<PAGE>
Seeking attractive returns from small company stocks doesn't need to involve
excessive risks. Invest in a fund that focuses on more than just a few, hot
stocks.
- --------------------------------------------------------------------------------
COLONIAL SMALL CAP VALUE FUND ANNUAL REPORT
- --------------------------------------------------------------------------------
JUNE 30, 1999
[Graphic Omitted]
<PAGE>
TABLE OF CONTENTS
1 HIGHLIGHTS
2 PORTFOLIO MANAGERS' REPORT
4 PERFORMANCE
5 PORTFOLIO OF INVESTMENTS
8 FINANCIAL STATEMENTS
10 NOTES TO FINANCIAL STATEMENTS
12 FINANCIAL HIGHLIGHTS
- -------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
- -------------------------------
PRESIDENT'S MESSAGE
[Photo of Stephen E. Gibson]
Dear Shareholder:
The Fund's fiscal year was marked by a series of events that created dramatic
shifts in investor sentiment. In the first six months of the year, economic
problems in Asia and Latin America, coupled with fears of inflation, created an
atmosphere of uncertainty about the direction of the stock market. As a result,
investors sought large-cap, blue chip stocks for their quality and liquidity.
The Standard & Poor's 500 Index was spurred to new highs on the strength of 18
top growth stocks. Although small stocks got a boost in October and November
from a series of interest rate cuts, it was a generally difficult period.
As Asia and Latin America's financial problems showed signs of recovery in late
1998 and the U.S. economy continued its upward trend, investors in early 1999
looked to technology holdings, and "dot com" stocks soared far past their
fundamental valuations. The technology sector accounted for more than 25% of the
performance of the Russell 2000 and S&P 600 Small Cap indexes. Later in the
period, the market favored deep value stocks, as hopes built for a world
economic recovery. Colonial Small Cap Value Fund's Class A share total return of
negative 11.25%, not including a sales charge, is a result of the generally poor
market environment for small stocks during most of the 12-month period.
The following report provides a discussion of your Fund and the economic factors
that have affected its performance. As well, the report offers an overview of
the Fund's investment philosophy. Thank you for selecting Colonial Small Cap
Value Fund and for giving us the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
August 11, 1999
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
<PAGE>
- --------------------------------------------------------------------------------
HIGHLIGHTS
- --------------------------------------------------------------------------------
> LARGE-CAP STOCKS LED MARKET FOR MUCH OF THE YEAR.
A flight to quality in the fall of 1998 helped make large-cap growth
stocks the winners of 1999 for the fourth consecutive year. The market
was so narrow that 18 stocks accounted for 100% of the return of the
Standard & Poor's 500 Index in the fourth quarter.
> TECHNOLOGY SECTOR SOARED IN EARLY 1999.
As the strength of the U.S. economy became clear, investors made a
significant shift into the technology sector, but the market remained
relatively narrow.
> Value stocks improved in the second quarter of 1999.
It wasn't until the end of the period that the market made a
significant shift, when investors renewed interest in value stocks.
Solid performance in the metal and consumer cyclical sectors provided
investors with renewed confidence in the broader market.
> LARGE-CAP DOMINANCE HURT SMALL-CAP PERFORMANCE.
The dominance of large-cap stocks had a negative impact on small-cap
stock performance during the past 12 months.
COLONIAL SMALL CAP VALUE FUND PERFORMANCE VS.
S&P 600 SMALL CAP INDEX AND S&P 500 INDEX (6/30/98 - 6/30/99)
Colonial Small Cap Value Fund -11.25%
S&P 600 Small Cap Index -3.02%
S&P 500 Index 22.76%
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions.
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of 500 large-capitalization U.S. stocks. The S&P 600 Small Cap Index
is an unmanaged index that tracks the performance of 600 small-capitalization
stocks. Unlike mutual funds, indexes are not investments and do not incur fees
or expenses. It is not possible to invest directly in an index.
NET ASSET VALUE PER SHARE AS OF 6/30/99
Class A $30.36
--------------------------------------------
Class B $28.78
--------------------------------------------
Class C $29.59
--------------------------------------------
Class Z $30.70
--------------------------------------------
<PAGE>
ANNUAL REPORT: COLONIAL SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' REPORT
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 6/30/99
(AS A PERCENTAGE OF NET ASSETS)
1. Furniture Brands 2.1%
--------------------------------------------
2. CEC Entertainment 1.9%
--------------------------------------------
3. Valassis Communications 1.9%
--------------------------------------------
4. QLogic 1.7%
--------------------------------------------
5. SemTech 1.7%
--------------------------------------------
6. Ames Dept. Stores 1.5%
--------------------------------------------
7. Fremont General 1.5%
--------------------------------------------
8. Applied Micro Circuits 1.5%
--------------------------------------------
9. Fossil, Inc. 1.4%
--------------------------------------------
10. Ethan Allen Interiors 1.4%
--------------------------------------------
Holdings are calculated as a percentage of total net assets.
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to hold these securities in the future.
BOUGHT
COMPUTER HARDWARE
Applied Micro Circuits Corporation (1.5% of net assets) provided the
microcircuits for 70% of Cisco's routers and has a proprietary relationship with
Cisco for Cisco's next generation of products. We believe this key partnership
bodes well for future profitability.
PRI Automation, Inc. (0.9% of net assets) helps microchip producers automate
their production, helping these producers avoid costly accidents and down time,
which can improve their bottom line.
FUND'S PERFORMANCE IMPROVED LATE IN THE PERIOD
For the 12-month period ended June 30, 1999, the Fund had a total return of
negative 11.25% for Class A shares, without a sales charge. By comparison, the
S&P 600 Small Cap Index, the Fund's benchmark, had a total return of negative
3.02% during the same period. However, as the market broadened in the second
quarter of 1999, the Fund performed well. In the final three months of the
period, the Fund had a total return of 17.54%, versus 15.42% for the S&P 600.
Despite several shifts in investor psychology during the year, we stayed true to
our philosophy of broad diversification. We did not follow the trend of making
large bets in momentum-driven areas of the market. Instead, we sought to
maintain sector weightings similar to those of the S&P 600 Small Cap Index.
However, as indexes became heavily "weighted" with stocks that had large price
increases during the period, the result was often underperformance for many
active managers. The reason for this underperformance, we believe, is that most
prudent managers would never load up on a few "hot" issues -- it simply would
not be in the best interest of the shareholders.
We continue to believe that, over the long-term, our strategy can smooth the
bumps of a volatile market and is a sensible way to pursue growth while
maintaining diversification. Where we work to add value to the investor is
through stock selection. We are constantly seeking to invest in companies with
solid management and good business plans, but that are currently out of favor
with the market.
TECHNOLOGY HOLDINGS BENEFITED FUND
We increased our technology holdings during the period to remain within 5% of
the S&P 600 Small Cap Index's weighting. Avoiding unproven Internet or "dot com"
stocks that we believed were overvalued, we focused on more established
companies that provide the infrastructure, or hardware, that the Internet needs
to continue growing.
CYCLICAL INDUSTRIES RETURNED TO FAVOR
Another focus for the Fund has been cyclical stocks like manufacturing, retail
and energy. Cyclical commodities got help from OPEC late in the Fund's fiscal
year as members agreed to reduce oil production in an effort to raise prices.
The move was successful in raising both oil and natural gas prices.
Despite slow and steady economic growth and the housing boom, furniture stocks
were hit hard in the fall. We have held onto several names that we believe offer
good long-term value.
BROADENING TREND CONTINUES
Going forward, we believe the recent broadening trend in the market will
continue as investors remain confident in worldwide financial recovery. At the
small cap level, in particular, companies are reporting increased profits as a
result of continued strength in consumer spending and production as well as an
increase in demand for exports.
/s/ James P. Haynie /s/ Michael Rega
JAMES HAYNIE and MICHAEL REGA co-manage Colonial Small Cap Value Fund. Mr.
Haynie is a senior vice president of Colonial Management Associates, Inc. (CMA).
Mr. Rega is a vice president of CMA.
CHANGE IN SECTOR BREAKDOWNS FROM 6/30/98 -- 6/30/99
6/30/99 6/30/98
CONSUMER CYCLICALS 19.4% 18.6%
TECHNOLOGIES 19.0% 11.6%
FINANCIALS 12.0% 14.6%
CAPITAL GOODS 11.1% 9.9%
HEALTH CARE 9.3% 12.3%
SERVICES 6.9% 4.2%
CONSUMER STAPLES 3.9% 5.2%
UTILITIES 3.8% 5.2%
Industry sectors in the following financial statements are based upon standard
industrial classification (SIC) as published by the U.S. Office of Management
and Budget. The sector classifications used on this page are based upon the
Advisor's defined criteria as used in the investment process.
HELD
RETAIL
Fossil, Inc. (1.4% of net assets)
This Dallas-based designer and distributor of fashion watches has increased its
earnings growth by 25% for five consecutive quarters. This company protects its
core profits with approximately five key watch lines, but fuels its growth by
licensing its name to select partners.
FURNITURE
Furniture Brands International
(2.1% of net assets) manufactures quality furniture at low prices under the
Broyhill, Thomasville and Lane Company brand names.
<PAGE>
ANNUAL REPORT: COLONIAL SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
COLONIAL SMALL CAP VALUE CLASS A SHARE INVESTMENT PERFORMANCE VS.
THE RUSSELL 2000 INDEX AND THE S&P 600 SMALL CAP INDEX
Change in Value of $10,000 from 6/30/89 - 6/30/99 with and without sales charge
RUSSELL S&P 600
WITHOUT CHARGE WITH CHARGE 2000 INDEX SMALL CAP INDEX
- --------------------------------------------------------------------------------
6/89 $10,000 $ 9,425 $10,000 $10,000
6/90 9,938 9,366 10,296 9,934
6/91 8,607 8,112 10,433 9,746
6/92 9,173 8,645 11,949 11,412
6/93 11,799 11,120 15,057 14,663
6/94 12,401 11,687 15,711 14,937
6/95 16,560 15,607 18,871 17,978
6/96 20,751 19,557 23,379 22,656
6/97 24,806 23,379 27,196 27,568
6/98 29,506 27,809 31,685 32,927
6/99 26,185 24,680 32,160 32,171
CHANGE IN VALUE OF A $10,000 INVESTMENT IN ALL SHARE CLASSES FROM
6/30/89 - 6/30/99
SHARE CLASS A B C Z
- -------------------------------------------------------------------------------
Without Sales Charge $26,185 $24,942 $25,549 $26,441
- -------------------------------------------------------------------------------
With Sales Charge $24,680 $24,942 $25,549 $26,441
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/99
SHARE CLASS A B C Z
INCEPTION 7/25/86(1) 11/9/92 1/15/96 7/28/95
- -------------------------------------------------------------------------------
Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
- -------------------------------------------------------------------------------
1 year (11.25)% (16.36)% (11.91)% (16.31)% (11.91)% (12.79)% (10.99)%
- -------------------------------------------------------------------------------
5 years 16.12 14.76 15.28 15.05 15.55 15.55 16.35
- -------------------------------------------------------------------------------
10 years 10.10 9.45 9.57 9.57 9.83 9.83 10.21
- -------------------------------------------------------------------------------
(1) Investment policies changed November 2, 1992.
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 5.75% charge for Class A shares and the contingent deferred sales
charge (CDSC) maximum charge of 5% for one year and 2% for five years for Class
B shares and 1% for one year for Class C shares. Classes B, C, and Z 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 the periods prior to the inception of Class B and
Class C shares would have been lower, and Class Z share returns would have been
higher.
The Russell 2000 Index and the Standard & Poor's 600 Small Cap Index are
unmanaged indexes that track 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.
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
June 30, 1999
(In thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.3%
- --------------------------------------------------------------------------------
CONSTRUCTION - 2.9%
BUILDING CONSTUCTION - 2.1%
Lennar Corp. .................................... 66 $ 1,584
NVR, Inc. (a) ................................... 163 8,480
Toll Brothers, Inc. (a) ......................... 150 3,214
--------
13,278
--------
NON-BUILDING CONSTRUCTION - 0.8%
Granite Construction, Inc. ...................... 169 4,948
--------
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 11.3%
DEPOSITORY INSTITUTIONS - 3.7%
Astoria Financial Corp. ......................... 75 3,273
Bank United Corp. ............................... 72 2,882
Charter One Financial, Inc. ..................... 103 2,859
Downey Financial Corp. .......................... 161 3,532
FirstFed Financial Corp. (a) .................... 192 3,686
Peoples Heritage Financial Group, Inc. .......... 208 3,908
Webster Financial Corp. ......................... 93 2,523
--------
22,663
--------
INSURANCE CARRIERS - 5.3%
ARM Financial Group, Inc. ....................... 247 2,098
Capital RE Corp. ................................ 191 3,066
Delphi Financial Group, Inc. (a) ................ 101 3,607
Enhance Financial Services Group, Inc. .......... 201 3,960
Fidelity National Finance, Inc. ................. 136 2,847
Fremont General Corp. ........................... 486 9,169
LandAmerica Financial Group, Inc. ............... 107 3,076
Orion Capital Corp. ............................. 47 1,690
XL Capital Ltd., Class A ........................ 58 3,278
--------
32,791
--------
NONDEPOSITORY CREDIT INSTITUTIONS - 1.1%
Consumer Portfolio Services, Inc. (a) ........... 107 179
Metris Companies, Inc. .......................... (b) (b)
Resource America, Inc. .......................... 166 2,407
Resource Bancshares Mortgage Group, Inc. ........ 393 4,023
--------
6,609
--------
REAL ESTATE - 0.3%
Chicago Title Corp. ............................. 45 1,606
--------
SECURITY BROKERS & DEALERS - 0.9%
Advest Group, Inc. .............................. 74 1,483
Investment Technology Group, Inc. ............... 2 68
Raymond James Financial, Inc. ................... 169 4,036
--------
5,587
--------
- --------------------------------------------------------------------------------
MANUFACTURING - 41.7%
APPAREL - 1.0%
Kellwood Co. .................................... 79 2,146
Nautica Enterprises, Inc. (a) ................... 239 4,038
--------
6,184
--------
CHEMICAL & ALLIED PRODUCTS - 3.4%
A. Schulman, Inc. ............................... 75 1,289
Barr Laboratories, Inc. (a) ..................... 43 1,715
Chattem, Inc. ................................... 37 1,177
Dexter Corp. .................................... 108 4,412
Goodrich (B.F.) Co. ............................. 67 2,826
Jones Pharma, Inc. .............................. 58 2,284
Medicis Pharmaceutical Corp., Class A (a) ....... 241 6,104
Zonagen, Inc. (a) ............................... 108 998
--------
20,805
--------
COMMUNICATIONS EQUIPMENT - 1.4%
Comverse Technology, Inc. (a) ................... 101 7,644
Premisys Communications, Inc. (a) ............... 160 1,170
--------
8,814
--------
ELECTRICAL EQUIPMENT - 1.5%
Applied Micro Circuits Corp. (a) ................ 110 9,048
--------
ELECTRONIC COMPONENTS - 6.2%
Innovex, Inc. ................................... 130 1,820
Park Electrochemical Corp. ...................... 174 4,994
Plexus Corp. (a) ................................ 161 4,844
QLogic Corp. (a) ................................ 80 10,520
Sanmina Corp. (a) ............................... 75 5,691
SemTech Corp. (a) ............................... 196 10,217
--------
38,086
--------
FABRICATED METAL - 1.3%
Alliant Techsystems, Inc. (a) ................... 20 1,764
Barnes Group, Inc. .............................. 194 4,211
Nortek, Inc. (a) ................................ 64 1,998
--------
7,973
--------
FOOD & KINDRED PRODUCTS - 2.4%
Canandaigua Brands, Inc., Class A (a) ........... 127 6,633
Michael Foods, Inc. ............................. 202 4,754
Ralcorp Holdings, Inc. (a) ...................... 94 1,510
Smithfield Foods, Inc. (a) ...................... 60 2,010
--------
14,907
--------
FURNITURE & FIXTURES - 3.5%
Ethan Allen Interiors, Inc. ..................... 233 8,811
Furniture Brands International, Inc. (a) ........ 466 12,987
--------
21,798
--------
MACHINERY & COMPUTER EQUIPMENT - 7.4%
Asyst Technology, Inc. (a) ...................... 189 5,670
Bell & Howell Co. (a) ........................... 45 1,702
Brooks Automation, Inc. (a) ..................... 21 563
Gehl Co. (a) .................................... 115 2,335
Kaydon Corp. .................................... 114 3,816
Manitowoc, Inc. ................................. 209 8,691
Milacron, Inc. .................................. 117 2,164
NACCO Industries, Inc. .......................... 51 3,741
Novellus Systems, Inc. (a) ...................... 71 4,846
Pentair, Inc. ................................... 46 2,100
SPS Technologies, Inc. (a) ...................... 26 986
Terex Corp. (a) ................................. 139 4,216
Watsco, Inc. .................................... 1 20
Xircom, Inc. (a) ................................ 52 1,566
Zebra Technologies Corp., Class A (a) ........... 89 3,417
--------
45,833
--------
MEASURING & ANALYZING INSTRUMENTS - 3.3%
ADAC Laoboratories .............................. 325 $ 2,356
Colorado MEDtech, Inc. (a) ...................... 157 3,438
Esterline Technologies Corp. (a) ................ 88 1,261
Fossil, Inc. (a) ................................ 184 8,879
Maxxim Medical, Inc. (a) ........................ 70 1,632
Ocular Sciences, Inc. (a) ....................... 25 434
VISX, Inc. (a) .................................. 34 2,692
--------
20,692
--------
MISCELLANEOUS MANUFACTURING - 0.5%
Russ Berrie & Co., Inc. ......................... 136 3,373
--------
PAPER PRODUCTS - 0.2%
Wausau-Mosinee Paper Corp. ...................... 82 1,473
--------
PETROLEUM REFINING - 0.4%
Tesoro Petroleum Corp. (a) ...................... 142 2,255
--------
PRIMARY METAL - 3.5%
Encore Wire Corp. (a) ........................... 156 1,414
Mueller Industries, Inc. (a) .................... 131 4,449
Precision Castparts Corp. ....................... 116 4,917
Quanex Corp. .................................... 84 2,386
RTI International Metals (a) .................... 276 4,052
Ryerson Tull, Inc. .............................. 67 1,507
Tredegar Industries, Inc. ....................... 123 2,664
--------
21,389
--------
PRINTING & PUBLISHING - 1.9%
Valassis Communications, Inc. (a) ............... 317 11,597
--------
RUBBER & PLASTIC - 0.4%
Carlisle Cos., Inc. ............................. 54 2,575
--------
STONE, CLAY, GLASS & CONCRETE - 0.8%
Centex Construction Products, Inc. .............. 22 734
Lone Star Industries, Inc. ...................... 119 4,458
--------
5,192
--------
TEXTILE MILL PRODUCTS - 0.3%
Interface, Inc. ................................. 200 1,728
--------
TRANSPORTATION EQUIPMENT - 2.3%
AAR Corp. ....................................... 59 1,343
Arvin Industries, Inc. .......................... 175 6,644
Varlen Corp. .................................... 124 5,020
Winnebago Industries, Inc. ...................... 41 920
--------
13,927
--------
- --------------------------------------------------------------------------------
MINING & ENERGY - 1.7%
OIL & GAS EXTRACTION - 0.4%
Stolt Comex Seaway, S.A. (a) .................... 237 2,581
--------
OIL & GAS FIELD SERVICES - 1.3%
Pool Energy Services Co. (a) .................... 60 1,219
Pride International, Inc. (a) ................... 303 3,196
Veritas DGC, Inc. (a) ........................... 197 3,613
--------
8,028
--------
RETAIL TRADE - 10.5%
APPAREL & ACCESSORY STORES - 2.0%
Claire's Stores, Inc. ........................... 108 $ 2,767
Genesco, Inc. (a) ............................... 133 1,937
Ross Stores, Inc. ............................... 156 7,864
--------
12,568
--------
AUTO DEALERS & GAS STATIONS - 0.5%
United Auto Group, Inc. (a) ..................... 300 3,074
--------
FOOD STORES - 0.5%
The Kroger Co. (a) .............................. 107 2,989
--------
GENERAL MERCHANDISE STORES - 2.6%
Ames Department Stores, Inc. (a) ................ 210 9,572
Shopko Stores, Inc. ............................. 178 6,453
--------
16,025
--------
HOME FURNISHINGS & EQUIPMENT - 0.1%
CompUSA, Inc. (a) ............................... 70 518
--------
MISCELLANEOUS RETAIL - 1.5%
Musicland Stores Corp. (a) ...................... 169 1,499
Tiffany & Co. ................................... 32 3,107
Zale Corp. (a) .................................. 115 4,600
--------
9,206
--------
RESTAURANTS - 3.3%
CEC Entertainment, Inc. (a) ..................... 284 11,978
CKE Restaurants, Inc. ........................... 110 1,791
Foodmaker, Inc. (a) ............................. 240 6,799
--------
20,568
--------
- --------------------------------------------------------------------------------
SERVICES - 18.6%
AMUSEMENT & RECREATION - 0.4%
Anchor Gaming (a) ............................... 56 2,667
--------
AUTO REPAIR, RENTAL & PARKING - 0.6%
Midas, Inc. ..................................... 46 1,302
XTRA Corp. ...................................... 48 2,210
--------
3,512
--------
BUSINESS SERVICES - 2.6%
Advo, Inc. ...................................... 302 6,260
Interim Services, Inc. (a) ...................... 103 2,124
Norrell Corp. ................................... 125 2,352
Ogden Corp. ..................................... 192 5,172
--------
15,908
--------
COMPUTER RELATED SERVICES - 3.9%
DSP Group, Inc. (a) ............................. 200 7,200
Health Management Systems, Inc. (a) ............. 211 1,160
Inacom Corp. (a) ................................ 325 4,107
Jack Henry & Associates ......................... 85 3,317
Macromedia, Inc. (a) ............................ 94 3,314
Personnel Group of America, Inc. (a) ............ 83 827
Systems & Computer Technology Corp. (a) ......... 253 3,680
Technology Solutions Co. (a) .................... 58 627
--------
24,232
--------
COMPUTER SOFTWARE - 3.4%
Acclaim Entertainment, Inc. (a) ................. 121 771
BMC Software, Inc. (a) .......................... 41 2,198
Computer Horizons Corp. (a) ..................... 65 898
Computer Task Group, Inc. ....................... 74 1,258
Data Dimensions, Inc. (a) ....................... 403 1,334
Hyperion Solutions Corp. (a) .................... 110 1,967
PRI Automation, Inc. (a) ........................ 153 5,546
Progress Software Corp. (a) ..................... 126 3,568
Symantec Corp. (a) .............................. 126 3,213
--------
20,753
--------
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 2.8%
Core Laboratories N.V. (a) ...................... 94 1,303
EG&G, Inc. ...................................... 63 2,234
Jacobs Engineering Group, Inc. (a) .............. 116 4,419
Kendle International, Inc. (a) .................. 74 1,184
Quest Diagnostic, Inc. (a) ...................... 38 1,035
URS Corp. (a) ................................... 73 2,140
Whittman-Hart, Inc. (a) ......................... 150 4,762
--------
17,077
--------
HEALTH SERVICES - 3.9%
Curative Health Services, Inc. (a) .............. 187 1,026
Hooper Holmes, Inc. ............................. 184 3,741
IDEXX Laboratories, Inc. (a) .................... 62 1,445
Integrated Health Services, Inc. ................ 183 1,463
Lincare Holdings, Inc. (a) ...................... 34 850
Osteotech, Inc. (a) ............................. 270 7,764
Pediatrix Medical Group, Inc. (a) ............... 30 631
RehabCare Group, Inc. (a) ....................... 185 3,402
Universal Health Services, Inc., Class B (a) .... 79 3,758
--------
24,080
--------
HOTELS, CAMPS & LODGING - 0.6%
Sunterra Resorts, Inc. (a) ...................... 265 3,699
--------
OTHER SERVICES - 0.4%
Metamor Worldwide, Inc. (a) ..................... 113 2,719
--------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 6.4%
AIR TRANSPORTATION - 1.3%
Airborne Freight Corp. .......................... 85 2,353
Comair Holdings, Inc. ........................... 156 3,250
Midwest Express Holdings, Inc. .................. 10 323
SkyWest, Inc. ................................... 81 2,020
--------
7,946
--------
ELECTRIC SERVICES - 2.0%
CMP Group, Inc. ................................. 212 5,549
Public Service Co. of New Mexico ................ 141 2,809
Sierra Pacific Resources ........................ 85 3,092
The United Illuminating Co. ..................... 28 1,188
--------
12,638
--------
GAS SERVICES - 0.4%
UGI Corp. ....................................... 128 2,576
--------
MOTOR FREIGHT & WAREHOUSING - 1.1%
CNF Transportation .............................. 24 921
USFreightways Corp. ............................. 127 5,891
--------
6,812
--------
SANITARY SERVICES - 0.5%
Piedmont Natural Gas Co. ........................ 97 3,010
--------
TRANSPORTATION SERVICES - 1.1%
Avis Rent-A-Car, Inc. (a) ....................... 147 4,284
Circle International Group, Inc. ................ 116 2,536
--------
6,820
--------
- --------------------------------------------------------------------------------
WHOLESALE TRADE - 3.2%
DURABLE GOODS - 1.6%
Brightpoint, Inc. (a) ........................... 170 1,031
HA-LO Industries, Inc. (a) ...................... 286 2,827
Owens & Minor, Inc. ............................. 166 1,828
Patterson Dental Co. (a) ........................ 129 4,465
--------
10,151
--------
NONDURABLE GOODS - 1.6%
Bindley Western Industries, Inc. ................ 88 2,020
Fresh Del Monte Produce, Inc. (a) ............... 83 1,165
United Stationers, Inc. (a) ..................... 166 3,645
Universal Corp. ................................. 113 3,214
--------
10,044
--------
TOTAL COMMON STOCKS (cost of $512,568) .......... 595,332
--------
CORPORATE FIXED INCOME BONDS &
NOTES - 0.4% PAR
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 0.4%
FINANCIAL SERVICES
Impac Mortgage Holdings,
(cost of $2,292) 11.000% 2/15/04 ................ $ 2,537 2,416
--------
TOTAL INVESTMENTS - 96.7% (cost of $514,860) (c) 597,748
--------
SHORT-TERM OBLIGATIONS - 3.2%
- --------------------------------------------------------------------------------
Repurchase agreement with SBC Warburg, dated
06/30/99, due 07/01/99 at 4.800%, collateralized
by U.S. Treasury bonds & notes with various
maturities to 2027, market value $20,666
(repurchase proceeds $19,967) 19,964 19,964
--------
OTHER ASSETS & LIABILITIES, NET - 0.1% 617
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $618,329
========
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a)Non-income producing.
(b)Rounds to less than one.
(c)Cost for federal income tax purposes is $516,164.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
June 30, 1999
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $514,860) $597,748
Short-term obligations 19,964
-------
617,712
Receivable for:
Investments sold 1,447
Fund shares sold 1,103
Dividends 341
Interest 38
Other 5
-------
2,934
-------
Total assets 620,646
LIABILITIES
Payable for:
Fund shares repurchased 2,197
Accrued:
Transfer agent out-of-pocket fee 92
Deferred Trustees fees 6
Other 22
-------
Total liabilities 2,317
-------
Net assets $618,329
========
Net asset value & redemption price per share --
Class A ($263,436/8,676) $ 30.36(a)
--------
Maximum offering price per share -- Class A ($30.36/0.9425) $ 32.21(b)
--------
Net asset value & offering price per share -- Class B
($307,252/10,675) $ 28.78(a)
--------
Net asset value & offering price per share -- Class C
($35,987/1,216) $ 29.59(a)
--------
Net asset value, offering and redemption price per share --
Class Z ($11,654/380) $ 30.70
--------
COMPOSITION OF NET ASSETS
Capital paid in $600,566
Overdistributed net istment income (20)
Accumulated net reali loss (65,105)
Net unrealized apprecion 82,888
--------
$618,329
========
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended June 30, 1999
(in thousands)
INVESTMENT INCOME
Dividends $ 4,839
Interest 1,509
---------
Total investment income 6,348
EXPENSES
Management fee 5,541
Service fee - Class A, Class B, Class C 1,723
Distribution fee - Class B 2,347
Distribution fee - Class C 259
Transfer agent 2,197
Bookkeeping fee 252
Trustees fee 37
Custodian fee 14
Audit fee 23
Legal fee 4
Registration fee 234
Reports to shareholders 33
Other 270
---------
Total expenses 12,934
---------
Net investment loss (6,586)
---------
NET REALIZED AND UNREALIZED LOSS ON
PORTFOLIO POSITIONS
Net realized loss (65,105)
Net change in unrealized appreciation/depreciation on investments (41,618)
---------
Net loss (106,723)
---------
DECREASE IN NET ASSETS FROM OPERATIONS $(113,309)
=========
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(in thousands)
YEAR ENDED JUNE 30
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1999 1998
- --------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (6,586) $ (3,989)
Net realized gain (loss) (65,105) 31,123
Net unrealized appreciation (depreciation) (41,618) 54,532
-------- ---------
Net increase (decrease) from operations (113,309) 81,666
DISTRIBUTIONS
From net realized gains -- Class A -- (16,194)
In excess of net realized gains -- Class A -- (199)
From net realized gains -- Class B -- (16,680)
In excess of net realized gains -- Class B -- (205)
From net realized gains -- Class C -- (1,153)
In excess of net realized gains -- Class C -- (14)
From net realized gains -- Class Z -- (302)
In excess of net realized gains -- Class Z -- (4)
-------- ---------
(113,309) 46,915
-------- ---------
FUND SHARE TRANSACTIONS
Receipts for shares sold -- Class A 351,785 891,244
Value of distributions reinvested -- Class A -- 14,748
Cost of shares repurchased -- Class A (432,118) (661,166)
-------- ---------
(80,333) 244,826
-------- ---------
Receipts for shares sold -- Class B 113,872 217,087
Value of distributions reinvested -- Class B -- 15,906
Cost of shares repurchased -- Class B (127,575) (59,973)
-------- ---------
(13,703) 173,020
-------- ---------
Receipts for shares sold -- Class C 17,714 34,266
Value of distributions reinvested -- Class C -- 1,108
Cost of shares repurchased -- Class C (15,229) (5,846)
-------- ---------
2,485 29,528
-------- ---------
Receipts for shares sold -- Class Z 9,145 1,139
Value of distributions reinvested -- Class Z -- 306
Cost of shares repurchased -- Class Z (3,444) (650)
-------- ---------
5,701 795
-------- ---------
Net increase (decrease) from fund share
transactions (85,850) 448,169
-------- ---------
Total increase (decrease) (199,159) 495,084
NET ASSETS
Beginning of period 817,488 322,404
-------- ---------
End of period (net of overdistributed net
investment $20 and $12, respectively) $618,329 $817,488
======== ========
NUMBER OF FUND SHARES
Sold -- Class A 12,703 26,435
Issued for distributions reinvested -- Class A -- 452
Repurchased -- Class A (15,776) (19,429)
-------- --------
(3,073) 7,458
-------- --------
Sold -- Class B 4,179 6,641
Issued for distributions reinvested -- Class B -- 509
Repurchased -- Class B (4,850) (1,848)
-------- --------
(671) 5,302
-------- --------
Sold -- Class C 629 1,020
Issued for distributions reinvested -- Class C -- 34
Repurchased -- Class C (561) (177)
-------- --------
68 877
-------- --------
Sold -- Class Z 319 35
Issued for distributions reinvested -- Class Z -- 10
Repurchased -- Class Z (122) (19)
-------- --------
197 26
-------- --------
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION
Colonial Small Cap Value Fund (the Fund), a series of Liberty Funds Trust VI,
formerly 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. A 1.00% contingent
deferred sales charge is assessed 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. Class C shares are subject to a contingent deferred
sales charge on redemptions made within one year after purchase and an annual
distribution fee. Class Z shares are offered continuously at net asset value.
There are certain restrictions on the purchase of Class Z shares, as described
in the Fund's 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.
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 (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.
Per share data is calculated using the average shares outstanding during the
period. In addition, Class A, Class B and Class C net investment income per
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.
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 Advisor) is the investment advisor
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 Advisor provides bookkeeping and pricing services for a monthly fee equal
to $27,000 annually plus 0.035% of the Fund's average net assets over $50
million.
TRANSFER AGENT
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of the
Advisor, provides shareholder services for a monthly fee equal to 0.236%
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 was 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. (the Distributor), a subsidiary of the
Advisor, is the Fund's principal underwriter. For the year ended June 30,
1999, the Fund has been advised that the Distributor retained net underwriting
discounts of $112,250 on sales of the Fund's Class A shares and received
contingent deferred sales charges (CDSC) of $71,743, $1,610,025 and $39,182 on
Class A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee
to the Distributor 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 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.
OTHER
The Fund pays no compensation to its officers, all of whom are employees of
the Advisor.
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, 1999, purchases and sales of investments, other
than short-term obligations, were $354,052,443 and $403,817,756, respectively.
Unrealized appreciation (depreciation) at June 30, 1999, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $158,991,454
Gross unrealized depreciation (77,407,699)
------------
Net unrealized appreciation $ 81,583,755
============
CAPITAL LOSS CARRYFORWARD
At June 30, 1999, capital loss carryforwards available (to the extent provided
in regulations) to offset future realized gains were approximately as follows:
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
2007 $ 18,702,000
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable
to shareholders as ordinary income.
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, 1999.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of each class outstanding
throughout each period are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1999
-----------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS Z
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 34.210 $ 32.670 $ 33.590 $ 34.490
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (0.161) (0.359) (0.367) (0.090)
Net realized and unrealized loss (3.689) (3.531) (3.633) (3.700)
--------- --------- --------- ---------
Total from Investment Operations (3.850) (3.890) (4.000) (3.790)
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 30.360 $ 28.780 $ 29.590 $ 30.700
========= ========= ========= =========
Total return (b) (11.25)% (11.91)% (11.91)% (10.99)%
--------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses (c) 1.49% 2.24% 2.24% 1.24%
Net investment loss (c) (0.57)% (1.32)% (1.32)% (0.32)%
Portfolio turnover 53% 53% 53% 53%
Net assets at end of period (000) $263,436 $307,252 $ 35,987 $ 11,654
(a)Per share data was calculated using average shares outstanding during the period.
(b)Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent
deferred sales charge.
(c)The benefits derived from custody credits and directed brokerage arrangements had no impact.
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1998 YEAR ENDED JUNE 30, 1997
------------------------------------------ --------------------------------------------
CLASS A CLASS B CLASS C CLASS Z CLASS A CLASS B CLASS C(b) CLASS Z
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $30.570 $ 29.490 $30.240 $30.740 $ 26.480 $ 25.770 $26.400 $26.550
------- -------- ------- ------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a) (0.096) (0.338) (0.348) (0.010) (0.003) (0.199) (0.208) 0.065
Net realized and unrealized gain 5.786 5.568 5.748 5.810 5.073 4.899 5.028 5.105
------- --------- ------- ------- -------- -------- ------- -------
Total from Investment Operations 5.690 5.230 5.400 5.800 5.070 4.700 4.820 5.170
------- --------- ------- ------- -------- -------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net realized gains (2.025) (2.025) (2.025) (2.023) (0.980) (0.980) (0.980) (0.980)
In excess of net realized gains (0.025) (0.025) (0.025) (0.027) -- -- -- --
------- --------- ------- ------- -------- -------- ------- -------
Total Distributions Declared
to Shareholders (2.050) (2.050) (2.050) (2.050) (0.980) (0.980) (0.980) (0.980)
------- --------- ------- ------- -------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD $34.210 $ 32.670 $33.590 $34.490 $ 30.570 $ 29.490 $30.240 $30.740
------- -------- ------- ------- -------- -------- ------- -------
Total return (c) 18.95% 18.05% 18.17% 19.21% 19.54% 18.63% 18.64% 19.87%
------- -------- ------- ------- -------- -------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 1.42% 2.17% 2.17% 1.17% 1.32% 2.07% 2.07% 1.07%
Net investment income (loss) (d) (0.28)% (1.03)% (1.03)% (0.03)% (0.01)% (0.76)% (0.76)% 0.24%
Portfolio turnover 35% 35% 35% 35% 54% 54% 54% 54%
Net assets at end of period (000) $401,929 $370,699 $38,562 $ 6,298 $131,151 $178,234 $ 8,194 $ 4,825
(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 arrangements had no impact.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1996 YEAR ENDED JUNE 30, 1995
---------------------------------------------- -------------------------
CLASS A CLASS B CLASS C(b) CLASS Z(c) CLASS A CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 22.260 $ 21.840 $ 22.550 $ 24.790 $ 16.670 $ 16.470
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a) 0.036(d) (0.147)(d) (0.072)(d) 0.096(d) 0.002 (0.139)
Net realized and unrealized gain 5.479 5.372 3.922 2.959 5.588 5.509
--------- --------- --------- --------- --------- ---------
Total from Investment Operations 5.515 5.225 3.850 3.055 5.590 5.370
--------- --------- --------- --------- --------- ---------
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 $ 22.260 $ 21.840
--------- --------- --------- --------- --------- ---------
Total return (e) 25.31% 24.44% 17.07%(f) 12.81%(f) 33.53% 32.60%
--------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.38%(g) 2.13%(g) 2.15%(g)(h) 1.13%(g)(h) 1.45% 2.20%
Net investment income (loss) 0.15%(g) (0.60)%(g) (0.54)%(g)(h) 0.41%(g)(h) 0.01% (0.74)%
Portfolio turnover 46% 46% 46% 46% 64% 64%
Net assets at end of period (000) $89,924 $96,158 $ 2,585 $ 3,616 $ 40,661 $ 29,458
(a)Per share data was calculated using average shares outstanding during the period.
(b)Class D shares were initially offered on January 15, 1996 and were redesignated Class C shares on July 1, 1997. Per share
data r eflects activity from that date.
(c)Class Z shares were intially offered on January 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 arrangements had no impact. Prior years' ratios are net
of bene fits received, if any.
(h)Annualized.
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE TRUSTEES OF LIBERTY FUNDS 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 Liberty Funds Trust VI, formerly Colonial Trust VI)
at June 30, 1999, 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,
1999 by correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 11, 1999
<PAGE>
ANNUAL REPORT: COLONIAL SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
TRUSTEES & TRANSFER AGENT
- --------------------------------------------------------------------------------
ROBERT J. BIRNBAUM WILLIAM E. MAYER
Consultant (formerly Special Partner, Development Capital, LLC
Counsel, Dechert, Price & Rhoads; (formerly Dean, College of Business
President and Chief Operating and Management, University of
Officer, New York Stock Exchange, Maryland; Dean, Simon Graduate
Inc.; President, American Stock School of Business, University of
Exchange Inc.) Rochester; Chairman and Chief
Executive Officer, CS First Boston
TOM BLEASDALE Merchant Bank; and President and
Retired (formerly Chairman of the Chief Executive Officer, The First
Board and Chief Executive Officer, Boston Corporation)
Shore Bank & Trust Company)
JAMES L. MOODY, JR.
JOHN V. CARBERRY Retired (formerly Chairman of the
Senior Vice President of Liberty Board, Chief Executive Officer and
Financial Companies, Inc. (formerly Director Hannaford Bros. Co.)
Managing Director, Salomon
Brothers) JOHN J. NEUHAUSER
Dean, Boston College School of
LORA S. COLLINS Management
Attorney (formerly Attorney,
Kramer, Levin, Naftalis & Frankel) THOMAS E. STITZEL
Professor of Finance, College of
JAMES E. GRINNELL Business, Boise State University;
Private Investor (formerly Senior Business Consultant and Author
Vice President-Operations, The
Rockport Company) ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly
RICHARD W. LOWRY Management Consultant, Saatchi and
Private Investor (formerly Chairman Saatchi Consulting Ltd. and
and Chief Executive Officer, U.S. Principal and International
Plywood Corporation) Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SALVATORE MACERA
Private Investor (formerly ANNE-LEE VERVILLE
Executive Vice President of Itek Consultant (formerly General
Corp. and President of Itek Optical Manager, Global Education Industry,
& Electronic Industries, Inc.) and President, Applications
Solutions Division, IBM
Corporation)
- --------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Small Cap Value Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The 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 High Yield Securities
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 with the most
recent copy of the Liberty Funds Distributor, Inc. Performance Update.
<PAGE>
- --------------------------------------------------------------------------------
CHOOSE LIBERTY
- --------------------------------------------------------------------------------
BECAUSE NO SINGLE INVESTMENT MANAGER CAN BE ALL THINGS TO ALL INVESTORS.(SM)
- --------------------------------------------------------------------------------
L I B E R T Y
- --------------------------------------------------------------------------------
[Graphic Omitted] Colonial has long been a recognized leader in fixed-income
investing. In addition, Colonial has distinguished itself
with both a traditional value and a more contemporary
approach to equity investing.
- --------------------------------------------------------------------------------
[Graphic Omitted] Crabbe Huson's contrarian investment style seeks long-term
performance by investing in stocks from high-quality,
out-of-favor companies. This risk-averse strategy
capitalizes on the potential of these companies to regain
market popularity.
- --------------------------------------------------------------------------------
[Graphic Omitted] LAMCO brings institutional money management to individual
investors through a disciplined multi-manager investment
process that seeks to deliver consistent long-term returns.
- --------------------------------------------------------------------------------
[Graphic Omitted] A leader in Asian investing(TM), Newport has an unparalleled
knowledge of Asian economies, business and culture.
- --------------------------------------------------------------------------------
[Graphic Omitted] Stein Roe's growth management style emphasizes companies
with the ability to create, maintain and grow earnings in
different market environments.
- --------------------------------------------------------------------------------
BOSTON o CHICAGO o NEW YORK o PORTLAND o SAN FRANCISCO
- --------------------------------------------------------------------------------
That's why each of these affiliated managers has excelled in a particular
investment style. These managers not only specialize in a distinct investment
style, they hold a passion for their style along with a demonstrated track
record.
Each of these managers is a member of the Liberty Financial Companies (NYSE: L),
a diversified asset accumulation and management organization with over $62.7
billion in assets under management for more than 1.7 million investors. Many of
the affiliated managers' products are offered by prospectus through Liberty
Funds Distributor, Inc.
Ask your financial advisor to help you develop an investment strategy that
blends the complementary disciplines of different managers into a well-balanced
program tailored to your goals.
- --------------------------------------------------------------------------------
COLONIAL SMALL CAP VALUE FUND ANNUAL REPORT, JUNE 30, 1999
- --------------------------------------------------------------------------------
[Graphic
Omitted] L I B E R T Y -------------
ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o BULK RATE
STEIN ROE ADVISOR U.S. POSTAGE
Liberty Funds Distributor, Inc. (C)1999 PAID
One Financial Center, Boston, MA 02111-2621, HOLLISTON, MA
1-800-426-3750 PERMIT NO. 20
Visit us at www.libertyfunds.com -------------
SC-02/413H-0699 (8/99) 99/984
