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COLONIAL
Investment Grade Bond Fund
SEMIANNUAL REPORT
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JUNE 30, 2000
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Investment Portfolio (Unaudited)
June 30, 2000
(In thousands)
BONDS & NOTES - 111.5% Par VALUE
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ASSET-BACKED SECURITIES - 52.9%
ASSET-BACKED SECURITIES - 13.2%
Conseco Finance Securitizations Corp.,
Series 2000-A, Class BV1,
8.390% 2/15/31 $250 $250
Delta Funding Home Equity Loan Trust,
Series 1997-3, Class M2F,
7.330% 10/25/28 288 270
Green Tree Financial Corp.,
Series 1995-3, Class B-1,
7.850% 8/15/25 500 419
Salomon Brothers Mortgage Securities VII, Inc.,
Series 2000-LB1, Class M3,
7.000% 5/25/29 250 225
UCFC Home Equity Loan Corp.
Series 1996-B1, Class A7,
8.200% 9/15/27 230 229
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1,393
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NON-AGENCY MORTGAGE-BACKED - 39.7%
Chase Mortgage Finance Corp.:
Series 1998-AS1, Class B2,
6.750% 8/25/28 256 223
Series 2000-S1, Class B2,
7.250% 2/25/30 274 244
Countrywide Asset-Backed Certificates:
Series 1999-2, Class BV,
8.730% 5/25/29 500 504
Series 2000-1, Class MF2,
8.600% 3/31/31 250 252
Series 2000-1, Class BF,
8.600% 3/31/31 250 241
Headlands Mortgage Securities, Inc.,
Series 1998-1, Class B3,
6.500% 11/25/28 245 197
Norwest Asset Securities Corp.:
Series 1998-10, Class B2,
6.750% 5/25/28 274 251
Series 1998-4, Class 2B2,
6.750% 2/25/28 88 78
Series 2000-1, Class B3,
7.250% 2/25/30 250 222
Option One Mortgage Loan Trust,
Series 2000-1, Class M3,
8.320% 4/25/30 276 275
Residential Accredit Loans, Inc:
Series 1999-QS13, Class M3,
7.750% 10/25/29 265 245
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Series 1999-QS6, Class M3,
6.500% 5/25/29 297 253
Series 1998-QS16, Class M2,
6.500% 11/25/13 484 451
Residential Funding Mortgage Securities I, Inc.,
Series 1999-S24, Class M2,
7.500% 12/25/29 263 248
Saxon Asset Securities Trust:
Series 2000-1, Class MF2,
8.730% 3/25/30 250 254
Series 2000-1, Class BF1,
9.760% 3/25/30 250 253
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4,191
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TOTAL ASSET BACKED SECURITIES (cost of $5,520) 5,584
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U.S. GOVERNMENT & AGENCIES OBLIGATIONS - 42.6%
GOVERNMENT AGENCIES - 18.7%
Federal National Mortgage Association,
7.500% 5/1/50 2,000 1,972
GOVERNMENT OBLIGATIONS - 23.9%
U.S. Treasury Bonds,
7.875% 2/15/21 355 423
U.S. Treasury Notes:
6.500% 2/15/10 860 889
6.750% 5/15/05 374 383
WI Treasury Security,
6.000% 8/15/09 831 824
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2,519
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TOTAL GOVERNMENT OBLIGATIONS (cost of $4,470) 4,491
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CORPORATE FIXED-INCOME BONDS & NOTES - 16.0%
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FINANCE, INSURANCE & REAL ESTATE - 2.1%
INSURANCE CARRIERS
Jefferson-Pilot Capital Trust,
8.285% 3/1/46 250 226
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MANUFACTURING - 9.4%
CHEMICAL & ALLIED PRODUCTS - 4.7%
Equistar Chemicals, L.P.,
8.500% 2/15/04 250 245
Lockheed Martin Corp.,
8.200% 12/1/09 250 253
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498
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PAPER PRODUCTS - 2.3%
Abitibi-Consolidated, Inc.,
7.875% 8/1/09 250 241
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PETROLEUM REFINING - 2.4%
Valero Energy Corp.,
8.375% 6/15/05 250 253
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SERVICES - 4.5%
AMUSEMENT & RECREATION - 2.2%
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Harrah's Operating Co., Inc,
7.500% 1/15/09 250 230
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TRANSPORTATION, COMMUNICATION, ELECTRIC, - 2.3%
GAS, & SANITARY SERVICES
Endesa-Chile Overseas Co.,
8.500% 4/1/09 250 245
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TOTAL CORPORATE FIXED INCOME BONDS & NOTES
(cost of $1,692) 1,693
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TOTAL INVESTMENTS (cost of $11,682)(a) 11,768
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SHORT-TERM OBLIGATIONS - 9.0%
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Repurchase agreement with SBC Warburg Ltd.,
dated 06/30/00 due 07/03/00 at 6.600%
collateralized by U.S. Treasury notes
with maturities to 2026, market value $971
(repurchase proceeds $952) 951 951
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Other Asset & Liabilities, Net - (20.5%) (2,168)
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NET ASSETS - 100% $ 10,551
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Notes to Investment Portfolio:
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(a) Cost for federal income tax purposes is the same.
<PAGE> 5
STATEMENT OF ASSETS & LIABILITIES
June 30, 2000 (Unaudited)
(In thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $11,682) $ 11,768
Short-term obligations
951
========
12,719
Receivable for:
Investments sold 1,941
Interest 144
Expense reimbursement due from Advisor 12
Other 5 2,102
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Total Assets 14,821
LIABILITIES
Payable due to custodian bank 249
Payable for:
Investments purchased 3,938
Distributions - Class A 17
Distributions - Class B 2
Distributions - Class C 2
Distributions - Class Z 2
Accrued:
Bookkeeping fee 4
Transfer agent fee 1
Other 55
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Total Liabilities 4,270
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NET ASSETS $ 10,551
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Net asset value & redemption price per share -
Class A ($7,356/609) $ 12.09(a)
========
Maximum offering price per share - Class A
($12.09/0.9425) $ 12.83(b)
========
Net asset value & offering price per share -
Class B ($1,087/90) $ 12.08(a)
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Net asset value & offering price per share -
Class C ($1,072/89) $ 12.08(a)
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Net asset value & offering price per share -
Class Z ($1,036/86) $ 12.09
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COMPOSITION OF NET ASSETS
Capital paid in $ 10,478
Undistributed net investment income $ 13
Accumulated net realized loss (26)
Net unrealized appreciation 86
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$ 10,551
========
(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.
See notes to financial statements.
<PAGE> 6
STATEMENT OF OPERATIONS (Unaudited)
For The Period Ended June 30, 2000 (a)
(In thousands)
INVESTMENT INCOME
$ 349
EXPENSES
Management fee $ 23
Service fee - Class A, Class B, Class C 10
Distribution fee - Class B 2
Distribution fee - Class C 3
Transfer agent fee 6
Bookkeeping fee 12
Trustee fee 2
Custodian fee 1
Audit fee 10
Legal fee 3
Registration fee 1
Reports to shareholders 11
Other 7
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91
Fees and expenses waived or borne
by the Advisor (53) 38
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Net Investment Income 311
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NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss on investments (26)
Net change in unrealized appreciation on
investments 86
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Net Gain 60
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Increase in Net Assets from Operations $ 371
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(a) The Fund commenced investment operations on January 18, 2000.
See notes to financial statements.
<PAGE> 7
STATEMENT OF CHANGES IN NET ASSETS
(In thousands)
(Unaudited)
Six months ended June 30,
INCREASE (DECREASE) IN NET ASSETS 2000(a)
Operations:
Net investment income $ 311
Net realized loss (26)
Net change in unrealized appreciation 86
--------
Net Increase from Operations 371
Distributions:
From net investment income - Class A (211)
From net investment income - Class B (29)
From net investment income - Class C (28)
From net investment income - Class Z (30)
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73
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Fund Share Transactions :
Receipts for shares sold - Class A 7,110
Value of distributions reinvested - Class A 194
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7,304
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Receipts for shares sold - Class B 1,055
Value of distributions reinvested - Class B 26
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1,081
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Receipts for shares sold - Class C 1,040
Value of distributions reinvested - Class C 25
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1,065
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Receipts for shares sold - Class Z 1,000
Value of distributions reinvested - Class Z 28
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1,028
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Net Increase from Fund Share
Transactions 10,478
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Total Increase 10,551
NET ASSETS
Beginning of period --
--------
End of period (including undistributed
net investment income of $13)
$ 10,551
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(a) The Fund commenced investment operations on January 18, 2000.
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STATEMENT OF CHANGES IN NET ASSETS - CONT.
(Unaudited)
Six months ended June 30,
2000(a)
NUMBER OF FUND SHARES
Sold - Class A 593
Issued for distributions reinvested - Class A 16
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609
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Sold - Class B 88
Issued for distributions reinvested - Class B 2
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90
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Sold - Class C 87
Issued for distributions reinvested - Class C 2
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89
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Sold - Class Z 84
Issued for distributions reinvested - Class Z 2
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86
=======
See notes to financial statements.
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
------------------------------------
In the opinion of management of Colonial Investment Grade Bond Fund (the Fund),
a series of Liberty Funds Trust IV, the accompanying financial statements
contain all normal and recurring adjustments necessary for the fair presentation
of the financial position of the Fund at June 30, 2000, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
---------------------------
Organization: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund's investment objective is to
seek as high a level of after-tax total return as is consistent with moderate
volatility, by pursuing current income exempt from federal income tax and
opportunities for appreciation from a portfolio primarily invested in
investment-grade, intermediate-term municipal bonds. 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 to Class A shares
purchased without an initial sales charge on on redemptions made within eighteen
months on an original purchase of $1 million to $25 million. Class B shares are
subject to an annual distribution fee and a contingent deferred sales charge.
Effective February 1, 2000, Class B shares will convert to Class A as follows:
CONVERTS TO
ORIGINAL PURCHASE CLASS A SHARES
----------------- --------------
Less than $250,000 8 years
$250,000 to less than $500,000 4 years
$500,000 to less than $1,000,000 3 years
Class C shares which 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 sold continuously at net asset value. There are certain
restrictions on the purchase of Class Z shares as defined 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 that are consistently followed by the Fund in
the preparation of its financial statements.
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Security valuation and transactions: Debt securities generally are valued by a
pricing service based upon market transactions for normal, institutional-size
trading units of similar securities. When management deems it appropriate, an
over-the-counter or exchange bid quotation is used.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
Determination of class net asset values and financial highlights: All income,
expenses (other than the Class B and Class C distribution fees), and realized
and unrealized gains (losses), are allocated to each class proportionately on a
daily basis for purposes of determining the net asset value of each class.
Class B and Class C per share data and ratios are calculated by adjusting the
expense and net investment income per share data and ratios for the Fund for the
entire period 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; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
Distributions to shareholders: The Fund declares and records distributions daily
and pays monthly.
The 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.
NOTE 3. 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 0.50% 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 per year plus 0.035% annually of the Fund's average
net assets over $50 million.
<PAGE> 11
Administrative Fee
Colonial Management Associates, Inc. (the Administrator), an affiliate of the
Advisor, provides accounting and other services and offices facilities for a
monthly fee equal to 0.25% annually of the Fund's average net assets.
Transfer Agent Fee: Liberty Funds Services, Inc. (the Transfer Agent), an
affiliate of the Advisor, provides shareholder services for a fee comprised of
0.07% annually of average net assets plus charges based on the number of
shareholder accounts and transactions and receives reimbursement for certain
out-of-pocket expenses.
Underwriting discounts, service and distribution fees: Liberty Funds
Distributor, Inc. (the Distributor), a subsidiary of the Advisor is the Fund's
principal underwriter. During the period ended June 30, 2000 the Fund has been
advised that the Distributor retained no net underwriting discounts on sales of
the Fund's Class A shares and received no contingent deferred sales charges
(CDSC) 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 on Class A, Class B and Class C net assets
as of the 20th of each month. The plan also requires the payment of a
distribution fee to the Distributor equal to 0.45% and 0.60% annually of the
average net assets attributable to Class B 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.
Expense limits: The Advisor has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 0.65% annually of the Fund's average net
assets.
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 4. PORTFOLIO INFORMATION
Investment activity: For the period ended June 30, 2000, purchases and sales of
investments, other than short-term obligations, were $23,732,934 and $12,022,863
respectively.
Unrealized appreciation (depreciation) at June 30, 2000, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
Gross unrealized appreciation $ 124,000
Gross unrealized depreciation (38,000)
---------
Net unrealized appreciation $ 86,000
=========
Other: The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
<PAGE> 12
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
(Unaudited)
Period ended June 30,
2000
---------------------------------------------
Class A Class B Class C Class Z
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Net Asset Value -
Beginning of Period $12.000 $12.000 $12.000 $12.000
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a)(b) 0.367 0.348 0.341 0.378
Net realized and
unrealized loss 0.075 0.065 0.065 0.075
------- ------- ------- -------
Total from Investment
Operations 0.442 0.413 0.406 0.453
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.352) (0.333) (0.326) (0.363)
------- ------- ------- -------
Net asset value -
End of period $12.090 $12.080 $12.080 $12.090
======= ======= ======= =======
Total return (c)(d)(e) 3.72% 3.47% 3.42% 3.81%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (f)(g) 0.90% 1.35% 1.50% 0.65%
Fees and expenses waived
or borne by the Advisor (f)(g) 1.15% 1.15% 1.15% 1.15%
Net investment income (f)(g) 6.61% 6.16% 6.01% 6.86%
Portfolio turnover 143% 143% 143% 143%
Net assets at end
of period (000) $ 7,356 $ 1,087 $ 1,072 $ 1,036
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.064 $ 0.064 $ 0.064 $ 0.064
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(g) Annualized
<PAGE> 13
TRUSTEES & TRANSFER AGENT
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TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore
Bank & Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalls & 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)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and
President of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Park Avenue Equity Partners (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
Academic Vice President and Dean of Faculties, Boston College (formerly Dean,
Boston College School of Management)
THOMAS E. STITZEL
Business Consultant and Chartered Financial Analyst (formerly Professor of
Finance, College of Business, Boise State University)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
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IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Investment Grade Bond 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 Investment Grade Bond
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 Funds and with the most
recent copy of the Liberty Funds Distributor, Inc. Performance Update.
<PAGE> 14
--------------------------------------------------------------------------------
CHOOSE LIBERTY
--------------------------------------------------------------------------------
BECAUSE NO SINGLE INVESTMENT MANAGER CAN BE ALL THINGS TO ALL INVESTORS.(SM)
LIBERTY FUNDS
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COLONIAL Fixed income and value style equity investing.
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NEWPORT A leader in international investing.(SM)
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ADVISOR Innovative solutions for growth and income investing.
KEYPORT A leading provider of innovative annuity products.
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
BEFORE YOU INVEST, CONSULT YOUR FINANCIAL ADVISOR.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
------------------------------------------------------------
COLONIAL INVESTMENT GRADE BOND FUND SEMIANNUAL REPORT
------------------------------------------------------------
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LIBERTY
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