<PAGE>
LETTER FROM THE PRESIDENT
[PHOTO JOHN A. MCNEICE, JR., PRESIDENT]
Dear Shareholder:
During the seven months ended June 30, 1995, Colonial Tax-Exempt Money
Market Fund continued to meet its objective of providing investors with steady
income, ready liquidity, and maximum stability of principal.
FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
INCEPTION 6/16/87 5/5/92
------------------------------------------------------------
<S> <C> <C>
Distributions declared per share,
six months ended 5/31/95 $0.0154 $0.0104
Distributions declared per share,
seven months ended 6/30/95 $0.0178 $0.0120
Seven-day yield on 5/31/95 3.44% 2.55%
Seven-day yield on 6/30/95 3.46% 2.45%
Seven-day taxable-equivalent
yield on 5/31/95(1) 5.70% 4.22%
Seven-day taxable-equivalent
yield on 6/30/95(1) 5.73% 4.06%
30-day yield on 5/31/95 3.65% 2.68%
30-day yield on 6/30/95 2.92% 1.89%
------------------------------------------------------------
</TABLE>
ECONOMIC SUMMARY
It appears that the U.S. economy may be coming in for the "soft landing"
that has been the Federal Reserve Board's goal for the last two years.
Annualized gross domestic product for the first three months of 1995 was 2.8%,
down significantly from the annualized GDP of 5.1% for the final quarter of
1994. Among other factors, this reflects a slowdown in consumer spending and
residential construction.
The slowing economy was reflected in a gradual decline in interest rates
over the second half of the Fund's fiscal year. For money market investors, the
decline in interest rates was a significant development. As interest rates moved
lower, so too did the yields available from money market securities.
INVESTMENT STRATEGY
On February 17, 1995, the Trustees voted to recommend to you and your
fellow shareholders that they approve the conversion of Fund management to a
"master fund/feeder fund" structure. Currently, the Fund is managed directly by
Colonial Management Associates, Inc. Under the new structure, the Fund (a feeder
fund) would meet its objective by investing exclusively in shares of the SR&F
Municipal Money Market Portfolio (the master fund), a municipal money market
fund advised by Stein Roe & Farnham Incorporated.
The recommended changes will be voted on at a special shareholder meeting,
currently scheduled for September 15, 1995 and if approved, become effective
September 27, 1995. In anticipation of this approval, the Trustees have changed
the Fund's fiscal year end from November 30 to June 30 to match the fiscal year
end of the new master fund.
The Trustees believe the master fund/feeder fund structure will allow the
Fund to benefit from greater economies of scale, reflecting its participation in
a much larger pool of assets. The Fund will continue to be an excellent choice
for conservative investors seeking relief from federal income taxes, as well as
an ideal investment during periods of economic volatility. The Fund's attractive
services and privileges will continue to be maintained in the future, and
Colonial Investment Services, Inc. will continue to provide you with annual and
semiannual reports.
If you have any questions regarding the proposed changes, feel free to
contact our shareholder services department at 1-800-426-3750. One of our
knowledgeable telephone representatives will be pleased to help you.
Sincerely,
/s/ John A. McNeice, Jr.
------------------------
John A. McNeice, Jr.
President
July 20, 1995
(1) Taxable-equivalent yields are based on the 39.6% federal income tax rate.
<PAGE>
INVESTMENT PORTFOLIO (IN THOUSANDS) JUNE 30, 1995
<TABLE>
<CAPTION>
SHORT-TERM MUNICIPAL
OBLIGATIONS PAR VALUE
---------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - (a) 99.2%
---------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 15.8%
NC State Educational Facilities Authority,
Bowman Grey Medical School Project,
4.000% 09/01/20................... $ 1,300 $ 1,300
NY Seneca County Industrial Development
Agency, New York Chiropractic College,
4.050% 10/01/21................... 400 400
PA State Higher Education Assistance
Agency, Series 1984-A,
4.200% 12/01/20................... 500 500
TX North Texas Higher Education
Authority, Series A,
4.100% 04/01/20................... 1,200 1,200
UT State Board of Regents, Series B,
4.000% 11/01/00................... 1,000 1,000
---------
4,400
---------------------------------------------------------------------------
ELECTRIC - 6.5%
MI Monroe County Economic Development
Corp., Detroit Edison Co., Series CC,
4.550% 10/01/24................... 400 400
NY Niagara Mohawk Series 1985-A, Daily,
4.550% 07/01/15................... 900 900
VT Industrial Development Authority,
Ryegate Project,
3.850% 12/01/15................... 500 500
---------
1,800
---------------------------------------------------------------------------
GENERAL OBLIGATIONS - 9.4%
IL Chicago General Obligation,
Series B,
4.000% 10/31/95................... 1,400 1,400
NY General Obligation 1994 Daily,
4.500% 08/15/22................... 400 400
NY New York City, Sub-Series 4,
4.500% 08/15/23................... 800 800
---------
2,600
---------------------------------------------------------------------------
HOSPITALS & HEALTH CARE - 18.9%
CA State Health Facilities Finance
Authority, Catholic Health Care:
Catholic Healthcare, Series A,
3.900% 07/01/09................... 400 400
Catholic Healthcare, Series C,
3.900% 07/01/20................... 200 200
CO State Health Facilities Authority,
North Colorado Medical Center,
4.000% 05/15/20................... 1,200 1,200
IL State Health Facilities Authority,
Palos Community Hospital,
Series B,
4.350% 12/01/15................... 660 660
KS Kansas City, PQ Corp. Project,
4.350% 08/01/15.................... 300 300
MO Kansas City Industrial Development
Authority, Research Health Services System,
4.200% 10/15/14.................... 300 300
MO State Health & Educational
Facilities Authority, Christian
Health Services,
3.950% 12/01/19.................... 900 900
SC Greenville, Series A,
4.100% 05/01/23.................... 1,300 1,300
---------
5,260
---------------------------------------------------------------------------
HOUSING - 3.6%
IL Lisle, Ashley of Lisle Project,
4.150% 12/15/25.................... 1,000 1,000
---------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT REVENUE - 7.6%
GA Hapeville Development Authority,
Hapeville Hotel Ltd.,
4.350% 11/01/15.................... 1,200 1,200
MI Delta County Economic Development
Corp., Mead-Escanaba Paper Project,
Series F,
4.500% 12/01/13.................... 500 500
TX Denton Industrial Development Authority,
Safety-Kleen Corp. Project,
4.200% 12/09/09.................... 400 400
---------
2,100
---------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 15.5%
CA State Pollution Control Financing
Authority, Southern California Edison,
Series D,
4.500% 02/28/08.................... 700 700
IL State Development Finance Authority,
A.E. Staley Manufacturing Project,
4.150% 12/01/05.................... 300 300
LA East Baton Rouge Parish,
Rhone-Poulenc Project,
4.300% 06/01/98.................... 600 600
NC Halifax County Industrial Facilities
& Pollution Control Authority,
Westmoreland Coal Co.,
4.500% 12/01/19.................... 300 300
WY Green River,
4.300% 06/01/07.................... 1,400 1,400
WY Sweetwater County,
Pacificorp,
4.600% 12/01/14.................... 1,000 1,000
---------
4,300
---------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
2
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
SHORT-TERM MUNICIPAL
OBLIGATIONS - CONT. PAR VALUE
---------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - CONT.
---------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITY & IMPROVEMENT - 9.0%
GA De Kalb County Development Authority,
Pet, Inc. Project,
4.400% 02/01/00............... $ 600 $ 600
IN Gary, U.S. Steel Project,
3.600% 07/15/02............... 500 500
OH Environmental Improvement Authority,
U.S. Steel Corp. Project,
3.900% 12/01/01............... 400 400
TN Clarksville Public Building
Authority,
4.300% 12/01/00............... 1,000 1,000
--------
2,500
---------------------------------------------------------------------------
TRANSPORTATION - 10.0%
IL Chicago Airport Special Facilities,
CSX-Beckett Aviation,
3.350% 12/15/14............... 500 500
IL State Toll Highway Authority,
Series B,
4.250% 01/01/10............... 500 500
NY Triborough Bridge & Tunnel
Authority,
3.750% 01/01/24............... 1,300 1,300
VA Peninsula Ports Authority,
Dominion Terminal Project,
4.250% 07/01/16............... 500 500
--------
2,800
---------------------------------------------------------------------------
WATER & SEWER - 2.9%
NY New York City Water and Sewer Daily,
Series G,
4.100% 06/15/24............... 800 800
--------
Total investments (cost $27,560) (b) 27,560
OTHER ASSETS & LIABILITIES, NET - 0.8% 226
---------------------------------------------------------------------------
NET ASSETS - 100.0% $ 27,786
---------------------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) Variable rate demand notes are considered short-term obligations.
Interest rates change periodically on specified dates. These securities
are payable on demand and are secured by either letters of credit or
other credit support agreements from banks. The rates listed are as of
June 30, 1995.
(b) Cost for federal income tax purposes is the same.
</TABLE>
See notes to financial statements.
3
<PAGE>
INVESTMENT PORTFOLIO (unaudited, in thousands) MAY 31, 1995
<TABLE>
<CAPTION>
SHORT-TERM MUNICIPAL
OBLIGATIONS PAR VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES - (a) 102.8%
--------------------------------------------------------------------------------
EDUCATION - 17.4%
NC State Educational Facilities
Authority, Bowman Grey
Medical School Project,
3.950% 09/01/20 ........................ $1,300 $1,300
NY Seneca County Industrial
Development Agency,
New York Chiropractic College,
3.450% 10/01/21 ........................ 400 400
PA State Higher Education Assistance
Agency, Series 1984-A,
4.000% 12/01/20 ........................ 500 500
TX North Texas Higher Education
Authority, Series A,
3.700% 04/01/20 ........................ 1,100 1,100
UT State Board of Regents,
Series B,
3.600% 11/01/00 ........................ 1,000 1,000
------
4,300
--------------------------------------------------------------------------------
ELECTRIC - 3.2%
MI Monroe County Economic Development
Corp., Detroit Edison Co.,
Series CC,
4.150% 10/01/24 ........................ 300 300
VT Industrial Development Authority,
Ryegate Project,
3.650% 12/01/15 ........................ 500 500
------
800
--------------------------------------------------------------------------------
GENERAL OBLIGATIONS - 7.3%
IL Chicago General
Obligation, Series B,
3.550% 10/31/95 ........................ 1,400 1,400
NY New York City,
Sub-Series 4,
4.750% 08/15/23 ........................ 400 400
------
1,800
--------------------------------------------------------------------------------
HOSPITALS & HEALTH CARE - 24.9%
CA State Health Facilities Finance
Authority, Catholic Health Care:
Catholic Healthcare, Series A,
4.000% 07/01/09 ........................ 400 400
Catholic Healthcare, Series C,
4.000% 07/01/20 ........................ 200 200
CO State Health Facilities Authority,
North Colorado Medical Center,
4.000% 05/15/20 ........................ 1,200 1,200
IL State Health Facilities Authority,
Palos Community Hospital,
Series B,
4.050% 12/01/15 ........................ 660 660
MO Kansas City Industrial
Development Authority,
Resh Health Services System,
4.100% 10/15/14 ........................ 300 300
MO State Health & Educational
Facilities Authority,
Christian Health Services:
4.000% 11/01/19 ........................ 500 500
4.000% 12/01/19 ........................ 900 900
SC Greenville, Series A,
3.950% 05/01/23 ........................ 1,300 1,300
WI State Health Facilities Authority,
Franciscan Health Care:
Series A-1,
3.650% 01/01/16 ........................ 400 400
Series A-2,
3.650% 01/01/16 ........................ 300 300
------
6,160
--------------------------------------------------------------------------------
HOUSING - 4.0%
IL Lisle, Ashley of Lisle Project,
4.000% 12/15/25 ........................ 1,000 1,000
--------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT REVENUE - 9.7%
GA Hapeville Development Authority,
Hapeville Hotel Ltd.,
4.150% 11/01/15 ........................ 1,200 1,200
KS Kansas City, PQ Corp. Project,
4.150% 08/01/15 ........................ 300 300
MI Delta County Economic Development
Corp., Mead-Escanaba Paper Project,
Series F,
4.500% 12/01/13 ........................ 500 500
TX Denton Industrial Development Authority,
Safety-Kleen Corp. Project,
3.900% 12/09/09 ........................ 400 400
------
2,400
--------------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 14.9%
CA State Pollution Control Financing
Authority, Southern California Edison,
Series D,
4.700% 02/28/08 ........................ 700 700
IL State Development Finance Authority,
A.E. Staley Manufacturing Project,
3.500% 12/01/05 ........................ 300 300
</TABLE>
See notes to investment portfolio.
4
<PAGE>
INVESTMENT PORTFOLIO - continued
<TABLE>
<CAPTION>
SHORT-TERM MUNICIPAL
OBLIGATIONS - CONT. PAR VALUE
--------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - CONT.
--------------------------------------------------------------------------------
<S> <C> <C>
POLLUTION CONTROL REVENUE - CONT.
LA East Baton Rouge Parish,
Rhone-Poulenc Project,
4.350% 06/01/98.......................... 700 $ 700
MS Perry County,
Leaf River Forest Project,
4.050% 03/01/02.......................... 100 100
WY Green River,
3.150% 06/01/07.......................... 900 900
WY Sweetwater County,
Pacificorp,
4.200% 12/01/14.......................... 1,000 1,000
-------
3,700
--------------------------------------------------------------------------------
PUBLIC FACILITY & IMPROVEMENT - 10.1%
GA De Kalb County Development Authority,
Pet, Inc. Project,
4.450% 02/01/00.......................... 600 600
IN Gary, U.S. Steel Project,
4.550% 07/15/02.......................... 500 500
OH Environmental Improvement Authority,
U.S. Steel Corp. Project,
4.400% 12/01/01.......................... 400 400
TN Clarksville Public Building
Authority,
3.550% 12/01/00.......................... 1,000 1,000
-------
2,500
--------------------------------------------------------------------------------
TRANSPORTATION - 11.3%
IL Chicago Airport Special Facilities,
CSX-Beckett Aviation,
4.320% 12/15/14.......................... 500 500
IL State Toll Highway Authority,
Series B,
3.750% 01/01/10.......................... 500 500
NY Triborough Bridge & Tunnel
Authority,
3.300% 01/01/24.......................... 1,300 1,300
VA Peninsula Ports Authority,
Dominion Terminal Project,
4.150% 07/01/16.......................... 500 500
-------
2,800
--------------------------------------------------------------------------------
Total investments (cost $25,460) (b) 25,460
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - (2.8)% (700)
--------------------------------------------------------------------------------
NET ASSETS - 100.0% $24,760
--------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
Notes to investment portfolio:
(a) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of May 31, 1995.
(b) Cost for federal income tax purposes is the same.
5
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
(in thousands except for per share amounts)
-----------------------------------------------------------------------------------
<CAPTION>
(unaudited)
Period Six months
ended ended
June 30 May 31
------- -----------
1995(a) 1995
------- -----------
<S> <C> <C>
ASSETS
Investments at amortized cost.......................... $27,560 $25,460
Cash................................................... 419 84
Receivable for:
Investments sold..................................... -- 200
Fund shares sold..................................... 101 --
Interest............................................. 98 103
Expense reimbursement due from adviser................. 3 --
Other.................................................. 26 37
------- -------
Total assets...................................... 28,207 25,884
------- -------
LIABILITIES
Payable for:
Investments purchased................................ 301 --
Fund shares repurchased.............................. 55 1,035
Distributions........................................ 61 88
Accrued:
Deferred Trustees fees............................... 1 1
Other.................................................. 3 --
------- -------
Total liabilities................................. 421 1,124
------- -------
NET ASSETS............................................. $27,786 $24,760
======= =======
Net assets - Class A................................... $24,675 $22,815
======= =======
Net assets - Class B................................... $3,111 $1,945
======= =======
Shares of beneficial interest outstanding - Class A.... 24,677 22,817
======= =======
Shares of beneficial interest outstanding - Class B.... 3,110 1,945
======= =======
Class A.............................................. $1.00 $1.00
======= =======
Class B.............................................. $1.00 $1.00
======= =======
COMPOSITION OF NET ASSETS
Capital paid in...................................... $27,788 $24,762
Accumulated net realized loss........................ (2) (2)
------- -------
$27,786 $24,760
======= =======
<FN>
(a) The Fund changed its fiscal year end from November 30 to June 30 in 1995.
</TABLE>
See notes to financial statements.
6
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
<TABLE>
STATEMENT OF OPERATIONS
(in thousands)
-----------------------------------------------------------------------------------
<CAPTION>
(unaudited)
Period Six months
ended ended
June 30 May 31
------- -----------
1995(a) 1995
------- -----------
<S> <C> <C>
INVESTMENT INCOME
Interest............................................... $667 $588
---- ----
EXPENSES
Management fee......................................... 88 77
Service fee - Class B.................................. 4 4
Distribution fee - Class B............................. 13 11
Transfer agent......................................... 43 38
Bookkeeping fee........................................ 16 13
Trustees fees.......................................... 6 5
Custodian fee.......................................... 2 2
Custodian credits earned............................... (2) (2)
Audit fee.............................................. 15 13
Legal fee.............................................. 6 5
Registration fees...................................... 15 12
Reports to shareholders................................ 2 1
Other.................................................. 4 3
---- ----
212 182
Fees and expenses waived or borne by the adviser....... (63) (51)
---- ----
149 131
---- ----
Net investment income........................ $518 $457
---- ----
<FN>
(a) The Fund changed its fiscal year end from November 30 to June 30 in 1995.
</TABLE>
See notes to financial statements.
7
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<CAPTION>
(unaudited)
Period Six months Year
ended ended ended
June 30 May 31 November 30
------- ---------- -----------
1995(a) 1995 1994
------- ---------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income........................................ $ 518 $ 457 $ 518
Distributions
From net investment income - Class A......................... (485) (428) (493)
From net investment income - Class B......................... (35) (31) (23)
-------- -------- --------
(2) (2) 2
Fund share transactions
Receipts for shares sold - Class A........................... 32,426 26,761 69,633
Value of distributions reinvested - Class A.................. 386 323 371
Cost of shares repurchased - Class A......................... (36,942) (33,075) (59,816)
-------- -------- --------
(4,130) (5,991) 10,188
-------- -------- --------
Receipts for shares sold - Class B........................... 4,502 3,105 9,572
Value of distributions reinvested - Class B.................. 26 23 15
Cost of shares repurchased - Class B......................... (5,285) (5,050) (6,628)
-------- -------- --------
(757) (1,922) 2,959
-------- -------- --------
Net increase (decrease) from Fund share transactions..... (4,887) (7,913) 13,147
-------- -------- --------
Total increase (decrease).............................. (4,889) (7,915) 13,149
-------- -------- --------
NET ASSETS
Beginning of period.......................................... 32,675 32,675 19,526
-------- -------- --------
End of period................................................ $ 27,786 $ 24,760 $ 32,675
======== ======== ========
Undistributed net investment income at end of period........... $ -- $ -- $ 2
======== ======== ========
NUMBER OF FUND SHARES
Sold - Class A............................................... 32,426 26,761 69,633
Issued for distributions reinvested - Class A................ 385 323 371
Repurchased - Class A........................................ (36,942) (33,075) (59,817)
-------- -------- --------
(4,131) (5,991) 10,187
-------- -------- --------
Sold - Class B............................................... 4,502 3,105 9,572
Issued for distributions reinvested - Class B................ 26 23 15
Repurchased - Class B........................................ (5,285) (5,050) (6,628)
-------- -------- --------
(757) (1,922) 2,959
-------- -------- --------
Net increase (decrease) in shares outstanding............ (4,888) (7,913) 13,146
------- -------- --------
<FN>
(a) The Fund changed its fiscal year end from November 30 to June 30 in 1995.
</TABLE>
See notes to financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
Colonial Tax-Exempt Money Market Fund (the Fund), a series of Colonial
Trust IV, is a Massachusetts business trust, registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open-end, management
investment company. The Fund may issue an unlimited number of shares and offers
Class A and Class B shares. Class B shares, which are identical to Class A
shares except for an annual service and distribution fee and a contingent
deferred sales charge, will convert to Class A shares when they have been
outstanding approximately eight years. The following significant accounting
policies are consistently followed by the Fund in the preparation of its
financial statements and conform to generally accepted accounting principles.
The Fund changed its fiscal year end from November 30 to June 30 in 1995.
--------------------------------------------------------------------------------
SECURITY VALUATION AND TRANSACTIONS
The Fund values its portfolio securities utilizing the amortized cost
valuation method.
Security transactions are accounted for on the date the securities are
purchased or sold.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
--------------------------------------------------------------------------------
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS
All income, expenses (other than the Class B service and distribution
fees), 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 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 service and distribution fees applicable to Class B 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 and tax-exempt income, no federal
income tax has been accrued.
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and records distributions daily and pays monthly.
--------------------------------------------------------------------------------
INTEREST INCOME
Interest income, including original issue discount accretion and
premium amortization, is recorded daily on the accrual basis.
--------------------------------------------------------------------------------
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 0.50% 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 0.20%
annually of the Fund's average net assets, and receives a reimbursement for
certain out of pocket expenses.
--------------------------------------------------------------------------------
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
--------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through Colonial Investment Services, Inc. (the
Distributor), is the Fund's principal underwriter. During the six months ended
May 31, 1995 and the period ended June 30, 1995, the Distributor received
contingent deferred sales charges (CDSC) of $20,654 on Class B share
redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the
Distributor a service fee and a distribution fee equal to 0.25% annually and
0.75% annually, respectively, of the Class B dividend shares.
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 Adviser 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, commissions, taxes, and extraordinary expenses, if any)
exceed 0.75% annually of the Fund's average net assets.
--------------------------------------------------------------------------------
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
During the six months ended May 31, 1995 and the period ended June 30,
1995, purchases and sales (including maturities) of short-term investments
aggregated $20,560,000 (unaudited) and $27,700,000 (unaudited), respectively,
and $26,760,000 and $31,800,000, respectively.
--------------------------------------------------------------------------------
OTHER
The Fund has greater than 10% of its net assets invested in Illinois at
May 31, 1995 and Illinois and New York at June 30, 1995.
There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
--------------------------------------------------------------------------------
NOTE 4. OTHER RELATED PARTY TRANSACTIONS
At June 30, 1995 the Fund had three shareholders who owned greater than
5% of the Fund's shares outstanding.
--------------------------------------------------------------------------------
NOTE 5. RESULTS OF SPECIAL SHAREHOLDERS MEETING
On February 15, 1995, a special meeting of shareholders was held and a
new Management Agreement between the Trust and Colonial Management Associates,
Inc. was approved that became effective upon the completion of the merger of The
Colonial Group, Inc. and Apple Merger Corporation, a subsidiary of Liberty
Financial Companies, Inc. on March 24, 1995. Out of the shares of beneficial
interest outstanding on December 9, 1994, 17,222,141 voted for the new
Management Agreement, 628,505 voted against and 482,308 abstained. Of the shares
of beneficial interest outstanding that abstained 10,012 represented broker
non-votes.
--------------------------------------------------------------------------------
NOTE 6. SUBSEQUENT EVENT
A special shareholder's meeting is scheduled for September 15, 1995 to
vote on the conversion of the Fund to a "master fund/feeder fund" structure. In
anticipation of the approval of the recommended change, the Trustees have
changed the Fund's fiscal year end from November 30 to June 30.
--------------------------------------------------------------------------------
10
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30 MAY 31 NOVEMBER 30
---------------------- ----------------------- ----------------------
1995 (b) 1995 1994
---------------------- ----------------------- ----------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period..... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (a)............. 0.018 0.012 0.015 0.010 0.020 0.010
------- ------- ------- ------- ------- -------
Less distributions declared
to shareholders:
From net investment income............ (0.018) (0.012) (0.015) (0.010) (0.020) (0.010)
------- ------- ------- ------- ------- -------
Net asset value - End of period........... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
======= ======= ======= ======= ======= =======
Total return(c)(d)........................ 1.80%(e) 1.20%(e) 1.55%(e) 1.05%(e) 2.00% 1.01%
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Expenses.............................. 0.75%(f) 1.75%(f) 0.75%(f) 1.75%(f) 0.60% 1.60%
Fees and expenses waived or
borne by the adviser................ 0.36%(f) 0.36%(f) 0.33%(f) 0.33%(f) 0.59% 0.59%
Net investment income................. 3.05%(f) 2.05%(f) 3.07%(f) 2.07%(f) 2.05% 1.05%
Net assets at end of period (000)......... $24,675 $3,111 $22,815 $1,945 $28,808 $3,867
<FN>
(a) Net of fees and expense waived
or borne by the adviser
which amounted to.................... $0.002 $0.002 $0.002 $0.002 $0.006 $0.006
(b) The Fund changed its fiscal year end from November 30 to June 30 in 1995.
(c) Total return at net asset value assuming all distributions reinvested and no CDSC.
(d) Had the adviser not waived or reimbursed a portion of expenses total return would
have been reduced.
(e) Not annualized.
(f) Annualized.
</TABLE>
--------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income tax
purposes.
11
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
---------------------------------------------------------------------------
1993 1992 1991 1990
-------------------- ------------------- ------- -------
CLASS A CLASS B CLASS A CLASS B (b) CLASS A CLASS A
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period........ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (a)................ 0.017 0.009 0.024 0.007 0.042 0.055
Less distributions declared
to shareholders:
From net investment income............... (0.017) (0.009) (0.024) (0.007) (0.042) (0.055)
------- ------- ------- ------- ------- -------
Net asset value - End of period.............. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
======= ======= ======= ======= ======= =======
Total return(c)(d)........................... 1.73% 0.93% 2.44% 0.68% (e) 4.26% 5.64%
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Expenses................................. 0.75% 1.75% 0.75% 1.75% (f) 0.75% 0.75%
Fees and expenses waived or
borne by the adviser................... 0.50% 0.50% 0.61% 0.79% (f) 0.53% 0.38%
Net investment income.................... 1.69% 0.69% 2.42% 1.42% (f) 4.23% 5.50%
Net assets at end of period (000)............ $18,618 $908 $34,956 $135 $28,355 $37,158
<FN>
(a) Net of fees and expense waived
or borne by the adviser
which amounted to....................... $0.005 $0.005 $0.006 $0.003 $0.005 $0.004
(b) Class B shares were initially offered on May 5, 1992. Per share amounts reflect
activity from that date.
(c) Total return at net asset value assuming all distributions reinvested and no CDSC.
(d) Had the adviser not waived or reimbursed a portion of expenses total return would
have been reduced.
(e) Not annualized.
(f) Annualized.
</TABLE>
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF COLONIAL-TAX EXEMPT
MONEY MARKET 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 Tax-Exempt Money Market
Fund (a series of Colonial Trust IV) at June 30, 1995, the results of its
operations for the seven months ended June 30, 1995, the changes in its net
assets for the seven months ended June 30, 1995 and the year ended November 30,
1994 and the financial highlights for the seven months ended June 30, 1995 and
for each of the five years in the period ended November 30, 1994, 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, 1995 by
correspondence with the custodian and broker, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
July 20, 1995
13
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly Dean,
Simon Graduate School of Business, University of Rochester; Chairman and Chief
Executive Officer, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JOHN A. MCNEICE, JR.
Chairman of the Board and Director, The Colonial Group, Inc. and Colonial
Management Associates, Inc. (formerly Chief Executive Officer, The Colonial
Group, Inc. and Colonial Management Associates, Inc.)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
14
<PAGE>
-------------------------------------------------------------------------------
ABOUT OUR COVER...
The symbol on the cover of this Report represents the Fund's primary investment
focus on municipal bonds.
-------------------------------------------------------------------------------
Colonial Tax-Exempt Money Market Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
SHAREHOLDER SERVICES AND TRANSFER AGENT
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
This material may be used with potential investors if it is preceded or
accompanied by a current Fund prospectus containing more complete information
including fees, risks, and expenses.
15
<PAGE>
[LOGO]
COLONIAL
MUTUAL FUNDS
COLONIAL
TAX-EXEMPT
MONEY MARKET FUND
ANNUAL REPORT
JUNE 30, 1995
[LOGO]
COLONIAL
MUTUAL FUNDS
Printed on recycled paper.
TM-02/044B-0695
COLONIAL INVESTMENT SERVICES, INC. (C)1995
