applicable CDSC for
Class B shares is 5% for one year and 2% for five years. The applicable CDSC for
Class C shares is 1% for one year.
Class B and Class C share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. These Class A share
returns are not restated to reflect any expense differential (e.g., Rule 12b-1
fees) between Class A shares and the newer class shares. Had the expense
differential been reflected, the returns for periods prior to the inception of
the newer class shares would have been lower.
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. It is not
possible to invest directly in an index.
6
<PAGE>
INVESTMENT PORTFOLIO
JUNE 30, 1998 (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 92.3% SHARES VALUE
- -----------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - 0.6%
Building Construction
NVR, Inc. (a) 11 $ 453
Toll Brothers, Inc. (a) 156 4,475
-----------
4,928
-----------
.............................................................................
FINANCE, INSURANCE & REAL ESTATE - 14.1%
Depository Institutions - 3.7%
ALBANK Financial Corp. 85 5,998
Downey Financial Corp. 120 3,922
First Union Corp. 45 2,641
FirstFed Financial Corp. (a) 84 4,384
GBC Bancorp. 100 2,650
Peoples Heritage Financial Group, Inc. 206 4,863
Silicon Valley Bancshares (a) 103 3,666
St. Paul Bancorp, Inc. 100 2,259
-----------
30,383
-----------
Insurance Carriers - 7.8%
ARM Financial Group, Inc. 220 4,868
American Bankers Insurance Group, Inc. 84 5,051
Capital RE Corp. 83 5,952
Conseco, Inc. 67 3,148
Delphi Financial Group, Inc., Class A (a) 92 5,154
Enhance Financial Services Group, Inc. 179 6,055
Executive Risk Inc. 27 1,991
Fidelity National Finance, Inc. 166 6,601
Fremont General Corp. 163 8,816
Horace Mann Educators Corp. 144 4,954
NAC Re Corp. 75 3,982
Orion Capital Corp. 78 4,330
Vesta Insurance Group, Inc. 131 2,796
-----------
63,698
-----------
Nondepository Credit Institutions - 1.1%
Consumer Portfolio Services, Inc. (a) 126 1,312
Imperial Credit Industries, Inc. (a) 128 3,003
Resource Bancshares Mortgage Group, Inc. 239 4,452
-----------
8,767
-----------
Real Estate Investment Trusts - 0.4%
Imperial Credit Mortgage Holdings 221 3,444
-----------
Security Brokers & Dealers - 1.1%
Jefferies Group, Inc. 78 3,198
Raymond James Financial, Inc. 182 5,440
-----------
8,638
-----------
</TABLE>
7
<PAGE>
Investment Portfolio/June 30, 1998
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONT. SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 35.0%
Apparel - 0.9%
Kellwood Co. 79 $ 2,828
Nautica Enterprises, Inc. (a) 184 4,933
-----------
7,761
-----------
Chemicals & Allied Products - 4.1%
Dexter Corp. 127 4,043
Ferro Corp. 223 5,646
Fuller (H.B.) Co. 46 2,550
Goodrich (B.F.) Co. 102 5,037
Medicis Pharmaceutical Corp., Class A (a) 114 4,114
NBTY, Inc. (a) 272 4,989
Rexall Sundown, Inc. (a) 125 4,458
Serologicals Corp. (a) 80 2,590
-----------
33,427
-----------
Communications Equipment - 0.4%
Comverse Technology, Inc. (a) 58 2,988
-----------
Electrical Industrial Equipment - 0.5%
Artesyn Technologies, Inc. (a) 90 1,440
MagneTek, Inc. (a) 153 2,410
-----------
3,850
-----------
Electronic Components - 3.2%
Innovex, Inc. 267 3,471
Park Electrochemical Corp. 250 5,290
Plexus Corp. (a) 104 2,045
QLogic Corp. (a) 139 4,961
Sanmina Corp. (a) 126 5,465
SemTech Corp. (a) 297 5,255
-----------
26,487
-----------
Fabricated Metal - 1.6%
Barnes Group, Inc. 120 3,237
Hexcel Corp. (a) 214 4,833
Valmont Industries 105 2,103
Wyman-Gordon Co. (a) 129 2,572
-----------
12,745
-----------
Food & Kindred Products - 1.0%
Canandaigua Brands, Inc., Class A (a) 85 4,201
Michael Foods, Inc. 152 4,462
-----------
8,663
-----------
</TABLE>
8
<PAGE>
Investment Portfolio/June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Furniture & Fixtures - 2.9%
Ethan Allen Interiors, Inc. 172 $ 8,609
Furniture Brands International, Inc. (a) 532 14,924
-----------
23,533
-----------
Lighting Equipment - 0.7%
Technitrol, Inc. 141 5,611
-----------
Lumber & Wood Products - 0.6%
Oakwood Homes Corp. 174 5,210
-----------
Machinery & Computer Equipment - 5.0%
Applied Power, Inc., Class A 100 3,437
Asyst Technology, Inc. (a) 218 2,757
Camco International, Inc. 47 3,641
Cincinnati Milacron, Inc. 130 3,161
GENICOM Corp. (a) 176 814
Gehl Co. (a) 192 3,878
Kaydon Corp. 119 4,185
Manitowoc, Inc. 137 5,507
NACCO Industries, Inc., Class A 34 4,446
STB Systems, Inc. (a) 157 1,959
Terex Corp. (a) 114 3,249
Zebra Technologies Corp., Class A (a) 91 3,899
-----------
40,933
-----------
Measuring & Analyzing Instruments - 5.6%
ADAC Laboratories (a) 262 5,895
ATL Ultrasound, Inc. (a) 84 3,810
ESC Medical Systems Ltd. (a) 513 17,307
Esterline Technologies Corp. (a) 184 3,835
Fossil, Inc. (a) 267 6,653
Input/Output, Inc. (a) 217 3,891
Respironics, Inc. (a) 285 4,427
-----------
45,818
-----------
Miscellaneous Manufacturing - 0.4%
Russ Berrie & Company, Inc. 136 3,407
-----------
Paper Products - 0.7%
Shorewood Packaging Corp. (a) 209 3,317
Wausau-Mosinee Paper Corp. 106 2,428
-----------
5,745
-----------
Petroleum Refining - 0.4%
Tesoro Petroleum Corp. (a) 184 2,922
-----------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1998
- ----------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - CONT.
Primary Metal - 2.9%
Brush Wellman, Inc. 10 $ 195
Encore Wire Corp. (a) 153 2,467
Inland Steel Industries, Inc. 213 6,004
Mueller Industries, Inc. (a) 110 4,084
Precision Castparts Corp. 85 4,537
RMI Titanium Company (a) 93 2,116
Texas Industries, Inc. 82 4,357
-----------
23,760
-----------
Printing & Publishing - 1.4%
Bowne & Co., Inc. 49 2,223
Valassis Communications, Inc. (a) 241 9,297
-----------
11,520
-----------
Rubber & Plastic - 0.3%
Carlisle Cos., Inc. 61 2,622
-----------
Stone, Clay, Glass & Concrete - 1.0%
Libbey, Inc. 80 3,073
Lone Star Industries, Inc. 64 4,955
-----------
8,028
-----------
Textile Mill Products - 0.6%
Culp, Inc. 3 39
Interface, Inc. 233 4,696
-----------
4,735
-----------
Transportation Equipment - 0.8%
Arvin Industries, Inc. 100 3,635
Varlen Corp. 77 2,672
-----------
6,307
-----------
............................................................................
MINING & ENERGY - 4.1%
Oil & Gas Extraction - 1.9%
Devon Energy Corp. 89 3,110
Patterson Energy, Inc. (a) 315 3,091
Pride International, Inc. (a) 190 3,218
Santa Fe Energy Resources, Inc. 182 1,952
Vintage Petroleum, Inc. 221 4,171
-----------
15,542
-----------
Oil & Gas Field Services - 2.2%
Marine Drilling Companies, Inc. (a) 275 4,400
Pool Energy Services Co. (a) 272 4,022
Veritas DGC, Inc. (a) 195 9,713
-----------
18,135
-----------
</TABLE>
10
<PAGE>
Investment Portfolio/June 30, 1998
- ---------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
RETAIL TRADE - 12.0%
Apparel & Accessory Stores - 4.8%
Claire's Stores, Inc. 317 $ 6,498
Dress Barn, Inc. (a) 337 8,412
Finish Line, Inc., Class A (a) 270 7,594
Genesco, Inc. (a) 306 4,997
Paul Harris Stores, Inc. (a) 137 1,807
Ross Stores, Inc. 179 7,693
Stein Mart, Inc. (a) 184 2,472
-----------
39,473
-----------
General Merchandise Stores - 3.1%
Ames Department Stores, Inc. (a) 463 12,185
Consolidated Stores Corp. (a) 103 3,748
Meyer (Fred), Inc. (a) 124 5,249
Shopko Stores, Inc. 123 4,182
-----------
25,364
-----------
Home Furnishings & Equipment - 0.4%
Compucom Systems, Inc. (a) 205 1,331
CompUSA, Inc. (a) 96 1,734
-----------
3,065
-----------
Miscellaneous Retail - 0.9%
Fingerhut Companies, Inc. 119 3,911
Tiffany & Co. 64 3,072
-----------
6,983
-----------
Restaurants - 2.8%
Foodmaker, Inc. (a) 434 7,317
Showbiz Pizza Time, Inc. (a) 385 15,520
-----------
22,837
-----------
.............................................................................
SERVICES - 15.0%
Amusement & Recreation - 0.5%
Anchor Gaming (a) 51 3,920
-----------
Business Services - 1.9%
Advo, Inc. 222 6,269
Norrell Corp. 241 4,795
Ogden Corp. 150 4,147
-----------
15,211
-----------
Computer Related Services - 4.3%
DSP Group, Inc. (a) 190 3,687
Inacom Corp. (a) 216 6,842
Jack Henry & Associates 88 3,069
National Instruments Corp. (a) 68 2,422
Rent-Way, Inc. (a) 265 8,086
</TABLE>
11
<PAGE>
Investment Portfolio/June 30, 1998
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONT. SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
SERVICES - CONT.
Computer Related Services - Cont.
StaffMark, Inc. (a) 120 $ 4,395
Systems & Computer Technology Corp. (a) 233 6,286
-----------
34,787
-----------
Computer Software - 2.0%
Data Dimensions, Inc. (a) 118 2,013
Hyperion Software Corp. (a) 381 10,856
Symantec Corp. (a) 149 3,900
-----------
16,769
-----------
Engineering, Accounting, Research & Management - 0.7%
CDI Corp. (a) 59 1,578
Jacobs Engineering Group, Inc. (a) 136 4,370
-----------
5,948
-----------
Health Services - 5.1%
Curative Health Services, Inc. (a) 232 6,601
Diagnostic Health Services, Inc. (a) 49 410
Hooper Holmes, Inc. 64 1,415
Integrated Health Services, Inc. 92 3,440
Lincare Holdings, Inc. (a) 40 1,682
NovaCare, Inc. (a) 368 4,329
Osteotech, Inc. (a) 153 2,684
RehabCare Group, Inc. (a) 177 4,255
Total Renal Care Holdings, Inc. (a) 234 8,060
Universal Health Services, Inc., Class B (a) 158 9,206
-----------
42,082
-----------
Hotels, Camps & Lodging - 0.5%
Signature Resort (a) 250 4,125
-----------
..............................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 5.3%
Air Transportation - 1.4%
Airborne Freight Corp. 208 7,250
Comair Holdings, Inc. 131 4,038
-----------
11,288
-----------
Electric Services - 1.1%
Public Service Company of New Mexico 240 5,445
Sierra Pacific Resources 100 3,631
-----------
9,076
-----------
Gas Services - 0.5%
UGI Corp. 181 4,497
-----------
</TABLE>
12
<PAGE>
Investment Portfolio/June 30, 1998
- ----------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Motor Freight & Warehousing - 1.0%
CNF Transportation 23 $ 986
US Xpress Enterprises, Inc. Class A (a) 60 1,000
USFreightways Corp. 187 6,157
-----------
8,143
-----------
Sanitary Services - 0.4%
Piedmont Natural Gas Co. 99 3,336
-----------
Telecommunication - 0.4%
Aliant Communications, Inc. 113 3,106
-----------
Transportation Services - 0.5%
Circle International Group, Inc. 135 3,786
-----------
..............................................................................
WHOLESALE TRADE - 6.2%
Durable Goods - 2.4%
CHS Electronics, Inc. (a) 326 5,818
Ingram Micro, Inc. (a) 83 3,673
MicroAge, Inc. (a) 129 1,830
Owens & Minor, Inc. 230 2,297
Patterson Dental Co. (a) 136 4,995
SED International Holdings, Inc. (a) 93 757
-----------
19,370
-----------
Nondurable Goods - 3.8%
Fleming Co., Inc. 339 5,954
Herbalife International, Inc. Class A 50 1,237
Herbalife International, Inc. Class B 100 2,072
Richfood Holdings, Inc. 300 6,204
United Stationers, Inc. (a) 61 3,956
Universal Corp. 322 12,031
-----------
31,454
-----------
TOTAL COMMON STOCKS (cost of $629,721)(b) 754,227
-----------
SHORT-TERM OBLIGATIONS - 7.8% PAR
- --------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp., dated 06/30/98, due 07/01/98
at 6.100%, collateralized by U.S. Treasury notes and bill with various
maturities to 2027, value $65,146
(repurchase proceeds $63,776) $ 63,765 63,765
-----------
OTHER ASSETS & LIABILITIES, NET - (0.1)% (504)
- -----------------------------------------------------------------------------
NET ASSETS - 100.0% $817,488
-----------
</TABLE>
13
<PAGE>
Investment Portfolio/June 30, 1998
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
See notes to financial statements.
14
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1998
(in thousands except for per share amounts and footnotes)
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments at value (cost $629,721) $754,227
Short-term obligations 63,765
---------
817,992
Cash $ 900
Receivable for:
Fund shares sold 5,412
Dividends 486
Interest 11
Other 5 6,814
------- ---------
Total Assets 824,806
LIABILITIES
Payable for:
Investments purchased 4,790
Fund shares repurchased 2,468
Accrued:
Transfer Agent Out-of-Pocket fees 32
Deferred Trustees fees 4
Other 24
-------
Total Liabilities 7,318
---------
NET ASSETS $817,488
========
Net asset value & redemption price per share - Class A
($401,929/11,749) $ 34.21
========
Maximum offering price per share - Class A
($34.21/0.9425) $ 36.30(a)
========
Net asset value & offering price per share - Class B
($370,699/11,346) $ 32.67(b)
========
Net asset value & offering price per share - Class C
($38,562/1,148) $ 33.59(b)
========
Net asset value, offering and redemption
price per share - Class Z ($6,298/183) $ 34.49
========
COMPOSITION OF NET ASSETS
Capital paid in $692,994
Overdistributed net investment income (12)
Net unrealized appreciation 124,506
---------
$817,488
========
</TABLE>
(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.
15
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
(in thousands)
INVESTMENT INCOME
Dividends $ 4,051
Interest 2,835
-------
6,886
EXPENSES
Management fee $ 4,641
Service fee - Class A, Class B, Class C 1,526
Distribution fee - Class B 2,112
Distribution fee - Class C 168
Transfer agent 1,832
Bookkeeping fee 222
Trustees fee 30
Custodian fee 28
Audit fee 27
Legal fee 8
Registration fee 102
Reports to shareholders 28
Other 151 10,875
--------- ---------
Net Investment Loss (3,989)
---------
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 31,123
Net unrealized appreciation 54,532
---------
Net Gain 85,655
---------
Increase in Net Assets from Operations $ 81,666
========
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands) Year ended June 30
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1998 (a) 1997
<S> <C> <C>
Operations:
Net investment loss $ (3,989) $ (1,000)
Net realized gain 31,123 12,663
Net unrealized appreciation 54,532 37,333
---------- ---------
Net Increase from Operations 81,666 48,996
Distributions:
From net realized gains - Class A (16,194) (3,482)
In excess of net realized gains - Class A (199) -
From net realized gains - Class B (16,680) (4,515)
In excess of net realized gains - Class B (205) -
From net realized gains - Class C (1,153) (160)
In excess of net realized gains - Class C (14) -
From net realized gains - Class Z (302) (133)
In excess of net realized gains - Class Z (4) -
---------- ---------
46,915 40,706
---------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 891,244 359,182
Value of distributions reinvested - Class A 14,748 3,095
Cost of shares repurchased - Class A (661,166) (339,178)
---------- ---------
244,826 23,099
---------- ---------
Receipts for shares sold - Class B 217,087 99,839
Value of distributions reinvested - Class B 15,906 4,261
Cost of shares repurchased - Class B (59,973) (43,089)
---------- ---------
173,020 61,011
---------- ---------
Receipts for shares sold - Class C 34,266 9,132
Value of distributions reinvested - Class C 1,108 127
Cost of shares repurchased - Class C (5,846) (4,522)
---------- ---------
29,528 4,737
---------- ---------
Receipts for shares sold - Class Z 1,139 1,208
Value of distributions reinvested - Class Z 306 133
Cost of shares repurchased - Class Z (650) (773)
---------- ---------
795 568
---------- ---------
Net Increase from Fund Share
Transactions 448,169 89,415
---------- ---------
Total Increase 495,084 130,121
NET ASSETS
Beginning of period 322,404 192,283
---------- ---------
End of period (net of overdistributed and
including undistributed net investment
income of $12 and $26, respectively) $817,488 $322,404
---------- ---------
</TABLE>
(a) Class D shares were redesignated Class C shares on July 1, 1997.
Continued on next page.
See notes to financial statements.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
<TABLE>
<CAPTION>
Year ended June 30
----------------------------
1998 (a) 1997
<S> <C> <C>
NUMBER OF FUND SHARES
Sold - Class A 26,435 13,304
Issued for distributions reinvested - Class A 452 112
Repurchased - Class A (19,429) (12,520)
---------- --------
7,458 896
---------- --------
Sold - Class B 6,641 3,812
Issued for distributions reinvested - Class B 509 159
Repurchased - Class B (1,848) (1,659)
---------- --------
5,302 2,312
---------- --------
Sold - Class C 1,020 337
Issued for distributions reinvested - Class C 34 5
Repurchased - Class C (177) (169)
---------- --------
877 173
---------- --------
Sold - Class Z 35 44
Issued for distributions reinvested - Class Z 10 5
Repurchased - Class Z (19) (28)
---------- --------
26 21
---------- --------
</TABLE>
(a) Class D shares were redesignated Class C shares on July 1, 1997.
See notes to financial statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1. ACCOUNTING POLICIES
................................................................................
Organization: Colonial Small Cap Value 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 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 C and Class Z. 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. Class B shares will convert to Class A shares
when they have been outstanding approximately eight years. Effective July 1,
1997, Class D shares were redesignated 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. Class Z shares are offered continuously at
net asset value. There are certain restrictions on purchasing Class Z shares;
please refer to the 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 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.
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 A, Class B and Class C service fee and 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.
The per share data was calculated using the average shares outstanding during
the period. In addition, Class A, Class B, and Class C net investment income per
19
<PAGE>
Notes to Financial Statements/June 30, 1998
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
................................................................................
share data reflects the service fee applicable to Class A, Class B and Class C
shares and the distribution fee applicable to Class B and Class C shares only.
Class A, 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 service
fee applicable to Class A, Class B and Class C shares and by the distribution
fee 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.
Distributions to shareholders: Distributions to shareholders are recorded
on the ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
Other: Corporate actions are recorded on the ex-date. Interest income is
recorded on the accrual basis.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-
market daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
................................................................................
Management fee: Colonial Management Associates, Inc. (the Adviser) is the
investment adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.80% annually of the Fund's
average net assets. Through September 30, 1997, the monthly fee was 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
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),
20
<PAGE>
Notes to Financial Statements/June 30, 1998
- --------------------------------------------------------------------------------
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 $262,362 on sales of the Fund's Class A shares and
received contingent deferred sales charges (CDSC) of $3,054, $565,628 and
$14,304 on Class A, 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 attributable to
Class A, Class B and Class C, 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, respectively.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
Other: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
................................................................................
Investment activity: During the year ended June 30, 1998, purchases and sales of
investments, other than short-term obligations, were $568,616,073 and
$193,125,510, respectively.
Unrealized appreciation (depreciation) at June 30, 1998, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
Gross unrealized appreciation $ 168,719,000
Gross unrealized depreciation (44,213,000)
-------------
Net unrealized appreciation $ 124,506,000
=============
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.
21
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Year ended June 30
-------------------------------------------
1998
Class A Class B Class C (b) Class Z
-------- ----------------------------------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 30.570 $ 29.490 $ 30.240 $30.740
--------- --------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (a) (0.096) (0.338) (0.348) (0.010)
Net realized and
unrealized gain 5.786 5.568 5.748 5.810
--------- --------- -------- -------
Total from Investment
Operations 5.690 5.230 5.400 5.800
--------- --------- -------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized
gains (2.025) (2.025) (2.025) (2.023)
In excess of net
realized gains (0.025) (0.025) (0.025) (0.027)
--------- --------- -------- -------
Total distributions (2.050) (2.050) (2.050) (2.050)
Net asset value -
End of period $ 34.210 $ 32.670 $ 33.590 $34.490
========= ========= ======== =======
Total return (c) 18.95% 18.05% 18.17% 19.21%
========= ========= ======== =======
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 1.42% 2.17% 2.17% 1.17%
Net investment
income (loss) (d) (0.28)% (1.03)% (1.03)% (0.03)%
Portfolio turnover 35% 35% 35% 35%
Net assets at end
of period (000) $ 401,929 $ 370,699 $ 38,562 $ 6,298
</TABLE>
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Class D shares were redesignated 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 arrange-
ments had no impact.
- --------------------------------------------------------------------------------
Federal income tax information (unaudited)
76% of the ordinary income distributed by the Fund in the year
ended June 30, 1998 qualifies for the corporate dividends received
deduction.
- --------------------------------------------------------------------------------
22
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
<CAPTION>
Year ended June 30
- ---------------------------------------------------------------
1997
Class A Class B Class C (b) Class Z
- -------- -------- ------- -------
<S> <C> <C> <C>
$ 26.480 $ 25.770 $ 26.400 $26.550
- -------- -------- ------- -------
(0.003) (0.199) (0.208) 0.065
5.073 4.899 5.028 5.105
- -------- -------- ------- -------
5.070 4.700 4.820 5.170
- -------- -------- ------- -------
(0.980) (0.980) (0.980) (0.980)
- - - -
- -------- -------- ------- -------
(0.980) (0.980) (0.980) (0.980)
$ 30.570 $ 29.490 $ 30.240 $30.740
======== ======== ======= =======
19.54% 18.63% 18.64% 19.87%
======== ======== ======= =======
1.32% 2.07% 2.07% 1.07%
(0.01)% (0.76)% (0.76)% 0.24%
54% 54% 54% 54%
$131,151 $178,234 $ 8,194 $ 4,825
</TABLE>
23
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Year ended June 30
-----------------------------------------------------------
1996
Class A Class B Class C(b) Class Z(c)
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 22.260 $ 21.840 $ 22.550 $ 24.790
-------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (loss) (a) 0.036(d) (0.147)(d) (0.072)(d) 0.096(d)
Net realized and
unrealized gain 5.479 5.372 3.922 2.959
-------- -------- ------- -------
Total from Investment
Operations 5.515 5.225 3.850 3.055
-------- -------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized
gains (1.295 (1.295) - (1.295)
-------- -------- ------- -------
Net asset value -
End of period $ 26.480 $ 25.770 $ 26.400 $ 26.550
======== ======== ======= =======
Total return (e) 25.31% 24.44% 17.07%(f) 12.81%(f)
======== ======== ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.38%(g) 2.13%(g) 2.15%(g)(h) 1.13%(g)(h)
Net investment
income (loss) 0.15%(g) (0.60)%(g) (0.54)%(g)(h) 0.41%(g)(h)
Portfolio turnover 46% 46% 46% 46%
Net assets at end
of period (000) $ 89,924 $ 96,158 $ 2,585 $ 3,616
</TABLE>
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Class C shares were initially offered on January 15, 1996. Per share data
reflects activity from that date.
(c) Class Z shares were initially offered on July 31, 1995. Per share data
reflects activity from that date.
(d) Includes distribution from Advo, Inc., which amounted to $0.047 per share.
(e) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(f) Not annualized
(g) The benefits derived from custody credits and directed brokerage arrange-
ments had no impact. Prior years' ratios are net of benefits received, if
any.
(h) Annualized.
24
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended June 30
- -------------------------------------------------------
1995 1994
Class A Class B Class A Class B
- ------- ------- ------- -------
$16.670 $16.470 $15.860 $15.790
- ------- ------- ------- -------
0.002 (0.139) (0.047) (0.176)
5.588 5.509 0.857 0.856
- ------- ------- ------- -------
5.590 5.370 0.810 0.680
- ------- ------- ------- -------
- - - -
- ------- ------- ------- -------
$22.260 $21.840 $16.670 $16.470
======= ======= ======= =======
33.53% 32.60% 5.11% 4.31%
======= ======= ======= =======
1.45% 2.20% 1.56% 2.31%
0.01% (0.74)% (0.27)% (1.02)%
64% 64% 35% 35%
$40,661 $29,458 $24,760 $ 8,489
25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
COLONIAL SMALL CAP VALUE FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of Colonial Small Cap Value
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
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Small Cap Value Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Small Cap Value 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 Small Cap Value 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 the most recent copy of our
Performance Update.
27
<PAGE>
[back cover]
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, KPMG Peat Marwick 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 [bullet] STEIN ROE ADVISOR FUNDS [bullet] 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 SC-02/610F-07/98 (98/855)
