OK, the key here is to choose a material with alpha channel, could be transparent diffuse, you don't need a texture with alpha
then you create your color variable, just create a variable and choose color as the type
then compose you action like this... or in any way you want but make sure to set the material color to the variable and update it every frame to see the animation
the result should be like this
the cube is orange at the beginning because i set the color var orange and change it to green and transparent at the same time. To fade the object without changing the color, you just set the alpha in the 'To Value' field
